3. Operation centers and subsidiaries</li></ul>Nike as a business<br />The Nike Brand<br />Nike is the leading maker of athletic shoes, equipment and apparel. Nike products cover a broad range of sports including basketball, football, running and soccer. Sneakers made by Nike are sold for $40-$200 per pair. Nike is one of the most-heavily advertised and best known brands in the world. Nike has signed exclusive and expensive marketing deals with some of the world's top athletes -- including Tiger Woods, Andre Agassi and LeBron James -- to promote its products. <br />The Nike Legacy<br />Wholly-owned Nike subsidiaries include Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom-based global football (soccer) brand.<br />Brand IdentityNIKE enjoys the popularity of its brand name, which is recognized all around the world. Its name carries a trademark, and thus makes it illegal for other companies to infringe upon the NIKE name. Besides the brand name, the company also has a trademark for the ‘Swoosh Design’ logo that identifies NIKE Inc. In fact, NIKE considers its name and the ‘Swoosh’ symbol to be the most valuable assets; therefore, the company registered these trademarks in over 100 countries.<br />PatentsOne of the exclusive licenses that distinguish NIKE from the rest of its competitors is the patented “Air” technology that the company uses to sell footwear. “The process utilizes pressurized gas encapsulated in polyurethane.” Although some NIKE AIR patents have expired, NIKE still holds a number of subsequent NIKE AIR patents, and patents that cover specific features in various athletic and leisure shoes that will not expire for several years. In addition, the company places a significant emphasis on its Research and Development, Production and Marketing, and Design departments to maintain its competitive edge.<br />Customer Base Perspectives<br />Customer logic is derived from evaluation of a company and its product based upon customer needs, customer benefits, and product features. Each of these areas is researched to determine what level of pressure logic exists. For branded athletic shoes, Nike is facing customer needs on a global level. This is because there is global demand for brand name athletic shoes and there is opportunity available for growth. <br />Sponsorship<br />Nike pays top athletes in many different sports to use their products and promote/advertise their technology and design.<br />Nike's first professional athlete endorser was Romanian tennis player Ilie Năstase, and the company's first track endorser was distance running legend 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.<br />Besides Prefontaine, Nike has sponsored many other successful track & field athletes over the years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it was the signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike over the course of his storied career with Spike Lee as Mars Blackmon, that proved to be one of the biggest boosts to Nike's publicity and sales.<br />During the past 20 years especially, Nike has been one of the major clothing/footwear sponsors for leading tennis players. Some of the more successful tennis players currently or formerly sponsored by Nike include: James Blake, Jim Courier, Roger Federer, Lleyton Hewitt, Juan Martín del Potro, Andre Agassi, Rafael Nadal, Pete Sampras, Marion Bartoli, Lindsay Davenport, Daniela Hantuchová, Mary Pierce Maria Sharapova, Serena Williams.<br />Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 till end of 2010. <br />Nike also sponsors some of the leading clubs in world football, such as the Brazil National Team, Portugal National Team, Netherlands National Team, US National Team, Manchester United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar, Porto, Steaua, Red Star, Boca Juniors, Corinthians, Club América, Aston Villa, Celtic, Águila and PSV Eindhoven. Nike will also sponsor Dundee United from summer 2009.<br />Nike sponsors several of the world's top golf players, including Tiger Woods, Trevor Immelman and Paul Casey.<br />Nike also sponsors various minor events including Hoop It Up (high school basketball) and The Golden West Invitational (high school track and field).<br /><ul><li>Operation centers and subsidiaries</li></ul>Headquarters<br />Nike's world headquarters are surrounded by the city of Beaverton, but are within unincorporated Washington County. The city attempted to forcibly annex Nike's headquarters, which led to a lawsuit by Nike, and lobbying by the company that ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in unincorporated Washington County for 35 years, while Electro Scientific Industries and Tektronix get that same protection for 30 years. <br />Subsidiaries<br />As of November 2008, Nike, Inc. owns four key subsidiaries: Cole Haan, Hurley International, Converse Inc. and Umbro.<br />Nike's first acquisition was the upscale footwear company Cole Haan in 1988.<br />Cole Haan, a wholly-owned subsidiary of NIKE, Inc., is one of America’s leading luxury brands, offering high-quality men’s and women’s footwear, accessories and outerwear. Each product blends craftsmanship, design and innovation to give it distinctive character and style. Cole Haan operates more than 180 retail locations throughout the United States, Canada, the Middle East and Asia. Cole Haan is headquartered in New York City and Yarmouth, Maine.<br />In February 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley.<br />Headquartered in Costa Mesa, California, Hurley International LLC designs and distributes a line of action sports apparel for surfing, skateboarding and youth lifestyle apparel and footwear under the Hurley brand name. Hurley realized $203 million in sales in fiscal 2009.<br />In July 2003, Nike paid US$305 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars.<br />Converse, Inc., established in 1908 and based in North Andover, Massachusetts, has built a reputation as “America’s Original Sports Company”™ and has been associated with a rich heritage of legendary shoes such as the Chuck Taylor® All Star® shoe, the Jack Purcell® shoe and the One Star® shoe. Today, Converse offers a diverse portfolio including premium lifestyle men's and women's footwear and apparel. Converse product is sold globally by retailers in over 160 countries and through more than 50 company-owned retail locations. Converse realized $915 million in sales in fiscal 2009.<br />On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the manufacturers of the England national football team's kits, in a deal said to be worth £285 million (about US$600 million).<br />Founded in 1924 and headquartered in Manchester, England. Umbro, Ltd. designs, distributes, and licenses athletic and casual footwear, apparel and equipment, primarily for the sport of football (soccer), under the Umbro trademarks. Umbro Ltd. has been associated with football since the 1930s and its relationship with leading national teams and professional clubs includes exclusive endorsements and distribution rights for playing kit, apparel and equipment, including playing and training kits for England’s National Team. Umbro realized $174 million in sales in fiscal 2009.<br />Other subsidiaries previously owned and subsequently sold by Nike include Bauer Hockey and Starter.<br />Manufacturing<br />Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia. Nike is hesitant to disclose information about the contract companies it works with. However, due to harsh criticism from some organizations like Corp Watch, Nike has disclosed information about its contract factories in its Corporate Governance Report.<br />Physical Resources<br />In 1980, Phil Knight dispatched five employees to Europe to establish presence for the U.S shoe manufacturer there. The initial office was set up in Amsterdam; the current, a state of the art complex designed by William McDonough & partners, opened in Hilversum, The Netherlands. Nike has entrenched local representation in the region; it currently has 21 offices in the Europe, Middle East, & Africa (EMEA) region. The distribution center in Laakdal, Belgium, and the headquarters in The Netherlands make up most of the employees in the region. Nike has the centralized European distribution point at Laakdal, Belgium since 1994. In 1980, Nike had only 2,700 employees and sales of $270 million. Today, Nike has 5,000 employees in Europe alone.<br />PROPERTIES <br />NIKE, Inc. World Headquarters (WHQ) encompasses 17 buildings on 193 acres, totaling 1.9 million square feet of interior space in Beaverton, Oregon. We also lease more than 750,000 square feet of space in the surrounding metropolitan area. <br />NIKE, Inc. European Headquarters (EHQ) is located in leased office space of nearly 500,000 square feet in Hilversum, The Netherlands.<br />Nike currently has more than 50 independent footwear contact factories in the Asia Pacific region, providing more than 250,000 jobs to local communities. There are over 300 apparel factories, providing more than 150,000 jobs to local communities.<br />STEP2<br /><ul><li>Nike history
4. Nike background</li></ul>Company History:<br />Founded as an importer of Japanese shoes, NIKE, Inc. (Nike) has grown to be the world's largest marketer of athletic footwear and apparel. In the United States, Nike products are sold through about 20,000 retail accounts; worldwide, the company's products are sold in about 110 countries. Both domestically and overseas Nike operates retail stores, including NikeTowns and factory outlets. Nearly all of the items are manufactured by independent contractors, primarily located overseas, with Nike involved in the design, development, and marketing. In addition to its wide range of core athletic shoes and apparel, the company also sells Nike and Bauer brand athletic equipment, Cole Haan brand dress and casual footwear, and the Sports Specialties line of headwear featuring licensing team logos. The company has relied on consistent innovation in the design of its products and heavy promotion to fuel its growth in both U.S. and foreign markets. The ubiquitous presence of the Nike brand and its Swoosh trademark led to a backlash against the company by the late 20th century, particularly in relation to allegations of low wages and poor working conditions at the company's Asian contract manufacturers.<br />BRS Beginnings<br />Nike's precursor originated in 1962, a product of the imagination of Philip H. Knight, a Stanford University business graduate who had been a member of the track team as an undergraduate at the University of Oregon. Traveling in Japan after finishing up business school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger Co., and arranged to import some of its products to the United States on a small scale. Knight was convinced that Japanese running shoes could become significant competitors for the German products that then dominated the American market. In the course of setting up his agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese partner's expectations that he represented an actual company, and this hypothetical firm eventually grew to become Nike, Inc.<br />At the end of 1963, Knight's arrangements in Japan came to fruition when he took delivery of 200 pairs of Tiger athletic shoes, which he stored in his father's basement and peddled at various track meets in the area. Knight's one-man venture became a partnership in the following year, when his former track coach, William Bowerman, chipped in $500 to equal Knight's investment. Bowerman had long been experimenting with modified running shoes for his team, and he worked with runners to improve the designs of prototype Blue Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a cornerstone of the company's continued expansion and success. Bowerman's efforts first paid off in 1968, when a shoe known as the Cortez, which he had designed, became a big seller.<br />BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000. By 1965 the fledgling company had acquired a full-time employee and sales had reached $20,000. The following year, the company rented its first retail space, next to a beauty salon in Santa Monica, California, so that its few employees could stop selling shoes out of their cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a distribution office in Wellesley, Massachusetts.<br />Bowerman's innovations in running shoe technology continued throughout this time. A shoe with the upper portion made of nylon went into development in 1967, and the following year Bowerman and another employee came up with the Boston shoe, which incorporated the first cushioned mid-sole throughout the entire length of an athletic shoe.<br />Emergence of Nike in 1970s<br />By the end of the decade, Knight's venture had expanded to include several stores and 20 employees and sales were nearing $300,000. The company was poised for greater growth, but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing from the Japanese trading company Nissho Iwai Corporation, BRS was able to manufacture its own line of products overseas, through independent contractors, for import to the United States. At this time, the company introduced its Swoosh trademark and the brand name Nike, the Greek goddess of victory. These new symbols were initially affixed to a soccer shoe, the first Nike product to be sold.<br />A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S. Olympic Trials, the first of many marketing campaigns that would seek to attach Nike's name and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious athlete, and their high performance carried with it a high price.<br />In their first year of distribution, the company's new products grossed $1.96 million and the corporate staff swelled to 45. In addition, operations were expanded to Canada, the company's first foreign market, which would be followed by Australia, in 1974.<br />Bowerman continued his innovations in running-shoe design with the introduction of the Moon shoe in 1972, which had a waffle-like sole that had first been formed by molding rubber on a household waffle iron. This sole increased the traction of the shoe without adding weight.<br />In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The company's payroll swelled to 250, and worldwide sales neared $5 million by the end of 1974. This growth was fueled in part by aggressive promotion of the Nike brand name. The company sought to expand its visibility by having its shoes worn by prominent athletes, including tennis players Ilie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts began to pay off as Nike shoes were worn by rising athletic stars.<br />The company's growth had truly begun to take off by this time, riding the boom in popularity of jogging that took place in the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976, and then doubled in just one year to $28 million in 1977. To keep up with demand, the company opened new factories, adding a stitching plant in Maine and additional overseas production facilities in Taiwan and Korea. International sales were expanded when markets in Asia were opened in 1977 and in South America the following year. European distributorships were lined up in 1978.<br />Nike continued its promotional activities with the opening of Athletics West, a training club for Olympic hopefuls in track and field, and by signing tennis player John McEnroe to an endorsement contract. In 1978 the company changed its name to Nike, Inc. The company expanded its line of products that year, adding athletic shoes for children.<br />By 1979 Nike sold almost half the running shoes bought in the United States, and the company moved into a new world headquarters building in Beaverton, Oregon. In addition to its shoe business, the company began to make and market a line of sports clothing, and the Nike Air shoe cushioning device was introduced.<br />1980s Growth through International Expansion and Aggressive Marketing<br />By the start of the 1980s, Nike's combination of groundbreaking design and savvy and aggressive marketing had allowed it to surpass the German athletic shoe company Adidas AG, formerly the leader in U.S. sales. In December 1980, Nike went public, offering two million shares of stock. With the revenues generated by the stock sale, the company planned continued expansion, particularly in the European market. In the United States, plans for a new headquarters on a large, rural campus were inaugurated, and an East Coast distribution center in Greenland, New Hampshire, was brought on line. In addition, the company bought a large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development Lab and also to provide for more domestic manufacturing capacity. The company had shifted its overseas production away from Japan at this point, manufacturing nearly four-fifths of its shoes in South Korea and Taiwan. It established factories in mainland China in 1981.<br />By the following year, when the jogging craze in the United States had started to wane, half of the running shoes bought in the United States bore the Nike trademark. The company was well insulated from the effects of a stagnating demand for running shoes, however, since it gained a substantial share of its sales from other types of athletic shoes, notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its other product lines, which included apparel, work and leisure shoes, and children's shoes.<br />Given the slowing of growth in the U.S. market, however, the company turned its attention to growth in foreign markets, inaugurating Nike International, Ltd. in 1981 to spearhead the company's push into Europe and Japan, as well as into Asia, Latin America, and Africa. In Europe, Nike faced stiff competition from Adidas and Puma, which had a strong hold on the soccer market, Europe's largest athletic shoe category. The company opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981 bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products. In 1982 the company outfitted Aston Villa, the winning team in the English and European Cup soccer championships, giving a boost to promotion of its new soccer shoe.<br />In Japan, Nike allied itself with Nissho Iwai, the sixth largest Japanese trading company, to form Nike-Japan Corporation. Because Nike already held a part of the low-priced athletic shoe market, the company set its sights on the high-priced end of the scale in Japan.<br />By 1982 the company's line of products included more than 200 different kinds of shoes, including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air Ace, the latest models in the long line of innovative shoe designs that had pushed Nike's earnings to an average annual increase of almost 100 percent. In addition, the company marketed more than 200 different items of clothing. By 1983--when the company posted its first-ever quarterly drop in earnings as the running boom peaked and went into a decline--Nike's leaders were looking to the apparel division, as well as overseas markets, for further expansion. In foreign sales, the company had mixed results. Its operations in Japan were almost immediately profitable, and the company quickly jumped to second place in the Japanese market, but in Europe, Nike fared less well, losing money on its five European subsidiaries.<br />Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year, Nike moved away from its traditional marketing strategy of support for sporting events and athlete endorsements to a wider-reaching approach, investing more than $10 million in its first national television and magazine advertising campaign. This followed the 'Cities Campaign,' which used billboards and murals in nine American cities to publicize Nike products in the period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the fiscal year ending in May 1984, although international sales were robust and overall sales rose slightly. This decline was a result of aggressive price discounting on Nike products and the increased costs associated with the company's push into foreign markets and attempts to build up its sales of apparel.<br />Earnings continued to fall in the next three quarters as the company lost market share, posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three months later, and another loss of $2.1 million at the end of February 1985. In response, Nike adopted a series of measures to change its sliding course. The company cut back on the number of shoes it had sitting in warehouses and also attempted to fine-tune its corporate mission by cutting back on the number of products it marketed. It made plans to reduce the line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of the company was streamlined, as founder Knight resumed the post of president--which he had relinquished in 1983--in addition to his duties as chairman and chief executive officer. Overall administrative costs were also reduced. As part of this effort, Nike also consolidated its research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting 75 of the plant's 125 employees. Overall, the company laid off about 400 workers during 1984.<br />Faced with shifting consumer interests (i.e., the U.S. market move from jogging to aerobics), the company created a new products division in 1985 to help keep pace. In addition, Nike purchased Pro-form, a small maker of weightlifting equipment, as part of its plan to profit from all aspects of the fitness movement. The company was restructured further at the end of 1985 when its last two U.S. factories were closed and its previous divisions of apparel and athletic shoes were rearranged by sport. In a move that would prove to be the key to the company's recovery, in 1985 the company signed basketball player Michael Jordan to endorse a new version of its Air shoe, introduced four years earlier. The new basketball shoes bore the name 'Air Jordan.'