NIKE

INTRODUCTION:

Nike is engaged in the design, development and worldwide marketing of footwear, apparel,
equipment and accessory products. It sells its products to around 18000 retail accounts in the
United States and through a mix of independent distributors, licenses and subsidiaries in
nearly 200 countries. Nike is the largest seller of athletic footwear and athletic apparel in the
world.

The company creates designs for men, women and children. The top selling product category
includes running, basketball, children’s, cross-training and women’s shoes. It also designs
shoes for outdoor activities like tennis, golf, soccer, baseball, football, hiking and other
athletic and recreational uses.

VISION:

“Bring inspiration and innovation to every athlete in the world.”

MISSION:

As the largest seller of athletic footwear and athletic apparel in the world (2, 3), we create
products for consumers and athletics (1) who enjoy having quality products that are high
performance and reliable such as shoes, apparel, and technologically advanced equipment)
(4). Our dedicated employees (9) continuously work on developing new products, price, and
product identity through marketing and promotion (7). The company aims to lead in
corporate citizenship (8) through proactive programs that reflect caring for the world family
of Nike (6) and by ensuring continuous growth and profitability to our investors and
stakeholders (5).

1. Customer
2. Products or services
3. Markets
4. Technology
5. Concern for survival, profitability, growth
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
 SWOT ANALYSIS:

OPPORTUNITIES:

1. Younger consumers are less price sensitive and generally spend more on casual and
athletic footwear than older consumers

2. Most footwear companies have outsourced their production abroad in order to

maintain lower cost and R&D expenses

3. US footwear imports totaled 2.36 billion pairs in 2007, or roughly 7.9 pairs per capita
which is was up 0.4 percent from 2006

4. North American Free Trade Agreement (NAFTA) and the World Trade Organization
(WTO), both helped eliminate quotas and tariff barriers for foreign footwear
manufacturers to ship their goods

5. The Internet allows footwear companies to pursue a direct to consumer sales channel

6. Sales of apparel, accessories, and footwear on the Internet has been growing at a
double digit pace, considerably faster than more traditional sales models such as retail
stores

7. Internet sales of apparel, accessories, and footwear could reach 18 percent of category
sales by 2012

8. Companies that added a Web-based sales strategy are able to customize footwear and
other merchandise directly to the customer’s needs and taste, are enable to achieve
considerably better pricing as well as “deepening” the emotional bond consumers
have with the brand

THREATS:

1. After the age of 40, the typical consumer is not willing to pay more than $35 to $40
per pair for athletic footwear
 2. Competition is strong among athletic footwear and apparel from off brand companies

3. Fluctuation of foreign currency impacts the cost of importing goods to the U.S.

4. Increase in unemployment has impacted the household income which may result in
spending less on brand name

5. Barrier to entry is low

6. Level of inventory is increasing in many retail stores due weak economy

STRENGTHS:

1. Nike is the dominant competitor for athletic footwear priced above $60 per pair,
holding better than a 50 percent market share for athletic footwear priced $85 per pair
or higher

2. Nike characterizes its organization as a collaborative matrix organization

3. The Jordan brand has a 10.8 percent share of the overall U.S. shoe market, which
makes it the second biggest brand in the country and more than twice the size of
Adidas’ share

4. Three out of every four pairs of basketball shoes sold in this country are Jordan, while
86.5 percent of all basketball shoes sold over $100 are Jordan

5. Nike’s 2009 revenues increased 2.9 percent to $19.1 billion

6. Inside the United States, Nike has three significant distribution and customer service
facilities

7. Nike estimates that they sell products to more than 25,000 retail accounts in the
United States and more than 27,000 retail accounts, including Nike-owned stores and
a mix of independent distributors and licensees outside the United States

8. The company’s Internet Web site, www.nikebiz.com, allows customers to design and
purchase Nike products directly from the company
 9. Nike has five wholly owned subsidiaries: Cole Haan, Converse, Hurley International,
NIKE Golf, and Umbro Ltd

WEAKNESS:

1. Nike’s 2009 net income decreased 21 percent to $1.48 billion

2. Almost all of Nike’s footwear is manufactured outside the United States by

independent contractors

3. In fiscal 2008, contract manufacturers in China, Vietnam, Indonesia, and Thailand

manufactured 99 percent of Nike’s footwear worldwide

4. Because Nike competes primarily in athletic footwear, apparel and related sporting
equipment, its sales are heavily concentrated in the youth and young adult market

5. Accounts payable has increased by almost $1.0 billion in 2009

6. Negative publicity and boycotting of the Nike products due to outsourcing jobs
overseas and the use of child labor in such factories
 STAGE I: THE INPUT STAGE

EXTERNAL FACTOR MATRIX (EFE) MATRIX:

EFE (External Factor Evaluation) matrix is the strategic tool used to evaluate
external environment or macro environment of the firm include economic, social,
technological, government, political, legal and competitive information.

