OMAR ANDAZOLA EMILY MAJORS KRIS LOVIN

Strategic Management CaseAnalysis

June 7th 2016Dr. Isaac Wanasika

NIKE TOP MANAGEMENT

PHIL KNIGHT

FOUNDER OF NIKE

MARK PARKER

CEO 

TREVOR EDWARDS

PRESIDENT OF NIKEBRAND

A director since 1968, isChairman of the Board ofDirectors of NIKE, Inc. Mr.Knight is a co­founder ofthe company and, exceptfor the period from June1983 through September

1984, served as itsPresident from 1968 to

1990

For more than 30 years,he’s brought innovative

concepts and engineeringexpertise into such vitalroles as Vice President of

Consumer ProductMarketing, Vice Presidentof Global Footwear andCo­President of the Nike

Brand.

Is responsible for leading all

category and geographic

business units, the Jordan

Brand and Action Sports,

which includes Hurley

International LLC, Digital

Sport and brand management

throughout the world as well

as leading NIKE's wholesale,

retail and e­commerce

operations.

Net Worth: 28B Net Worth: 250M Net Worth: 5.2M

Short Term Goals

Financial

ROI CapitalAccelerated Cash FlowRevenue GrowthIncreaseEarnings/ShareReturns on capital

Sustainability

ManufacturersMaterialsLabor

Expand Gross Margin

Optimize Selling & Admin

Expense

Financial Strategies /Tactics

Product Innovation

Reduce Costs

Supply Chain

Increase Margin in DTC opps

Expand Gross Margin

ConsumerEngagement Infrastructure

LegacyInfrastructure

Incremental RevenueGross Profit

Efficiency

Optimize Admin & Selling Expense

Sustainability

NIKE

EXTERNAL

ENVIRONMENT

Political Drivers

Nike is the number one in sportswear. Nike’s profits, turnover, marketing,sponsorship and advertising surmount all other sportswear companies.Nike not only refers to its position as a market leader, but also sees itselfas leading the industry in labour practices initiatives.

Nike refers to themselves as a network firm. This means they employ8000 people in management, design, sales, and promotion, and leavesproduction in the hands of some 75,000 workers hired by independentcontractors.

Most of the out-sourced production takes place in Indonesia, where apair of Nikes that sells in the UK for around £60 is produced for about £3and young women paid as little as £0.10 per hour.

At the moment Indonesia is Nike’s biggest production centre, with 17footwear factories that employ 90,000 workers and produce about 7million pairs of shoes each month.

Nike Sweatshops

“AT NIKE, WE BELIEVE IT IS NOT ENOUGHTO ADAPT TO WHAT THE FUTURE MAY

BRING – WE’RE CREATING THE FUTURE WEWANT TO SEE THROUGH SUSTAINABLE

INNOVATION.”

Nike CEO, Scott Parker

 Eliminating waste through more efficient product

design and manufacturing technologies.

WASTE

 In FY15 alone, 54 million pounds of factory scrap was

transformed into premium materials used in Nike

performance footwear and apparel.

  Footwear manufacturing, diverted 92% of total waste

from landfill and incineration without energy recovery.

ENERGY

Launched  Energy and Carbon program in 2008, Nike

footwear contract manufacturers have cut energy use

per unit in half

Meaning today it takes about half the energy and

emissions to make a pair of shoes compared to eight

years ago.

 Focus on understanding, reducing and improving

our water use.

WATER

Reduced water use by 18% per unit in apparel materials

and 43% per unit in footwear manufacturing, far

surpassing goals for FY15.

CHEMISTRY

Launched  Energy and Carbon program in 2008, Nike

footwear contract manufacturers have cut energy use

per unit in half

Meaning today it takes about half the energy and

emissions to make a pair of shoes compared to eight

years ago.

INNOVATING THE ROLE OFTHE WORKER

Rely on a source base that is high performing, resilient and

agile, with workers that are motivated and fairly compensated

to deliver high productivity and world­class product.

 Running pilot research programs dedicated to engaging

and connecting workers to healthcare, education and

finance networks to make positive changes inside and

outside the workplace.

NIKE’S COMMITMENT TO TRANSPARENCY

 Transparency and accountability are fundamental to Nike’s

sustainable business approach.

The Nike Manufacturing Map discloses the names, locations

and demographic information about the workforce at the

factories we contract to make our product, and holds us

accountable for our chosen source base. 

