AMERICAN UNIVERSITY IN KOSOVO

GLOBAL FORCES & TRENDS

Section 14, Winter 2010

Instructor: WILLIAM MYERS

NIKE, Inc.
Nike World Headquarters
One Bowerman Drive
Beaverton, OR 97005

Team Members:
Artur Krasniqi
Betim Mehmeti
Butrint Ymeri
Fitor Murati

9 February, 2010 Prishtina, Kosova

 NIKE, Inc.

Table of Contents
Profile .................................................................................................................................................... 5
1. Executive Summary ..................................................................................................................... 5
1.1. Identification of unique features of the business ................................................................. 5
1.2. Single most important issue facing the corporation today .................................................. 6
2. Mission and Vision....................................................................................................................... 6
3. Description of the Business ......................................................................................................... 7
3.1. Location.................................................................................................................................. 7
4. Brief history of business .............................................................................................................. 8
4.1. Origin ..................................................................................................................................... 8
4.2. Ownership .............................................................................................................................. 9
4.3. Mergers .................................................................................................................................. 9
4.4. Branding ............................................................................................................................... 10
5. Legal - business form ................................................................................................................. 10
5.1. Business type ....................................................................................................................... 11
5.2. What are they selling? ......................................................................................................... 11
5.3. Quality provided and consumers relationship ................................................................... 11
6. Growth opportunities ................................................................................................................. 12
7. Corporate Goals and Objectives ................................................................................................ 12
8. What essential resources is the success of the corporation reliant upon? ............................... 13
9. How do the suppliers and stakeholders define success? .......................................................... 14
10. Market Analysis ...................................................................................................................... 14
10.1. Target Market Identification: .......................................................................................... 14
10.2. How does the customer define success? ........................................................................ 15
11. Markets are growing............................................................................................................ 15
12. SWOT Analyses ...................................................................................................................... 16
12.1. Strengths ........................................................................................................................... 16
12.1.1. Competitive spirit..................................................................................................... 16
12.1.2. Brand recognition..................................................................................................... 17
12.1.3. Teamwork ................................................................................................................. 17
12.2. Weaknesses ...................................................................................................................... 17
12.2.1. Dependence on footwear ......................................................................................... 17
12.2.2. Retailers .................................................................................................................... 18
12.3. Opportunities.................................................................................................................... 18
12.3.1. Popularity of soccer in USA is growing ................................................................. 18
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12.3.2. Converting some sport brands into more luxury ones ........................................... 18
12.3.3. Tracking down the growing population trends ...................................................... 18
12.4. Threats .............................................................................................................................. 18
12.4.1. Globalization makes it easier to steel ideas ............................................................ 18
12.4.2. International nature of trade .................................................................................... 19
12.4.3. Internet has changed the concept of advertising .................................................... 19
13. PEST Analysis ......................................................................................................................... 19
13.1. Political Analysis ............................................................................................................. 19
13.2. Economic Analysis .......................................................................................................... 19
13.3. Society Analysis .............................................................................................................. 19
13.4. Technology Analysis ....................................................................................................... 20
14. Marketplace segmentation ...................................................................................................... 21
15. Five most influential competitors ........................................................................................... 21
15.1. How does their product or service differ? ...................................................................... 24
15.2. Competitor‟s strengths and weaknesses ......................................................................... 25
15.3. How do they advertise? ................................................................................................... 26
16. How can the corporation hold/increase your market share?................................................. 28
17. How does the corporation promote their business? .............................................................. 28
18. What pricing strategy have they devised? ............................................................................. 29
19. Scenario Planning Processes .................................................................................................. 29
19.1. Trend 1 - Targeting Developing Countries .................................................................... 29
19.1.1. Worst case scenario.................................................................................................. 30
19.1.2. In-Between Scenario ................................................................................................ 30
19.1.3. Best case scenario .................................................................................................... 30
19.2. Trend 2 – Avoiding Environmental Issues .................................................................... 31
19.2.1. Worst case scenario ..................................................................................................... 31
19.2.2. In-between scenario ................................................................................................. 31
19.2.3. Best case scenario .................................................................................................... 31
19.3. Trend 3 – Popularity of soccer is rising in USA ............................................................ 32
19.3.1. Worst case scenario.................................................................................................. 33
19.3.2. In-between scenario ................................................................................................. 33
19.3.3. Best case scenario .................................................................................................... 33
19.4. Trend 4 – Technology ..................................................................................................... 34
19.4.1. The best case scenario ............................................................................................. 35
19.4.2. In-between scenario ................................................................................................. 35

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19.4.3. Worst case scenario.................................................................................................. 35

19.5. Trend 5 – Fashion ............................................................................................................ 36
19.5.1. Worst case scenario.................................................................................................. 36
19.5.2. In-between scenario ................................................................................................. 36
19.5.3. Best case scenario .................................................................................................... 36
19.6. Trend 6 – Employment .................................................................................................... 37
19.6.1. The best case scenario ............................................................................................. 38
19.6.2. In-between scenario ................................................................................................. 38
19.6.3. Worst case scenario.................................................................................................. 38
20. Summary .................................................................................................................................. 38
References ........................................................................................................................................... 40

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 NIKE, Inc.

Profile

- Type: Public
- Industry: Sportswear and Sports Equipments
- Service Area: Worldwide
- Subsidiaries: Cole Haan, Hurley, Converse, Umbro
- Chairman and Chief Executive Officer: Phil Knight
- Nr. of employees: 32,000
- Headquarter Address: Nike World Headquarters, One Bowerman Drive, Beaverton,
OR 97005
- Website: http://www.nike.com; http://www.nikebiz.com

1. Executive Summary

Back in 1962, in a partnership of Bill Bowerman and Phil Knight was founded Blue

Ribbon Sports, nowadays known as Nike Inc. Their primary goal was to offer low cost and

quality athlete shoes to American consumers. Since being founded in 1962, Nike has grown from

a small retail shoe company to a worldwide leading sport company operating by distributing

sports wears in over 170 countries. Today the goal of Nike is to maintain the innovative thinking

and developing products that might help athletes to perform better and reach their potentials.

