nike analysis
TRANSCRIPT
History• Founded 1962• Bowerman & Knight• Blue Ribbon > Nike > Nike• Simply Number ONE!• Presence in 120 Countries
Input Stage
IFEKey Internal Factor Weight Rating WS
Strengths
Most dominant player in global market (50% market share),in footwear >$84.
0.12 3 0.36
Jordan (2nd Largest), 10.8% of US shoe market. 0.12 4 0.48
75% for Basketball, 86.5% for >$100. 0.07 3 0.21
Revenue Increase 2.9% in 2009. 0.07 3 0.21
25,000 Retail Accounts in USA and more than 27000 outside US.
0.11 4 0.44
Internet based customization through web site www.nikebiz.
0.1 4 0.4
Nike has five wholly owned subsidiaries. 0.07 3 0.21
Weaknesses
Net Income Reduce 21% in 2009 0.1 1 0.1
Allmost 99% Manufacturing Outsourced out side USA 0.12 1 0.12
Sales are heavily concentrated in the youth and young adult market 12 to 24 year old age bracket.
0.12 2 0.24
Totals 1 2.77
EFEKey External Factor Weight Rating WS
Opportunity
Making shoes for 35+ and under 12 age braket 0.1 1 0.1
Younger consumers are less price sensitive. 0.1 4 0.4
Growing Market 0.11 3 0.33
WTO (Outsourcing, Other Markets) 0.1 3 0.3
Internet, Altering Sales Model (18% growth expected by 2012)
0.1 3 0.3
Threat
Foreign exchange rate fluctuations. 0.08 2 0.16
After age 40 consumers do not pay more than $35 to $40. 0.09 2 0.18
Strong Competition 0.12 3 0.36
Addidass strong in (Europe & China) Beijing 2008 games. 0.07 2 0.14
Global Recession 0.13 2 0.26
Totals 1 2.53
Nike Adidas PumaCritical Success Factors Weight Rating score Rating score Rating score
Advertising 0.14 4 0.56 4 0.56 3 0.42Product Quality 0.14 3 0.42 3 0.42 2 0.28Price competitiveness 0.11 3 0.33 3 0.33 2 0.22Management 0.08 4 0.32 2 0.16 2 0.16Financial Position 0.07 4 0.28 2 0.14 2 0.14Customer Loyalty 0.12 4 0.48 3 0.36 2 0.24Global Expansion 0.07 4 0.28 3 0.21 3 0.21Market Share 0.13 4 0.52 3 0.39 2 0.26Technology 0.14 3 0.42 2 0.28 2 0.28 Total 1.00 3.61 2.85 2.21
Competitive Profile Matrix (CPM)
Matching Stage
Strength Weakness
Opportunity Threats
1. Most dominant player in global market (50% market share),in footwear >$84.
2. Jordan (2nd Largest), 10.8% of US shoe market.
3. 75% for Basketball, 86.5% for >$100.4. Revenue Increase 2.9% in 2009. 5. 25,000 Retail Accounts in USA and more
than 27000 outside USA.6. Internet based customization through web
site www.nikebiz.com.7. Nike has five wholly owned subsidiaries.
1. Most dominant player in global market (50% market share),in footwear >$84.
2. Jordan (2nd Largest), 10.8% of US shoe market.
3. 75% for Basketball, 86.5% for >$100.4. Revenue Incr- ease 2.9% in
2009
Strength
Weakness
1. Net Income Reduce 21% in 2009.2. Allmost 99% Manufacturing
Outsourced out side USA.3. sales are heavily concentrated in the
youth and young adult market 12 to 24 year old age bracket.
Weakness
Opportunity
Opportunity
1. Making shoes for 35+ and under 12 age bracket.
2. Younger consumers are less price sensitive.3. Growing Market.4. WTO (Outsourcing, Other Market).5. Internet, Altering Sales Model (18% growth
expected by 2012).
Threats
Threats
1. Foreign exchange rate fluctuations.2. After age 40 consumers do not pay more
than $35 to $40.3. Strong Competition.
4. strong in (Europe & China) Beijing 2008 games.
5. Global Recession.
SO Strategies
1. S7,O5 increase marketing and sales through internet.
WO Strategies
2. W3,O1 make specific products for children and older people.
ST Strategies
3. S1,S3,W3,W4 develop low price quality products.
WT Strategies
4. W1,W2,T1 outsourcing out side the USA sho- uld be cut down to almost 50% because almost 50% sales comes from USA which will reduce foreign exchange risk.
