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NIKE INC. Chris Kaiser Rodrigo Quintanar Naomi Robinson Caitlin Schneider Natalie Welch. History of Nike. Bill Bowerman and Philip Knight Knight’s project at Stanford High quality/low costs  Japan. History of Nike. Tiger - running shoe manufacturer Blue Ribbon Sports

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nike inc
NIKE INC

Chris Kaiser

Rodrigo Quintanar

Naomi Robinson

Caitlin Schneider

Natalie Welch

history of nike
History of Nike
  • Bill Bowerman and Philip Knight
  • Knight’s project at Stanford
  • High quality/low costs  Japan
history of nike1
History of Nike
  • Tiger - running shoe manufacturer
  • Blue Ribbon Sports
  • Became Nike and the Swoosh born (1971)
  • Late 70’s: from $10M to $270M in sales.
swot analysis
Strengths

Global leader in footwear

Nationally recognized brand with “swoosh” symbol

High-valued stock

Endorsed by top athletes

Excellent supply chain management

SWOT Analysis

Weaknesses

  • Recent controversial advertisements
  • Public dissent over us of sweatshops
swot analysis1
SWOT Analysis

Opportunities

  • Growth through subsidiaries
  • Future innovative products
  • Rumored buyout of Puma

Threats

  • Slowing growth in U.S. economy
  • Rapid changes in customer tastes
  • Adidas’ pending acquisition of Reebok
herfindahl hirschman index
Herfindahl-Hirschman Index

Nike: 1,339.56

Adidas-Reebok: 449.44

New Balance: 59.29

Puma: 1.21

HHI Index:1,849.5

markets demand elasticity
Markets, Demand & Elasticity

Products are cyclical

“As Nike grows internationally, that seasonality becomes less of a factor. There is much more cyclicality in footwear than you are going to find in the Disney business.”

Seasonality during the spring, back-to-school season, and Christmas holiday.

markets demand elasticity1
Markets, Demand & Elasticity
  • Products
    • Normal
    • Elastic
  • Substitutes - Adidas, Reebok, Under Armour, New Balance
  • Complements
    • Apple
markets demand elasticity2
Markets, Demand & Elasticity
  • However with Nike brands such as…
      • Brand Jordan
      • L3 (LeBron James)
      • NikeiD
      • NikePlus

They have created luxury items that are inelastic and other companies can’t compete with

advertising
Advertising

“Just Do It”

  • Endorsements
  • Nike has invested 11%-13% of revenue into their marketing efforts
  • Print and television ads
production
Production

“Our business model in 1964 is essentially the same as our model today: We grow by investing our money in design, development, marketing and sales and then contract with other companies to manufacture our products.”

production1
Production
  • Nike outsources nearly all production to outside manufacturers
  • Allows Nike to achieve huge economies of scale
  • More focus on product development and innovation

(Source: Nike, Corporate Responsibility Report, FY 2006 as of May 31, 2006)

production nike s contract factory footprint
ProductionNike’s Contract Factory Footprint

(Source: Nike, Corporate Responsibility Report, FY 2006 As of Feb. 28, 2007)

production2
Production
  • Apparel - labor intensive
  • Footwear - capital intensive
  • Training provided to employees differs among sectors
    • Development programs for MBA graduates
    • International preparation for current employees
    • Trying to implement educational training for workers in factories
production3
Production
  • Controversy with the labor standards
    • Underpayment
    • Child labor
    • Working conditions
production4
Production
  • Retail Sales
    • Stores
    • Factory Outlets
    • NIKETOWNs
    • Online
    • Distributors/Licensees
costs
Costs
  • Research and Development
  • Marketing
    • Endorsements
  • Global costs
government policy
Government Policy
  • Sustainability
  • Legal Issues
  • Patents
extent of market market structure
Extent of Market & Market Structure
  • Global Market
    • 2008 Olympics
  • Monopolistic Competition
    • No barriers to entry
    • Each brand produces own brand or version of differentiated product
pricing strategies
Pricing Strategies

Intertemporal Price Discrimination

High initial price

Price drops over time

Willing to pay higher prices because products seen as status symbol among athletes

pricing strategies1
Pricing Strategies

Peak-Load Pricing

Seasonality

Sport-specific demand

non pricing strategies
Non-pricing Strategies

Adjusting mix of specific product offerings

Trends

Demand

New, innovative products

Research and development

Patents

non pricing strategies1
Non-pricing Strategies

Aggressive Marketing

Endorsers

Large volume TV ads

Cause-related marketing

Outsourcing

China, Vietnam, Indonesia

strategies games
Strategies/Games
  • First-mover advantage
    • Extensive research and development
    • E-commerce
barriers to entry
Barriers to Entry
  • Free entry and exit
  • Nike and others have created legal barriers
    • Patents
        • “Air Technology”
      • Economies of scale
        • Start-up price