Professional Documents
Culture Documents
Introduction:
Website: www.nike.com
History:
The company initially operated as a distributor for Japanese shoe
maker Onitsuka Tiger, making most sales at track meets out of Knight's
automobile. The following is a history of Nike, Inc. from the beginning
when it was known as Blue Ribbon Sports.
1955 Phil Knight and Bill Bowerman meet at University of Oregon in Eugene.
1960 Bowerman continues tinkering with new designs for athletic shoes.
Knight receives a Master of Business Administration from Stanford University
1962 and makes up a company named "Blue Ribbon Sports" (BRS).
1965 Jeff Johnson becomes BRS' first full-time employee (he switched over from
selling Adidas football shoes).
1966 Jeff Johnson opens the first BRS retail outlet in Santa Monica, Calif. Knight &
Bowerman convert their handshake agreement from 1964 into a formal
written partnership on April 26.
1968 The first BRS West retail store is opened in Eugene, Oregon.
Knight devotes himself full-time to BRS (he was an Assistant Professor of
1969 Business Administration at Portland State University).
Knight becomes Chairman of the Board and Chief Executive Officer of BRS and
later Nike, Inc.
Swoosh Design trademark is created by Carolyn Davidson for a fee of $35.
1971
Johnson dreams up the company's new brand name, NIKE, the Greek Goddess
of victory.
A soccer/football shoe is the first NIKE model to hit the retail market.
A Nike T-shirt to promote the shoe becomes the first apparel item.
BRS launches the Nike brand at the U.S. Olympic Trials.
1972
Canada becomes BRS’ first foreign market.
BRS starts Athletics West.
1977
Manufacturing factories are set up in Taiwan and Korea.
Nike is the No. 1 running shoe with nearly 50 percent of the U.S. market
revenues. World Headquarters are opened at 3900 S.W. Murray Blvd. in
Beaverton, Oregon.
Nike goes public with 2 million shares of common stock.
1980
The NIKE Sport R&D Lab opens in Exeter, New Hampshire.
1985 AIR JORDAN court shoes are introduced along with apparel.
1987 The Air Pegasus, a NIKE classic in its 4th generation, sells its 5,000,000th pair.
The “Just Do It” campaign is introduced.
1988
Revenues break $1 billion for the first time.
1989 "Bo Knows" commercials featuring Bo Jackson are tied to the Just Do It theme.
Doors open to the NIKE World Campus.
1990
The first Niketown opens in Portland, Oregon.
1996 In November, Niketown New York opens its 85,000 sq. ft. of innovative retail
design & sports heritage.
Nike sponsors WNBA and selected athletes in the American Basketball League.
1997
Nike designers approach the design of the first Nike running watch.
2000 Nike Air Presto, otherwise known as a “t-shirt for your feet,” is launched.
2002 Speed skaters wearing Nike Swift Skin suits set eight world records & earn gold
medals in Salt Lake City.
2003 Nike completes the acquisition of Converse Inc. & its incredibly rich & storied
heritage in September.
Background:
Since then, Nike’s stock has soared 18-fold, while its profits have
grown rapidly. In several recent blockbuster quarters, earnings surged
more than 70% from a year earlier. But that growth suddenly
evaporated, and sneaker and apparel sales stayed slack during much of
2002. Sports equipment was projected to become Nike’s “third engine,”
powering the flagging sneaker and apparel sales.
Acquisitions:
Products:
Top Products:
1. Nike Trainer Manny Pacquiao SC 2010 Men’s Training Shoe-
Other Products:
5. NIKE BAUER VAPOR XXXX HOCKEY GLOVE: The glove that feels
like an extension of your hand gives you unparalleled flexibility
thanks to a Segmented Back Roll, protecting you from every hit and
every blast. Get a greater feel for the game with the Vapor XXXX
Gloves.
Levels of Strategic Management at Nike:
The products and services mentioned above reflect three types of
major strategies employed by the organization at various levels. Namely
they are:
Unleashing potential through sport. In the last two years, Nike has
invested $100 million worldwide in community-based sports initiatives.
By 2011, NIKE is expected to invest another $315 million. These
investments will be used to give excluded youth around the world the
chance to play because as access to sport can enhance their lives.
3. Objectives:
contribution to NIKE.
Identify focused consumer segment opportunities.
externally.
Establish and nurture relevant emotional ties with consumer
segments.
Maximize profits.
