Nike_Competitive_analysis

8/7/2019 Nike_Competitive_analysis

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Group 4:Josh Fernino

Brent HareVictor Hemmati

Lance Hollister

Chris Kerschen

Ty Parasiliti

Vincent Ukwu


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Nike has become one of most recognizablecompanies in the entire world

Nike is now the most popular brand in, not

just America, but through out the wholeworld.

Nike offers all the athleticshoes, clothes, and other accessories one

would need to wear in their certain sport.


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LeBron James, Tiger Woods, Mia Hamm

have been recognized as many of today's sports

Images that are associated with Nike .


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Nikes target market for their shoes, clothesand other accessories are males and femalesbetween 18 and 35 years old.

Nikes Competitive market has expanded anddominated in the international market.

Nike disburse TV ads during professional andcollege sports events, prime-time

programs, and late-night TV programs


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The graph below indicates how Nikemanufacturing and sales compete with theirclosest rivals in the early 2000s worldwide.


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A financial analysis helps us compare acompanys current performance with its pastperformance

Gives us an idea of how the entire industry isperforming as well

Liquidity ratios, profitability ratios, andleverage ratios will give us a good basis of

how Nike, Adidas Group, and Under Armourare performing


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Indicator of a firms short term liquidity

Above 1 is usually considered good

Nike and Under Armour have excellent current ratio scores, as theAdidas Group is abnormally high

0

2

4

6

8

10

12

14

16

18

2006 2007 2008

Nike

Adidas GroupUnder Amour


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Shows how well the working capital is being used A higher ratio is usually an indication of better cash collection

management

As we can see, Under Armour has had a very rapid increase since2006

Nike and Adidas Group have good, steady ratio numbers

0

1

2

3

4

5

6

7

8

9

10

2006 2007 2008

Nike

Adidas Group

Under Armour


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Mainstay for all profits made by the firm

Higher the better

Nike trails for below Under Armour and Adidas Group

Under Armour has a very good gross profit margin

38%

40%

42%

44%

46%

48%

0%

2%

2006 2007 2008

Nike

Adidas Group

Under Armour


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Also known as return on investment Shows profitability of company based on total assets

Nike outperforms its competitors with a drastic increase in 2007and 2008

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

2006 2007 2008

Nike

Adidas GroupUnder Armour


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Shows profitability of company

Gives the return with the money shareholders have invested

Nike leads the competition by a modest amount, as Under Armourhas a sharp decline in the recent years

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2006 2007 2008

Nike

Adidas Group

Under Armour


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Measures a firms financial leverage Can also be looked at as a measure of how much is being financed

through debt than equity

A high number for the debt equity ratio is not attractive to investors

Under Armour is the most appealing in this group for the debt equityratio

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2006 2007 2008

Nike

Adidas Group

Under Armour


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The Altman ZS

core is a good way to evaluate a companys creditrisk

A score of 1.81 or less is not good

A score of 2.67 or greater indicates that a company has littlebankruptcy risk

2008

Nike 5.47

Adidas Group 2.41Under Armour 4.63


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The strengths that Nike takes pride in isgetting the top athletes to wear and sponsortheir products rather than events or

competitions as much.The basis of this comes from the idea that

people tend to remember the brand worn byplayers and not the brand that sponsors the

event that the players perform at.


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The market that Nike participates in is veryprice sensitive. Most of Nikes income comesfrom the selling of its products to retailers.

This usually shows that margins tend to getsqueezed as retailers try to get low pricecompetition on Nikes products.


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The technology is always changing in theretail market, as well as the sporting market.

The ability to have the most recent fashion

trends involved in their sporting equipment,sunglasses, shoes, and clothing is crucial togenerate more money.

Nike has a large global market and a large

acceptance of their product all over theglobe.


