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INTRODUCTION In this paper, there would be a thorough deep analysis about a global footwear company that produces their products all across the country and opening up distribution in every nation. Nike.inc has been one of the inspiration for our project. They have gone through the market and strategies for more over 50 years of time. They have reached a title of ‘global company’ and experienced in creating most demand of footwear sales all across country. In this opportunity, we’d like to discuss about their strategies, long-term objectives, and what is possible for them to improve their performance even better. Strategic Management is used for analysing all aspects that made Nike to be successful, and creating more demand through the strategies. The strategies will be based on the research and possible projected costs and will be chosen from the highest return.

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TABLE OF CONTENTS INTRODUCTION VISION & MISSION EXTERNAL OPPORTUNITIES & THREATS COMPETITIVE PROFILE MATRIX (CPM) EXTERNAL FACTOR MATRIX INTERNAL STRENGTHS & WEAKNESSES INTERNAL FACTOR MATRIX STRATEGIES LONG TERM OBJECTIVES & TIME TABLE PROJECTED RATIOS & FINANCIALS ANNUAL OBJECTIVES & POLICIES STRATEGY REVIEW & EVALUATION CONCLUSION

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ABSTRACTS Research Method The members of this research are consisted of 2 people, Jonathan Lukasanto and Siti Raudhah. We use information technology as our way of collecting data. The type of data that we used are from the official site of Nike itself, development graphs/charts of Nike externally, and forums. •

Nike website : www.nike.com

We use Nike official website to support our ideas and arguments in a research paper. The advantages are it lets us look at specific topics from an interdisciplinary perspective and the ability to gain access to the most current information. Direct access to current information increases the effectiveness in our search for information.

•

Development graphs/charts : we use graphs/charts as our type of data to know the development externally and the company growth.

•

Forums : we use forums as our qualitative data methods to know about public opinion.

Data Analysis Method

In this research, we use several analysis methods:

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1. IFE and EFE Matrix ! as a strategy-formulation tool that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company.

2. Competitive Profile Matrix ( CPM ) ! to compare it with the major firms of the industry. The CPM shows the firm its weak and strong points as compared to the major players in the industry.

The

CPM

takes

into

account

effectiveness

of

advertising, product quality, management, finances, the prices and competitiveness among other factors.

3. Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix ! to help the company to understand its internal capabilities and external market conditions. Then, use it to develop a strategy for business that gains benefit from the strengths and opportunities while avoiding weaknesses and threats.

4. Boston Consulting Group (BCG) Matrix ! help organisations with the task of analysing their product line or portfolio to provide a useful insight into the likely opportunities and problems with a particular product.

History

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Nike, originally known as Blue Ribbon Sports (BRS), was founded by University of Oregon track athlete Philip Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS), making most sales at track meets out of Knight's automobile. According to Otis Davis, a student athlete whom Bowerman coached at the University of Oregon, who later went on to win two gold medals at the 1960 Summer Olympics, Bowerman made the first pair of Nike shoes for him, contradicting a claim that they were made for Phil Knight. Says Davis, "I told Tom Brokaw that I was the first. I don't care what all the billionaires say. Bill Bowerman made the first pair of shoes for me. People don't believe me. In fact, I didn't like the way they felt on my feet. There was no support and they were too tight. But I saw Bowerman make them from the waffle iron, and they were mine."[7] In 1964, in its first year in business, BRS sold 1,300 pairs of Japanese running shoes grossing $8,000. By 1965 the fledgling company had acquired a full-time employee, and sales had reached $20,000. In 1966, BRS opened its first retail store, located at 3107 Pico Boulevard in Santa Monica, California next to a beauty salon, so its employees no longer needed to sell inventory from the back of their cars. In 1967, due to rapidly increasing sales, BRS expanded retail and

distribution

operations

on

the

Massachusetts.[8]

5

East

Coast,

in

Wellesley,

By 1971, the relationship between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the Swoosh newly designed by Carolyn Davidson.[9] The Swoosh was first used by Nike on June 18, 1971, and was registered with the U.S. Patent and Trademark Office on January 22, 1974.[10] In 1976, the company hired John Brown and Partners, based in Seattle, as its first advertising agency. The following year, the agency created the first "brand ad" for Nike, called "There is no finish line", in which no Nike product was shown. By 1980, Nike had attained a 50% market share in the U.S. athletic shoe market, and the company went public in December of that year.[11] Together, Nike and Wieden+Kennedy have created many print and television

advertisements, and

Wieden+Kennedy

remains

Nike's

primary ad agency. It was agency co-founder Dan Wieden who coined the now-famous slogan "Just Do It" for a 1988 Nike ad campaign, which was chosen by Advertising Age as one of the top five ad slogans of the 20th century and enshrined in the Smithsonian Institution.[12] Walt Stack was featured in Nike's first "Just Do It" advertisement, which debuted on July 1, 1988.[13] Wieden credits the inspiration for the slogan to "Let's do it", the last words spoken by Gary Gilmore before he was executed.[14] Throughout the 1980s, Nike expanded its product line to encompass many sports and regions throughout the world.[15] In 1990, Nike

