NikeInternal Analysis

Presentation by: Travis Kennedy, Jeff Lewis, Nikki Bowman,

Monica Muchina, Liz White,Danielle Boenisch, and Sam Gogel

• Largest seller of athletic apparel and footwear worldwide

• International performance for 2008: • $18.6 billion total revenue• $9.7 billion from athletic shoe sales (52% of total revenue)

General Information

• Accounts for 31% of the global market for footwear

• Total U.S. revenue in 2008: $6.4 billion

• Nike aims for 50% revenue increase over next 5 years, while footwear industry is expected to increase 20%

• Key Competitors: Adidas-Reebok, Under Armour, Puma

Global Market Share

• 52% footwear, 28% apparel, 6% equipment, 14% other

• Footwear includes: running, cross training, basketball, soccer, and sport inspired casual footwear like the Air Force Ones

• Apparel includes: running shorts, t-shirts, and licensed apparel (with logos of college and pro sports teams)

• Equipment: balls, protective equipment, golf clubs

Divisions within Nike, Inc.

Nike Performance Chart

International

Headlines Use of Iconic “swoosh” Helps Gain Global Market Saturation

Human Rights and

Child Labor Laws in

Asian factoriesTaking Control of Global Athletic Footwear Market with Sponsorship Contracts

Model of Worldwide Production without

Ownership of Factories

Fake Jordans Found in Arizona

Competitors• Nike accounts for 36% of the U.S. market for athletic footwear

• Key competitor: Adidas-Reebok• U.S. market share of 8.9% prior to Reebok merger• merged with Reebok in 2005• 46% of their total sales comes from footwear in 2008

• Nike’s strength above competition lies in its ability to differentiate and its popular brand image

Differentiation• Nike is the industry leader in service and product differentiation

• Service differentiation• Nike id 2001

• 109 customizable shoes • ave price of Nike id Shox $120 vs regular Shox $120• apparel and equipment customization

• Mi adidas 2009• 17 customizable shoes• ave price of Mi adidas Microbounce $140 vs Microbounce $100• Adidas Mi Innovation Center Cube 2006

• Product Differentiation• shoes designed specifically for a large variety of sports• shoe technology and innovation

• Flywire technology and Lunar Foam Cushioning system• Nike Frees and Nike Shox• Nike Sports Research Lab

Brand Awareness• Marketing strategy • targeting different audiences

•Top 100 Global Brands of 2007• Nike 30th overall with an increase of 9% from 2006• Adidas 71st overall with and increase of 8% from 2006

vs

Brand Awareness• Creating customer recognition and brand loyalty

• Creating long-term shareholder value

• Keeping the Nike “swoosh” consistent

• Performance minded

• Adhere to their five brand principles namely:

inspire, innovate, focus, connect, and care

Advertising• Advertising• Nike spent $2.8 billion, Adidas spent $1.8 billion in 2008• print and commercials• sporting venues and events

• Sponsorships• of athletes• of other celebrities• of NCAA teams• of professional teams

Internal Analysis Framework• Core competency: DIFFERENTIATION & BRANDING• Valuable +/+• neutralizes threats and exploits new opportunities

• Rare -/+• common in shoe industry/ unique

• Costly-to-Imitate +/+• based on positive relationships and developed over

time

• Nonsubstitutable +/+• no strategic equivalent/ not found in competitors

Mergers and Alliances• Current Nike Portfolio• Converse• Cole Haan• Hurley International LLC• NIKE Golf• Umbro Ltd• Exeter Brands Group LLC• Nike Bauer Hockey

• Alliances• 2003 Nike Grind• 2006 Nike + iPod• 2006 Center of Excellence • 2008 House of Hoops• 2009 BICEP

Over 130 Wholly-Owned Subsidiaries

Low level of related diversification with the dominant business

Outsourcing and the Value ChainOutsourcing and the Value Chain• First movers advantage in E-commerce

• Brand recognition and reputation

• Strong control over its own distribution channel

• Use of outsourcing to cut manufacturing costs• 900 factories, 50 countries, 600,060 employees

• Strong management team with good corporate strategy in the U.S. and overseas

Corporate GovernanceCorporate Governance• Notable Board Members

Phil Knight – Cofounder and Chairman of the BoardMark Parker – CEO of NikeAlan Graf – also CFO of FedExOrin Smith – former President and CEO of StarbucksJohn Thompson – former Georgetown basketball Coach

• 6 board committees oversee specific policies and procedures• audit, Compensation, Corporate Responsibility,

Executive, Finance, and Nominating & Corporate Governance

• Corporate Responsibility Committee• established in 2001 to review significant policies and activities

regarding labor and environmental practices

RecommendationsRecommendations

• Gain a more positive global image, especially regarding labor laws

• Pull back the extreme spending on endorsements

• Better management of their fashion shoe sector

• Gain a stronger presence in China