thenikefinal
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.
Just Do It.
Brian Johnson
Zach Lomas
Samuel Brace
Leslie Powell
Shawn Mitchell Ashley Hugh
“Business professional is an oxymoron. Business professional at Nike are Levis, running
shoes, and a Nike shirt. It’s an old school thought that stuck with University’s and
haven’t changed with the times.”
9
Nelson Farris
Director of Corporate Education
Created by the University of Oregon track athlete Phillip Knight
and his coach Bill Bowerman
Founded in 1964 as Blue Ribbon Sports, and later became Nike Inc.
in 1972.
Mission:"To bring inspiration and innovation to
every athlete in the world. If you have a body, you are an athlete."
Nike Overview
27
Nike Overview
Operates in more than 160 countries
Goal: to set Nike apart from the competition by providing products to athletes of every ability
Over 30,000 employees globally
World’s largest provider of shoes and athletic apparel 27
The Nike Campus (Headquarters) is located in Beaverton, Oregon
7,000 employees
Campus is 193 acres
Consists of 17 main buildings whose names pay tribute to legendary Nike athletes
The buildings on campus total more than 2 million square feet or about 35 football fields
Nike Campus
27
Nike Stats
The Nike name came from the Greek winged
Goddess of victory—Nike.
Nike paid only $35 for the
Swoosh logo.
The first Nike shoe was
created when Bowerman
poured liquid urethane into a
waffle iron.
The first pairs of Nike shoes were sold out
of Bowerman’s car for $3.30
each.
27-1-23-22
Acquire other footwear and
apparel companies.
Related Diversification Strategic Fit
Corporate Level Strategy
33
Our stuff’s Different…
“To build our business, we have to fuel and respond to consumer interest
around the world and continually appeal to changing demographics and new
markets in a deeply competitive
industry.”
33
Differentiation R&D
Considered Design
GX (GreenxChange)
BICEP
Generate Demand
Sports marketing (Athletes, Bball, Football, College
sports)
Advertising
("Nike Biz")
Business Level Strategy
26
Industry• Textile- Apparel Footwear & Accessories
Target Customer?
Competitor Analysis
2-23-27
“Everyone that has a body is an athlete.” - Nike.Com
• Brand Equity
Marketing
• Adidas concept stores• Puma retail stores
Manufacturing & Operations
Industry Key Success Factors
3-4-21-23-24-28-30
Acquisitions
Key Success Factors -
Nike• Converse $305 mil.• Hurley $50 mil.• Umbro $600 mil.
Puma • Cobra golf
Adidas• Reebok $3.8 Billion
New Balance• Vital
3-4-21-23-24-28-30
49%
36%
4%
9%2%
Financial Performance Nike Adidas New Balance Puma Under Armor
3-21-23-28-30
Nike’s Code of Conduct
Forced Labor
Child Labor
Compensation
Benefits
Hours of Work/ Overtime
Environment Safety & Health
Documentation & Inspection
2
Human Trafficking
Poor living conditions
Passports taken away
Excessive Overtime
Incidents have grown year after
year
Too many styles is contributor to
OT
Labor Practices & Factory Conditions
25
Minimum Wage Rates (Monthly)
Vietnam
$95
China
$140
Malaysia
$177
Brazil
$268
Mexico
$712
United States $1160
Australia $1856
8-13-14-17-18-31-32
Solutions
Conduct audits at minimum quarterly
Incentives for factories that excel in audits
Strategic partners & Bid Process
Increase expenses
Improve brand image
Promote better quality
Implications
$250 billion per year industry
Product enforcement doubled last year
4 of 5 counterfeit items originate in China
•Cargo Boat/Plane
•US Customs inspection rate of only 2%
•Transshipping through Canada/Mexico
How do counterfeits make it to the US?
Direct counterfeit vs. Generic “look-alike”
Counterfeiting
11-15
•Cheap, skilled labor
•Technical expertise
Nike produces a majority of their products in China
•Nike loses millions in potential revenues
•Intellectual property rights are stolen•Millio
ns spent on R&D
Why is this a problem?
Nike Counterfeits
29
Nike Counterfeits
High-markup products that can be produced at a low cost
Nike counterfeits:
• Footwear• Apparel• Golf products
Where is the market?
