Nike Environmental Analysis

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Nike Environmental Analysis

  1. 1. strategic management NIKE just do it! andi erdika maydita diah s. m. setiawan kusmulyono rieni widyastuti yusuf firdaus Internal and External Assessment S1 Business Prasetiya Mulya Business School Undergraduate Degree Indonesia
  2. 2. Company Profile
  3. 3. Visi … <ul><li>To bring inspiration and innovation to every athlete </li></ul>… Misi Nike is the “ largest seller of athletic footwear and athletic apparel in the world . Performance and reliability of shoes, apparel, and equipment, new product development, price, product identity through marketing and promotion, and customer support and service are important aspects of competition in the athletic footwear, apparel, and equipment industry … We believe we are competitive in all these areas.” The company aims to “ lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike .
  4. 4. The Internal Assessment
  5. 5. Marketing <ul><li>Target Market  Male and Female; 18 – 34 y.o. </li></ul><ul><li>Positioning  High performance shoes designed with hi-tech features </li></ul><ul><li>Have many brands and products model for each type of consumers. </li></ul><ul><li>Have high allocation of advertising budget for endorser contract, TVC, print ads, and sponsorship activities. </li></ul><ul><li>Have top endorsers that are the champion in their sports areas. </li></ul>
  6. 6. Distribution <ul><li>Nike has worldwide distribution line </li></ul><ul><li>Nike has good distribution line to retailer </li></ul><ul><li>Nike has new ordering system, named Futures Ordering Program </li></ul>
  7. 7. Research & Development <ul><li>Nike has NSRL (Nike Sport Research Laboratory) and APE (Advanced Product Engineering) which cooperated in developing and executing idea </li></ul><ul><li>Nike did direct research to the athlete by accompanying their daily activities to find the best suitable product </li></ul><ul><li>Nike always developing superior technology to compete with others </li></ul>
  8. 8. Management Style / Culture <ul><li>Knight as CEO Nike, is an former athlete of long distance run </li></ul><ul><li>Nike working culture is established as camaraderie and cooperative culture. </li></ul><ul><li>Factory design in Oregon is especially designed to create natural circumstances and equipped with complete sport facilities. </li></ul>
  9. 9. Social Responsibility <ul><li>Nike placed VP for social responsibility in 1998 </li></ul><ul><li>Nike joined Fair Labour Association (FLA) and Global Alliance for Workforce and Communities (GAWC) </li></ul><ul><li>Nike funded many NGO such as WWF, etc. </li></ul><ul><li>Nike do public relation activities to keep the company’s image </li></ul>
  10. 10. Finance / Accounting <ul><li>Nike has healthy financial situation </li></ul>Sumber: Nike 2003 Form 10-K, p.37 (data diolah) <ul><li>But, Profit margin is lower than </li></ul><ul><li>Gross Profit margin </li></ul>
  11. 11. The External Assessment
  12. 12. Economic forces <ul><li>EU is changing into one currency. </li></ul><ul><li>USA economic growth is in slow growth because of WTC. </li></ul><ul><li>Contract manufacturing is chosen by many athletic shoes company. </li></ul>
  13. 13. Social forces <ul><li>Since 70-s, customer is more brand-minded. </li></ul><ul><li>Sport Consumer preferences is changing into more fashion-oriented. </li></ul><ul><li>Young consumer is believed much in advertising promotion and use internet as the primary sources of information. </li></ul><ul><li>Buying motives of young consumer is dominated for leisure activity </li></ul><ul><li>Since 90-s, woman’s consumer dominated the athletic shoe market because of the changing lifestyle. </li></ul>
