Jarryd Phillips, Jermaine West, Spencer Jacoby, Othniel Hyliger, Steven Pelletier

Nike, Inc. Strategic Analysis 2009

*HISTORYMAJOR MILESTONESCURRENT VISION & MISSION STATEMENTS PROPOSED VISION & MISSION STATEMENTS

EXTERNAL ASSESSMENT POSITIONING MAP CPM MATRIX OPPORTUNITIES & THREATSEFE MATRIX

INTERNAL ASSESSMENT ORGANIZATIONAL CHART 2009 INCOME STATEMENT 2009 BALANCE SHEET CURRENT FINANCIAL RATIOS FINANCIAL TRENDS STRENGTH & WEAKNESSES IFE MATRIX

STRATEGIC ASSESSMENT SWOT MATRIX SPACE MATRIX GRAND STRATEGY MATRIX BCG MATRIX IE MATRIX MATRIX ANALYSIS QSPM RECOMMENDATIONS OBJECTIVES

STRATEGIC IMPLEMENTATION PROJECTED INCOME STATEMENT PROJECTED BALANCE SHEET PROJECTED FINANCIAL RATIOS

EVALUATION BALANCED SCORECARDSOURCESQUESTIONS

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1970- The Swoosh first appears on a football/soccer cleat called the Nike.1978- Tennis "bad boy" John McEnroe is signed by Nike to an endorsement contract.1989- Nike enters the European football market1994 +2003- Nike wins Advertiser of the Year at the Cannes Advertising Festival.1996- Nike signs Tiger Woods1999- Bill Bowerman, co-founder of Nike, dies on Dec. 24 at age 88.2002- Nike purchases Hurley International2003- Nike acquires once-bankrupt rival Converse for $305 million2004- Phil Knight steps down as CEO and President of Nike, but continues as chairman2005- Nike Signs Tennis Pro Rafael Nadal.2006- Nike and Apple release the Nike+iPod sports kit2008- Nike sells its Nike Bauer hockey equipment division & purchases Umbro.

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"To bring inspiration and innovation to every athlete in the world" If you have a body, you are an athlete.

*Nike co-founder Bill Bowerman

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.

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To equip every athlete with products that combine performance, quality, and fashion.

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At Nike, we desire to deliver superior products to customers and athletes that are both safe and dependable (1, 2 and 6). Our well trained employees and experienced executives will ensure a competitive advantage for our markets, growth for the company, and profits for our shareholders (5). Our commitment to social responsibility and the communities in which we operate will ensure business relationships and alliances for the future and a perception of concern with our stakeholders (6, 8). We will continue to utilize innovation and technology to provide our employees with the best possible work environment while adapting to the many changes in the global market (3, 4, 7, and 9).

*1. Customers2. Products or services3. Markets4. Technology. 5. Concern for survival, growth, and profitability6. Philosophy7. Self-concept8. Concern for public image 9. Concern for employees

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*High PerformanceLow PerformanceHigh PriceLow Price

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NIKEADIDASPUMACritical Success factorsWeightsRatingWeighted ScoreRatingWeighted ScoreRatingWeighted Score0.0 to 1.01 to 41 to 41 to 4Advertising0.1030.3040.4030.20Product Quality0.0840.3230.2420.16Price Competitiveness0.0820.1630.2410.08Management0.0630.1840.2420.12Financial Position0.0840.3230.2410.08Customer Loyalty0.0530.1520.1010.05Global Expansion0.0530.1540.2020.10Market Share0.0840.3220.1610.08Brand0.0940.3630.2710.09Endorsement Deals0.1040.4030.3030.30Portfolio Diversification0.0830.2440.3220.16Product Placement0.0930.2720.1810.09Research & Development0.0630.1840.2410.06Totals1.003.353.131.57

