Case Study presentation on NIKE
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- 2. ABOUT NIKE Largest seller of athletic footwear and athletic apparel in the world. Design, development and worldwide marketing of footwear apparel, equipment and accessory products. 18 000 retails in the US Product for women, men and children Top selling product: running, basketball, cross- training and women’s shoes Also design sportswear for tennis, soccer, baseball, football, bicycling, volleyball, wrestling, cheerleading, aquatic activities, hiking, … The Swoosh 19713, represents of the wing of the goddess. Nike a winged goddess capable of moving at high speed, personifying victory The headquarters of Nike in Beaverton, Oregon. 56 % of its sales abroad 2
- 3. ABOUT NIKE Manufacturing Footwear & Apparel 98% outside the US: China, Vietnam, Indonesia and Thailand: 98% of total Nike brand footwear Raw materials: rubber, plastic compounds, foam cushioning materials, Marketing and Advertising • Significant weight on marketing • Successful and influential athletes • Adjusting the mix of existing product offerings, developing new products, styles and Main competitors Products Sports-inspired lifestyle apparel (bags, socks, sport balls, eyewear, protective equipment, …) + products under other brand names in particular markets Owns: Converse, Hurley International, LLC, Nike Golf (13% of total revenues, $2.5 billion 3
- 4. FAMOUS SNEAKERS Nike Air Jordan Nike Air Force One Nike Air Max Nike + iPod Chuck Taylor All Star Nike SB Nike 6.0 Nike Flyknit Nike Roshe Run 4
- 5. CURRENT SITUATION ANALYSIS NIKE, Inc. has been the worldwide leader of athletic shoe sales. The company’s successful brand image united competition and empowerment for the competitive. However, NIKE is losing their grasp of the urban, casual runner. NIKE’s current brand statements are aligned with. Nike needs to reposition their brand towards a focus on fun and functionality. Currently stands in the athletic shoe industry and how they will be able to adapt their brand position to be more successful in the future. 5
- 6. EXTERNAL ENVIRONMENT: General Environment Political Environment Economic Environment Social Environment Technological Environment Legal Environment 6
- 7. INTERNAL ENVIRONMENT Corporate structure Corporate culture 7
- 8. ORGANIZATIONAL ACTIVITIES ANALYSIS OF NIKE Products Place Price Promotion 8
- 9. COMPETITIVE ADVANTAGE Product Brand Innovation Extensive collaboration Research & Development 9
- 11. INDUSTRY LIFE CYCLE Nike is in the stage at which the efficiency of dominant business model provides the company competitive advantage over the competition Factors Strong Product Awareness Barrier of New entry Share market 11
- 12. NIKE CORPORATE STRATEGY Focus on innovation and emphasis on their research and development in order to be: • Profitable in the long run. • Reduce or eliminate athletes injury. • Help in athletic performance and maximize comfort. 12
- 13. NIKE COMPETITIVE STRATEGIES Nike has a combination of two strategies: • Best cost provider strategy. (by outsourcing and most of their products are manufactured outside the United States ,and by economic of scale) • Broad differentiation strategy. Nike emphasize on key elements such as design of products , High quality products, brand advertising and product development Nike differentiates its products for athletics in three ways: Firstly, it manufactures for three different segments of people: men, women and children. Secondly, differentiates it products by offering a variety of accessories and apparels like gym bags, gloves and skates. Thirdly, Nike has the licensees to manufacture and sell Nike brand products aside from athletic products like school supplies, electronic media devices and timepieces. 13
- 14. 5 FORCES ANALYSIS: US & DEVELOPED MARKETS 14 Internal Rivalry (High) Fierce Competition Mostly Non-Price competition Differentiation strategy Loyal customers (other cies) E-commerce Threat of New entrants(Low) High Barriers to Entry Capital Intensive Strong & well established brand name Economies of scale High Marketing & R&D Costs Industry in consolidation phase Bargaining Power of Buyer (High) End user brand loyalty Price sensitivity issues Retail and vendor consolidations Growing power of retail chains Good Infrastructure Threat of Substitutes (Low) Other types of shoes Other sport apparel Bargaining Power of Supplier (Low) Abundantly available raw materials Cheap resources-commodity item • Large amount of buyers relative to the number of firms on this industry • Nike needs to seek continously for high quality to keep its clients • Competitive products all compete in diffentiations • Many online buyers are proce sensitive & switching costs is low for the buyer • Buyers of sports footwear have changed in the past decade • An increase in women buying the shoes • Generation Y has a different taste & purchasing methods • Sub contracts to more than 500 small scal factories • Suppliers are dependent on sport firms • Selling footwear online is highly competitive: barriers to enter into this e-commerce industry are quite low • Cheap copies from the Far East • Fashion brand • Innovation and confort • Buyer’s prepensity to substitute is low • Consumer substitues for athletic footwear products are low • Boots, flip-flops, sandals • Reebok, offering more choice of shoe, introducing endorsment by sports personalities, sponsoring sporting leagues etc • Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports • Each company has a stron brand