MANUFACTURING GOALS FOR 2020

• Source 100% from factories that meetour definition of sustainable

• Ensure contract factory workers sharein productivity gains

• Establish partnerships supporting theneeds of factory workers both inside and

outside the factories

Our mission  to bring inspiration and innovation toevery athlete in the world drives us to encourage

every person to reach their full potential, whether it’son the track, field or court, at work or at home. Westrive to help people be active and engaged, fully

participating in the world around them.

What’s good for our consumers is also good for ouremployees and our communities. We believe thatinvesting in our employees and communities isessential to achieving our ambitious growth and

innovation agenda.

Our 2020 Targets to Unleash HumanPotential:

• Invest at least 1.5% of pre­taxincome to positively impact

communities• Attract and develop diverse talent to

drive the future of the industry

North America Performance DriversNike experienced double­digit growth in its top line across several major categories including Jordan,

Sportswear, Running, and Men’s Training.

Nike introduced several product innovations  including Tech Pack, Aeroloft, and Flyknit.

Sales growth trends were strong in both the wholesale and direct­to­consumer (or DTC) channels.

Analyzing Nike’s performance in Greater ChinaGreater China was the fastest­growing Nike  segment in fiscal 2Q16. Segment sales grew 23.7% year­over­year to

$938 million. The segment accounted for 12.2% of Nike’s sales and 24.4% of pre­tax income in the quarter.

Nike experienced growth in almost all categories in Greater China with sportswear, running, and NIKE basketball

being the major sales drivers.

OverallRobust Growth In Running, Basketball And Soccer Categories

Strong Growth In North America, Emerging Markets And Central And Eastern Europe

Increasing Profitability

Innovative Product Portfolio

Economic Drivers

Social DriversINNOVATING TO GET

KIDS MOVING

CREATING POSITIVEIMPACT IN LOCAL

COMMUNITIES

ACCELERATING GLOBAL CHANGE

Technological Drivers

3­D motion analysis (kinematics)Ground reaction forces and loading rates (kinetics)Foot­pressure measurement (in­shoe and external)AccelerometersFoot morphology (anthropometrics)Electromyography (muscle activity)High­speed video (>30,000 frames/second)Humac­Norm (isokinetic muscle strength testing and measurement)Metabolic cart (oxygen consumption)Electrocardiograms (ECG)Skin and core­temperature sensorsSkin humidity sensorsCopper Sweating MannequinThermal cameraBlood chemistry analyses

TESTING METHODS

Technological Drivers

PHYSIOLOGYPhysiology team conducts research with the goal of creating footwear and apparel solutions thatenhance athlete performance. The goal of this research is to create footwear and apparel solutions

that lower an athlete’s body temperature and reduce his or her energy expenditure, therebyallowing him or her to train longer and harder.The team focuses on three primary athlete needs:

Thermoregulation

Recovery

economy

Technological Drivers

EXAMPLESThermoregulation Recovery economy

MAJOR COMPETITORS

ADIDAS

MAJOR COMPETITORS

UNDER ARMOUR

MAJOR COMPETITORS

NIKE DOMINANCE

PORTERS FIVE FORCES

Threat Of NewEntrants

Low to Medium

BargainingPower OfSuppliers

Low

CompetitiveRivalry WithinThe Industry

Threat OfSubstituteProducts

BargainingPower OfCustomers

Low to Medium

Medium to High Low to Medium

STRATEGIC GROUPSBRAND RECOGNITION

PRODUCT LINE

CASUAL ATHLETIC

LOW

HIGH

NIKE

INTERNAL

ENVIRONMENT

KEY ORGANIZATION RESOURCES AND CAPABILITIES

Research and development Innovative 

Variety of products 

Major Manufacturing and distribution facilities 

Marketing strategies 

VALUE CHAIN ANALYSIS

Firm infrastructure:  It system across supply chain, strong financial position and CRS,empowerment of top management, great financial discipline with low debt, strongbrand product market place solution delivery and support, effective complianceprocess through strategic knowledge and verificationHuman resources management: strong management team, global learning and stafftraining, excellent employee relationship, minimum hierarchy concept, greatmanagement and efficient corporate strategy globally, blend of new hires andpromotion, high ethical values among employees, well monitored labor audit addbrand auditsTechnology development: research and product development, leading edge intechnology development, product improvement, ability to change, great producttechnology such as motion analysis metabolic rate and blood work, air­soletechnology expert Procurement: long term and trusting relationship with supplies, localized and bulkprocurement, just in time strategy as finished goods are shipped as soon as they areready for sale, buffer and safety stock in hand