The reason why we have chosen Nike Inc. is that Nike is the leading company in

sportswear and sports equipment industry. Since all four of us prefer sports, this is an addition

motive to make a research for the Nike Inc. Moreover, two of our group members have worked

for Nike Factory Store in Las Vegas, Nevada. Knowing more about the company mentioned

above is the main reason of choosing it.

1.1. Identification of unique features of the business

Nike uses a lot of unique features that appeal to customers, especially their resources

used to make the products and their taglines used in Nike ads. The most unique feature that Nike
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uses is the tagline “Just Do It”, and this tagline appeals to customers in that way that customers

use this tagline even when they talk about something else and it stays in customers mind for a

long time ("Is your Marketing Campaign Appealing," 2009). Also, Nike uses special resources,

such as, lunarlite foam, flywire, nylon, leather, natural and synthetic rubber, and many others for

making Nike shoes ("Annual Report 2009," 2009, July 27).

1.2. Single most important issue facing the corporation today

The most important issue that Nike is facing today is the issue that Nike supply chain is a

complex network that connects with all of their consumers, communities, and their workers

("Corporate Responsibility Report FY07-09," 2009). Moreover, Nike is facing problems with the

wages and the freedom of association of their workers, but Nike is trying to solve their problem

and respond to their concerns in the best possible way.

2. Mission and Vision

Nike Company has a very clear mission, “to bring inspiration and innovation to every

athlete* in the world” (“Company Overview,” 2010). By this they mean that everyone who has a

body, products of Nike would inspire them and would encourage them to be sports player or

even to feel like a sport player.

Nike‟s philosophy and vision is to remain the leading sports company around the world.

They will continue to produce affective athlete products that can help sports‟ people to perform

better. Thus, they will meet the needs of consumers and try to come up with innovative products.

*
If you have a body, you are an athlete.
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3. Description of the Business

3.1. Location

Nike World Headquarters are located in Beaverton, Oregon, United States; the city where

Nike was founded on 24 th January, 1964. It is an area with 17 buildings (around 190,000 m2)

which are named after greatest Nike athletes or coaches such as: Michael Jordan, Tiger Woods,

Pete Sampras, Lance Armstrong, Mia Hamm, etc. Whereas Nike Regional Headquarters are

located in Hilversum, a small town in the North Holland. These Regional Headquarters operate

for all Europe, Middle East, and Africa. Listed below you can see address of both, World and

Regional Headquarters:

Regional Headquarters
World Headquarters
Nike EMEA (Europe, Middle
Nike World Headquarters
East & Africa) Headquarters
One Bowerman Drive
Colosseum 1
Beaverton, OR 97005
1213 NL Hilversum

Nowadays, Nike operates in over 170 countries, 6 continents, all over the World. United

States, United Kingdom, Australia, India, Canada, Germany, Netherlands, Sweden, Spain, Italy,

France, Switzerland, Belgium, Norway, China, Ireland, Japan, Brazil, South Africa, are just

some out of hundred countries that Nike operates Worldwide (“Frequently Asked Questions,”

2009).

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4. Brief history of business

4.1. Origin

Nike was founded on 24 th January 1964, by a University of Oregon student and athlete

Philip Knight and his coach Bill Bowerman. “Bill Bowerman was a nationally respected track

and field coach at the University of Oregon, who was constantly seeking ways to give his

athletes a competitive advantage” while “Phil Knight was a talented middle-distance runner from

Portland, who enrolled at Oregon in the fall of 1955 and competed for Bowerman‟s track

program” (“History & Heritage 1950s,” 2010). They first decided to invest each $500 dollars and

to form Blue Ribbon Sports, a company that would start distributing shoes of Onitsuka Tiger, a

Japanese shoe maker. Phil Knight was selling the shoes, while Bill Bowerman was working on

improving them; making them lighter and better (“History & Heritage 1950s,” 2010). Basically,

this is how Nike, now the leading company in sportswear and equipments, was established.

In 1966, Blue Ribbon Sports opened their first

retail store in Santa Monica, California. Later on, they

decided to move further on manufacturing shoes and

not just distributing them. On January 31, 1972, BRS

came up with the new logo 1, what is known today as the

Swoosh, designed by J.B. Strasser (“Trademark by Nike,

Fig. 1. Swoosh in 1972 and today
Inc.,” 2004, March 3). Under the new logo, now a

trademark of Nike Inc., BRS produced their first shoes in 1972. In 1978, BRS decided to change

their name to Nike (Greek goddess of victory).

During the 1980‟s, Nike reached 50% of the market share in the US shoe market. In a

short time, they came up with an advertising campaign known as „the Revolution‟ and with the

1
Fig.1. shows how the Swoosh looked in 1972 and nowadays.
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famous tagline “Just Do It”. Nowadays, “Just Do It” has become a slogan of Nike all around the

Globe. Since the late 80‟s, when Nike took the leadership on footwear and apparel, they have

“never relinquished that position again” (“History & Heritage 1980s,” 2010).

Nowadays, Nike is the leading company in sportswear and sports equipments‟ industry. It

sponsors some of the greatest athletes and teams Worldwide.

4.2. Ownership

“Behind a great company are strong leaders” (“Executives,” 2010). Nike Inc. functions as

a whole team. Nevertheless, behind this team, there are some great leaders such as: Phil Knight,

the founder and the chairman; Mark Parker, President and Chief Executive Officer; Charlie

Denson, President of Nike Brand, and many other board members, directors, managers,

designers, sales associates etc, that in total make up a team of more than 33,000 people (i.e.

employees).

4.3. Mergers

Nike Inc. owns four other key subsidiaries: Cole Haan, Hurley International, Converse

Inc., and Umbro.

Fig. 2. Nike, Inc. subsidiaries

In 1988, Cole Haan, a footwear company, became the first subsidiary of Nike. Then, in

February 2002, Nike expanded its company by buying a surf apparel company known as Hurley

International, from its founder Bob Hurley. Just a year after they put Hurley under their

umbrella, Nike paid US$305 million to purchase Converse Inc. Converse is a footwear and

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apparel company, known the most for their famous Chuck Taylor All Stars. The last, but not the

least company acquired by Nike was sports apparel supplier Umbro, on March 3, 2008. The deal

was said to be worth around US$600 million.

