Nike, Inc.

- 2009
Case Notes Prepared by: Dr. Mernoush Banton
Case uthor: Randy Harris
A. Case Abstract
Nike, Inc. !""".nike.co#$ is a co#prehensi%e strate&ic #ana&e#ent case that
inc'udes the co#pany(s )isca' May *+
st
, 2009 )inancia' state#ents, co#petitor
in)or#ation and #ore. ,he case ti#e settin& is the year 2009. -u))icient interna'
and e.terna' data are pro%ided to enab'e students to e%a'uate current strate&ies
and reco##end a three-year strate&ic p'an )or the co#pany. /ead0uartered in
Bea%erton, 1re&on, Nike is traded on the Ne" 2ork -tock 3.chan&e under ticker
sy#bo' N43.
B. Vision Statement !ctua'$
5Brin& inspiration and inno%ation to e%ery ath'ete in the "or'd.6
C. Mission Statement !ctua'$
5,o be the 'eadin& sports brand in the "or'd.6
Mission Statement !Proposed$
s the 'ar&est se''er o) ath'etic )oot"ear and ath'etic appare' in the "or'd !2, *$,
"e create products )or consu#ers and ath'etics !+$ "ho en7oy ha%in& 0ua'ity
products that are hi&h per)or#ance and re'iab'e such as shoes, appare', and
techno'o&ica''y ad%anced e0uip#ent$ !8$. 1ur dedicated e#p'oyees !9$
continuous'y "ork on de%e'opin& ne" products, price, and product identity
throu&h #arketin& and pro#otion !9$. ,he co#pany ai#s to 'ead in corporate
citi:enship !;$ throu&h proacti%e pro&ra#s that re)'ect carin& )or the "or'd )a#i'y
o) Nike !<$ and by ensurin& continuous &ro"th and pro)itabi'ity to our in%estors
and stakeho'ders !=$.
+. Custo#er
2. Products or ser%ices
*. Markets
8. ,echno'o&y
=. Concern )or sur%i%a', pro)itabi'ity, &ro"th
<. Phi'osophy
9. -e')-concept
;. Concern )or pub'ic i#a&e
9. Concern )or e#p'oyees
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
D. External Audit
CPM Competitive Profile Matrix
Nie Adidas Puma
Critical Success !actors
"ei#$
t
%atin
#
"ei#$te
d Score
%atin
#
"ei#$te
d Score
%atin
#
"ei#$ted
Score
Price co#petiti%eness 0.+0 * 0.*0 2 0.20 + 0.+0
?'oba' 3.pansion 0.09 8 0.2; * 0.2+ 2 0.+8
1r&ani:ationa' -tructure 0.08 * 0.+2 + 0.08 + 0.08
,echno'o&y 0.09 * 0.29 + 0.09 2 0.+;
Product -a)ety 0.+= 2 0.*0 * 0.8= 8 0.<0
Custo#er @oya'ty 0.09 8 0.*< * 0.29 2 0.+;
Market -hare 0.09 8 0.*< * 0.29 2 0.+;
d%ertisin& 0.+2 8 0.8; * 0.*< 2 0.28
Product Aua'ity 0.+2 * 0.*< 2 0.28 + 0.+2
Product I#a&e 0.09 8 0.2; * 0.2+ 2 0.+8
Binancia' Position 0.0< 8 0.28 * 0.+; 2 0.+2
&otal '.(( ).)* +.*+ +.(,
-pportunities
+. 2oun&er consu#ers are 'ess price sensiti%e and &enera''y spend #ore on
casua' and ath'etic )oot"ear than o'der consu#ers
2. Most )oot"ear co#panies ha%e outsourced their production abroad in
order to #aintain 'o"er cost and CDD e.penses
*. E- )oot"ear i#ports tota'ed 2.*< bi''ion pairs in 2009, or rou&h'y 9.9 pairs
per capita "hich is "as up 0.8 percent )ro# 200<
8. North #erican Bree ,rade &ree#ent !NB,$ and the For'd ,rade
1r&ani:ation !F,1$, both he'ped e'i#inate 0uotas and tari)) barriers )or
)orei&n )oot"ear #anu)acturers to ship their &oods
=. ,he Internet a''o"s )oot"ear co#panies to pursue a direct to consu#er
sa'es channe'
<. -a'es o) appare', accessories, and )oot"ear on the Internet has been
&ro"in& at a doub'e di&it pace, considerab'y )aster than #ore traditiona'
sa'es #ode's such as retai' stores
9. Internet sa'es o) appare', accessories, and )oot"ear cou'd reach +;
percent o) cate&ory sa'es by 20+2
;. Co#panies that added a Feb-based sa'es strate&y are ab'e to custo#i:e
)oot"ear and other #erchandise direct'y to the custo#er(s needs and
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
taste, are enab'e to achie%e considerab'y better pricin& as "e'' as
5deepenin&6 the e#otiona' bond consu#ers ha%e "ith the brand
&$reats
+. )ter the a&e o) 80, the typica' consu#er is not "i''in& to pay #ore than
G*= to G80 per pair )or ath'etic )oot"ear
2. Co#petition is stron& a#on& ath'etic )oot"ear and appare' )ro# o)) brand
co#panies
*. B'uctuation o) )orei&n currency i#pacts the cost o) i#portin& &oods to the
E.-.
