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Case Write-up for Nike
May 18
2012By Fred Sosa Nike Case Write-up
A) Positioning
1. Short Company History- Before there was the Swoosh, before there was Nike; there were two
visionary men who pioneered a revolution in athletic footwear that redefined the industry. Bill
Bowerman was a nationally respected track and field coach at the University of Oregon, who was
constantly seeking ways to give his athletes a competitive advantage. He experimented with
different track surfaces, re-hydration drinks and – most importantly – innovations in running
shoes. But the established footwear manufacturers of the 1950s ignored the ideas he tried to offer
them, so Bowerman began cobbling shoes for his runners. Phil Knight was a talented middle-
distance runner from Portland, who enrolled at Oregon in the fall of 1955 and competed for
Bowerman’s track program. Upon graduating from Oregon, Knight earned his MBA in finance
from Stanford University, where he wrote a paper that proposed quality running shoes could be
manufactured in Japan that would compete with more established German brands. But his letters
to manufacturers in Japan and Asia went unanswered, so Knight took a chance. He made a cold-
call on the Onitsuka Co. in Kobe, Japan, and persuaded the manufacturer of Tiger shoes to make
Knight a distributor of Tiger running shoes in the United States. When the first set of sample shoes
arrived, Knight sent several pairs to Bowerman, hoping to make a sale. Instead, Bowerman
stunned Knight by offering to become his partner, and to provide his footwear design ideas to
Tiger. (Nike)
2. Mission Statement- “IF YOU HAVE A BODY, YOU ARE AN ATHLETE” (Nike)
3. Stated Objectives- Our goal is 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.
4. Stated Strategies - The key for NIKE, Inc. in any market is to drive innovation at every level –
brand, product, retail, operations, events, and communications. That’s at the core of our growth
strategy. In May 2010, I stated a goal for NIKE, Inc. to deliver $27 billion of revenue in fiscal 2015.
I’m excited to tell you that we’re ahead of schedule, so we’re revising that number. When I look at
the strengths of our company and the opportunity we have going forward, I believe we can exceed
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that goal and reach $28-30 billion in revenue by fiscal 2015. Today we have seven distinct, high-
energy brands – each with a powerful connection to its consumers. Those connections give us the
insights we need to create amazing products and experiences. That’s the fundamental cycle that
continually drives growth. And while each brand has enormous potential in its own right, the real
power of NIKE, Inc. comes from making the overall value of our portfolio greater than the sum of
the parts. We define our portfolio as the NIKE, Inc. brands and everything that drives them: our
products, retail partners and executions, supply chain, strong balance sheet and a very focused
management team. We use the power of our portfolio to manage risk and attack our biggest
growth opportunities. It’s the source of our financial capital. It gives us the scale necessary to
drive down costs. It enables us to leverage our resources across multiple brands and categories.
And it all revolves around one thing: innovation. We innovate to serve the athlete. We innovate to
grow the company. And we innovate to inspire the world. (Mark Parker President & CFO of NIKE
Inc)
5. Revised mission statement -As the saying goes “If it aint broke don’t fix it”
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6. The Industry: Porter’s Five Forces -
7. Competitor Profile Matrix
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8. Strengths-Weaknesses-Opportunities-Threats (SWOT)
Strengths-
Brand
Loyalty
Top Management
Innovativeness
Weaknesses-
Ethics (labor practices)
Highly competitive market
Changing trends
Opportunities-
Research and Development
Niche
Threats-
cutback in consumer spending.
Consumers may be scanning the market for new and different footwear and apparel products
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9. External Factors Matrix
Opportunities Weight Rating ScoreResearch & Development
.35 4 1.4
Specialization in products for athletes (niche)
.30 4 1.2
Threats Weight Rating Scorecompetition .15 2 .30consumer changes .20 2 .40
Totals 1.00 3.3
10. Internal Factors Matrix
Internal Strengths Weight Rating ScoreBrand .2 4 .8Advertising campaign .2 4 .8Multi Brand .1 3 .3Product Design and Development
.2 4 .8
Internal Weaknesses Weight Rating ScoreEthics .15 1 .15Labor practices .1 1 .1Changing trends .05 2 .1
Totals 1.00 3.05
11. Ratio Analysis
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a) Financial and performance ratios: company, competitors, industry, sector
What can you conclude by looking at these numbers?
Quick ratio-greater than 1.0 so Nike is sufficiently able to meet their short-term liabilities.
Current ratio-is well above the industry showing ease of converting assets to cash to cover short-term obligations.
High inventory turnover ratio -Nike benefits from greater cash flows, reduced storage costs
Gross margin- (dollar of revenue that the company retains as gross profit) Nike has gross margins above industry
Return on equity-(how much profit a company generates with the money shareholders have invested.) Nike has a positive return
on equity
B) Strategy & Policy
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1. Internal-External Matrix
According to the I/E matrix the grow and build strategy is suggested. This means intensive and
aggressive tactical strategies. The strategies should focus on market penetration, market
development, and product development.