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The retail sector is becoming substantiallyprice competitive. Ultimately it means thatconsumers are shopping around for a better

deal.The consumer now maintains the control

over the manufact

So if a consumer wanted to find the lowest

price on the same exact product, then theconsumer could just walk from store to


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Designed Employee Networks to separatethem from their competition

Employee Networks promote diversity within

the organization


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Intended role of network:

Foster professional development

Enhance work performance

Identify mentors Assist in recruiting diverse professionals

Develop community interaction

Encourage increased teamwork


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For every team to be high-performing, diverse, and inclusive

To achieve this vision, the strategy is to: cultivate diversity and inclusion to develop

world-class, high-performing teams

ignite change and inspire critical conversationsaround diversity, inclusion and innovation

create venues and environments for opendialogue, diverse opinions and a multitude ofperspectives


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Adidas is about to launch a new innovativecampaign praising the Team Spirit in sports

"It takes 5IVE" - celebrating the concept of

team over individual or "we over me"Nike has always been big on marketing the

individual as the passport to sellingbasketball shoes.


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Nike owns over 80% of the U.S.'s $2.6 Billionbasketball market and its share is alsogrowing year over year

Adidas share of the market is only about 14%Adidas has a growing market share, but it

remains to be seen whether it will grow atthe cost of Nike, or other lesser brands.


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NIKEiD is a sub brand which allows customers to design andpersonalize their Nike footwear, and is available online atNIKEiD.com.

The NIKEID brand also has boutique stores in New YorkCity, London, Paris, Osaka, and Berlin. It has beenreported that the NIKEID business has more than tripledsince 2004. Presently, there are over 3,000,000 uniquevisitors at NIKEiD.com per month.


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On March 10, 2009, Nike introduced the ultimate apparel system for select

college teams as they march into tournament madness with superiorinnovation from head to toe.

Nike is introducing a 360 degree approach complete with new base layerapparel, unique uniforms and customized footwear.

Nike will outfit the following Universitys: Duke

Gonzaga

The University of Memphis Michigan State

University of Oregon

Nike Pro Combat is ergonomically designed to provide basketball-specificprotective padding without restricting mobility on the court for maximumperformance.

The Nike Pro CombatD

eflex short provides padding over the hip andthigh, and the Nike Pro Combat Deflex elbow pad provides superiorprotection.

Both the shorts and sleeve will showcase vibrant team colors for each of theaforementioned schools.

Using Nike Aerographic technology, an engineered mesh providing zonedcooling and dramatically reducing the fabric density, the weight of thejersey is reduced by 31 percent compared to current uniforms.

The Aerographic jerseys debuted on the USA Senior National Team duringthe 2008 Olympic Games.


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Nike has been known for their endorsementsof high profile athletes.

Examples included:

Michael Jordan

LeBron James

Kobe Bryant

Tiger Woods

But, some investors worry about Nikes starendorsements.

Nike is likely to cut the 2009 marketingbudget


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One of Adidas biggest Marketing schemes wasto merge with Reebok to compete with thepowerhouse Nike.

The Germany-based global power announced

a $3.8 billion deal to buy Canton, Mass.-based Reebok, uniting two of the world's topsports companies and creating a muchstronger challenge to Nike, particularly on

the global giant's home turf: the prime NorthAmerican market that accounts for abouthalf of the category's sales worldwide.


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Adidas Group pro league sponsorshipsinclude:

Reebok has a deal with the NFL to exclusivelydesign, market, and sell all on-field uniformsand licensed consumer apparel.

The NHL will also add the Reebok logo to itsuniforms.

Reebok in 2001 signed a 10-year deal tooutfit the NBA, WNBA and NBA Development

League. As of the 2008 football season, Reebok still

has their logo on all NFL jerseys.


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In an industry known for motivationaladvertising, Adidas' current theme is"Impossible is nothing."

It also dominates soccer, having endorsement

deals with superstars such as David Beckhamand sponsorship of top events including theFIFA World Cup.


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According to their Annual Report, their marketing andpromotion efforts begin with a strategy of sellingtheir products to high performing athletes and teamson the collegiate and professional levels.

They implement this strategy through collegiate

sponsorships, individual athlete agreements, and byselling their products directly to team equipmentmanagers and to individual athletes.

As a result, their uniforms, batting gloves, socks andother items of apparel are seen on the field, givingtheir products exposure to various consumer

audiences, through television, magazines and live atsporting events.

This exposure to consumers helps them establish on-field authenticity as consumers can see theirproducts being worn by high-performing athletes.