Creating sportswear that would incorporate recycled materials from their own production lines and other places.Promotion as a fashionable wear, not just sportswear.Growing segment of the female athletes.International expansion into emerging markets e.g.. IndiaAdditional marketing of existing products to appeal to new demographic groups.Develop new alliances with companies that are respected regarding social responsibility. Brand reorganization by market regions*

High competitive industryFailure to respond to market trends in timely manner could greatly affect financial position. Production of counterfeit goods, and generic products.Negative public perception created by environmental, child labor, contracted manufacturing issues, and sponsored athletes. International currency changes could decrease profits.Federal Trade regulations in dealing with foreign manufactures.*

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External Opportunities1. Creating sportswear that would incorporate recycled materials from their own production lines and other places.0.0530.152. Promotion as a fashionable wear, not just sportswear.0.0620.123. Growing segment of the female athletes.0.0830.244. International expansion into emerging markets e.g. India0.1240.485. Additional marketing of existing products to appeal to new demographic groups.0.0720.146. Develop new alliances with companies that are respected regarding social responsibility. 0.0610.067. Brand reorganization by market regions0.0720.14External Threats1. High competitive industry0.1440.562. Failure to respond to market trends in timely manner could greatly affect financial position. 0.0940.363. Production of counterfeit goods, and generic products.0.0620.124. Negative public perception created by environmental, child labor, contracted manufacturing issues, and sponsored athletes. 0.0930.275. International currency changes could decrease profits.0.0620.126. Federal Trade regulations in dealing with foreign manufactures.0.0520.27Totals1.003.03

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Year Ended May 31(In millions, except per share data)200920082007

Revenues $ 19,176.10 $ 18,627.0 $ 16,325.9 Cost of sales $ 10,571.70 $ 10,239.6 $ 9,165.4 Gross margin $ 8,604.40 $ 8,387.4 $ 7,160.5 Selling and administrative expense $ 6,149.60 $ 5,953.7 $ 5,028.7 Restructuring charges (Note 16) $ 195.00 $ - $ - Goodwill impairment (Note 4) $ 199.30 $ - $ - Intangible and other asset impairment (Note 4) $ 202.00 $ - $ - Interest income, net (Notes 1, 7 and 8) $ (9.50) $ (77.1) $ (67.2)Other (income) expense, net (Notes 17 and 18) $ (88.50) $ 7.9 $ (0.9)Income before income taxes $ 1,956.50 $ 2,502.9 $ 2,199.9 Income taxes (Note 9) $ 469.80 $ 619.5 $ 708.4 Net income $ 1,486.70 $ 1,883.4 $ 1,491.5 Basic earnings per common share (Note 12) $ 3.07 $ 3.80 $ 2.96 Diluted earnings per common share (Note 12) $ 3.03 $ 3.74 $ 2.93 Dividends declared per common share $ 0.98 $ 0.875 $ 0.71

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May 31,20092008(In millions)ASSETSCurrent assets: Cash and equivalents $ 2,291.10 $ 2,133.90 Short-term investments $ 1,164.00 $ 642.20 Accounts receivable, net (Note 1) $ 2,883.90 $ 2,795.30 Inventories (Notes 1 and 2) $ 2,357.00 $ 2,438.40 Deferred income taxes (Note 9) $ 272.40 $ 227.20 Prepaid expenses and other current assets $ 765.60 $ 602.30 Total current assets $ 9,734.00 $ 8,839.30 Property, plant and equipment, net (Note 3) $ 1,957.70 $ 1,891.10 Identifiable intangible assets, net (Note 4) $ 467.40 $ 743.10 Goodwill (Note 4) $ 193.50 $ 448.80 Deferred income taxes and other assets (Notes 9 and 18) $ 897.00 $ 520.40 Total assets $ 13,249.60 $ 12,442.70 LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities: Current portion of long-term debt (Note 8) $ 32.00 $ 6.30 Notes payable (Note 7) $ 342.90 $ 177.70 Accounts payable (Note 7) $ 1,031.90 $ 1,287.60 Accrued liabilities (Notes 5 and 18) $ 1,783.90 $ 1,761.90 Income taxes payable (Note 9) $ 86.30 $ 88.00 Total current liabilities $ 3,277.00 $ 3,321.50 Long-term debt (Note 8) $ 437.20 $ 441.10 Deferred income taxes and other liabilities (Note 9) $ 842.00 $ 854.50 Commitments and contingencies (Notes 15 and 18) $ - $ - Redeemable Preferred Stock (Note 10) $ 0.3 $ 0.3 Shareholders equity: Common stock at stated value (Note 11): Class A convertible 95.3 and 96.8 shares outstanding $ 0.1 $ 0.1 Class B 390.2 and 394.3 shares outstanding $ 2.7 $ 2.7 Capital in excess of stated value $ 2,871.40 $ 2,497.80 Accumulated other comprehensive income (Note 14) $ 367.50 $ 251.40 Retained earnings $ 5,451.40 $ 5,073.30 Total shareholders equity8693.17825.3 Total liabilities and shareholders equity13249.612442.7

