NATIONAL INSTITUTE OF FASHION TECHNOLOGY

PATNA

STRATEGIC ANALYSIS OF NIKE

COURSE: MASTER OF FASHION MANAGEMENT

SESSION: 2019-21
SUBJECT: STRATEGIC AND INNOVATION MANAGEMENT

Submitted to: Dr. Vikas Kumar Submitted by: Debopriya Saha

Simran Singh
ACKNOWLEDGEMENT
We would like to express our deepest appreciation to all those who provided us the possibility
to complete this assignment.
A special gratitude we give to our professor, Dr. Vikas Kumar, whose contribution in
stimulating suggestions and encouragement, helped us to coordinate our project especially in
writing this report. We would also like to thank him for investing his full efforts in guiding the
team in achieving the goal.
The completion of this undertaking could not have been possible without the participation and
assistance of so many people whose names may not all be enumerated. Their contributions are
deeply appreciated and gratefully acknowledged.
CONTENTS
➢ Introduction 1-2
➢ Mission and Vision 2
➢ Swot Analysis 3-6
• Nike’s Strengths – Internal Strategic Factors 3-4
• Nike’s Weaknesses – Internal Strategic Factors 4-5
• Nike’s Opportunities – External Strategic Factors 5
• Nike’s Threats – External Strategic Factors 6
➢ Stage I: The Input Stage 7-10
• External Factor Evaluation for Nike (EFE) 7
• Internal Factor Evaluation for Nike (IFE) 8
• Competitive Profile Matrix (CPM) 9-10
➢ Stage II: The Matching Stage 11-19
• Nike's Swot Matrix 11-13
• BCG Matrix 13-14
• SPACE Matrix 15-16
• Grand Strategy Matrix 17
• IE Matrix 18
• Matrix 19
➢ Stage III: The Decision Stage 20-22
• Quantitative Strategic Planning Matrix (QSPM)
➢ Conclusion 22
INTRODUCTION

Nike is an American multinational corporation that is

engaged in the design, development, manufacturing, and
worldwide marketing and sales of footwear, apparel,
equipment, accessories, and services. The company was
founded on January 25, 1964, as Blue Ribbon Sports (BRS), by University of Oregon track
athlete named Phil Knight and his coach Bill Bowerman, and officially became Nike on May
30, 1971. The company primarily operated as a distributor for Japanese shoemaking
company Onitsuka Tiger (aka Asics). The company is headquartered near Beaverton, Oregon,
in the Portland metropolitan area.

It is the world's largest supplier of athletic shoes and apparel and a major manufacturer of sports
equipment. It is one of the fastest growing and globally respected brands. Its logo - a curved
check mark called the “swoosh” - was recognized throughout the world, which was designed
by Carolyn Davidson. Nike is solely concentrated on innovation to fully satisfy their
consumers. From the late 1980s, Nike steadily expanded its business and diversified its product
line through numerous acquisitions. Its first acquisition was the upscale footwear company
Cole Haan in 1988, followed by the purchase of Bauer Hockey in 1994.

In 1996, the company created Nike ACG (“all-conditions gear”), which markets products for
extreme sports such as snowboarding and mountain biking. In the early 21st century, Nike
began selling sports-technology accessories, including portable heart-rate monitors and high-
altitude wrist compasses.

In 2002, Nike bought surf apparel company Hurley International from founder Bob Hurley. In
2003, Nike paid US$309 million to acquire sneaker company Converse. The company acquired
Starter in 2004 and soccer uniform maker Umbro in 2007.

1
In order to refocus its business lines, Nike began divesting of some of its subsidiaries in the
2000s. It sold Starter in 2007 and Bauer Hockey in 2008. The company sold Umbro in 2012
and Cole Haan in 2013. As of 2020, Nike owns only one subsidiary - Converse Inc.

Part of Nike’s success is owed to endorsements by such athletes as Michael Jordan, Mia Hamm,
Roger Federer, and Tiger Woods. The NikeTown chain stores, the first of which opened in
1990, pay tribute to these and other company spokespersons while offering consumers a full
range of Nike products.