The organization we selected is a leading Footwear brand “Nike”. Matrix is as follows

Key External Factors Weight Rating Weighted

Score

Opportunities

1. Younger consumers are less price sensitive and generally 0.08 3 0.24
spend more on casual and athletic footwear than older
consumers
2. Most footwear companies have outsourced their production 0.07 4 0.28
abroad in order to maintain lower cost and R&D expenses
3. US footwear imports totaled 2.36 billion pairs in 2007, or 0.07 3 0.21
roughly 7.9 pairs per capita which is was up 0.4 percent
from 2006
4. North American Free Trade Agreement (NAFTA) and the 0.06 4 0.24
World Trade Organization (WTO), both helped eliminate
quotas and tariff barriers for foreign footwear
manufacturers to ship their goods
5. The Internet allows footwear companies to pursue a direct 0.07 4 0.28
to consumer sales channel
6. Sales of apparel, accessories, and footwear on the Internet 0.08 3 0.24
has been growing at a double digit pace, considerably faster
than more traditional sales models such as retail stores
7. Internet sales of apparel, accessories, and footwear could 0.07 4 0.28
reach 18 percent of category sales by 2012
8. Companies that added a Web-based sales strategy are able 0.06 3 0.18
to customize footwear and other merchandise directly to the
customer's needs and taste, are enable to achieve
considerably better pricing as well as "deepening" the
emotional bond consumers have with the brand
Threats

1. After the age of 40, the typical consumer is not willing to 0.07 3 0.21
pay more than $35 to $40 per pair for athletic footwear
2. Competition is strong among athletic footwear and apparel 0.08 2 0.16
from off brand companies
3. Fluctuation of foreign currency impacts the cost of 0.06 2 0.12
importing goods to the U.S.
4. Increase in unemployment has impacted the household 0.09 3 0.27
income which may result in spending less on brand name
5. Barrier to entry is low 0.06 2 0.12

6. Level of inventory is increasing in many retail stores due 0.08 2 0.16

weak economy
Total 1.00 2.99

The total of EFE matrix is 2.99, which is more than average. So, it shows that Nike
performing up to the mark to avail the opportunities and avoid the threats from the market.
 INTERNAL FACTOR EVALUATION (IFE) MATRIX:

IFE (Internal Factor Evaluation) matrix is the strategic tool used to evaluate the company’s
internal strength and weakness to identify the company’s abilities against the competitors to
win the business game.

The organization we selected is a leading Footwear brand “Nike”. Matrix is as follows

Key Internal Factors Weight Rating Weighted Score

Strengths

1. Nike is the dominant competitor for athletic footwear 0.08 4 0.32

priced above $60 per pair, holding better than a 50
percent market share for athletic footwear priced $85
per pair or higher
2. Nike characterizes its organization as a collaborative 0.02 3 0.06
matrix organization
3. The Jordan brand has a 10.8 percent share of the 0.06 4 0.24
overall U.S. shoe market, which makes it the second
biggest brand in the country and more than twice the
size of Adidas' share
4. Three out of every four pairs of basketball shoes sold 0.08 4 0.32
in this country are Jordan, while 86.5 percent of all
basketball shoes sold over $100 are Jordan
5. Nike's 2009 revenues increased 2.9 percent to $19.1 0.09 4 0.36
billion
6. Inside the United States, Nike has three significant 0.05 3 0.15
distribution and customer service facilities
7. Nike estimates that they sell products to more than 0.04 3 0.12
25,000 retail accounts in the United States and more
than 27,000 retail accounts, including Nike-owned
stores and a mix of independent distributors and
licensees outside the United States
8. The company's Internet Web site, www.nikebiz.com, 0.07 4 0.28
allows customers to design and purchase Nike
products directly from the company
9. Nike has five wholly owned subsidiaries: Cole Haan, 0.07 3 0.21
Converse, Hurley International, NIKE Golf, and
Umbro Ltd
Weaknesses