- 15. VALUE CHAIN ANALYSIS Firm Infrastructure HR Management Technology Development Procurement Operations Outbound logistics Marketing& Sales Service SupportActivities • High brand recognition and reputation • Scale advantage • Price leadership and value based pricing strategy • First mover advantage in e- commerce in the industry • Agressive marketing • Celebrety endorsement • High allocation on marketing budget • Strong customer base • Diversity of products offered online • Low production costs • Locally purchase most raw materials in bulk • Specialised materials importantion • Local logistics providers • Inventory control and reduced inventory risk • Focus on product design marketing and product technology • Nike IHM specialized in rubber, foam and raw material •Strong management team •Global learning & staff training •Excellent employee relationship •Minimum hierarchy concept Long-term and trusting relationship with suppliers Localised and bulk procurement Just in time strategy as finished goods are shipped as soon as they are ready for sale Buffer and safety stock in hand Inbound logisitcs • Outsourcing manufacturing and assembly • Design (R&D) • Technological innovation • Effective supply chain management • Heavy investment in R&D • Quality control • Low and no packing options • Nike personals to assist factory management • No heavy metal, glue or solvent used • Strong control over global distribution channel • Just in time delivery • Good supplier relation • Ability of forward integration • Use of strong servers to support and manage supply chain projects • Customer care • Pre-sales & after sales services • Use of IT to improve customer service (touch screen) • Increased customer satisfaction • Customization •IT system across supply chain •E-commerce infrastructure •Strong financial position & CSR •Emprowement of top management • Great financial discipline with low debt • Strong brand, product, marketplace solution, delivery and support • Effective compliance process through strategic knowledge and verification • Great management and efficient corporate strategy globally • Blend of new hires and promotion • High ethical values among employees • Well monitored labor audit add brand audits •Research and product dvp: leading edge in technology dvpt •Product improvment •Ability to change • Great product technology like Motion Analysis, metabolic rate, blood work • Air-sole technology expert Primary Activities 15
- 16. NIKE’S SWOT Strengths • Brand recognition • High product quality • Effective marketing strategy • Capacity of innovation • Strong distribution chain • Strong R&D • Strong customer relationship/satisfaction Threats • Fierce industry competition • Revenue relies on consumer’s discretionary income • Economic rescission • Fluctuation in the currency Opportunities • Expansion into emerging markets • Increased demand in product innovation • Growing segment of women athlets • Increase in the number of sports event like Olympic, FIFA • Develop the fashion brand image Weaknesses • Overseas manufacturing dependency • Decreasing US market share • High product price compared to Adidas • Currency exposure • Medium retail presence 16
- 17. Key External Factors Weight Rating Weighted Score External Opportunities 1. Should strive to penetrate the new regions that have higher rate of growth such as “Brazil, Eastern Europe, India, and China” 0.1 4 0.4 2. New production line for protective or safety footwear. 0.1 2 0.2 3. Pursue the government to establish Anti-dumping duties on Chinese products. 0.05 1 0.05 4. Internet website. 0.05 1 0.05 5. New production line for fashionable footwear to attract new consumers. 0.1 2 0.2 6. New era to concentrate on children from 3 to 12 years Old. 0.15 4 0.6 External Threats 1. Competition in athletic footwear and apparel is fierce. 0.05 2 0.1 2. Main competitor is Adidas, Reebok, TaylorMade, and Rockport. 0.05 3 0.15 3. Adidas contracts with Chinese basketball superstar to produce basketball shoes. 0.1 2 0.2 4. A new competitor who's sell the footwear for leisure and fashion. 0.05 2 0.1 5. The competitors expand their categories and countries with deepen their relationships with customers. 0.1 1 0.1 6. Consumer shifting to fashionable footwear. 0.1 1 0.1 Total 1.00 2.25 External Factor Evaluation (EFE) Matrix 17
- 18. Internal Factors Evaluation (IFE) Matrix Key Internal Factors Weight Rating Weighted Score Internal Strengths 1. Nike is the world’s largest sports apparel producer. 0.08 4 0.32 2. Nike’s U.S retail stores about 338 outlets, and 336 outlets outside U.S 0.05 3 0.15 3. International branch offices in 52 countries. 0.05 4 0.2 4. Fiscal May 31, 2009 revenues increased 2.9% to $19.1 billion. 0.05 3 0.15 5. The company’s website allows consumers purchase directly from Nike. 0.05 4 0.2 6. Customization availability. 0.02 4 0.08 7.Strong in Marketing and R&D. 0.08 4 0.32 8.Diverse portfolio. 0.08 4 0.32 9. Customer loyalty. 0.02 4 0.08 10.Strong financial position 0.05 3 0.15 11. Strong international presence. 0.05 4 0.2 12.Nike doesn’t own any factories. 0.05 3 0.15 Internal Weakness 1. Nike’s fiscal May 31, 2009 net income decreased 21% to $1.48 billion. 0.1 1 0.1 2. Only concentrate in youth and young adult market, from 12to24 years old age. 0.15 1 0.15 3. Lack of stores serving females. 0.05 1 0.05 4. Heavy dependency on footwear sales. 0.07 1 0.07 Total 1.00 2.69 18