4.4. Branding2

Besides its subsidiaries, Nike Inc. owns more

than 30 other brands. Starting from Nike Golf, NIKEiD,

Nike Vision, Nike Total 90, Air Jordan, Air Force One,

Nike Air Max, Nike+, and lot more. In addition, Nike has

created „personal‟ brands for some of their greatest

athletes such as: Ronaldinho (R10), LeBron James Fig. 3. NIKEiD

(LJ23), Kobe Bryant (KB24), Roger Federer (RF), etc. Air Jordan is another famous brand of the

greatest basketball player of all times, Michael Jordan. Nike has been producing under the name

of Air Jordan for more than 25 years now. Another brand of Nike is NIKEiD. NIKEiD is a

program which allows customers to customize different designs for some of the Nike shoes and

apparels. Customer can choose the colors, write their name and then Nike delivers that designed

shoe or apparel directly to them.

5. Legal - business form

Nike Inc. is a public company which stocks can be purchased by general public through

stock exchange. On New York Stock Exchange (NYSE) Nike is known as NKE (NYSE, 2010,

February 5).

2
More about Nike Brands you can find in Appendix A.
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5.1.Business type

Nike “is engaged in the design, development, and worldwide marketing of footwear,

apparel, equipment, and accessory products” (NYSE, 2010, February 5). Its products are sold

through Nike Stores (including NikeTown 3), retailers (e.g. Footlocker, The Finish Line), or

online trough Nike.com.

5.2. What are they selling?

Nike is mostly focused in sports. Therefore, Nike‟s main benefiters are athletes, coaches,

sports‟ fans, and other people related with sports issues.

Nike Inc. “markets footwear designed for aquatic activities, baseball, cheerleading,

football, golf, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking,

wrestling and other athletic and recreational uses. It sells a line of performance

equipment under the NIKE brand name, including bags, socks, sport balls, eyewear,

timepieces, electronic devices, bats, gloves, protective equipment, golf clubs and other

equipment designed for sports activities” (“Nike Inc. - Comparative Business Analysis

Snapshot,” 2008).

5.3. Quality provided and consumers relationship

Nike pays a lot of attention to their products‟ quality and to their customers. Nike‟s

customer service mission is “to represent the highest service standard within and beyond our

industry, building loyal consumer relationships around the world” (“Shop & Customer Service,”

2010). Footwear is Nike‟s largest product category and the most demanded one with around 54%

of whole Nike products, then it comes apparel with 27%, followed by equipments with 6 %,

while other products make other 13% of Nike‟s Total Revenue 4 (“Annual Report 2009,” 2009,

3
NikeTown is Nike, Inc. Store where you can find the newest products of Nike after they are released in the market.
4
In Appendix B you can find Nike‟s most wanted products (separated on categories) for the 4 last years (2006- 09).
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July 27, p. 87). In brand terms, AirJordans, Nike Dunks, Nike Air Force Ones are the most

demanded products on footwear section.

6. Growth opportunities

Nike “pursues promising growth opportunities by leveraging its resources, and attracts

consumers with its range of premium products and services” (Marcial, 2009, July 14). So far,

they have been following the right steps in order to have higher growth opportunities such as:

customer needs are measured trough different surveys, market segmentation, new geographic

markets, different competitive measurements etc. “We‟re aligning with our biggest growth

opportunities, both geographically in markets such as China, and in core product categories and

consumer segments such as basketball and football (soccer),” said Nike Brand President, Charlie

Denson, in one of the Nike presentations in August, 2006 (qtd. in “Nike Brand Aligns

Leadership To Drive Geographic And Consumer Segmentation Growth,” 2006, August 7).

Another factor impacting the growth opportunities is

franchising. Up to now, Nike franchising has just been

increasing and Nike plans to continue doing that by opening

new stores in countries where there are only few ones or not

any at all. Fig. 4. Nike Store in Tokyo

7. Corporate Goals 5 and Objectives

Nike‟s goal is “to carry on [its co-founder Bill Bowerman] legacy of innovative thinking,

whether to develop products that help athletes of every level of ability reach their potential, or to

5
See Appendix C for detailed information on Nike five-year Goals.
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create business opportunities that set Nike apart from the competition and provide value for our

shareholders” (“Company Overview,” 2010).

Nike‟s long term objectives are to keep delivering compelling products, maintaining the

integrity of its brands, building stronger relationships with its consumers, creating compelling

retail experiences, etc. (Parker, 2009, June 26). ”While at the same time, Nike remains focused

on its seven key markets: U.S. U.K. Brazil, China, India, Japan, and Russia, and on its seven key

performance and lifestyle categories: football (soccer), basketball, action sports, running, men‟s

training, women‟s training, and sportswear.

8. What essential resources is the success of the corporation reliant upon?

Currently, some of the essential resources that Nike is dependent upon are textile, plastic,

rubber, animal‟s fur, etc. Nonetheless, Nike is working and giving more and more effort on

decreasing the quantity of some of these recourses used to produce its products as it is the case

with animal‟s fur. The only way Nike thinks this

can be achieved is by innovating. “Imagination is
infinite. Resources aren‟t 6.” is a campaign that
Nike is doing to raise the awareness of natural
resources importance (“TheGreenXChange,” 2009,
Imagination is infinite. Resources aren’t.
Act accordingly.
Design products to be reused and reborn.
Everything has a use. Waste nothing.
Apply nothing to the product
or process that harms.
Seek fossil fuel independence.

January 20). Furthermore, Nike have put a goal to

themselves to decrease the air pollution released by its manufactures; to use as less fresh water as

possible in the process of production of its resources etc.

Besides the resources that are used in the process of production, Nike‟s success is also

reliant on their products, athletes, employees, etc.

6
More about the campaign called GREENXCHANGE you can find in Appendix D.
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9. How do the suppliers and stakeholders define success?

From suppliers‟ perspective, success essentially is when Nike makes all required

payments to them. Additionally, suppliers see as a success the success of Nike itself, since both

successes are directly related. Hence, the suppliers are succeeding since Nike‟s products are

highly demanded which automatically means that resources from suppliers will be needed more

and more in order to produce Nike products.

Whereas shareholders define success mainly related with the financial position of the

company. Different shareholders define success differently. For some, it is only important to

have a good financial position, while some other think that financial position it‟s not the only

factor of defining the success.

