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BUSINESS STRATEGY, CORPORATE STRATEGY, SWOT ANALYSIS & SWOT MATRAX REPORT: BUSINESS STRATEGY CASE STUDY: NIKE INC

BY

ALI IBRAHIM JILI'OW

MBA

OPEN UNIVERSITY MALAYSIA

MAY, 2016

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NIKE STRATEGIC REPORT TABLE OF CONTENTS 1.0 INTRODUCTION.....................................................................................................................4 1.1 BACKGROUND.......................................................................................................................4 1.2 WHAT DOES NIKE DO...........................................................................................................5 1.3 PIONEERS FOR NIKE.............................................................................................................5 1.4 MISSION STATEMENT FOR NIKE.......................................................................................5 1.5 NIKE'S VISION .......................................................................................................................5 1.6 NIKE'S GOALS ........................................................................................................................6 1.7 OBJECTIVES............................................................................................................................6 1.8 NIKE'S INDUSTRY..................................................................................................................6 2.0 SWOT ANLYSIS IN FORM OF MATRIX..............................................................................6 2.1.1 EXTERNAL OPPORTUNITIES............................................................................................6 2.1.2 NIKE'S KEY EXTERNAL THREAT....................................................................................7 2.1.3 KEY INTERNAL STRENGHTS...........................................................................................7 2.1.4 KEY INTERNAL WEAKNESSES........................................................................................7 2.1 NIKE'S PRODUCTS.................................................................................................................9 2.2 TARGET MARKET..................................................................................................................9 2.3 SALES AND MARKETING.....................................................................................................9 2.4 NIKE AS A LEADER IN ATHLETIC INDUSTRY................................................................9 2.5 NIKES MAJOR COMPETITORS............................................................................................9 2.6 NIKE'S APPROACH FOR MANAGING SUPPLIER...........................................................10 2.7 BUSINESS SUSTAINABILITY.............................................................................................10 3.0 NIKE'S COMPETITIVE PROFILE MATREX......................................................................10 4. 0EXTERNAL FACTOR EVALUATION.................................................................................11 © Jili'ow, Business strategy, corporate strategy, Report: Business Strategy

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5.0 INTERNAL FACTOR EVALUATION..................................................................................12 6.0 NIKES'S STRATEGY.............................................................................................................13 6.1 NIKE'S CORPORATE STRATEGY......................................................................................15 6.2 NIKE'S BUSINESS STRATEGY...........................................................................................15 6.2.1 NIKE'S BUSINESS LEVEL STRATEGY...........................................................................15 6.3 NIKE'S CORPORATE STRATEGY .....................................................................................15 6.4 FUNCTIONAL STRATEGY FOR NIKE...............................................................................15 6.5 NIKES GLOBAL STRATEGY...............................................................................................16 6.6 NIKE'S RELATIONS WITH SUPPLIERS.............................................................................16 6.6.1 NIKE'S CURRENT STRATEGY........................................................................................16 6.7 NIKE'S BUSINESS PERFORMANCE FOR THIS YEAR....................................................16 6.7.1 NIKES PERFORMANCE IN THE THIRD QUARTER OF THE YEAR..........................17 7.0 NIKE'S FUTURE OUTLOOK................................................................................................17 7.2 EVALUATION NIKE'S CURRENR CORPORATE & BUSINESS STRATEGY...............17 7.3 NIKE'S STRATEGIC ANALYSIS AND EVALUATION.....................................................18 7.3 SUMMARY AND CONCLUSION........................................................................................19 RECOMMENDATIONS...............................................................................................................21 REFERENCES..............................................................................................................................23 APPENDICES...............................................................................................................................25 APPENDIX A: SWOT ANALYSIS..............................................................................................25 APPENDIX B: COMPETITIVE PROFILE MATRIX.................................................................26 APPENDIX C: EXTERNAL FACTOR EVALUATION.............................................................27 APPENDIX D: INTERNAL FACTOR EVALUATION..............................................................28

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1.0 INTRODUCTION Business strategy has been concern for many managers and investors, in order for any organization to be successful in its missions and vision, organization should establish and implementing the best strategy that can conform to all organization's corporate and business levels. As famous scholar has already said ''business without strategy is like a ship without compass''. Nevertheless, this report discusses the background of Nike Corporation, mission and vision statement of the company, the company's SWOT analysis in the form of Matrix, the corporation's competitive Profile matrix, External factor evaluation matrix, Internal factor evaluation matrix, the report also identifies and evaluates Nike's current corporate and business level, finally the this report recommends the best strategy that Nike should pursuit in order to be successful in the athletic market. Nike Corporation is being chosen because there are no corporations that operate officially here in Mogadishu, Somalia and what is more, data availability is relatively difficulty. 1.1 BACKGROUND Based in Beaverton, Oregon, Nike is the world’s largest designer, marketer, and distributor of athletic footwear and athletic apparel. The company also designs, markets, and distributes sportsrelated apparel, equipment, and accessories. Led by the company’s flagship Nike brand footwear, as well as Nike Golf, the company also owns a number of subsidiaries, such as Cole Haan, Converse, Hurley International, an d Umbro Ltd . (David, Strategic Manegement, 2009). Nike Corporation was established by University of Oregon track athlete named Phil Knight and his coach Bill Bowerman in January 1964. Its original name was Blue Ribbon Sports (BRS). The company primarily operated as a distributor for Japanese shoemaker Onitsuka Tiger , which meet Knight's automobile. (Nike Inc., 2016) Nike, Inc. is an American multinational corporation that is engaged in the design, development, manufacturing and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area, United States of America. (Hussain A. Ali Mahdi M. A., 2015).

