Presentation nike finance marketing india asia

1. Khattab Al Qrarah Manas Ussenov Victoria Rosca Yousra Zaghdoud Bernichi

2. Agenda • Introduction • Nike overview • Internal analysis – Corporate Strategy – Resource-based and core-competencies • Innovation and knowledge • External analysis

3. About Nike Largest seller of athletic footwear and athletic apparel in the world. Design, development and worldwide marketing of footwear apparel, equipment and accessory products. 18 000 retails in the US Product for women, men and children Top selling product: running, basketball, cross-training and women’s shoes Also design sportswear for tennis, soccer, baseball, football, bicycling, volleyball, wrestling, cheerleading, aquatic activities, hiking, … The Swoosh 19713, represents of the wing of the goddess. Nike a winged goddess capable of moving at high speed, personifying victory The headquarters of Nike in Beaverton, Oregon. 56 % of its sales abroad

4. About Nike Manufacturing Footwear & Apparel 98% outside the US: China, Vietnam, Indonesia and Thailand: 98% of total Nike brand footwear Raw materials: rubber, plastic compounds, foam cushioning materials, Marketing and Advertising • Significant weight on marketing • Successful and influential athletes • Adjusting the mix of existing product offerings, developing new products, styles and categories Main competitors Products Sports-inspired lifestyle apparel (bags, socks, sport balls, eyewear, protective equipment, …) + products under other brand names in particular markets Owns: Converse, Hurley International, LLC, Nike Golf (13% of total revenues, $2.5 billion

5. Famous sneakers Nike Air Jordan Nike Air Force One Nike Air Max Nike + iPod Chuck Taylor All Star Nike SB Nike 6.0 Nike Flyknit Nike Roshe Run

6. Timeline Blue Ribbon Sports, is founded Phil Knight and Bill Bowerman in Portland, Oregon 1964: 1978: 1979 Nike's Air technology patented by inventor M. Frank Rudy BRS, Inc. merges into Nike, Inc. officially becoming Nike, Inc. 1981 The Air Force 1 basketball shoe becomes the first using the Air technology. 19841982 Phil Knight and CSR: commits Nike to standards for its affiliated manufacturing facilities 1986 Corporate revenues surpass $1 billion for the first time. 1988: 1989 1995 1997 Hockey stars, including Sergei Fedorov and Jeremy Roenick 19981996 2002 Acquisition of ** And until 2010, 2003 International sales exceed USA sales. 2004 Creation of Exeter Brands Group Annual revenues exceed $ 12.25 billion 2005 2006 2008 Nike introduces shoes featuring new Flywire**** and Lunarlite***** Annual revenue for fiscal year 2008 (ending May 31) of $18.6 billion, a 14% increase over the previous fiscal year Sponsor 2007 1987 Air Max shoe is introduced 2009 2010 2014 Patent for automatic shoes Greenpeace finds toxic product in their product Nike became the first supplier worldwide for football, before Adidas .

7. Nike’s SWOT Strengths • Brand recognition • High product quality • Effective marketing strategy • Capacity of innovation • Strong distribution chain • Strong R&D • Strong customer relationship/satisfaction Threats • Fierce industry competition • Revenue relies on consumer’s discretionary income • Economic rescission • Fluctuation in the currency Opportunities • Expansion into emerging markets • Increased demand in product innovation • Growing segment of women athlets • Increase in the number of sports event like Olympic, FIFA • Develop the fashion brand image Weaknesses • Overseas manufacturing dependency • Decreasing US market share • High product price compared to Adidas • Currency exposure • Medium retail presence

8. Biggest opportunity/threat • Biggest opportunity for Nike -> Non sport customers • Biggest threat for Nike -> Competitors - developing alternative brands to take away Nike’s market share.