<br />In early 1986 Nike announced expansion into a number of new lines, including casual apparel for women, a less expensive line of athletic shoes called Street Socks, golf shoes, and tennis gear marketed under the name 'Wimbledon.' By mid-1986 Nike was reporting that its earnings had begun to increase again, with sales topping $1 billion for the first time. At that point, the company sold its 51 percent stake in Nike-Japan to its Japanese partner; six months later, Nike laid off ten percent of its U.S. employees at all levels in a major cost-cutting strategy.<br />Following these moves, Nike announced a drop in revenues and earnings in 1987, and another round of restructuring and budget cuts ensued, as the company attempted to come to grips with the continuing evolution of the U.S. fitness market. Only Nike's innovative Air athletic shoes provided a bright spot in the company's otherwise erratic progress, allowing the company to regain market share from rival Reebok International Ltd. in several areas, including basketball and cross-training.<br />The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a commanding lead in sales to young people to claim 23 percent of the overall athletic shoe market. Profits rebounded to reach $100 million in 1988, as sales rose 37 percent to $1.2 billion. Later that year, Nike launched a $10 million television campaign around the theme 'Just Do It' and announced that its 1989 advertising budget would reach $45 million.<br />In 1989 Nike marketed several new lines of shoes and led its market with $1.7 billion in sales, yielding profits of $167 million. The company's product innovation continued, including the introduction of a basketball shoe with an inflatable collar around the ankle, sold under the brand name Air Pressure. In addition, Nike continued its aggressive marketing, using ads featuring Michael Jordan and actor-director Spike Lee, the ongoing 'Just Do It' campaign, and the 'Bo Knows' television spots featuring athlete Bo Jackson. At the end of 1989, the company began relocation to its newly constructed headquarters campus in Beaverton, Oregon.<br />Market Dominance in the Early to Mid-1990s<br />In 1990 the company sued two competitors for copying the patented designs of its shoes and found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air Jordan basketball shoes. In 1990 the company's revenues hit $2 billion. The company acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company opened NikeTown, a prototype store selling the full range of Nike products, in Portland, Oregon.<br />By 1991 Nike's Visible Air shoes had enabled it to surpass its rival Reebok in the U.S. market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark, fueled by record sales of 41 million pairs of Nike Air shoes and a booming international market. Its efforts to conquer Europe had begun to bear fruit; business there grew by 100 percent that year, producing more than $1 billion in sales and gaining the second place market share behind Adidas. Nike's U.S. shoe market had, in large part, matured, slowing to five percent annual growth, down from 15 percent annual growth from 1980 and 1988. The company began eyeing overseas markets and predicted ample room to grow in Europe. Nike's U.S. rival Reebok, however, also saw potential for growth in Europe, and by 1992 European MTV was glutted with athletic shoe advertisements as the battle for the youth market heated up between Nike, Reebok, and their European competitors, Adidas and Puma.<br />Nike also saw growth potential in its women's shoe and sports apparel division. In February 1992 Nike began a $13 million print and television advertising pitch for its women's segment, built upon its 'Dialogue' print campaign, which had been slowly wooing 18- to 34-year-old women since 1990. Sales of Nike women's apparel lines Fitness Essentials, Elite Aerobics, Physical Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped by 68 percent in 1992.<br />In July 1992 Nike opened its second NikeTown retail store in Chicago, Illinois. Like its predecessor in Portland, the Chicago NikeTown was designed to 'combine the fun and excitement of FAO Schwartz, the Smithsonian Institute and Disneyland in a space that will entertain sports and fitness fans from around the world' as well as provide a high-profile retail outlet for Nike's rapidly expanding lines of footwear and clothing.<br />Nike celebrated its 20th anniversary in 1992, virtually debt free and with company revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring sales in its retail division, which expanded to include 30 Nike-owned discount outlets and the two NikeTowns. To celebrate its anniversary, Nike brought out its old slogan 'There is no finish line.' As if to underscore that sentiment, Nike Chairman Philip Knight announced massive plans to remake the company with the goal of being 'the best sports and fitness company in the world.' To fulfill that goal, the company set the ground plans for a complicated yet innovative marketing structure seeking to make the Nike brand into a worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney.<br />Nike continued expansion of its high-profile NikeTown chain, opening outlets in Atlanta, Georgia, in the spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its long-term marketing strategy, Nike began an ambitious venture with Mike Ovitz's Creative Artists Agency to organize and package sports events under the Nike name--a move that potentially led the company into competition with sports management giants such as ProServ, IMG, and Advantage International.<br />Nike also began a more controversial venture into the arena of sports agents, negotiating contracts for basketball's Scottie Pippin, Alonzo Mourning, and others in addition to retaining athletes such as Michael Jordan and Charles Barkley as company spokespersons. Nike's influence in the world of sports grew to such a degree that in 1993 Sporting News dubbed Knight the most powerful man in sports.<br />Critics contended that Nike's influence ran too deep, having its hand in negotiating everything in an athlete's life from investments to the choice of an apartment. But Nike's marketing executives saw it as part of a campaign to create an image of Nike not just as a product line but as a lifestyle, a 'Nike attitude.'<br />Nearly everyone agreed, however, that Nike was the dominant force in athletic footwear in the early to mid-1990s. The company held about 30 percent of the U.S. market by 1995, far outdistancing the 20 percent of its nearest rival, Reebok. Overseas revenues continued their steady rise, reaching nearly $2 billion by 1995, about 40 percent of the overall total. Not content with its leading position in athletic shoes and its growing sales of athletic apparel--which accounted for more than 30 percent of revenues in 1996--Nike branched out into sports equipment in the mid-1990s. In 1994 the company acquired Canstar Sports Inc., the leading maker of skates and hockey equipment in the world, for $400 million. Canstar was renamed Bauer Nike Hockey Inc., Bauer being Canstar's brand name for its equipment. Two years later Bauer Nike became part of the newly formed Nike equipment division, which aimed to extend the company into the marketing of sport balls, protective gear, eyewear, and watches. Also during this period, Nike signed up its next superstar spokesperson, Tiger Woods. In 1995, at the age of 20, Woods agreed to a 20-year, $40 million endorsement contract. The golf phenom went on to win an inordinate number of tournaments, often shattering course records, and to become only the second golfer in history to win three 'majors' within a single year, more than validating the blockbuster contract.<br />Late 1990s Slippage<br />For the fiscal year ending in May 1997, Nike earned a record $795.8 million on record revenues of $9.19 billion. Overseas sales played a large role in the 42 percent increase in revenues from 1996 to 1997. Sales in Asia increased by more than $500 million (to $1.24 billion), while European sales surged ahead by $450 million. Back home, Nike's share of the U.S. athletic shoe market neared 50 percent. The picture at Nike soon turned sour, however, as the Asian financial crisis that erupted in the summer of 1997 sent sneaker sales in that region plunging. By fiscal 1999, sales in Asia had dropped to $844.5 million. Compounding the company's troubles was a concurrent stagnation of sales in its domestic market, where the fickle tastes of teenagers began turning away from athletic shoes to hiking boots and other casual 'brown shoes.' As a result, overall sales for 1999 fell to $8.78 billion. Profits were falling as well--including a net loss of $67.7 million for the fourth quarter of fiscal 1998, the company's first reported loss in more than 13 years. The decline in net income led to a cost-cutting drive that included the layoff of five percent of the workforce, or 1,200 people, in 1998, and the slashing of its budget for sports star endorsements by $100 million that same year.<br />Nike was also dogged throughout the late 1990s by protests and boycotts over allegations regarding the treatment of workers at the contract factories in Asia that employed nearly 400,000 people and that made the bulk of Nike shoes and much of its apparel. Charges included abuse of workers, poor working conditions, low wages, and use of child labor. Nike's initial reaction--which was highlighted by Knight's insistence that the company had little control over its suppliers--resulted in waves of negative publicity. Protesters included church groups, students at universities that had apparel and footwear contracts with Nike, and socially conscious investment funds. Nike finally announced in mid-1998 a series of changes affecting its contract workforce in Asia, including an increase in the minimum age, a tightening of air quality standards, and a pledge to allow independent inspections of factories. Nike nonetheless remained under pressure from activists into the 21st century. Nike, along with McDonald's Corporation, the Coca-Cola Company, and Starbucks Corporation, among others, also became an object of protest from those who were attacking multinational companies that pushed global brands. This undercurrent of hostility burst into the spotlight in late 1999 when some of the more aggressive protesters against a World Trade Organization meeting in Seattle attempted to storm a NikeTown outlet.<br />Seeking to recapture the growth of the early to mid-1990s, Nike pursued a number of new initiatives in the late 1990s. Having initially missed out on the trend toward extreme sports (such as skateboarding, mountain biking, and snowboarding), Nike attempted to rectify this miscue by establishing a unit called ACG&mdash⁄ort for 'all-conditions gear'--in 1998. Two years later, the company created a new division called Techlab to market a line of sports-technology accessories, such as a digital audio player, a high-altitude wrist compass, and a portable heart-rate monitor. Both of these initiatives were aimed at capturing sales from the emerging Generation Y demographic group. In early 1999 Nike began selling its shoes and other products directly to consumers via the company web site. Nike announced in September of that year that it would buy about ten percent of Fogdog Inc., which ran a sporting goods e-commerce site, in exchange for granting Fogdog the exclusive online rights to sell the full Nike line. The company finally earned some good publicity in 1999 when it sponsored the U.S. national women's soccer team that won the Women's World Cup. With its record of innovative product design and savvy promotion and an aggressive approach to containing costs and revitalizing sales, Nike appeared likely to stage an impressive comeback in the early 21st century.<br />Nike History Timeline Info <br />1950's<br />Phil Knight and Bill Bowerman meet<br />1960's<br />Blue Ribbon Sports (BRS) was made and founded by Phil Knight<br />The popular Cortez aka "Dope Mans" are made in Japan<br />1970's<br />The Swoosh logo is created by Carolyn Davidson for $35.00<br />The first Nike model shoe to hit the retail market is a soccer/football shoe<br />A Promo Nike Tee becomes the first apparel item<br />The famous Waffle Trainer is introduced, which becomes the best selling shoe in the US<br />Nike’s racing and training spiked shoe is made called the "Elite"<br />Factories for manufacturing are set up in Korea and Taiwan<br />For the first time Nike shoes are sold in Asia<br />Blue Ribbon Sports changes their company name to Nike Inc.<br />The first Nike running shoe with a air sole system to come out is the "Tailwind"<br />World Headquarters are opened in Beaverton, Oregon<br />1980's<br />Nike talks with the P.R. of China so they can produce shoes there<br />Nike shoes become Canada’s top seller<br />Nike shoes are now produced in 11 countries<br />The famous "NIKE AIR" Air Force 1 and Air Ace make their introduction<br />Over 200 shoes are now in Nike’s footwear line<br />The first high performance kid’s running shoe is called the "Destiny"<br />The Air Jordan makes it’s way to Nike footwear line up<br />The Sock Racer comes out and is part of the Dynamic-Fit technology<br />The first Air Max<br />The first Cross Trainer<br />The famous "Just Do It" slogan comes to life<br />The first model to combine the footbridge device and Air Sole is the Air Stab<br />Spike Lee’s "Mars Blackmon" character helps promote the third style of Air Jordan<br />Bo Jackson’s "Bo Knows" commercials include the "Just Do It" slogan<br />Nike moves to a new World Campus in Beaverton<br />1990's<br />The new World Campus sits on 74 acres with 570,000 square feet.<br />In Portland, Oregon the first Nike Town opens<br />The intro of the Air Huarache running shoe<br />The intro of the Air Mowabb<br />Nike Town opens in Chicago<br />Charles Barkley first signature shoe is introduced<br />The intro of the Run Walk shoe<br />Nike Town opens in Atlanta and Orange County<br />The intro of dual pressure cushioning in the Air Max<br />Nike gets distribution rights in Korea and Japan<br />The intro of Zoom Air technology<br />Nike Town New York opens<br />The Air Penny comes to life<br />2000's<br /><ul><li>2000: The National Football League declines to renew its exclusive
5. apparel licensing arrangement with Nike.
6. 2001: Nike opens its first Nike Goddess store, a unit targeting women, in Newport Beach, CA.
7. 2003: Nike purchases Converse Inc. for $ 305 million.
11. Evolution of the Swoosh Logo</li></ul>STEP 3<br /><ul><li>Accounting policies
12. Financial statements and its analysis
13. Results of operations
14. Financial ratios
15. Competitors and there's ratios
18. Share repurchases</li></ul>ACCOUNTING POLICIES<br />Basis of Consolidation<br />The consolidated financial statements include the accounts of NIKE, Inc. and its subsidiaries (the “Company”). All significant intercompany transactions and balances have been eliminated.<br />Recognition of Revenues<br />Wholesale revenues are recognized when title passes and the risks and rewards of ownership have passed to the customer, based on the terms of sale.<br />This occurs upon shipment or upon receipt by the customer depending on the country of the sale and the agreement with the customer. Retail store revenues are recorded at the time of sale. Provisions for sales discounts, returns and miscellaneous claims from customers are made at the time of sale.<br />As of May 31, 2010 and 2009, the Company's reserve balances for sales discounts, returns and miscellaneous claims were $370.6 million and $363.6 million, respectively.<br />Shipping and Handling Costs<br />Shipping and handling costs are expensed as incurred and included in cost of sales.<br />Advertising and Promotion<br />Advertising production costs are expensed the first time the advertisement is run. Media (TV and print) placement costs are expensed in the month the advertising appears.<br />A significant amount of the Company’s promotional expenses result from payments under endorsement contracts. Accounting for endorsement payments is based upon specific contract provisions. Generally, endorsement payments are expensed on a straight−line basis over the term of the contract after giving recognition to periodic performance compliance provisions of the contracts. Prepayments made under contracts are included in prepaid expenses or other assets depending on the period to which the prepayment applies.<br />Through cooperative advertising programs, the Company reimburses retail customers for certain costs of advertising the Company’s products. The Company records these costs in selling and administrative expense at the point in time when it is obligated to its customers for the costs, which is when the related revenues are recognized. This obligation may arise prior to the related advertisement being run.<br />Total advertising and promotion expenses were $2,356.4 million, $2,351.3 million, and $2,308.3 million for the years ended May 31, 2010, 2009 and 2008, respectively. Prepaid advertising and promotion expenses recorded in prepaid expenses and other assets totaled $260.7 million and $280.0 million at May 31, 2010 and 2009, respectively.<br /> <br />Cash and Equivalents<br />Cash and equivalents represent cash and short−term, highly liquid investments with maturities of three months or less at date of purchase. The carrying amounts reflected in the consolidated balance sheet for cash and equivalents approximate fair value.<br />Short−term Investments<br />Short−term investments consist of highly liquid investments, primarily commercial paper, U.S. treasury, U.S. agency, and corporate debt securities, with maturities over three months from the date of purchase. Debt securities that the Company has the ability and positive intent to hold to maturity are carried at amortized cost. <br />At May 31, 2010 and 2009, short-term investments consisted of available-for-sale securities Available−for−sale securities are recorded at fair value with unrealized gains and losses reported, net of tax, in other comprehensive income, unless unrealized losses are determined to be other than temporary.<br />The Company considers all available−for−sale securities, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs and therefore classifies all securities with maturity dates beyond three months as current assets within short−term investments on the consolidated balance sheet.<br />Allowance for Uncollectible Accounts Receivable<br />Accounts receivable consists primarily of amounts receivable from customers. We make ongoing estimates relating to the collectability of our accounts receivable and maintain an allowance for estimated losses resulting from the inability of our customers to make required payments. In determining the amount of the allowance, we consider our historical level of credit losses and make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. Accounts receivable with anticipated collection dates greater than 12 months from the balance sheet date and related allowances are considered non−current and recorded in other assets. <br />The allowance for uncollectible accounts receivable was $116.7 million and $110.8 million at May 31, 2010 and 2009, respectively, of which $43.1 million and $36.9 million was classified as long-term and recorded in other assets.<br />Inventory Valuation<br />Inventories are stated at lower of cost or market and valued on a first−in, first−out (“FIFO”) or moving average cost basis.<br />Property, Plant and Equipment and Depreciation<br />Property, plant and equipment are recorded at cost. Depreciation for financial reporting purposes is determined on a straight−line basis for buildings and leasehold improvements over 2 to 40 years and for machinery and equipment over 2 to 15 years. Computer software (including, in some cases, the cost of internal labor) is depreciated on a straight−line basis over 3 to 10 years.<br />Impairment of Long−Lived Assets<br />The Company reviews the carrying value of long−lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset, or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset groups carrying amount and its estimated fair value.<br />Identifiable Intangible Assets and Goodwill<br />The Company performs annual impairment tests on goodwill and intangible assets with indefinite lives in the fourth quarter of each fiscal year, or when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit or an intangible asset with an indefinite life below its carrying value. Events or changes in circumstances that may trigger interim impairment reviews include significant changes in business climate, operating results, planned investments in the reporting unit, or an expectation that the carrying amount may not be recoverable, among other factors. The impairment test requires the Company to estimate the fair value of its reporting units. If the carrying value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and the Company proceeds to step two of the impairment analysis. In step two of the analysis, the Company measures and records an impairment loss equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value should such a circumstance arise.<br />The Company generally bases its measurement of fair value of a reporting unit on a blended analysis of the present value of future discounted cash flows and the market valuation approach. The discounted cash flows model indicates the fair value of the reporting unit based on the present value of the cash flows that the Company expects the reporting unit to generate in the future. The Company’s significant estimates in the discounted cash flows model include: its weighted average cost of capital; long−term rate of growth and profitability of the reporting unit’s business; and working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of the reporting unit to comparable publicly traded companies in similar lines of business. Significant estimates in the market valuation approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment, and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting unit.