10. Market Analysis

10.1. Target Market Identification:

Bill Bowerman, co-founder of Nike said “If you have a body, you are an athlete”

(“Company overview,” 2010). This sentence explains in plain words whose Nike‟s target market.

Nike has a huge number of trends, producing for everyone; all ages and genders; and almost

every sport (See Appendix A). However, their primary targets are ages from 16-46 years old. As

long as income is concerned Nike has its own politics, it gives chance to everyone through sales

and also through Nike Factory Stores where one can find cheaper Nike products. However, when

they first introduce new products they usually are overprices, but they drop the prices after some

time.

Nike world headquarters is located near Beaverton, Oregon. However, Nike operates in

more than 170 countries around the globe. Just in USA they sell their products to more than

25,000 retailers, not to mention the Europe and Asia which are two other huge markets. Another
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way that they use for reaching every market is Internet. You just visit (Nike.com) and you can

buy Nike products from every part of the world.

10.2. How does the customer define success?

Nike‟s customers have a lot of measuring tools through which they can define Nike‟s

success.

An important measure is the quality of the product. Nike is continuing to do the best with

their innovative strategies to produce great performance athletic sportswear and equipments.

Moreover, the advertisement that Nike does play a big role in customer‟s definitions of

success. When one sees Lebron James or Frenando Torres advertising Nike products it will

immediately know that Nike is still there with the best athletes of the world.

Also, customer service in Nike stores is crucial. Every Nike store has its own website

where customers write about their experience in Nike‟s stores.

On the other side, the rising awareness for the environmental issues has turned into a

measuring tool for the success of most companies, especially huge ones. Mark Parker, NIKE,

Inc‟s, President and CEO stated: “Sustainability is key to Nike‟s growth and innovation” (qtd. in

“Nike Outlines Global Strategy for Creating a More Sustainable Business,” 2010).

11. Markets are growing

According to Nike‟s annually reports on income we can conclude that Nike‟s markets are

growing. However, the growth is moving up at a decreasing rate.

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19,176.10 18,627.00 16,325.90 14,954.90

25,000.00
19,176.10 18,627.00
20,000.00
16,325.90
14,954.90
15,000.00

10,000.00

5,000.00

0.00
2009 2008 2007 2006

Fig. 7. Nike Sales7

The reasons for the success are the growing markets particularly in Turkey, Russia, and

Brazil. Sales in Turkey and Russia increased 25% during 2008, and grew an additional 30% in

Q1 2009. Moreover, Nike sponsored the Beijing 2008 Olympics and endorsed 21 of the 26

national teams. This sponsorship helped them a lot in their markets in China. While giving the

report for 2009 Mark Parker labels the sponsorship to Olympic Games “Beijing 2008” as the

“…biggest win of all” (2009, p.1).

12. SWOT Analyses

12.1. Strengths

12.1.1. Competitive spirit

Throughout their company Nike has implanted a sense of healthy competition against

their competitors. Phil Knight is quoted as saying “Business is war without bullets”. It is

awesome how they achieved to embrace the competitive spirit of the sports they represent.

7
Annual Report 2009
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12.1.2. Brand recognition

Nike has achieved a stage where they don‟t need to always write the name next to their

“Swoosh”. When people see the logo (Swoosh) they immediately recognize the brand. The brand

is well recognized around the world.

Nike sponsors some of the great teams and athletes in the world. Michael Jordan, Tiger

Wood, and Cristiano Ronaldo wear Nike. This says a thousand words in terms of advertising.

12.1.3. Teamwork

Phil Knight highly regards the teamwork: “It's not a single product model, nor a single

manager, nor one ad, nor a single celebrity, not even a single innovation that is key to Nike. It is

the people of Nike, and their unique and creative way of working together.” (qtd. in “We're All

About Sports. And Then Some,” 2010)

The company has installed a team spirit within their employees. It is another example of

carrying the spirit of sport in their company. In Nike stores managers are labeled as coaches

while other employees are players. In their outfit you can see the text “TEAM NIKE”. This

teamwork is crucial in maintaining their leadership in world athletic sportswear.

12.2. Weaknesses

12.2.1. Dependence on footwear

The biggest share of Nike profits comes from footwear. It is dangerous because of the

competition increasing every day. A slight change in consumer preferences toward footwear can

cause damages in Nike‟s profits.

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12.2.2. Retailers

A great number of incomes are derived from retailers. The risk comes from the fact that

retailers may fail to transmit the same spirit that Nike as a company has.

12.3. Opportunities

12.3.1. Popularity of soccer in USA is growing

One of the opportunities to follow is the soccer trend in USA. This market has potential

to become a large one in USA8.

12.3.2. Converting some sport brands into more luxury ones

Nike produces also sunglasses and/or watches. Products like this at the moment are more

sport oriented. It can be a great opportunity to work on developing these kinds of products in a

more luxury taste.

12.3.3. Tracking down the growing population trends

A good opportunity for dropping costs is tracking the growing population trends, and

taking advantage of less developed countries where the labor force is cheaper. Some places to be

taken under consideration are: Palestinian Territories, Niger, Yemen and Angola.

12.4. Threats

12.4.1. Globalization makes it easier to steel ideas

In today world innovation is an advantage; however based on the global character of

business it is easier for other companies to steel ideas in a short period of time. It is hard for Nike

to hold their market share because of smaller companies doing business with cheaper prices.

8
More about “The popularity of soccer in USA” see 19.3 or appendix G.
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12.4.2. International nature of trade

The international nature of trade (buying and selling in different currencies) means that

Nike sometimes may manufacture and sell at a loss.

12.4.3. Internet has changed the concept of advertising

The competition is becoming stiffer and tools like internet are making it easier even for

smaller businesses to advertise. Consequently, smaller companies with cheaper price can

advertise easier and threaten Nike‟s market share. Therefore, Nike has to be ready for these

challenges in their marketing strategies.

13. PEST Analysis

13.1. Political Analysis

Government policies help businesses to grow. One of the businesses who profits from

these policies is Nike. Nike benefited from US government through their low interest rates,

stable currency conditions and international competitiveness of the tax system.

