strategic management

NIKE
Undergraduate Degree Indonesia

just do it!

Internal and External Assessment

S1 Business Prasetiya Mulya Business School

A.RAMYA II-MBA MTWU

Company Profile

Visi
To bring inspiration and innovation to every athlete

Misi
Nike is the largest seller of athletic footwear and athletic apparel in the
world. Performance and reliability of shoes, apparel, and equipment, new product development, price, product identity through marketing and promotion, and customer support and service are important aspects of competition in the athletic footwear, apparel, and equipment industry We believe we are competitive in all these areas. The company aims 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.

The Internal Assessment

Marketing

Target Market Male and Female; 18 34 y.o. Positioning High performance shoes designed with hi-tech
features

Have many brands and products model for each type of consumers.

Have high allocation of advertising budget for endorser contract, TVC, print ads, and sponsorship activities.

Have top endorsers that are the champion in their sports areas.

Distribution

Nike has worldwide distribution line Nike has good distribution line to retailer Nike has new ordering system, named Futures Ordering Program

Research & Development

Nike has NSRL (Nike Sport Research Laboratory) and APE (Advanced Product Engineering) which cooperated in

developing and executing idea

Nike did direct research to the athlete by accompanying their daily activities to find the best suitable product

Nike always developing superior technology to compete with others

Management Style / Culture

Knight as CEO Nike, is an former athlete of long distance run Nike working culture is established as camaraderie and cooperative culture.

Factory design in Oregon is especially designed to create natural circumstances and equipped with complete sport facilities.

Social Responsibility

Nike placed VP for social responsibility in 1998 Nike joined Fair Labour Association (FLA) and Global Alliance for Workforce and Communities (GAWC)

Nike funded many NGO such as WWF, etc. Nike do public relation activities to keep the companys image

Finance / Accounting
Nike has healthy financial situation

Sumber: Nike 2003 Form 10-K, p.37 (data diolah)

But, Profit margin is lower than

Gross Profit margin

The External Assessment

Economic forces

EU is changing into one currency. USA economic growth is in slow growth because of WTC. Contract manufacturing is chosen by many athletic shoes company.

Social forces

Since 70-s, customer is more brand-minded. Sport Consumer preferences is changing into more fashionoriented.

Young consumer is believed much in advertising promotion and use internet as the primary sources of information.

Buying motives of young consumer is dominated for leisure activity Since 90-s, womans consumer dominated the athletic shoe market because of the changing lifestyle.

Political forces

World is entering global trade climate with NAFTA and GATT There is anti-dumping regulation existed in EU

Technology forces

Nike has integrated technology system to develop their product Nike always adopted latest technology for their product and matched with their vision

Competitive forces

Competition is more tight with the coming of Reebok and Adidas

Competition is happened around the world, globally, not locally Athletic shoe trend is going to be fashion-oriented

Five forces (Porter)

Bargaining to :

Supplier Buyer New Entrant Substitution

High High Low Low

Conclusion:

Internal Rivalry

High (Oligopoly)

Conclusion

SWOT analysis
Strength(s)

Weakness(es)
Bad social issues, such as children labor, sexual harassment, etc

High brand awareness Highest market share Worldwide distribution line Integrated and future R&D Better working culture Healthiness of financial condition

SWOT analysis (lanjutan)

Opportunity(ies)

Threat(s)
US economic growth is decreasing More newcomers Close competitor, such as Rbk And Adidas are more aggresive Anti-dumping regulation in EU

Total of athletic shoe sales in US is increasing in 2002

Fashion trend
Domination of womans consumer Global and Free Market

Generic Strategies

Nike uses network structure Nike implemented Differentiation Strategies

Detail Strategies
Finance
Marketing

Keep the financial ratio in standard

use endorser in every sport Higher allocation of marketing budget

Operation

Centralization of R&D in Oregon application of NSRL

HR

Network Structure Athlete management

Problem(s) :
1.

Manufacturing ethics

Social issues about labor exploitation

2. 3.

Law suits High endorsement fees paid to athletes

High SA Expenses (selling and administrative) Based on the analysis of Nike I/S, the growth of SA expense in 2002 -2003 is

not comparable (11.2%) with the growth of the sales (8.1%).

Measure Performance

Nike has good position in market Financial liquidity is good Primary threats is coming from:

Contracted manufacturing(labor) Long-term endorser usage

Conclusion
There is a changing behaviour of the consumer in athletic shoe. They are moving from sportswear to fashion-sportswear. Unfortunately, Nike is still using the endorser that is not fashionable, even though they are the champion in their area. It was proven by the highest growth of SA expense in 2002-2003.

Recommendation

Try to generate sales from SA expense, by:

Flexible endorser contract (not in long term) Lifestyle consideration in choosing the endorser

End by: Kelly Kusmulyono setiawan_kusmulyono@yahoo.com Prasetiya Mulya Business School