• Online auctions - eBay• Flea markets• Street sales
20,000 pairs of Nike sneakers
Nike hats, apparel, and other clothing worth an estimated $25 million
Accounting ledgers traced to China
Long Island, NY warehouse 1
100,000 items worth $20 million
Nike footwear, apparel, bags floor to ceiling
All products originated in China
Bay Ridge, Brooklyn
warehouse 4
Recent Counterfeit Seizures
5-20
Solutions
Stronger Internal Controls• Production facility
audits• Employee inspections
External Controls• Inspect flea markets• Work with
authorities• Further lobbying
Solutions
• Security Devices• Holograms• Individualized Serial
Numbers
Product Development
• How to Spot Counterfeits• Online Verification System
Customer Education
ImplicationsTighten controls in an effort to recover
lost revenues
Higher costs related to
Litigation
Must weigh the costs/benefits
Training
More overseas personnel to
inspect factories
Internet counterfeit experts
Product development
Individualizing products (serial
numbers)
Growth & Expansion
Nike needs to grow through increased
revenues and profits from increased sales
They can expand the Nike brand through
the “un-thought” sports
“Apparel is the single biggest opportunity for NIKE, Inc. We are already one of the world’s largest apparel companies but that is nothing compared to what is possible in this space.” • – Mark Parker, Nike CEO
Retail Sales Growth
$4.4 Billion in sales
29.9% Gross Profit Margin
3.1% Net Profit Margin
$4.85 Billion in sales
27.9% Gross Profit Margin
1% Net Profit Margin 7-10
Brand Expansion
• Nike sponsored India’s premier team to learn how to build better performing apparel and equipment
Cricket
“There are many unique customer groups and we want find a way to serve all of them.” – Farris
6
Australia New Zealand Argentina South
Africa England
Scotland Ireland Wales France
Brand Expansion
Rugby
Implications
Financial•Increased Debt & Liabilities•Decreased Cash
Marketing•Expand team and athlete sponsorships in the
“un-thought” sports
Management•Widen Horizontal
structure•Create new sports
divisions
Sources Cited-
1) 1964, By. "Nike History and Timeline." American Studies @ The University of Virginia. Web. 23 Apr. 2010. <http://xroads.virginia.edu/~CLASS/am483_97/projects/hincker/nikhist.html>.
2) "2007 Nike, Inc. Code of Conduct." Web. 15 Apr. 2010. <http://www.nikebiz.com/responsibility/documents/Nike_Code_of_Conduct.pdf>.
3) "Adidas AG." LexisNexis Acedemic. Reed Elsevier Inc., 22 Apr. 2010. Web. 22 Apr. 2010. <http://www.lexisnexis.com/hottopics/lnacademic/>.4) "Adidas Concept Stores." Welcome to Adidas. Web. 16 Apr. 2010. <http://www.adidas.com/conceptstores/content/index.asp?strBrand_adidascom=performance&strCountry_adidascom=us&country=us&strLanguage_adidascom=us&language=us>.
5) Associated Press, The. “Police Seize Fake Goods Worth Millions.” New York Times, p. 2. 17 Apr. 2008.
Sources Cited-
6) "Cricinfo.com." Cricinfo.com | Cricket News, Live Scores and Statistics. Web. 22 Apr. 2010. <http://www.cricinfo.com/indiandomestic2009/content/current/story/261616.html>.
7) Dick's Sporting Goods, Inc." LexisNexis Acedemic. Reed Elsevier Inc., 16 Apr. 2010. Web. 16 Apr. 2010. <http://www.lexisnexis.com/hottopics/lnacademic/>.
8) Fair Work Online. Web. 21 Apr. 2010. <http://www.fairwork.gov.av/Pay-leave-and-conditions/Finding-the-right-pay/Pages/Minimum-wage.aspx>.
9) Farris, Nelson. Telephone interview. 14 Apr. 2010.
10) Foot Locker, Inc." LexisNexis Acedemic. Reed Elsevier Inc., 16 Apr. 2010. Web. 16 Apr. 2010. <http://www.lexisnexis.com/hottopics/lnacademic/>.
11) Fong, M. “Counterfeit for Christmas.” Wall Street Journal, p. B1. 9 Dec. 2005.
12) Gunther, Marc. "Dick's Sporting Goods: Retail's Rising Star - Apr. 20, 2010." Business, Financial, Personal Finance News - CNNMoney.com. 20 Apr. 2010. Web. 20 Apr. 2010. <http://money.cnn.com/2010/04/20/news/companies/dicks_sporting_goods.fortune/index.htm?source=yahoo_quote>.
