Nike

Nike Corporation is a Fortune 500 company, founded in 1964 and listed on the NYSE as NKE.
Headquartered in Beaverton, Oregon, Nike is a proven leader in the sports equipment, apparel and athletic shoe industries. As of 2011, Nike employees more than 30,000 people worldwide. The brand portfolio, in addition to a wide variety of Nike premium products for leisure and sports activities, includes: Read more....
Cole Haan, Converse, Umbro, Ltd., Hurley and Nike Golf. Nike contracts with more than 800 retail outlets globally, promoting exclusive lunarite foam and flywire technology in brand items. Annual sales exceed $30 billion. The business income is heavily dependent on the shoe market and an overseas workforce. Nike is known as a fashion brand, worn by individuals for many occasions outside of sports activities. However, with its mission to bring innovation and inspiration to all athletes throughout the world, Nike has a strong presence in world championship sports competitions, celebrity and community sponsorships as well as numerous athletic wear eShops. On the BCG Matrix, based on an economic index rating, Nike is considered a Cash Cow. Developed by the Boston Consulting Group (BCG), the matrix helps corporations to plan retail offerings, according to two controlling characteristics: market growth and relative market share of the business. In essence, Cash Cows are brand products that generate more revenues than investments as leaders in a mature market. The products are worth keeping in the corporate portfolio. If the products turn into Dogs or bring in low shares in a slow or lowgrowth market, the company should get rid of them since they can no longer bring in proper revenues. The Nike BCG Matrix also indicates that the company portfolio is established and can benefit from economies of scale, which means mass output or expansion with lower production costs and a bigger is better philosophy. Although the Cash Cow market has slowed over the years, Nike products possess a fairly stable market share as of 2011. Sales revenues have increased an average of 14-18 percent annually for the last eight years. Net profits have gained 14-18 percent per year. As a company rooted in competition, Nike marketing strategists focus on more diversification of the market share, quality products and service as well as price leadership. www.businessteacher.org.uk or www.scribd.com
4ps
The athletic shoe industry is highly competitive as well as a demanding market where fierce competition, price conscience consumers, and constant changing market trends and fads have all been attributing factors in how a manufacturer responds. Highly focused brand includes Nike, Adidas, and Reebok, they target a precise market. However, there is evidence that a brand will widen its target market as it reaches a greater level of maturity. In the case of Nike, for example, there was a move into new sports areas away from the running heritage. Nikes target audience has moved from more masculine towards female and Generation Y. Price is related to Product, through the characteristics of the brand, its packaging and overall image. People are buying into an ideal, not just the item. Consumers believe that there is a link between quality of a product and the price. Consumers question what they are getting for their money. Brand Management, customer awareness and loyalty, is directly linked to the price, therefore maintenance of the relationship between brand images; quality and price have to be consistent (Johnson, G & Scholes J 2004).
Models used in Analysis

Swot analysis
This analysis will summarise key issues from the business environment and the strategic capacity of Nike. This can be used to judge future strategic options.
Strengths o o o o o o o Weaknesses o
Single Brand Product Range Capacity for innovation Distribution expertise Single Brand Stars endorsement Contract manufacturing Large portfolio of products
o o o o o
Too many stars endorsement Contract manufacturing Spread portfolio of products Reliant on retailers Reduction of target market
Opportunities o o o o o o o Threats o o o o o o o o
Competition Fashion Trends Contract manufacturing and copying of product (intellectual property) Consumer lifestyle changes Competition Bad press associated with Nike Outlets cancelling orders Sars New Markets E commerce Research and development Increase product line Product diversification Change target market New manufacturing countries
Pestle
This will consider environmental influences on the organisation, both in the past and with future strategic plans.
Political o o o Economic o o o o
Slow down in the economy Reduction in consumer confidence Barriers of entry to the EU Contract manufacturing Striking dock workers Political unrest in the production countries Terrorism in the home country
Socio-cultural o o o o o
Brand conscious consumers Change in buying habits in younger people Generation Y prefers other types of footwear Increase in the female share of the market Corporate social responsibility
Technological o o o
Speed of change of product Design Ability Speed of News reporting
Environmental o o
Re use a shoe Sustainability philosophy
o Legal o o o
Climate impact
Threaten action by underage workforce Poor employment record Corporate social responsibility
o Contract manufacturing and copying of product (intellectual property) o Trade agreements
Supply Chain
Like every large IT undertaking, the team responsible for the implementation of Nike Supply Chain (NSC) began with a set of specific, stated goals:
Enhancing Nikes ability to respond to changing conditions; Reducing inventory and capital investment risk; Improving service to meet customer/consumer needs; Improving process, information and product quality; and Providing an efficient global supply chain with local implementation
Porters 5 forces
This model is used to identify the sources of competition, and how to gain advantage over them.
Potential Entrants o o Buyers o o o

The buyers of sports footwear have changed in the past decade. There has been and increase in women purchasing the shoes, Generation Y has a different tastes and purchasing methods. Other sportswear manufacturers expanding their portfolio Cheap copies from the Far East
Substitutes o
When required for professional use there is no substitute goods, but as a fashion item there are many other goods that could be purchased.
Suppliers o
Using production facilities in the Far East has give Nike economies of scale. Although there are now problems arising from these factories, they are switching to making there own goods, labour and political unrest causes delays in manufacturing and shipping of the goods,
Competitive Rivalry o
Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues
Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports.
BCG matrix
Nike is established within its markets, benefiting from economies of scale. This places them in the Cash Cows category on the Matrix. Cash cows market growth has slowed, and the products hold a fairly stable market share

Nike

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Nike Corporation is a Fortune 500 company, founded in 1964 and listed on the NYSE as NKE.

Models used in Analysis

o Contract manufacturing and copying of product (intellectual property) o Trade agreements

Potential Entrants o o Buyers o o o

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