Nike Nirav Katrodiya Kunal Kapadiya Rinku Kasundra

Profile It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment with revenue in excess of $19.2 billion USD in 2009. it employed over 33,000 people world-wide. Nike is the only Fortune 500 companies in sports apparel industries, headquartered in the state of Oregon. The company was founded in 1962 as Blue Ribbon Sports. The company takes its name from Nike, the Greek goddess of victory. Nike markets its products under its own brand as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding, Team Starter, and subsidiaries including Cole Haan, Hurley International, Umbro and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer).

Profile In addition to manufacturing sportswear and equipment, the company operates retail stores under the name Niketown. Nike sponsors many high profile athletes and sports teams around the world, with the highly recognized trademarks of "Just do it" and the Swoosh logo. Their products are made for men, women, and children of all ages. The company presently sells roughly 300 models of athletic shoes in 900 styles for 25 different sports. Nike's target market for their shoes is males and females between 18 and 35 years old. March 3, 2008 – NIKE completed the acquisition of Umbro Ltd. which Umbro shareholders accepted on January 31, 2008 for approximately $565 million.

HISTORY 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.. 1964: William Bowerman becomes a partner by matching Knight's investment of $500. 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.(Creation of the swoosh logo)

HISTORY 1980: Nike goes public, offering shares of stock. 1978: The company changes its name to Nike. 1980: Nike goes public, offering 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. 2001: Nike opens its first Nike Goddess store, a unit targeting women, in Newport Beach, CA. 2003: Nike purchases Converse Inc.

Results from the problem Problems in mid 1980s: Demographic changes - baby boomers pushed into their late forties & felt less like running. 2. Market for running shoes become highly segmented (mature market) -many different models for every nuisance of customer need. Competition -Reebok create new market orientations to sell sneakers based on fashion rather than performance Results from the problem 1984- Nike’s unit sales decreased 17% - market share declined 31% to 24% 1987- have only 18.6 % share of shoes market Action taken Introduced technological features to enhance shoes performance. Use of celebrities as spokesperson. Air Jordan was a major hit. Using advertising as marketing strategy

Challenge in late 1990s Problem in 2000 1) Shoe market had changed -younger customer favors of hiking boots & more casual footwear. -teens began participating in nontraditional ‘extreme’ sport. NIKE responded by introducing ACG (all-condition gear) 2) Controversy surrounding its overseas labour practices -Nike being accused of utilizing sweatshop labour in developed nations. Protest sprang. NIKE created corporate & social responsibility department. Problem in 2000 Involved in squabbles with 2 large universities over those school’s endorsement of the Worker Right Consortium.

Why? (1997) Establishing a separate division called ACG (all-condition gear), designed a line of shoes and apparel that bears the distinctive ACG logo rather than the familiar Nike swoosh.

Evolution of the Swoosh logo

STRATEGIC THINKING PURPOSE: 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.

MISSION: “To bring inspiration and innovation to every athlete in the world” VISION: “Innovate for better world” Unleashing potential through sport. In the last two years, Nike has invested $100 million worldwide in community-based sports initiatives. By 2011, NIKE is expected to invest another $315 million. These investments will be used to give excluded youth around the world the chance to play because as access to sport can enhance their lives. Nike will provide products, resurface playing fields, support community-based programs, and help young people create their own communities. This is all will be the NIKE “Let Me Play

VALUE: Three core values of the company are honesty, competitiveness, and teamwork. Despite its size, Nike operates with a minimum of hierarchy. As a result, there is a lot of collaboration and consensus decision-making. Commonly held values are imperative in such a matrix organization.

INTERNAL ENVIRONMENTS STRENGTHS Strong management team and good corporate strategy in both North American and overseas markets. First mover advantage in e-commerce. Brand recognition and reputation. Diversity and variety in products offered on the web (footwear, apparel, sporting equipment, etc.) Strong control over its own distribution channel. Strong customer base. Strong financial position with minimal long term debts. Innovative designs in footwear enabling consumers to design their own shoes online. Diversity and variety in products offered on the web. Emerging brand name.

WEAKNESSES Negative image portrayed by poor working conditions in its overseas factories. E-commerce is limited to USA. The direct sale to consumers is creating conflicts with its own resellers. Currently available supply chain, manufacturing, and fulfilment technologies aren't known for its research easily integrated with online build-to-order systems and development leading to innovative designs. The e-commerce is limited to USA, however, has planned to expand to Canada and international in the near future. Online customer service not "helpful" or easy to find.