9. Financial overview

10. 5 Forces Analysis: US & Developed Markets Internal Rivalry (High) Fierce Competition Mostly Non-Price competition Differentiation strategy Loyal customers (other cies) E-commerce Threat of New entrants(Low) High Barriers to Entry Capital Intensive Strong & well established brand name Economies of scale High Marketing & R&D Costs Industry in consolidation phase Bargaining Power of Buyer (High) End user brand loyalty Price sensitivity issues Retail and vendor consolidations Growing power of retail chains Good Infrastructure Threat of Substitutes (Low) Other types of shoes Other sport apparel Bargaining Power of Supplier (Low) Abundantly available raw materials Cheap resources-commodity item 10 • Large amount of buyers relative to the number of firms on this industry • Nike needs to seek continously for high quality to keep its clients • Competitive products all compete in diffentiations • Many online buyers are proce sensitive & switching costs is low for the buyer • Buyers of sports footwear have changed in the past decade • An increase in women buying the shoes • Generation Y has a different taste & purchasing methods • Sub contracts to more than 500 small scal factories • Suppliers are dependent on sport firms • Selling footwear online is highly competitive: barriers to enter into this e- commerce industry are quite low • Cheap copies from the Far East • Fashion brand • Innovation and confort • Buyer’s prepensity to substitute is low • Consumer substitues for athletic footwear products are low • Boots, flip-flops, sandals • Reebok, offering more choice of shoe, introducing endorsment by sports personalities, sponsoring sporting leagues etc • Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports • Each company has a stron brand identity

11. Porter’s force which has the biggest impact: Rivalry Facing fierce competition in product quality/technology Price Marketing Capability Celebrity endorsement Distribution Manufacturing. Industry rapidly changing, even if it’s at its maturity stage Market experiencing a slowdown in sales because products have achieved acceptance by buyers -> Difficult to sustain its competitive advantage -> Need to develop new products with higher quality than its competitors NIKE invests heavily in R&D to offer innovative products and services in order to stay consumer’s first choice.

12. Industry life cycle • Nike is in the stage at which the efficiency of dominant business model provides the company competitive advantage over the competition • Factors – Strong Product Awareness – Barrier of New entry – Share market – Quality of product

13. Strategy

14. NIKE corporate strategy Focus on innovation and emphasis on their research and development in order to be: • Profitable in the long run. • Reduce or eliminate athletes injury. • Help in athletic performance and maximize comfort. Dermesropian, Drage, Grigaite and Lopez (2004,p.15)

15. NIKE COMPETITIVE STRATEGIES Nike has a combination of two strategies: • Best cost provider strategy. (by outsourcing and most of their products are manufactured outside the United States ,and by economic of scale) • Broad differentiation strategy.  Nike emphasize on key elements such as design of products , High quality products, brand advertising and product development  Nike differentiates its products for athletics in three ways: Firstly, it manufactures for three different segments of people: men, women and children. Secondly, differentiates it products by offering a variety of accessories and apparels like gym bags, gloves and skates. Thirdly, Nike has the licensees to manufacture and sell Nike brand products aside from athletic products like school supplies, electronic media devices and timepieces. Dermesropian, Drage, Grigaite and Lopez (2004,p.15)

16. NIKE COMPETITIVE STRATEGIES

17. NIKE Competitive Advantage • Technology in Products– Historically had some of the most cutting-edge products on the market. E.g. Nike + iPod This technology allows consumers to connect their iPod devices to sensors inside the shoes to record time, distance, pace, and calories burned. • Manufacturing Skills:  Use of low cost contract manufacturers, based outside USA, outsourcing to Asia).  Massive economic of scale.  Economic of scope and customization

18. NIKE Competitive Advantage • Strength of patents Nike Air Nike Zoom Nike Air Max Nike Shox. • Marketing Nike work very hard in their marketing strategies and which one of the primary reasons behind its success, they do a large campaigns associated with sport stars Such as, Michael Jordan and Rafael Nadal.

