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Nike - 2000

Prentice Hall, 2001

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Vision Statement

To become the world’s leading sports and fitness company

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Mission Statement Components1. Customers

2. Products or services

3. Markets

4. Technology

5. Concern for survival, profitability, growth

6. Philosophy

7. Self-concept

8. Concern for public image

9. Concern for employees

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Mission Statement

Nike strives to provide the most technologically (4) advanced athletic footwear and apparel (2) to all ages an sizes of individuals (1) worldwide (3). We believe good ethics is good business (6,7). Our historical growth, future growth and profitability results (5) from motivated employees (9) and satisfied customers. We strive to improve all communities where we have operations worldwide (8).

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Opportunities• There are increasing international competitive opportunities in

the Unified European market as well as in Asia and the former Russian republics

• Buyers are brand conscious

• A generation that rivals the baby boomers in size (generation Y) is a good future market

• The U.S. economy has been good since the early 1990’s

• People are living longer

• The peak earning years are 45-54 and the baby boomers are moving into this age group

• Two wage earner families can more easily afford higher priced athletic shoes

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Threats• The industry is very competitive

• Most people do not exercise at the levels that are suggested by experts

• Overseas production is vulnerable to political and governmental unrest

• The major competitors are seen by mean consumers as providing very similar products

• Economic conditions negatively affect spending for higher priced athletic wear

• The youth market is demanding other types of casual shoes instead of athletic shoes

• Economics in international markets are often very volatile

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Competitive Profile Matrix

Nike Adidas Reebok

Critical Success Factors Weight RatingWeightedScore Rating

WeightedScore Rating

WeightedScore

Brand RecognitionMarket ShareFinancial StrengthR&DProduct QualityAdvertisingNumber of Retail OutletsProduct MixDepend on Suppliers forQuality

0.150.140.130.100.100.120.050.110.10

443434442

0.600.560.390.400.100.480.200.440.20

422233133

0.600.280.260.200.300.360.050.330.30

432334332

0.600.420.260.300.300.480.150.330.20

Total 1.00 3.37 2.68 3.04

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EFE Matrix

Key External Factors Weight Rating Weighted ScoreOpportunitiesInternational competitive opportunities 0.10 3 0.30Brand conscious buyers 0.04 3 0.12Future market – generation Y 0.10 4 0.40Good U.S. economy 0.10 4 0.40People are living longer 0.02 3 0.06Large number of people at peak earning years 0.08 2 0.16Two wage earner families 0.06 2 0.12ThreatsCompetitive industry 0.10 4 0.40People exercise less than suggested 0.05 2 0.10Overseas production 0.07 3 0.21Competitors are seen as similar by consumers 0.10 2 0.20Economic conditions 0.04 3 0.12Youth market demands other types of casual shoes 0.04 2 0.08Volatile international economies 0.10 2 0.20Total 1.00 2.87

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Strengths• Net income increased 13 percent in 1999

• The company sells casual shoes in addition to athletic shoes

• Research and development represents only a small proportion of profits, but this is enough to keep the company’s products on the cutting edge

• Television ads are creative and use celebrity spokespersons effectively

• The accessories are very fashionable and take advantage of the Nike logo and name

• The Swoosh logo is very recognizable

• The company offers a wild variety of models and styles for 25 different sports

• The strategy of contracting production to foreign manufactures keeps capital investment costs low

• The company is building a competitive advantage in Europe, the Asia/Pacific region, and Latin America

• The company has advertising offices in international markets to take advantage of local talent

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Weaknesses• Research and development costs increase the selling price of shoes

• Contracting the manufacture of shoes lengthens the channel of distribution and the final price of shoes is higher

• Research and development efforts focus on five years in the future

• Sports stars who become injured or retire from competition could negatively affect the company’s sales

• Quality of supply is dependent on the contract manufacturer

• Response to social issues such as production shoes outside the U.S. and concern about working conditions in some foreign factories could negatively impact the company’s image

• Net income decreased 50 percent in 1998, in large part due to sales problems in international markets

• Sales declined significantly in both U.S. and international market’s in 1998 and 1999

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IFE MatrixKey Internal Factors Weight Rating Weighted

