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Nike Strategic Analysis

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David Fink

on 1 December 2012

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Transcript of Nike Strategic Analysis

Nike: A Strategic Analysis About Nike David Fink
Junjie Huang
Murtaza Amir
Patrick Ettorre Portfolio of
Brands Cole Haan Converse Inc. Hurley International, LLC Jordan
Brand Nike
Golf Umbro,
LTD. Product
Diversity Athletic shoes
Apparel Sports Equipment Made up approximately $2.7 billion of Nike, Inc.'s revenue! 1960 2000 1980 2002 March (cc) image by jantik on Flickr 1962 - Blue Ribbon Sports founded 1966- BRS opens
first retail outlet 1971 - Nike brand and swoosh image are born 1978 - BRS officially changes name to Nike, Inc. Nike goes public 1985 - Nike signs
Michael Jordan,
premiers the
"Air Jordan" Today 1990 - First
NikeTown opens 1996 - Nike equipment
division created 2003 - Nike acquires Converse Inc. 2008 - Nike introduces
Flywire and Lunarlite
foam materials for shoes Corporate Culture Mission Statement To bring inspiration and innovation to every athlete in the world. Revised Mission Statement At Nike, our focus is to provide quality athletic footwear and apparel to athletes of all kinds. Our goal is to bring inspiration and innovation to every athlete in the world. As the market leader, our innovation fuels our passion. The latest technology allows us to create products superior to any in the market. Our devotion to creating the best products for all athletes be it man or woman, young or old, is what makes us the best.

Our employees receive the best amenities to foster creativity and excellence. We are committed to improving our processes for the betterment of our communities and to serve our customers as best as possible. Our competitive drive fuels our passion for continued creativity which will allow Nike to grow and sustain its course for a long time to come. Vision Statement To carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders. Internal Assessment The IFE Matrix Strengths & Weaknesses Explained Based on our weighting, the most pertinent strengths to Nike are as follows:

Current market share
Corporate culture
Product design and quality perception Based on our weighting, the most pertinent weaknesses facing Nike are as follows:

Heavy reliance on outsourced manufacturing processes
Social responsibility issues regarding outsourced processes
Heavy reliance on oil, cotton, labor and air-freight costs External Assessment EFE Matrix Opportunities & Threats Explained Based on our weighting, the most pertinent opportunities for Nike are as follows:
•Emerging markets with increasing disposable income like India and China
•Rise in popularity of American sports in foreign countries (specifically China/Europe)
•Rising segment of female athletes Based on our weighting, the most pertinent threats facing Nike are as flows:
•Rising oil, cotton, labor and air freight costs globally
•Public outcry against child labor/labor overworking/outsourcing
•Fierce industry competition The CPM Based on our weightings, the most pertinent critical success factors to the sporting apparel and footwear industry are as follows:

•Brand Recognition
•Price Competitiveness
•Product Quality SWOT & SWOT Conversion Market Penetration Market Penetration Recommendation 1 Increase R&D budget 10%
5% towards logistics and supply chain development
Task force creation, assessing viability of increasing domestic apparel manufacturing Long term objective Increase domestic apparel manufacturing to 10% by 2017 Financial: 5% R&D budgetary increase Human:
10 member task force creation Recommendation 1 3% towards senior product development Hydraulic fitness equipment, fluid resistance equipment Long term objective
Increase senior fitness and rehabilitation equipment offerings Financial:
3% R&D budgetary increase Human:
Increased engineer employment targeting fluid resistance and hydraulic competencies Recommendation 1 2% towards female product development Long term objective
increase NikeWomen product offerings Financial:
2% R&D budgetary increase Est. in 1960 In Oregon
Founder: Phillip Knight and Bill Bowerman
Full Time Employees: 38,000
Stock Price: 110.35
Market Share in the Year of 2011:
43.1% in the U.S. athletic shoe Market.
18% in the global footwear market.

Chairman of the Board of Directors
Stepped down as CEO and president in 2004 being replaced by William Perez, and then replaced by Mark Parker in 2006
Age:74 Phillip H Knight Charlie Denson
President of NIKE Brand .
Starting as an assistant manager at Nike’s first retail store in Portland, Oregon in 1979.
Charlie Denson is responsible for leading the strategy of NIKE Brand.
Total Calculated Compensation:7.7 Millions Mark Parker President, CEO NIKE, INC.
Parker Joined Nike in the year of 1979.
Parker is responsible for the growth of NIKE, Inc.'s global business portfolio, which includes Cole Haan, Converse Inc., Hurley International LLC, and Umbro Ltd.
Total Calculated Compensation: 11 Millions Leadership Evaluation

R&D expenditures undisclosed

Baby boomer market has large potential but risky

Cost structure Recommendation 2 Increase foreign retail presence Short term objectives
5 stores in China
3 stores in India
2 stores in Uruguay
2 stores in Chile
All by 2015 5 member task force per new store, eventually hiring 1 manager, 1 asst., manager and 20 part-time employees Human: Physical 10 new stores Financial $1,200,000 allocated per store prior to first sale High entry barriers
Cultural differences Evaluation Recommendation 3 Increase PR initiatives attempting to: Negate foreign labor blemishes
Negate negative public perception of increased prices Short term objectives Innovative R&D and high quality Formation of two advertisement campaigns Increased social responsibility efforts Human: Wieden & Kennedy Financial: 800,000$ allocated per campaign Evaluation Risk of over publicizing Recommendation 4 Implement new customer loyalty program to increase customer retention rates Short term objective Increase current American Consumer Satisfaction Index of 80 to 83 by 2014 Press release and mailer formation/distribution
Point of Sale instruction
Web development Human Financial Technological 30,000$ allocated for mailers Ensure compatibility of new program within existing system Evaluation Consumer recognition as a new program Diversification Cost Leadership Market Penetration 2.845 = above industry average Manufacturers:
Vietnam: 37%
China: 34
Indonesia: 23
Thailand: 2
India: 1 All foreign manufacturing located in 33 countries Nearly all domestic manufacturing Brand Portfolio
1. Nike.Inc Website. “About Nike Inc.” <http://nikeinc.com/pages/executives>
2. Nike.Inc Website. “Executives” <http://nikeinc.com/pages/executives>
3. Nike.Inc Website. “Executives” <http://nikeinc.com/pages/executives>
4. “Nike vs. Adidas: Let the game begin”. Tom Van Riper. MSNBC online. July 15, 2008.
http://www.msnbc.msn.com/id/25690584/ns/business-business_of_the_olympics/t/nike-vs-adidas-let-games-begin/#.T446UtXYFts3) ‘Tinker Hatfield, VP of Innovation at Nike: “Just Innovate”’. David Eckoff blog cite. May 2007.
5. <http://www.evancarmichael.com/Famous-Entrepreneurs/998/Lesson-4-Keep-Your-Company-in-a-Constant-State-of-War.html>
6. “Nike shares drop in price hike plan”. Charles Riley. March 18, 2011. CNNMoney.
7. “Emerging Markets Radar (January 23, 2012)”. Advisor Analyst Services. January 23, 2012.
8. “Women’s Sports Popularity Rising”. Zach Hudson, The Daily Gamecock. July 19, 2011.
<http://www.dailygamecock.com/news/item/1550-womens-sports-popularity-growing> Questions? Comments?
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