BUILDING A GLOBAL BRAND

AN INTEGRATED CASE STUDY OF NIKE

An integrated case study analysis conducted in partial fulfilment of the

requirements of the Cardiff Metropolitan University, Cardiff, for the degree of
Master in Business Administration (MBA)

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 Building a Global Brand
An Integrated Case Study of Nike Incorporated

“Whatever happens, there are always things you could have done better. You score two
goals and you usually feel you could have done better. You score two goals and you usually
feel you could have scored a third. That's perfectionism. That's what makes you progress in
life”. Eric Cantona, (Former France and Manchester United Player)

Executive Summary

The charismatic presence of Nike in football accessories market is resumes as the

competitors cannot withstand the incredible run that paved the way to become the market
leader in less than two decades since the company seriously approached the industry. But
Adidas, the arch rival of Nike in the industry, successfully keep them at bay from the mega
event organizes by the apex body of soccer, the FIFA, in every four years records an
accumulated viewers of a whopping 3 billion people. Nike Incorporated, one of the world’s
leading brands, is the market leader in sports apparels and accessories industry but failed to
be the official partners of two of the biggest sporting event in the world, Olympics and FIFA
World Cup.

The case study attempts to examine the strategic approach of Nike that ensured the
prolonged upper hand in the sector over its competitors and the development of soccer boots
in order to penetrate in the market. The study emphasizes on primary and secondary data
those analyses using management tools like SWOT Analysis, Ansoff Matrix, Red Ocean
approach, Porter’s five forces analysis, etc. In essence, the study aims to extract the
managerial strategy that paved the way for the success of Nike in long run. While examining
the data the study further reveal the proximity of threat that the company faces along with
the vulnerabilities of the decision that cost the company in the past. The study further
extracts ethical issues in the corporate business which affected the company adversely in

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various occasions used to trim the brand equity and product boycott. The main limitation of
the study is that it heavily depends on secondary data since the availability of primary data is
limited.

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Table of Contents
1. Chapter 1. Introduction 06
1.1 Introduction 06
1.2 Company Profile 06
1.2 Aims and Objectives of the Study 07
2. Chapter 2. Case Brief and Assumption of the Study 09
2.1 Case Brief 09
2.2 Scope of the Study 10
2.3 Assumption of the Study 11
3. Chapter 3. Problem Statement and Plan of Analysis 12
3.1 Problem Statement 12
3.1.1 International Business 12
3.1.2 International Marketing 13
3.1.3 Financial Analysis and Management 14
3.2 Plan of Analysis 15
3.3 Models, Tools and Concepts Used 16
3.3.1 Porter’s Five Forces Model 17
3.3.2 Swot Analysis 17
3.3.3. Ansoff Matrix 17
3.3.4 Boston Matrix 19
3.3.5 Red Ocean Strategy 19
3.3.6 PEST Analysis 20
3.3.7 Financial Performance Analysis 21
4. Analysis and Findings 22
4.1 Nike Competitive Analysis using Five Forces Method 22
4.2 PEST Analysis of Nike 25
4.3 Development of Mercurial Vapor 27
4.4 Swot Analysis of Nike Inc. 28
4.4.1 Strengths 29

4.4.2 Weaknesses 30

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 4.4.3 Opportunities 30
4.4.4 Threats 32
4.5 Ansoff Matrix a Nike Model 33
4.6 Innovative Advertising and Marketing: A Way to Success 34
4.7 Behind the Swoosh (Ethical Issues) 35
5. Chapter 5. Findings, Recommendations and Limitations of the Study 37
5.1 Findings of the study 37
5.2 Recommendations of the Study 38
5.3 Limitations of the Study 39
5.4 Future Scope of the Study 39
6. Exhibits 40
7. Bibliography 44

Chapter 1. Introduction
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1.1 Introduction

Football – soccer in United States – is the most popular game in planet earth. In the modern
world football is not merely a game of 22 players but it is a billion dollar industry and bread
and butter of tens of thousands of people. Every match pumps millions of dollars into the
industry. Modern players are getting iconic status not only from their own country but from
elsewhere in the world and they are a good business tool as well. The whopping inter-club
transfers in the European leagues illustrate how big the markets for such player are.

Sports is not merely an event that provide human being to enjoy their leisure time but it is a
purely become a multi-billion industry and likewise any other a highly competitive sectors
as well. The basis of income may be from different sources like Television sponsorship,
royalty payment and sale of sports goods etc. It is the monopoly of Sky network in the live
telecast of sporting events but the retail sector is highly competitive where Nike Inc and
Adidas seize the major chunk of this multi-billion industry as they are the immediate
competitors for more than a decade.

In an environment where two companies, Nike and Adidas, having intense rivalry for more
than two decades, fighting to capitalize in the industry, it is worth to study about the critical
factors behind the success of these companies. The case study analyses the factors that led
Nike to be the market leader in sports accessories market, particularly football accessories.
The researcher looks to set a highly recommended result that will be useful for the business
units in order to reach the heights that Nike already conquered and will further help to learn
the lessons of pitfall, if any Nike had in the past.

1.2 Company Profile

Nike was formally established in 1968 by Bill Bowerman and Phil Knight, though they
started functioning in the late 1950s. The former was coach at University of Oregon and US
Olympic Track and Field where as the latte was an athlete in the same University. Initially
the company concentrated on distributing footwear for Japanese company Onitsuka and later
on Nike moved to set up their own manufacturing unit. At the earlier stage the company was

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mainly concentrated on manufacturing and distributing on apparels for track and field
events. Within a decade the company grabbed around 50% of the US athletic shoe market
and continued to grow in the 1980s by expanding their product portfolios for other sports
events like basketball by designing a shoe for Michael Jordan.

During the 1990s, the period during which the international becomes a global village as
trade barriers were no longer exist since the inception of globalization, the company reaped
the space in the market through innovative ideas and extending the range of products. The
1994 FIFA world cup held in USA was the turning point of the company presence in
football accessories market. They were the sponsor of the then champion of Brazil football
team and the relationship made significant leap in developing wide range of football boot
that constituted the company’s future growth in a great extent, though the company faced its
major setback in the history when the company were accused of exploitation of labor in the
third world countries and unhealthy advertisement practices which dipped the image
amongst the public

With the use of Advent technologies and the implementation of the better managerial policy,
the acquisition of Umbro extended the product portfolio and customer database as well,
Nike leapfrogged Adidas in market share during the 2000s. With the development of the
boot in Mercurial Vapor 8, the latest in the series, Nike underlines they are the best brand in
football accessories market.

1.3 Aims and Objectives of the Study

1. To study about the sports accessories market, particularly football and the role of Nike in
such a market. One the prime objective of the study is to study and analyze the sports
accessories market especially the football accessories and the role of Nike Inc. The study
further tries to extract any potential chance to contribute the bottom line of Nike Inc. by
formulating or changing the existing management policies and financial decisions.