4. Goals:
5. Strategies:
6. Values:
Nike main three core values of the company are honesty,
competitiveness, and teamwork. Despite its size, Nike operates with a
minimum of hierarchy. As a result, there is a lot of collaboration and
consensus decision-making. Commonly held values are imperative in
such a matrix organization.
7. Programmes:
The final elements are the programmes which set out the
implementing plans for its key strategies. These should cover resources,
objectives, time scales, deadlines, budgets & performance target.
Strengths:
Nike is a globally recognized for being the number one sportswear
brand in the World.
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.
Nike is quite strong regarding its research & development; quite
evident regarding its evolving and innovative product range.
It belongs to Fortune 500 companies which 2007 total revenue
exceeded 18 billion USD.
It employs more than 30,000 people worldwide.
Owns strong marketing strategy under Nike brand that assumes the
involvement of world top-class athletes and sportsmen in Nike’s ‘Just
do it’ advertising campaigns.
It leads its international business operations through acquisitions and
re-branding: Converse Inc, 2003; Starter athletic clothing, 2004;
Umbro, 2008.
Nike’s premium brand is used to manufacture and promote a wide
variety of products for all types of sport-oriented and leisure activities.
It manages the US premier training program SPARQ Training
Program.
Nike applies lunarlite foam and flywire materials to reduce the weight
of manufactured shoes.
Weaknesses:
The Nike organization does have a wide and diverse range of sports
products but the income of the business is still heavily dependent
upon the footwear market.
The retail sector is very sensitive to price.
Nike unwilling to disclose information concerning its partnering
companies, which caused harsh criticism from Corp Watch and other
companies.
Nike has violated overtime laws minimum wage rates and in Vietnam,
1996.
It provides poor working conditions, and tends to exploit cheap
workforce overseas, especially in free trade zones.
In 1990s, Nike was reported to apply child labour in Pakistan and
Cambodia to produce soccer balls.
Contracts overseas companies that apply non-transparent and
inadequate labour regulations, involving child labour.
Positioned as a permanent subject of criticism by anti-globalization
groups.
Forced Labour applications in partnering apparel factories in
Malaysia, involving forced Labour and poor living conditions.
Opportunities:
Nike has many opportunities in the product development department.
There is also the opportunity to develop products other than shoes
such as sportswear, jewelry, clothing, etc.
The business could also be developed more extensively in
international markets and thereby build upon its strong global brand
recognition.
Producing sportswear products from manufacturing waste.
Extension of eco-friendly projects like ‘Reuse-A-Shoe Program’ aimed
at further recycling.
Emphasis on corporate marketing strategy through the promotion of
corporate brand and sponsorship agreements.
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.
Threats:
For e.g. If Nike faces sales problem then the company may go Price
analysis, which involves the breakdown of a price to unit figure.
As we talk about Nike, they are giving a lot of attention and time to
make the new advertisement strategy of the company. There are three
main types of strategies i.e. corporate, business and functional.
This step deals with various resources available with Nike such as:
BCG MATRIX:
Companies that are large enough to be organized into Strategic
business units face the challenge of allocating resources among those
units. In the early 1970's the Boston Consulting Group developed a
model for managing a portfolio of different business units (or major
product lines). One popular method for analyzing corporate business
portfolios is the BCG growth share matrix.
We can analyze Nike’s different products like sport balls,
timepieces, eyewear, skates, bats, athletic shoes, & apparel, other
equipment designed for sports activities with the help of BCG Matrix.
Question marks:
Question marks are new lines of business with a low market share
in an expanding market that the corporation believes can be grown into
stars. To make question marks into stars, corporations must make
significant cash outlays; this requires profit from their other lines of
business. This commitment of resources is, of course, not without risk
because question marks can become dogs. Question marks use growth
strategies to get to profitability fast.
Nike has decided to market a tailored line of sporting apparel to
compete more directly with under amours high performance sweat
resistant line of fitting clothing’s. Nike needs to closely monitor sales of
these products to determine whether it has a star or a dog on its hand.
Stars:
Stars are emerging business with a rapidly growing market share.
Corporations typically plow profits back into the stars products, in the
hope that a star will eventually gain enough market shares to become a
cash cow. Stars often use growth strategies.
Nike developed a star by hiring Tiger Woods to represent its new
line of golf clubs. Nikes golf line has since done very well, finding a direct
link between Tiger’s wins & increased sales volume. The Nike+
technology used to monitor a runner’s distance & calories burned has
been a pleasant star by Nike expects the market for Nike+ to grow
rapidly.
