INTERNAL ANALYSIS

Internal Analysis

Key Questions in Situation Analysis

¡  Question 1:  How well is the company’s strategy working?

¡  Question 2:  What are the company’s resource strengths and weaknesses and its external opportunities and threats?

¡  Question 3:  Are the company’s prices and costs competitive?

¡  Question 4:  Is the company competitively stronger or weaker than key rivals?

¡  Question 5:  What strategic issues and problems merit front-burner managerial attention?

Situation Analysis Question 1:  How Well is the Company’s Strategy Working?

�   Is the company achieving its financial and strategic objectives?

�   Is the company an above-average industry performer?

Performance Indicators

¡   Trends in sales and earnings growth

¡   Trends in the company’s stock price

¡   The company’s overall financial strength

¡   The rate at which new customers are acquired

¡   Image and reputation with customers

¡   Evidence of improvement in internal processes such as defect rate, order fulfillment, and days of inventory

NIKE, INC.

I. Introduction

A. Overview of Company

        Ticker Symbol, Home Office,

        Description of Business

B. Mission Statement

C. Strategic Goals

D. Customer Analysis

Competitive Strategy

Customer Demographics

Nike Inc. (NYSE - NKE)
Company Overview

¡  CEO & President Mark Parker

§  Appointed January 2006

¡  World Headquarters

§  Beaverton, Oregon

¡  The Company

§  Nike designs, develops and markets athletic footwear, apparel, equipment and accessory products under the Nike and other brand names.

¡  Phil Perez resigned as CEO in 2005 (CEO less than one year) (Phil Knight Interim)

¡  #1 Athletic Footwear Company in the World

¡  Overseas sales now ~53% of Nike’s business.

Nike’s Mission Statement

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

Nike Strategic Goals

¡  Accelerating growth through focused execution

§  Nike opening 1.5 retail doors/day in China

§  Growth through selected acquisitions

▪     Converse shoe line acquisition (Chuck Taylor)

¡  Delivering superior, innovative products

¡  Supply Chain a Competitive advantage

¡  Deepening relationships with customers

Nike’s Real  Strategic Goals Summarized

¡  Countering slowing US sales by growing internationally.

§  China

§  Europe, Eastern Europe

¡  Diversification into apparel and related sports equipment.

¡  Sourcing production outside the US

§  China, Mexico, Central America, SE Asia

Nike Financial Goals

¡  High single digit revenue growth

§  Sales Growth 5-9%

¡  Mid-teens EPS growth

§  14-17% growth in EPS

¡  Increased Return on Invested Capital and accelerated Cash Flows

¡  Consistent results through effective management of Nike’s diversified portfolio of businesses***

Nike Competitive Strategy

¡  Differentiation Strategy

§  Brand Image

§  Quality

§  Celebrity Endorsements

§  Cross-Branding

▪   Apparel

▪   Sports Equipment

§  Premium Pricing***

Nike Customer Demographics

¡  Who is the Customer?

§  What is their…

▪     Income

▪     Age

▪     Gender

▪     Race and/or Ethnicity

▪     Geographic Location

▪     Price Sensitivity

▪     Quantity/Quality Tradeoffs

▪     etc……

Nike Customer Demographics

Age Segment Market Share

Nike Customer Demographics

Age Segment Footwear Spending

Nike Customer Demographics

Market Share/ Price Category

Nike Geographic Markets

II. Company Analysis

A. Strategic Performance Indicators

        Sales, Net Income, EPS, ROE

        US Market Share   

B. Executive Officers of Company

C. Major Products and Services

D. SWOT

E. Major Strategic Issues

Nike
Strategic Performance Indicators

¡  Fiscal 2008 Revenues $18.6 billion

¡  Sales Growth 14.09%

¡  ROE 2008 = 24.06%

¡  EPS = $3.80/share

¡  Market Share

§  US in 2007 = 34.0%

¡  32,500 Employees    Worldwide

Nike
Strategic Performance Indicators

 •       Sells to about 18,000 retail accounts in the U.S. and in approximately 200 countries around the world

•       296 US Nike-Owned Stores

▪     12 NikeTowns

▪     121 Nike Factory Stores

▪     14 Nike stores

•       FootLocker*****

▪     10% of global sales

Nike Executive Officers

•       Phil Knight

▪     Chairman of the Board since 1968

•       Mark G. Parker

▪     Chief Executive Officer (CEO), President

•       Charlie Denson*

•     President, Nike Brand

•       David Ayre*

▪     Global Human Resources, Vice President

•       Don Blair*

▪     Vice President, Chief Financial Officer

Nike Major Products

§  Footwear

▪     $9.7 billion       53%

§  Apparel

▪     $5.2 billion       29%

§  Athletic Equipment

▪     $1.1 billion        6%

§  Other

▪     $2.5 Billion       10%

Nike Subsidiaries

§  Cole Haan

 §  Converse, Inc.

 §  Hurley Intl. LLC

 §  Nike Golf

 §  Umbro Ltd.

SWOT Analysis

 ¡  Internal Strengths

¡  Internal Weaknesses

¡  External Opportunities

¡  External Threats

Nike SWOT

¡  Strengths

§  Global Reach

§  Globally competitive brand image

§  Globally competitive manufacturing costs

§  Cutting-edge technology / R&D

§  Dominant market share at high-end price points

¡  Weaknesses

§  Dependency on 12-24 age demographic

§  Negative image from manufacturing practices

§  Increasing reliance on EU and Asia for growth

§  Leadership turmoil

§  Beijing Olympics Mixed Results

Nike SWOT cont.

¡  Opportunities

§  Vancouver 2010 Olympics

§  China

§  Companies/Brands may present other acquisition candidates

¡  Threats

§  Adidas/Reebok Merger

§  China

§  Fashion Shifts in Footwear market

§  Slowing Global Economy

Nike Major Strategic Issues

¡  Adidas/Reebok Merger

§  Worldwide Market Share = 22%

¡  China

§  Manufacturing & Sales

§  US/European Image

¡  Olympic  Marketing Campaigns

¡  Global Recession

¡  Executive Leadership /CEO Turmoil

V. Recommendations to Corporation

¡  Recommendation One

§  Achievable, Quantifiable, Realistic

¡  Recommendation Two

§  Achievable, Quantifiable, Realistic

¡  Recommendation Three

§  Achievable, Quantifiable, Realistic

Nike Recommendations

•                      Goal of 100% of the US Basketball Shoe market by 2010. Target an attempt to drive Adidas/Reebok from the basketball segment of the footwear market through promotions and celebrity appeal.

•                      Goal of #1 market share in China for athletic footwear by 2010. Target 25% of 2008 advertising budget to Asia/Pacific region. Attempt to recruit Yao Ming to Nike Brand.

•                      Goal of attaining sponsorship of the 2012 London Olympics. Target product placements and advertising to dominate 2012 Olympic television coverage worldwide.