ALIGNING THE 7 S’ STRUCTURE: Matrix-structure. STAFFING: Mix of new hires and promotions. SHARED VALUES: Balance of individualistic atmosphere and structure of matrix. Calculated risk taking. SYSTEMS: Encourages work ethics. SKILLS: Financially disciplined. STYLE: Empowerment of top management. STRATEGY: Diversify business portfolio with new acquisitions.

EXTERNAL ENVIRONMENTS OPPORTUNITIES Increasing demand in the industry for products available online. Increase female participation in athletics. New technology and innovation to stay on top of market needs. Expand e-commerce to global markets. Possibility of outsourcing the web development and e-commerce to a third party developer. Growing interest in the sport of Basketball. Partnering up with other retailers to sell basketball footwear and apparel. Growing reputation in non-basketball sports will boost e-business. E-commerce will reduce the cost of goods. Collaborate with other online retailers to offer Adidas products.

THREATS Negative image due to "sweatshops". Economic downturn in North America and Asian Countries. Increase in the price of providing technological solutions (e-commerce). Strong competition from some of its major challengers in all branches of the business. Increase in the Price of Raw materials. Nike's strong reputation in the footwear and apparel industry. Continuing challenges in import/export duties. Threats to free trade and foreign currency fluctuations. Possibility of distress from growing beyond its capabilities.

PORTER'S FIVE FORCES BARGAINING POWER OF BUYERS - HIGH Consumer’s participation in improving conditions in LDCs. Segmented buyers High price points surveys show people are willing to pay more. People do not usually do what they say. BARGAINING POWER OF SUPPLIERS - LOW Really powerful suppliers. One company is producing 40% of worldwide shoes. How can you impose your standards on them? What about the other companies? They can forward integrate, they have the technology

BARRIERS TO ENTRY - LOW (NEW ENTRANTS) Competing shoes and new companies coming in. RIVALRY AMONG EXISTING COMPETITORS - HIGH Competitors are doing the same thing. Low production cost / High marketing. THREATS OF SUBSTITUTES – LOW

Advantages NIKE have COSTS SPEED DIVERSITY OF SUPPLIERS NIKE'S WORLDWIDE SUPPLY-CHAIN PROJECT ADDING VALUE FOR THE CUSTOMER

COSTS SPEED Outsource non-core activities Allows Nike to focus on their core competencies of: Product Design, Marketing , AIR SOLE Technology Having a virtual relationship with suppliers and the companies who assemble Nike products allows them to: Reduce administrative costs, Payroll costs. Switch to companies that provide low labor costs and a quality product. SPEED Having a virtual supply chain, Nike can increase the speed their product flows through the supply chain. Send new designs to suppliers who produce shoe parts. Suppliers send these shoe parts to the assembly companies. Ship the finished products to distributors worldwide. This allows them cut down on the amount of time required from the initial design, to production and then distribution.

DIVERSITY OF SUPPLIERS ADDING VALUE FOR THE CUSTOMER A VSC allows a company to search for and use a wider range of suppliers. Although geography may separate them they can still communicate electronically. Having multiple suppliers that you can trust allows you to avoid emergencies in your supply chain. With more suppliers available a company is more flexible. ADDING VALUE FOR THE CUSTOMER Nike now provides customized shoes for customers. (Websites) A company called Planar has installed touch-screen systems in Nike Stores to allow customers to build their own shoes. By combining technology with customized service Nike has created an instant ordering system while providing more services for their customers.

Employed many athletes as its spokesperson Nike has a number of famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially Ronaldino, Renaldo, and Roberto Carlos), David Beckham, Cristiano Renaldo etc., Tennis players like Roger Fedrer, Rafael Nadal, Sharapova, William sisters etc., Lebron James and Jermane O’Neal, Michael Jodan for basketball, Lance Armstrong for cycling, and Tiger Woods for Golf.

Advertising Strategy Designed to make a connection to the consumer Seldom pitch the product directly or talk about product attributes Sometimes don’t even mention the company’s nam, featuring instead only the swoosh logo Seek to portray the core values of sport Collaboration ads with another strong branded product, such as Apple iPod

Balance sheet pattern Out of 100%, 53.8% goes to cost of sells. And 32.2% goes to selling and administrative exp. From the remaining 14%, 24.7% deducted as income tax. So profit margins are 10.57% as per last result declared.

(Source: ICFAI journal)

Bibliography http://invest.nike.com/phoenix.zhtml?c=100529&p=irol-newsArticle&ID=1336485&highlight= http://www.nikebiz.com/?sitesrc=USLP http://corporate-marketing-branding.suite101.com/article.cfm/audit_on_nikes_marketing_strategies#ixzz0T42n2mQd ICFAi journals www.Scribd.com