Company: Nike Inc. (NKE)
One
Bowerman Drive
Beaverton, OR 97005
Phone: 503-671-6453
Beaverton, OR 97005
Phone: 503-671-6453
Website: http://www.nike.com
Sector: Consumer Goods
Industry: Textile- Apparel Footwear &
Accessories
Company’s performance[1]
·
Sales-
2007: $9,165.40
2008: $10,239.60
2009: $10,571.70
·
Revenues 2007: $16,325.90
2008: $18,627.00
2009: $19,176.10
·
Price
range of Common Stock in millions-
2007: $57.12(high) $37.76(low)
2008: $70.60 (high)
$51.50 (low)
2009: $70.28 (high)
$38.24 (low)
New
products/services - introduced over the past 2 years
2008:
ü Air
Jordan XX3: Celebrating 23 years of
its legacy as one of the most iconic basketball shoes for one of the all-time
greatest athletes in history. First pinnacle performance basketball shoe in
Nike history to embrace the Nike Considered design ethos[2].
ü Flywire:
Just in time for the 2008 Olympics,
Nike released its most innovative, lightest footwear yet. Flywire[3] is
a revolutionary new technology that utilizes high-strength threads which act
like cables on a suspension bridge to place support precisely where a foot
needs it.
2009:
ü Pro
Combat[4]:
A new protective base-layer equipped to
provide protection from every athlete’s specific sport including football,
basketball, soccer, lacrosse, and baseball.
ü CTR300[5]: Football boots which work with a new program to offer elite
soccer training. Each pair of boots gives access to Nike Football+(Soccer+)
with premium pro training programs as well as making the world’s top coaches
and footballers available.
Core
Competency & Competitive Advantage
Nike
has core competencies in marketing and product design. It “outsources” other functions to companies
with complementary core competencies. As stated in their annual 10-K documents:
“Our principal business
activity is the design, development and worldwide marketing of high quality
footwear, apparel, equipment, and accessory products.” [6]
One of Nike’s
main competitive advantages is their ability to be an innovative forerunner in
the athletic footwear industry. Their long history of producing reliable,
quality products has earned them a degree of trust in the hearts of consumers,
allowing the public to take to new NIKE products almost instantly. Another
advantage of the company is their ownership of many other footwear brands such
as Converse Inc. and Hurley International LLC[7]. The
diversification of footwear produced by NIKE Inc. and its subsidiaries allow
the company to have control over a considerable market share.
SWOT Analysis
Strengths – Innovative; product reliability; celebrity endorsements;
quality; brand logo; appearance; competitive drive
Weaknesses – Seasonality of sports-wear; price-sensitive retail industry;
reliance on retail industry
Opportunities – New product development; international expansion; sponsorship of
2010 Olympic medalists; new markets
Threats- Competitive market; consumer price-sensitivity;
changing fashion trends
Utilizing SWOT results
Nike utilizes
its strength of innovation by diversifying their workforce in an effort to
incorporate many different opinions in the development of new products. The
company also uses celebrity endorsements by such famed athletes as Tiger Woods
to nationally brand their product and also broaden their consumer base. I think
a great way for Nike to take advantage of a present opportunity would be to
sponsor some of the winners of the 2010 Winter Olympics. By taking on such a
current center-stage celebrity, Nike would be able to ride on the coattails of
the Olympics and get their brand out to a more global audience.
One strategy
Nike uses to fight off the threat thrust upon them by the highly competitive
athletic footwear market is to focus entirely on innovation and new product
development, part of their core competency. Due to ever-changing fashion trends
as well as changes found in consumers’ lifestyles, Nike knows that they must
constantly be coming up with fresh new ideas in order to retain and gain
customers.
BCG Analysis
ê Star Product
-Sports apparel
-Golf product line
|
?
Problem
Child
-Electronic equipment
-Other accessories (i.e.
Sunglasses)
|
$
Cash
Cow
-Athletic footwear
|
~
Dog
product
-Failed athlete
endorsements
|
Environmental Factors
Social:
Celebrities- the public opinion of a
celebrity can have an effect on the brand they represent,
possibly leading to significant gains or losses in revenue; i.e. Tiger Woods’
scandal.
Political/Legal: Nike stated in their 2009 annual 10-K statement that some
of their patents for NIKE AIR in other countries have expired, possibly
enabling competing businesses to mirror their technology[8].
OSHA- This organization in particular can pose a possible threat to Nike
because of the large amount of outsourcing done by the company. In many of
those countries the working conditions are known to sometimes be inhumane,
causing them to be a concern to an organization like OSHA. Nike is also of
course bound by the federal, state, and local laws under which their
corporation falls.
Technology: Nike uses their innovation to produce new types of athletic
technology, beginning with their patented “Air” technology. Most recently in
2009 Nike came out with a lightweight, comfortable sports-specific body armor
called “Pro Combat”[9].
Nike’s Major Competitors
ê New Balance Athletic Shoe Inc., PUMA AG Rudolf Dassler
Sport, Adidas Shoe[10]
Nike deals with its
competitive environment by honoring a commitment to innovation in which product
development is one of the main focuses of the corporation. NIKE knows that in
order to retain a broad customer base, as well as to attract new customers, it
must stay current with the fashion and lifestyle trends largely followed by the
general public.
Product-Market Strategies
Market
Penetration: NIKE takes advantage of
celebrity endorsements by using athletes in advertising and promotions for
marketing existing products into the company’s existing market.
