Dustin Nadeau, Donatas Sumyla, David Deprey and Jaime Rodriguez Bus 411, May 2006. Nike 2003. Nike 2003. Case-Study Overview. Internal: History, Nike overview, Key Facts, Our Brands and Stock Information Nike Actual & Proposed Vision and Mission Economic Performance
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
Bus 411, May 2006
History, Nike overview, Key Facts, Our Brands and Stock Information
Nike Actual & Proposed Vision and Mission
Evolution of Financial Ratios
Strengths and weaknesses
Industry overview and comparison of financial ratios
Opportunities and threats
Grand Strategy Matrix
Possible strategies: Matrix Analysis
Why our decision?
1962: Phillip Knight, a Stanford University business graduate and former member of the track team, arranges to import athletic shoes from Japan and sell them in the U.S.. Knight created Blue Ribbon Sports as a cover name for his small-scale shoe-selling operations
1964: William Bowerman becomes a partner by matching Knight's investment of $500.
1965: Hires a full time employee, and annual sales reach $2,000.
1966: Blue Ribbon Sports, also known as BRS, rents its first retail space; employees can now stop selling shoes from their cars.
1969: It now has several stores and 20 employees; sales are close to $300,000.
1971: Nike, capitalizing on the Greek goddess of victory. The first Nike product sold with the new symbol is a soccer shoe.
1970 – 1975: Steve Prefontaine was turned to the University of Oregon by Bill Bowerman and wore Nike products.
1976: The popularity of jogging increases revenue to $14 million.
1978: The company changes its name to Nike.
1980: Nike goes public, offering 2 million shares of stock.
1990: Nike files suit against competitors for copying the patented designs of its shoes, and also engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes.
1997: Feb., Stocks reaches a high of $76 per share.
1998: Sept., Stocks tumbles to $31 per share.
2000: The National Football League declines to renew its exclusive apparel licensing arrangement with Nike.
2001: Nike opens its first Nike Goddess store, a unit targeting women, in Newport Beach, CA.
2003: Nike purchases Converse Inc. for $ 305 million.
Nike is the Ancient Greek goddess of victory
“It is one of the most recognized symbols in the world – The Swoosh. Simple. Fluid. Fast.”
(Quote from Nike’s website)
Nike’s principal business activity is the design, development and worldwide marketing of high quality footwear, apparel, equipment, and accessory product
Distributed in over 160 countries around the world: (Asia, Australia, Canada, Europe, Latin America, and the United States)
Nike is the largest seller of athletic footwear and athletic apparel in the world.
Fiscal year ended May 2003: Revenues of $10,697 million (increase of 8.1% against 2002)
Employees: 26,000 worldwide.
650,000 in Nike contracted factories around the globe.
Facilities: in Oregon, Tennessee, North Carolina and The Netherlands.
Also operates leased facilities for:
* 14 Niketowns,
* Over 200 Nike Factory Stores,
* 12 NikeWomen stores
* Over 100 sales and administrative offices.
Headquarters: Beaverton, OR
Index Membership: S&P 500 S&P 1500 Super Comp
Sector: Consumer Goods
Industry: Textile - Apparel Footwear & Accessories
Other Brands: Cole Haan, Converse, Hurley, Bauer Hockey, Starter Apparel
Market Cap: 21.738 billion
Ticker Symbol: NKE
Ranked 173 in the Annual ranking of America's largest corporations (Fortune 500 magazine)
Stock Symbol: NKE.
Went public in December 1980 and is traded on the New York Stock Exchange.
Dec 31st, 2003: $68.46
May 1st, 2006: $82.21
Shares Outstanding (July 2003): 263.7 mill
“To bring inspiration and innovation to every athlete* in the world”
(* “If you have a body, you
are an athlete”
Bill Bowerman, co-founder)
Continue to bring inspiration to present and future athletes, while maintaining the company's standard of quality for its products.
Nike is the "largest seller of athletic footwear and athletic apparel in the world. Performance and reliability of shoes, apparel, and equipment, new product development, price, product identity through marketing and promotion, and customer support and service are important aspects of competition in the athletic footwear, apparel, and equipment industry. We believe we are competitive in all of these areas." The company aims to " lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike."
To continue to offer quality products with increasing growth in the industry and expanding globally. Our mission has always been to provide a competitive edge by developing the most technological products. Keeping in mind fair labor practices in all our suppliers’ factories, while maintaining a competitive advantage, with the shareholders interests, and company profits in mind. We also believe our employees are one of our most important assets. To increase the responsibility towards the environment by evaluating the impact of day to day operation and attempts to change operations that have a negative impact.