2. Analyse data collected from various sources, primary and secondary, of Nike Inc. over the
past years in order to know the performance of the company. By going through the various

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reports, not only Nike Inc but the competitors as well, the case study attempt to compare and
contrast performance of the company and which ultimately provide the an effective policy
and will help to make investment decisions in the future.

3. To study about the strength and weakness of the company that will facilitate to formulate
managerial policies that help to tap future opportunities through SWOT analysis. Using
SWOT analysis tool the case study digs out the Strength, weaknesses, opportunities and
threats, if any.

4. To about the impact of counterfeit products in the market and how such products do affect
Nike Inc.’s bottom line and managerial decisions. Challenges form counterfeit products are
one of the obstacles that the modern business world faces, particularly branded products
portfolios. Hence the case study uses it as an opportunity to glance at the volume of
counterfeit products that caused to diminish the return of Nike Inc.

5. To analyse the pricing strategy of the Nike and the competitors. An effective pricing
policy not only contributes for the bottom line of the business but it keeps the customers as
well. In knife edged market where there is no room for errors it is very much important to
have an efficient pricing strategy. The case study attempts to look at the pricing strategy of
Nike Inc. at various points of time and in various markets also.

6. To go through the ethical issues faced Nike and how did it affect the company’s
reputation and goodwill of the company. A successful business will never come without
challenge but the company had faced enormous amount of such challenges over past few
years like they had been accusation of dodging employees in the under developed nations to
make full use of the unemployment by working them for relative lower wages. The case
study tries to understand the impact ethical issues in Nike corporations business

Chapter 2. Case Study Brief and Assumption

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2.1 Case Brief

Sport industry becomes highly competitive over the past decades since 1991, the year
globalisation comes to effect that shrunk the globe as a single market. With the use of advent
technology the game has changed drastically and now the players are developing in the labs
rather than playing fields, traditional way of development. The football accessories sector
witnessed a big leap during these periods; every transfer window in the European football
underlines it as the flurry of funds by these clubs breaks records year after year.

The case study goes thorough changes that we have had witnessed over these period for the
industry and one of the main player in the sector, the Nike Inc. The case study tries to
emphasis the corporate strategy of Nike during the past five football world cup organized by
the Fédération Internationale de Football Association (FIFA), the apex body of soccer, from
1994 USA world cup to 2010 world cup conducted in South Africa. FIFA world cup is the
flagship event of FIFA organizes in every four years and it is the biggest sporting in the
world, contesting 32 teams, in terms of viewership as the last world cup recorded 2.2 billion
an increase of 3% from the previous years and offered collective prize money of a whopping
amount of USD 420 million including USD 30 million for the champions alone.

Nike is actively participating in FIFA world cups since the first world cup host by the USA,
where the company’s head office situates, along other prominent sponsors of the event like
Adidas, Coca cola, Sony, VISA etc. But unlike the other corporate giant Nike is not an
official partner (Exhibit 1) of this mega shows, though they have had an impeccable
presents. The project makes a deep study of the company’s enormous amount spending for
its marketing activity and the result paid off by analysing the research and development
expenses and advertising and promotional activities during these mega events.

As the world becomes a single market it started migration not only the technology but
outsourced the labor as well to the third world where the manufacturing is too low
comparing to the developed nations. But that resulted to raise a lot of ethical issues against
the company from all the parts of the world. The project tried to tweet into such issue to

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know about the impact such issues in the corporate world particularly for the Nike’s
goodwill. In order to look at the various issues the company faced over the past years and
what will be the challenges in the future the cast study uses management tool like SWOT,
PEST analysis etc.

2.2 Scope of the Study

The case study covers the areas of sports accessories market mainly football, and the
involvement of Nike Corporation and its competitors. Through analysing the business
functions and areas the case study tries to extend the scope of the study and extracts more
details as well. Hence the report covers the following areas:

1. Global sports, mainly football, accessories market. The main scope of the study is the
global football related accessories market and the role of Nike Inc. in such a highly
competitive market as one of the leaders in the sector.

2. Management decision making. By analysing and interpreting the management strategy of

Nike during the past the case study tries to examine how effective was the decision by the
management behind the success of the company.

3. Ethical issues: Ethical issues are all over the world, whether it is a business venture or a
nonprofit organisation. Nike has had to acknowledge a lot ethical issues during the past two
decades including child labor and hazardous working conditions in sweatshops and
unhealthy business practices.

4. Innovation and creativity. The researcher looks at the innovative ideas while developing a
product and the impact of creative marketing by the management of the company.

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2.3 Assumption of the Study

1. The case study assumes that one of the major sources of the revenue of Nike inc. is from
sale of accessories related to football. The case study assumes the major source of the
revenue of Nike Corporation is from the segment of football related accessories as the study
concentrates on this segment.

2. The company has enough room in the Asian market, yet to be tapped. It is assumed that
the company is not fully tapped the opportunity to penetrate on Asian market, the biggest in
terms of both demographic and growth.

3. There is stiff competition in the market. The case stud assumes that there is extreme
competition though the market has space to grow the company faces challenges from the
market.

4. The sponsorship of Soccer world cup and Olympics is not the ultimate word for creating
brand image. The researcher approaches the case study with an assumption that the
sponsorship of sporting event alone never contribute for creating brand image.

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 Chapter 3. Problem or Opportunity Statement and Plan of
Analysis

3.1 Problem Statement

The first segment of the chapter discusses the problem that Nike faces and/or the
opportunities if any. As business organisation that operates in various countries across the
world the problem that the company faces may different from market to market. The main
problems that Nike faces are as described below.

3.1.1. International Business

1. Counterfeit goods and distribution rights – Nike is one of the companies in the world
that becomes the prey of trading of counterfeit goods even though the company spends
enormous efforts to prevent it from being deceived in the market. The company loses
millions of turnover due to illegal distribution of counterfeit all over the world. The prime
source of such good are from China and the market is Third world countries and Eastern
Europe and distribution of low quality goods affect the company’s goodwill as well.

2. Exploitation labor force in underdeveloped countries - Inception of globalisation in

1991 brought the world into a single market which facilitated a borderless market and the
flow of capital from country to another. Corporate world started migration from developed
countries to developing and underdeveloped countries as the cost production in such
backward nations aided the business to cut down the cost of production that ultimately
constitutes the shareholder wealth as well. Albeit globalisation transitioned the approach of
business entirely the business world started exploitation of unemployment in the third world
nations, Nike was not all an exception for this. Nike was in the line of attack as the
company has had to utilize the cheap labors availed in Latin America and ASEAN countries.