<br />The Company believes the weighted use of discounted cash flows and the market valuation approach is the best method for determining the fair value of its reporting units because these are the most common valuation methodologies used within its industry; and the blended use of both models compensates for the inherent risks associated with either model if used on a stand−alone basis.<br />Indefinite−lived intangible assets primarily consist of acquired trade names and trademarks. In measuring the fair value for these intangible assets, the Company utilizes the relief−from−royalty method. This method assumes that trade names and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method requires the Company to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted average cost of capital.<br />Foreign Currency Translation and Foreign Currency Transactions<br />Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are included in the foreign currency translation adjustment, a component of accumulated other comprehensive income in shareholders’ equity.<br />The Company’s global subsidiaries have various assets and liabilities, primarily receivables and payables, that are denominated in currencies other than their functional currency. These balance sheet items are subject to remeasurement, the impact of which is recorded in other (income) expense, net, within our consolidated statement of income.<br />Accounting for Derivatives and Hedging Activities<br />The Company uses derivative financial instruments to limit exposure to changes in foreign currency exchange rates and interest rates. All derivatives are recorded at fair value on the balance sheet and changes in the fair value of derivative financial instruments are either recognized in other comprehensive income (a component of shareholders’ equity), debt or net income depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge, and, if designated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in the same category as the cash flows from the related hedged items. For undesignated hedges and designated cash flow hedges, this is within the cash provided by operations component of the consolidated statement of cash flows. For designated net investment hedges, this is generally within the cash used by investing activities component of the cash flow statement. As our fair value hedges are receive−fixed, pay−variable interest rate swaps, the cash flows associated with these derivative instruments are periodic interest payments while the swaps are outstanding, which are reflected in net income within the cash provided by operations component of the cash flow statement.<br />Stock−Based Compensation<br />The Company estimates the fair value of options granted under the NIKE, Inc. 1990 Stock Incentive Plan (the “1990 Plan”) and employees’ purchase rights under the Employee Stock Purchase Plans (“ESPPs”) using the Black−Scholes option pricing model. The Company recognizes this fair value, net of estimated forfeitures, as selling and administrative expense in the consolidated statements of income over the vesting period using the straight−line method.<br />Income Taxes<br />The Company accounts for income taxes using the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. United States income taxes are provided currently on financial statement earnings of non−U.S. subsidiaries that are expected to be repatriated. The Company determines annually the amount of undistributed non−U.S. earnings to invest indefinitely in its non−U.S. operations. The Company recognizes interest and penalties related to income tax matters in income tax expense.<br />Earnings Per Share<br />Basic earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive stock options and awards.<br />Management Estimates<br />The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, including estimates relating to assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.<br />Reclassifications<br />Certain prior year amounts have been reclassified to conform to fiscal year 2010 presentation, including a reclassification to investing activities for the settlement of net investment hedges in the consolidated statement of cash flows for the year ended May 31, 2008. These reclassifications had no impact on previously reported results of operations or shareholders’ equity and do not affect previously reported cash flows from operations, financing activities or net change in cash and equivalents.<br />Recently Adopted Accounting Standards:<br />In January 2010, the Financial Accounting Standards Board ("FASB") issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires additional disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and the transfers between Levels 1, 2, and 3 of the fair value measurement hierarchy. This guidance became effective for the Company beginning March 1, 2010, except for disclosures relating to purchases, sales, issuances and settlements of Level 3 assets and liabilities, which will be effective for the Company beginning June 1, 2011. As this guidance only requires expanded disclosures, the adoption did not and will not impact the Company's consolidated financial position or results of operations. See Note 6 — Fair Value Measurements for disclosure required under this guidance.<br />In February 2010, the FASB issued amended guidance on subsequent events. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and the Company adopted these new requirements since the third quarter of fiscal 2010.<br />Financial statements and its analysis<br />CONSOLIDATED STATEMENTS OF INCOME<br />Year over year, Nike Inc. has seen revenues remain relatively flat ($19.2B to $19.0B), though the company was able to grow net income from $1.5B to $1.9B. A reduction in the percentage of sales devoted to cost of goods sold from 55.13% to 53.72% was a key component in the bottom line growth in the face of flat revenues.<br />Currency inMillions of U.S. DollarsAs of:May 312007May 312008ReclassifiedMay 312009May 312010Revenues16,325.918,627.019,176.119,014.0TOTAL REVENUES16,325.918,627.019,176.119,014.0Cost of Goods Sold9,165.410,239.610,571.710,213.6GROSS PROFIT7,160.58,387.48,604.48,800.4Selling General & Admin Expenses, Total5,028.75,953.76,149.66,326.4OTHER OPERATING EXPENSES, TOTAL5,028.75,953.76,149.66,326.4OPERATING INCOME2,131.82,433.72,454.82,474.0Interest Expense-49.7-38.7-40.2-36.4Interest and Investment Income116.9115.849.730.1NET INTEREST EXPENSE67.277.19.5-6.3Currency Exchange Gains (Loss)---77.043.049.2Other Non-Operating Income (Expenses)-28.08.5----EBT, EXCLUDING UNUSUAL ITEMS2,171.02,442.32,507.32,516.9Merger & Restructuring Charges-----195.0--Impairment of Goodwill-----199.3--Gain (Loss) on Sale of Assets14.760.6----Other Unusual Items, Total14.2---156.5--Other Unusual Items14.2--45.5--EBT, INCLUDING UNUSUAL ITEMS2,199.92,502.91,956.52,516.9Income Tax Expense708.4619.5469.8610.2Earnings from Continuing Operations1,491.51,883.41,486.71,906.7NET INCOME1,491.51,883.41,486.71,906.7<br />NIKE, INC.<br />CONSOLIDATED BALANCE SHEETS<br />Nike Inc. is among the least leveraged companies in the Textiles, Apparel and Luxury Goods industry and has a Debt to Total Capital ratio of 5.72%. Additionally, an examination of near-term assets and liabilities shows that there are enough liquid assets to satisfy current obligations.. Cash collection is average with Accounts Receivable are typical for the industry, although improving, with 53.11 days worth of sales outstanding. Last, inventory levels, relative to the Cost of Goods Sold, are typical for the industry but have shown a consistent increase during the last 4 years. This implies a potential loss of efficiency or pricing power.<br />Currency inMillions of U.S. DollarsAs of:May 312007May 312008ReclassifiedMay 312009May 312010Assets Cash and Equivalents1,856.72,133.92,291.13,079.1Short-Term Investments990.3642.21,164.12,066.8TOTAL CASH AND SHORT TERM INVESTMENTS2,847.02,776.13,455.25,145.9Accounts Receivable2,494.72,795.32,883.92,649.8TOTAL RECEIVABLES2,494.72,795.32,883.92,649.8Inventory2,121.92,438.42,357.02,040.8Prepaid Expenses--602.3482.3454.1Deferred Tax Assets, Current219.7227.2272.4248.8Other Current Assets393.2--283.2419.8TOTAL CURRENT ASSETS8,076.58,839.39,734.010,959.2Gross Property Plant and Equipment3,619.14,103.04,255.74,389.8Accumulated Depreciation-1,940.8-2,211.9-2,298.0-2,457.9NET PROPERTY PLANT AND EQUIPMENT1,678.31,891.11,957.71,931.9Goodwill130.8448.8193.5187.6Long-Term Investments----13.714.6Deferred Tax Assets, Long Term392.8520.4801.6858.6Other Intangibles409.9743.1467.4467.0Other Long-Term Assets----81.70.4TOTAL ASSETS10,688.312,442.713,249.614,419.3 LIABILITIES & EQUITY Accounts Payable1,040.31,287.61,031.91,254.5Accrued Expenses1,120.01,475.71,593.61,610.1Short-Term Borrowings100.8177.7342.9138.6Current Portion of Long-Term Debt/Capital Lease30.56.332.07.4Current Income Taxes Payable109.088.086.359.3Other Current Liabilities, Total183.4286.2190.3294.3TOTAL CURRENT LIABILITIES2,584.03,321.53,277.03,364.2Long-Term Debt409.9441.1437.2445.8Deferred Tax Liability Non-Current668.7854.5842.0853.8Other Non-Current Liabilities------1.5TOTAL LIABILITIES3,662.64,617.14,556.24,665.3TOTAL PREFERRED EQUITY0.30.30.30.3Common Stock18.104.22.168.8Additional Paid in Capital1,960.02,497.82,871.43,440.6Retained Earnings4,885.25,073.35,451.46,095.5Comprehensive Income and Other177.4251.4367.5214.8TOTAL COMMON EQUITY7,025.47,825.38,693.19,753.7TOTAL EQUITY7,025.77,825.68,693.49,754.0TOTAL LIABILITIES AND EQUITY10,688.312,442.713,249.614,419.3<br />NIKE, INC.<br />CONSOLIDATED STATEMENTS OF CASH FLOWS<br />Currency inMillions of U.S. DollarsAs of:May 312007May 312008ReclassifiedMay 312009May 312010NET INCOME1,491.51,883.41,486.71,906.7Depreciation & Amortization260.3312.3371.4382.0Amortization of Goodwill and Intangible Assets22.214.171.1243.5DEPRECIATION & AMORTIZATION, TOTAL270.2321.5383.3395.5(Gain) Loss from Sale of Asset---60.6----(Gain) Loss on Sale of Investment----20.7--Asset Writedown & Restructuring Costs----380.6--Change in Accounts Receivable-39.6-118.3-238.0181.7Change in Inventories-49.5-249.832.2284.6Change in Accounts Payable85.1330.9-220.0298.0Change in Other Working Capital-60.8-11.214.1-69.6CASH FROM OPERATIONS1,878.71,936.31,736.13,164.2Capital Expenditure-313.5-449.2-455.7-335.1Sale of Property, Plant, and Equipment28.31.932.010.1Cash Acquisitions---571.1----Divestitures--246.0----Investments in Marketable & Equity Securities382.4380.4-518.7-936.8CASH FROM INVESTING92.9-489.8-798.1-1,267.5Short-Term Debt Issued52.663.7177.1--Long-Term Debt Issued41.8------TOTAL DEBT ISSUED94.463.7177.1--Short Term Debt Repaid-------205.4Long Term Debt Repaid-255.7-35.2-6.8-32.2TOTAL DEBT REPAID-255.7-35.2-6.8-237.6Issuance of Common Stock322.9343.3186.6364.5Repurchase of Common Stock-985.2-1,248.0-649.2-741.2Common and/or Preferred Dividends Paid-343.7-412.9-466.7-505.4TOTAL DIVIDEND PAID-343.7-412.9-466.7-505.4Other Financing Activities55.863.025.158.5CASH FROM FINANCING-1,111.5-1,226.1-733.9-1,061.2Foreign Exchange Rate Adjustments42.456.8-46.9-47.5NET CHANGE IN CASH902.5277.2157.2788.0<br />Financial statements analysis<br />Since the adoption of this long−term strategy in 2001, NIKE, Inc.’s revenues and earnings per share have grown 8% and 14%, respectively, on an annual compounded basis. During the same period, our return on invested capital has increased from 14% to 21%. While macroeconomic conditions in fiscal 2010 continued to remain challenging, putting significant pressure on consumer spending in most markets worldwide, they have continued to focus on achieving appropriate financial performance, while extending their market leadership and positioning for sustainable, profitable growth over the long term.<br />NIKE, Inc.’s fiscal 2010 revenues declined 1% to $19.0 billion, net income increased 28% to $1.9 billion, and they delivered diluted earnings per share of $3.86, a 27% increase versus fiscal 2009. their fiscal 2009 reported results contain significant non−comparable transactions, including an after−tax charge of $145 million for restructuring activities, recorded in the fourth quarter of fiscal 2009, and an after−tax charge of $241 million for the impairment of goodwill, intangible and other assets of Umbro, which was recorded in the third quarter of fiscal 2009. Excluding these non−comparable items, Nike fiscal 2010 net income would have increased 2% and diluted earnings per share would have increased 1% compared to fiscal 2009 .<br />The increase in net income excluding non−comparable items was primarily driven by an improved gross margin percentage and a reduction in our effective tax rate, which more than offset the reduction in revenues and higher selling and administrative expenses. The increase in gross margin percentage was primarily the result of favorable product mix, cost reduction initiatives, lower input costs and sales growth in NIKE−owned retail business. Nike year−over−year effective tax rate improvement was driven by continued benefit from Nike international businesses, which are generally taxed at rates lower than the U.S. statutory rate. The increase in selling and administrative expense was primarily attributable to an increase in performance−based compensation as well as investments in NIKE−owned retail business, which more than offset reductions in compensation expense resulting from restructuring activities that took place in the fourth quarter of fiscal 2009. For fiscal 2010, diluted earnings per share grew at a slightly lower rate than net income given higher average outstanding shares. In fiscal 2010, Nike increased cash flow from operations as a result of working capital reductions, reflecting our efforts to aggressively manage inventory levels and accounts receivable collections. At May 31, 2010, Nike inventory and accounts receivable balances were down 13% and 8%, respectively, compared to May 31, 2009.<br />During fiscal 2010, Nike also returned larger amounts of cash to Nikes shareholders through higher dividends and increased share repurchases compared to fiscal 2009.<br />Although most of Nike businesses reported revenue declines in the first half of fiscal 2010, the majority returned to growth in the second half of fiscal 2010. <br />Futures orders for NIKE Brand Footwear and Apparel scheduled for delivery during the first six months of fiscal 2011 increased 7% as compared to the same periods in the prior year.<br />Revenues<br />Fiscal 2010 Compared to Fiscal 2009 leftbottom<br />Excluding the effects of changes in currency exchange rates, revenues for NIKE, Inc. declined 2%, driven primarily by a 2% decline in revenues for the NIKE Brand. All of Nike geographies delivered lower revenues with the exception of Emerging Markets, reflecting a challenging economic environment across most markets, most notably in Western Europe and Central and Eastern Europe geographies. By product group, revenues for worldwide NIKE Brand footwear business were down 1% compared to the prior year. Worldwide NIKE Brand apparel and equipment revenues declined 5% and 7%, respectively. While Nike wholesale business remains the largest component of NIKE Brand revenues, NIKE−owned retail business continues to grow, representing approximately 15% of total NIKE Brand revenues in fiscal 2010 as compared to 13% in fiscal 2009.<br />Revenues from Other Businesses were comprised of results from Cole Haan, Converse, Inc., Hurley International, LLC, NIKE Golf and Umbro, Ltd. Excluding the impact of currency changes, revenues for these businesses increased by 4% for fiscal 2010, driven by increased revenues at Converse, Umbro and Hurley, which more than offset revenue declines at NIKE Golf and Cole Haan<br />Gross Margin<br />Fiscal 2010 Compared to Fiscal 2009<br />For fiscal 2010, Nike consolidated gross margin percentage was 140 basis points higher than the prior year. The primary factors contributing to this improvement were as follows:<br />• Improved in−line product margins across most geographies, driven by reduced raw material and freight costs as well as favorable changes in product mix;<br />• Improved inventory positions, most notably in North America and Western Europe, which drove a shift in mix from discounted close−out to higher margin in−line sales; and<br />• Growth of NIKE−owned retail as a percentage of total revenue, across most NIKE Brand geographies, driven by an increase in both new store openings and comparable store sales.<br />Together, these factors increased consolidated gross margins by approximately 160 basis points for fiscal 2010. These increases were partially offset by the impact of unfavorable currency exchange rates, primarily affecting Nike Emerging Markets and Central and Eastern Europe geographies.<br />Selling and Administrative Expense<br />rightbottomFiscal 2010 Compared to Fiscal 2009<br />Changes in foreign currency exchange rates increased selling and administrative expense by 1 percentage point in fiscal 2010.<br />Excluding changes in exchange rates, operating overhead expense increased 4% compared to the prior year due primarily to increases in performance−based compensation and investments in NIKE−owned retail. These increases were partially offset by reductions in compensation spending in fiscal 2010 as a result of restructuring activities that took place in the fourth quarter of fiscal 2009.<br />In fiscal 2010, changes in currency exchange rates had a minimal impact on demand creation expense. Demand creation expense remained flat compared to the prior year, as increases in sports marketing and digital marketing expenses were offset by reductions in advertising.<br />Goodwill, Intangible and Other Asset Impairment<br />In fiscal 2009, Nike recognized a $401 million pre−tax non−cash impairment charge to reduce the carrying value of Umbro’s goodwill, intangible and other assets. Although Umbro’s financial performance for fiscal 2009 was slightly better than Nike had originally expected, projected future cash flows had fallen below the levels we expected at the time of acquisition. This erosion was a result of both the unprecedented decline in global consumer markets, particularly in the United Kingdom, and Nike decision to adjust the level of investment in the business.<br />Other (Income) Expense, net<br />Fiscal 2010 Compared to Fiscal 2009 <br />Other (income) expense, net is primarily comprised of foreign currency conversion gains and losses from the remeasurement of monetary assets and liabilities in non−functional currencies, the impact of certain foreign currency derivative instruments and unusual or non−recurring transactions that are outside the normal course of business. For fiscal 2010, other (income) expense, net was primarily comprised of net foreign currency gains and the recognition of previously deferred licensing income related to Nike fiscal 2008 sale of NIKE Bauer Hockey.<br />For fiscal 2010, Nike estimate that the combination of translation of foreign currency−denominated profits from Nike international businesses and the year−over−year change in foreign currency related gains included in other (income) expense, net increased Nike income before income taxes by approximately $34 million.<br />Income Taxes<br />Fiscal 2010 Compared to Fiscal 2009<br />Nike effective tax rate for fiscal 2010 was 20 basis points higher than the effective rate for fiscal 2009. Nike effective tax rate for fiscal 2009 includes a tax benefit related to charges recorded for the impairment of Umbro’s goodwill, intangible and other assets. Excluding this tax benefit, Nike effective rate for fiscal 2009 would have been 26.5%, 230 basis points higher than Nike effective tax rate for fiscal 2010. The decrease in the effective tax rate for fiscal 2010 was primarily attributable to the continued benefit from Nike international operations, where tax rates for these operations are generally lower than the U.S. statutory rate.<br />Nike estimate that their effective tax rate for fiscal year 2011 will be in line with their fiscal 2010 effective tax rate.