13.2. Economic Analysis

We have just witnessed an economic recession. During this recession most of the huge

companies suffered huge losses. Even though Nike also Nike felt this downturn of the economy,

we can say that they survived this economic recession. Nike‟s profits were slowed down;

however they still continue to go up. Nike was also affected by the rising cost of labor and

material prices.

13.3. Society Analysis

Nike is benefiting from a more health-conscious population nowadays, especially in USA

where fast foods are destroying people‟s health. Now people are looking forward to joining sport

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activities and this immediately sends them to Nike where they will find their exercise tools like

shoes, apparel and equipments.

Society as a whole also affects the customer preferences. Just as an example it may be

how the society deals with scandals like the one with Tiger Woods who represents Nike. People

can absorb a negative feeling related to these scandals, which can turn to a bad image for the

company.

13.4. Technology Analysis

Nike works hard to stay in touch with the newest technologies. Many of the new designs

created by Nike are delivered through the latest technology. They use the technology to analyze

what will fit best for their customers, and what will generate the best of their athletes.

Moreover, today you can buy a pair of Nike shoes online, by just clicking some web-

pages. Nike also works together with companies like Apple to take advantage of technological

improvements. An example is “Nike +iPod” technology. 9

9
You put the chip into your shoes. It measures your performances while you train, and you can explore them
afterwards in an Apple computer. (http://nikerunning.nike.com/nikeos/p/nikeplus/language_tunnel/)
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14. Marketplace segmentation

The market place in Nike is segmented like this:

Men Women Kids

Footwear Apparel Equipments

Others

Soccer Basketball Golf Running

Swimwear
Nike works based on the segmentation presented above. The greatest deal of profits to

Nike comes from the running section that includes running shoe, apparel, and equipments. The

second place is taken by basketball and soccer.

15. Five most influential competitors

Five most influential competitors of Nike are:

 Adidas

 Reebok

 Puma

 K-Swiss

 Sketchers

The main competitor is Adidas Group. Apart from being a different company Adidas

plays the same game with almost the same rules as Nike. They manufacture apparel, footwear

and equipments. Same as Nike their production goes beyond being only athletic oriented;

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furthermore, they work on developing their trend as a fashionable one for the time being. Adidas

Group has had some unwelcomed experiences with the recent global economical recession.

However they expect that 2010 will be the point where they raise on their feet again.

“In line with the projections of the OECD, the World Bank and independent researchers,

we expect the global macroeconomic environment to recover in 2010, although growth

rates are estimated to remain well below 2008 levels. We forecast this development to

support the operational performance of our Group in 2010. Under this assumption, we

project Adidas Group sales and net income to improve in 2010 compared to

2009.”(“adidas Group 2009 Outlook”, 2009).

Sale graphs of Adidas Group look like this:

Sales
12,000 10,799
10,084 10,299
10,000

8,000
6,636
6,000

4,000

2,000

0
2005 2006 2007 2008

Fig. 8. Adidas Group Sales10

Reebok since 2005 is part of the Adidas group. Thus, the above analyses for Adidas

Groups include Reebok sales as well.

10
Information for constructing the graph were taken from several sources therefore, we don‟t have a specific one
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Puma is considered as the strongest competitor after Adidas Group. Same as Adidas

Group, Puma felt the cruelty of the recent economical recession. According to their annual report

their sales declined in all markets in 2009:

Sales
2,160.00 2,148.60
2,140.00
2,120.00
2,094.80
2,100.00
2,080.00
2,060.00
2008 2009

Fig. 9. Puma Sales 11

Another competitor is K-Swiss. Even though it has a smaller share in market K-Swiss

competes only in the much coveted market of footwear. K-Swiss also felt the economic recession

and their sales and revenues declined: “Our total revenues decreased 27.5% and 23.7% in the

nine and three months ended September 30, 2009 from the nine and three ended September 30,

2008, respectively” (“K SWISS INC - FORM 10-Q,” 2009).

Another emerging strong competitor is “Sketchers”. Even though they experienced some

losses in 2009 they seem to be in an attacking position when talking about stretching their

markets:

As of September 30, 2009 we owned 218 domestic retail stores and 26 international retail

stores, and we have established our presence in most of what we believe to be the major

domestic retail markets. During the first nine months of 2009, we opened five domestic

concept stores, ten domestic outlet stores, one international concept store, and two

11
Financial Report 2009 (http://about.puma.com/downloads/137526520.pdf)
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international outlet stores and we closed two domestic concept stores.(“SKECHERS

USA INC - FORM 10-Q,” 2009)

15.1. How does their product or service differ?

In this industry the competition is fiercely strong. However, the main competitor for Nike

remains Adidas Group. As mentioned above their strategies seem to be very similar to Nike.

Even sometimes they were criticized for not creating their own identity. Nevertheless, Adidas

Group gained a good deal of market share especially after taking Reebok under their control in

2005. Up to know only small innovations in their products and services differentiates them from

each other.

Fig. 10. Nike Shoe

Fig. 11. Adidas shoe

On the other side Puma in contrast to Nike and Adidas whose aim is to bring inspiration

and improve athletes performance through innovation, tries to combine fashion, style and sport

in their company‟s strategies. In a word Puma is more “lifestyle driven style”. Furthermore in

order to differ from their rivals, Puma frequently organizes promotion events that are based

around “active lifestyle events” themes based on dinning, music, and fashion.

Fig. 12. Puma shoe Fig. 13. K-Swiss shoe

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In comparison with the companies that we mentioned above K-Swiss differs from in the

fact that they are based only on producing only shoes. They have their own “Tennis based

identity” and also identify their selves with the white color shoes.

“Skechers” as mentioned above is the emerging

competitor. Their style is completely different from the

competitors mentioned above. They produce shoes in

different forms and for variety of events. As for example

these are the “Women Work Shoe” and “Men‟s Dress Shoe”: Fig. 14. Skechers

15.2. Competitor’s strengths and weaknesses

Adidas Group (Adidas & Reebok) is the leading athletic sportswear company in Europe.

This is based especially on their soccer sponsorship around Europe. They sponsor teams like

Liverpool, Chelsea, Milan, Real Madrid and several other teams in Europe; while in 2004 they

announced a 10-year sponsorship deal with MLS (Major Soccer League) in USA. Up to now the

battle where they strongly compete with Nike is soccer.