Nike has over 125 plants, including contracted companies, in Asian region where the over
700,000 employees work. Various reports published by different organizations and news
media state that 30% to 50% of these plants do not have proper sanitation and drinking

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water facilities. The company had reportedly paid nearly $1.5 million to settle the sweatshop
allegations which affected the goodwill also.

3. Various lawsuits faced by the company – In the present world where consumer clasp
every right to enjoy the products as they are the real king of modern market. Nike was no
exception in this case as they faced has had to face various lawsuits by the customer,
including consumer right protection groups, and employees as well. The case Mark Kasky, a
renowned consumer activist in the U.S versus Nike was one on of the best brining down the
public attention against false advertising campaign and unfair employment policies of the
company.

4. Stagnation of European market - Economic crisis erupted in late 2007 engulfed the
business world completely which caused accumulated losses of trillions of dollars for the
corporate world. Though the credit crunch affected banking sector at the first instance, as the
root cause was subprime lending and resultant housing bubble in the US and developed
nations, it slowly distressed other business as well. Europe, a continent where football is a
huge investment, was Nike’s prime market whereas the credit crunch which caused to
change purchasing pattern of customer in developed nations lead to stagnate the market.

5. Over-dependence on outside contractors - Outsourcing is one of the latest phenomena

in international business as it help the multinational companies to spread the cost of
production in a large geographical area that constitute towards the shareholders wealth.
Globalisation made it possible for the companies to export and/or import skills beyond the
frontier of continents. Nike is heavily dependents on contractors for manufacturing their
sports accessories may often compromise in many areas as against the company’s policies.
Currently Nike has over 800 such factories spread across the world works more than
650,000 employees. The figure shows that virtually the company completely depends on
outside parties for its daily process.

3.1.2 International Marketing

1. Nike is not an official sponsor of the tournament- The biggest challenge Nike faces
over the past two decades in the world football arena, it is nearly two decades since the
company seriously entered into football accessories market, is to become one of the official

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partners of the world football mega show by the FIFA. The biggest hindrance of Nike Inc. is
Adidas, their immediate competitor in the industry, as they partnering the world cup with
FIFA since 1974. The terms and conditions made by the Adidas with the apex body of
football caused the life even difficult during the world as the Nike cannot air their
advertisement during the world cups which ultimately forced Nike to think a fresh way of
marketing activities that resulted to frantic use of online media such as YouTube and Social
Networks.

2. Early failure of target market – Since the entry at the football accessories industry in
the early 1990s Nike constantly seeks to come across with a right mixture of target market
as target marketing is one of the prime tool to penetrate in a highly competitive market. At
the very beginning Nike concentrated age group of 12 – 16 but it was not as success as the
management team anticipated. The driving force behind this age group is merely passion at
the product and brand value for this age group is influence very little. Above all the
purchasing power of the said target group of customers will be comparatively low and in
most of the instances the decision may be taken by the parents of the kids.

3.1.3 Financial Analysis and management

1. Excessive investment in advertisement and marketing activities – Advertisement is

the backbone of a successful marketing campaign, particularly in an extremely competitive
market where a small margin of error could lose the business. Since the digital media has
been made phenomenal influence in the day to day life advertisement campaign had changed
its prolonged traditional approach as well. Nike, like other multinational companies, has
been investing heavily for the company’s advertisement with use of sophisticated
technologies and innovative ways in order to maintain the existing customers and also
penetrating into the new market segments. But in many occasions such a heavy investment
might not prove worth as the future return will not be tantamount to what the company spent
for.

2. Pricing of products – As customers are more aware about pricing of substitute products
pricing is one of the challenging area where the management needs extra eye as any
movement in price may cause to lose the market. Nike, like their competitor Adidas charges

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comparatively higher prices for their products since both the companies enjoy a prominent
brand value in the sector. But, the price they charges for their products are not affordable in
Asian market as the purchasing power of the people in Asian and African region are pretty
low as compared with European and the U.S market. This further drive customer in those
markets to buy counterfeit products which will be availed at a lower price, ultimately affect
Nike’s sales adversely. Hence, it is very much important to consider a wise pricing policy at
these markets as the huge potential market is yet to be tapped.

3.2 Plan of Analysis

Once the issues are find out the next step is to decide how the current problems to be solved.
It is very much important to apply the right kind of tools in order to achieve the desired
result. The expected result has very much influential while selecting the precise method of
analysing to reach the outcome, else the result never help for management decision making.
The research uses both primary and secondary data to analyse the problems and/or
opportunities that Nike has had or will have in the future. As any other researcher in the
present world, where the prime source of data is online resources, the case study uses
internet to collect bulk of the data for analysis purpose thought the creditability of such data
often questions. The researcher further uses qualitative, like the journal reports, and
quantitative data, such as financial statement or market surveys etc, as well

Collection of primary data makes repeatedly difficult for a researcher as most of the
companies do not want to disclose the business secret, particularly the key success factors,
in a world where minute margin of error may constitute for the loss of entire market. Hence,
the case study has to depend on secondary source of data from the journals, publication –
both online and printed media. The quantitative way of analysis provides more accurate
outcome than qualitative as the former permits cross examinations in numerous ways. The
case study uses tool like ratio analysis, SWOT, Porters Five Forces and PETS analysis etc.
aiming for both qualitative and quantitative results.

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3.3 Models, Tools, Concepts

The credibility of the outcome of a study lies in connection with the tool the researcher uses
to analyse the situation related with. The more the tools use to analyses and interpret a single
case will provide a better result as it provides a prospect of cross checking between the
results by different concepts and will ease decision making at managerial level. There wide
array of management tools and concept that can apply for analysis and interpretation of any
case but the use of such tools heavily depends on the result that the researcher expects. The
case study applies management concepts and techniques like PEST analysis, Porter’s Five
Forces analysis, Ansoff Matrix, Red Ocean theory for the penetration of existing product in
the existing market.

3.3.1 Porters Five Forces Model

Michael Porter’s business model is an elaborated approach that applies for managerial
decision making to evaluate company’s market position and competitive strategy. The case
study uses to those five forces to measure the relative tolerance of Nike in each of those
distinct areas and how well the company could respond in the past. Michael Porter’s five
forces framework is often uses for strategic planning as it covers the areas as follows:

a. Threat of new entrants: We may have good market that response to the company
positively by contributing to the share holders’ wealth. But the excessive profit and/or the
space in the market which is yet to be utilized by the company may often lure a new entrant
to the market. Michael Porter states that the company must try to seal such open door that
will lead to share the future return. Hence, the threat of new entrants to the market is always
a critical factor that influences decision making at the managerial level.

b. Bargaining power of suppliers: Supplier comprises of all sorts of inputs that produces for
the company’s smooth flow of business that include supply of raw materials, finished
product, outsourcing of labor etc. Bargaining power of suppliers will be high where the
market is dominant by a few suppliers and the availability of the substitute will be restricted.