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Liquidity RatiosCurrent2.97Quick 2.25Leverage RatiosDebt to total assets 0.06Debt to equity 0.09Long-term debt to equity 0.05Times-interest-earned ratio 61.06Activity RatiosFixed Assets Turnover 9.8Total Assets Turnover 1.45Inventory Turnover 8.14Profitability Ratios Gross profit margin0.45Operating profit margin 0.13Net profit margin 0.08Return on assets 0.11Return on equity 0.17Price-earnings ratio 18.83EPS 3.03

Growth Ratios3 YearsSales Growth% 0.28226Net Income Growth% 0.06803Earnings per share Growth% -0.4261Dividends per share Growth% -0.1695

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DateSalesEBITDEPRECIATIONTOTAL NET INCOMELONG TERM DEBTMay-0919.18 Bill1.96 Bill347.00 Mill1.49 Bill437.20 MillMay-0818.63 Bill2.50 Bill312.80 Mill1.88 Bill441.10 MillMay-0716.33 Bill2.20 Bill279.60 Mill1.49 Bill409.90 MillMay-0614.95 Bill2.14 Bill291.80 Mill1.39 Bill410.70 MillMay-0513.74 Bill1.86 Bill266.50 Mill1.21 Bill687.30 Mill

Recognized brand name Swoosh is ubiquitousStrong in research and development innovative product development Strong marketing campaign - sponsors top athletes. Marketing practices enables them to expand the athletic market. Diverse portfolio Successful advertising campaigns.Customer loyaltyStrong financial positionStrong international presence *

Products are highly pricedRevenues are still mostly dependent upon footwear salesHistory for violations of minimum wages, child labor and over times in its manufacturing countries.Little control over quality of products from 3rd party contractorsAnti-globalization groupsPrice sensitivity of products*

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Internal StrengthsRecognized brand name Swoosh is ubiquitous0.1040.40Strong in research and development innovative product development 0.0730.21Strong marketing campaign - sponsors top athletes. Marketing practices enables them to expand the athletic market0.0940.36A very professionally competitive company 0.0830.24Diverse portfolio 0.0830.24Successful advertising campaigns0.0940.36Customer loyalty0.0630.18Strong financial position0.0940.36Strong international presence 0.1040.4Internal WeaknessesProducts are highly priced0.0620.12Revenues are still mostly dependent upon footwear sales0.0520.10History for violations of minimum wages, child labor and over times in its manufacturing countries.0.0620.12Little control over quality of products from 3rd party contractors0.0510.05Anti-globalization groups0.0420.08Price sensitivity of products0.0620.12Totals1.003.10