Analyzing the weaknesses of Adidas some find the fact that Adidas is so associated with

Germany as a weakness. On the other hand, another weakness is the overpricing of some

products. Nowadays, people have a tendency to buy products at lower price. Also their

international nature of their markets makes them vulnerable to economic fluctuations around the

world.

Reebok strength can be added to Adidas Group. They mainly consist of strong

advertising campaign, and the developing moisture technology. Though, their weakness is the

dependency on footwear.

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Puma’s main strength is their association with a different style. As mentioned above they

identify themselves as a “life-style driven” company. They are not direct followers of Nike and

Adidas, and that is what separates them. They have created their own way of connecting sport

with life style. The weaknesses remain the same with Adidas, their overpricing and the fragility

of economic fluctuations around the world. Moreover, they often lose within the war between

Nike and Adidas.

K-Swiss bases its own strength on their identity associated with tennis, and also

association with the white color. Their main weakness is the limitation of production only in

footwear.

Sketchers who have a smaller share have their completely different style. In this way

they differentiate themselves and can get away from the stiff competition and target some other

human preferences. However, it is hard for them to get more share of the market since the above

companies have already created their loyal customers.

15.3. How do they advertise?

Adidas aim in their advertising campaigns is to influence consumer behaviour. They do

this by connecting with people emotions and feelings with catchy advertising. A great example

of how they try to influence people and also built a strong relationship with customers is the

Ad Campaign “Impossible is nothing”. In this campaign we see Steven Gerrard, Lionel Messi,

Kaka, Zidane and others talking about their experiences and struggles on their way for

achieving success.

Another example may be the advertisements on big events such as FIFA WORLD CUP

2006, where you could see the Adidas logo everywhere during the event. The same strategy

goes with other sports as they advertise with NBA stars like Dwight Howard. Other
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advertisement strategies are short advertisements presenting only the logo of the brand

reminding customers that Adidas is still strong. Adidas has a huge advertisement strategy that

would take a lot more to write about; however, these were some of their strongest approaches.

Reebok does their work on the other side. Their advertisement campaigns are

innovative and also try to grab people‟s attention through freshness and the “Re” coming to life

idea. As they state in their web-site: “Having Fun Staying in Shape comes to life through a fun,

bold, provocative manner expressed through fresh, eye catching imagery signed off with a

unique „Reeword‟”(“About Reebok,” 2010). Their recent campaign is addressed to females

particularly. This campaign portrays young and fresh girls with the body of an athlete,

explaining the benefits of wearing “Reebok” shoes and clothes. Similarly to other companies

they use celebrities (e.g. Shakira) to present their products.

Puma advertisement goes equally with the strategies of Nike, Adidas and Reebok. They

also use celebrities and athletes to advertise their products. They also want to catch people‟s

attention through their distinct logo “PUMA” which is associated with speed.

K-Swiss advertisement is based on maintaining the identification of their brand with

Tennis, by promoting through Tennis stars as Anna Kournikova. They also try to catch

people‟s attention through creating a sense of “classical” style in their shoes. An example of

this is the glamorous black and white photo with K-Swiss shoes on.

Sketchers advertisement campaigns concentrate on showing the relation between the

usefulness and elegance of their products. As an example is one of their advertisements where

they state their goal of their products “Feel good. Look great.”

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16. How can the corporation hold/increase your market share?

Nike, Inc is the leading company in sportswear and sports equipment market, thus, Nike

has a larger market share than his competitors (i.e. Adidas, Puma, etc). Nike to increase the

market share would mean to have a larger competitive advantage, and this would be achievable

by having competitive information and being ahead with the most important trends that are

today.

17. How does the corporation promote their business?

Nike, Inc promotes the business by organizing and funding many sports activities and by

creating creative ads.

Nike Public Relations plan is developed thru sponsoring many sports teams and

organizing various sports activities, such as The Nike Foundation, Homeless World Cup,

ninemillion, and many others. The Nike Foundation was created in 2004 to invest in adolescent

girls and unleash a powerful ripple effect of positive change ("Corporate Responsibility Report

FY07-09," 2009). Homeless World Cup was created in 2003 to organize soccer programs for

homeless people in more than 60 countries globally ("Corporate Responsibility Report FY07-

09," 2009). Also, Nike, Inc in 2006 organized the ninemillion campaign to help more than 9

million children living in refugee camps to have a better access to education, sport, and

technology. This campaign was organized together with United Nations High Commissioner of

Refugees (UNHCR) and Microsoft ("Corporate Responsibility Report FY07-09," 2009).

Nike Advertising plan is created thru both the Public Relations plan and advertising in

different Medias. The Public Relations plan makes a great image for Nike, Inc as a corporation

dedicated totally to the people around the word to enable them to taste the sport life. And, the

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advertisings among the best Medias around the world thru various attractive ads made Nike

globally known as the greatest sportswear and sports equipment firm.

18. What pricing strategy have they devised?

Nike, Inc as many other successful companies, firstly, make high prices for the newest

products that they release and after a period of time they reduce their prices as new products

begin to evolve.

19. Scenario Planning Processes

Trends that should be followed by Nike, Inc.:

1. Targeting Developing Countries

2. Avoiding Environmental Issues

3. Popularity of soccer is rising in USA

4. Technology

5. Fashion

6. Employment

For all of the trends mentioned above we have created a scenario for each one. For being

a successful company the signposts and indicators should be followed carefully. Therefore, we

have listed the signposts and signals that Nike should follow if they want to follow the trends in

their best case scenarios. The first four scenarios are also attached in Appendix E trough H.

19.1. Trend 1 - Targeting Developing Countries

Most of the Nike Inc factories are located in the developing countries which they already

have a stabilize economy. Nike should now focus more on the developing companies and follow

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 NIKE, Inc.

this trend because of several reasons. These countries have unused resources that can be used by

the Nike Company; the labor force is cheaper; taxes are lower and the cost of opening and

maintaining factories and stores are lower. All these factors might help improving the Company

by reducing the cost and having more profit.

19.1.1. Worst case scenario

If we consider the worst case scenario, then Nike would have to close all the factories and

stores, and focus on countries that are already developed. Because they need money they can

increase the taxes, and therefore lower the profit or even in the worst case making no profit at all.

