General Information

Nike is an American multinational corporation that is engaged in the design, development and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than 44,000 people worldwide. The brand alone is valued at $10.7 Billion making it the most valuable brand among sports businesses. As of September 2012, Nike, Inc. owns four key subsidiaries: Cole Haan, Hurley International, Converse Inc. and Umbro. However, on May 31, 2012, Nike announced its intention to sell both Cole Haan and Umbro. Nike's first acquisition was the upscale footwear company Cole Haan in 1988. In February 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley. In July 2003, Nike paid US$309 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars sneakers. On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the manufacturers of the England national football team's kit, in a deal said to be worth 285 million (about US$600 million). Other subsidiaries previously owned and subsequently sold by Nike include Bauer Hockey and Starter Nike Inc. will buy back $8 billion of Nike's class B stock in 4 years after the current $5 billion buyback program is completed in second quarter of fiscal 2013. Up to September 2012, Nike Inc. has bought back $10 billion of stock.

Nikes Vision:
For every team to be high-performing, diverse, and inclusive to achieve this vision, the strategy is to: Cultivate diversity and inclusion to develop world-class, high-performing teams. Ignite change and inspire critical conversations around diversity, inclusion and innovation. Create venues and environments for open dialogue, diverse opinions and a multitude of perspectives.

Nike in USA:
In scal 2011, sales in the United States including U.S. sales of Nikes other businesses accounted for approximately 43% of total revenues, compared to 42% in scal 2010 and 2009. Other businesses were primarily comprised of afliate brands; Cole Haan, Converse, Hurley and Umbro (which was acquired on March 3, 2008); and NIKE Golf. Nike sells to more than

20,000 retail accounts in the United States. The NIKE Brand domestic retail account base includes a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops, and other retail accounts. During scal 2011, the three largest customers accounted for approximately 23% of sales in the United States.

PRODUCTS
NIKEs athletic footwear products are designed primarily for specic athletic use, although a large percentage of the products are worn for casual or leisure purposes. They place considerable emphasis on high quality construction and innovation in products designed for men, women and children. Running, training, basketball, soccer, sport-inspired casual shoes, and kids shoes are currently their top-selling footwear categories and they expect them to continue to lead in product sales in the near future. Nike also markets footwear designed for baseball, cheerleading, football, golf, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational uses. They sell sports apparel and accessories covering most of the above categories, sports-inspired lifestyle apparel, as well as athletic bags and accessory items. NIKE apparel and accessories feature the same trademarks and are sold through the same marketing and distribution channels. They often market footwear, apparel and accessories in collections of similar design or for specic purposes. They also market apparel with licensed college and professional team and league logos. Nike sells a line of performance equipment under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities. They also sell small amounts of various plastic products to other manufacturers through a wholly-owned subsidiary, NIKE IHM, Inc. In addition to the products they sell directly to customers through their Direct to Consumer operations, they have entered into license agreements that permit unafliated parties to manufacture and sell certain apparel, electronic devices and other equipment designed for sports activities. Nikes wholly-owned subsidiary, Cole Haan (Cole Haan), headquartered in New York, New York, designs and distributes dress and casual footwear, apparel and accessories for men and women under the Cole Haan trademark. Their wholly-owned subsidiary, Converse Inc. (Converse), headquartered in North Andover, Massachusetts, designs, distributes and licenses athletic and casual footwear, apparel and accessories under the Converse Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. Their wholly-owned subsidiary, Hurley International LLC (Hurley), headquartered in Costa Mesa, California, designs and distributes a line of action sports and youth lifestyle apparel and accessories under the Hurley trademark.

Competitor Analysis
To understand the position of Nike in the industry, it is important to perform a competitor analysis. Nikes major competitors in the footwear industry are Adidas & Reebok, New Balance, Puma, Sketchers and other players combined together. Adidas AG is the major competitor of NikeInc. Adidas is not completely different from Nike in terms of products they offer. Adidas is into the manufacturing and marketing of athletic as well as non-athletic foot wear and apparel. Nike has a notable advantage when it comes to economies of scale. Adidas Group is second only to this company in terms of sales and market share. It enjoys 22% of the worldwide athletic footwear and apparel market.

Market Share: As of 2007, Nike has a dominant global market share of 31% followed by Adidas and Reebok together at 22%. The corresponding figure in US hovers around 36% followed by Adidas and New balance at distant second and third.