8. Increase in une#p'oy#ent has i#pacted the househo'd inco#e "hich
#ay resu't in spendin& 'ess on brand na#e
=. Barrier to entry is 'o"
<. @e%e' o) in%entory is increasin& in #any retai' stores due "eak econo#y
External !actor Evaluation .E!E/ Matrix
0e1 External !actors
"ei#$t %atin# "ei#$ted
Score
-pportunities

+. 2oun&er consu#ers are 'ess price sensiti%e and
&enera''y spend #ore on casua' and ath'etic
)oot"ear than o'der consu#ers
0.0; * 0.28
2. Most )oot"ear co#panies ha%e outsourced their
production abroad in order to #aintain 'o"er cost
and CDD e.penses
0.09 8 0.2;
*. E- )oot"ear i#ports tota'ed 2.*< bi''ion pairs in
2009, or rou&h'y 9.9 pairs per capita "hich is "as up
0.8 percent )ro# 200<
0.09 * 0.2+
8. North #erican Bree ,rade &ree#ent !NB,$ and
the For'd ,rade 1r&ani:ation !F,1$, both he'ped
e'i#inate 0uotas and tari)) barriers )or )orei&n
)oot"ear #anu)acturers to ship their &oods
0.0< 8 0.28
=. ,he Internet a''o"s )oot"ear co#panies to pursue a
direct to consu#er sa'es channe'
0.09 8 0.2;
<. -a'es o) appare', accessories, and )oot"ear on the
Internet has been &ro"in& at a doub'e di&it pace,
considerab'y )aster than #ore traditiona' sa'es
#ode's such as retai' stores
0.0; * 0.28
9. Internet sa'es o) appare', accessories, and )oot"ear
cou'd reach +; percent o) cate&ory sa'es by 20+2
0.09 8 0.2;
;. Co#panies that added a Feb-based sa'es strate&y
are ab'e to custo#i:e )oot"ear and other
#erchandise direct'y to the custo#erHs needs and
0.0< * 0.+;
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
taste, are enab'e to achie%e considerab'y better
pricin& as "e'' as Ideepenin&I the e#otiona' bond
consu#ers ha%e "ith the brand
&$reats

+. )ter the a&e o) 80, the typica' consu#er is not
"i''in& to pay #ore than G*= to G80 per pair )or
ath'etic )oot"ear
0.09 * 0.2+
2. Co#petition is stron& a#on& ath'etic )oot"ear and
appare' )ro# o)) brand co#panies
0.0; 2 0.+<
*. B'uctuation o) )orei&n currency i#pacts the cost o)
i#portin& &oods to the E.-.
0.0< 2 0.+2
8. Increase in une#p'oy#ent has i#pacted the
househo'd inco#e "hich #ay resu't in spendin& 'ess
on brand na#e
0.09 * 0.29
=. Barrier to entry is 'o"
0.0< 2 0.+2
<. @e%e' o) in%entory is increasin& in #any retai' stores
due "eak econo#y
0.0; 2 0.+<
&otal
'.(( +.22
Positionin# Map
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
E. 3nternal Audit
Stren#t$s
+. Nike is the do#inant co#petitor )or ath'etic )oot"ear priced abo%e G<0 per
pair, ho'din& better than a =0 percent #arket share )or ath'etic )oot"ear
priced G;= per pair or hi&her
2. Nike characteri:es its or&ani:ation as a co''aborati%e #atri. or&ani:ation
*. ,he Jordan brand has a +0.; percent share o) the o%era'' E.-. shoe
#arket, "hich #akes it the second bi&&est brand in the country and #ore
than t"ice the si:e o) didas( share
8. ,hree out o) e%ery )our pairs o) basketba'' shoes so'd in this country are
Jordan, "hi'e ;<.= percent o) a'' basketba'' shoes so'd o%er G+00 are
Jordan
=. Nike(s 2009 re%enues increased 2.9 percent to G+9.+ bi''ion
<. Inside the Enited -tates, Nike has three si&ni)icant distribution and
custo#er ser%ice )aci'ities
9. Nike esti#ates that they se'' products to #ore than 2=,000 retai' accounts
in the Enited -tates and #ore than 29,000 retai' accounts, inc'udin& Nike-
o"ned stores and a #i. o) independent distributors and 'icensees outside
the Enited -tates