19. BCG Analysis ADIDAS BCG • Air Jordan: shoes and athletic clothing designed and produced only for Michael Jordan, and released for public consumption in 2001. • Converse: Nike subsidiary primarily consist of life style footwear and sport wear. • Cole Haan: Nike subsidiary markets and distributes luxury items such as shoes, handbags and coats. • Athletic Electronics: Stopwatches, Headsets , etc

20. NIKE Business units and synergies • Knowledge sharing and synergies between Nike business units among the value chain function to obtain economies of scope that increase profitability. • Nike relies heavily on application of IT to support synergy among value chain.

21. NIKE Business units and synergies CONVERSE NIKEiD ELECTRONICs NIKE LIFE STYLE

22. Value chain Analysis Firm Infrastructure HR Management Technology Development Procurement Operations Outbound logistics Marketing& Sales Service SupportActivities • High brand recognition and reputation • Scale advantage • Price leadership and value based pricing strategy • First mover advantage in e- commerce in the industry • Agressive marketing • Celebrety endorsement • High allocation on marketing budget • Strong customer base • Diversity of products offered online • Low production costs • Locally purchase most raw materials in bulk • Specialised materials importantion • Local logistics providers • Inventory control and reduced inventory risk • Focus on product design marketing and product technology • Nike IHM specialized in rubber, foam and raw material •Strong management team •Global learning & staff training •Excellent employee relationship •Minimum hierarchy concept Long-term and trusting relationship with suppliers Localised and bulk procurement Just in time strategy as finished goods are shipped as soon as they are ready for sale Buffer and safety stock in hand Inbound logisitcs • Outsourcing manufacturing and assembly • Design (R&D) • Technological innovation • Effective supply chain management • Heavy investment in R&D • Quality control • Low and no packing options • Nike personals to assist factory management • No heavy metal, glue or solvent used • Strong control over global distribution channel • Just in time delivery • Good supplier relation • Ability of forward integration • Use of strong servers to support and manage supply chain projects • Customer care • Pre-sales & after sales services • Use of IT to improve customer service (touch screen) • Increased customer satisfaction • Customization •IT system across supply chain •E-commerce infrastructure •Strong financial position & CSR •Emprowement of top management • Great financial discipline with low debt • Strong brand, product, marketplace solution, delivery and support • Effective compliance process through strategic knowledge and verification • Great management and efficient corporate strategy globally • Blend of new hires and promotion • High ethical values among employees • Well monitored labor audit add brand audits •Research and product dvp: leading edge in technology dvpt •Product improvment •Ability to change • Great product technology like Motion Analysis, metabolic rate, blood work • Air-sole technology expert Primary Activities

23. NIKE Business units and synergies CONVERSE COLE HAAN ELECTRONICs NIKE LIFE STYLE Resource-based view and core competencies

24. NIKE Resource Based-View Tangible resources  Physical assets- land, buildings (858 Stores worldwide, research centers, HQ, distribution facilities), machinery, equipment;  Financial assets- strong financial position (constant growth); ROI, ROA is higher than industry’s average;  Technological resources- patents (Nike Air, Nike Zoom, Nike Air Max, Nike Shox), trademarks (Swoosh), contracts with sport legends to promote their brand;  Organizational resources- big and loyal customer base, effective distribution network and control system over the Supply Chain (teaming with Hewlett-Packard to supply hardware, software and consulting services to host the worldwide Nike Supply Chain (NSC) project)

25. NIKE Resource based-view Intangible resources  Human resources- 56.500 employees worldwide, powerful research team (specialists such as bio mechanics, industrial designers, and exercise physiologists).  Innovation resources- knowledge transfer, integrated research laboratories, dynamic technological innovation design, exclusive worldwide patents, an online website ideal for customization (“customer-designer”).  Reputation resources- brand name, identifiable distinctive trademarks (“Just Do It”), logos (Swoosh logo).