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moved

into

its

eight-building

World

Headquarters

campus

in

Beaverton, Oregon.[16] Acquisitions Nike has acquired several apparel and footwear companies over the course of its history, some of which have since been sold. Its first acquisition was the upscale footwear company Cole Haan in 1988,[17] followed by the purchase of Bauer Hockey in 1994. In 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley.[18] In 2003, Nike paid US$309 million to acquire Converse, makers of the Chuck Taylor All-Stars line of sneakers.[19] The company acquired Starter in 2004[20] and Umbro, known as the manufacturers of the England national football team's kit, in 2008.[21] In order to refocus on its core business lines, Nike began divesting of some of its subsidiaries in the 2000s.[22] It sold Starter in 2007[20] and Bauer Hockey in 2008.[23] The company sold Umbro in 2012,[24] and Cole Haan in 2013.[25] As of 2013, Nike owns two key subsidiaries:

Converse

Inc.

and

Hurley

International.

Source

:

Wikipedia

Information on Nike’s brand Porter's Five Forces Barriers to Entry - Low The Barriers to entry to the athletic footwear industry are quite low. Though selling top quality footwear for athletes is a highly competitive field, there is a huge potential for new entrants. Due to the enormous 7

scale of operations of both NIKE and Adidas, they are able to control their costs and hence maintain a competitive advantage over new and emerging competitors. Their powerful brand identities give them an aura which is difficult for a new entrant to pervade through and beat. Their brand images have a distinct competitive advantage. Even with all these factors coming into play, the industry is a comparatively easy one for new manufacturers to enter. Also, there is a threat of other manufacturers to expand their portfolio. These, with already strong regional brand names, might emerge strong competitors. For example, in India Bata launched its Power brand of running and athletic shoes which are still going strong. In addition to these, there is also the loss from copies of their premium footwear, made mostly in the far eastern countries. They also result in a huge loss of revenue. Bargaining power of buyers - High There are a huge number of buyers with respect to the number of brands in the industry. Therefore these companies are in a constant struggle to differentiate their brand and use other innovative means to market them differently and successfully. They must establish a strong brand identity, essential to attract and retain the target consumer. Identity is the key to brand trust and loyalty. Many buyers in new markets are cost sensitive and switching cost is low for the buyer, hence the importance of the brand image. The buyers of sports footwear have changed in the past decade and there has been an increase in woman purchasing athletic footwear. The new generation 8

has vastly different tastes and purchasing methods. All in all, the buyers have a high amount of bargaining power. Bargaining Power of Suppliers – Low

NIKE – Marketing Strategies

Bargaining power of suppliers to this industry is virtually non-existent. There are a large number of suppliers in the market and the materials needed for this industry, namely, Cotton, Rubber and Leather are commodities readily available in the open market. The conglomerates hold sway over the suppliers as they have mostly standardized their input procedures and hence can easily switch between substitutes. This gives them enormous power over their suppliers. The suppliers are usually dependent on these firms as a means of survival. In this situation, bargaining power of suppliers is negligible.

There are no real substitutes for athletic footwear. There may be substitutes for a fashion item. But for a professional athlete, substitutes for his shoes do not exist. He cannot play with boots or his bare feet. He cannot switch mainly due to his performance specifications but he has little alternative to switch as well. A consumer is not likely to switch and so, the threat of substitutes is very low. Rivalry among existing Competitors - High

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The rivalry among existing competitors is very high in this industry. NIKE, Adidas and others in this field such as Puma and Reebok have grown tremendously in the last decade and each of them have been offering more choice, more identity due to endorsements by top sporting personalities and by aggressive marketing and sales strategies. The industry is in hyper competition and the rivalry is extremely fierce. The intense competitive rivalry makes the need for differentiation very important. A differentiation strategy required the need for brand creation and enhancement. NIKE must ensure that any international marketing strategies will continue to enhance its already superior brand name through an integrated marketing communication.

1. Vision, mission, objectives, and strategies 1.1Vision Statement: “To bring inspiration and innovation to every athlete* in the world” *“If you have a body, you are an athlete” – Bill Bowerman, co-founder 1.2 Mission Statement: Nike is the “largest seller of athletic footwear and athletic apparel in the

world.

Performance

and

reability

of

shoes,

apparel,

and

equipment, new product development, price, product identity through marketing and promotion, and customer support and service is

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important aspects of compeetition in the athletic footwear, apparel, and equipment industry. We believe we are competitive in all of these areas.” 1.3 Objectives “to lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike.” 1.4Strategies Primary : •

Focus on finding the most promising customers (kids and women) and introduce more products or improve current ones to satisfy potential increase in demand

Alternatives : •

Keep expanding into current and future foreign markets by being aggressive and the worldwide leader of the footwear industry

•

Accelerate funding for numerous marketing campaigns in order to get to specif markets or customer groups

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•

Focus on improving working condition and human rights at international manufacturer centers and at the same time increasing their productivity

•

Implement

product

technologies

so

diversification

resulting

with

increased

company’s earnings

newest

could

be

reinvested into R&D plans

Develop Vision and Mission

2.1 Developing Vision

•

Continue to bring inspiration to present and future athletes, while maintaining the company’s standard of quality for its products.