;. ,he co#pany(s Internet Feb site, """.nikebi:.co#, a''o"s custo#ers to
desi&n and purchase Nike products direct'y )ro# the co#pany
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
Price !/i&h$ Price !'o"$
Custo#er @oya'ty
!/i&h$
Custo#er @oya'ty
!@o"$
Nike
Pu#a
didas
9. Nike has )i%e "ho''y o"ned subsidiaries: Co'e /aan, Con%erse, /ur'ey
Internationa', NI43 ?o'), and E#bro @td
"eanesses
+. Nike(s 2009 net inco#e decreased 2+ percent to G+.8; bi''ion
2. '#ost a'' o) Nike(s )oot"ear is #anu)actured outside the Enited -tates by
independent contractors
*. In )isca' 200;, contract #anu)acturers in China, Kietna#, Indonesia, and
,hai'and #anu)actured 99 percent o) Nike(s )oot"ear "or'd"ide
8. Because Nike co#petes pri#ari'y in ath'etic )oot"ear, appare' and re'ated
sportin& e0uip#ent, its sa'es are hea%i'y concentrated in the youth and
youn& adu't #arket
=. ccounts payab'e has increased by a'#ost G+.0 bi''ion in 2009
<. Ne&ati%e pub'icity and boycottin& o) the Nike products due to outsourcin&
7obs o%erseas and the use o) chi'd 'abor in such )actories
!inancial %atio Anal1sis !Dece#ber 2009$
4ro5t$ %ates 6 Nie 3ndustr1 S7P *((
-a'es !Atr %s year a&o 0tr$ -8.00 -2.+0 -8.;0
Net Inco#e !2,D %s 2,D$ -+.=0 -2.00 -<.00
Net Inco#e !Atr %s year a&o 0tr$ -8.00 -+.<0 2<.;0
-a'es !=-2ear nnua' %&.$ 9.*9 +8.=* +2.99
Net Inco#e !=-2ear nnua' %&.$ 9.89 ++.9; +2.<9
Di%idends !=-2ear nnua' %&.$ 2+.=+ +8.92 ++.;*
Price %atios Nie 3ndustr1 S7P *((
Current PL3 Catio 22.0 2=.9 2<.9
PL3 Catio =-2ear /i&h 2*.= 0.9 +<.<
PL3 Catio =-2ear @o" +0.9 0.2 2.<
PriceL-a'es Catio +.9= 2.+0 2.2=
PriceLBook Ka'ue *.89 *.9< *.8;
PriceLCash B'o" Catio +9.=0 +9.90 +*.90
Profit Mar#ins 6 Nie 3ndustr1 S7P *((
?ross Mar&in 88.= 89.2 *;.9
Pre-,a. Mar&in +0.* +8.8 +0.*
Net Pro)it Mar&in ;.0 +0.+ 9.+
=2r ?ross Mar&in !=-2ear %&.$ 88.= =+.9 *;.<
=2r Pre,a. Mar&in !=-2ear %&.$ +2.9 +;.2 +<.<
=2r Net Pro)it Mar&in !=-2ear %&.$ 9.0 +2.+ ++.=
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
!inancial Condition Nie 3ndustr1 S7P *((
DebtL30uity Catio 0.0< 0.0< +.09
Current Catio *.= *.= +.=
Auick Catio 2.9 2.< +.*
Interest Co%era&e 22*.; +*9.0 2*.9
@e%era&e Catio +.8 +.8 *.8
Book Ka'ueL-hare +;.98 +=.2+ 2+.<*
dapted )ro# """.#oneycentra'.#sn.co#
Av# P8E Price8 Sales Price8 Boo
Net Profit
Mar#in .6/
0=L09 +9.;0 +.8< *.+9 9.;
0=L0; +<.80 +.;= 8.29 +0.+
0=L09 +<.+0 +.99 8.0= 9.+
0=L0< +<.00 +.82 *.29 9.*
0=L0= +;.00 +.<2 *.;0 ;.;
0=L08 +;.80 +.=9 *.9+ 9.9
0=L0* +9.20 +.80 *.90 <.9
0=L02 2+.*0 +.8; *.9* <.;
0=L0+ 20.+0 +.+; *.+< <.2
0=L00 2*.00 +.** *.<9 <.8

Boo Value8
S$are
Debt8
E9uit1
%eturn on
E9uit1 .6/
%eturn on
Assets .6/
3nterest
Covera#e
0=L09 G+9.9+ 0.09 +9.+ ++.2 N
0=L0; G+=.9* 0.0; 28.+ +=.+ N
0=L09 G+8.00 0.0; 2+.2 +8.0 N
0=L0< G+2.2; 0.++ 22.+ +8.+ N
0=L0= G+0.;+ 0.+8 2+.= +*.; N
0=L08 G9.09 0.+9 +9.; +2.0 *<.<
0=L0* G9.=9 0.2+ +;.= +0.9 2<.;
0=L02 G9.2+ 0.29 +9.8 +0.8 22.+
0=L0+ G<.=+ 0.*9 +<.9 +0.+ +=.9
0=L00 G=.;2 0.8< +;.= 9.9 20.8
dapted )ro# """.#oneycentra'.#sn.co#
3nternal !actor Evaluation .3!E/ Matrix
0e1 3nternal !actors
"ei#$t %atin# "ei#$ted
Score
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
Stren#t$s

+. Nike is the do#inant co#petitor )or ath'etic
)oot"ear priced abo%e G<0 per pair, ho'din&
better than a =0 percent #arket share )or
ath'etic )oot"ear priced G;= per pair or hi&her
0.0; 8 0.*2
2. Nike characteri:es its or&ani:ation as a
co''aborati%e #atri. or&ani:ation
0.02 * 0.0<