<br />Geography Highlights<br />By geography and in total for the NIKE Brand, futures orders were as follows:<br />GeographyReported Futures OrdersExcluding Currency ChangesNorth America 8% 7% Western Europe -2% 11% Central and Eastern Europe -2% 3% Greater China 19% 16% Japan -17% -16% Emerging Markets 30% 30% Total NIKE Brand 7% 10% <br />North America<br />During the fourth quarter, revenue for North America increased 4 percent to $1.8 billion. Footwear revenue was up 1 percent to $1.2 billion, apparel revenue increased 13 percent to $447 million and equipment revenue was essentially flat at $90 million. Earnings before interest and taxes (EBIT) for North America improved 8 percent to $435 million. <br />North America revenue for the full fiscal year was down 1 percent to $6.7 billion. Footwear revenue decreased 2 percent to $4.6 billion, apparel revenue was flat at $1.7 billion and equipment revenue increased 1 percent to $346 million. North America EBIT grew 8 percent to $1.5 billion for the fiscal year. <br />Western Europe<br />During the fourth quarter, revenue for Western Europe increased 2 percent to $956 million. Footwear revenue increased 1 percent to $593 million, apparel revenue was up 8 percent to $309 million and equipment declined 12 percent to $54 million. EBIT for Western Europe decreased 17 percent to $193 million. <br />For the full fiscal year, revenue for Western Europe was down 6 percent to $3.9 billion. Footwear revenue decreased 3 percent to $2.3 billion, apparel revenue declined 9 percent to $1.3 billion and equipment revenue dropped 15 percent to $247 million. Compared to last year, EBIT decreased 9 percent to $856 million. <br />Central and Eastern Europe<br />In the fourth quarter, revenue for Central and Eastern Europe was 9 percent better than the same period last year at $332 million. Footwear increased 9 percent to $199 million, apparel revenue grew 10 percent to $109 million and equipment improved 2 percent to $25 million. EBIT for Central and Eastern Europe decreased 9 percent to $84 million. <br />Revenue for Central and Eastern Europe declined 16 percent for the fiscal year to $1.1 billion. Footwear revenue decreased 12 percent to $660 million, apparel revenue dropped 21 percent to $399 million and equipment revenue declined 20 percent to $91 million. Compared to last year, EBIT decreased 32 percent to $281 million. <br />Greater China<br />Fourth quarter revenue for Greater China grew 12 percent to $464 million. Footwear revenue increased 14 percent to $246 million, apparel was up 10 percent to $193 million and equipment improved 17 percent to $25 million. EBIT for Greater China increased 20 percent to $187 million. <br />For fiscal 2010 Greater China revenue was essentially flat to the prior year at $1.7 billion. Footwear revenue grew 1 percent to $953 million, apparel revenue declined 2 percent to $684 million and equipment revenue improved 1 percent to $105 million. Fiscal 2010 EBIT for Greater China grew 11 percent to $637 million. <br />Japan<br />Japan's fourth quarter revenue declined 8 percent to $261 million. Compared to the prior year, footwear revenue was basically flat at $129 million, apparel revenue was down 13 percent at $105 million and equipment revenue dropped 17 percent to $27 million. EBIT declined 6 percent in the fourth quarter to $61 million. <br />Fiscal 2010 revenue for Japan declined 5 percent to $882 million. Compared to last year, footwear revenue increased 1 percent while apparel and equipment revenue declined 10 percent and 7 percent respectively. EBIT for Japan was down 12 percent for the year at $180 million. <br />Emerging Markets<br />In the Emerging Markets, revenue was up 47 percent to $556 million for the fourth quarter. Footwear revenue increased 42 percent to $355 million, apparel revenue rose 70 percent to $162 million and equipment revenue increased 19 percent to $39 million. EBIT for the Emerging Markets in the fourth quarter improved 46 percent to $114 million. <br />Full fiscal year revenue for the Emerging Markets was up 20 percent to $2.0 billion. Footwear revenue was up 23 percent to $1.4 billion, apparel revenue increased 22 percent to $532 million and equipment revenue declined 3 percent to $154 million. EBIT for the Emerging Markets improved 44 percent to $493 million for the year<br />FINANCIAL RATIOS<br />Price RatiosCompanyIndustryS&P 500Current P/E Ratio21.620.521.3P/E Ratio 5-Year HighNA13.212.5P/E Ratio 5-Year LowNA1.72.2Price/Sales Ratio2.112.592.14Price/Book Value4.245.463.54Price/Cash Flow Ratio17.9017.2012.90<br />The company high PE ratio shows that investors are expecting higher earnings growth in the future < 1.1%> <br />Profit Margins %CompanyIndustryS&P 500Gross Margin46.551.839.5Pre-Tax Margin13.418.216.8Net Profit Margin10.112.612.25Yr Gross Margin (5-Year Avg.)44.951.638.35Yr PreTax Margin (5-Year Avg.)12.818.015.85Yr Net Profit Margin (5-Year Avg.)9.312.111.2<br />Also compared to the industry Nike has lower gross margin <5.3%> and lower net profit margin.<br />Financial ConditionCompanyIndustryS&P 500Debt/Equity Ratio0.060.061.07Current Ratio126.96.36.199Quick Ratio188.8.131.52Interest Coverage648.7441.437.8Leverage Ratio184.108.40.206Book Value/Share20.2114.9723.78<br />Nike has slightly higher current ratio than industry <0.2%>, it means that the company has liquidity than can cover the debts.<br />Also, higher quick ratio refers Nike higher ability to meet its short term obligations. <br /> Nike have the same leverage ratio compared to industry, it means that Nike have normal ability to cover its debts throw assets.<br />Investment Returns %CompanyIndustryS&P 500Return On Equity20.826.325.4Return On Assets14.317.48.0Return On Capital18.422.210.5Return On Equity (5-Year Avg.)21.724.716.4Return On Assets (5-Year Avg.)220.127.116.11Return On Capital (5-Year Avg.)18.821.510.5<br />Lower ROA<3.1%> reflects that managers don’t use its assets efficient.<br />Lower ROE<5.5%> indicates that company don’t generate its profit throw the equity.<br />Management EfficiencyCompanyIndustryS&P 500Income/Employee56,765108,278102,166Revenue/Employee563,677696,031926,601Receivable Turnover6.913.217.0Inventory Turnover4.63.910.8Asset Turnover18.104.22.168<br />Nike low R turnover reflects how ineffective receivables are collected.<br />Also low I turnover shows how ineffective the company inventory sold during the period. <br />NIKE and competitors ratios<br />Direct Competitor Comparison <br />NKEADDYY.PKPVT1PVT2IndustryMarket Cap:41.07B13.71BN/AN/A380.26MEmployees:34,40042,6594,00019,50311.21KQtrly Rev Growth (yoy):7.80%20.10%N/AN/A9.20%Revenue (ttm): 19.39B15.75B1.64B13.53B2486.15MGross Margin (ttm):46.51%47.79%N/AN/A40.15%EBITDA (ttm):2.94B1.61BN/AN/A46.45MOperating Margin (ttm): 13.23%8.01%N/AN/A9.94%Net Income (ttm):1.95B791.64MN/A180.40M2N/AEPS (ttm):3.961.89N/AN/A1.38P/E (ttm):21.7017.32N/AN/A16.35PEG (5 yr expected):1.803.14N/AN/A1.00P/S (ttm):2.110.88N/AN/A0.79<br />STOCK<br />The company common stock is traded on the NASDAQ Stock Market under the:<br />Symbol: NKE <br />Last Sale: $ 85.42 Shares Outstanding: 387,900,000 <br />Market Value: $ 33,134,418,000 Exchange: NYSE<br /> Issue Type: Common Stock High: $ 92.49<br />Low: $ 60.89<br />Stock Ownership <br />TypeDate(Q,M)No. OwnersShares Held (000s)% OwnInstitutional09/30/10804341,46688.03<br />Top 5 Holders Shares Held OAK HILL INVEST... 26,830,665 FMR LLC 19,036,943 VANGUARD GROUP ... 13,921,179 JENNISON ASSOCI... 13,881,034 STATE STREET CO... 12,576,163<br />Ownership Analysis# Of HoldersSharesTotal Shares Held: 800 341,335,877 New Positions: 63 5,680,170 Increased Positions: 331 19,752,930 Decreased Positions: 379 25,002,380 Holders With Activity: 710 44,755,310 Sold Out Positions: 43 1,697,457<br />This chart represent common stock prices during 2001-2010<br />At July 16, 2010, there were 20,452 holders of record of our Class B Common Stock and 19 holders of record of our Class A Common Stock. These figures do not include beneficial owners who hold shares in nominee name. The Class A Common Stock is not publicly traded but each share is convertible upon request of the holder into one share of Class B Common Stock. The following tables set forth, for each of the quarterly periods indicated, the high and low sales prices for the Class B Common Stock as reported on the New York Stock Exchange Composite Tape and dividends declared on the Class A and Class B Common Stock<br />Share Repurchases & Dividends <br />During the fourth quarter, the Company repurchased a total of 2,884,008 shares for approximately $216 million under the Company's four-year, $5 billion program approved in September 2008. For the fiscal year, the Company repurchased a total of 11.3 million shares for approximately $754 million. <br />Repurchases for the fiscal year were made in conjunction with two approved repurchase programs. In the third quarter of fiscal 2010 the Company completed its previous four-year, $3 billion share repurchase program approved by the Board of Directors in June 2006 under which the Company purchased a total of 53.9 million shares. Having completed the previous program, the Company began repurchases under the four-year, $5 billion program approved in September 2008. Of the total shares repurchased during the fiscal year, 6.6 million shares for approximately $454 million were purchased under this program.<br />Dividends & SplitsForward Annual Dividend Rate4:1.24Forward Annual Dividend Yield4:1.40%Trailing Annual Dividend Yield3:1.12Trailing Annual Dividend Yield3:1.30%5 Year Average Dividend Yield4:1.80%Payout Ratio4:27.00%Dividend Date3:Dec 29, 2010Ex-Dividend Date4:Dec 2, 2010Last Split Factor (new per old)2:2:1Last Split Date3:Apr 3, 2007<br />Per Share Overview<br />Date12-mos Rolling EPSDividendP/E Ratio08/20103.960.27017.6805/20103.860.27018.7502/20103.510.27019.2611/20093.000.27021.6308/20093.040.25018.2205/20093.030.25018.8302/20093.310.25012.5511/20083.740.25014.24<br />STEP 4<br /><ul><li>Industry analysis
20. Market share
21. PESTLE analysis
22. Porter 5 forces</li></ul>Sportswear, sports accessories & footwear industries<br />Sportswear<br />The global sportswear industry has become increasingly competitive since the phase out of the Multi-Fibre Arrangement in 2005 with the industry containing some of the world’s must powerful multinational brands such as Adidas, Nike, and Puma. In 2007 the global sportswear industry was worth US$145 billion and despite the global economic downturn the sector continues to increase in value.<br />In 2010, the United States athletic apparel market become the world’s largest Sportswear market, accounting for 41% of total sales, followed by the European Union, which accounts for about 38% of total sporting apparel turnover. There is a stiff competition among the sportswear brands that control a majority of the share of this market. These companies spend heavily on innovation and sponsorship events which act as major barriers for the new entrants to this industry.<br />Athletic footwear<br />Since the 2003 athletic footwear industry has begun to enter the high-cost, high-growth "double high" development mode.<br />The athletic footwear market declined 2008, and continued till 2009. <br />In 2010, According to The NPD Group, Inc., one of the leading market research companies, the athletic footwear market is starting to show signs of shifting momentum. <br /> Women's and girls' footwear (excluding athletic footwear)Athletic footwearMen's and boys' footwear (excluding athletic footwear)Footwear and shoe accessoriesInfants' footwear<br />Competition<br />Because Nike sells products for such a wide variety of sports, it competes against many niche companies, like New Balance, but also against similar large athletic footwear and apparel manufacturers like Adidas AG (ADDYY) and Puma AG Rudolf Dassler Sport (PMMAY). <br />Adidas AG (ADDYY) : 2009 revenues - $13.8 billion. The adidas Group competes in the overall sporting goods market. It makes sports footwear, apparel, accessories, and equipment. Like Nike, the adidas Group is also much larger than Puma in terms of sales. <br />Puma AG Rudolf Dassler Sport (PMMAY) : 2009 revenue - $3.3 billion. Puma AG is a Germany-based competitor in the sells sports footwear, apparel, accessories, and equipment. It operates through two brands, Puma and Tretorn. <br />Under Armour (UA): 2009 revenue - $856.4 million. Under Armour is a fairly new company (incorporated in 1996) that designs and sells sports footwear, apparel, and accessories. Its products, which are designed with microfibers intended to wick away perspiration, extend across the sporting goods, outdoor, and active lifestyle markets. Under Armour's sales are growing rapidly, with a 5 year growth rate of 65.03% (industry average is 16%).<br />Company Revenue 2009 (Millions) Net Income 2009 (Millions) Nike (2009 Data) $18,627 $1,883.4 Adidas AG (ADDYY) $13,786 $325 Puma AG Rudolf Dassler Sport (PMMAY) $3,261 $167 Under Armour (UA)  $857 $47 <br />In addition to Nike's footwear competitors, the company also competes with other makers of outdoor apparel, such as V.F. Corporation, Columbia Sportswear and Quicksilver<br />Market Share<br />Nike was the clear market leader, with 31% of the global athletic footwear market in 2007. Looking at the market in the United States, Europe, or Asia reveals a similar picture: Nike's market share in these regions hovers around 36%, followed by Adidas at 20%, with Puma and New Balance as distant third and fourth. <br />The market for athletic apparel is both larger--$49.5 billion in 2005--and more diffuse; the top five firms control only 27% of the market. Nike is, however, also the global leader in apparel, with a 7% market share in 2007. <br />PESTLE ANALYSIS<br />Political <br />Striking dock workers<br />Political unrest in the production countries<br />Terrorism in the home country<br />The government must create economic policies that will foster the growth of businesses. Nike, fortunately, has been helped by the US policies which enable it to advance its products. The support accorded to Nike by the US government, particularly in the general macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system, form the foundation critical to Nike’s growth.<br />Economic <br />Slow down in the economy<br />Reduction in consumer confidence<br />Barriers of entry to the EU<br />Contract manufacturing<br />In economy, the biggest threat for Nike would be economic recession. During recession, Nike’s growth will be adversely affected. The US economy is experiencing a downturn right now. Consumer purchases are slowing down. Currently, Nike's feeling the pinch of the economic recession. The Asian economic crisis also affects Nike since its goods are manufactured in Asia. The labor costs and material prices are going up.<br />Nike's growth is not just affected by the local economy but also in the international economy. A weak Euro and an Asian recession could mean weak sales for Nike. <br />Socio-cultural<br />Brand conscious consumers<br />Change in buying habits in younger people<br />Generation Y prefers other types of footwear<br />Increase in the female share of the market<br />Corporate social responsibility <br />People are more health conscious nowadays. Diet and health are getting more prominence. Consequently, more and more people are joining fitness clubs. There is an accompanying demand for fitness products particularly exercise apparel, shoes and equipment. Nike is at the forefront of this surge in demand as people are looking for sports shoes, apparel and equipment.<br />Nike, however, failed to foresee problems brought about by a sweatshop expose pertaining to labor and factory conditions at production locations in Asia. This caused bad publicity and declining sales as society and consumers demand more socially responsible companies<br />Technological <br />Speed of change of product<br />Design Ability<br />Speed of News reporting<br />Nike uses IT in its marketing information systems very effectively. Nike applies marketing information systems to the economics of innovation, segmentation and differentiation for most of its businesses. Nike’s leadership status owes in large part to the use of extremely valuable Information Technology, and applying it to every aspect of the product from development to distribution.<br /><ul><li>Nike introduced Nike Shox, which revolutionized the cushioning foam used in shoes
23. Nike also collaborated with Apple and is launching new apparel and footwear that will easily carry the consumer’s iPod
24. Product innovation is an ongoing process and is vital to stay ahead of competition Companies in this industry invest money in R&D to keep up with the new demands of today’s athletes.
25. Nike employs many specialists including engineers, athletes, biomechanics, and industrial designers to work together in the design process</li></ul>Environmental <br />Re use a shoe<br />Sustainability philosophy<br />Climate impact<br />Environmental consciousness has a strong presence in Western Europe and Japan, as well as in the United States. Currently, Nike has been “… pursuing product sustainability for more than a decade. From increasing the use of water-based solvents in footwear manufacturing and working to keep greenhouse gas emissions in check, to supporting organic cotton and turning old shoes into new sports surfaces, Nike’s commitment to sustainability is part of our Considered ethos” (“What led us to Nike Considered”). It can be said then that Nike does not suffer environmental issues.<br />Legal <br />Threaten action by underage workforce<br />Poor employment record<br />Corporate social responsibility <br />Contract manufacturing and copying of product (intellectual property)<br />Trade agreements<br /><ul><li>Without proper management leading and planning in the Nike Corporation, the company would have suffered from the child labor issue.
26. Nike has made a true bounce-back from the negative media attention, and continues to be successful due to their strong business ethic philosophy.
27. Geography</li></ul> <br /><ul><li>Production is outsourced to plants in Asia, Latin America, and Africa
28. This reduces costs because labor is cheaper
29. Puts sources of production closer to where they will be sold
30. Firms who outsource lose the ability to closely monitor product quality and working conditions
31. Although some people find this unethical, firms cannot afford to keep production close to home and still compete on profit margins
32. Plants are also located in many different countries, rather than being concentrated in one area
33. Diversification of production plants reduces the risk that a firm will greatly be affected by a problem in any particular country
34. Example: Nike’s largest footwear factory accounts for only 6% of the total footwear production
35. Nike claims it can recover from any loss in production within one year’s time
36. INTERNATIONAL </li></ul>The demographic environment tells marketers who can be potential customer in terms of size, density, location, age, sex, race, occupation, and other statistics. Changes can result in significant opportunities and threats presenting themselves to the organization and major trends for marketers include worldwide explosive population growth (Kotler and Armstrong). All of these can provide Nike with the tools and assets it needs to promote its products in different areas of the world and gain a bigger share of the market globally. The industry has realized the influence of women’s sport players and is preparing to accommodate such an increase and as women increase their consumption the younger generation is decreasing because of the popularity of other footwear. <br />Porter’s 5 forces<br /> <br /> <br />This model is used to identify the sources of competition, and how to gain advantage over them.<br />Potential Entrants <br /><ul><li>Other sportswear manufacturers expanding their portfolio
37. Cheap copies from the Far East
38. Threats of New Entrants: (Low) </li></ul>Barriers to entry in the athletic footwear industry are high due to several factors. <br />It is as very capital intensive industry. Even though it would not be difficult for a new company to obtain the raw materials and the labor needed to produce shoes, there is almost no chance for them to gain popularity in such a mature industry with some of the strongest brand names in the world. Brand loyalty is extremely strong and it would be very hard for a new entrant to “steal” loyal customers from the already existent players. <br />Economies of scale play a huge role as well and the bigger players have an advantage of producing the products at a lower price than compared with newer entrants. As the output is bigger and the fixed costs of factories, machinery, marketing and R&D will be decreased per unit. Both marketing and R&D constitute high costs and since new entrants will not be able to take advantage of the economies of scale they will be less competitive. <br />The industry itself is in a consolidation phase and only the big ones will survive. The large companies are strategically and constantly acquiring smaller companies. Some of the most popular acquisitions include Reebok by Adidas, Converse by Nike, Saucony by Stride Rite, etc. Small companies are bought before they become a threat to the bigger ones and before they have a chance to gain market share. In other words, it is impossible to grow in this industry because someone will take over your company. <br />Buyers<br /><ul><li>The buyers of sports footwear have changed in the past decade.
39. There has been and increase in women purchasing the shoes,
40. Generation Y has a different tastes and purchasing methods
41. Customers more affected by price
42. Buyer Power: (Very High)
43. The buyers for this industry are retailers and end users. </li></ul>The footwear retailers, i.e. Footlocker, Wal-Mart, range in sizes. However, the top 25 retailers account for two-thirds of the sales of athletic footwear- approximately $15 billion in value. New retailers are entering the market, such as “big box stores” and vendors that open their own stores. The lack of concentration among buyers brings down the margins and gives the power to the vendors. Retailers also have no power in determining the design of the product. Therefore the big footwear manufacturers generally dictate the price of their shoes. <br />In order to gain more power buyer companies have started merging- Footlocker -Foot Action, Sport Authority- Gart. This consolidation will transfer some of the power from the big players because in order to be industry leaders they will need these well-recognized retailers as well. Growing margins suggest that buyer power has been increasing.24 <br />The end user of the industry is also considered a buyer and he has unlimited power. Every company is fighting for the loyalty of the end user through constant innovations and brand management. However, if the user is dissatisfied, he can easily switch the brand to another one. <br />.<br />Substitutes <br /><ul><li>Substitutes for athletic shoes are shoes in another category.
44. When required for professional use there is no substitute goods, but as a fashion item there are many other goods that could be purchased.