Financial analysis:
Company Nike Puma Adidas Under Armour New Balance Earnings Mkt Cap per share 3.51 35.42B 13.63 3.66B 1.95 8.80B 0.98 1.63B Current Return on ratio avg assets 2.97 11.57 2.19 6.44 1.58 2.66 3.73 9.06 Private Company Return on avg equity 18 10.62 6.85 12.67 Net profit margin 7.75 5.12 2.36 5.46 Revenue Millions 19,176.10 2,460.70 10,381.00 856.41 1,640.00 Net income Income as % Revenue Millions of sales growth (2009) 7.75287989 1,486.70 2.87% 5.11643028 125.9 -0.90% 2.36008092 245 0.40% 5.46233696 46.78 15% 0.60%

From the analysis shown above between the major competitors, it is quite obvious that Nike is leading the market in most of aspects. However, the company to note here is Under Armour as this company has high growth rate despite the fact that other companies are experiencing a slow sales growth. Nike should put some effort to study the strategy of this company.

Product Portfolio Analysis: 1

New Balance

K-Swiss Converse

Type of Shoe\Company Nike Adidas Reebok

Puma Asics Vans Brooks AND1 Stride Rite Corp

It can that has

Saucony

Mizuno

Spira

Running Walking Basketball Childrens Tennis Lifestyle Skating Cross-Training Soccer

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be seen Nike

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products in all lines. During early 2006, Nike was lacking products in the skating category. However, they quickly recognized this shortcoming and introduced a skate boarding shoe. Also, it can be noted that there are overlapping product category lines between Adidas and Reebok. Hence, there is a high possibility that Adidas is competing with Reebok and hence cannibalizing its own sales after the merger. With such a product line, Nike will be able to compete with all players in the industry. Therefore, Nike is at a strategic advantage. Advertising strategy: The advertising strategy differs from company to company. Generally, Nike believes in spending 5-7% of its revenues in advertising and endorsement. Nike has planned to spend $4.2 Billion until 2014 for endorsements alone. With the huge size of Nike, it is tough for other companies to allocate a big amount for their marketing expenses. Moreover, Nike has always an edge when it comes to advertising and marketing. The table below shows the advertising strategy for the major players in the industry.

Company

Nike

Strategy Endorsing Athletes Sponsoring Sports events City based advertisements Banners & Billboards Themes on bringing inspiration and innovation to every athlete in world

Adidas, Reebok

Puma2

Other companies

Sponsoring Sports events Endorsing Athletes Themes on improving performance of every athlete in the world Mixing influence of sports, lifestyle & fashion Puma concept retail stores Puma fashion shows New stuff advertising campaigns Building seasonal momentum during holiday seasons Minimal or less advertising based on stores

Branding Strategy: Nike has invested a lot so far in developing a premium brand that implies high quality and care for the customer. Nike has a wide range of products ranging from athletics to life style and also in different price ranges. Therefore, it is always a challenge to fight against brand dilution within Nike. The following gives an idea of the customers perception of the brands.

Company Nike

Branding message and strategy Athletic, Influential, Outgoing, Aggressive, hi tech, futuristic, retro cool American way of living Associated with Athletes at top of their sport To bring inspiration and innovation to every athlete in world Clear, orderly, Practical, hi tech, Sophisticated, Sincere Conservative European style To improve performance of every athlete in the world Associated with elite soccer players/teams, NBA stars, Hip hop artists Elegant, colorful, fresh, spontaneous, individual, metropolitan, international Mixing influence of sports, lifestyle & fashion Fashion brand, performance & casual footwear, fringe, extreme sports Based on their product lines. Generally not a strong brand message

Adidas, Reebok

Puma Other companies

In general, Nikes shoes are associated to be of high quality and stylish. Reeboks are comfortable and casual, and the Adidas brand boasts superior performance and is perceived as a professional, technically orientated brand with strong European roots. Technology and Innovation strategy: Nike fields some of the best in class technological practices and has a few patents to its credit. Nike emphasizes on these and has developed a lot of new products with use of high technology and sophistication. An example of that is the microprocessor shoe to give great experience and comfort to the customer. However, Adidas is also working on high tech innovations to provide

high quality shoes. Lately, Adidas and Nike have been doing entertainment based marketing campaign by forming alliances with technology/entertainment companies. Nike had an alliance with Apple to sell Nike shoes with Apple iPods while Adidas tied up with Microsoft to sell Adidas goods with Microsoft Xbox gaming systems. So far the success of these alliances is yet to be quantified. Manufacturing strategy: Nike follows a 100% outsourcing strategy. Most competitors follow the outsourcing strategy. Exceptions to this are New Balance and other smaller players. New Balance claims that 75% of its production is from the US and other small companies produce in the US as well. Competitor Analysis in Emerging Markets: In general, competition in the emerging markets is granular and from a lot of players. However, the case in China is very different. According to a research report by Merrill Lynch, Nike was the most popular sport brand in China with 19% market share in 2008, while Adidas ranked second with 15% share and Li Ning third with 11%. The brokerage estimated Li Ning to have overtaken Adidas in 2009 as the second-largest player in China's $10 billion sportswear industry. There are speculations that Li Ning has overtaken Nike as well.