*. ,he Jordan brand has a +0.; percent share o)
the o%era'' E.-. shoe #arket, "hich #akes it
the second bi&&est brand in the country and
#ore than t"ice the si:e o) didasH share
0.0< 8 0.28
8. ,hree out o) e%ery )our pairs o) basketba''
shoes so'd in this country are Jordan, "hi'e
;<.= percent o) a'' basketba'' shoes so'd o%er
G+00 are Jordan
0.0; 8 0.*2
=. NikeHs 2009 re%enues increased 2.9 percent
to G+9.+ bi''ion
0.09 8 0.*<
<. Inside the Enited -tates, Nike has three
si&ni)icant distribution and custo#er ser%ice
)aci'ities
0.0= * 0.+=
9. Nike esti#ates that they se'' products to #ore
than 2=,000 retai' accounts in the Enited
-tates and #ore than 29,000 retai' accounts,
inc'udin& Nike-o"ned stores and a #i. o)
independent distributors and 'icensees
outside the Enited -tates
0.08 * 0.+2
;. ,he co#panyHs Internet Feb site,
""".nikebi:.co#, a''o"s custo#ers to desi&n
and purchase Nike products direct'y )ro# the
co#pany
0.09 8 0.2;
9. Nike has )i%e "ho''y o"ned subsidiaries: Co'e
/aan, Con%erse, /ur'ey Internationa', NI43
?o'), and E#bro @td
0.09 * 0.2+
"eanesses

+. NikeHs 2009 net inco#e decreased 2+ percent
to G+.8; bi''ion
0.09 2 0.+8
2. '#ost a'' o) NikeHs )oot"ear is #anu)actured
outside the Enited -tates by independent
contractors
0.0; + 0.0;
*. In )isca' 200;, contract #anu)acturers in
China, Kietna#, Indonesia, and ,hai'and
#anu)actured 99 percent o) NikeHs )oot"ear
"or'd"ide
0.0< + 0.0<
8. Because Nike co#petes pri#ari'y in ath'etic
)oot"ear, appare' and re'ated sportin&
e0uip#ent, its sa'es are hea%i'y concentrated
in the youth and youn& adu't #arket.
0.0; + 0.0;
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
=. ccounts payab'e has increased by a'#ost
G+.0 bi''ion in 2009
0.0; 2 0.+<
<. Ne&ati%e pub'icity and boycottin& o) the Nike
products due to outsourcin& 7obs o%erseas
and the use o) chi'd 'abor in such )actories
0.09 + 0.09
&otal
'.(( +.:*
!. S"-& Strate#ies
Stren#t$s "eanesses
+. Nike is the do#inant
co#petitor )or ath'etic
)oot"ear priced abo%e
G<0 per pair, ho'din&
better than a =0 percent
#arket share )or ath'etic
)oot"ear priced G;= per
pair or hi&her
2. Nike characteri:es its
or&ani:ation as a
co''aborati%e #atri.
or&ani:ation
*. ,he Jordan brand has a
+0.; percent share o)
the o%era'' E.-. shoe
#arket, "hich #akes it
the second bi&&est
brand in the country and
#ore than t"ice the si:e
o) didas( share
8. ,hree out o) e%ery )our
pairs o) basketba''
shoes so'd in this
country are Jordan,
"hi'e ;<.= percent o) a''
basketba'' shoes so'd
o%er G+00 are Jordan
=. Nike(s 2009 re%enues
increased 2.9 percent to
G+9.+ bi''ion
<. Inside the Enited -tates,
Nike has three
si&ni)icant distribution
and custo#er ser%ice
+. Nike(s 2009 net inco#e
decreased 2+ percent to
G+.8; bi''ion
2. '#ost a'' o) Nike(s
)oot"ear is
#anu)actured outside
the Enited -tates by
independent contractors
*. In )isca' 200;, contract
#anu)acturers in China,
Kietna#, Indonesia, and
,hai'and #anu)actured
99 percent o) Nike(s
)oot"ear "or'd"ide
8. Because Nike co#petes
pri#ari'y in ath'etic
)oot"ear, appare' and
re'ated sportin&
e0uip#ent, its sa'es are
hea%i'y concentrated in
the youth and youn&
adu't #arket
=. ccounts payab'e has
increased by a'#ost
G+.0 bi''ion in 2009
<. Ne&ati%e pub'icity and
boycottin& o) the Nike
products due to
outsourcin& 7obs
o%erseas and the use o)
chi'd 'abor in such
)actories
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