  14. 14. Political forces <ul><li>World is entering global trade climate with NAFTA and GATT </li></ul><ul><li>There is anti-dumping regulation existed in EU </li></ul>
  15. 15. Technology forces <ul><li>Nike has integrated technology system to develop their product </li></ul><ul><li>Nike always adopted latest technology for their product and matched with their vision </li></ul>
  16. 16. Competitive forces <ul><li>Competition is more tight with the coming of Reebok and Adidas </li></ul><ul><li>Competition is happened around the world, globally, not locally </li></ul><ul><li>Athletic shoe trend is going to be fashion-oriented </li></ul>
  17. 17. Five forces (Porter) <ul><li>Bargaining to : </li></ul><ul><ul><li>Supplier  High </li></ul></ul><ul><ul><li>Buyer  High </li></ul></ul><ul><ul><li>New Entrant  Low </li></ul></ul><ul><ul><li>Substitution  Low </li></ul></ul><ul><li>Conclusion: </li></ul><ul><ul><li>Internal Rivalry  High (Oligopoly) </li></ul></ul>
  18. 18. Conclusion
  19. 19. SWOT analysis <ul><li>Strength(s) </li></ul><ul><li>High brand awareness </li></ul><ul><li>Highest market share </li></ul><ul><li>Worldwide distribution line </li></ul><ul><li>Integrated and future R&D </li></ul><ul><li>Better working culture </li></ul><ul><li>Healthiness of financial condition </li></ul><ul><li>Weakness(es) </li></ul><ul><li>Bad social issues, such as children labor, sexual harassment, etc </li></ul>
  20. 20. SWOT analysis (lanjutan) <ul><li>Opportunity(ies) </li></ul><ul><li>Total of athletic shoe sales in US is increasing in 2002 </li></ul><ul><li>Fashion trend </li></ul><ul><li>Domination of womans consumer </li></ul><ul><li>Global and Free Market </li></ul><ul><li>Threat(s) </li></ul><ul><li>US economic growth is decreasing </li></ul><ul><li>More newcomers </li></ul><ul><li>Close competitor, such as Rbk And Adidas are more aggresive </li></ul><ul><li>Anti-dumping regulation in EU </li></ul>
  21. 21. Generic Strategies <ul><li>Nike uses network structure </li></ul><ul><li>Nike implemented Differentiation Strategies </li></ul>Detail Strategies <ul><li>Finance  Keep the financial ratio in standard </li></ul><ul><li>Marketing  use endorser in every sport </li></ul><ul><li> Higher allocation of marketing budget </li></ul><ul><li>Operation  Centralization of R&D in Oregon </li></ul><ul><li> application of NSRL </li></ul><ul><li>HR  Network Structure </li></ul><ul><li> Athlete management </li></ul>
  22. 22. Problem(s) : <ul><li>Manufacturing ethics </li></ul><ul><ul><ul><li>Social issues about labor exploitation </li></ul></ul></ul><ul><li>Law suits </li></ul><ul><li>High endorsement fees paid to athletes </li></ul><ul><ul><ul><li>High SA Expenses (selling and administrative) </li></ul></ul></ul><ul><ul><ul><li>Based on the analysis of Nike I/S, the growth of SA expense in 2002 -2003 is not comparable (11.2%) with the growth of the sales ( 8.1%). </li></ul></ul></ul>
  23. 23. Measure Performance <ul><li>Nike has good position in market </li></ul><ul><li>Financial liquidity is good </li></ul><ul><li>Primary threats is coming from: </li></ul><ul><ul><li>Contracted manufacturing(labor) </li></ul></ul><ul><ul><li>Long-term endorser usage </li></ul></ul>
  24. 24. Conclusion <ul><li>There is a changing behaviour of the consumer in athletic shoe. They are moving from sportswear to fashion-sportswear. Unfortunately, Nike is still using the endorser that is not fashionable, even though they are the champion in their area. It was proven by the highest growth of SA expense in 2002-2003. </li></ul>
  25. 25. Recommendation <ul><li>Try to generate sales from SA expense, by: </li></ul><ul><ul><li>Flexible endorser contract (not in long term) </li></ul></ul><ul><ul><li>Lifestyle consideration in choosing the endorser </li></ul></ul>
  26. 26. End by: Kelly Kusmulyono [email_address] Prasetiya Mulya Business School

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