26. NIKE Resource based-view Organizational capabilities  A streamlined management structure => cost effectiveness  Human resource management strategy focused on training (training programs with contract manufacturers)  Good inventory management  Distinctive customer service (NikeSupport, best e- commerce experience)  Product design capabilities (perfect combination of performance, comfort and fashion)

27. NIKE Core Competencies “CREATING BRAND THROUGH PAST EXPERIENCE” Strong MARKETING strategy  distinctive competence, especially in consumer brand awareness and brand power  involvement of world top-class athletes and sportsmen in advertising campaigns - “Edorsment effect”  centring on the brand image: a distinctive logo (the Swoosh ) and the advertising slogan "Just Do It“ => Image differentiation Extensive R&D capabilities  innovative product design (focus on technology & innovation)  main focus is on new product development (updating shoe models every six months, in order to maintain a high speed to the market).  Comfort and performance - Nike has pioneered four shoe-cushioning systems that reduce shock, distribute pressure, protect from impact and offer comfort. provide value and benefits to Nike’s consumers, not easy to imitate, can be leveraged widely to most of their products and markets

28. NIKE Core Competencies Extensive SCM (supply-chain management) capabilities  strongly connected with the previous core competences – all Nike competitors have outsourced in Asia  BUT, Nike outperforms its rivals with its unique business model in which its brand name dominates, suggesting high quality and stylish sports footwear  Nike makes use of suppliers anywhere in the world (global sourcing). They have 715 contract factories and 984.136 contract workers in 44 countries. Most of the facilities are located in China, Thailand, Indonesia, Malaysia, Vietnam, Turkey, Sri Lanka, Cambodia, Taiwan, El Salvador, Mexico, India and Israel. Source: http://manufacturingmap.nikeinc.com/

29. Core Competencies NIKE vs Adidas • Product innovation => strong brand based on high quality, innovative products • Marketing & Distribution • Customer focus • Supply chain Core skills setting Nike and Adidas apart from the competition: - marketing, distribution and technological expertise - outsourcing capacity => gaining efficiencies like shifting of risk, reduced capital requirements, lower wages, ability to focus on valuable core competences  Main difference: Nike consistent brand image; aggressive but integrated marketing model (including social media – “Run For”), different markets (identifying markets with more growth potential), integration of sustainability in company’s operations "Nike is talking to the right people, instead of the most people” Joseph Jaffe, president of Jaffe, marketing consulting firm

30. Resources + Competences = Sustainable Competitive Advantage • Imitability – innovative product quality, inventory management&turnover • Value – brand recognition experience & know-how, use of resources & capability to exploit new market opportunities, effective in-store operations • Rarity –brand recognition, product quality • Non substitutable - product features and performance (hard to duplicate, neither matched in short-term)  Competitive superiority – Nike is positioned ahead its competitors in many ranks  Resources and activities with great potential for competitive advantage are internalized, while lower value-adding activities are outsourced => focus more extensively on market research and R&D "They have so many resources and such clarity of vision“ "They've had a laser focus“ Matt Powell, footwear analyst at SportsOneSource

31. Criteria for Sustainable Competitive Advantage Is a resource or capability… Valuable? Rare? Difficult to Imitate? Without Substitutes ? Implications for Competitiveness? 1. Outsourcing and cost efficiency Yes No No No Competitive parity 2. Reputation and brand recognition Yes Yes No Yes Sustainable CA 3. Human resources Yes No Yes No Temporary CA 4. Innovative Product&Desig n Yes Yes Yes Yes Sustainable CA 5. Marketing Yes No No Yes Temporary CA 6. Effective in- store operations Yes No Yes No Temporary CA

32. Criteria for Sustainable Competitive Advantage Is a resource or capability… Valuable? Rare? Difficult to Imitate? Without Substitutes ? Implications for Competitiveness? 1. Outsourcing and cost efficiency Yes No No No Competitive parity 2. Reputation and brand recognition Yes Yes No Yes Sustainable CA 3. Human resources Yes No Yes No Temporary CA 4. Innovative Product&Desig n Yes Yes Yes Yes Sustainable CA 5. Marketing Yes No No Yes Temporary CA 6. Effective in- store operations Yes No Yes No Temporary CA Knowledge and Innovation

