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KARNAVATI UNIVERSITY
UNITEDWORLD SCHOOL OF LAW

STRATEGIC MANAGEMENT PROJECT

RESEARCH REPORT ON NIKE

Submitted To: Prof. Nityanand Jha

Submitted By: Husain Bohra

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ACKNOWLEDGEMENT

The success and final outcome of this assignment required a lot of guidance and
assistance from many people and I’m extremely fortunate to have got this all along
the completion of my assignment work. Whatever I have done is only due to such
guidance and assistance and I would not forget to thank them. I respect and thank
Prof. Nityanand Jha for giving me an opportunity to do this assignment work and
providing me all support and guidance which made me complete the assignment on
time, we extremely grateful to him for providing such a nice support and guidance.
I’m really grateful because I managed to complete this assignment within the time
given by Prof. Nityanand Jha. Last but not least, I would like to express my
gratitude to my friends and classmates for support and willingness to spend some
time with me.

TABLE OF CONTENTS
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I. Executive Summary.......................................................................................4
II. Introduction..................................................................................................5
About the Company................................................................................5

III. SWOT Analysis......................................................................................... 6

a. Internal Analysis...............................................................................6

Strength of Nike............................................................................6

Weakness of Nike..........................................................................8

b. External Analysis..............................................................................9

Opportunities For Nike.............................................................9

Threats for Nike.......................................................................11

IV. Strategies...................................................................................................12

V. Conclusion..................................................................................................15

V. Bibliography...............................................................................................16

EXECUTIVE SUMMARY
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Nike Inc. was founded in 1962 by Bill Bowerman and Phil Knight as a partnership under the
name, Blue Ribbon Sports. Our 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. Today in 2000, Nike Inc. not only manufactures and distributes athletic
shoes at every marketable price point to a global market, but over 40% of our sales come from
athletic apparel, sports equipment, and subsidiary ventures. Nike maintains traditional and non-
traditional distribution channels in more than 100 countries targeting its primary market regions:
United States, Europe, Asia Pacific, and the Americas (not including the United States). We
utilize over 20,000 retailers, Nike factory stores, Nike stores, Nike Towns, Cole Haan stores, and
internet-based Web sites to sell our sports and leisure products. We dominate sales in the athletic
footwear industry with a 33% global market share. Nike Inc. has been able to attain this premier
position through "quality production, innovative products, and aggressive marketing." As a
result, for the fiscal year end 1999, Nike's 20,700 employees generated almost $8.8 billion in
revenue.

INTRODUCTION
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About Nike –

Nike, Inc. is an American multinational association

that is involved in the design, development,
manufacturing and worldwide marketing and sales
of apparel, footwear, accessories, equipment and
services.

The company’s world headquarters are situated near Beaverton, Oregon, in the Portland
metropolitan area (USA). It is a major producer of sports equipment and one of the world’s
largest suppliers of athletic shoes and apparel.

It employs more than 44,000 people worldwide and in 2014 the brand alone was valued as $19
billion (€17,5 billion), making it the most valuable brand between sports businesses. Founded by
Bill Bowerman and Phil Knight on January 25 1964, as Blue Ribbon Sports, the company
became officially Nike, Inc. on May 30 1971. The company was named after the Greek goddess
of victory, Nike (Νίκη).

Apart from its own brand, Nike market its products under Nike Pro, Nike+, Nike Golf, Nike
Blazers, Air Jordan, Air Max and other as well as subsidiaries including brands Jordan, Hurley
Int. and Converse.

Nike has acquired several apparel and footwear companies over the course of its history, some of
which have since been sold. In order to refocus on its core business lines, Nike began selling
some of its subsidiaries in the 2000’s. Since 2013, Nike owns two key subsidiaries: Hurley Int.
and Converse, Inc.

The Mission of Nike is to drive product innovation for athletes everywhere. Countless ideas are
tested in pursuit of aiding performance, injury risk reduction, enhancing perception and feel, and
delivery of innovative products to athletes.