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They are the official uniform supplier of theUniversity of Maryland and Texas TechFootball Team

They supply uniforms, sideline apparel andfan gear for the following

Auburn University

South Carolina University

University of Utah University of Delaware

University of Hawaii

University of South Florida


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In 2008 hey launched the New Prototypecross-trainer shoe.

Analysts hailed the launch as successful, andthe New Prototype outperformed Nike's newcross-trainer line, which was backed with a

hefty campaign of its own (with a tagline "My better is better than your

better," which many observers took for trashtalk).


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Nike has historically had some of the mostcutting-edge products on the market.

For example, Nike teamed up with Apple and

launched the Nike + iPod line of products.This technology allows consumers to connect

their iPod devices to sensors inside the shoesto record time, distance, pace, and calories

burned.


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Due to cheap labor in foreign countries, Nikeoutsources virtually all production to otherareas of the world.

This behavior has become an industrystandard, with all major competitors alsooutsourcing production.

Consequently, no competitor has a major

advantage in manufacturing.


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One of Nikes most revolutionary technologies comesthrough its footwear cushioning.

The cushioning systems in a shoe serve to distributepressure evenly among the foot, absorb shock, anddeliver comfort to the user.

Nike has patents on four cushioning technologies: Nike Air Nike Zoom Nike Air Max Nike Shox

Although some of Nikes earlier patents are beginningto expire, they still hold patents on the newertechnologies.

In the past, competitors have tried to match rivalNikes cushioning systems, but none have matchedtheir success.


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Nike is the single largest producer of athleticfootwear and apparel, allowing them largecost advantages over competition.

Larger companies tend to have majoreconomies of scale over smaller companies inareas such as distribution and marketing.

Nike is so large that many of the companys

suppliers depend on Nike to remain inbusiness.


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Being such a large corporation, Nike reliesheavily on IT in order to manage its supplychains.

Nike admits that it is at serious risk if abreakdown were to happen in these systems,resulting in bad effects on their business andfinancial condition

This puts them at a disadvantage against some of

their smaller competitors, who do not rely soheavily on IT

The very fact that they are such a large companymakes them more likely to have these problems


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To move its large and global organization intoorganizational learning and sustainablepractices.

Their goal is to spread the understanding ofsustainability throughout the company anddemonstrate its value to the business and itscustomers.

In 21st century, you must successfullyintegrate corporate responsibility into theheart of the business.


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Nike was the clear market leader, with 31% of the global athletic

footwear market in 2007 (graphs below). Looking at the market in theUnited States, Europe, or Asia reveals a similar picture: Nike's marketshare in these regions hovers around 36%, followed by Adidas at 20%,with Puma and New Balance as distant third and fourth. The globalmarket for athletic footwear is concentrated, with the top four firmscontrolling 71%. By contrast, the market for athletic apparel is both

larger ($49.5 billion in 2005) and more diffuse; the top five firmscontrol only 27% of the market. Nike is, however, also the global leaderin apparel, with a 7% market share in 2007.


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Nike strives to minimize the environmentalimpact of each product throughout its productlife cycle from design to manufacturing, post-consumer use and ultimate disposal.

NEAT programs now recycle shoe manufacturingwaste.

Nike shoes produces solid waste. The largest ofthese by weight is cured rubber used in shoe

soling. Nike employees engineered a creativeway to keep it out of landfills and convert it intomore outsoles,called REGRIND, is available tothe public.


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Nike's products are viewed as higher qualityand command higher prices than itscompetitors, sometimes though consumersdo not agree to this line of thinking.

To substantiate its high quality/high pricelines, Nike is placing emphasis on the latesttechnology and applying innovation towardsthe development of new products,

particularly the Nike Alpha Project which is anew line of athletic shoes. In the past, Nikehas overlooked the mid to lower price pointproducts, which could be a possibleweakness too.


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Formulating a strategic plan for thecorporations future is key in determining theall around goals of the company.

Nike, with there marketing, innovation,technological advancements, and equitablemanufacturing departments, has created anal around dominant strategic plan

Nike has built there competitive advantageto the highest form possible.


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Nike has shown that they are a true force to bereckoned with.

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