)aci'ities
9. Nike esti#ates that they
se'' products to #ore
than 2=,000 retai'
accounts in the Enited
-tates and #ore than
29,000 retai' accounts,
inc'udin& Nike-o"ned
stores and a #i. o)
independent distributors
and 'icensees outside
the Enited -tates
;. ,he co#pany(s Internet
Feb site,
""".nikebi:.co#,
a''o"s custo#ers to
desi&n and purchase
Nike products direct'y
)ro# the co#pany
9. Nike has )i%e "ho''y
o"ned subsidiaries:
Co'e /aan, Con%erse,
/ur'ey Internationa',
NI43 ?o'), and E#bro
@td
-pportunities
S;- Strate#ies
";- Strate#ies
+. 2oun&er consu#ers are
'ess price sensiti%e and
&enera''y spend #ore
on casua' and ath'etic
)oot"ear than o'der
consu#ers
2. Most )oot"ear
co#panies ha%e
outsourced their
production abroad in
order to #aintain 'o"er
cost and CDD e.penses
*. E- )oot"ear i#ports
tota'ed 2.*< bi''ion pairs
in 2009, or rou&h'y 9.9
pairs per capita "hich is
"as up 0.8 percent )ro#
200<
+. 3.pand into
internationa' #arket
#ore "here the
econo#y is stron&er
!-+, -*, -8, -9, 1+$
2. Increase ad%ertisin& and
pro#otion throu&h
socia' net"orkin& such
as ,"itter and
Bacebook !-;, 1+, 1=,
19$
+. De%e'op ne" products
)or s#a'' kids based on
cartoon characters !F8,
1+, 1*$
2. -ponsor #ore ath'etics
pro&ra#s, #ost'y )or
youn& &eneration !F+,
F8, F<, 1+, 12, 1*$
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
8. North #erican Bree
,rade &ree#ent
!NB,$ and the For'd
,rade 1r&ani:ation
!F,1$, both he'ped
e'i#inate 0uotas and
tari)) barriers )or )orei&n
)oot"ear #anu)acturers
to ship their &oods
=. ,he Internet a''o"s
)oot"ear co#panies to
pursue a direct to
consu#er sa'es channe'
<. -a'es o) appare',
accessories, and
)oot"ear on the Internet
has been &ro"in& at a
doub'e di&it pace,
considerab'y )aster than
#ore traditiona' sa'es
#ode's such as retai'
stores
9. Internet sa'es o)
appare', accessories,
and )oot"ear cou'd
reach +; percent o)
cate&ory sa'es by 20+2
;. Co#panies that added a
Feb-based sa'es
strate&y are ab'e to
custo#i:e )oot"ear and
other #erchandise
direct'y to the
custo#er(s needs and
taste, are enab'e to
achie%e considerab'y
better pricin& as "e'' as
5deepenin&6 the
e#otiona' bond
consu#ers ha%e "ith
the brand
&$reats
S;& Strate#ies
";& Strate#ies
+. )ter the a&e o) 80, the
typica' consu#er is not
"i''in& to pay #ore than
+. De%e'op a ne"
#oderate'y priced
product 'ine !-+, -2, -*,
+. Make 'o" priced
)oot"ear #ade in the E-
and pro#ote it as 5Made
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
G*= to G80 per pair )or
ath'etic )oot"ear
2. Co#petition is stron&
a#on& ath'etic )oot"ear
and appare' )ro# o))
brand co#panies
*. B'uctuation o) )orei&n
currency i#pacts the
cost o) i#portin& &oods
to the E.-.
8. Increase in
une#p'oy#ent has
i#pacted the househo'd
inco#e "hich #ay
resu't in spendin& 'ess
on brand na#e
=. Barrier to entry is 'o"
<. @e%e' o) in%entory is
increasin& in #any retai'
stores due "eak
econo#y
-8, ,2, ,8, ,<$
2. 3.pand distribution by
se''in& to stores other
than their o"n retai'ers
!-9, ,2$
in #erica6 !F2, F<,
,2, ,*, ,8, ,<$
2. c0uire a 'ess
e.pensi%e brand o)
accessories and
sports"ear and pro#ote
the# as an o)) brand o)
Nike !F8, F<, ,+, ,8,
,<$
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
4. SPACE Matrix
!inancial Stabilit1 .!S/ Environmental Stabilit1 .ES/
Ceturn on In%est#ent 8 Ene#p'oy#ent -8
@e%era&e = ,echno'o&ica' Chan&es -8
@i0uidity * Price 3'asticity o) De#and -=