ScoreStrengthsNet income increases in 1999 0.02 3 0.06Varied product mix 0.07 3 0.21Small percent of profit is R&D 0.08 4 0.32Creativity in TV advertising 0.10 4 0.40Fashionable accessories 0.05 3 0.15Recognizable Swoosh logo 0.07 3 0.21Variety of athletic shore models 0.05 3 0.15Manufacturing strategy 0.08 3 0.24Building of international competitive advantage 0.04 3 0.12Advertising agencies opened in international markets 0.06 3 0.18WeaknessesR&D cost increase shoe price 0.06 2 0.12Lengthened distribution channel increase final price of shoes 0.07 1 0.07Five year focus of R&D 0.02 2 0.04Injuries of spokesperson 0.02 2 0.04Quality dependent on supplier 0.05 1 0.05Potential for negative image 0.04 1 0.04Net income decrease in 1998 0.07 1 0.07Significant sales declines in 1998 and 1999 0.07 1 0.07TOTAL 1.00 2.54

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TOWS AnalysisStrengths Weaknesses1. Net income increased 13

percent in 19992. The company sells casual shoes

in addition to athletic shoes3. Research and development

represents only a smallproportion of profits, but this isenough to keep the company’sproducts on the cutting edge

4. Television ads are creative anduse celebrity spokespersonseffectively

5. The accessories are veryfashionable and take advantageof the Nike logo and name

6. The Swoosh logo is veryrecognizable

7. The company offers a wildvariety of models and styles for25 different sports

8. The strategy of contractingproduction to foreignmanufactures keeps capitalinvestment costs low

9. The company is building acompetitive advantage inEurope, the Asia/Pacific region,and Latin America

10. The company has advertisingoffices in international marketsto take advantage of local talent

1. Research and development costsincrease the selling price ofshoes

2. Contracting the manufacture ofshoes lengthens the channel ofdistribution and the final priceof shoes is higher

3. Research and developmentefforts focus on five years in thefuture

4. Sports stars who become injuredor retire from competition couldnegatively affect the company’ssales

5. Quality of supply is dependenton the contract manufacturer

6. Response to social issues suchas production shoes outside theU.S. and concern about workingconditions in some foreignfactories could negativelyimpact the company’s image

7. Net income decreased 50percent in 1998, in large partdue to sales problems ininternational markets

8. Sales declined significantly inboth U.S. and internationalmarket’s in 1998 and 1999

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TOWS Analysis continued

Opportunities S-O Strategies W-O Strategies1. There are increasing

international competitiveopportunities in the UnifiedEuropean market as well as inAsia and the former Russianrepublics

2. Buyers are brand conscious3. A generation that rivals the baby

boomers in size (generation Y)is a good future market

4. The U.S. economy has beengood since the early 1990’s

5. People are living longer6. The peak earning years are 45-

54 and the baby boomers aremoving into this age group

7. Two wage earner families canmore easily afford higher pricedathletic shoes

1. Expand more into internationalmarkets by concentrating on theEuropean Community countries,Asia, Latin America, and theformer Russian Republics (S9,O1)

2. Continue extensive advertisingcampaigns ((S4, O2, O3)

3. Acquire other brands ofcasual/dress shoes for men andwomen (S2, O2)

1. Develop more advertisingcampaigns for the youth market(W4, W6, O2-4)

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TOWS Analysis continued

Threats S-T Strategies W-T Strategies1. The industry is very competitive2. Most people do not exercise at

the levels that are suggested byexperts

3. Overseas production isvulnerable to political andgovernmental unrest

4. The major competitors are seenby mean consumers asproviding very similar products

5. Economic conditions negativelyaffect spending for higherpriced athletic wear

6. The youth market is demandingother types of casual shoesinstead of athletic shoes

7. Economics in internationalmarkets are often very volatile

1. Develop a line of moderatelypriced athletic shoes (S2, S7,T2, T6)

2. Continue to develop newtechnology advanced athleticshoe models (S3, T1)

3. Open more Nike Athletic Shoestores in malls (S2, S5, S6, T4,T6)

1. Begin offering products througha company catalog (W7, W8,T1, T4)

2. Acquire a less expensive brandof accessories and sports wear(W8, T5)

3. Manufacture some of its ownathletic shoes and accessories(W5, T2)

4. Stop celebrity endorsements(W4, T4)

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SPACE MatrixInternal strategic positionFinancial strength +4 +1 best to +6 worst Y axis: 4 + (-3) = 1Environmental stability -3 -6 worst to –1 best

External strategic positionCompetitive advantage -2 -6 unstable to –1 stable X axis: 3 + (-2) = 1Industry strength +3 +1 best to +6 worst