VALUE CHAIN ANALYSIS

Inbound logistics: Low production costs, locally purchase most raw materials in bulk,specialized materials importation, inventory control and reduced inventory risk, focuson product design marketing and product technology, Operations: Outsourcing manufacturing and assembly, design, technologicalinnovation, effective supply chain management, heavily investment in R and D,Quality control, low and no packing options, no heavy metal, glue or solvent usedOutbound logistics: strong control over global distribution channel, just in timedelivery, good supplier relations, ability of forward integration, use of strong servers tosupport and manage supply chain projectsMarketing and sales:  high brand recognition and reputation, scale SD vantage, priceleadership and value based pricing strategy, first mover advantage in e­commerce inthe industry, aggressive marketing, celebrity endorsement, high allocation onmarketing budget, strong customer base, diversity of products offered onlineService:  customer care, pre­sales and after sales service, use of IT to improvecustomer care, increased customer satisfaction, customization 

Areas where internal efficiency and cost savings can be obtained

Research and development 

Customization 

SWOT ANALYSIS

STRENGHTS OPPORTUNITIES

WEAKNESESS THREATS

Brand RecognitionHigh Quality ProductEffective MarketingStrategyStrong R&DStrong Distribution Chain

Overseas Manufacturing DependenciesMedium Retail PresenceHigh Price Compared to CompetitorsDecreasing U.S. Market Share

Expansion into emergingmarkets (CHINA)Growth in SustainabilityIncrease Demand inproduct InnovationGrowth in Female Athletes

Fierce Competition Within IndustryRevenue Reliance on Consumers DiscretionaryincomeFluctuation In CurrencyLosing out on Signing Big Time Athletes

NIKE

FINANCIALS

& ANALYSIS OF MARKETING POSITION

Kris Finance Slide

Stock Performance

Company Value & Competitor Value

Nike is number one with a brand value of 19 billion dollars

Adidas is number 2 with a brand value of 5.8 billion dollars 

Under Armor number 3 with a brand value of 4.1 billion dollars

THE MARKET IS CURRENTLY IN A MATURE STATE

MARKETING STRATEGIES

Celebrity Endorsements 

Word of Mouth 

Sponsorship 

Innovation

Selling Benefits  Advertising 

PROBLEMS/ISSUES

The growth of competitors 

Going out of style keeping

up with trends

Recovery from ethical issues 

NIKE

STRATEGIC

POSITION

CORE COMPETENCIES

Strong Marketing Strategies Extensive R&D Capabilities

Customer Focus Supply Chain Capabilities

Competitive Advantages

Branding

Scope

Scale

Customization 

Innovation

NIKE

RECOMMENDATIONS

CONTINUE MAINTAINRESEARCH &

DEVELOPMENT IN

ENVIRONMENTAL

PRODUCTS

DO NOT STRAY AWAY

FROM PROPER LABOR

PRACTICES &

PROTECT EMPLOYEES

CONNECT WITH LOCAL

COMMUNITIES AND

KIDS THROUGH

ADVERTISING

CONNECT

CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL RECOMMENDATIONS

DONT SLEEP RESEARCHOBTAIN NEW BIG

TIME ATHLETES TO

THE NIKE TEAM AS

ENDORSEMENT PAY

CONTINUE TO

INNOVATE PRODUCT

PERSONALIZATION IN

EACH ATHLETE

ADVERTISE THE FACT

THAT NIKE HAS

FIXED THEIR SUPPLY

CHAIN ISSUES

SUPPLY CHAIN AD

SHORT TERM RECOMMENDATIONS

EXPANSION INTEGRATELOOK FOR EMERGING

MARKETS TO EXPAND

(CHINA,BRAZIL)

NIKE HAS THE

CAPACITY TO

INTIGRATE NEW

TECHNOLOGY . USE IT!

BECOME THE MAIN

SPONSOR OF MAJOR

SPORTING EVENTS

WORLD EVENTS

LONG TERM RECOMMENDATIONS

SOURCES

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