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Nike outsource notable chunk of their manufacturing activities for third parties and it will
influence their decision making.

c. Bargaining power of customers: As per the traditional approach of marketing customers

are the king but the modern world rule by the corporate where they decides what and when
the customers’ needs, yet they the pressure is always form the potential buyers. Customers
bargaining power will likely be high in such a market condition when there is a
concentration of customers and the switching cost is very low.

d. Threat of substitutes: Since the customers are usually price sensitive they will show a
tendency to switch from one product to their substitutes where the switching cost is low. It is
not only substitute product but the complementary product affect the market as well

e. Rivalry among existing companies: The intensity of competition is a concerning factor for
every company while they formulate strategy to conquer the market. High intensity of
competition will reduce the turnover, margin and growth of the company as the businesses
will be forced to share sector.

3.3.2 SWOT or Opportunity Analysis

SWOT, stands for Strength, Weaknesses, Threat and Opportunities, is the simplest form of
analysing business environment and its resources. The methods uses to analyse internal how
well the strength, may be financial viability, possession of technical know-how etc., of the
entrepreneurship make use to reap the maximum from the industry. The analysis exposes the
weakness of the company apart from the threat that business faces from the external
environment. The thorough study of external environment further enhance the chance future
opportunities that can be made use to heighten the level of utilization of business assets in
order to contribute the shareholders wealth.

3.3.3 Ansoff Matrix

Ansoff Matix, invented by H. Igor Ansoff, is a management tool that helps the companies to
decide their product and their strategy to capture market. Ansoff Matrix explains that
business attempt to cash from the market with a right strategy in current or new market or

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product by considering four factors; market penetration, product development, market
development and diversification

The case study examines how well Nike Inc. uses all the above mentioned factors to
capitalize in the existing scenario and the strategy that will help the company in the
company to market their products in the new market. Like the figure 2.1 depicts market
penetration exploits existing market with an existing product through applying appropriate
growth strategies where as on the other horizon, in diversification scenario of the matrix, the
company is strives to develop a new product for a new market. In market development the
company searches for a new market for the existing product by approaching new
geographical areas, new product dimensions or packing or new pricing policies to attract
new customers whereby the company expands the reach of the product. Igor Ansoff
establishes, in product development, that the companies require new strategies for the
existing market through the development of products which could attract fresh customers.

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3.3.4 Boston Matrix

Most of the business units deal in more than one product to distribute the risk and cash the
profit from the market. If a company heavily depends on one product and any sudden fall in
the demand of that particular product force to shut down the business. Boston Matrix,
designed by Boston Consulting Group, discusses about the proper product mix and
investment strategy through categorizing the opportunity into four groups, dogs, stars, cash
cows and question mark, based on market share and market growth.

As the above figure shows question market is a situation where the market shows a higher
growth rate but the products shows little presence at the sector. Since the company does not
have performing well in the market tantamount to the relative growth of the market the
investor fails to reap the maximum. Star is a situation where the market a high growth rate
and the product are response in similar fashion having relative market share. This is the best
opportunity for a potential investor to pull the trigger by investing additional capital to tap
the market advantage. Dogs are the third matrix in which both the market share and growth

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rate is low and it is a desired situation to invest in such a condition as the investment may
went into vain due to the adverse condition.

3.3.5 Red Ocean Strategy

Red ocean is strategic approach that seeks to compete in the existing market space by
extending product portfolio or developing similar product in order to beat the competition
focusing on the existing customers. It may be by adding more features to the existing
products or implementing better pricing policies by anticipating the future demand for the
product by marinating the current the customers. The case study makes outlook about how
well Nike outperformed their competitors, above all Adidas, their archrival in the industry.

3.3.6 PEST Analysis

PEST, abbreviation of Political, Economical, Social and Technological, is one of the

common management tools that use to analyse the macro environment of the business. The
tool is analyzes the external environment of the business for strategic formulation and
market research for the development of company. The compositions of Pest analysis are:

Political - The degree of government policies like international trade agreement, taxation
policy, labor law etc. come under the political factors and any minute change of these factors
will have an impact on firm’s earning as well.

Economic -Since the world is shrinking to be a single economy the economic factors around
the globe will affect the business’s decision making and strategic formulation. The factors
like inflation, exchange rates of currency, economic growth, interest rates etc.

Social – Social factors include demographic factors like age distribution and population
growth rate, culture of the communities ect. Companies’ may force these factors to change
their strategy in order to attract their customers.

Technological – The explosive development of technology, particularly in information

technology, has made a huge impact in the corporate world over the past two decades.
Appropriate applications of information technology for research and development,

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outsourcing of activities, innovative advertising and marketing activities ect. Constitutes for
the firm's success in long run

3.3.7 Financial Performance Analysis

Financial data is a key performance indicator (KPI) of a company as it is not only the
investors or owners but the third parties outside the business are keen to know the financial
performance of a company. The financial statements that tell an overall picture of the
performance undergoes for thorough scrutiny by these parties depending on the outcome
those desire to. Ratio analysis is an empirical test, the most commonly used tool uses, to
analyse and interpret the financial statement.

Ratio analysis is an extensive test of numerical value that provides quantitative result; such
result can be a measure of quality of performance of business in various corner of business.
Different ratios are in use to analyse business data in order to measure to the profitability,
liquidity, and efficiency of the business.

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 Chapter 4 Analysis and Findings

The methods of analysis have a greater importance on the outcome of the study. The tools
that uses to examine and interpret are very much depend on the result that analyst or the user
looks for. The previous chapter described about the tools and concepts that use to apply for
analyse purpose.

4.1 Nike Competitive Analysis using Five Forces Analysis

Nike is mainly focused on designing and marketing of their product rather than
manufacturing as most of their manufacturing processing are carried through outsourcing, an
innovative way use by the corporate in order to reduce cost of production. But the company
is fairly focuses on customers, vertically orientated towards the potential buyer, carrying out
most of Nike’s business in its retail outlets and online trade. Since the power of the company
is more concentrated in the middle and it is closely work with the customers they have well
orient control over its suppliers and manufactures which resulted to make strong demand for
the products in the industry. The case use Porter’s five forces approach to analyse and
evaluate Nike’s performance and the scope of threat or opportunity, if any, at the current
scenario.

