Strategic Analysis

Prepared By Rati Kiria & Natia Tsutskiridze

Contents

History

Products

Sales and Income Trends

Company Analysis

Environmental Analysis

History Nike Inc. was founded in 1962 by Bill Bowerman and Phil Knight as a partnership under the name, Blue Ribbon Sports. Their modest goal then was to distribute low-cost, high-quality Japanese athletic shoes to American consumers in an attempt to break Germany's domination of the domestic industry.

Sales and Income TrendsRevenues in the fiscal year ended May 31, 1999, declined by 8% over the prior year to $8.777 billion. As illustrated in the graph below, this marked the first time since 1994 that revenues have declined. Regardless of this year's decline, Nike Inc. achieved 300% revenue growth over a 10-year period, rising from 1990 sales of $2.235 billion.

ProductsTheir primary product focus is athletic footwear designed for specific-sport and/or leisure use(s). They also sell athletic apparel carrying the same trademarks and brand names as many of our footwear lines. Among their newer product offerings, they sell a line of performance equipment under the Nike brand name that includes sport balls, timepieces, eyewear, skates, bats, and other equipment designed for sports activities.

In addition, we utilize the following wholly-owned subsidiaries to sell additional sports-related merchandise and raw materials: Cole Haan Holdings Inc., Nike Team Sports, Inc., Nike IHM, Inc., and Bauer Nike Hockey Inc. Our most popular product categories include the following:

Company AnalysisBoard of Directors - Strength

Nike’s board of directors consists of both management directors and independent directors. The combination of these two types of directors benefits Nike in that there is a presence of those directly involved with Nike as well as others indirectly involved who bring outside experience, provide another frame of reference and can assist the overall board in thinking "outside the box."

Strengths and Weaknesses of the Corporate/Business Level Board of Directors - Weakness

The average age of Nike’s board is 62, the youngest member being 49 and oldest being 79. This constitutes a possible weakness in that there is a lack of younger members of the board who could serve to bring a new perspective to the company and assist in achieving Nike’s goals.

Environmental AnalysisInternal – Strength

Nike’s management analyzes its internal environment and makes decisions based on that analysis. Because of Nike’s marketing research, the company has decided to revamp its apparel division to be more fashion savvy.

External - Weakness

Nike’s failure to foresee problems in relation to labor and factory conditions at production locations has resulted in bad publicity and declining sales as society and consumers call for more "socially responsible" companies.

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