1. Nike's 2009 net income decreased 21 percent to $1.48 0.07 2 0.14

billion
2. Almost all of Nike's footwear is manufactured outside 0.08 1 0.08
the United States by independent contractors
3. In fiscal 2008, contract manufacturers in China, 0.06 1 0.06
Vietnam, Indonesia, and Thailand manufactured 99
percent of Nike's footwear worldwide
4. Because Nike competes primarily in athletic footwear, 0.08 1 0.08
apparel and related sporting equipment, its sales are
heavily concentrated in the youth and young adult
market.
5. Accounts payable has increased by almost $1.0 billion 0.08 2 0.16
in 2009
6. Negative publicity and boycotting of the Nike 0.07 1 0.07
products due to outsourcing jobs overseas and the use
of child labor in such factories
Total 1.00 2.65

The total score for IFE matrix is greater than average score which indicate that the company
has major focuses on its strengths and is in ability to overcome the weakness
COMPETITIVE PROFILE MATRIX (CPM):

CRITICAL SUCCESS FACTOR:

Following are some critical Success factors

 Price Competitiveness
 Global Expansion
 Organizational Structure
 Technology
 Product Safety
 Advertisement
 Product Quality
 Product Image
 Financial Position
 Nike Adidas Puma

Weighted Weighted Weighted

Critical Success Factors Weight Rating Score Rating Score Rating Score

Price competitiveness 0.10 3 0.30 2 0.20 1 0.10

Global Expansion 0.07 4 0.28 3 0.21 2 0.14

Organizational Structure 0.04 3 0.12 1 0.04 1 0.04

Technology 0.09 3 0.27 1 0.09 2 0.18

Product Safety 0.15 2 0.30 3 0.45 4 0.60

Customer Loyalty 0.09 4 0.36 3 0.27 2 0.18

Market Share 0.09 4 0.36 3 0.27 2 0.18

Advertising 0.12 4 0.48 3 0.36 2 0.24

Product Quality 0.12 3 0.36 2 0.24 1 0.12

Product Image 0.07 4 0.28 3 0.21 2 0.14

Financial Position 0.06 4 0.24 3 0.18 2 0.12

Total 1.00 3.35 2.52 2.04

 STAGE II: THE MATCHING STAGE
SWOT Matrix:
Strengths
1. Nike is the dominant
competitor for athletic
footwear priced above $60
per pair, holding better
than a 50 percent market
share for athletic footwear
priced $85 per pair or
higher
2. Nike characterizes its
organization as a
collaborative matrix
organization
3. The Jordan brand has a
10.8 percent share of the
overall U.S. shoe market,
which makes it the second
biggest brand in the
country and more than
twice the size of Adidas’
share
4. Three out of every four
pairs of basketball shoes
sold in this country are
Jordan, while 86.5 percent
of all basketball shoes sold
over $100 are Jordan
5. Nike’s 2009 revenues
increased 2.9 percent to
$19.1 billion
6. Inside the United States,
Nike has three significant
distribution and customer
service facilities
7. Nike estimates that they
sell products to more than
25,000 retail accounts in
the United States and more
than 27,000 retail
accounts, including Nike-
owned stores and a mix of
independent distributors
Weaknesses
1. Nike’s 2009 net income
decreased 21 percent to
$1.48 billion
2. Almost all of Nike’s
footwear is manufactured
outside the United States
by independent contractors
3. In fiscal 2008, contract
manufacturers in China,
Vietnam, Indonesia, and
Thailand manufactured 99
percent of Nike’s footwear
worldwide
4. Because Nike competes
primarily in athletic
footwear, apparel and
related sporting
equipment, its sales are
heavily concentrated in the
youth and young adult
market
5. Accounts payable has
increased by almost $1.0
billion in 2009
6. Negative publicity and
boycotting of the Nike
products due to
outsourcing jobs overseas
and the use of child labor
in such factories
 and licensees outside the
United States
8. The company’s Internet
Web site,
www.nikebiz.com, allows
customers to design and
purchase Nike products
directly from the company
9. Nike has five wholly
owned subsidiaries: Cole
Haan, Converse, Hurley
International, NIKE Golf,
and Umbro Ltd