Strong brand recognition
Growing international presence
Superior research and development department
Strong financial returns
Strong sense of culture in the working environment
Great celebrity spokespersons
Automatic replenishment system
Successful experience being competitive
Nike doesn’t own any factories
Successful marketing campaigns
Lack of stores catering to the active females
Poor employment practices at their international manufacturing sites giving a bad reputation
Heavy dependency on footwear sales
Issues with Footlocker
Athletic footwear manufactures captured nearly one-third of the total footwear market in the early 1970s.
Over a span of more than 25 years, American consumers spent $300 billion on 7.5 billion pairs of athletic shoes.
Reebok international Ltd. and Adidas became $ 3.5 Billion companies, while Nike Inc. became the first ever $ 9.5 Billion company.
By 1996 the number of establishments had dropped to about 52, with 12 factories closing since 1995.
China's imports increase by 6 percent to 1.26 billion pairs in 2003 .
Brazil's share increased 2.3 percent to 83.5 million pairs in 2003.
Vietnam's share jumped 91.9 percent to 23.5 million pairs in 2003.
The US markets continue to be dominated by imports from countries with low-cost labor.
From 1997 to 2001, the value of industry shipments declined from $ 219.6 million to $106.5 million.
U.S. shoe manufacturing plants declined by 775 between 1967 and 2001, the number of new plants opening dwindled to nearly zero.
* Y axis: - Financial Strength: +4
- Environmental Stability: - 1 => Y coordinate: +3 STRATEGY: AGRESSIVE
* X axis: - Competitive Advantage: - 2 => X coordinate: +3
- Industry Strength: + 5
Europe, Middle East and Africa (EMEA)
- Market Development
- Market Penetration
- Product Development
- Backward Integration
- Forward Integration
- Concentric Diversification
Primary: Focus on finding the most promising customers (kids and women) and introduce more products or improve current ones to satisfy potential increase in demand
Keep expanding into current and future foreign markets by being aggressive and the worldwide leader of the footwear industry
Accelerate funding for numerous marketing campaigns in order to get to specific markets or customer groups
Focus on improving working conditions and human rights at international manufacturer centers and at the same time increasing their productivity
Implement product diversification with company’s newest technologies so resulting increased earnings could be reinvested into R&D plans
U.S. Women: Prefer fashion, not footwear, they prefer clothing, we must create a shopping style based in athletic shopping.
U.S. Kids: E-commerce, influenced by innovation and design, not only comfort or sports
We need to consolidate US sales compared to international sales and international competitors
Difficult to expand towards other sports or population segments
Open 25 specific stores specialized only for women
Increase R&D expenses by 7% in women products
Increase Marketing expenses by 10%, designing a specific campaign for women using female endorsements
Create a new logo for women market which would be associated with fashion trends and introduce new products
Increase R&D expenses by 7% in kids products
Increase Marketing expenses by 10%, designing a specific campaign for kids
Introduce more soccer and basketball products targeting potential youth market
Research in international market to find out what are the new trends related with women and kids products (Long-term)
Nike annual financial reports
Sales and profits reports (on-line and off-line) based on Women stores and Kids products
Frequent management meetings between VP Global Brand Management (US), VP Global Footwear, VP Global Apparel, and VP Subsidiaries and New Business Development
2004: Nike introduces “Swift” technology.
Nike Swift increases track times by up to 1.13%.
Football (soccer) wear becomes #1 in Europe.
Nike SHOX footwear introduced in other footwear types and continues to boom.
2005: Profits recover, growing nearly 30% to reach $1.2 billion on unprecedented revenue of $ 13.7 billion.
Nike has 8 NikeWomen stores in key cities in the U.S..
Nike Pro Apparel introduced into NFL and MLB.
Greatly expands SHOX running footwear
August: Main competitors have joined with the recent announced acquisition of Reebok by Adidas
2006: Nike Pro Apparel expands into NBA.
Nike uses Rihanna to help infiltrate the women’s market.
Nike expands women’s product line and website.
Introduced “Nike Consider” to be more environmental conscious.
Introduced new footwear and apparel line “Pre” dedicated to Steve Prefontaine
Nike Annual Reports (2003 & 2005)
Annual ranking of America's largest corporations, Magazine: Fortune 500 (2005): cnn.money.com
www.nikebiz.com (Investor Relations)
Strategic Management Concepts and Cases; Fred R. David, 10th Ed.