19.1.2. In-Between Scenario

Because in these countries the potential market is high, Nike‟s competitors can also

follow this trend. In this case they would have to share the market along with other competitors,

which means less profit.

19.1.3. Best case scenario

In the best case scenario, the government would lower the taxes and make it easier for big

companies, like Nike, to enter the market in their respective countries. In this case Nike Inc will

lower the cost and therefore make more profit which is the objective of the company

It is very important for the companies to create these scenarios because in that way they

can have a clear image of what might happen to their company. Therefore, they should be very

careful and follow the signposts and indicators. If the indications are that the government is

increasing taxes than Nike should immediately take actions and try to follow a different scenario.

If they see that the revenues are going down and the customers are buying more products of our

competitors, and are taking Nike‟s market shares, are indicators that the worst case scenario

would happen. On the other hand, if the revenues start going up, and the government decides to
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lower the taxes, is a signal that Nike Company should follow this scenario because it might bring

a huge profit to the company. Watching these signposts can help the company react faster than

competitors and try different solutions to solve the problem.

19.2. Trend 2 – Avoiding Environmental Issues

One of the global issues that Nike Inc. should avoid are the environmental issues. These

issues are forcing big companies to take actions and changes in order to avoid them. Even though

currently Nike uses recycled materials to produce the bags they use, recycles old shoes and

creates a material which makes possible to build sporting grounds, still it needs to give high

importance to environmental issues, making some changes such is Recycling, not using animal‟s

fur, and also to taking care of air pollution.

19.2.1. Worst case scenario

In the worst case scenario Nike would struggle to avoid environmental issues and would

have a tough future which may lead to loosing the market share to competitors and lose money.

There are a lot of organizations that deal with environmental issues. If Nike decides to close their

eyes when it comes to these issues, many organizations can take actions against Nike which

would result to losing costumers and therefore making less money.

19.2.2. In-between scenario

In this case Nike would keep going forward with the same pace considering that the

competitors would not do much about the environmental issues. Thus, Nike may still face some

problems in the future, since environmental issues are a critical problem.

19.2.3. Best case scenario

Here, Nike would have to avoid all or at least minimize the environmental issues while

competitors would have to struggle. In this case the revenues of Nike would increase and by this
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they would have more profit to spend continuing in avoiding the issues that are left if there are

any.

Like every other company also Nike should create scenarios and try successfully to

follow the signpost and indicators which will lead the company in the right direction. Following

the right steps of avoiding environmental issues would be a high advantage over the competitors.

Contrary, if Nike continues to produce animal‟s fur would have to deal with a lot problems by

the environmental organizations and individuals who do not support this. If Nike sees they are

having pressure from these organizations and individuals they would have to stop producing

products from animal‟s fur and try to find another solution. Another signpost that Nike should

follow is air pollution. Air pollution is becoming more and more a global issue. If the signposts

are that the government would set new levels of polluting the air, then Nike would have to

reduce the pollution made by the factories. If the factories of Nike are polluting the air outside of

normal pollution levels set by the government, they would automatically consider this because

they may face problems with the government which may result to closing all the Nike factories.

19.3. Trend 3 – Popularity of soccer is rising in USA

Nike is the leading company in sportswear worldwide. Within Nike‟s products a great

deal of profits comes from soccer. Even though soccer is the most popular sport almost all over

the world, the same doesn‟t happen in United States. The main reasons why Nike should follow

this trend are: the quality of the National League of soccer is increasing because great soccer

players like David Beckham are playing, the success that the national team of USA is having,

and also the tourists coming from places that soccer is very popular. Currently, Nike is not

following properly this trend because there are not that much of soccer equipments in Nike

stores.

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19.3.1. Worst case scenario

The worst case scenario would be if Nike doesn‟t take the necessary steps to remain the

only official partner of National Team and also not being able to sign the contract with the MLS

when it expires in 2014 which currently Adidas have it. If Adidas starts the partnership with

MLS and also remains its partnership with MLS would benefit a huge profit from them and

therefore would become the leadership company in athletic products.

19.3.2. In-between scenario

If we consider this scenario, Nike will have to continue with the same pace as now and

not giving their best in that direction. It will continue to sponsor USA national team and meets in

better ways people requirements for soccer stuff as jerseys from big European or South

American soccer teams. Just to mention that the success of the company if this scenario happens

is not guaranteed it.

19.3.3. Best case scenario

A success of US National soccer team in the “World Cup South Africa 2010” would lead

to an increase of the popularity of soccer in USA. By this Nike would benefit since they sponsor

the USA‟s national soccer team. In order for this trend to continue also the economy needs to

move upward, and then people will have more money and time to spend on sports, respectively

on soccer. Also, Nike should give it best to secure a partnership with MLS by 2014 when

Adidas‟s contract expires.

Following the accurate signposts and indicators may lead the company to the right

direction for the future. The best case scenario would be indicated by these signposts: revenues

moving up; Nike maintains leadership in sportswear around the world; Nike starts conquering

the soccer world in USA; and the popularity of soccer continues to rise in USA. While the worst

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case scenario would be indicated by: revenues moving down; competitors taking Nikes share of

market in soccer; or players switching from Nike to competitors (mainly Adidas); or the

popularity of soccer moves on the wrong directions because of economy falling down or bad

results for the national soccer team. If MLS teams do not begin to be profitable in the near future

as expected, that can also be seen as an indicator for the worst case scenario.

19.4. Trend 4 – Technology

The technology in Nike, Inc over the 21st decade has been developed enormously by

creating manufactories in a lot of countries, improving manufactories by using the most efficient

engines and machines, opening fancy shops all over the world, and improving the quality of the

resources that are used to create Nike products. Further, the developing of the technology has

helped Nike, Inc to become one of the biggest companies for sportswear and sports equipment.

In addition, Nike should focus on the technology as one of their most important trends that have

evolved over time and focus on improving and maintaining their most purchased products, such

as shoes, sports gear, sports jersey, and others. Moreover, some key factors and driving forces

that will determine the success of improving the technology in Nike are public opinion and

questionnaires about Nike position and technology, competitor advantage and various Market

analysis, extending factories and stores (Nike is mostly located in Asia, but in 170 countries

worldwide and has over 600 retail stores worldwide) and implementing technology - machines

and engines, getting the best quality resources (such as flywire and lunarlite foam for shoes) to

improve Nike products, and employing high educated managers and presenters to implement and

advertise the newest technologies.