1) Threat of new entrants to the industry

The threat of a new entrant to the industry is always concerned as it will lead to share the
market space and the return from the sector as well. Currently sports accessories industry,
the industry where Nike operates possess high completion that prevent the threat of a new
entrant particularly in a position where the business world is, as the economic turmoil in the
developed country caused to stagnate the market in developed nations. But the vast area of
Asian market is yet to be utilized, neither by the multinational companies like Nike and
Adidas nor the Small and Medium Enterprises (SMEs). Hence the entry of new companies
may expect in such kind of market. Take to the example of India as the latest survey shows

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the popularity of football increases at a rapid pace and will become the most popular
sporting event in the country (Exhibit 3)

2. Bargaining power of suppliers and manufactures

Bargaining power of suppliers is a key factor that affects the bottom line of the business
adversely as when there is a high bargaining power for the suppliers or manufactures, Nike
depends a lot on third parties, and the possible return from the sector will be less. But Nike
uses never allow concentrating their manufacturing process to any single suppliers as they
shows a tendency to switch where there is a chance of reducing cost without compromising
the quality of the product, here the product football accessories particularly boots.

Literally, Nike produces 100 percent their footwear, including boots, produces in Asian
countries like Vietnam, Indonesia, Thailand and China. China and Vietnam constitutes 36
and 33 percent respectively while the other two countries contribute a combined 30 percent.

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The major raw materials for the boots are synthetic fabrics, a petroleum by-product and/or
natural rubber. These two materials are cheaply available in those countries as those
countries are the biggest producers in the world. Above all the cheap labor attracts the
companies.

3. Bargaining Power of Customers

Nike has two kinds of customers; the retailers such as Foot Locker and Sports Direct and the
ultimate consumers. Both the segment of customers is very much important for the
company’s success. The retail sector is highly price sensitive where any slight movement
will shift the customers particularly the switching cost is low and the aloes substitutes are
available in the market. Adidas and Puma produces close substitute for Nike’s football
boots.

“Retailers are working to decrease their inventory levels and increase their inventory turns
(Marketwatch).” The economic crisis and the resultant concentration of market induced
Retailers like Sports Direct and Foot Locker to cut down the investment in inventory caused
a lot of obstacles for the company as the stock level of the company constituted to amplify
that further composed to trim the market for the company in European and the Market.

4. Threat of Substitutes

The market for the sports shoes is highly competitive and complex. There are new
substitutes products on every day basis from the competitors as they develop new products
and this reduces the life span of products. The immediate threat is from Adidas and Puma as
those companies are well established in football accessories market well before Nike entered
to the market in the early 1990s. But the strong brand image help the company to maintain
the market shares and it keep growing over the past years that made possible to leapfrog
Adidas. Nike understand their customers very well by developing the product range
considering all segment of customers with affordable price without negotiating the quality of
the products.

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Rivalry amongst Existing Players

The intensity of football accessories industry is highly concentrated with competing

companies brand images. The level of rivalry is reached in new heights that resulted Nike
throw out of the main stream of world’s biggest sporting events, FIFA World Cup, where
Adidas is the official sponsor that keep Nike at bay from airing their advertising. This forced
Nike to find an innovative way of marketing which led to use the World Wide Web,
predominantly YouTube. The file uploaded video clip related with the launch new football
boot Mercury Vapor VIII featuring Rafael Nadal, one of the prime talent in modern tennis
and Christiano Ronaldo, the prominent Real Madrid and Portuguese footballer, recorded a
whopping hit of 7 million in less than a month since uploaded on 30 March 2012.

4.2 PEST Analysis of Nike

PEST, the acronym of Political, Economical, Social and Technical, analyses the external
environment of the origination which may have influence on the bottom line and those
factors often influence managerial decisions. The researcher analyses how those factors did
influence Nike Inc. over the past years.

Political
Nike is operating their business across the world, though the main countries are the U.S.
where Nike originated and European nations mostly, the U.K. France and Germany. The
company’s manufacturing activities spread across the world predominantly in Asian nations
in order to minimise cost of production. Hence the political factors across the world affect
and influence the managerial decision making and strategy formulation.
As an international brand Nike has to pay attention to the policies of the governments
globally. Europe is still recovering from the perils of economic crisis and most of the
government had takes corrective measures by restructuring taxation policy and cutting
expenses. And the crisis affected stability of the governments in many European countries
that in turn affects the companies. Nike must consider the and be aware of pressure groups

25
as they try to impose ban on the marketing and advertising policies of the company because
this could affect the brand image of the company.

Economical
1. Recovery from the economic crisis – The world is gradually return to its normal course of
business from the perils of economic crisis of the played havoc in corporate world. As a
company from the U.S., the nation where the economic crisis started, Nike had to suffer the
aftermath impact of economic crisis as the share price of Nike recorded heavy loss of the
value, the share price sharply declined to $60 in 2009 from a high of $140 barely two years
ago, in Dow Jones US Footwear Index. The share price of the company is recovering of the
past couple of years but the management expert forecast a second dip of economies and it is
an alarming factor that the company must consider.
2. Exchange rate of currencies- As a multinational company every minute change in
exchange rate will have a huge impact in the earning capacity of Nike Inc. The downfall of
dollar during the year 2007-08 costs heavily for the company since most of the
manufacturing units of the company are outside the U.S. But since then dollar strongly
recovered that helped to overcome the previous losses but the recent plunge of Indian rupee
against the dollar will affect the return from the Indian market even though it opens the door
to invest in Indian market.
3. Taxation Policies – Taxation policy of the governments’ make huge impact on
shareholders wealth as it directly affect the net return after tax. It can be affect them on
either way depending on the movement of currency value
4. Inflation / Purchasing Power - Inflation will cause to decrease the purchase power of
costumers and it will reduce the demand for the products. Since Nike is not dealing in
necessity goods, inflation does usually not affect the demand of such product; people may
show a tendency to control their spending on luxury or durable goods. During the periods of
credit crunch a lot of people lost their jobs, particularly in PIGS and other developed
countries, the region where Nike obtain their most of the turnover, led to dip their sales and
ultimately to reduce the profit

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Social
Being a multinational company the decision to develop a new product or new advertisement
campaign they have had social responsibility. In many cases Nike breached their social
responsibility and came under the attack from all walks of life. Nike is using the skin of
animals as a raw material for the making of leather product, though not uses for football
boots, is often questioned by the animal welfare groups that once again compel to go for
green products. But it is not as easy as the common psychology customers are the green
products are not matching in quality with the current products Nike offers.

Technological
Technological development made a revolution over past two decades that pushed the
corporate world to new dimensions. The better application of information technology for
data analysis and strategic formulation will offer an added an extra mileage to the business.
Nike extensively exercises technology for the development of their products especially for
developing for football boots since they entered to the market. The ‘Joga Bonito’ and
freestyle football campaign by using internet is the best example of creating brand value
amongst the youths by using information technology. Countries like India where the
numbers of internet users are being increase at a rapid pace it will be an added advantage if
the company extends the campaigns to such countries.