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1.2 WHAT DOES NIKE DO? Sporting industry has been active and contest for the twenty first century, sporting activities are taking place across the world wide, without any obstacles and limitations. Sports became now days a universal language. NiKE INC. it's a popular company in Sports industry that produces, designs, makes for athletic clothes and shoes, most competitive sports and Fitness Corporation on the earth is Nike now. Its headquarters is in Beaverton, Oregon. The Pacific Northwest is Nike's place of origin. It has expanded their horizons to every corner of the globe. Nike's labour forces estimated approximately 24,300 people. Nike operates on six continents. It employs suppliers, shippers, retailers and service providers amounting to a total workforce of close to 1 million people. 1.3 PIONEERS FOR NIKE Earlier, Nike was established as an importer of Japanese shoes in 1962, the founders, Bill Bowerman and Phil Knight worked as a partnership under the name, Blue Ribbon Sports. However Nike holds a global market share of approximately 37 percent (answers.com). In 1958, Phil Knight, a business major at the University of Oregon, and a miler on the track Team, shared with his coach, Bill Bowerman, dissatisfaction with the clumsiness of American running shoes. They formed a company in 1964 to market a lighter and more comfortable shoe designed by Bowerman. In 1968, this company became NIKE, Inc. named for the Greek goddess of Victory. 1.4 MISSION STATEMENT FOR NIKE According to Divids, 2009, Nike’s mission is to carry on Bowerman’s legacy of innovative thinking, develop products that help athletes of every level of ability reach their full potential, and to create business opportunities that set Nike apart from the competition and provide value for their shareholders. 1.5 NIKE'S VISION To “bring inspiration and innovation to every athlete in the world Corporate Vision ”Nine has corporate vision, so Nike’s corporate vision is To help Nike.INC and our customers thrive in sustainable economy where people profit and planets are in balance. (Smithson, 2016). © Jili'ow, Business strategy, corporate strategy, Report: Business Strategy

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1.6 NIKE'S GOAL Nike's goal is to bring inspiration and innovation to every athlete in the world. 'The Nike goal is to carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability to reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders.’ Nike's Long Term Goals Nike's long term goals will be eliminating the concept of waste in our product design, use of materials, energy, and any resource that cannot be readily recycled, renewed or reabsorbed back into nature, eliminating all substances that are known or suspected to be harmful to human health or the health of biological or ecological systems. 1.7OBJECTIVES Nike’s objectives are to provide an environment in which develops people to maximize their contribution to Nike. To Identify focused consumer segment opportunities Provide quality and innovative services and products internally and externally 1.8 INDUSTRY FOR NIKE The industry that Nike competes was growing over that past generation and actually it is still growing with its new challenges, if we look back the profile of shoe industry it seems that it has faced a dramatic evolution over the last fifty years, however the industry faces many challenges from those who produce identical products. 2.0 SWOT ANALYSIS IN THE FORM OF MATRIX According to David (2009), ''SWOT Matrix is an essential matching tool that assist managers develop four kinds of strategies: SO means strengths-opportunities Strategies, WO means weaknessesopportunities Strategies, ST means strengths-threats Strategies, and WT means weaknesses-threats Strategies''.

2.1.1 EXTERNAL OPPORTUNITIES 1. E- Commerce is growing and it will have a positive effect on Nikes sells 2. There is emerging and new markets that Nike can grow 3. Female's dependence on athletic footwear and clothing is increasing substantially 4. The clients who use Nike's products change from athletic purpose to fashion items 5. Nike's Product development offers many opportunities. © Jili'ow, Business strategy, corporate strategy, Report: Business Strategy

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6. Nike's new technology and innovation make possible to stay on top of market needs 7. The company might also be developed globally, building upon its strong worldwide brand identification 8. There is also the chance for Nike to develop new products such as sport wear 2.1.2 NIKE'S KEY EXTERNAL THREAT i.

Nike is facing Strong competition from Adidas, Puma, Reebok and many others

ii.

Consumer Preferences is dynamic due to technology and many choices

iii.

Currency Fluctuation and interest charge is another treat that Nike will suffer

iv.

Piracy of footwear and appeal design could decrease sells and adversely affect Nike's image

v.

Political un-rest in the supplier countries, due to coup, new legislation, rules and regulations

vi.

ongoing challenges in import and export duties

vii.

Negative image created by the sponsored athletes

viii.

Negative image due to "sweatshops"

ix.