SWOT ANALYSIS
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A. INTERNAL ANALYSIS

SAP PROFILE (STRENGTHS & WEAKNESS OF COMPANY)

STRENGTHS

1. Strong Brand Awareness and Brand Value– Nike is one of the most recognizable
brands in the world as its name alone is memorable, easy to pronounce, and very unique.
Its swoosh symbol is easily recognized by everyone. According to Interbrand, Nike has a
brand value of $42.5 Billion.
2. Huge Customer base – Nike has millions of customers from around the world who
loyally follow Nike’s trends, participate in Nike events, and even provide customer
feedback. Due to its huge popularity, Nike’s market cap has grown to $232 billion as of
Jan 2022.
3. Aimed For Sustainability – Nike’s CEO Mark Parker has addressed that they will
continue to acknowledge the environmental issues in the communities. The CEO ensures
that Nike will help to contribute in finding a solution against these environmental issues.
4. Iconic Relationships – Nike’s long-term partnership with Michael Jordan has proved to
be beneficial in terms of sales for the company. Their collaboration resulted in “Air
Jordan 1 Shoes”. Additionally, Nike teamed up with the famous basketball player to help
design the “Air Jordan 1 Shoes”.
5. Side Brands – Nike’s ability to maintain and enhance its side brands such as converse
and Hurley have enabled it to enjoy unparalleled success for decades.
6. Low Manufacturing Cost – Most of Nike’s footwear is manufactured in foreign
countries. In the fiscal year 2021, Vietnam produced 51%, China produced 24%, and
Indonesia produced 21% of total Nike’s footwear. Other operations are in Argentina,
Brazil, India, Italy, and Mexico.
7. In-house Professionals – Nike has a team of professionals that design its shoes and other
athletic accessories. Nike believes that their business has flourished due to the thorough
research that is conducted for each product.
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8. Superior Marketing Capabilities – Nike has excellent marketing campaigns. The brand
heavily relies on demand creation expense, which includes advertisement, promotion,
endorsement contracts, media print and complimentary products. In the fiscal year 2019,
2020 and 2021, Nike spent $3.7 billion, $3.6 billion and $3.1 billion respectively. The
brand has successfully utilized social media and marketing campaigns to target more
customers.

WEAKNESS
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1. Poor Labor Conditions in Foreign Countries – In the last 20 years, Nike has been
consistently targeted regarding their poor labor conditions. These issues include forced
labor, child labor, low wages, and horrific working conditions that were deemed “unsafe”.
2. Retailers Have a Stronger Hold – Nike’s retail sector makes Nike weak due to its
sensitivity against pricing. 65% of Nike products are sold directly to wholesalers or
retailers. With retailers serving as their core customers, Nike does not put up a fight
against their pricing structures whatsoever.
3. Pending Debts – Although Nike’s income statements prove to be prosperous, a quick
glance at their balance sheet could paint a different picture. Nike is still facing financial
threats. As of FY21, Nike’s total long-term debt was $9.4 billion
4. Dependency on US Market – Even after having established itself globally, Nike still
relies on the U.S Market in terms of sales and revenue. In the fiscal year 2021, about 39%
of Nike’s sales came from the North America, while the rest of 61% came globally.
Despite its fame, Nike depends on the U.S for substantial sales and growth.
5. Lawsuits:
 Recently, a former employee accused Nike of discrimination based on his Croatian
origin.
 Four former female Nike employees filed a class-action lawsuit against the company
in August 2018. According to these women, Nike has a toxic company culture for
women. The women filed their case against the sportswear company claiming that the
company violated the Equal Pay Act. The women said the company engaged in
systematic gender pay bias where men were paid more than women for the same
amount of work.

6. Lack of Diversification: Nike’s over-dependence on sporting apparel or lack of

diversification is a major weakness. The pandemic has discouraged physical interaction
and gathering with sporting events cancelled or postponed. Several sporting teams are on
the brink of collapse. If the crisis discourages sporting events for longer, Nike’s losses can
be catastrophic.
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B. EXTERNAL ANALYSIS

ETOP PROFILE (THREATS AND OPPORTUNITIES FOR COMPANY)