Opportunities W-O Strategies

S-O Strategies
1. Younger consumers are 1. Expand into international 1. Develop new products for
less price sensitive and market more where the small kids based on
generally spend more on economy is stronger (S1, cartoon characters (W4,
casual and athletic S3, S4, S7, O1) O1, O3)
footwear than older 2. Increase advertising and 2. Sponsor more athletics
consumers promotion through social programs, mostly for
2. Most footwear companies networking such as young generation (W1,
have outsourced their Twitter and Facebook (S8, W4, W6, O1, O2, O3)
production abroad in order O1, O5, O7)
to maintain lower cost and
R&D expenses
3. US footwear imports
totaled 2.36 billion pairs in
2007, or roughly 7.9 pairs
per capita which is was up
0.4 percent from 2006
4. North American Free
Trade Agreement
(NAFTA) and the World
Trade Organization
(WTO), both helped
eliminate quotas and tariff
barriers for foreign
footwear manufacturers to
ship their goods
5. The Internet allows
footwear companies to
pursue a direct to
consumer sales channel
6. Sales of apparel,
accessories, and footwear
on the Internet has been
 growing at a double digit
pace, considerably faster
than more traditional sales
models such as retail
stores
7. Internet sales of apparel,
accessories, and footwear
could reach 18 percent of
category sales by 2012
8. Companies that added a
Web-based sales strategy
are able to customize
footwear and other
merchandise directly to the
customer’s needs and
taste, are enable to achieve
considerably better pricing
as well as “deepening” the
emotional bond consumers
have with the brand
Threats W-T Strategies
S-T Strategies
1. After the age of 40, the 1. Develop a new moderately 1. Make low priced footwear
typical consumer is not priced product line (S1, made in the US and
willing to pay more than S2, S3, S4, T2, T4, T6) promote it as “Made in
$35 to $40 per pair for 2. Expand distribution by America” (W2, W6, T2,
athletic footwear selling to stores other than T3, T4, T6)
2. Competition is strong their own retailers (S7, T2) 2. Acquire a less expensive
among athletic footwear brand of accessories and
and apparel from off brand sportswear and promote
companies them as an off brand of
3. Fluctuation of foreign Nike (W4, W6, T1, T4,
currency impacts the cost T6)
of importing goods to the
U.S.
4. Increase in unemployment
has impacted the
household income which
may result in spending less
on brand name
5. Barrier to entry is low
6. Level of inventory is
increasing in many retail
stores due weak economy
SPACE MATRIX:

Financial Stability (FS) Environmental Stability (ES)

Return on Investment 4 Unemployment -4

Leverage 5 Technological Changes -4

Liquidity 3 Price Elasticity of Demand -5

Working Capital 3 Competitive Pressure -5

Cash Flow 4 Barriers to Entry -5

Financial Stability (FS) Average 3.8 Environmental Stability (ES) Average -4.6

Competitive Stability (CS) Industry Stability (IS)

Market Share -1 Growth Potential 5

Product Quality -2 Financial Stability 4

Customer Loyalty -3 Ease of Market Entry 1

Competition’s Capacity Utilization -1 Resource Utilization 3

Technological Know-How -4 Profit Potential 4

Competitive Stability (CS) Average -2.2 Industry Stability (IS) Average 3.4
X-axis; IS+CA= (3.4) + (-2.2) = 1.4

Y-axis: FS + ES= (3.8) + (-4.6) = -0.8

FS
Conservative Aggressive
7

CS IS
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7

-1

-2

-3

-4

-5

-6

Defensive -7 Competitive

ES
BCG MATRIX:

NIKE

1. Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration
 INTERNAL EXTERNAL MATRIX:

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

I II III

High
3.0 to 3.99

IV IV VI

The EFE
Total

Weighted
Medium Nike, Inc
Score
2.0 to 2.99

VII VIII IX

Low
1.0 to 1.99
GRAND STRATEGY MATRIX:

Rapid Market Growth

Quadrant I
Quadrant II

Weak Strong

Competitive Competitive
Position
Position

Quadrant IV
Quadrant III Slow Market Growth

1. Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration

7. Related diversification
STAGE III: DECISION STAGE

QSPM:

Key Factors Weight AS TAS AS TAS

Opportunities

1. Younger consumers are less price sensitive 0.08 1 0.08 4 0.32

and generally spend more on casual and
athletic footwear than older consumers
2. Most footwear companies have outsourced 0.07 --- --- --- ---
their production abroad in order to maintain
lower cost and R&D expenses
3. US footwear imports totaled 2.36 billion 0.07 --- --- --- ---
pairs in 2007, or roughly 7.9 pairs per capita
which is was up 0.4 percent from 2006
4. North American Free Trade Agreement 0.06 2 0.12 3 0.18
(NAFTA) and the World Trade
Organization (WTO), both helped eliminate
quotas and tariff barriers for foreign
footwear manufacturers to ship their goods
5. The Internet allows footwear companies to 0.07 --- --- --- ---
pursue a direct to consumer sales channel
6. Sales of apparel, accessories, and footwear 0.08 2 0.16 4 0.32
on the Internet has been growing at a double
digit pace, considerably faster than more
traditional sales models such as retail stores
7. Internet sales of apparel, accessories, and 0.07 4 0.28 1 0.07
footwear could reach 18 percent of category
sales by 2012
8. Companies that added a Web-based sales 0.06 4 0.24 1 0.06
strategy are able to customize footwear and
other merchandise directly to the customer's
needs and taste, are enable to achieve
considerably better pricing as well as
"deepening" the emotional bond consumers
have with the brand
Threats

1. After the age of 40, the typical consumer is 0.07 1 0.07 4 0.28
not willing to pay more than $35 to $40 per
pair for athletic footwear
2. Competition is strong among athletic 0.08 --- --- --- ---
footwear and apparel from off brand
companies
3. Fluctuation of foreign currency impacts the 0.06 --- --- --- ---
cost of importing goods to the U.S.
4. Increase in unemployment has impacted the 0.09 1 0.09 3 0.27
household income which may result in
spending less on brand name
5. Barrier to entry is low 0.06 --- --- --- ---

6. Level of inventory is increasing in many 0.08 4 0.32 2 0.16

retail stores due weak economy
TOTAL 1.00 1.36 1.66

Strengths

1. Nike is the dominant competitor for athletic 0.08 --- --- --- ---
footwear priced above $60 per pair, holding
better than a 50 percent market share for
athletic footwear priced $85 per pair or
higher
2. Nike characterizes its organization as a 0.02 --- --- --- ---
collaborative matrix organization
3. The Jordan brand has a 10.8 percent share 0.06 3 0.18 1 0.06
of the overall U.S. shoe market, which
makes it the second biggest brand in the
country and more than twice the size of
Adidas' share
4. Three out of every four pairs of basketball 0.08 3 0.24 1 0.08
shoes sold in this country are Jordan, while
86.5 percent of all basketball shoes sold
over $100 are Jordan
5. Nike's 2009 revenues increased 2.9 percent 0.09 --- --- --- ---
to $19.1 billion
6. Inside the United States, Nike has three 0.05 --- --- --- ---
significant distribution and customer service
facilities
7. Nike estimates that they sell products to 0.04 3 0.12 4 0.16
more than 25,000 retail accounts in the
United States and more than 27,000 retail
accounts, including Nike-owned stores and
a mix of independent distributors and
licensees outside the United States
8. The company's Internet Web site, 0.07 4 0.28 1 0.07
www.nikebiz.com, allows customers to
design and purchase Nike products directly
from the company
9. Nike has five wholly owned subsidiaries: 0.07 1 0.07 3 0.21
Cole Haan, Converse, Hurley International,
NIKE Golf, and Umbro Ltd
Weaknesses
 1. Nike's 2009 net income decreased 21 0.07 1 0.07 3 0.21
percent to $1.48 billion
2. Almost all of Nike's footwear is 0.08 --- --- --- ---
manufactured outside the United States by
independent contractors
3. In fiscal 2008, contract manufacturers in 0.06 --- --- --- ---
China, Vietnam, Indonesia, and Thailand
manufactured 99 percent of Nike's footwear
worldwide
4. Because Nike competes primarily in athletic 0.08 1 0.08 3 0.24
footwear, apparel and related sporting
equipment, its sales are heavily concentrated
in the youth and young adult market
5. Accounts payable has increased by almost 0.08 --- --- --- ---
$1.0 billion in 2009
6. Negative publicity and boycotting of the 0.07 --- --- --- ---
Nike products due to outsourcing jobs
overseas and the use of child labor in such
factories
SUBTOTAL 1.00 1.04 1.03

SUM TOTAL ATTRACTIVENESS SCORE 2.4 2.69

Recommendations

Acquire a company who manufactures and sells less expensive products than Nike. The
company should have established distribution and retail shelf space with non-competing
product lines. It would be ideal if the company is a U.S. based corporation with domestic
manufacturing facilities.