45. Substitutes: (Low)
46. Lifestyle athletic shoes sales, for instance are growing at the fastest annual rate and Puma is undoubtedly the leader in this segment- with more than 50% sales growth. </li></ul>First, in the sports industry, other types of apparel could also be seen as a substitute, in terms of building image and style. <br />Second, in the same product category, other types of shoes are also substitutes, such as slippers, heels, boots, flip-flops, etc. <br />Even though sneakers are still the most popular type of footwear in the world, <br />Companies such as Steve Madden and Sketchers are also seen as threats. Steve <br />Madden’s “thick high heeled shoes”19 are very popular and since thick heels are <br />considered a more comfortable version among women they could be a substitute <br />for sneakers. Sketchers introduced non-athletic heel-less shoes also called “sneaker <br />mules”20 These shoes, first gained popularity in Europe but now are also becoming <br />popular in the United States. <br />1) They are an attractive alternative product or service, which customers can easily shift to if there are low switching costs<br />OR <br />2) The availability of substitutes invites customers to make price, quality and performance comparisons <br />CAN I jump higher? Is it cheaper? Can I run faster?<br /> <br />3) Competitively priced substitutes impose a maximum value on prices relevant industry can charge for its products or services<br />Suppliers <br /><ul><li>Using production facilities in the Far East has give Nike economies of scale. Although there are now problems arising from these factories, they are switching to making there own goods, labour and political unrest causes delays in manufacturing and shipping of the goods,
47. Supplier Power: (Low)
48. The suppliers do not have the power to bargain the price of their product, since there are numerous suppliers.</li></ul> There has been some standardization of production in the industry due to growing concerns of labor practices of the suppliers and manufacturers. These practices have been damaging the image of some companies including Nike.<br />Therefore, the big companies prefer to work only with approved manufacturers and suppliers that are known to follow these labor standards. Both Adidas and Nike have created a system to ensure that all the high quality of the product, the working conditions, and the distribution are at high standards.<br />Competitive Rivalry <br />Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues<br />Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports.<br />In order to stay competitive and have presence in all sectors, many mergers and acquisitions, i.e. Adidas and Reebok, are taking place and the market is going towards consolidation. As a result, maintaining a single brand image for companies like Nike becomes really a tough ask.<br />In general, with three out of five forces being high, emerging market does not look like a favorable environment. However, on continuous marketing an educating effort, this market might be transferred into a growth region for all companies. <br />STEP 5<br /><ul><li>Company structure
49. Employee network
50. Board of directors
52. Awards & Recognition
53. Nike Responsibility Governance
54. Vision and mission
55. Organizational Structure
56. Products</li></ul>Moving Toward Greater Diversity <br />Employee Networks<br />Nike Employee Networks are designed to help Nike move toward greater diversity. In the U.S., six employee networks focus attention on important communities within Nike. The intended role of each network is to foster professional development, enhance work performance, identify mentors, assist in recruiting diverse professionals, develop increased community interaction, and encourage improved teamwork and interaction within and across work groups.<br />Native American Employee Network<br />Mission: To increase awareness and continue to educate Nike employees about the Native American culture.<br />Through educational opportunities, seminars, speakers and community involvement, NAEN continues to increase awareness of Native American values and culture at Nike. By sponsoring sporting events and various youth programs, the group creates visible community support and inspiration for Native cultures. With their help, the North American Native American community will understand Nike is an employer of choice.<br />Latino Employee Network<br />Mission: To increase the awareness of the Hispanic/Latino culture at Nike, explore diversity in the Nike workplace, develop resources to increase career and cultural growth for Nike employees, strengthen ties to the Hispanic/Latino community and develop initiatives that align with Nike business strategies.<br />The Latino Employee Network encourages all Nike employees to experience Hispanic/Latino culture. The group holds monthly network meetings to discuss Hispanic/Latino initiatives and activities, and celebrates Hispanic/Latino cultural events such as Cinco de Mayo and Hispanic Heritage Month. <br />Ability* Network<br />Mission: To enrich Nike and our community by promoting the inclusion of people impacted by disabilities and fostering an environment that realizes everyone's full potential. It's not about our limitations; it's about what each of us can contribute. The disabled Employees and Friends Network enhances our company-wide awareness of the contributions and potential of people with disabilities. The group provides information, resources, and education to all Nike employees through a wide variety of partnerships and outreach activities. They also work to promote opportunities for all employees to contribute as volunteers, support Nike's global diversity and inclusion initiatives, and support managers in developing and promoting a diverse, highly effective workforce.<br />Nike created the Casey Martin award in 2001 to celebrate athletes with disabilities. <br />Asia Pacific Employee Network<br />Mission: To promote awareness and understanding of Asia Pacific cultures in pursuit of corporate objectives and employee growth.<br />It's a big world. APEN enhances our employees' awareness and understanding of Asia Pacific culture. They work to increase involvement within the Asia Pacific communities, both locally and globally where we do business as well as support Nike's business strategies for the Asia Pacific consumer.<br />Black Employee and Friends Network (BEN)<br />Mission: To add value to the Nike business by promoting an environment that attracts, promotes and retains black employees.<br />Nike's Black Employee & Friends Network (BEN) offers a strong support system for black employees to facilitate a successful transition into Nike's corporate culture. The network also builds human resources support for identifying and bringing to Nike qualified black candidates. BEN offers resources to help incorporate the cultural nuances of the black consumer market in Nike's global marketing strategies. Ultimately, the BEN enhances cultural awareness for Nike and its black employees.<br />Board of Directors<br /><ul><li>lefttopPhilip H. Knight Chairman of the Board of DirectorsMr. Knight, 71, a director since 1968, is Chairman of the Board of Directors of NIKE. Mr. Knight is a co-founder of the Company and, except for the period from June 1983 through September 1984, served as its President from 1968 to 1990, and from June 2000 to 2004. Prior to 1968, Mr. Knight was a certified public accountant with Price Waterhouse and Coopers & Lybrand and was an Assistant Professor of Business Administration at Portland State University.lefttopMark G. Parker President and Chief Executive OfficerMr. Parker, 53, has been President and Chief Executive Officer and a director since January 2006. He has been employed by NIKE since 1979 with primary responsibilities in product research, design and development, marketing, and brand management. Mr. Parker was appointed divisional Vice President in charge of development in 1987, corporate Vice President in 1989, General Manager in 1993, Vice President of Global Footwear in 1998, and President of the NIKE Brand in 2001. In addition to helping lead the continued growth of the Nike brand, Parker is responsible for the growth of NIKE, Inc.'s global business portfolio, which includes Cole Haan, Converse Inc., Hurley International LLC, and Umbro Ltd. David J. Ayre Vice President, Global Human Resources — Mr. Ayre, 50, joined NIKE as Vice President, Global Human Resources in July 2007.Prior to joining NIKE, he held a number of senior human resource positions with PepsiCo, Inc. since 1990, most recently as head of Talent and Performance Rewards.-952527940Donald W. Blair Vice President and Chief Financial Officer — Mr. Blair, 52, joined NIKE in November 1999. Prior to joining NIKE, he held a number of financial management positions with PepsiCo, Inc., including Vice President, Finance of Pepsi−Cola Asia, Vice President, Planning of PepsiCo’s Pizza Hut Division, and Senior Vice President, Finance of The Pepsi Bottling Group, Inc. Prior to joining PepsiCo, Mr. Blair was a certified public accountant with Deloitte, Haskins, and Sells.Charles D. Denson -9525356235006858000President of the NIKE Brand — Mr. Denson, 54, has been employed by NIKE since 1979. Mr. Denson held several management positions within the Company, including his appointments as Director of USA Apparel Sales in 1994, divisional Vice President, U.S. Sales in 1994,divisional Vice President European Sales in 1997, divisional Vice President and General Manager, NIKE Europe in 1998, Vice President and General Manager of NIKE USA in 2000, and President of the NIKE Brand in 2001.Gary M. DeStefano 0123825President, Global Operations — Mr. DeStefano, 53, has been employed by NIKE since 1982, with primary responsibilities in sales and regional administration. Mr. DeStefano was appointed Director of Domestic Sales in 1990, divisional Vice President in charge of domestic sales in 1992, Vice President of Global Sales in 1996, Vice President and General Manager of Asia Pacific in 1997, President of USA Operations in 2001, and President of Global Operations in 2006.Trevor Edwards Vice President, Global Brand and Category Management — Mr. Edwards, 47, joined NIKE in 1992. He was appointed Marketing Manager, Strategic Accounts, Foot Locker in 1993, Director of Marketing, the Americas in 1995, Director of Marketing, Europe in 1997, Vice President, Marketing for Europe, Middle East and Africa in 1999, and Vice President, U.S. Brand Marketing in 2000. Mr. Edwards was appointed corporate Vice President, Global Brand Management in 2002 and Vice President, Global Brand and Category Management in 2006. Prior to NIKE, Mr. Edwards was with the Colgate−Palmolive Company.Jeanne P. Jackson -101601618615-95255514975President, Direct to Consumer — Ms. Jackson, 58, served as a member of the NIKE, Inc. Board of Directors from 2001 through March 2009, when she resigned from our Board and was appointed President, Direct to Consumer. She is founder and CEO of MSP Capital, a private investment company. Ms. Jackson was CEO of Walmart.com from March 2000 to January 2002. She was with Gap, Inc., as President and CEO of Banana Republic from 1995 to 2000, also serving as CEO of Gap, Inc. Direct from 1998 to 2000. Since 1978, she has held various retail management positions with Victoria’s Secret, The Walt Disney Company, Saks Fifth Avenue, and Federated Department Stores. Ms. Jackson is the past President of the United States Ski and Snowboard Foundation Board of Trustees, and is a director of McDonald’s Corporation. She is a former director of Nordstrom, Inc., and Harrah’s Entertainment, Inc.Audit CommitteeDavid W. Johnson, Chair. Jill K. Conway. Ellen M. Hancock. Richard J. Kogan. Howard B. Wentz, Jr. Nominating and Corporate Governance CommitteeDelano E. Lewis, Chair. Jill K. Conway. Ellen M. Hancock. David W. Johnson. Howard B. Wentz, Jr. Finance CommitteeHoward B. Wentz, Jr., Chair. John T. Cahill. Ellen M. Hancock. Richard J. Kogan. Delano E. Lewis. Reuben Mark. J. Pedro Reinhard Personnel and Organization CommitteeRichard J. Kogan, Chair. John T. Cahill. Jill K. Conway. David W. Johnson. Delano E. Lewis. J. Pedro Reinhard</li></ul>ExecutivesBehind a great company are strong leaders.<br />At Nike, we excel as a team. The Nike environment is a collaborative, matrix organization, where team members often report into two areas, such as a geography and a global function. In the Nike brand, teams work across footwear, apparel and equipment product engines; our core consumer categories - action sports, basketball, football (soccer), men's training, running, sportswear, and women's training; and in our six geographies - North America, Western Europe, Eastern/Central Europe, Greater China, Japan, and Emerging Markets. Our NIKE, Inc. affiliate brands operate in a similarly collaborative way, as well as critical corporate functions.<br />Below is Nike's global senior team leading our business and growth strategies.<br />Philip H. Knight, Chairman of the Board of DirectorsMark Parker, President & Chief Executive Officer, NIKE, Inc.Charlie Denson, President, NIKE Brand <br />AJim Allaker, President & Chief Executive Officer, Umbro Ltd.Mark Allen, VP, Global Footwear Product Creation & OperationsKris Aman, VP, Global Category Athletic Training Tom Arndorfer, VP, Business Development, NIKE Brand Nick Athanasakos, VP, Global Sourcing & Manufacturing David Ayre, VP, Global Human Resources <br />BDon Blair, VP & Chief Financial Officer Sandy Bodecker, VP, NIKE Global Design & Action SportsMike Brewer, VP, North America Supply Chain OperationsMartin Brok, VP, Western Europe Retail <br />CAndy Campion, VP & CFO, NIKE BrandOscar Cardona, VP, Global Human Resources, Infrastructure & Shared ServicesPamela Catlett, VP, North America Women’s TrainingCraig Cheek, VP/GM, NIKE Greater ChinaSimon Clark, VP, Western Europe SalesDr. Thomas E. Clarke, President, New Business Development Dermott Cleary, VP, Global Category NSW John F. Coburn III, Corporate SecretaryRiccardo Colombini, VP, Global Football & Western Europe Sports MarketingBruce Connelly, VP, Sport Performance FootwearSteve Conroy, VP, Brand Human ResourcesAndrea Correani, VP, Footwear SportswearDiana Crist, VP, Apparel Product Creation <br />DCindy Davis, VP & President NIKE Golf Gary M. DeStefano, President, Global OperationsShelley K. Dewey, VP, Category Project LeaderKen Dice, VP, Marketing North America <br />ETrevor Edwards, VP, Global Brand & Category ManagementMaria S. Eitel, President, NIKE Foundation <br />GJim Godbout, VP & GM, NIKE JapanDavide Grasso, VP, Global Brand MarketingRalph Greene, VP, North America Business Development Football <br />HWillem Haitink, VP/GM, Converse Europe, Middle East and AfricaClare Hamill, VP, Commerce AffiliatesTinker Hatfield, VP, Creative DesignTim Hershey, VP, North America RetailJoaquin Hidalgo, VP/GM, Emerging MarketsElliott Hill, VP/GM, North AmericaGreg Hoffman, VP, Global Brand Creative John R. Hoke, III, VP, Global DesignKeith Houlemard, President, Jordan BrandBert Hoyt, VP, Global Category FootballPeter Hudson, VP, Footwear Design Bob Hurley, Chairman, Hurley International LLC <br />JJeanne P. Jackson, President, Direct to ConsumerJamie Jeffries , VP, North America NSWDan Jones, VP, North America BasketballHannah Jones, VP, Sustainable Business & Innovation, Government Public Affairs <br />KTommy Kain, VP, North America Sports MarketingPeter Koehler, Assistant SecretaryHilary Krane, VP & General Counsel <br />LLeslie Lane, VP, NIKE Foundation<br />MJayme Martin, VP, Global Category RunningMonique Matheson, VP, North America Human ResourcesDave McTague, VP & Chief Executive Officer, Cole HaanLynn Merritt, VP, Global Basketball Sports Marketing Eunan McLaughlin, President, NIKE AffiliatesJoe Monahan, VP, North America Sales <br />NJohn Notar, VP, Apparel Sports Categories <br />OStefan Olander, VP, Digital SportHeidi O'Neill, VP, Global Category Women's Training <br />PRoland Paanakker, VP, Lean Business Solutions Bernie Pliska, VP, Corporate ControllerNigel Powell, VP, Corporate Communications <br />RFiona Reekie, VP, Western Europe MerchandisingMark Riley, VP, North America Athletic TrainingGerry Rogers, VP, Logistics & Geography OperationsErnie Rose, VP, Manufacturing & Sourcing <br />SBrent Scrimshaw, VP & GM, Western EuropeJoe Serino, VP, North America MerchandisingChris Shimojima, VP, E-CommerceJan Singer, VP, Global FootwearShamina Singh, VP, Government & Public Affairs John Slusher, VP, Global Sports MarketingMichael Spillane, VP & Chief Executive Officer, Converse Inc.Eric Sprunk, VP, Merchandising & ProductJill Stanton, VP, Global ApparelMichaela Stitz, VP & GM, Central & Eastern Europe <br />VHans van Alebeek, VP, Global Operations & TechnologyDirk-Jan van Hameren, VP, Western Europe MarketingDennis van Oossanen, VP, Global MerchandisingMarc van Pappelendam, VP & GM, UK & Ireland <br />WGina A. Warren, VP, Global Diversity & InclusionCarol L. Welch, VP, Corporate AuditAmy White, VP, North America RunningHoward White, VP, Sports Marketing Jordan BrandRoland Wolfram, VP, Global SalesBob Wood, President, SPARQ/SSTBob Woodruff, VP & TreasurerRoger Wyett, VP & Chief Executive Officer, Hurley International LLC <br />ZCraig Zanon, VP, Global Category BasketballBrian Zappitello, VP, Apparel SportswearPat Zeedick, VP & GM, Category Kids <br />Awards & RecognitionAiming to lead, in every way.<br />Featured Award<br />Nike Named in Top 10 of Newsweek's 2010 Green Rankings Newsweek's 2010 Green Rankings is a data-driven assessment of the largest companies in the U.S. and in the world. In the industry of consumer goods, Nike was rated number 1 for the “green score” and number 2 for the “reputation score.”<br />Corporate Responsibility<br />Nike Named as One of the 100 Best Corporate Citizens for 2010Corporate Responsibility Magazine (the new name of CRO Magazine) released the 11th annual 100 Best Corporate Citizens List® March 2, featuring Nike on the list. Waste Management has awarded Nike's World Headquarters in Beaverton, Oregon the 2010 Innovation and Sustainability Award. This award not only acknowledges how Nike has integrated sustainability into its operations, but is also a well-deserved achievement for the great work done on a daily basis to support this important initiative. Nike recognized as a leader in climate change – Nike ranks #25 out of the top 350 U.S. companies announced by Maplecroft in its 2010 Climate Innovation Index.Nike Tops Climate Counts List in Corporate Commitment to Climate – Nike tops the list of Climate Counts' third annual corporate climate scores.Nike Recognized as One of the World's Most Ethical CompaniesThe Ethisphere Institute named Nike as one of the World’s Most Ethical Companies for 2010. The Institute recognizes organizations annually that promote ethical business standards and practices by going beyond legal minimums, introducing innovative ideas benefiting the public and forcing their competitors to follow suit.Nike Named as One of the 100 Best Corporate Citizens for 2010Corporate Responsibility Magazine (the new name of CRO Magazine) released the 11th annual 100 Best Corporate Citizens List® March 2, featuring Nike on the list.Nike Named as One of the Best Green Companies for America’s Children for 2010Working Mother names companies who are following green paths, implementing recycling programs and reducing their carbon footprints. Nike Named as One of 100 Most Sustainable Corporations in the WorldInnovest Strategic Value Advisors and Corporate Knights Inc. identified the 100 Most Sustainable Companies in the globe for 2009. Companies were evaluated based on how effectively they manage environmental, social and governance risks and opportunities, relative to their industry peer. Nike Received Top Score in Design Innovation from CeresNike is the leader in the apparel category in Ceres' first-ever ranking of consumer and tech companies on climate change strategies. Nike's strong board governance and design innovations were recognized, receiving a score of 71. Nike Named One of the World’s Top Sustainable StocksNike claimed the only spot in our industry for the 2007 Sustainable Business list of the World’s Top Sustainable Stocks.In their release from July 18th, Sustainable Business and KLD called out Nike’s leadership in the consumer products area, saying: “It's not easy to ‘just do it’ when your manufacturing is outsourced to subcontractors, but Nike is showing it's possible. Its very impressive sustainability report drills down to the finest details of the company's operations and products. It is transforming its products by using green design principles, rooting out waste and toxics, and planning for carbon neutrality by 2015.”Nike Recognized for its Leadership in Climate Change Solutions by World Wildlife Fund– 2007 As a founding partner of the Climate Savers Program, Nike attained its company-wide target, achieving annual CO2 emissions reductions 13 percent below 1998 levels by the end of 2005. WWF noted our efforts to reduce greenhouse gas emissions by pursuing energy conservation projects, purchasing clean power from renewable sources, investing in community energy efficiency projects, extending reduction activities to suppliers and subcontractors, and eliminating SF6 from footwear, and demonstrating that climate protection is good business.United Nations Association of Australia World Environment Day Awards – 2004Finalist for Business Enterprise Award for Nike Australia Reuse-A-ShoeSustainable Industries Journal – 2003Nike ranked #1 in the “Companies in a Class all their Own” list for use of organic cotton and Reuse-A-Shoe campaign<br />Business<br />Nike Named for Apparel & Innovation on Fortune's 2008 Most Admired Companies For the third consecutive year, Nike was ranked as the Most Admired Company in America in the Apparel industry, according to Fortune Magazine. Nike was second behind Apple in Innovation in the overall rankings of more than 300 companies. In addition to placing first in innovation in Apparel, Nike also topped the industry in social responsibility – up from third a year ago – as well as financial soundness and long-term investment. Nike Named to Fast Company's "Fast 50" Most Innovative Companies ListNike was called out 6th on the list for its innovative consumer experiences like Run Americas, the Nike Women's Marathon, Nike+ Supersonic, House of Hoops and NikeiD Studios. The magazine said Nike's "latest masterstroke is social networking. From events to the Web to unique retail hubs, Nike is blurring the line beween brand and experience." I.D. Magazine 2007 Best Of Consumer Products – 2007 Three Nike products have been recognized by I.D. magazine in its 2007 Best Of Consumer Product category. Nike’s Revolutionary Support Sports Bra (described by the magazine as “a piece of apparel worthy of the Title 9 generation”), the Considered 2K5 shoe (“Green doesn’t have to be ugly”) and Nike+ Air Zoom Moire (“as a reflection of an active digital lifestyle, this has no equal”) were selected.Industrial Design Excellence Awards – 2005 Nike has been honored withIndustrial Design Excellence Awards 2005 for its excellence in design for the following products: Nike Considered Boot: Gold, Consumer ProductNike ACG Search and Rescue CommVEST: Gold, Business & Industrial ProductsIDEA silver Nike EyeD: Silver, Design ExplorationsNIKEiD: Silver, Digital Media & InterfacesOregon Consular Corps' Global Business Award – 2005Nike was recognized as an Oregon company that has successfully fostered international trade within the state. The awards were initiated by the Oregon Consular Corps, which is comprised of more than 30 country representatives serving the state of Oregon as Consul Generals and Honorary Consuls.Far Eastern Economic Review – December 2003 Named one of Asia's leading multinational companies <br />Employer<br />Business Week – 2007 Nike placed #55 on BusinessWeek’s 2007 Top 100 Places to Launch A Career list. Students gave us even higher marks ranking us #14 based on a survey of 44,000 undergraduates. All 100 companies are featured online. FORTUNE Magazine – 2006, 2007 & 2008 Nike has been recognized three times by FORTUNE magazine on its "100 Best Companies To Work For" list for employee benefits like paid sabbaticals, on-site childcare, and a 50 percent discount on company products, as well as for corporate responsibility efforts in addressing conditions in overseas contract factories.Best Workplaces for Commuters– 2004, 2005, 2006Recognized for commuter benefits program and its significance on reducing traffic and air pollution. Oregon Business Magazine – 2005Nike ranked 21st on the annual list of 100 Best Companies to Work for in Oregon; among all employers, Nike ranked #1 for employee benefits in Oregon.