4.3 Development of Mercurial Vapor (Red Ocean Strategy)

Mercurial Vapor is the product ambassador of Nike’s product portfolio in football

accessories. The first of the series introduced on the occasion of FIFA World Cup 2002 in
Germany teamed with the then Brazilian Star Ronaldo. “I don’t need to be cushioned, I need
go fast”, it was the feedback from Ronaldo that led Nike to think and develop a new light
weight boot. The company has to use innovative idea to penetrate on the existing market of
football boots to beat competition and the development of Nike Vapor revolutionized the
sector. The company continued to compose innovative ideas that paved the way to design
the latest in the series Vapor VIII (Exhibit 2) during the March 2102 that already been made

27
an immediate impact in the football market as the players, especially forwards and
midfielders, are eager to beat defenders on their pace at the field.

Whenever Nike released the latest version of the Mercurial Vapor series the company uses
big matches in order to attention of the new product is successful marketing campaign
employed. For example Vapor II, which was released in January 2004, was introduced in
two colors blue and red. The blue pairs was first used by Ronaldo (Brazilian and Real
Madrid Footballer) in his El Classico match at Nu Camp, the prestigious match for the big
guns in Spanish League F.C. Barcelona and Real Madrid that watches millions of football
fans across the world. Whereas the red one was worn by Thierry Henry, the French man
playing for Arsenal, against Inter Milan in his Champions League match and he scored two
goals as well in that match. The development and innovative marketing strategies are the
best example of application red ocean strategy in an already established market.

4.4 SWOT Analysis of Nike Inc.

Nike Inc. is world’s leading manufacturer and distributor of wide array of sports accessories,
both in terms of market share and volume of turnover. Since the acquisition of Umbro in
2007 the company enjoys a potential market share thought Nike faces intense competition
for the rival companies particularly from Adidas, another giant in the industry. SWOT
analysis helps to find out the strength and weakness of the company and the potential threat
as well as the opportunities, if any.

4.4.1 Strengths

1. Healthy market share supported with strong brand equity

Nike is one of the leading players in the athletic footwear and apparels market. The
company enjoys a strong market position in most of its product segments. Widening product
lines coupled with strong marketing and innovation has contributed to Nike's rising market
share in the global footwear market. The company’s market share showed a sudden climb of

28
14% in 2006, the year world cup taken place in Germany; means an impact of marketing
strategy was very well reaped.

2. Competent technical innovation in products enhances Nike’s competitive advantage

and brand equity

Nike is has the advantage of using the most sophisticated technology for developing their
products that give them upper hand in the market over the company’s rivals. This
technological advancement helped the company to develop the company their best series of
football boots ‘Mercurial’ since 1998, it was the lightest football boot then. The continued
emphasis of using technology for the betterment of the products and services finally
rewarded them with the development of the latest of Mercurial series Vapor VIII, arguably
the one of the best boots ever produced by Nike. “The Mercurial Vapor VIII gives my game
an edge combining the latest design and innovations. I can get ahead of defenders, knowing
that the boot will give me the speed and grip I need without compromising support, control
or of course style” Crisitano Ronaldo on the occasion of introduction of the new Vapor VIII.
This itself says how innovative the boot is and express a professional soccer player’s
presumption about style.

3. Broad distribution network

Nike sells their products through a wide array of independent retailers like Sports Direct,
Foot Locker etc, throughout the world apart from the Nike stores in the prime locations in
big cities across the world. The local retailers of Nike have a very broad distribution
network that makes sure the products reaches to ultimate customers without delay. And the
company uses official website as a best means of marketing and distribution channel that
most of the customers in developed countries utilize to buy goods. The biggest advantage for
the online trade is that it allow the customers to personalize their boots, i.e. they can choose
color combination, add name on the boots etc. These extra features attract the customers to
exploit the facilities Nike offers. Thus a broad distribution channel with added features by
using information technology the company manage their inventories in a better way that in
turn reduces the investment in stock as well.

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4.4.2 Weaknesses

1. Over-dependence on third party manufactures

Outsourcing has become a common scenario in the world since the globalisation caused to
break the frontier between markets to bring it a single umbrella. Now the businesses,
whether it small or big is no longer a matter, uses the facility to outsource their work to other
countries where the cost of production is low in order to maximize the profit (Exhibit 5).
Nike heavily outsource their manufacturing activities in Asian countries where 99% of their
sports apparel manufacturing activities are carrying out the countries like Vietnam, China,
Indonesia and India. In countries like Brazil Argentina, Mexico and India the company has
contract with third parties to manufacture footwear for those countries where the quality of
the products that company offers will not matching with those in developed countries as
they sell it lower price.

The heavy dependency on third parties often raise question about the control over the
manufacturing activity and the quality. For instance, it has been a psychological
phenomenon that the products are made in China or in a developing nation in Asia will lack
the quality that European manufactures recommend. Any failure from the supplier will force
the company to withdraw the product that lacks the quality will over run the brand image of
the company and constitute to loss. In 2010 US Consumer Product Safety Commission
seized about 67,000 units and Health Canada recalled 60000 units of hockey sticks, shafts
and blades which were inferior quality. A few of these goods asked to withdrew from
market was made for Nike in China. Thus over dependency on third party vendors may
often exposes the companies to risk of inferior quality of products and/or services.

4.4.3 Opportunities

1. Association with NFL would consolidate market leadership in the US

Nike is official partner of many sports events, sports personalities and clubs all over the
world which is an organ of the products and it assists to create brand equity in the markets.
Nike’s presence in the US National Football League’s riveted in 2010 as they named
launched to sponsor jerseys and on filed apparels. The huge leap was that Nike agreed to

30
partner with the NFL commencing from 2012 until 2016 to become the official sponsor,
rather interestingly dethroned Adidas, the immediate competitor.

2. Wide open Indian Market

Nike India, a subsidiary of Nike Inc, started functioning in 2004 with a view to exploit the
growing Indian market. Since 2001 the government of India started deregulating the market
by allowing Foreign Direct Investment (FDI) in various sectors step by step. And in
February 2012 the parliament decided to allow 100% FDI, earlier it was 49%, in retail sector
that led to flurry of capital from abroad. Above all the surveys shows that soccer will be the
second popular sports in the country by 2018 as the number of viewers grows constantly. If
Nike can successfully ploy the demography the scenario will be entirely different for the
company. Since the company has manufacturing unit in India they can distribute it at lower
cost through their own retail outlets as the government allows setting up of retail units
through inviting the foreign players. The limited participation MNCs in the domestic market
(Exhibit 4) shows that there is a gap widely open for such a foreign player who grabs the
opportunity at the earliest

5. Football becomes more popular in Asian region

Over the past years football was less popular in Asian countries as compared to other
sporting actives, like cricket in Indian peninsula and badminton and other ball games in
ASEAN nations. But, after the world cup 2002 held in Japan and Korea made a huge shift in
polarity of soccer in Asian countries. The shift in popularity coupled with economic growth
in this region constituted demand for sports accessories.