OPPORTUNITIES

1. Emerging Markets – Although Nike already has a presence in many foreign countries,
there is still plenty of opportunities for Nike. This is because emerging markets like India,
China, and Brazil are gradually flourishing.
2. Innovative Products – Although Nike has produced many products, there is still a lot to
innovate. Nike has extended its reach in technology in association with fitness and health.
Products like wearable technology that monitors physical activities, is the first step in
building innovative technology products. Combining technology with athletic wear can
prove to be beneficial as it is an aspect of the fashion industry that still hasn’t been
explored much.
3. Efficient Integration – The supply and production of Nike’s products depend on
independent manufacturers. The brand can either acquire a few of these or make some of
its own for a more efficient and streamlined supply chain.
4. Cutting ties with big retailers: Nike has decided to cut ties with some of the biggest
multi-brand retailers and wholesale partners. According to the report, Nike will no longer
work with wholesale retailers such as Zapoo’s, Dillard’s, Fred Meyer, Bob’s Stores,
etc. The step is taken for better product positioning and greater customer experience.
5. Acquired Artificial Intelligence Start-up – With its vast financial resources, Nike can
acquire small or medium companies or startups. It recently acquired predictive analytics
platform – Celect to expand its online sales capabilities and predict
customer’s shopping behavior.
6. Merges with the Metaverse – Recently, Nike acquired RTFKT, a digital shoe-making
company. Yes, you heard that right, the company designs shoes, but for the virtual
stratosphere only. However, RTFKT also claimed that it partnered with FEWOCiOUS (a
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young artist) to sell real shoes along with their digital versions. Nike is banking on the
opportunity to market their digital shoes on the Metaverse, where players can use their
Meta mask wallets to purchase different types of in-game merchandize.
7. Exiting From Wholesale Distribution – Recently, Nike announced it’s going to be
exiting the wholesale distribution market in the U.S. The company plans to only market
its products at Nike stores, app, and websites. According to Nike, the move away from
distributors is going to help them double their profit margins. Moreover, Nike will also
have the opportunity to spearhead the customer shopping experience as well as control
prices.
8. Consumer Direct Strategy – Nike has accelerated the consumer-direct strategy, which
means shifting its focus to digital business and subsequently closing physical stores. In
fiscal year 2021, 38.7% of its Nike brand revenue comes from online sales. Clearly, the
pandemic is shaping up how Nike interacts with its customers.

THREATS
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1. Counterfeit Products – Counterfeit products can significantly affect the revenue and
reputation of Nike. The company deals globally and the risk of counterfeit products has
become higher. A number of merchandisers and retailers offer counterfeit Nike products
at lower prices. The low-priced products are made from low-quality materials but still
have the Nike label. This can tarnish the image of the brand as the customers might feel
that Nike has started producing low quality products.
2. Increased competitive pressure – Although, Nike is a dominating the athletic industry,
competition, and new emerging brands are still potential threats to the company. With
higher competition ratio, Nike has to spend more money on marketing and advertising.
Nike spent $3.5 Billion specifically on marketing and demand generation in fiscal year
2020. To overpower competition, Nike’s safest bet is to design innovative products that
are tailored according to the needs of athletes.
3. Marketing Budget Pressure – Companies like Under Armour , Adidas and Lululemon
are spending more on marketing and advertising campaigns, increasing the pressure on
Nike.
4. Currency Foreign Exchange Risks – Since the brand operates globally, it is affected by
fluctuating foreign exchange rates. Nike reports its financial earnings in U.S dollars. This
affects its revenue as the U.S dollar is exposed to volatility against other financial
currencies.
5. Patent Disputes – Regardless of whether a company is wrong or right, patent disputes
are hotly and fiercely contested in the public domain and expose some dirty secrets about
sides in the dispute. Nike and Adidas have been engaged in a fierce patent disputes over
Prime knit and Fly knit shoes in U.S. and German courts.
6. Economic Uncertainty – Regardless of the industry, all companies are susceptible to the
negative effects of a global recession. Already, Nike has registered a 38% decline in sales
in Q2 of 2020 and can drop further in the future if the recession strikes as hard as
predicted by experts.

STRATEGIES
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Mission statement
Our mission at Nike is to be a company that surpasses all others in the athletic industry. We will
maintain our position by providing quality footwear, apparel and equipment to institutions and
individual consumers of all ages and lifestyles. We pledge to make our products easily available
worldwide through the use of retail outlets, mail order and our company web site. Nike’s
management believes that our success lies in the hands of our teammates, customers,
shareholders and the communities in which we operate. We vow to keep this in mind with the
execution of every decision within our company.

Values Statement

Nike will focus its commitment to all stakeholders by continuing to make strides towards being a
company that sets the precedents in social responsibility. Nike is continuously making efforts to
ensure that all employees and members of its surrounding communities are treated in a manner
that is in line with our mission. Nike has made many alliances with human rights organizations
in an attempt to ensure labour rights for employees of the industry overseas. We are committed
to treating our employees with the utmost respect, which is reflected in our compensation and
human resource policies. We are also committed to making sound decisions in regards to our
environment, resources, and the fight against pollution.

Vision Statement

At Nike, our vision is to remain the leader in our industry. We will continue to produce the
quality products that we have provided in the past. Most importantly, we will continue to meet
the ever-changing needs of our customers, through product innovation.