Forkin& Capita' * Co#petiti%e Pressure -=
Cash B'o" 8 Barriers to 3ntry -=
!inancial Stabilit1 .!S/ Avera#e ).< Environmental Stabilit1 .ES/ Avera#e ;,.:
Competitive Stabilit1 .CS/ 3ndustr1 Stabilit1 .3S/
Market -hare -+ ?ro"th Potentia' =
Product Aua'ity -2 Binancia' -tabi'ity 8
Custo#er @oya'ty -* 3ase o) Market 3ntry +
Co#petition(s Capacity Eti'i:ation -+ Cesource Eti'i:ation *
,echno'o&ica' 4no"-/o" -8 Pro)it Potentia' 8
Competitive Stabilit1 .CS/ Avera#e ;+.+ 3ndustr1 Stabilit1 .3S/ Avera#e ).,
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
B-
C-
3-
I-
< = 8 * 2 +
Conservative A##ressive
Competitive
Defensive
+
2
*
8
=
<
9 -2 -* -8 -= -9 -+ -<
9
-9
-<
-=
-8
-*
-2
-+
2-a.is: B- M 3- N *.; M !-8.<$ N - 0.;
O-a.is: C- M I- N !-2.2$ M !*.8$ N +.2
=. 4rand Strate#1 Matrix
+. Market de%e'op#ent
2. Market penetration
*. Product de%e'op#ent
8. Bor"ard inte&ration
=. Back"ard inte&ration
<. /ori:onta' inte&ration
9. Ce'ated di%ersi)ication
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
"ea
Competitive
Position
Quadrant II
Quadrant I
Quadrant IV
Quadrant III
Stron#
Competitive
Position
%apid Maret 4ro5t$
Slo5 Maret 4ro5t$
3. &$e 3nternal;External .3E/ Matrix
&$e 3!E &otal "ei#$ted Score
-tron&
*.0 to 8.0
%era&e
2.0 to 2.99
Feak
+.0 to +.99
/i&h
*.0 to *.99
I II III
Mediu#
2.0 to 2.99
IK IK
Nie> 3nc.
KI
@o"
+.0 to +.99
KII KIII IO
?. @SPM

Increase
ad%ertisin&
and
pro#otion
throu&h
socia'
net"orkin&
such as
,"itter and
Bacebook
c0uire a 'ess
e.pensi%e
brand o)
accessories
and
sports"ear
and pro#ote
the# as an
o)) brand o)
Nike
0e1 !actors "ei#$t AS &AS AS &AS
-pportunities

Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
&$e E!E &otal
"ei#$ted
Score
+. 2oun&er consu#ers are 'ess price sensiti%e
and &enera''y spend #ore on casua' and
ath'etic )oot"ear than o'der consu#ers
0.0; + 0.0; 8 0.*2
2. Most )oot"ear co#panies ha%e outsourced
their production abroad in order to #aintain
'o"er cost and CDD e.penses
0.09 --- --- --- ---
*. E- )oot"ear i#ports tota'ed 2.*< bi''ion
pairs in 2009, or rou&h'y 9.9 pairs per capita
"hich is "as up 0.8 percent )ro# 200<
0.09 --- --- --- ---
8. North #erican Bree ,rade &ree#ent
!NB,$ and the For'd ,rade 1r&ani:ation
!F,1$, both he'ped e'i#inate 0uotas and
tari)) barriers )or )orei&n )oot"ear
#anu)acturers to ship their &oods
0.0< 2 0.+2 * 0.+;
=. ,he Internet a''o"s )oot"ear co#panies to
pursue a direct to consu#er sa'es channe'
0.09 --- --- --- ---
<. -a'es o) appare', accessories, and )oot"ear
on the Internet has been &ro"in& at a
doub'e di&it pace, considerab'y )aster than
#ore traditiona' sa'es #ode's such as retai'
stores
0.0; 2 0.+< 8 0.*2
9. Internet sa'es o) appare', accessories, and
)oot"ear cou'd reach +; percent o) cate&ory
sa'es by 20+2
0.09 8 0.2; + 0.09
;. Co#panies that added a Feb-based sa'es
strate&y are ab'e to custo#i:e )oot"ear and
other #erchandise direct'y to the
custo#erHs needs and taste, are enab'e to
achie%e considerab'y better pricin& as "e''
as Ideepenin&I the e#otiona' bond
consu#ers ha%e "ith the brand
0.0< 8 0.28 + 0.0<
&$reats
+. )ter the a&e o) 80, the typica' consu#er is
not "i''in& to pay #ore than G*= to G80 per
pair )or ath'etic )oot"ear
0.09 + 0.09 8 0.2;
2. Co#petition is stron& a#on& ath'etic
)oot"ear and appare' )ro# o)) brand
co#panies
0.0; --- --- --- ---
*. B'uctuation o) )orei&n currency i#pacts the
cost o) i#portin& &oods to the E.-.