2. Space Matrix
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Financial Strength (FS) Values: +1 (worst) to +6 (best)
Return on investment 6
Leverage 4
Liquidity 5
Cash flow 4
Brand Image 4
Control over supplier 4
Average= 4.5
Total X axis score=1.67
Competitive Advantage CA Values: -1 (best) to - 6 (worst)
Market share -2
Product quality -1
Product life cycle -4
Customer loyalty -2
Technological know-how -2
Control over suppliers & distributors -6
Average=-2.83
Industry Strength (IS) Values: +1 (worst) to
+6 (best)
Growth potential 4
Profit potential 4
Financial stability 5
Technological know-how 4
Resource utilization 4
Ease of entry into market 4
Average= 4.16
Total Y axis score=1.16
Environmental Stability (ES) Values: -1 (best) to -6 (worst)
Technological changes -3 Risk involved in business-4
Price elasticity of demand--demand variability-5
Rate of inflation-3
Price range of competing products-3
Av erage=-3.0
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Internal Strategic Position External Strategic Position
According to the graph above Nike Falls into the Aggressive Quadrant which means it should
focus on market penetration, market development, product development and diversification
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3. Grand Strategy Matrix
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SLOW
4. SWOT Matrix
Strengths – S
Brand
Loyalty
Top Management
Innovativeness
Weaknesses – W
Highly competitive market
Ethics (labor practices)
Changing trends
Opportunities – O Emerging markets
Specialization
Research and Development
SO StrategiesTake advantage of emerging specialty
market
Keep producing quality products
Keep being innovative
WO Strategies
Stand out-Create a specialized product
Product Development
Threats – TCompetition
Changes in economic conditions
Cutback in consumer spending.
Consumers may be scanning the market for new and different
footwear and apparel products
ST StrategiesUse Brand Loyalty to further yourself
from the competition
Create Something different that sets you apart from competitors
WT Strategies
Keep providing affordable footwear at different price ranges
Stay on top of current trends and technological advances
5. Quantitative Strategic Planning Matrix
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AS = Attractiveness Score; TAS = Total Attractiveness Score
1=Not Attractive 2=Somewhat Attractive 3=Reasonably Attractive 4=Highly Attractive
According to the QSPM we can come to the conclusion that Research & Development is a better
option. This is given by the TAS Scores.
C)Conclusion
1. Impact of globalization on the firm- Being that Nike is well known overseas it would have a
very small effect on the firm.
2. Ethical Issues? “Green” Issues? Nike has had many ethical issues when It comes to child labor
practices and this is something that has not affected them too much in terms of still being
financially successful, but it could potentially be a very bad situation if it doesn’t improve.
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3. How does the company compete? Nike holds a huge share of the market and is a much larger
company and it is considered one of the main competitors for every other shoe company, so
to answer your question, Nike competes very well.
4. What recommendations or changes would you make? My recommendation to Nike would be
to keep being innovative and keep trying to push forward, besides that Nike really has the
hang of things.
5. Compare your recommendations to strategies planned by the company
My recommendations are exactly along the lines of what the company is already doing.
6. Business lessons learned...What is your take-away from this case?
My take away from this case is that Nike knows what is doing and if it continues to do what it
is already doing then it will continue to prosper
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Works CitedMark Parker President & CFO of NIKE Inc. (n.d.). http://investors.nikeinc.com/Theme/Nike/files/doc_financials/AnnualReports/2011/index.html#mark_parker_letter. Retrieved from http://investors.nikeinc.com/Theme/Nike/files/doc_financials/AnnualReports/2011/index.html#mark_parker_letter: http://investors.nikeinc.com/Theme/Nike/files/doc_financials/AnnualReports/2011/index.html#mark_parker_letter
Nike. (n.d.). http://nikeinc.com/pages/about-nike-inc. Retrieved from http://nikeinc.com/pages/about-nike-inc: http://nikeinc.com/pages/about-nike-inc
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Executive Summary
Nike, the true Cinderella story of the Footwear industry, It all started with two guys that
took a chance on something that could have easily flopped but it didn’t and here Nike stands
today as one of the biggest Athletic Footwear companies in the market, Who would have known?
The main difference between the Nike of today and the Nike of the past is its financial resources.
Nike is now in a position where it can invest money into these huge advertising and marketing
campaigns and have its own production factories and even its own “Nike Town’s”.
The athletic footwear industry is a challenging and saturated market. With Intense
competition, fashion trends, and price conscious consumers In order to have an edge over the
leaders, companies must be able to compete at all levels such as reasonable pricing, efficient
production, and high product quality. As stated in the strategies “The key for NIKE, Inc. in any
market is to drive innovation at every level – brand, product, retail, operations, events, and
communications.” This is what makes them leaders of the industry understanding that you have
to constantly reinvent yourself and be unique in everything you do to be successful in this
industry. Even though Nike faces the problem of changing consumer trends (as all companies in
this industry face) it can easily overcome this because of its innovativeness. In terms of changes
I think the only thing Nike should “just do” is what it already is doing and it will have no
problem staying at the top.
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