Increase in the Price of Raw materials 2.1.3 KEY INTERNAL STRENGHTS 1) Nike has a Brand name that is so familiar worldwide 2) Nike is Financially strong that makes possible to remain in the market and competitive 3) Strong competition position, it can defeat its major competitors 4) Sell variety of models not only one or two types of products 5) Nike has Effective Research and Development that makes it to be innovative 6) Effective promotional activities, it also sponsored many sports 7) Successful experience for being competitive because it had been in operation for ages 8) Nike engages in many international marketing efforts 9) Nike Strongly controls over its own distribution channels 10) Nike doesn't own any Factories 11) Diverse portfolio & Customer Loyalty 12) Innovative designs

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2.1.4 KEY INTERNAL WEAKNESSES 1) Nike uses contracts for manufacturers that makes difficult to control quality of its products 2) Nike uses sport stars who fail to perform due to retired or injured 3) Heavy dependence on footwear sells 4) Nike uses contract manufacture in foreign countries, this create potential financial problem due to foreign currency fluctuations and increases interest change 5) Negative image portrayed by poor working conditions in its overseas factories 6) Nike only concentrates on youth and young adult market ignoring others 7) Luck of stores serving females 8) Strong competition from some of its major challengers in all branches of the business 9) Market is becoming saturated and consumers may become sick of Nike brand and move to other smaller, more individual brands. NIKE'S SWOT MATRIX SO Strategies  With the help of brand image and effective research and development, Nike can focus on growing E-Commerce (S2,S3,S7,O2)

WO Strategies  Product development (W3,W4)  Nike uses contracts for manufacturers that makes difficult to control quality of its

 Market development ( S1,S5 and O1)

products, it should sell these to control the

 As Nike's Brand name that so familiar

quality of its products (W1,w4,O2)

worldwide it can reach new and emerging

 Heavy dependence on footwear sells

markets (S1, O2)

 Nike is heavy dependence on footwear

 Nike is effective in R& D, so it can develop a new products (S5,O8) ST Strategies

sells, so it should produce new other items (W3,O2,,O5,O8 WT Strategies

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

Alternative Brand ( S1, S2, S5,T1)

a) Innovative Products (W3,T1 and T2)



Market penetration ( S6,52)

b) Nike is currently facing strong competition



Backward integration (S2, T5)

,because of its negative image due to



Nike e is Financially strong, so it can

"sweatshops" (W8,T8)

defeat its competitors by constant doing

c) Market is becoming saturated and

research and development, invention and

consumers may become sick of Nike brand

innovation (S2,S3, S5,T1)

and move to other smaller, more individual brands (W9,T1)

2.2 NIKES PRODUCTS Nike’s athletic footwear products, the most important revenue segment, are intended primarily for, but not restricted to, specific athletic use. The main emphasis that the Company places on its products are quality and innovation in products designed for men, women, and children. Nike sells sports apparel and accessories relevant to each sport mentioned above as well as sportsinspired lifestyle apparel, including bags, socks, sport balls, eyewear, protective equipment, basic sport equipment, etc. (Ruiz, 2010). 2.3 TARGET MARKET We focus our NIKE Brand product offerings in eight key categories: Running, Basketball, Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear (our sports inspired lifestyle products) and Golf. Basketball includes our Jordan Brand product offerings and Men’s Training includes our baseball and American football product offerings. We also market products designed for kids, as well as for other athletic and recreational uses such as cricket, lacrosse, tennis, volleyball, wrestling, walking and outdoor activities (Nike A. R., 2015). 2.4 SALES AND MARKETING: Nike is exposed to a number of demand factors in different geographic and product markets. The mix of product sales might differ significantly as a result of changes in seasonal and geographic demand for particular kinds of footwear, apparel and equipment (Ruiz, NIKE, Inc. (NKE), 2010)

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2.5 NIKE AS A LEADER IN ATHLETIC INDUSTRY “Companies that have taken leadership positions in their industries in the last decade such as Nike have done so by narrowing their business focus, not broadening it. They have focused on delivering superior customer value in line with one of three value disciplines: operational excellence, customer intimacy, or product leadership (Treacy and Wiersema 1993).” Although Nike was still considered to be the number three athletic footwear brand back in 1987 they were working as if they were on top. They applied new ideas, game changing innovations, and infused profitable creative assets into their business. With the development of the “Just Do It” campaign, the brand expansion via the creation of new products and top of the line communication programs, Nike was making moves (Neiderhauser, 2013) 2.6 NIKES MAJOR COMPETITORS Nike is currently facing touch completion from many companies like, Adidas, Reebok, Under Armour, Puma, Li Ning, Toys R us, Taylormade, PVH, Crocs, Rebook, PhatFarm, Atac, Sketcher, these companies compete with Nike in different ways as Brand, Price, Quality and other factors social responsibility, Nike is facing

better completions from Puma, Rebook and

Adidas in price, quality and brand. 2.7 NIKE'S APPROACH FOR MANAGING SUPPLIER Nike's move toward to managing supplier responsibility significantly evolved over the past two decades, with the company launching a robust system of supplier monito...