0.0< --- --- --- ---
8. Increase in une#p'oy#ent has i#pacted
the househo'd inco#e "hich #ay resu't in
spendin& 'ess on brand na#e
0.09 + 0.09 * 0.29
=. Barrier to entry is 'o" 0.0< --- --- --- ---
<. @e%e' o) in%entory is increasin& in #any
retai' stores due "eak econo#y
0.0; 8 0.*2 2 0.+<
&-&AA '.(( '.): '.::
Stren#t$s
+. Nike is the do#inant co#petitor )or ath'etic
)oot"ear priced abo%e G<0 per pair, ho'din&
0.0; --- --- --- ---
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
better than a =0 percent #arket share )or
ath'etic )oot"ear priced G;= per pair or
hi&her
2. Nike characteri:es its or&ani:ation as a
co''aborati%e #atri. or&ani:ation
0.02 --- --- --- ---
*. ,he Jordan brand has a +0.; percent share
o) the o%era'' E.-. shoe #arket, "hich
#akes it the second bi&&est brand in the
country and #ore than t"ice the si:e o)
didasH share
0.0< * 0.+; + 0.0<
8. ,hree out o) e%ery )our pairs o) basketba''
shoes so'd in this country are Jordan, "hi'e
;<.= percent o) a'' basketba'' shoes so'd
o%er G+00 are Jordan
0.0; * 0.28 + 0.0;
=. NikeHs 2009 re%enues increased 2.9 percent
to G+9.+ bi''ion
0.09 --- --- --- ---
<. Inside the Enited -tates, Nike has three
si&ni)icant distribution and custo#er ser%ice
)aci'ities
0.0= --- --- --- ---
9. Nike esti#ates that they se'' products to
#ore than 2=,000 retai' accounts in the
Enited -tates and #ore than 29,000 retai'
accounts, inc'udin& Nike-o"ned stores and
a #i. o) independent distributors and
'icensees outside the Enited -tates
0.08 * 0.+2 8 0.+<
;. ,he co#panyHs Internet Feb site,
""".nikebi:.co#, a''o"s custo#ers to
desi&n and purchase Nike products direct'y
)ro# the co#pany
0.09 8 0.2; + 0.09
9. Nike has )i%e "ho''y o"ned subsidiaries:
Co'e /aan, Con%erse, /ur'ey Internationa',
NI43 ?o'), and E#bro @td
0.09 + 0.09 * 0.2+
"eanesses
+. NikeHs 2009 net inco#e decreased 2+
percent to G+.8; bi''ion
0.09 + 0.09 * 0.2+
2. '#ost a'' o) NikeHs )oot"ear is
#anu)actured outside the Enited -tates by
independent contractors
0.0; --- --- --- ---
*. In )isca' 200;, contract #anu)acturers in
China, Kietna#, Indonesia, and ,hai'and
#anu)actured 99 percent o) NikeHs )oot"ear
"or'd"ide
0.0< --- --- --- ---
8. Because Nike co#petes pri#ari'y in ath'etic
)oot"ear, appare' and re'ated sportin&
e0uip#ent, its sa'es are hea%i'y
concentrated in the youth and youn& adu't
#arket
0.0; + 0.0; * 0.28
=. ccounts payab'e has increased by a'#ost
G+.0 bi''ion in 2009
0.0; --- --- --- ---
<. Ne&ati%e pub'icity and boycottin& o) the 0.09 --- --- --- ---
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
Nike products due to outsourcin& 7obs
o%erseas and the use o) chi'd 'abor in such
)actories
SBB&-&AA '.(( '.(, '.()
SBM &-&AA A&&%AC&3VENESS SC-%E +., +.:2
0. %ecommendations
c0uire a co#pany "ho #anu)actures and se''s 'ess e.pensi%e products than Nike. ,he
co#pany shou'd ha%e estab'ished distribution and retai' she') space "ith non-co#petin&
product 'ines. It "ou'd be idea' i) the co#pany is a E.-. based corporation "ith do#estic
#anu)acturin& )aci'ities.
A. EPS8EB3& Anal1sis
G #ount Needed: G*=0 #i''ion
-tock Price: G<=.<=
,a. Cate: 28P
Interest Cate: 8.9=P !3sti#ated$
Q -hares 1utstandin&: 8;9 Mi''ion
Common Stoc !inancin# Debt !inancin#
Recession Normal Boom Recession Normal Boom
3BI, G+,;00,000,000 G2,=00,000,000 G*,=00,000,000 G+,;00,000,000 G2,=00,000,000 G*,=00,000,000
Interest 0 0 0 +<,<2=,000 +<,<2=,000 +<,<2=,000
3B, +,;00,000,000 2,=00,000,000 *,=00,000,000 +,9;*,*9=,000 2,8;*,*9=,000 *,8;*,*9=,000
,a.es 8*2,000,000 <00,000,000 ;80,000,000 82;,0+0,000 =9<,0+0,000 ;*<,0+0,000
3, +,*<;,000,000 +,900,000,000 2,<<0,000,000 +,*==,*<=,000 +,;;9,*<=,000 2,<89,*<=,000
Q -hares 892,**+,*02 892,**+,*02 892,**+,*02 8;9,000,000 8;9,000,000 8;9,000,000
3P- +.C< ).<: *.,( +.C< ).<< *.,,
C( Percent Stoc ; )( Percent Debt C( Percent Debt ; )( Percent Stoc
Recession Normal Boom Recession Normal Boom
3BI, G+,;00,000,000 G2,=00,000,000 G*,=00,000,000 G+,;00,000,000 G2,=00,000,000 G*,=00,000,000
Interest +*,*00,000 +*,*00,000 +*,*00,000 *,*2=,000 *,*2=,000 *,*2=,000
3B, +,9;<,900,000 2,8;<,900,000 *,8;<,900,000 +,99<,<9=,000 2,89<,<9=,000 *,89<,<9=,000
,a.es 82;,;0;,000 =9<,;0;,000 ;*<,;0;,000 8*+,202,000 =99,202,000 ;*9,202,000
3, +,*=9,;92,000 +,;;9,;92,000 2,<89,;92,000 +,*<=,89*,000 +,;99,89*,000 2,<=9,89*,000
Q -hares 890,9*+,9+2 890,9*+,9+2 890,9*+,9+2 8;;,=99,*9+ 8;;,=99,*9+ 8;;,=99,*9+
3P- +.CC ).<* *.,( +.C2 ).<< *.,,
M. Epilo#ue
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.