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Financial Strengthrating is 1 (worst) to 6 (best)Ratings1 Liquidity 6.02 Leverage 6.03 Working capital 6.04 Return on assets 4.05 Return on equity 4.06 Price per earnings 6.07 Earnings per share 5.0Industry Strengthrating is 1 (worst) to 6 (best)FS Total37.01 Profit potential 6.02 Extent Leveraged 5.03 Economies of scale 5.04 Growth potential 5.05 Financial stability 6.06 Resource utilization 5.07 Diverse Portfolio 5.0Environmental Stabilityrating is -1 (best) to -6 (worst)IS Total37.01 Price range of competing products -2.02 Competitive pressure -2.03 Ease of exit from market -1.04 Successful and recognized advertising -1.05 Endorsement agreements -1.06 Price elasticity of demand -1.07 Risk involved in business -1.0Competitive advantagerating is -1 (best) to -6 (worst)ES Total-9.01 Market share -1.02 Global presence -1.03 Strong investor reputation -1.04 Technological innovation -1.05 Product life cycle -2.06 Customer loyalty -1.07 Control over suppliers and distributors -3.0CS total -10.0

ES average -1.29CA average-1.43IS average5.29FS average5.29

X Coordinate3.86Y Coordinate4.00

Strategy ->>>>Aggressive

*Rapid Market GrowthSlow Market GrowthWeak Competitive MarketStrong Competitive MarketQuadrant IIQuadrant IIIQuadrant IQuadrant IVMarket DevelopmentMarket PenetrationProduct DevelopmentForward IntegrationBackward IntegrationHorizontal IntegrationRelated Diversification

*1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0LowHigh+250+5+15+20-25-20-15-5LowIGRStarsQuestion MarksCash CowDogs(2) 37%(1) 35%(3) 17%(4) 11%IIIIIIIV

DivisionsRevenue% RevenueProfits% ProfitsRMSPIG Rate%(1) U.S.6,542.939%837.235%11.20%(2) AMEA5,512.233%877.137%1-2.20%(3) Asia Pacific3,322.020%394.617%12.70%(4) Americas1,284.78%263.611%11.20%Total16,661.8100%2,372.5100%

*High 3-4Medium 2-2.99Low 1-1.99Strong 3-4Average 2-2.99Weak 1-1.99EFEI F E

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Alternative StrategiesIESPACEGRANDBCGCountForward Integrationxxxx4Backward Integrationxxxx4Horizontal Integrationxxxx4Market Penetrationxxxx4Market Developmentxxxx4Product Developmentxxxx4Related Diversificationxx2Unrelated Diversificationx1Horizontal DiversificationJoint VentureRetrenchmentx1Divestiturex1Liquidationx1

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Market ExpansionProd/Recycle/MaterialsAdd. Sports Accessories Key factorsWeightASTASASTASASTASExternal1 to 41 to 41 to 4Create products from recycled materials 0.130.320.240.4Promotion as a fashionable wear, not just sportswear.0.0730.2110.0720.14Growing segment of the female athletes0.08------International expansion into emerging markets - India0.1240.4820.2410.12Add. marketing of existing prod - appeal to new groups0.130.320.240.4New alliances with co. respected for social responsibility0.0630.1820.1210.06Brand reorganization by market regions0.0640.2410.0620.12High competitive industry0.0840.3230.2420.16Failure to respond to market trends in timely manner 0.06------Negative public perception0.06------Federal Trade regulations with foreign manufactures0.0840.3230.3220.16International currency changes could decrease profits0.0720.1440.3230.21Production of counterfeit goods, and generic products0.0630.1820.1210.06total should be 1.01Internal1 to 41 to 41 to 4Recognized brand name Swoosh is ubiquitous0.140.430.320.2Strong in research and development/innovation 0.0940.3620.1830.27Strong marketing campaign/sponsors top athletes0.0820.1610.0830.24Diverse portfolio0.0910.0930.2720.18Successful advertising campaigns0.0710.0720.1430.21Customer loyalty0.0730.2120.1410.07Strong financial position0.0820.1630.2440.32Strong international presence 0.0840.3230.2410.08Products are highly priced0.0610.0620.1230.18Revenues still mostly dependent upon footwear sales0.0530.1520.110.05Violations for wages and child labor in manuf. countries0.06------Little control over quality of prod. from 3rd party contract.0.0620.1230.1810.06Anti-globalization groups0.05------Price sensitivity of products0.0630.1820.1210.06total should be 1.0104.9543.75