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19.4.1. The best case scenario

The technology of Nike will keep growing faster if Nike keeps opening new factories,

shops, employing more people (nowadays there are more than 30000 people employed

worldwide), produces new technological products (such as Nike + iPod Sports Kit), and

improving and maintaining other products. Also, divide Nike in more sectors (for example, until

now they separated into Nike+, Nike Pro, Nike Air, Nike Golf, Nike Skateboarding, and others)

and possess more subsidiaries (today Nike subsidiaries are Coe Haan, Hurley International,

Umbro, and Converse).

19.4.2. In-between scenario

The in-between scenario will be if Nike keeps going with the same rhythm and makes no

changes in improving the technology. In this way, the demand for Nike products will decrease,

and Nike will lose competitor advantage, which means they will lose their position as a leading

sportswear and sports equipment company.

19.4.3. Worst case scenario

The worst case scenario may happen, especially, if Nike leadership starts being laissez-

fair leaders that means only sitting on their position and doing nothing in improving the

technology. In this case, Nike popularity will decrease enormously and the demand will decrease

as well, thus, the productivity will fall and Nike may lose their track in the market. Also, many

workers will lose their jobs.

The main indicator that demonstrates Nike successive technology is their profitability or

Nike revenue (which is $19.176 billion in 2009) – the largest one comparing to others sportswear

and sports equipment companies, such as Adidas and Puma. Also, the advertisements that Nike

makes in different Medias, and Nike new products, such as the Nike + iPod Sports Kit which is a

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 NIKE, Inc.

chip in Nike shoes that connects with iPod or iPhone and it can measure the time and the speed

that a person can run.

19.5. Trend 5 – Fashion

Being the leading company of sportswear and focusing more on sports products, Nike in

a way has not been able to create a lifestyle fashion for older people. Since it is a very successful

company in sportswear Nike should start and create a lifestyle fashion for older people too and

not just for athlete people. Considering that also older people want to feel young again, Nike

should cooperate with well known designers to start creating a lifestyle for this category of

people. As the slogan of the company is “if you have a body you are an athlete,” also the older

people would like to feel like an athlete in their twenties. Therefore, Nike should start to follow

this trend because can bring to the elder people the feeling of being young again, and what is

more to bring to the company enormous profits.

19.5.1. Worst case scenario

In the worst case scenario Nike will not be able to create a life style fashion for older

people and therefore not being able to gain more of the market share. Judging that older people

have more money to spend, not creating this trend means a lot of losses for the company.

19.5.2. In-between scenario

In this case Nike will try to build clothes and other products for older people but not

being very successful as other competitors and gaining a small percentage of market shares in

this fashion style.

19.5.3. Best case scenario

In the best case scenario, Nike would hire some well known designers and establish a

new lifestyle fashion for seniors. Believing that older people have more money to spend, they

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would want to spend it on Nike products. By doing so, Nike immediately would increase the

market share in this segment which will result in making more revenues and at the same time

making more profit.

Creating different scenarios and trying to follow the signposts and indicators helps

companies for being successful. Thus, also Nike should create scenarios for this particular trend.

The main indicators for fashion in Nike are the new products that Nike releases. If they respond

to the products that Nike offers to its costumers is an indicator that people are liking Nike‟s

products and also purchasing them. Moreover, if the revenues are increasing it is a signpost and a

signal that people are buying more of the Nike products. Contrary to this, if they see that the

revenues are not increasing and the people are not responding to this trend Nike should consider

this and not targeting the older people.

19.6. Trend 6 – Employment

Employment is also an important trend for Nike, Inc because employing more highly

educated workers will enable Nike to extend their business. It is important to employ more active

managers in different sections to lead the company in to success, and to employ presenters to

advertise in the best possible way to attract consumers to buy Nike products. Moreover, opening

more factories to hire more workers would reduce the unemployment rate all over the world and

would expand Nike productivity for sportswear and sport equipments. Some key factors that will

determine the success of employment in Nike are offering scholarships for the best students that

will successfully graduate and then work for Nike, Inc, offering more job positions through the

internet, and offering a higher percentage of salary and better work conditions for employees.

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19.6.1. The best case scenario

It would be if Nike advertises their key factors to people worldwide and show them that

Nike is the place where you should work. It will lead the company into a successful campaign in

attracting new workers.

19.6.2. In-between scenario

If Nike doesn‟t show interest in attracting workers and employ the best individuals to

lead the company in further success. It will be negative for the company because they will be

behind their competitors in attracting employees.

19.6.3. Worst case scenario

If Nike doesn‟t employ any worker in their factories and stores, it will be the worst

possible way to lose the leading power that Nike has because they will not be able to extend their

business.

As in other trends, the total revenue of Nike (i.e. $19.176 billion) is the main indicator

because Nike financially is able to employ more workers and expand the business. Also,

advertisements in many Medias makes Nike to be ahead from their competitors, thus, it will be

able to attract people with Nike job positions. And, Nike attractive products with special

resources make people curios and eager to be part of the creation of those products.

20. Summary

Nike continues to be the leading sportswear company in the world. Based on their team

spirit; innovative products; marketing strategies; and their brand recognition around the world we

can conclude that Nike is in the right way of accomplishing their goal of maintaining the

leadership in athletic sportswear.

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Based on research they face a stiff competition from Adidas Group and Puma, and they

should be prepared for struggles on keeping their success at the highest points. Up to the

moment, Nike is strong with their marketing strategies; however, competitors are very strong in

this field and they are playing their strongest cards.

The scenarios presented in this project should be taken under consideration. We believe

that soccer will be playing a huge impact on the competition between Adidas Group and Nike;

while environmental issues are becoming important in people‟s conciseness. Technology will

continue to play a crucial part in every company growth. Moreover, based on the trend of

growing elderly-population Nike should consider putting efforts on controlling this trend.

Further analysis can be taken on labor condition at Nike; deeper analysis on how Nike is

working to overcome environmental concerns; and people‟s reaction on some overpriced

products.

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