SWOT ANALYSIS:
Strengths
1. Nike is a worldwide recognized to be the number one sportswear brand in the World. 2. Nike being a competitive organization has a healthy aversion towards its competitors i.e. during Atlanta Olympics, Reebok expensed on sponsoring the games; Nike however sponsored the top athletes and due to this step, it gained valuable exposure. 3. Nike has no factories; rather it uses contract factories to get the work done which makes it quite a lean organization. It has contracts with above 705 shops globally in about 46 different countries. 4. Nike is quite strong regarding its research and development; quite evident regarding its evolving and innovative product range. 5. They are a Fortune 500 company. 6. It has employs about more than 40 thousand people all over the world.

Weaknesses
1. Al though it has a expand range for sportswear, however it is still heavily reliant upon its share of the footwear market which leaves it at a quite defenseless place if for any reason its market share corrode. 2. Every business retail sector is price sensitive that means trader usually have a propensity to offer a very similar know-how to the customers with a new cheaper product. 3. Nike was for pretty some time loath to reveal any type of information relating to its colleague companies. 4. This company was also accused to have practical child employment in Pakistan and Cambodia to produce footballs. 5. Anti-globalization groups due to its unruly and exploited manner that was quite a disaster for its reputation positioned.

Opportunities
1. A large number of customers put on Nike product just because they develop a fashion style rather than to take part in any type of sport. It is mostly seems in young generation. 2. Nike is a trendy brand, which also provides chances for Nike since its products would become old-fashioned before even the product wears out that is consumers, will sense the need to replace the item with a newer fashion. 3. Nike through the advertisement of corporate brand and sponsorship agreements give a bunch of effort on its business marketing.

Threats
1. There are heavy competitors of Nike in the market that always seeking the way to overtake it by applying new techniques.. 2. A slump in international economy may lead to job scarcity in most of Nikes worldwide shops.

3. Clients which are always shopping around for a better deal that express a good quality & if one store takes higher price for the products, the buyer would try to seek a better deal of the same product in any other place that convey the same value but cheaper. 4. Due to atmospheric pollution, Nike is careworn to maintain its ecological reputation in the whole world. 5. Due to its extensive advertisement this association is experiencing many unpleasant promotion feedbacks.

Advertising:
Nike makes contracts with some celebrity athletes which can draw attention to their products such as Tiger Woods, Ronaldo. This has created a relatively high level of Nike's awareness. Besides that, Nike also employed a large amount of advertisements through the mass media. Nike's brand images, including the Nike's name and the trademark are considered to represent one of the most recognizable brands in the world. The Nike name and associated trademarks have appeared from players' shirts, pants and everywhere. Their aggressive advertising campaigns, celebrity endorsements and quality products all enhance their brand and image. For example, when a celebrity athlete sponsors a specific brand of athletic shoes, the brand will be associated with success. Nikes strategy was to create dominant presence in media. Nike has created media presence in several trend setting United States cities. TV ads linking Nike to a city were used, but real drivers were huge oversized billboards and murals on buildings that blanketed cities with messages featuring key Nike-sponsored athletes, not products. The company focuses its marketing on celebrity endorsement, i.e. athletes in basketball, golf, soccer, and tennis. Lately, Nike has also began to sponsor big sporting events so as to create huge awareness and brand following. In 2008, Nike spent significant amount on advertising in the Beijing 2008 Olympics and the Football Championship. After the recent Tiger Woods scandal Nike plans on revisiting it celebrity endorsement strategy. It can be noted that the swoosh logo is one of the most famous in the world due to these huge advertising efforts.

Sponsorships
Nike pays top athletes in many sports to use their products and promote and advertise their technology and design. Nike's first professional athlete endorser was Romanian tennis player Ilie Nstase. The first track endorser was distance runner Steve Prefontaine. Prefontaine was the

prized pupil of the company's co-founder, Bill Bowerman, while he coached at the University of Oregon. Today, the Steve Prefontaine Building is named in his honor at Nike's corporate headquarters. Nike has also sponsored many other successful track and field athletes over the years, such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. The signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike over the course of his career, with Spike Lee as Mars Blackmon, proved to be one of the biggest boosts to Nike's publicity and sales. Nike was the official kit sponsor for the Indian cricket team for five years, from 2006 until the end of 2010. Nike sponsors some of the leading football national teams. Nike is a major sponsor of the athletic programs at Penn State University and named its first child care facility after Joe Paterno when it opened in 1990 at the company's headquarters. Nike originally announced it would not remove Paterno's name from the building in the wake of the Penn State sex abuse scandal. After the Freeh Report was released on July 12, 2012, Nike CEO Mark Parker announced the name Joe Paterno would be removed immediately from the child development center. A new name has yet to be announced.