- 19. TWOS Matrix: Strengths 1. Nike is the world’s largest sports apparel producer. 2. Nike’s U.S retail stores about 338 outlets, and 336 outside U.S. 3. International branch offices in 52 countries. 4. Fiscal May 31, 2009 revenues increased 2.9% to $19.1 billion. 5. The company’s website allows consumers purchase directly from Nike. 6. Customization availability. 7. Strong in Marketing and R&D. 8.Diverse portfolio. 9. Customer loyalty. 10. Strong financial position. 11. Strong international presence. 12. Nike doesn’t own any factories. Weaknesses 1.Nike’s fiscal May 31, 2009 net income decreased 21% to $1.48 billion. 2. Only concentrate in youth and young adult market, from 12 to 24 years old age. 3. Lack of stores serving females. 4. Heavy dependency on footwear sales. Opportunities 1.Should strive to penetrate the new regions that have higher rate of growth such as “Brazil, Eastern Europe, India, and China” 2. New production line for protective or safety footwear. 3. Pursue the government to establish Anti-dumping duties on Chinese products. 4. Internet website. 5. New production line for fashionable footwear to attract new consumers. 6. New era to concentrate on children from 3 to 12 years old. SO Strategies 1. S1, O1:With some of the most recognizableand followed athletes globally,expanding into places like India andforming alliances with different kinds ofsports leagues will be a valuablestrategy to expand. 2. S2, O2:With strong international precenseshould used to attract a new segment like kids and women. WO Strategies 1.W1, O1:With the concept to increase theconsumer attractiveness should paymore attention to the new era of considerable in fashionable footwear. Threats 1.Competition in athletic footwear and apparel is fierce. 2. Main competitor is Adidas, Reebok, Taylor Made, and Rockport. 3. Adidas contracts with Chinese basketball superstar to produce basketball shoes. 4. A new competitor who's sell the footwear for leisure and fashion. 5. The competitors expand their categories and countries with deepen their relationships with customers. 6. Consumer shifting to fashionable footwear. ST Strategies 1. S1, T1:Should apply CRM system to sustainthe numbers of consumers and gothrough product development andmarket development against itscompetitors in new markets WT Strategies 1. W1, T1:Should pay more attention to theChinese market to and make a joinventure with some suppliers could offer good quality raw material against the severe competition Internal External 19
- 20. Strategic Decision Alternative Strategy 1 Alternative Strategy 2 Alternative Strategy 3 Alternative Strategy 4 20
- 21. Advantages of Alternative Strategy 1: Addition of new products in various departments High quality Disadvantages of Alternative Strategy 1: Very challenging High cost Advantages of Alternative Strategy 2: increasing R&D increasing market share Disadvantages of Alternative Strategy 2: challenging economic Maintain rules and regulation 21
- 22. Recommendation Nike should take alternative strategy 1 and 2.From this study; we will recommend that Nike should have more concentrated on customer benefits. It can create a privilege for the members for bonding the relationship between the customer and the company. It also can improve the customer services by conducting survey to more understanding the customer needs. 22
- 23. Evaluation and control Area of objective Short Term Responsibility Customers 1. Image Well-recognized in their market division and process from there. Marketing 2. Customer relation Customer should feel they have more of an influence and say over the Nike products and expectation. Public Relations 3. Increase OTC sales Will help boost sales Sales Learning & growth 1. System maintenance upgrades Important to maintain and continuously be running the latest and up to date technology. IT department 2.Training & development Train new employees and update experienced workers. Managers 3. Funding allocation Important to wisely select division which need more funding than others. Managers Operation/Internal process 1. Controlling and managing materials Should be controlled and well organized for distribution Managers/Employees 2. Procurement of materials Manager should make sure they are getting materials and equipment for best possible cost. Management 3. Distribution of materials Delivery time-frame should be met within specified days. Management Financial 1.Decrease R&D expense Decrease R&D expense as a whole but fund certain division more than others for the time being. Management 23
- 24. CONCLUSION Based on the survey, there are 12% of the customers prefer Nike because of its reasonable price. 16% of the customers prefer Nike because of its durability. They think that Nike can last longer than other brands. 18% of the customers choose Nike because they feel that its product is comfortable and Nike has good reputation. Besides that, 17% of the customers are attracted by its trendy design. 19% of the customers choose Nike because Nike has good quality. In conclusion, there are several reasons that the consumer go for Nike. The reasons are its price, durable, comfortable, good reputation, trendy and good quality. Nike Company should do the marketing research to get the consumer’s opinion to improve their product. In addition, the company should add new features to attract more customers to buy their product. New features can expand the scope of the product and may develop a new market. 24
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Editor's Notes
- #15: Growing power of retail chains. Eg Walmart… Fierce Competition- Adidas, Reebok, New Balance