NIKE, INC.

M I C R O E C O N O M I C A N A LY S I S
Rohan Nagi (57) | Arijit Misra (13) | Rahul Gandhi (52)
Kotikalapudi Amrutha (31) | Sejal Sudhanshu Kamat (61)

Prof. Debasis Mallik & Prof. Pallavi Mody ● July 12, 2019
 An Introduction
to Nike

Founded: June 25, 1964 as Blue Ribbon Sports

Founders: Bill Bowerman & Phil Knight
CEO: Mark Parker

Headquarters: Beaverton, Oregon, USA

Revenues: $36.39B (Fortune500 #89)

The world’s largest supplier of athletic shoes

and apparel and a major manufacturer of
sports equipment.

Holds over a dozen brands serving more than

30 sports and consumer lifestyles.

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 The
Competition

Competitors: Market Share:

$24.67B $5.22B $5.20B

Analysis & Challenges:

• Very competitive market

• Many substitutes available with low

Source
switching costs

• Rapidly changing trends to keep up with

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 Demand
Conditions

Relatively Inelastic Demand:

North America: +9% Europe: +14% China: +31%

Reasons for Success: Causes for Decline:

• Strong and appealing marketing • Seasonality – major sales take place

around the holidays or important
• Loyal customers sporting events

• Aesthetic line of products endorsed by • Macroeconomic Factors – trade

top athletes regulations, currency fluctuations, etc.
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Source
 Cost
Structure

Focused on increasing gross margins by…

• Charging high prices (strong pricing power)

o Product Innovation
o Product Differentiation
o Brand Loyalty

• Keeping costs low (variable cost management)

o Low-Cost Manufacturing
o Technological Economies of Scale
o Marketing Economies of Scale

Nike can operate higher on the demand curve due to

loyal brand customers who are willing to buy the product even
at marginally higher prices.

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Source
 Business Strategies
for Sustainable Success

LOW-COST PRODUCT & SERVICE RESONANT

PRODUCTION I N N O V AT I O N MARKETING

On-going investments in new Currently spending the most

6%
manufacturing and on Marketing (5-7% more
21% Vietnam product technologies than Adidas – the closest
47% China competitor)
Indonesia Moving to more digital
Others experiences (SNKRS app)
26%

*Other countries include

Argentina, Brazil, Italy, and India
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Source
MICROECONOMICS
Prof. Debasis Mallik & Prof. Pallavi Mody
July 12, 2019

THANK
YO U