Product
Development: As athletic footwear is
the cash cow product of NIKE, market penetration is the company’s most commonly used method for growth. The company
introduces new footwear designs into the Apparel and Footwear markets in which
NIKE is already the dominant
force.
Market
Development: NIKE uses market
development to introduce current products into unfamiliar foreign markets.
According to the company website, NIKE currently operates more than 160
countries around the world[11].
Globalization
Outsourcing is one strategy
the company has undertaken in an effort to globalize the brand. Almost all of
their footwear is produced outside the United States, and their inventory is
produced in 34 countries around the world[12].
The globalization of NIKE is rather extensive and includes importation to the
European Union, Brazil, Argentina, Turkey, and China. The successful history of
NIKE has allowed the company to broaden their customer base to many countries
around the world. In 2008, NIKE acquired Umbro- a leading global football
(soccer) brand based in the United Kingdom[13].
This move helped to broaden the brand as well as providing a great opportunity
for expansion of NIKE’s global leadership in football.
Ethical/Social Behavior
In 2005, NIKE was the first
company within its own industry to publicly disclose their factory list[14].
This was done in an effort to ensure the public that NIKE was not hiding
anything by outsourcing their product. To prove its commitment to the community,
NIKE has teamed up with both RED and LIVESTRONG, in an effort to help find a
cure for AIDs and Cancer. In 2009 NIKE was named one of the “World’s Most
Ethical Companies” by Ethishpere.org[15].
Overall Evaluation
Overall, I would have to
say that NIKE is an extremely successful company. NIKE is the leader in
athletic footwear and accessories, and is globally recognized as a favorite
among famous athletes as well as professional and collegiate sports’
teams. The twenty-first century is one
in which the public has become obsessed with celebrities. This gives a clear competitive
advantage to the company, as they hold contracts with some of the top athletes
such as Michael Jordan, Kobe Bryant, and Tiger Woods. Their “Swoosh” logo has
become one of the most recognizable logos in the world, due in part to the
adept advertising and promotional skills of the NIKE marketing team.
Recommendation
Going forward, my advice to
NIKE would be to continue doing what they have been doing. Over the past few
years the company has continued bringing in high revenues despite the difficult
economic times. I think that a great opportunity for the company would be to
try and strike an endorsement deal with some of the Olympic athletes coming out
of the 2010 competition. Also, NIKE has chosen to take a bold stand in the
current Tiger Woods fiasco, being one of the only major endorsers still
standing behind the athlete. This could be a very smart move for the company
seeing as they are trying to gain a considerable stake in the growing Golf
market, and Tiger Woods accounts for much of the attention given to that sport.
I would advise the company to be cautious though, because it is possible that
Woods may not return to golf in time for the PGA Tour resulting in drastic cuts
in the ratings which will surely cause a loss for NIKE.
[1] NIKE,Inc. (2010). Form 10-K for the Fiscal Year Ended May
31, 2009. Retrieved February 22, 2010, from EDGAR database
[2] NIKE, Inc. (2010). Nikebiz: Company Overview:Timeline.
Retrieved February 22, 2010, from http://www.nikebiz.com/company_overview/timeline
[3] NIKE, Inc. (2010). Nikebiz: Company Overview:Timeline. Retrieved
February 22, 2010, from http://www.nikebiz.com/company_overview/timeline
[4] NIKE, Inc. (2010). Nikebiz: Company Overview:Timeline. Retrieved
February 22, 2010, from http://www.nikebiz.com/company_overview/timeline
[5] NIKE, Inc. (2010). Nikebiz: Company Overview:Timeline. Retrieved
February 22, 2010, from http://www.nikebiz.com/company_overview/timeline
[6] NIKE,Inc.
(2010). Form 10-K for the Fiscal Year Ended May 31, 2009. Retrieved February
22, 2010, from EDGAR database
[7] NIKE,Inc.
(2010). Form 10-K for the Fiscal Year Ended May 31, 2009. Retrieved February
22, 2010, from EDGAR database
[8] NIKE,Inc.
(2010). Form 10-K for the Fiscal Year Ended May 31, 2009. Retrieved February
22, 2010, from EDGAR database
[9]
NIKE,
Inc. (2010). Nikebiz: Company Overview:Timeline. Retrieved February 22, 2010,
from http://www.nikebiz.com/company_overview/timeline
[10] Yahoo
Finance. (2010). NKE: Summary for NIKE, Inc. Retrieved February 22, 2010, from http://finance.yahoo.com/q?s=nke
[11] NIKE, Inc.
(2010). Nikebiz: Company Overview:Timeline. Retrieved February 22, 2010, from
http://www.nikebiz.com/company_overview/timeline
[12] NIKE,Inc.
(2010). Form 10-K for the Fiscal Year Ended May 31, 2009. Retrieved February
22, 2010, from EDGAR database
[13] NIKE, Inc.
(2010). Nikebiz: Company Overview:Timeline. Retrieved February
22, 2010, from http://www.nikebiz.com/company_overview/timeline
[14]
NIKE,
Inc. (2010). Nikebiz: Company Overview:Timeline. Retrieved February 22, 2010,
from http://www.nikebiz.com/company_overview/timeline
[15]
NIKE,
Inc. (2010). Nikebiz: Nike Responsibility. Retrieved February 22, 2010, from
http://www.nikebiz.com/company_overview/responsibility