Long-Term Corporate Objectives

The following are Nike Inc.'s 5-Year long-term corporate objectives:

o Continue our improvement in stockholders' return on equity to achieve a 20.0%

return in 2004. This would be an increase of almost 6.5% from 1999.

o Increase earnings per share to $2.70 per diluted share by 2004 in an overall effort
to bolster the long-term resilience of our stock's value. This would surpass our
1997 record high.

Short-Term Corporate Objectives

The following are Nike Inc.'s short-term corporate objectives for fiscal year 2000:
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o Increase net income to $550 million by the end of fiscal year 2000 in order to
reach our long-term goals of improved return on equity and higher EPS. This 22%
increase from 1999 is realistic in light of combined 1st & 2nd Quarter income
already 32% higher compared to the same time last year.

o Recover the market price of our stock from its 52-week low of $26.50 per share
on February 8, 2000, to a value that approximates its 52-week average of $50 per
share.

Grand Strategy

Nike Inc. can use the comprehensive structured method to choose a grand strategy for achieving
the above business goals. According to the chart below, concentrating on product development
will help Nike to expand on our founding tenant, which has given us a position of leverage and
maintenance in the sports footwear, clothing, and accessories industries. Concentration is an
alternative option because Nike has a long history of excellent marketing in major worldwide
areas. Due of Nike's potential to regionally expand our product offerings, market development is
a third option to examine. The three tactics are extremely intertwined. Four evaluation factors
were weighted according to each approach to decide which would prevail as our overarching
strategic position: unique capability, culture, timing, and demography. Product development
takes second place, ahead of focus, and third place, ahead of market development, with a total
weighted score of 4.40.

Competitive Strategy

Our organisation has used product differentiation as a competitive tactic in the past. We will
continue to focus attention on this area, as our reputation demands. Nike has established its
company on producing items that are superior to all others; it is the reason for our current
success. Nike is well-known for its cutting-edge technology. We are the industry leaders in this
field, which helps our goods to stand out. Our emphasis also helps us to keep a relatively tight
niche, allowing us to successfully capture our customers' demands and desires.

Business level Strategy

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Nike incorporates a business level strategy that most resembles a differentiation strategy.
Through product innovation, technology development, and high quality products, they are able to
differentiate themselves from competitors and build their brand image.

Overall cost leadership is not something that Nike looks to utilize. Their products are higher end
prices that customers are willing to pay for because they see value and unique qualities in them.
Through NikeID and other personalization procedures, such as college sponsorships, Nike
enhances the perception that the product they provide is one of a kind and specialized for the
customer wants and needs.

Corporate Level Strategy

In Nike Inc., the biggest share of income comes from the company’s sales on shoes and apparel.
The company uses the same technology, distribution channels and other resources for other
minor products. Although Nike has been growing in the industry, corporate level strategies
should be designed to ensure the company’s growth. There are three main corporate-level
strategies that Nike has been using to ensure growth. Firstly, Nike has focused on product
development through the introduction of new products (Burgelman, 2017). By using new
advanced technology, Nike has been able to remain competitive in the market. Because of
product development, Nike’s products remain attractive to customers despite their change in
preference. Secondly, market development and penetration have also been crucial to corporate
level strategies. Nike has been continuously opening stores and retailers in the United States of
America and other regions in the word. More so, due to its strong brand image, Nike finds it easy
to penetrate and explore new markets as well as targeting new market segments (Burgelman,
2017). Market development and penetration in regions such as Africa and the Middle East have
contributed to an increase in Nike’s profit.

CONCLUSION
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Nike Company has still well position on market and their increasing will regularly
and they will be largest sportswear and shoes manufacturer.
They are already implementing their current strategy of focusing strategy and
diversification strategy. But with some little bit focus on different conjectures.
In this some recommended strategies of Nike. They are Advertising, Branding,
selling, Manufacturing, Organizational and Human Resource Management
strategy. Nike have chosen one of them and its is advertisement and branding
Strategy. They think that if they can change their advertisement shape and tend to
make a advertisement which touching the community values, through which they
get much more sales and revenue from the market.

BIBLIOGRAPHY
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1. www.newyorktimes.com
2. www.fiananceyahoo.com
3. www.nike.com
4. www.managementstudyguide.com
5. https://bstrategyhub.com/swot-analysis-of-nike-nike-swot-analysis
6. https://ivypanda.com/essays/strategic-management-the-case-of-nike-
inc/
7. https://www.academia.edu/40648358/
NIKE_INC_Case_Study_Strategic_Management_
8. https://condor.depaul.edu/~aalmaney/StrategicAnalysisofNike.htm
9. www.forbes.com
10. https://news.nike.com/news/nike-inc-announces-strategic-
management-changes