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To continue being the world leader in sports equipment and apparel.To complete brand reorganization within market regions that will lower cost of sales. To create sportswear that would incorporate recycled material.To develop new alliances with companies who are well respected regarding social responsibility.To invest in additional marketing of existing products that will appeal to new demographic groups.To promote products as fashion wear, not just sportswear.*

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Year Ended May 31Projected 20092010(In millions, except per share data)Revenues $ 19,176.10 $ 19,463.74 Forecasted 1.5% revenue increase.Cost of sales $ 10,571.70 $ 10,730.28 1.5% increase. Gross margin $ 8,604.40 $ 8,733.47 Selling and administrative expense $ 6,149.60 $ 6,351.95 3.3% increase from previous year.Restructuring charges (Note 16) $ 195.00 $ - Goodwill impairment (Note 4) $ 199.30 $ 50.00 Intangible and other asset impairment (Note 4) $ 202.00 $ - Interest income, net (Notes 1, 7 and 8) $ (9.50) $ (9.50)Other (income) expense, net (Notes 17 and 18) $ (88.50) $ (88.50)Income before income taxes $ 1,956.50 $ 2,429.52 Income taxes (Note 9) $ 469.80 $ 583.08 Based on 24% from 2009Net income $ 1,486.70 $ 1,846.43 Basic earnings per common share (Note 12) $ 3.07 $ 3.20 Diluted earnings per common share (Note 12) $ 3.03 $ 3.16 Dividends declared per common share $ 0.98 $ 1.00

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Year Ended May 31, Projected2009 2010

ASSETSCurrent assets: Cash and equivalents $ 2,291.10 $ 2,163.80 Minus $161.67 in investment. Short-term investments $ 1,164.00 $ 1,164.00 Accounts receivable, net (Note 1) $ 2,883.90 $ 2,976.18 3.2% previous Inventories (Notes 1 and 2) $ 2,357.00 $ 2,628.00 Influenced by the cricket line Deferred income taxes (Note 9) $ 272.40 $ 272.40 Prepaid expenses and other current assets $ 765.60 $ 900.00 Total current assets $ 9,734.00 $ 10,104.38 Property, plant and equipment, net (Note 3) $ 1,957.70 $ 1,972.70 Plus $15 million for three new stores.Identifiable intangible assets, net (Note 4) $ 467.40 $ 467.40 Goodwill (Note 4) $ 193.50 $ 95.00 Deferred income taxes and other assets (Notes 9 and 18) $ 897.00 $ 977.56 Total assets $ 13,249.60 $ 13,617.04 LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities: Current portion of long-term debt (Note 8) $ 32.00 $ 6.90 Notes payable (Note 7) $ 342.90 $ 375.00 Accounts payable (Note 7) $ 1,031.90 $ 1,051.50 Accrued liabilities (Notes 5 and 18) $ 1,783.90 $ 1,783.90 Income taxes payable (Note 9) $ 86.30 $ 90.00 Total current liabilities $ 3,277.00 $ 3,307.30 Long-term debt (Note 8) $ 437.20 $ 405.20 Less portion of $32.0Deferred income taxes and other liabilities (Note 9) $ 842.00 $ 872.71 Commitments and contingencies (Notes 15 and 18) $ - Redeemable Preferred Stock (Note 10) $ 0.30 $ 0.30 Shareholders equity: Common stock at stated value (Note 11): Class A convertible 95.3 and 96.8 shares outstanding $ 0.10 $ 0.10 Class B 390.2 and 394.3 shares outstanding $ 2.70 $ 2.70 Capital in excess of stated value $ 2,871.40 $ 2,995.40 Accumulated other comprehensive income (Note 14) $ 367.50 $ 367.50 Retained earnings $ 5,451.40 $ 5,665.83 Total shareholders equity $ 8,693.10 $ 9,031.53 Total liabilities and shareholders equity $ 13,249.60 $ 13,617.04