33. The main 5 concepts of Design innovation: - Learning by doing - Keeping the balance - Design as direction - Abandon the past and embrace the future (ex. Flyknit technology) - Staying focused on beauty and athletic products Concept of design Innovation

34. - Established in Exeter (1980) - athletes, scientists, engineers and designers converge to develop the key performance - focus is on biomechanics, physiology, perception and athletic performance - 3D motion capture and environmental chambers to collect the data - analysis and insights that provide the foundation for innovative Nike product The Nike Sport Research Lab (NSRL)

35. The FuelBand, a $150 electronic bracelet measures movements throughout the day, whether you play tennis, jog, or just walk to work. The device won raves for its elegant design and a clean interface that lets users track activity with simple color cues (red for inactive; green if you've achieved your daily goal). The Flyknit Racer featherlight shoes that feel more like a sock atop a sole. Created from knit threading rather than multiple layers of fabric, it required a complete rethink of Nike's manufacturing process. Examples of Innovative products 1/2

36. • Nike with Apple: The Nike+ package: pair of specially designed Nike+ running, an Ipod nano, and a Nike + iPod sport kit. Sensor: iPod tells the distance, pace, and calories burned via voice feedback that adjusts music volume as it plays • Design your own shoes Pre-defined designs. Customer can choose their own colors and mascots to create shoes. Screen technology in store • Nike self lacing automatic shoes: Coming up with the new automatic self lacing sneakers. It provides a set of straps thant can be automatically opened and closed to switch between a loosened and tightened position. Patent in 2009 Examples of Innovative products 1/2

37. Penalties and Incentives: The Manufacturing Index -The MI provides a consistent framework for measuring performance across Nike’s supply chain - The index is used to monitor, measure, and reward suppliers on quality, on-time delivery, cost, and sustainability performance. - Each of the four categories are awarded a score between 0 and 100, putting them in a gold, silver, bronze, yellow or red category. - Aim is to change supplier behavior for the better. Process Innovation to maintain sustainability

38. Innovation in Adidas • Sustainability: - DryDye technology is a polyester fabric dyeing process that uses no water, 50% fewer chemicals and 50% less energy than the traditional fabric dyeing process - In apparel, Adidas produced a full running line featuring t-shirts, tanks, tights, skirts and shorts with 95% pattern efficiency (only 5% waste). • Usage of the powerful communication tool in its supply chain, to be closer to factory workers and to really hear from them directly. Example: Pilot project: As part of the project, workers’ mobile numbers are anonymously gathered so factory management can send out group texts reminding workers of safety issues or letting them know about changes in policy.

39. • Nike spends enormous sums on continuous strategic knowledge development and innovation • The knowledge areas: buying behavior, product design and development, marketing, supply chain management. • Each of these knowledge areas is a highly complex combination of tacit and explicit knowledge relating to customers, design, marketing and supply chain management • Nike’s leaders encourage its employees to think creatively and there is a strong but informal team-based work ethic • Design teams work in informal and picturesque surroundings to develop new concepts and products • Laboratories and test tracks to test out new products are also located onsite. Strategic Knowledge Management

40. Global Organizational structure Portland, Oregon (USA) In charge of U.S, the Americas and Asia Pacific Regional headquarters is located in the Netherlands and is responsible for 27 countries in the EMEA region Subsidiaries enjoy some autonomy within clearly set boundaries *Nike was able to communicate and control the Corporate Strategic Plan throughout the Global organization