By

integrating

information

from

the

various

stakeholders groups, rethinking pass mistakes and processes will allow Nike to continue, implementing sustainable principles. This information enables Nike to make changes in the industry and in the company. Identifying challenges, brainstorming solutions, deciding and acting to evaluate, reevaluate if the vision is in line with expectations.

2.2 Developing Mission Statement

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monitor, and

•

To continue to offer quality products with increasing growth in the industry and expanding globaly. Their mission has always been to provide a competitive edge by developing the most technological products. Keeping in mind fair labor practices in all our supplier’s factories, while maintaining a competitive advantage, with the shareholders interests, and company profits in mind. Also believe our employees are one of our most important assets. To increase the responsibility toward the environment by evaluating the impact of day-to-day operation and attempts to change operations that have a negative impact.

Step 3: Identify the organization’s external opportunities and threats. Organization’s external opportunities and threats In this section, main opportunities that Nike have to do in the market and threat by the industry, mainly competitors will be discussed further. Opportunities that are derived from the external environment, such as the market itself, conditions and trends are becoming the important aspects in Nike’s growth in opportunity. 1.) Customer use of company’s products change from athletic purpose to fashion item.

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" When the market for athletic purpose has reached its maturity, Nike has another big opportunity to introduce how their products can be fashion items and trends. They had begun their invasion toward fashion industry by launching a model of products named : Nike Air Max. It can be used for exercising as well as for the sake of fashion. Nowadays, you can witness people using Nike footwears as their apparel when they want to go to school, university or even work. 2.) Development of international trade (GAAT and NAFTA) ! As Nike has expanded and started gaining markets outside the US, it becomes a big opportunity for Nike to “use” the development of policy in free trading. The cost to distribute Nike around North America and surroundings are tax free and that saved a lot of money. Therefore, Nike doesnt have to open any manufacturing there. They can use the money in other places. Furthermore, as GAAT is expanding more and more complex, there is a possibility that free trade will cover the Southern America or even the whole world. That will be a competitive advantage for a company like Nike will embrace. 3.) Changing Consumer Behaviour ! Consumer Behaviour for footwear industry like Nike is changing to a position where people buy footwear products not only for their needs of doing exercise, but also for fashion needs. ! This so called “sporty-fashion” products trend are booming all around the world, people use it for their non-sporty activities (school, universities, work). What Nike has been doing is keep innovating and

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finding the best model to suit into the market. Once they have gotten their signature model, it becomes even bigger than ever. 4.) Bigger Scope of Product Development Areas ! Technology is a broad topic to bring up. But, in this case, Nike has an opportunity to embrace the development of machinery creations through more advanced technology which make those all are possible. As we can see, they have started with Fuel Band – a technology that is used in your arm to measure how many movements and steps you have done in a day. That shows that Nike has much more to offer and their innovations haven’t been beaten by any of its competitors. 5.) Growing E-Commerce --> This information technology is totally useful for a company like Nike, while the consumers are not only businesses but mainly end users. End users are societies and without them Nike is nothing. When it comes to them, they just want everything to be practical and informative. Through this information technology, we can develop websites to sell, pick up, delivery or even advertise our products there. And as more emerging markets are used to utilize the importance of technology, that will open up opportunities to more sales in a future. 6.) More Emerging Markets are ready ! It is true that Nike has its highest sales in the US by far, however it has reached its maturity level. The market in the US has known Nike and the fluctuations of Sales are not that much and can’t get big direct impact on the development of the company. People would buy 15

Nike because of its quality and the price is suitable for the market in the US. However, since more emerging & developing markets have not reached any close to maturity level, and they have significant increase in income throughout the years, it becomes possible that those big populations are the new market for Nike to expand. Moving to the fact that a big company like Nike, even have more threats that what smaller companies do. Simply said, because everyone wants to try to be Nike as they had success for over the years. Here is listed below what are the threats that Nike is facing. 1.) Competitors following the same business model ! The business model that we are talking here is producing a high vaue branded product with high price. That means whenever people want to buy sport shoes with high quality and prestige, their minds go directly to Nike. ! When we are talking about Adidas, they have been in the same position mostly because they offer high quality products with high price range. And if Reebok or Puma do that in the future, it will be a great threat for Nike. 2.) Economic and Political Instability ! Economic instability involves fluctuation of the exchange rates between the US Dollars to other countries, especially emerging markets. Emerging markets have more instability than developed ones.

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