3. Reorganization of brand imitativeness and human resource

The economic crisis and the resultant loss to corporate sector forced companies to
reorganize and refocus on the existing strategy at various levels. During the year 2009 Nike
reorganized its brand with the reduced management hierarchy that consisting six
geographies; China, Japan, North America, Western Europe, Eastern/Central Europe and
emerging markets as against the four regions the U.S., Americas, Asia Pacific and EMEA-

31
consisting of Europe, Middle East and Africa. The reorganization cut down 4% of the labor
force which could contribute for the bottom line of business

4. Growth of BRIC Nations

The emergence of BRIC (Brazil, Russia, India and China) countries for the three years are
notable and compete to become the next economic powerhouse in the world is an advantage
for Nike as they already established in those countries. The economic growth will increase
the purchase power of people which in turn increase the spending on luxury goods (Nike
products are expensive hence in economics it consider as luxury goods and it is purchases by
the high income class in developing nations).

4.4.4 Threats

1. Highly Competitive Market

The market where Nike operates is highly competitive and there is no room for error. Nike
has to tackle the intense competition from Adidas and Puma internationally and regional
layers like Finnish Line and Dick’s Sporting etc. The availability of cheaper material and
labor pave the way to enter more regional players increase the amount of competition in
local markets and adversely affect the company’s margin.

2. Exchange rate risks

During the periods of economic crisis Dollar fell sharply against euro and it affected the
return of the company and caused to increase the expenses, in terms of USD. When the
dollar getting stronger it causes to shrink the overall return from abroad where Nike operates
mainly. Whereas the company can take it as an opportunity to increase the investment in
such countries that cost the less in terms of Dollar.

3. Threat from counterfeit products

Black market and the abundance of counterfeit products has been a growing concern for the
branded products all over the world in recent years. As per the latest report by
Counterfeiting Intelligence Bureau it is estimated that nearly 7% of the goods trading in the
world are either counterfeit or adulterated. Nike is one of the preys of counterfeit goods in

32
international market. Currently Nike is seeking to law suit against around 65 domain names,
which were registered in china, used to trade counterfeit goods by using Nike logo

4.5 Ansoff Matrix

Market penetration – Nike is one of the premium brands in world ranked 29 in 2011with
an estimated market value of $12,672 million. And Nike is the third best sports brand in
world after Tiger Wood and Manchester United, rather interestingly Nike has sponsorship
deal with both of the top two. Since Nike has already been established in the market and
they could attract noncustomers of the company with their highly established products.

Product Development – This is an area where the company is constantly focusing in order
to keep the existing customers and attract new potential buyers also. The Nike spends over
25% of the turnover for the research and development, shows how vital it is. The
development of Mercurial and Nike Air over the past years reveal that Nike put enormous
effort for the development of the product.

Market Development – The market development will have a least impact on Nike as the
company tends to focus their products on the familiar market conditions. But Nike has
enough potential ability to cross the border of the markets since the company has viable
financial resources. The financial soundness and brand image already created will help the
company to penetrate into a new market with the existing product. The reorganization of the
marketing zone can see as the first step towards to such market, particularly the company
concentrating on the developing market.

Diversification – Nike possess immense richness in technical know-how for diversify its
product portfolio. For example, The company start to design and develop new products like
Nike laptop, Nike MP3 plays as the company already been own electronic products like
wrist watch, electronic wrist band, Nike+ IPod etc. The research sees a chance to expand the
current product lines as over the past few years the company attempts to create new products
and market it by using the brand image established already.

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4.6 Innovative Advertising and Marketing: A Way to Success

As a multinational organisation its very difficult for a company like Nike to design and stick
on single advertisement and marketing campaign as the nature of the market will be
different and it causes the marketing activity extremely difficult for Nike. Whereas the
innovative approach of applying information technology for the advertising campaign and
the tactical use of advertising media is an important factor behind the Nike success.

Nike is not an official partner of Olympics and FIFA World Cup as their rival Adidas holds
the contracts for sponsoring both the mega events for decades keep Nike away from two of
the biggest sporting events conduct every four years. Adidas spends over $ 200 million for
sponsoring FIFA 2010 world in South Africa, agreed a sponsorship amount of $351 million
for the upcoming world cup due in Brazil in 2014, and another $100 million to become
official partner of the London Olympics. But, Nike without spending such a whopping
amount for the sponsorship rights made a huge leap that dethroned in the publicity buzz
during the world cup 2010. They ambushed Adidas with the innovative idea of using
YouTube for the marketing activity once the policies of FIFA prevented them airing
advertisement during the world cup. Nike, thanks to some creative advertising, claimed
30.2% of the of the official and competitor buzz during that period as against Adidas’
14.4%. Adidas was the sponsors of 12 teams participated in the 2010 world cup as against
the Nike’s 9 teams. Whereas Nike’s buzz campaign was driven by Cristiano Ronaldo and
Wayne Rooney made the big difference. The campaign named “write the future” viewed
almost 15 Million time in YouTube, the alternative adverting media of Nike, outperformed
Adidas campaign that starred by the like of David Beckham drawn only 2 million hits.

According the various reports published recently, like the FIFA World Cups, Nike is far
ahead in the campaign of the upcoming London Olympics. The research carried out by
BrandWatch shows Nike dominating with a web buzz of 7.7% during February 2012
whereas Adidas, by contrast, has only a meager amount of .49% by spending $ 100 million
for the event. In January 2012 Nike launched their advertising campaign featuring Paula
Radcliff,(Exhibit 6) the British Olympic gold medal winner, mentioning “Not an official
Olympic sponsor yet the public think they are…” is a big hit. Radcliff, in that black and
white Nike dress, has made her own statement “nearly isn’t enough” on her T-shirt.,
34
resonate the public that they are the sponsors, despite not breaking the rule of the event. The
two creative advertisement strategy not only saved millions of amount but provided upper
hand against the rival competitors.