<br />Diversity<br />Nike named top company for LGBT workers -- 2011For the ninth consecutive year, the Human Rights Campaign (HRC) has named Nike one of the best American companies for gay, lesbian, bisexual and transgender workers. Nike scored 100, the best possible. National Congress of American Indians Leadership Awards – 2002<br />Community<br />Nike 5K for Kids Recognized As Youth Program of the Year On February 12, 2008, Running USA and YouthRunner.com named the Nike 5K for Kids Series the Youth Program Contributor of the Year.USATF Names Nike Women's Marathon Charitable Race of the Year for 2006Hong Kong Caring Company Award – 2003, 2004Awarded by The Hong Kong Council of Social Services for Nike’s Slam Dunk Basketball Challenge supporting Save the ChildrenPortland Trailblazers’Heart of the Community Award – 2004National Head Start Association Award – April 2004Honored for commitment to Head Start and support of early childhood educationSpirit of Portland Award – December 2003Oregon Commission for the Blind's Private Sector Employer of the Year – December 2003Australian Prime Minister’s Community Business Partnership – 2003Awarded “Judges Encouragement Award” for Nike’s ARMTour PartnershipOregon Food Bank – 2003Received “Stone Soup” Award for volunteer matching program, food donations and support of Arnie Gardner, who serves on the OFB board<br />Thinking Strategically with GIS <br /><ul><li>Nike Responsibility GovernanceNike was founded on a handshake. </li></ul>Nike was founded on a handshake. Implicit in that act was the determination that we would build our business based on trust, teamwork, honesty and mutual respect.<br />As we have grown from a two-man partnership – between Phil Knight and Bill Bower man - to a global business, our task has been to maintain this same ethic across our operations. We've put in place corporate governance policies and practices to help us do this. These to include corporate responsibility principles and policies<br />Our Codes and Policies<br />Our code of ethics for employees is called Inside the Lines; it defines the standards of conduct we expect of all our employees. Every year, employees are required to verify that they have read and understand Inside the Lines.<br />We operate a global toll-free Alert line for employees to report in confidence any suspected violations of the law or our code of ethics. Any reported concerns around accounting, auditing or internal control are communicated to the Audit Committee of the Board.<br />We expect our suppliers to share our standards and to operate in a legal and ethical manner. While Inside the Lines covers the behavior of Nike employees, our Nike Code of Conduct covers contractors who manufacture Nike-branded products. It directs them to respect the rights of their employees, and to provide them with a safe and healthy work environment.<br />CR Management at the Board Level<br />Established in 2001, Nike's Board of Directors are responsible for corporate governance in compliance with the U.S. Sarbanes-Oxley Act and other laws, and the interests of our shareholders.<br />The Board is currently composed of independent non-executive directors as defined under the listing standards of the New York Stock Exchange.<br />CR Management at the Executive Level<br />In fiscal year 2006, we created a management framework to ensure executive accountability for Corporate Responsibility across Nike. The Vice President for Corporate Responsibility reports directly to the CEO, and in turn co-manages a number of CR dedicated teams with business and functional executives. <br />The responsibilities of the Business Leadership Team include:<br />Assisting in developing overall CR policies and strategies<br />Reviewing and approving policies and strategies prior to Board approval<br />Reviewing and approving overall CR investments, divestments and reinvestments<br />Reviewing and monitoring progress against overall CR objectives and plans and help promote/direct achievement of those objectives<br />Reviewing and approving global, regional and country CR organizational structure and accountabilities<br />Helping promote further integration of CR into the business through active advocacy for CR, both internally and externally<br />Integration of CR at the Operational Level:<br />At the operational level, corporate responsibility is managed by functional CR Directors representing “Responsible Competitiveness” (Labor Compliance); Considered Design (Environmental Sustainability); Community Investments; Business Integration; “Horizons” (Scenario Planning). <br />Nearly 120 Nike employees work on CR issues as their primary function or have CR work as a significant portion of their workload (as of December 2007).<br />Code of Ethics<br />A handshake between Bill Bowerman and Phil Knight sealed an agreement, founded a company and signaled the start of a revolution. It also became the foundation for how we conduct business - with integrity and a commitment to the highest ethical standards.Thirty years after that handshake Nike maintains the very same integrity fundamental to our commitment to bring inspiration and innovation to every athlete in the world. Nike's Code of Business Conduct & Ethics is a reflection of that commitment and serves to formalize the principles under which we operate.The Board of Directors of NIKE, Inc. approved amendments to update the Company’s Code of Ethics, which became effective on March 30, 2009. The revised Code of Ethics, which includes amendments to Equal Opportunity/Harassment; Safeguarding of Assets; Gifts, Gratuities, and other Payments; Conflict of Interest; No Retaliation; and Reporting Concerns, can be viewed above. <br />Corporate Governance Guidelines<br />The Board of Directors (the “Board”) of NIKE, Inc. (the “Company”) has adopted the following Corporate Governance Guidelines to assist the Board in the exercise of its responsibilities. These Guidelines reflect the Board’s commitment to monitor the effectiveness of policy and decision making both at the Board and senior management level, with a view to enhancing long-term shareholder value. These Guidelines will be reviewed annually by the Nominating and Corporate Governance Committee and the Board, and are subject to modification from time to time by the Board. Waivers of these Guidelines may be made only by the Nominating and Corporate Governance Committee or the Board.THE BOARD The Board’s PurposeThe Board, which is elected by shareholders, is the ultimate decision-making body of the Company, except with respect to those matters reserved to the shareholders. The Board represents the owners’ interest in the operation of the business, including optimizing long-term financial returns. It elects the corporate officers comprising the senior management team, who are responsible for the conduct of the Company’s business. The Board acts as an advisor to and oversees the senior management team, and ultimately monitors its performance. The Board has the responsibility to ensure that in good times, as well as difficult times, management is capably executing its duties.The Board is also responsible for reviewing and establishing procedures designed to ensure that the Company’s management and employees operate in a legal and ethically responsible manner.Role of DirectorsNormally it is management’s duty to formalize, propose and implement strategic choices, and the Board’s role to approve strategic direction and evaluate strategic results. To accomplish this, the Board engages in a regular dialogue with the Company’s Chief Executive Officer (“CEO”) and other members of the senior management team. The Board regularly reviews with the senior management team the Company’s long-term strategic business plans and other significant issues affecting the business of the Company.Directors are expected to spend the time and effort necessary to properly discharge their responsibilities. Accordingly, directors are expected to regularly attend meetings of the Board and committees on which he or she sits, and to review material distributed in advance for the meetings. It is expected that a director who is unable to attend a Board or committee meeting (which, is understood will occur on occasion) will notify Chairman of the Board or the Chair of the relevant committee.Selection of the Chairman of the Board and CEOThe Board elects the Chairman of the Board and the CEO. It is the policy of the Board that the positions of Chairman of the Board and CEO be held by different individuals, except in unusual circumstances.Size of the BoardIt is the policy of the Board that the number of directors not exceed the number that can function efficiently as a body, while properly staffing necessary Board committees. In recent years, the Board has had 10 – 14 directors, and it is the sense of the Board that this size permits diversity of experience without hindering effective discussion or diminishing individual accountability.Board Membership Criteria and IndependenceThe ultimate responsibility for the selection of nominees for director resides with the Board. The Nominating and Corporate Governance Committee oversees the process of identification, screening, and recommendation of new directors, and annually recommends a slate of directors for approval by the Board an election by the shareholders. Nominees for director are selected on the basis of their character, judgment, business experience and acumen, understanding of the Company’s business, diversity, specific skills needed by the Board, and ability to devote time to Board responsibilities.It is the policy of the Board that the Board be comprised of a majority who qualify as independent directors under the listing standards of the New York Stock Exchange (“NYSE”). Independence is determined by the Nominating and Corporate Governance Committee and the Board, in the exercise of business judgment, which review the relationships that each director has with the Company. The Board may adopt and disclose categorical standards to assist it in determining director independence. A member of the Audit Committee may not, other than in his or her capacity as a member of the Audit Committee, the Board, or any other Board committee, accept any consulting, advisory, or other compensatory fee from the Company, or be an affiliated person of the Company or a subsidiary thereof.Any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall tender his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Committee shall recommend to the Board the action to be taken with respect to the resignation. The Board will publicly disclose its decision within 90 days of the certification of the election results.Other Company DirectorshipsThe Company does not have a policy limiting the number of other company boards upon which a director may sit. However, the Nominating and Corporate Governance Committee considers the number of other company boards on which as prospective nominee is a member. Accordingly, directors are expected to advise the Chairman of the Board and the Chair of the Nominating and Corporate Governance Committee in advance of accepting any other company directorship or any assignment to the audit committee of the board of any other company.Directors Who Change Their Present Job ResponsibilityWhen a director’s principal occupation or business association changes substantially during his or her tenure as a director, the director is expected to submit his or her resignation for consideration by the Nominating and Corporate Governance Committee. The Corporate Governance Committee will review the effect, if any, of the change on the interests of the Company, and recommend to the Board whether to accept the resignation.Retirement AgeIt is the general policy of the Board that directors first elected after the 1993 fiscal year will not stand for re-election after reaching age 72.Board CompensationA director who is also an officer of the Company does not receive additional compensation for service as a director.The Company believes that compensation for non-employee directors should be competitive and should encourage increased ownership of the Company’s stock through the payment of a portion of director compensation in options to purchase Company stock. The Nominating and Corporate Governance Committee reviews the level and form of director compensation and how it compares to director compensation at companies of comparable size, industry, and complexity. Changes to director compensation are proposed to the Board for consideration. Board Access to Management and AdvisorsDirectors have free access to the Company’s senior management team and other employees. The Board has the authority to obtain advice and assistance from outside legal, accounting, or other advisors selected by the Board at the expense of the Company.Board Interaction with Investors, Analysts, Press, and CustomersIt is the policy of the Company that management speaks for the Company. This policy does not preclude non-employee directors from meeting with shareholders, but it is suggested that those meetings be held with management present. It is strongly suggested that directors refer inquiries from institutional investors, analysts, the press, or customers to appropriate senior management.Any interested parties desiring to communicate with the non-management directors regarding the Company may contact the Assistant Secretary of the Company, John F. Coburn III, One Bowerman Drive, Beaverton, Oregon 97005-6453.Board Orientation and Continuing EducationThe Company endeavors to conduct an orientation for new directors to familiarize them with the Company’s business and the Board. The process includes materials, meetings with other directors, and meetings with key senior management. Directors are selected based on part on their familiarity with the functioning of public companies and boards of directors generally, so extensive training is not typically required. The Nominating and Corporate Governance Committee may request directors to participate in continuing education programs related to their particular responsibilities or committee assignments on the Board.Self-Evaluation of the BoardThe Nominating and Corporate Governance Committee oversees an annual self-evaluation of the Board, and the committees required by the NYSE, to assess their effectiveness and performance.BOARD MEETINGS Frequency of MeetingsThere are five regularly scheduled meetings of the Board each year. Meetings may be held in locations that present opportunities to expose the Board to various facets of the Company’s business, are related to other Company business, or connected with a shareholder meeting.Agenda for Board and Committee MeetingsThe Chairman of the Board, and the Chairs of the Board committees, set the agenda for Board and committee meetings, respectively. Directors are invited to suggest inclusion of items on the agenda, and are free to raise at any Board meeting subjects that are not specifically on the agenda. Materials related to agenda items are provided to directors sufficiently in advance of Board meetings, where necessary, to permit directors to review and prepare for discussion.Attendance of Management at Board MeetingsAt the invitation of the Board, members of senior management recommended by the CEO attend Board meetings or portions thereof for the purpose of presenting information regarding a particular matter or participating in discussions. The Board is free to excuse members of senior management from meetings at any time.Executive Sessions of Non-Employee DirectorsExecutive sessions or meetings of non-employee directors without management present are held at least once each year. The responsibility to preside as chair of the executive sessions or meetings is rotated among the Chairs of the Board committees as designated by the Nominating and Corporate Governance Committee. This practice provides for leadership at all of the executive sessions or meetings of non-employee directors without the need to designate a lead director.COMMITTEE MATTERS Names and Independence of Board CommitteesThe Company has six standing committees: Audit, Compensation, Nominating and Corporate Governance, Finance, Corporate Responsibility, and Executive. The purpose and responsibilities of each committee are described in charters adopted by the Board. The Audit, Compensation, and Nominating and Corporate Governance Committees are composed entirely of independent directors. The CEO chairs the Executive Committee. The Board may, from time to time, form a new committee or disband a current committee depending on the circumstances. In addition, the Board may form ad hoc committees from time to time, and determine the composition of the committees.Committee AssignmentsThe Nominating Corporate Governance Committee, after consultation with the Chairman of the Board, makes recommendations for approval by the Board with respect to assignment of directors to committees, and the Chairs of committees. The Nominating Corporate Governance Committee annually reviews committee assignments.Committee MeetingsThe Chair of each committee, in consultation with the committee members, determines the frequency, agenda, and length of committee meetings consistent with any requirements of the committee’s charter. The schedule of all committee meetings is furnished to all directors.MANAGEMENT REVIEW AND SUCCESSION Evaluation of CEOThe Compensation Committee is responsible for overseeing the performance evaluation of the CEO. The Compensation Committee considers (1) achievement against approved financial performance measures and targets (such as revenue, net income, and earnings per share), and (2) other factors such as leadership, achievement of strategic goals, market position, and brand strength, which are signals of Company success. The Compensation Committee endeavors to reflect the CEO’s performance in the CEO’s compensation.Succession PlanningThe Board plans for succession of the CEO and certain other senior management positions in order to assure the orderly functioning and transition of the management of the Company, in the event of emergency or retirement of the CEO. As part of this process, the Chairs of the Nominating and Corporate Governance Committee and the Compensation Committee, in consultation with the CEO, assess management needs and abilities in the event a transition becomes necessary.<br /><ul><li>What is Nike Inc. vision and mission statement?</li></ul>Nike’s mission statement is:<br /> Nike 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<br />Its vision statement is:<br />“To bring inspiration and innovation to every athlete* in the world”<br />(*If you have a body, you are an athlete_ Bill Bowerman, co-founder)<br />Nike's Flat Organizational Structure<br />By Dwight Chestnut, eHow Contributor <br />updated: August 23, 2010 <br />Nike deploys a flat or matirix organization structure<br />business image by peter Hires Images from Fotolia.com <br />The Nike sportswear company is organized in a matrix organizational structure, more commonly known as a flat organizational structure. According to Flatworld Knowledge, Nike is a model of a successful company that uses this structure effectively.<br />Flat Organization<br />In a flat or matrix organization, employees report to project or product teams led by a product manager as well as to the department manager. With Nike, each brand has a department, and each department makes decisions independent of the CEO. Each department also has subdepartments or project teams responsible for handling minitasks within each department. <br />Roles<br />At Nike and in other flat or matrix organizations, the product team and product managers make decisions regarding product specifications and production. Department managers focus primarily on policy-related issues. <br />Best Practice<br />Global competition requires companies like Nike to react quickly to marketplace dynamics. In flat organizations, production teams led by product managers can make decisions and react much more quickly than the traditional department head, who is often removed from the production line. <br /><ul><li>Products:</li></ul>Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, base layers etc. for a wide range of sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse, basketball and cricket. The most recent additions to their line are the Nike 6.0 and Nike SB shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air Zoom Yorker, designed to be 30% lighter than their competitors'. In 2008, Nike introduced the Air Jordan XX3, a high performance basketball shoe designed with the environment in mind. <br />Nike positions its products in such a way as to try to appeal to a "youthful....materialistic crowd". It is positioned as a premium performance brand. However, it also engineers shoes and apparel for discount stores like Wal-Mart under the Starter brand. Nike sells an assortment of products, including shoes and a p p a r e l for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross training for men, women, and children. Nike also sells shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. Nike is well known and popular in Youth culture, Chav Culture and Hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner's performance i a a radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized by researchers who were able to identify users'R F I D devices from 60 feet (18 m) away using small, concealable intelligence motes in a wireless sensor network. <br />In 2004, they launched the SPARQ Training Program/Division. It is currently the premier training program in the U.S. In the video game Gran Turismo 4 there is a car by Nike called the NikeOne 2022, designed by Phil Frank.<br />For Men and Women:<br />Shoes –<br />Air force <br />Air Max<br />Cortez<br /> Nike dunk<br />Clothing –<br /> T.shirts ,hoodies and sweats <br />track jackets<br />wind runners and shells <br />tops, bottoms <br />Gear – Backpacks, bags <br />STEP 6<br /><ul><li>SWOT analysis
57. Value chain analysis
58. Competitive advantage</li></ul>SWOT analysis<br />Strengths<br /><ul><li>Nike is a globally recognized for being the number one sportswear brand in the World.