Cash Cows:
Cash cows generate lot of revenue. They may exhibit low growth,
but they have high market share e.g. Air Jordan sneakers. Cash cows
typically use stability strategies (why put a sure thing at risk?).
Dogs:
Dogs give low return in a low growth market, & to add insult to
injury, they have low market share – nothing is going right with a dogs.
Therefore, corporations often divest or liquidate their dogs at some point
when they determine the dogs is a hopeless case; for e.g. the World
Wrestling Federation folded the XFL in 2001. Dogs require turnaround &
retrenchment strategies.
The business portfolio analysis helps corporate level managers
figure out how to allocate cash & other resource among the
organization’s business lines (as well as which corporate strategies to
use). Managers use profits from cash cows to fund question marks &
sometimes stars. Any cash from dogs is also given to question marks &
stars, as well as any resources from their sale.
GE Growth Matrix:
The GE Matrix is a model to perform business portfolio analysis on
the Strategic Business Units of a corporation. The General Electronics of
USA with the support of consulting firm Mckinsey and Co. developed a
more complicated matrix as a technique of portfolio analysis.
The GE Business Screen introduces a three by three matrix, which
now includes a medium category. It utilizes industry attractiveness as a
more inclusive measure than BCG's market growth and substitute’s
competitive position for the original's market share.
Profit margin.
Environmental impact.
Market share.
Management profile.
R & D.
Efficiency.
Cost reduction.
At this stage the marketing manager adapts the list above to the needs of
his strategy. The GE matrix has 5 steps:
Five - Finally rank each SBU as either low, medium or high for business
strength, or low, medium and high in relation to market attractiveness.
Now follow the usual words of caution that go with all boxes,
models and matrices. Yes the GE matrix is superior to the Boston Matrix
since it uses several dimensions, as opposed to BCG's two. However,
problems or limitations include:
The GE matrix offers a broad strategy and does not indicate how best to
implement it.
7’S Mckinsey’s Matrix:
Mckinsey developed a new framework to better represent the challenges
of Services Marketing and for analysis and improving organizations
effectiveness i.e. the 7S model which can be shown with the help of the
following diagram:
With the help of the above diagram, 7S Mckinsey Matrix for Nike can be
explained as follows:
Strategy:
Diversify business portfolio with new acquisitions.
Structure:
Matrix-structure.
Balances creative with structure and discipline.
Systems:
Encourages work ethics.
State of the art computer systems.
Shared Values:
Balance of individualistic atmosphere and structure of matrix.
Calculated risk taking.
Staff:
Mix of new hires and promotions.
Promotions = consistency/company knowledge.
New-hire employees = business minded.
Socializing.
Skills:
Financially disciplined.
Style:
In the case of the World Shoe Project, Hartge operated under the
supervision of Jerry Karver, Divisional Vice President of Footwear, and
the guidance of Dan Loeb, General Manager of Nike China. Exhibit 1
shows how the World Shoe Project fitted into Nike’s organizational
structure.
Exhibit 1:
Positioning of World Shoes within Nike’s Organizational Structure
CEO
Phil Knight
President
Tom Clarke
Latin
America
Types of Strategies used by Nike:
Strategy refers to a plan of action designed to achieve a particular goal.
There are only 5 types of Strategies universally used and they are follows:
Nike uses Generic for the growth and development of the organization.
Generic strategies:
Cost Leadership:
Product Diversification:
Conclusion:
The specific brand objective of Nike would be to build up its brand
reputation, image and equity. A brand is not simply a collection of products
and benefits, but also a storehouse of value stemming from awareness, loyalty,
and association of quality and brand personality. A brand is a name, term,
sign, symbol or design or a combination of them intended to identify the goods
or services of one seller or group of sellers and to differentiate from those of
competitors. In essence, a brand identifies the seller or maker. It can convey up
to six levels of meaning: Attributes, Benefits, Values, Culture, Personality and
User. If a company treats a brand only as a name it misses the point. The
branding challenge is to develop a deep set of positive associations for the
brand. The motto of Nike is “Just Do It.”
Although these six meanings are noticeable in the Nike brand in the west
and other parts of the world, they are yet to be cultivated in India. Nike has to
ensure that their brand is built up on these pillars in India.
References:
Webliography:
www.nike.com
www.nikebiz.com
www.acaria.com
www.wikipedia.com
www.oppapers.com
www.allfreeessays.com
www.docter.com
www.managementparadise.com
Search Engine:
www.goole.com
www.yahoo.com
www.msn.com