Conservative FS Aggressive

CA IS

Defensive ES Competitive

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Grand Strategy MatrixRAPID MARKET

GROWTH

Quadrant II Quadrant I

Nike

COMPETITIVE STRONG

POSITION COMPETITIVE

POSITION

Quadrant III Quadrant IV

SLOW MARKETGROWTH

1. Market development2. Market penetration3. Product development4. Forward integration5. Backward integration6. Horizontal integration7. Concentric diversification

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The Internal-External (IE) MatrixThe IFE Total Weighted Score

Strong Average Weak3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III

3.0 to 3.99

Medium IV V VI

The EFE TotalWeighted Score

2.0 to 2.99 Nike

Low VII VIII IX

1.0 to 1.99

HOLD AND MAINTAIN

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QSPMStrategic Alter nat ive s

Key Inter nal F actor s We ight

Develop a L ine ofMo d erat ely Pr i ce d

Ath le ti c Shoes

Expand int o Asi a,Latin Amer ica , and

t he For merRussian Republics

S tr engths A S TAS AS TASNe t inco m e inc rea s es i n 1999 0.02 2.00 0.04 3.00 0.06Varied product mix 0.07 4.00 0.28 3.00 0.21

Sm all percen t of profit is R&D 0.08 - -- - -- - -- - --Cr eativit y in TV adverti sing 0.10 - -- - -- - -- - --F ashiona ble ac cess orie s 0.05 2.00 0.10 1.00 0.05Re cogni zabl e Sw oosh logo 0.07 1.00 0.07 3.00 0.21Vari et y of athl eti c shor e mode l s 0.05 4.00 0.20 3.00 0.15Manufactur ing str ategy 0.08 - -- - -- - -- - --

Buil ding of int erna tiona l co m petiti ve advantage 0.04 2.00 0.08 4.00 0.16Adverti sing agenci es opened i n int erna tiona l mark e ts 0.06 1.00 0.06 4.00 0.24Weakn ess esR& D co s t inc reas e shoe pri ce 0.06 4.00 0.24 2.00 0.12Leng thened dist ribu tion channel inc rea se fina l pr ic e ofsho e s

0.07 - -- - -- - -- - --

Fi ve year focus of R&D 0.02 - -- - -- - -- - --Injur i es of spokespe rson 0.02 - -- - -- - -- - --Qualit y de pendent on suppli er 0.05 - -- - -- - -- - --Pot enti al for negati ve image 0.04 - -- - -- - -- - --Ne t inco m e decr e ase i n 1998 0.07 3.00 0.21 4.00 0.28Sign i fi cant s a les dec lines i n 1998 and 1999 0.07 3.00 0.21 4.00 0.28S UBTO TAL 1.00 1.49 1.76

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QSPM continued

Key Exter nal Fac tors We igh t

Deve lop a L in e ofMo d erat ely Pr i ce d

Ath le ti c Shoes

Expand int o Asi a,Latin Amer ica ,

and th e For merRu ssian Republics

Opportunit ie s AS TAS AS TASIntern a tion al co m petitive opport uniti es 0.10 2.00 0.20 4.00 0.40Brand cons ciou s buy e rs 0.04 3.00 0.12 1.00 0.04Futur e m arke t – gener ation Y 0.10 - -- - -- - -- - --Good U.S. econo my 0.10 3.00 0.30 1.00 0.10Peop l e ar e living longe r 0.02 - -- - -- - -- - --Larg e nu m ber of peop l e at peak ea rning ye a rs 0.08 - -- - -- - -- - --Two wag e earne r famili es 0.06 - -- - -- - -- - --Th reat s

Co m petiti ve industr y 0.10 3.00 0.30 4.00 0.40Peop l e exe r ci se l ess t han sugg e sted 0.05 - -- - -- - -- - --Over seas produc tion 0.07 2.00 0.14 4.00 0.28

Co m petit or s ar e seen as simil ar by consu m er s 0.10 3.00 0.30 4.00 0.40E conomic condition s 0.04 2.00 0.08 3.00 0.12You th marke t demand s ot her type s of casu al sho e s 0.04 - -- - -- - -- - --Vo l atil e interna tiona l econo mi es 0.10 2.00 0.20 4.00 0.40S UBTO TAL 1.00 1.64 2.14S UM TO TAL AT TRACT IVE NESS S CO RE 3.13 3.90