Internal Strategic Position
External Strategic Position
Sr. No. Financial Position (FP) Rating Sr. No. Stability Position (SP) Rating
1Return on Investment declined by 26% 4 1Technological Changes: e.g. If Nike has Shox, Adidas has Adidas 1 and Reebok has Pump 2 created by NASA
-4
2Stronge Leverage Position i.e. 3% 7 2Avg Rate of Inflation: 2007: 2.8%, 2008: 3.8%, 2009: -0.4%
-3
3Liquidity ratio increased by 11% 6 3Demand Variability: a surging demand was witnessed for performance athletic apparels and footwear due to the increasing number of athletes and the growing health awareness
-2
4Working Capital ratio is 71% of total assets 6 4Price Range of Competing Products
-3
5Inventory was Turned over by 8 times only 5 5Barriers To Entry Into Market: Threat of new entrants based on first-mover advantage is minimal: -3
6Earnings Per Share declined by 19 % 4 6Competitive Pressure: Highly saturated and challenging industry: -3
7Price to Earning Ratio showing increase of 24% 6 7Ease of Exit From Market -2
8Cash Flow from operations decreased by 10.3% 4 8Risk Involved In Business -242 -22
Sr. No. Competitive Position (CP) Rating Sr. No. Industry Position (IP) Rating
1Nike is enjoying more than 50% market share -1 1
Growth Potential : Global sports footwear: * 46.8% volume growth from 05-10 and 2.1% from 09-10 * 46.7% value growth from 05-10 and 3.3% from 09-10
6
2
manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.
-2 2Profit Potential: Sports Footwear and apperal industry is highly profitable industry 5
3
In the apparel marketplace, Nike is apioneer in product lifecycle management(PLM). The company traces much of its PLMsuccess to a major focus on processreengineering.
-3 3Financial Stability: Players are financialy stronge 4
4Customer Loyalty -2 4Extent Leveraged: use of financial leverage is high in others. i.e adidas debt ratio 50% 4
5Capacity Utilization: outsourced all production operations like Nike does and hence have the flexibility of increasing or decreasing capacity at will. -3 5Resource Utilization 3
6Technological Know How: e.g. Nike + iPod Sport Kit, Many Nike shoes use a cushioning technology called "AIR.", Nike Shox technology, Hyperfuse construction delivers Superior breathability
-1 6Productivity, Capacity Utilization 3
7
Control Over Suppliers: NIKE can better plan with its material vendors; control excessive overtime. Hold lean manufacturingprocesses to ensure cost control and improve labor standardsrequired materials delivered on-time during the production process;
-2 7
-14 25
Space Matrix
Strategic Position And Action Evaluation (SPACE) Matrix
(Book Illustration for better understanding)
Grand Strategy Mix (GSM)
Selection Stage
S7,O5 increase marketing and sales through internet.
S1,S3,W3,W4 develope low price
quality products.
W3,O1 make
specific products for
children and older peaple.
Key Factors weight AS TAS AS TAS AS TASOpportunities
1 Making shoes for 35+ and under 12 age braket. 0.1 - - -2 Younger consumers are less price sensitive. 0.1 - - -3 Growing Market 0.11 - - -4 WTO (Outsourcing, Other Market). 0.1 4 0.4 3 0.3 2 0.2
5Internet, Altering Sales Model (18% growth expected by
2012) 0.1 4 0.4 3 0.3 2 0.2
Threats1 Foreign exchange rate fluctuations. 0.08 - - -2 After age 40 consumers do not pay more than $35 to $40 0.09 3 0.27 4 0.36 2 0.183 Strong Competition. 0.12 3 0.36 4 0.48 2 0.244 Adidas strong in (Europe & China) Beijing 2008 games. 0.07 - - -5 Global Recession. 0.13 3 0.39 4 0.52 2 0.26
1Strengths
1Most dominant player in global market (50% market
share),in footwear >$84. 0.12 4 0.48 1 0.12 1 0.122 Jordan (2nd Largest), 10.8% of US shoe market. 0.12 4 0.48 1 0.12 2 0.243 75% for Basketball, 86.5% for >$100. 0.07 4 0.28 1 0.07 2 0.144 Revenue Increase 2.9% in 2009. 0.07 - - -
525,000 Retail Accounts in USA and more than 27000 outside
USA. 0.11 4 0.44 2 0.22 3 0.33
6Internet based customization through web site
www.nikebiz.com. 0.1 4 0.4 3 0.3 2 0.27 Nike has five wholly owned subsidiaries. 0.07 - - -
Weaknesses1 Net Income Reduce 21% in 2009. 0.1 1 0.1 4 0.4 3 0.32 Allmost 99% Manufacturing Outsourced out side USA. 0.12 1 0.12 4 0.48 1 0.12
3sales are heavily concentrated in the youth and young adult
market 12 to 24 year old age bracket. 0.12 1 0.12 1 0.12 4 0.481 4.24 3.79 3.01
QSPM
SuggestionsConclusion
FP Average 5.25 IP Average 3.571
CP Average -2 SP Average -2.75
Directional Vector Co ordinates:
X axis: 1.571
Y axis: 2.5
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