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2009Projected 2010Liquidity RatiosCurrent2.973.06Quick 2.252.26Leverage RatiosDebt to total assets 0.060.06Debt to equity 0.090.09Long-term debt to equity 0.050.04Times-interest-earned ratio 48.5565.66Activity RatiosFixed Assets Turnover 9.89.87Total Assets Turnover 1.451.43Inventory Turnover 8.147.41Profitability Ratios Gross profit margin0.450.45Operating profit margin 0.10.12Net profit margin 0.080.09Return on assets 0.110.14Return on equity 0.170.20Price-earnings ratio 18.8317.83EPS 3.033.20

Growth Ratios3 Years1 YearSales Growth% 0.282261.50Net Income Growth% 0.0680324.20Earnings per share Growth% -0.42614.23Dividends per share Growth% -0.16952.04

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Area of ObjectivesMeasureTime ExpectationPrimary ResponsibilityCustomers1. Customer satisfactionCustomer and online surveysQuarterlyManagers/ Marketing2. Customer LoyaltyProduct and purchasing reviews. Memberships and number of returning and new customers.QuarterlyMarketing3. AccessibilityOpen more stores in various countries.Biannually- AnnuallyMarketingManagers/Employees1. Improve working conditionsIncrease in productivity, employee surveys.QuarterlyCEO2. Improve employee trainingIncrease in productivity and overall operating efficiencyQuarterlyHuman ResourcesCommunity/Social Responsibility1. Business EthicsEndorse positive role model athlete`s. Increase promotion of sports and wellness.AnnuallyCEO2. Environmentally FriendlyRecycle materials, improve reputation and customer perspective.BiannuallyCEO3. Community involvementRun local sports camps, community/ city events- increase customer awareness.BiannuallyRegional ManagersOperations/ Processes1. Improve Brand ImageIncrease in sales and customer recommendations.QuarterlyCEO2. Product InnovationNumber of new stores, products and marketingQuarterlyCEO/ Marketing3. Market PenetrationNumber of stores and sales in new/ other countriesAnnuallyMarketingFinancial1. Reduce Cost of productionDecrease in production expenses.AnnuallyCFO2. Increase RevenueIncrease in annual salesAnnuallyCFO

http://www.youtube.com/watch?v=4Uugz5Y7u6M*

http://investors.nikeinc.com/Investors/Financial-Reports-and-Filings/Annual-Reports/default.aspxhttp://investors.nikeinc.com/Theme/Nike/files/doc_financials/AnnualReports/2009/docs/Nike_2009_10-K.pdfhttp://investors.nikeinc.com/Theme/Nike/files/doc_financials/AnnualReports/2006/docs/10k.pdfhttp://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=NKE:US&dataset=incomeStatement&period=A&currency=nativehttp://finance.yahoo.com/q/is?s=NKE+Income+Statement&annualhttp://www.nike.com/nikeos/p/nike/en_US/?&refDatamonitor.com UMFK library siteshttp://en.wikipedia.org/wiki/List_of_most_populous_cities_in_Indiawww.yahoofinance.comhttps://materials.proxyvote.com/Approved/654106/20090724/AR_44240/HTML2/default.htmhttp://en.wikipedia.org/wiki/Nike_timelinehttp://nikeinc.com/pages/history-heritagehttp://investing.money.msn.com/investments/financial-statements?symbol=NKE http://www.nike.com/nikeos/p/nike/en_IN/store_locator Strategic Management Concepts and Cases 13th Edition. Fred R. David.

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