13) "Indonesian/Malaysia: Proposed Labor Pact Lacks Key Reforms." Human Rights Watch. 04 Mar. 2010. Web. 21 Apr. 2010. <http://www.hrw.org/en/news/2010/03/04/indonesiamalaysia-proposed-labor-pact-lacks-key-reforms.htm>.
14) Lingwei, Xie. "Minimum Wage to Be Increased as Economy Recovers." 26 Jan. 2010. Web. 21 Apr. 2010. <http://www.chinadaily.com.cn/2010-01/26/content_9380108.htm>.
Sources Cited-
Sources Cited-15) Leinwand, D. “Enforcement Boost Doubles Seizures of Counterfeit Items.” USA Today, p. 3A. 12 Jan. 2007.
16) Maureen Tkacik. "The Wall Street Journal Classroom Edition." CLassroomEdition.com. Sept. 2002. Web. 16 Apr. 2010. <http://www.wsjclassroomedition.com/archive/02sep/SPTS.htm>.
17) "Minimum Wage in Mexico for 2010." Web. 15 Apr. 2010. <http://www.monroycp.com/newsfeed/files/9b90d48a07c992e78c3000861e547445-1.html>.
18) "Minimum Wage Rises by $4.50 | Look At Vietnam." Look At Vietnam | Vietnam News Daily Update. 26 Mar. 2010. Web. 20 Apr. 2010. <http://www.lookatvietnam.com/2010/03/minimum-wage-rises-by-450.html>.
19) Moody, Robin J. "Adidas' $3.8B Acquisition of Reebok Surprises Analysts - Portland Business Journal." Portland News | Portland Business Journal. 5 Aug. 2005. Web. 25 Apr. 2010. <http://portland.bizjournals.com/portland/stories/2005/08/08/story8.html>.
20) Moynihan, C. “Counterfeiters Favored Nike, and Obama, Too.” New York Times, p. 17. 25 Apr. 2009
Sources Cited-
21) "NEW BALANCE ATHLETIC SHOE INC." LexisNexis Academic. Reed Elsevier Inc. Web. 16 Apr. 2010.
22) "NIKE FOUNDER, WHO USED WAFFLE IRON TO INVENT TRAINERS, DIES." The Independent [London] 27 Dec. 1999. LexisNexis. Web. 20 Apr. 2010. <http://www.lexisnexis.com.ezproxy.mtsu.edu/hottopics/lnacademic/>.
23) "Nike, Inc." LexisNexis Acedemic. Reed Elsevier Inc., 16 Apr. 2010. Web. 16 Apr. 2010.
24) "Nike, Inc." Standard & Poor's NetAdvantage. The McGraw-Hill Companies, 30 Mar. 2010. Web. 20 Apr. 2010.
25) "Nike, Inc. Corporate Responsibility Report FY07-09." Web. 12 Apr. 2010. <http://www.nikebiz.com/crreport/>.
26) "Nike Outlines Global Strategy for Creating a More Sustainable Business." Nike Biz. Nike Inc, 22/01/2010. Web. 23 Apr 2010. <www.nikebiz.com/media/pr/2010/01/22_FY070809CRReport.html >.
27) Nikebiz : NIKE, Inc. Official Site, the World?s Largest, Leading Athletic Brand. Web. 23 Apr. 2010. <http://www.nikebiz.com>.
Sources Cited-
28) "PUMA AG RUDOLF DASSLER SPORT." LexisNexis Academic. Reed Elseview Inc,. Web. 16 Apr. 2010.
29) Swift, E., & Yaeger, D. “Pssst...Wanna Buy Some Clubs?.” Sports Illustrated, 98(21): 66. 2003.
30) "Under Armour, Inc." LexisNexis Acedemic. Reed Elsevier Inc., 16 Apr. 2010. Web. 16 Apr. 2010.
31) United States Department of Labor. Web. 15 Apr. 2010. <http://www.dol.gov/whd/minwage/q-a.htm>.
32) "Update 1-Brazil Minimum Wage to Rise 8.8 Pct in 2010." Business & Financial News, Breaking US & International News. 31 Aug. 2009. Web. 21 Apr. 2010. <http://www.reuters.com/assets/print?aid=USN3145544020090831>.
33) www.nikebiz.com/responsibility/.../9_Nike_CRR_Nike_Biz_C.pdf -