59. Nike being a competitive organization has a healthy aversion towards its competitor's , during Atlanta Olympics, Reebok expensed on sponsoring the games; Nike however sponsored the top athletes and due to this step, it gained valuable coverage.
60. 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 700 shops globally in about 45 different countries.
61. Nike is quite strong regarding its research and development quite evident regarding its evolving and innovative product range.
62. They manufacture high quality at the lowest possible price, if prices rise due to price hike then the production process is made cheaper by changing the place of production.
63. It belongs to the Fortune 500 companies.
64. Nike is strong at research and development
65. Nike employs about more than 30.000 people worldwide.
66. It has a strong sense of marketing campaign by sponsoring top athletes.
67. It uses lunarlite foam and fly wire materials in order to make the manufactured shoes lighter and more controllable.
68. A very professionally competitive company.
69. Very well branded among consumers.
70. Offers their products worldwide.
71. Have offices in forty five different countries.
72. Has a very strong marketing campaign that increases brand familiarity.
73. Chains of retail stores such as Nike town.
74. Has ventured into many different rebranding opportunities with successful results.
75. Providing lightweight shoes by incorporating lunarlite foam materials.</li></ul>Nike is the leading and most recognized name in sportswear.<br />The Nike swoosh sign and slogan “Just do it” are loved by the people. <br />Nike has strong distributions, it supply its products almost at every part of the world.<br />Manufacture variety of sports products including sports shoes, trousers, shirts, sports equipment and other accessories.<br />Strong financial position,.<br />Strong marketing efforts by endorsing athletes for TV commercials.<br />Strong research and development in sports footwear.<br />Nike has made number of acquisitions including Cole Haan, Hurley International, Converse Inc. and Umbro<br />Weaknesses<br /><ul><li>Even though the organization has a diversified range for sportswear, the income of the business, however, is still heavily dependent upon its share of the footwear market which leaves it at a quite vulnerable spot if for any reason its market share erodes.
76. It was charged with the violation of overtime and minimum wage rates in Vietnam, 1996, that was seen as having poor working conditions, and that it was also charged for exploiting cheap workforce overseas.
77. Nike was also reported to have applied child labor in Pakistan and Cambodia to produce soccer balls.
78. It was positioned as a subject of criticism by anti-globalization groups due to its unruly and exploited manner that was quite a disaster for its reputation.</li></ul>Profits are largely dependent on the footwear products while other branded products are not as strong.<br />History of violations of over time laws and minimum wage rates in Vietnam.<br />Accusations of poor conditions in the work place.<br />Accusations of exploiting workforces that will work for cheap in overseas countries.<br />Constant focal point for negative criticism by the anti-globalization groups.<br />It is considered as the expensive brand, it is difficult for the third world and Asian countries to afford Nike products.<br />Less diversification in products which increase their depends on few products.<br />The retail sector is price sensitive; retailers usually tend to offer a very similar experience to the consumers with another cheaper product, which in return tends to get squeezed as retailers try to pass some of the low price competition pressure onto Nike. <br />Nike was for quite some time unwilling to disclose any type of information concerning its partnering companies.<br />Opportunities<br /><ul><li>The brand is sternly defended by its owners who believe that Nike is not a fashion brand, however, a large number of consumers wear Nike product because they derive a fashion trend rather than to participate in a sport. It is mostly argued that in youth culture, Nike is a fashion brand which also creates opportunities for Nike since its products would become outdated before even the product wears out i.e. consumers will feel the need to replace the product with a newer trend.
79. There are many international regions that still need tapping and there is need for sportswear and with Nike’s strong global brand recognition, it can initiate in many markets that have the disposable income to spend on high value sports goods.
80. Nike gives a lot of effort on its corporate marketing mainly through the promotion of corporate brand and sponsorship agreements.</li></ul>Creating sportswear items by incorporating the waste from regular manufacturing.<br />Stepping into the line of economy boosting projects that will encourage recycling.<br />Product development that changes as the trends change.<br />Expansion into sport sunglasses and jewelry lines.<br />Expansion in the global markets to create larger brand recognition. <br />Reducing controversy surrounding their trade and production practices.<br />Diversification in products range.<br />Reduce prices in Asian and third world countries to increase market share<br />Enter into the untapped markets.<br />Make efforts to reduce the pollution generated from the Nike manufacturing factors.<br />Utilization of shoe production waste.<br /><ul><li>1.Younger consumers are less price sensitive and generally spend more on
81. casual and athletic footwear than older consumers
82. 2.Most footwear companies have outsourced their production abroad in
83. order to maintain lower cost and R&D expenses
84. 4. North American Free Trade Agreement (NAFTA) and the World Trade
85. Organization (WTO), both helped eliminate quotas and tariff barriers for
86. foreign footwear manufacturers to ship their goods
87. 5.The Internet allows footwear companies to pursue a direct to consumer
88. sales channel
89. 6. Sales of apparel, accessories, and footwear on the Internet has been
90. growing at a double digit pace, considerably faster than more traditional
91. sales models such as retail stores</li></ul>Threats<br />Operating business internationally opens them to the possibilities of currency value fluctuations that can lead to losses.<br />Competitors are becoming more aggressive and creating high quality products that are taking from the profits of NIKE.<br />Sensitivity to price among consumers leads them to purchase the most cost effective pair of sports shoes.<br />Maintaining the reputation of being eco-friendly.<br />Managing the financial conditions in the economy today.<br />Nike is exposed to the international nature of trade so it sells its product in different currencies which destabilizes the costs and margins for profits over long periods of time. This type of exposure may make Nike to be manufacturing and/or selling at a loss, although that is not the case for a giant as itself. <br />The market for sports shoes and sportswear is quite competitive; the competitors are constantly developing alternative brands and techniques to take away Nike’s market share. <br />Consumers are constantly shopping around for a better deal that conveys a good quality and if one store charges a higher price for the products, the consumer would try to seek a better deal of the same product in the premises that delivers the same value but cheaper of the two, this type of price sensitivity among the consumers is a potential threat to Nike. <br />The textile industry unpleasantly upsets the atmosphere, and therefore the organization is constantly struggling to retain its eco-friendly reputation. <br />A recession may lead to job shortages in most of Nike’s worldwide branches. <br />The organization has experienced many adverse publicity feedbacks due to its widespread advertising<br /><ul><li>After the age of 40, the typical consumer is not willing to pay more than
92. $35 to $40 per pair for athletic footwear
93. 2.Competition is strong among athletic footwear and apparel from off brand
95. 3. Fluctuation of foreign currency impacts the cost of importing goods to the
97. 4.Increase in unemployment has impacted the household income which
98. may result in spending less on brand name
99. 6. Level of inventory is increasing in many retail stores due weak economy</li></ul>.<br />Value chain analysis<br />Nike's Value Chain<br />Supply Chain Management –<br /> Nike as a brand quickly realized through its value chain process that its strength lays in design and development, marketing and building customer relationships. They knew manufacturing is something they didn't strive on, so once they developed a new product in Portland, Oregon they outsourced the manufacturing to China, Taiwan and Brazil while imposing strict quality standards, Nike over the years has assured its partners over the years with its brand name and its services. Not only do they share customer knowledge with them but also share a generous premium price. They reduced their retail stores from 32 to 5 in Europe with its headquarters in Netherlands and warehousing in Belgium in order to make the overall supply more effective based on demand, Stonehouse & Minocha<br />STRENGTHS<br />Nike’s supply chain provides a clear view of the extent of the global nature of the company. Nike’s headquarters are in America; however, virtually all of its production takes place outside of the United States.<br />Nike’s supply chain upstream begins with the materials used in the production of its products. Many of these materials used in production are available in the locations which the manufacturing takes place, but some specialized materials have to be imported to the manufacturing company<br />WEAKNESSES <br />Negative image portrayed by poor working conditions in its overseas factories The direct sale to consumers is creating conflicts with its own resellers Currently available supply chain, manufacturing, and fulfillment technologies aren't easily integrated with online build-to-order Not known for its research and development leading to innovative designs„«systems The e-commerce is limited to USA, however, has planned to expand to Canada and international in the near future Online customer service not "helpful" or easy to find <br />OPPORTUNITIES Increasing demand in the industry for products available online E-commerce will reduce the cost of goods sold thus improving the "bottom line" New technology and innovation to stay on top of market needs Expand e-commerce to global markets Possibility of outsourcing the web development <br />COMPETITIVE ADVANTAGE<br />Nike is widely recognized as the market leader in the sports apparel industry by virtue of its market share, profitability and global reach<br /> Its exceptional knowledge of its customers and their motivations, marketing, design and development of new products and its supply chain management have blended together into a unique strategic knowledge which constitutes its core competencies and its Competitive Advantage <br />Technology in Products<br />Nike has historically had some of the most cutting-edge products on the market.<br />For example, Nike teamed up with Apple and launched the “Nike + iPod” line of products.<br />This technology allows consumers to connect their iPod devices to sensors inside the shoes to record time, distance, pace, and calories burned.<br />Manufacturing Skills<br />Due to cheap labor in foreign countries, Nike outsources virtually all production to other areas of the world.<br />This behavior has become an industry standard, with all major competitors also outsourcing production.<br />Consequently, no competitor has a major advantage in manufacturing.<br />Strength of Patents<br />One of Nike’s most revolutionary technologies comes through its footwear cushioning.<br />The cushioning systems in a shoe serve to distribute pressure evenly among the foot, absorb shock, and deliver comfort to the user.<br />Nike has patents on four cushioning technologies: <br />Nike Air<br />Nike Zoom<br />Nike Air Max<br />Nike Shox <br />Although some of Nike’s earlier patents are beginning to expire, they still hold patents on the newer technologies.<br />In the past, competitors have tried to match rival Nike’s cushioning systems, but none have matched their success. <br />Economies of Scale<br />Nike is the single largest producer of athletic footwear and apparel, allowing them large cost advantages over competition.<br />Larger companies tend to have major economies of scale over smaller companies in areas such as distribution and marketing.<br />Nike is so large that many of the company’s suppliers depend on Nike to remain in business.<br /><ul><li>Application of Information Technology
100. Being such a large corporation, Nike relies heavily on IT in order to manage its supply chains.
101. Nike admits that it is at serious risk if a breakdown were to happen in these systems, resulting in bad effects on their business and financial condition
102. This puts them at a disadvantage against some of their smaller competitors, who do not rely so heavily on IT
103. The very fact that they are such a large company makes them more likely to have these problems </li></ul>STEP 7<br /><ul><li>Nike challenges
104. Nike success
105. Future success
106. Nike R&D</li></ul>In the challenging economic environment of the last year we saw opportunity. We chose to rebuild the company to leverage our strengths and pursue our potential. We elevated our category offense, as that keeps us close to consumers. We created six new, strategic geographies to focus our efforts where the passion and culture of sport are strongest. We pushed forward with an aggressive retail agenda in-store and online, knowing that’s where people vote on our products. And we doubled our innovation agenda, because that’s what we do best. Today NIKE, Inc. is a stronger company than ever before<br />Nike challenges<br />The majority of challenges Nike had to overcome involved ethical issues and debates.<br /> Even though Nike was providing jobs to those who may not otherwise have one, it was paying “a mere $1.60 a day to Vietnam factory workers when the living wage is at least $3 a day” (Hill, 2009). Nike could have avoided this challenge by paying each employee worker the living wage of the country he or she lives in to purchase necessary items. <br />Moreover, the living wage is a cultural expectation which Nike failed to meet that led to protests. <br />Another ethical issue involved “a report that found workers with skin or breathing problems had not been transferred to departments free of chemicals and that more than half the workers who dealt with dangerous chemicals did not wear protective masks or gloves” (Hill, 2009). <br />The debate was over the unsafe conditions Nike was providing its factory workers while it experienced continual increase in profits.<br /> Nike was also criticized for failure to follow child labor laws by hiring children who were not allowed to work and forcing them to work overtime for below minimal pay. <br />Exposing workers to harsh and toxic chemicals including carcinogens were also factors that placed the company at odds with human rights activists.<br /> Even though Nike took steps to improve the accusations in the report, it should have been corrected once it was aware of the conditions and provided each worker with a fair and safe work environment.<br />Issues of concern <br /><ul><li>Nike’s overall US revenue growth is declined.
107. Overall growth in other geographical regions has also dropped considerably.
108. With the merger between Adidas and Reebok taking off slowly and strongly and surging of companies like New Balance, Nike’s sustainability of its market leadership becomes challenging.</li></ul> There are a few challenging issues that Nike is facing at this point of time:<br />1. Maturing industry in USA <br />a. Tightening competition – growth of Adidas, New Balance, Puma etc. Product differentiation alone will not help as customers will not be able to understand the advantages of technology beyond a certain level. There should be a price advantage as well. <br />b. Problem of brand dilution – Nike has been developing a premium and high quality brand image so far. With Nike entering low-price segments, there is a possible chance of brand dilution and as a result customer loyalty might take a hit. <br />c. Sky rocketing marketing expenditures and risk of endorsements – Marketing expenditures are growing steadily. A new risk on athlete endorsements is seen after the Tiger Woods scandal. Therefore, Nike has to decide on spending the endorsement and marketing budgets wisely. <br />d. Premium brand’s susceptibility to economic recessions – Premium brands are always susceptible to recession. It is to be noted that Nike has not gone back to its original growth rate ever since the 2008 economic recession occurred. <br />2. Increasing competition in developing economies <br />Amidst heavy competition to be a market leader in developing economies, there are quite a few issues to be noted. <br /><ul><li>Losing market share in China – Li Ning. It is worth noting that Nike does not have a Chinese online website store to facilitate customers to come online and learn/buy Nike’s products.