4.7 Behind the Swoosh (Ethical Issues)

“If Yuli wanted to earn enough to buy a pair of the Air Ascents she makes she would have to
work six days a week for almost five months, not paying her rent or eating. It would take her
44,492 years to earn Michael Jordan s annual endorsement fee from Nike.” by Victoria
International Development Education Association. The statement depicts the working
condition and wage policies in the Nike Factories in third world countries especially in East
Asian nation. Nike has been under criticism, more than any company, exploiting the
sweatshops, is a place where workers are subject to severe exploitation, in third world
countries to manufacture their products. Nike was criticized by the Western NGOs for
disregarding the human right violations in sweatshops intending to take benefits of cheap
labor, child employment and weak health and safety environments.
The report published in LIFE magazine criticizes Nike for using child labor that ultimately
caused to lose damage reputation, devaluation of brand image, led to boycott Nike products,
and above all faces legal action again the company. Nike was under the scanner of
International Labor Organisation and UN’s Universal Declaration of Human Rights and the
Convention on the Rights of the Child for many years as the company failed to cope up with
the SA8000 standard (Social Accountability 8000). But the effort from Nike over the past
few years is appreciable as the company continuously working to improve the working
conditions which helped them to peg back and presently the company feels the allegations
are wrong not justifiable.
The report published by Ernst and Young audit in 1997 reported serious health issues in one
of the contactors of Nike in Vietnam. Barely a year before E&Y published the report the
issue has been raised by the NGO Transnational Resource and Action Center, renamed as
Corp Watch. The contracting company, Tae Kwang Vina, employs more than 9,000
employees then was allegedly reporting health problem for the employees. The inhalation of

35
toluene, a chemical solvent that harms central nervous system, kidney and liver, was the
major threat as the contaminants particle was said to be exceeded between six to 177 times
than the normal limit. According to the report, the company manufactures around 4, 00,000
pairs of shoes per months, never provided any life protecting equipment for the employees.

36
 Chapter 5. Findings, Recommendation and Limitations of the
Study

5.1 Findings of the study

The Research expresses that no single measurement to solve any issues or to grab the
opportunities. Behind the long run success of every organisation there will be an array of
timely strategies and policies that make sure to keep the threat the company face and without
failing to grab the opportunities.

1. Nike not an official sponsor of the tournament: Since the terms and conditions of the
FFIA with Adidas, the immediate rival of Nike in the industry, Nike cannot find a place in
the list of official sponsors of the FIFA World cup. The contract with Adidas prevent Nike
from airing the advertisement during the periods of world cup could cause a huge loss, not in
terms of monetary basis but it entitle Adidas to have upper hand in terms of popularity.

2. Nike faces intense competition from the market: Nike faces intense competition from the
market both globally and regionally. The Main threat is from Adidas, the second largest
football accessories dealer after Nike, and Puma. Hence, the company needs to be more
focused on their competitors’ strategy in order to counter such moves. Nike has to be self
motivated from the words of Woody Allen “If universe is expanding, why I can’t find a
parking space?”

3. Nike needs to focus on ethical business: Though Nike had changed tremendously over the
past few years since the attack from various nooks and corner of the society the company is
still under the monitoring of the international society. Currently Nike has engaged many
projects, which will help to recapture the public image once lost amidst allegation, like the
project with United Nations Research Institute for Social Development and many other joint
projects for social development with United Nations. The company’s further need to rethink
about using materials that reduce greenhouse gas emission and will made with least carbon
footprint.

37
5.2 Recommendations

1. Be an official sponsor of the soccer world cup and Olympics – One of the most difficult
tasks and easy way to have a sizeable market share of football accessories industry is to
become the official partner of FIFA in the World Cup which will also help to overcome
Adidas’ grip at the football world cup as they are the sponsors of gold, silver and bronze
ball, award for the outstanding player of the tournament. They also sponsor gold, silver and
bronze boot of the tournament for the top scorers of the tournament apart from Lev Yashin
Adidas Golden glove for the best goal keeper. Though Nike has successfully overcame
Adidas in the 2010 edition with creative approach it will not practicable next time as the
competitors will be careful to avoid what had happened in the past by tightening their grip
over the publicity activities of world cup. In the case of Olympics the picture is not as good
even though the initial marketing activity has kept Adidas far behind for the race to become
most talked brand during the event, particularly Adidas is trying capitalize it by featuring
British athletes like Jessica Ennis and Philip Idowu.

2. Active involvement in soccer related activity in world wide– Nike is active in various
soccer activities but not as active in Africa and Asian region as Europe and America. The
company eying on the potential markets in the world, not tapped yet, must involve actively
in such nations. Nike has to go grass root level in Asian countries as the culture in those
countries, unlike Europe and America, makes it extremely difficult to penetrate only by
using information technology.

3. Sponsor Asian national teams and club football – Nike Sponsors more teams than their
competent Adidas does in every field of the game but the number of players they sponsor in
Asian and Africa is comparatively lower than other from other continent. Though the star
value of the players from the these continents are a concerning factor, Nike should sponsor
more players and teams considering the increased growth of both the viewers of the game
and growing market

5. Make full use of London Olympics 2012 - The 2012 London Olympics, the biggest
sporting event in the world, is less than 100 day away. Though Nike is not the part of the
event the company can reap the benefit from London Olympics with implementation of right

38
strategy for marketing and publicity. While formulating the program for the Olympics they
should give adequate weight for Umbro as they are a U.K. based company fully owned by
Nike. Hence, any gain that Umbro achieve from the Olympics will contribute for Nike’s
bottom line.

5.3 Limitation of the Study

The vast background of the study demand huge collection of data in a stipulated time frame
demands the study extremely difficult to reach an absolute conclusion though the researcher
tried to utilize the availed data to analyses and interpret to reach a meaningful result. The
cross checking of the result of various studies using different models can produce more
meaning results as the outcome of various concepts and tools will be different.

The study, in the absence of availability other modes, heavily depends on internet as a prime
source of data collection apart from books and journals. The credibility of the source,
internet, is often raises concern as anyone can upload any data over the internet.

Further, the researcher had use and applies secondary data due to lack of primary data as
none of the business organizations will be willing to provide their confidential data in an
extremely competitive world where there is no room for error though it is mandatory to
publish the audited statements, but every business will have secretes behind their success
and failure that they never wish to publish.

Future Scope of the Study

The researcher finds that there is enough room for future studies as the area is huge and it
will not accomplished the objective of the study if it fails future studies. The main areas to
be concentrated on the future studies are expansion of the eastern market and development
right approach to capture the sector before the rival companies grab the opportunities.

39
Exhibits

Exhibit 1

Source: The Neilson Company,

*Share of online buzz of major sponsors and their competitors

Exhibit 2 Nike Mercurial Vapor VIII

40
Ehibit 3

Growth of football audience in India during five years period between 2006 and 2010

Source: TAM People Meter

Exhibit 4

Participation corporate in Indian domestic and International football

Source: TAM People Meter

41
Exhibit 5

Nike regional product suppliers and distributors.

42
Source: Nike corporate responsibility report, FY 2011

Exhibit 6

Nike Advertising campaign for Olympics

Courtesy : http://www.nike.com/en_us/makeitcount

43
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23.http://blog.nielsen.com/nielsenwire/media_entertainment/nike-ambushes-official-world-
cup-sponsors/ Accessed April 2012
24. http://www.businessweek.com/magazine/content/10_21/b4179022112034.htm Accessed
May 2012
25.http://www.marketingmagazine.co.uk/news/1117275/non-sponsor-nike-brand-associated-
olympics/ Accessed May 2012

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