na'ysts e.pect that Nike "i'' be ab'e to boast o) its stron& earnin&s, &ro"in&
&ross #ar&ins, 'ean in%entories and a''-i#portant )utures orders. ,he co#pany
has boo#in& internationa' business, especia''y its China e.pansion p'ans, as "e''
as ne.t #onth(s For'd Cup, "here Nike is sponsorin& nine tea#s. nd in%estors
#ay )ind out "hat #ana&e#ent has p'anned )or that G9 a share in net cash on
the ba'ance sheets. !CNBC.co#$
Nike un%ei'ed its superchar&ed Nike 3'ite -eries )ootba'' boots pro%idin& ne"
'e%e's o) per)or#ance. Nike(s Mercuria' Kapor -uperB'y II, C,C*<0 Maestri,
,ota'90 @aser III and ,ie#po @e&end III a'' )eature ne" per)or#ance upper to
i#pro%e on-)ie'd %isibi'ity and a reen&ineered outso'e to de'i%er 'i&ht"ei&ht
per)or#ance )or e%ery sty'e o) p'ayer. Nike desi&ners ha%e reduced the "ei&ht
o) each boot so p'ayers can per)or# at their best. @i&ht"ei&ht construction,
intricate en&ineerin&, carbon-en)orced stren&th and hi&h contrast co'ors
distin&uish the boots. ,he hi&h contrast co'ors !Meta''ic Mach Purp'e and ,ota'
1ran&e$ are en&ineered to&ether )or enhanced %isibi'ity. Bor a )ootba''er this
uni0ue co#bination is desi&ned to increase %isua' per)or#ance enab'in& the# to
0uick'y spot their tea##ates and e.ecute a &a#e-chan&in& pass. 5t Nike, "e
ha%e a re'ent'ess )ocus on product inno%ation to &i%e ath'etes a rea' co#petiti%e
ed&e and de'i%er the best products in the "or'd,6 said ndre" Caine, Nike Desi&n
Director )or Bootba'' Boot"ear. 5,he Nike 3'ite -eries de'i%ers 'i&ht"ei&ht and
hi&h'y en&ineered boots )or the 'eadin& p'ayers in the "or'd to per)or# on the
bi&&est sta&e this su##er.6 !)inance.yahoo.co#$
Jordan Brand, a di%ision o) NI43, Inc., announced that the top +0 ranked 3-PNE
+00 p'ayers R No. + /arrison Barnes !#es, ILNorth Caro'ina$, No. 2 Jared
-u''in&er !Co'u#bus, 1/L1hio -tate$, No. * Brandon 4ni&ht !Cora' -prin&s,
B@LEndecided$, No. 8 4yrie Ir%in& !Fest 1ran&e, NJLDuke$, No. = ,obias /arris
!Di. /i''s, N2L,ennessee$, No. < Fi'' Barton !Ba'ti#ore, MDLMe#phis$, No. 9
Josh -e'by !Ba'ti#ore, MDLEndecided$, No. ; C.J. @es'ie !/o''y -prin&s,
NCLEndecided$, No. 9 Perry Jones !Duncan%i''e, ,OLBay'or$ and No. +0 ,ristan
,ho#pson !Bra#pton, 1N,L,e.as$ R "i'' head'ine the nation(s best hi&h schoo'
senior basketba'' p'ayers at the 20+0 Jordan Brand C'assic, presented by Boot
@ocker, at Madison -0uare ?arden in Ne" 2ork City on -aturday, pri' +9 at
;:00 p.#. 3-,. ,his year(s e%ent "i'' once a&ain be te'e%ised nationa''y 'i%e on
3-PN2. ,he Jordan Brand C'assic "i'' a'so continue to inc'ude a Ce&iona'
?a#e, sho"casin& the top prep p'ayers )ro# the Ne" 2ork City #etropo'itan
area in a City %s. -uburbs sho"do"n. In its third year o) the e%ent, an
Internationa' ?a#e "i'' )eature +< o) the top +9-and-under p'ayers )ro# around
the "or'd.
Copyri&ht > 20++ Pearson 3ducation, Inc. pub'ishin& as Prentice /a''.