109. Price sensitivity – Developing markets are generally price sensitive markets. Nike’s premium and high quality brand image doesn’t sync with the expectations of the customer. In other words, the differentiation strategy might not bring as good results as it had brought in the USA. </li></ul>3. Significant reliance on IT and sophistication in managing supply chains. <br />Nike is heavily dependent on information technology systems across our supply chain, including product design, production, forecasting, ordering, manufacturing, transportation, sales, and distribution. Nike’s ability to effectively manage and maintain our because the product design and innovation forms the backbone of the company. <br />Nike success<br />1. The key reasons for the success of Nike are associated with its global brand promotion. Due to its extensive advertising campaigns the Nike’s brand is known in almost every household worldwide.<br />2. Nike (now, called the unofficial sponsor!) has generated the most buzz online in the lead up to the World Cup. Much greater than Adidas, it’s arch-rival and official sponsor. Coca Cola, Sony, Visa and other FIFA partners are lagging far behind.<br />3. Nike shoes and other accessories have also become the favorite fashion products for teenagers.4. Nike is known around the world for being one of the iconic brands. It was recently ranked as the world’s 31st most valuable brand in terms of its brand value – USD10.8 billion – by the annual Business Week’s global top 100 brand survey New from Nike the Slingshot Iron set is said to be aimed at those who are looking for a little more consistency off the fairway. <br />5. The Nike Air Max 2010 has been a great success for Nike<br />The Nike Air Max 90 is a shoe by the company Nike that was introduced in 1987 as the first example of Air Max-branded technologies. The Nike Air Max shoe uses a large air cushioning unit which is visible at the side of the midsole in most models. <br />6. The Global 100 Most Sustainable Corporations in the World is a project initiated by Corporate Knights Inc., with Innovest Strategic Value Advisors Inc. The annual Global 100 is announced each year at the World Economic Forum, and NIKE, Inc. was honored in this ranking each year from 2006 through 2009. Innovest Strategic Value Advisors is an international investment advisory firm specializing in analyzing nontraditional drivers of risk and shareholder value including companies’ performance on environmental, social and strategic governance issues.<br />7. The 100 Best Corporate Citizens list, created by Business Ethics magazine, is a ranking of leading ethical performers publicly listed in the U.S. Released every spring, the 100 Best Corporate Citizens list is designed to recognize firms that excel at serving a variety of stakeholders with excellence and integrity. Nike was honored in this ranking in each year from 2005 through 2009.<br />8. Nike ranked as one of the World’s Most Ethical Companies each year from 2007 to 2009 in an analysis by Ethisphere.<br />9. Nike ranked in the top 10 of Newsweek’s 2009 first annual Green Rankings, an exhaustive assessment of the 500 largest U.S. public companies’ environmental performance, achievements and reputation.<br />10. In 2009 NIKE, Inc. scored the highest in nonprofit organization Climate Counts’ annual rankings.<br />Future Success<br />Nike future performance is subject to the inherent uncertainty presented by volatile macroeconomic conditions that may have an impact on Nike operations around the world. These conditions could continue to affect Nike business in a number of direct and indirect ways, including lower revenue from slowing consumer/customer demand for Nike products, reduced profit margins and/or increased costs, changes in interest and currency exchange rates, lack of credit availability and business disruptions due to difficulties experienced by suppliers and customers. Nike future performance is subject to Nike continued ability to take appropriate actions to respond to these conditions.<br />Opportunities Facing Nike In The Future<br />In the foreseeable future, Nike’s facing great opportunities backed up with the company’s 2008 financial success. The company will continue to implement its corporate projects and programmes to suit the demand and social needs of its worldwide customers. Though, the main emphasis will be put on promotions and so new sponsorship agreements will be concluded with the rising stars.<br />Possible Challenges Facing Nike in the Future<br />It is rather difficult to predict corporate challenges to be faced by the company considering the overall adverse affects of global financial crisis. Most likely, as many other multinational businesses, Nike will close its subsidiary offices in a number of countries and/or shorten manufacturing rates in Asia. <br />Overall, it is apparent that Nike has a solid potential background to hold strong competitive stance in the foreseeable future. Hopefully, in terms of further business orientation strategy, the company will become more socially responsible in the eyes of average consumers, and so the availability of its brand products will further increase. <br />Nike R&D<br />Product Research and Development <br />We believe our research and development efforts are a key factor in our past and future success. Technical innovation in the design of footwear, apparel, and athletic equipment receive continued emphasis as NIKE strives to produce products that help to reduce injury, enhance athletic performance and maximize comfort. <br />In addition to NIKE’s own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, engineering, industrial design and related fields, we also utilize research committees and advisory boards made up of athletes, coaches, trainers, equipment managers, orthopedists, podiatrists and other experts who consult with us and review designs, materials and concepts for product improvement. Employee athletes, athletes engaged under sports marketing contracts and other athletes wear-test and evaluate products during the design and development process<br />The Nike Sports Research Laboratory (NSRL) is located on the Nike campus in Portland, Oregon in the United States of America. The research and development (R&D) centre's role is to identify the physiological needs of athletes. The NSRL works directly with Nike's design teams and has established partnerships with major universities throughout Asia, Europe and North America. <br />Nike’s Research Program<br />Nike has been in the Research & Development in the market for quite a long time. The research that it has been carrying out relates to the earlier STP analysis which allows Nike to create a market for its products. Also Nike has a history of constantly innovating new products and attain the first-in-the-market advantage and charge a premium price. Nike spends a lot out of its revenue into R & D of new products and designs to constantly stay ahead of the competition. Nike conducts both qualitative and quantitative research forgathering vital information for its products and new launches. The qualitative research refers to the consumer purchasing behavior like why, how, what do they decide on the basis of Nike’s image as well as products. The quantitative research deals with what are the results of the company i.e. revenue against cost and other financial analysis .Nike indulges into research analysis of consumer markets as well as competitor’s analysis and thus understanding the consumer behavior and their buying pattern. Nike does extensive research in the attitudes and tastes and preferences and their changing pattern by having questionnaires filled up by its customers online as well as personally. It also indulges into personal interviews with its valued-customers to make some necessary changes that they might require. This is how the company came to be recognized as a high valued by its customers and thus attain maximum loyalty. Also the company came up with the idea of customization of their products online through this type of research itself which has yielded high results. Nike products undergo a rigorous testing process that covers a huge variety of testing surfaces (regular basketball hard wood, soccer turf, a running track, and endless outdoor testing on various terrain), and takes into account four major factors, geography, gender, age, and skill level as well as profession. All of this combined with the results of about a dozen other tests are use to develop new, user-friendly products like the Nike Shox, Nike Air, and other Nike basketball and running shoes. This is mainly because Nike needs to constantly be aware of the changes in the consumer buying behavior which can only be done through various researches. <br />RESEARCH & DEVELOPMENT <br />Nike has an underground research lab full of evil geniuses toiling to create the newest and most advanced designs and technology in the sneaker business. It’s true that Nike’s research lab has grown up considerably from its early days with Bill Bowerman and a waffle iron to create the Nike Waffle Racer. Today, it commands approximately 13,000 square feet containing some state-of-the-art research equipment. <br />Research is primarily divided into three parts: <br />Biomechanics <br />How the body moves. <br />Physiology <br />How the body works, especially under stress. <br />Sensory/Perception <br />The evaluation of how a product works, feels, and wears; how a person feels when wearing the shoes. <br />The Nike Sports Research Laboratory is located on the Nike campus in Portland, Oregon in the United States of America. Nike’s research team has spent more than 16 years dreaming, researching, developing and testing the possibility of attaching springs to the bottom of an athlete’s foot. Nike Shox, the most acclaimed technological development makes the dream a reality (“Nike”). Therefore, by advancing in technology, Nike holds a competitive edge in the market. <br />STEP 8+9<br /><ul><li>Nike strategies
110. Future plan
111. Recommendations</li></ul>NIKE STRATEGIES<br />Nike’s Global Business Strategy<br />When first founded in1 9 6 2 under the name of Blue Ribbon Sports, the strategy was “to distribute low-cost, high-quality Japanese athletic shoes to American consumers in an attempt to break Germany’s domination of the domestic industry.” <br />Today Nike offers athletic shoes at every marketable price point to a global market. <br />Nike sustains its leading position through emphasizing quality products, constant innovation, and aggressive marketing. Nike sells its products in more than 180 countries under not only its namesake brand but brands such as Cole Haan, Converse, Hurley International, and Umbro. <br />It uses distribution channels such as company-owned stores and websites or sports retailers, such as Foot Locker. <br />As mentioned earlier, Nike is a truly global company, which means that its success story is transferrable over borders. It divides its sales into four main regions- the US, Europe, Middle East and Africa (EMEA), Asia Pacific, and Central and South America. For 2009 each of these regions accounted respectively for 34.1%, 28.7%, 17.3%, and 6.7% of total revenue. <br />Segmentation Strategy:<br />Nike realizes that in order to be number one they need to offer a wide range of products to be able to develop a culture and fulfill their loyal customers’ needs. Nike’s strategy in terms of segmentation is excellent. Their core product is footwear but they also manufacture apparel and equipment and thus, they spread their influence in other sport-related markets. Nike also has several sub-brands to grasp different consumer groups. <br />Nike’s main source of revenue is athletic footwear, which is also its core competency. It accounts for 54% of total revenues. It is designated for running, cross-training competency. It accounts for 54% of total revenues. It is designated for running, cross-training, basketball, soccer and it includes even a casual footwear line. Sales in this segment increased by 14% in 2009 from which a big portion was a result of the increase in sales in the Asia Pacific region. <br />The second most profitable segment for Nike is a p p a r e l, such as t-shirts, shorts, sweatpants, and licensed apparel made specifically for universities with their own logos. With an increase of only 0.2%, apparel sales accounted for 27% of the company’s revenue in 2009. <br />However, sales in this segment grew by 14% in the previous period, between 2007 and 2008, due to the growth of 25% of revenues in emerging markets, such as Russia, and other EMEA countries but also a substantial revenue growth of 50% in China. Unlike footwear, which main market is the US, the majority of apparel sales come from the EMEA region accounting for 38% of total apparel revenue Equipment, such as balls, golf clubs etc. accounts for 6% of total revenues in 2009 and 13% come from other brands under Nike, such as Cole Haan, Converse, Umbro etc. these different sub-brands supplement Nike product lines. For instance, Umbro specializes in selling soccer apparel and footwear. Nike Golf targets golf players and offers specialized golf equipment, apparel and footwear. Cole Haan on the other hand offers premium dress and casual footwear. Hurley International offers products suitable for snowboarding, skating, and surfing.<br />Market Segments:<br />The market segments that Nike can mainly differentiate are high, medium and low end customers with varying income levels. Thus , Nike needs to segment on various fronts such as economic, demographic, geographical differentiations.<br />Economic segmentation:<br />High, medium and low income levels that can be clubbed with here lifestyles of high, medium and low end customers.<br />Demographic segmentation:<br />The company can segment the market into age, gender and class segments.<br />Geographical segmentation:<br />The company can segment the market into segments of north, west, east and south.<br />Target Market:<br />The company needs to target the market as per the brand image and equity in different markets. Thus, the company has targeted the market of high-end, high income level between the age of 16-55. Thus the market segment it is targeting is quite essential to differentiate itself from its competitors i.e. Reebok, Puma, Fila and local brands like Bata<br />Marketing Strategy:<br />Significant role for the competition of market share in the footwear industry plays marketing in order to strengthen the brand image, develop product identity and expand customer loyalty. Competition between players is n o n - p r I c e but rather based on differentiation in brand image and product innovations. Therefore, substantial investments in marketing campaigns are required. Nike invests annually between 11% and 13% of revenue in marketing. <br />Nike focuses all of their attention on the Athlete, but delivers much more than shoes; they deliver all the surrounding products that the Athlete needs for experience. It is part and parcel of what makes Nike such a great consumer-focused brand.<br />Marketing mix<br />1. Product: <br />Nike offers a wide range of shoe, apparel and equipment products, all of which are currently its top-selling product categories. Nike started selling sports apparel, athletic bags and accessory items in 1979. Their brand Cole Haan carries a line of dress and casual footwear and accessories for men, women and children.<br />2705100895350They also market head gear under the brand name Sports Specialties, through NikeTeam manufactures and distributes ice skates, skate blades, in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories.<br />2. Price:<br />Nike’s pricing is designed to be competitive to the other fashion Shoe retailer. The pricing is based on the basis of premium segment as target customers. Nike as a brand commands high premiums. Nike’s pricing strategy makes use of vertical integration in pricing wherein they own participants at differing channel levels or take part in more than one channel level operations. This can control costs and influence product pricing.<br />3. Place:<br />Nike shoes are carried by multi-brand stores and the exclusive Nike stores across the globe. Nike sells its product to about 20,000 retail accounts in the U.S. and in almost 200 countries around the world. In the international markets, Nike sells its products through independent distributors, licensees and subsidiaries. The company has production facilities in Asia and customer service and other operational units worldwide<br />4. Promotion:<br />Promotion is largely dependent on finding accessible store locations. It also avails of targeted advertising in the newspaper and creating strategic alliances. Nike has a number of famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially Ronaldo, Renaldo, and Roberto Carlos), Lebron James and Jermane O’Neal for basketball, Lance Armstrong for cycling, and Tiger Woods for Golf.<br />Nike also sponsors events such as Hoop It Up and The Golden West Invitational. Nike’s brand images, the Nike name and the trademark swoosh; make it one of the most recognizable brands in the world. Nike’s brand power is one reason for its high revenues. Nike’s quality products, loyal customer base and its great marketing techniques all contribute to make the shoe empire a huge success.<br />Advertising strategy:<br />Nike’s strategy was to create dominant presence in media. Nike 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.<br />Branding Strategy:<br />Nike’s strategy in this front is to develop a premium brand associated with high quality product that satisfies customer needs. Nike’s brand is associated with an aggressive attitude portrayed by, “you don’t win silver, you lose gold,”12 which clearly suggests that winning is vital. The Nike customer associated the Nike brand with being the ‘American’ way: Being individual and aggressive like Michael Jordan and John McEnroe. <br />Nike built its brand around sports, attitude and lifestyle. Nike backed this strategy with marketing campaigns like “Just do it” and with the companies front athletes like Michael Jordan and Tiger Woods.<br /> <br />Selling Strategy:<br />Nike’s strategy in early 2000s was to develop, flag ship stores, Nike Town shops in bigger cities, first national, and then abroad. Nike was the first company to establish flagship stores and it turned out to be a sensation.<br /> There are independent small retail stores that sell Nike products all around the world as well. Also, on seeing the potential of the low price market, Nike took efforts in 2005 to tap in to the low price segment by striking a deal with big retail discount stores like Walmart and rolled out starter shoes at a cheaper price, competing with private label brands. However, to avoid brand dilution, Nike did not use the swoosh logo in these shoes. Currently, Nike has a high quality website and uses it as an online selling channel. N i k e I d14, a part of the website allows a customer to customize his own shoes and buy it. The website is available in 14 languages and is different according to the country requirements. <br />Manufacturing Strategy:<br />Nike manufactures all of its footwear from outside United States. Nike has contract suppliers in China, Vietnam, Indonesia and Thailand15. These countries accounted for 36%, 36%, 22% and 6% of total NIKE brand footwear respectively. Nike also has manufacturing agreements with independent factories in Argentina, Brazil, India, and Mexico to manufacture footwear for sale primarily within these countries. Primary reason for this is that it is cheaper to manufacture in South East Asia and transport it to USA and Europe, regardless of the transportation and tariff costs involved. <br />Organizational Strategy:<br />With over 21,000 employees worldwide, the company was organized into departments by both geographic divisions and product categories, which created overlapping management responsibilities and a fluid leadership structure. For example, a footwear manager in Europe answered to both the Vice President of Footwear and the Vice President of Europe. However, there was no formal communication link between the regional vice presidents (those in the United States, Europe, Asia-Pacific, and Latin America) and the product vice presidents (footwear, apparel, equipment).16 <br />Human Resources Management Strategy:<br />The sweat shop debacle in late 1990s has led Nike to form a distinctive strategy to provide a good working environment for employees. They have several internal guidelines and compliance standards apart from state laws for ensuring proper working conditions for all workers in its contracted supplier factories. <br />Due to the magnitude of Nike and their number of stores and manufacturing plants throughout the world, Nike has taken the time to recognize the importance of each individual and what they can contribute to the team. For this reason, Nike does not call its employees, ‘employees’ but rather ‘team members’ because each part of the team has something to add to the business. <br />They have also admitted that they have a very large array of workers and this brings many diverse cultures and points of views together. According to one of its statement, diversity and inclusion is a crucial factor in Nike’s diplomacy in their many locations and globally. In identifying the differences they have set apart the opportunities to better understand how their teams will work together and what adversity they may face because of this. In order to strive to reach this mission they have put into action these strategies: <br />Cultivate diversity and inclusion to develop world-class, high-performing teams <br />Ignite change and inspire critical conversations around diversity, inclusion and innovation <br />Create venues and environments for open dialogue, diverse opinions and a multitude of perspectives <br />All of the above will in future venture apply and assist them in working more efficiently and having more satisfied employees for longer periods of time. <br />Nike future plan<br />NIKE FINANCIAL PLAN TILL 2015<br />During its investor meeting in New York, the Company announced a revenue target of $27 billion by the end of fiscal 2015 based on growth expectations across its portfolio, which includes the NIKE Brand, Cole Haan, Converse, Hurley, Jordan Brand, NIKE Golf and Umbro. Additionally, the Company believes it can generate over $12 billion of cumulative free cash flow from operations through 2015. Both goals extend NIKE, Inc.’s long-term financial model of high single-digit revenue growth, mid-teens earnings per share growth, and expanding returns on capital.*<br />Financial plan<br />Nike expects to Increase its future orders for delivery.<br />Nike will continue to focus their resources on those investments that drive sustainable and profitable growth. <br />Nike anticipate its gross margins in fiscal 2011 may be negatively impacted by macroeconomic factors including changes in currency exchange rates and rising costs for product input costs. <br />Nike expect demand creation will increase at a slightly slower rate than revenues, with spending weighted toward the first quarter driven by key events including the 2010 World Cup.<br />The company anticipate operating overhead will grow at a mid single−digit rate, with faster growth in the first half of the fiscal year, driven by increased investments in NIKE−owned retail business.<br />Geographic Opportunities<br />The Company announced plans to grow the NIKE Brand in all six of its geographies including driving mid single-digit growth through broader expansion in its developed geographies (North America, Western Europe, and Japan), targeting an additional $3.0-3.5 billion of annual revenue by the end of fiscal 2015. Additionally, NIKE plans to invest aggressively in its developing market geographies (Greater China, Central & Eastern Europe, and Emerging Markets) targeting low double-digit growth and an additional $3.0-3.5 billion of annual revenue by the end of fiscal 2015.<br />Direct to Consumer<br />In discussing its Direct to Consumer business, the Company outlined plans to open approximately 250-300 new NIKE-branded stores worldwide over the next five years to elevate the consumer experience and position the brand in the world’s premium shopping locations, as well as drive accelerated growth in digital commerce, leveraging the explosive growth of NIKEiD. Given these efforts, NIKE, Inc. expects mid-teens growth in its Direct to Consumer Business which should contribute an additional $2.2-2.6 billion by 2015.<br />NIKE, Inc. – Long-term Financial ObjectivesChief Financial Officer Don Blair gave an overview of the Company’s performance against its long-term financial model, highlighting delivery of strong performance through good and bad market environments. “Our long-term financial model helps us stay focused on driving sustainable, profitable growth, powerful cash generation, and preserving a very strong balance sheet, all of which gives us tremendous flexibility to invest in our business and generate extraordinary shareholder value.” Primary financial objectives through 2015 included the following:<br />High single-digit revenue growth (average annual rate)<br />Mid-teens Earnings Per Share growth (average annual rate)<br />Return on Invested Capital of 25%<br />Increasing dividends within a target calendar year payout range of 25-35% of trailing four quarter earnings per share<br />Our Recommendations<br />Improve its marketing plan including advertising.<br />SIMPLFY ITS WEB SITE<br />Focus on setting up a reliable Information system <br />Nike should focus more on its labor working conditions and wages<br />Increase its market share in the middle-east.<br />Increase its acquisition due to increasing the threat from adidas and rebook merger.<br />STEP 10<br />References:<br />http://investing.businessweek.com/businessweek/research/stocks/financials/financials.asp?ticker=NKE:US&dataset=cashFlow&period=A&currency=native<br />http://moneycentral.msn.com/investor/invsub/results/compare.asp?Symbol=US%3anke<br />http://invest.nike.com/phoenix.zhtml?c=100529&p=irol-newsArticle&id=1441171<br />http://seekingalpha.com/article/194368-nike-reports-strong-quarter-as-it-gains-market-share<br />http://www.wikinvest.com/stock/Nike_(NKE)<br />http://www.suite101.com/content/marketing-audit-of-nikes-strategies-a94402<br />http://www.mba-tutorials.com/marketing/240-nike-swot-analysis.html<br />http://www.quality-assurance-solutions.com/swot-analysis-nike.html<br />http://www.freeswotanalysis.com/apparel-industry-swot/84-nike-inc-swot-analysis.html<br />http://www.oppapers.com/essays/Nikes-Value-Chain/128546<br />http://uk.finance.yahoo.com/q/in?s=NKE<br />http://www.nasdaq.com/asp/quotes_reports.asp?symbol=NKE&selected=NKE<br />http://www.dailymarkets.com/stock/2010/09/22/earnings-preview-nike-inc/<br />http://hubpages.com/hub/Nike-Global-Business-and-Challenges<br />http://www.scribd.com/doc/38643840/Nike-Strategy-Analysis-Final-Jun-2010<br />http://ezinearticles.com/?Nike-Slingshot-Irons-Are-a-Huge-Success&id=4076428<br />www.nikebiz.com <br />www.Wikipedia.com<br />