41. Organizational Structure in Regional headquarters

42. EXTERNAL ANALYSIS

43. PESTEL POLITICAL Positive US government policies that foster business growth Political unrest in outsources manufacturers, nations such as Vietnam, Indonesia, and Thailand Potential risk of terrorism Favorable foreign nations’ relationship Risk of diverse tariffs and non-tariffs, law and regulations between countries Adverse Trade Protection in global business affects sales and service Opportunities Macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system ECONOMICAL Global Economic downturn affects consumer purchases Reduced consumer confidence Risk of currency exchange rates, and interest rates Economic benefits from low cost outsources manufactures Increasing material prices and labor costs in the production countries because of gradual increase of living standards International expansion, building upon its strong global brand recognition Strong economic conditions in other countries SOCIAL Consumers are becoming brand conscious Change in lifestyle – health awareness, sport participation on the rise: higher demand for sport products Consumer conscious in CSR Change in buying habits in youth Increasing market share of female customers Diversity of consumer preferences and demands TECHNOLOGICAL Lean manufacturing because of technological advances Up-to-date technology adoption Speed of technology transfer, and speed of change of product High rate of technological obsolescence Internet and information technology systems development Innovative and technically superior products Opportunities: Use of IT in marketing information system Scientific research in product quality & innovation ECOLOGICAL Growing popularity of “green products” Challenges of tackling climate change Waste disposal, recycle and reuse policies adoption Sustainability philosophy by using natural materials Reduce energy consumption LEGAL Risk of legal violation in terms of human rights, environmental issues Risk of contract manufacturers copying of product (intellectual property rights) Corporate social responsibility beyond legal obligation Trade agreements to safeguard for business operation

44. References • http://www.nikebiz.com • http://www.nikeresponsibility.com • http://www.dailyfinance.com/quote/nyse/nike/nke/financial-ratios • http://www.businessinsider.com/adidas-shows-soccer-is-overrated-2014-8 • https://econsultancy.com/blog/65598-nike-vs-adidas-which-provides-the-best-ecommerce-experience • http://repucom.net/media/nike-vs-adidas • http://www.statista.com/statistics/250287/total-number-of-nike-retail-stores-worldwide/ • http://www.statista.com/statistics/243199/number-of-employees-of-nike-worldwide/ • http://es.scribd.com/doc/29013150/Nike-VS-Adidas • http://www.nikeresponsibility.com/report/uploads/files/Nike_FY05_06_CR_Report_China.pdf • http://www.nike.com/ • http://investors.nikeinc.com/files/doc_financials/AnnualReports/2014/index.html • http://lostlagoon.info/…/7PCS%20Making%20and%20Doing%20Know… • http://epub.wu.ac.at/3791/1/Nike__WU-CaseSeries.pdf • http://www.nikeresponsibility.com/how/products/energy_co2 • “Who's leading the way in web marketing? It's Nike, of course” O'Malley, Gavin, Advertising Age, 00018899, 10/16/2006, Vol. 77, Fascículo 42, Source: Ebscohost • “Nike faces ultimate marketing challenge in China: Make running cool”. Advertising Age. 10/31/2011, Vol. 82 Issue 39, p1-56. 2p, • “3 Features a Nike-Apple Wearable Absolutely Must Have”. Vella, Matt, Time.com, 10/24/2014, Source: Ebscohost • “Nike assays blog as marketing tool”. Advertising Age. 6/14/2004, Vol. 75 Issue 24, p26-26. Source: Ebscohost • “Walk a mile in Nike's shoes”. Holloway, Andy, Canadian Business, 00083100, 2/2/2004, Vol. 77. Source: Ebscohost • “NIKE”. Mullman, Jeremy, Advertising Age, 00018899, 10/20/2008, Vol. 79. Source: Ebscohost • “LEADERSHIP & STRATEGY: Sustainability: Just Do It.” Industry Week/IW, February 1, 2014, p.22-23. Source: Ebscohost • Nikegobalsupplychain_Amini-case.pdf • Dermesropian, Drage, Grigaite and Lopez (2004,p.15)

Presentation nike finance marketing india asia

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