MISSION

Nike’s mission is “to bring inspiration and innovation to every athlete in the world.” The
company further states that everybody is an athlete, based on Nike founder Bill Bowerman’s
statement, “If you have a body, you are an athlete.”

 Ground-breaking Innovation: Nike believes that new ideas can change the way people
play sport and change the world.
 Sustainability: The Company is focused on sustainability and solving the prominent
environmental issues we face.
 Social Impact: Nike’s core priority is the community and social responsibility; that’s why
their actions speak for themselves and invested more than $81 million back into the
community.
 Diversity: Nike understands that critical changes need to happen within companies to
promote diversity and inclusion. In 2019, Nike continued to maintain the “global pay equity
ratio” for men to women and minorities.

VISION

Nike doesn’t provide a separate vision statement, but we can use a below statement to
understand its vision.

“Our mission is what drives us to do everything possible to expand human potential. We do

that by creating ground-breaking sport innovations, by making our products more sustainably,
by building a creative and diverse global team and by making a positive impact in communities
where we live and work.”

2
SWOT ANALYSIS

 Nike’s Strengths – Internal Strategic Factors

1. Nike is one of the most recognizable brands in the world as its name alone is memorable,
easy to pronounce, and very unique. Its swoosh symbol is easily recognized by everyone.
Nike has captured approx. 31% of the global athletic footwear market.

2. Nike is financially strong that makes possible to remain in the market and in competition.

3. Strong competitive position, it can defeat its major competitors.

4. Sell variety of models, not only one or two types of products. Nike’s ability to maintain
and enhance its side brands has enabled it to enjoy unparalleled success for decades.

5. Nike has effective Research and Development that makes it to be innovative. Nike has a
team of professionals that design its shoes and other athletic accessories. Nike believes that
their business has flourished due to the thorough research that is conducted for each
product.

6. Effective promotional activities, it also sponsored many sports. Iconic relationships, such
as Nike’s long-term partnership with Michael Jordan has proved to be beneficial in terms
of sales for the company. Their collaboration resulted in “Air Jordan 1 Shoes”.
Additionally, Nike teamed up with the famous basketball player to help design the “Air
Jordan 1 Shoes”.

7. Successful experience for being competitive because it had been in operation for ages.

8. Nike engages in many international marketing efforts. Nike has excellent marketing
campaigns. The brand heavily relies on digital marketing. In the year 2016 and 2017, Nike
spent $3.2 and $3.3 billion respectively. The brand has successfully utilized social media
and marketing campaigns to target more customers.

9. Nike strongly controls over its own distribution channels.

10. Nike doesn't own any factories. Low manufacturing cost because most of Nike’s footwear
is manufactured in foreign countries. In the year 2018, Vietnam produced 47%, China
produced 26%, and Indonesia produced 21% of total Nike’s footwear. Other operations are
in Argentina, Brazil, India, Italy, and Mexico.

3
11. Diverse portfolio and customer loyalty. Nike has millions of customer from around the
world who loyally follow Nike’s trends, participate in Nike events, and even provide
customer feedback. Due to its huge customer base, Nike’s market cap has grown to $115.19
billion as of 2018.

12. Innovative designs and aimed for sustainability. Nike’s CEO Mark Parker has addressed
that they will continue to acknowledge the environmental issues in the communities. The
CEO ensures that Nike will help to contribute in finding a solution against these
environmental issues.

 Nike’s Weaknesses – Internal Strategic Factors

1. Nike uses contracts for manufacturers that makes difficult to control quality of its products.
2. Nike uses sport stars who fail to perform due to retired or injured.
3. Heavy dependence on footwear sales, and mostly on US market. Even after having
established itself globally, Nike still relies on the U.S Market in terms of sales and revenue.
In the year 2018, about 42% of Nike’s sales came from the U.S, while the rest of 58% came
globally. Despite its fame, Nike depends on the U.S for substantial sales and growth.
4. Nike uses contract manufacture in foreign countries, this create potential financial problem
due to foreign currency fluctuations and increases interest change. Although Nike’s income
statements prove to be prosperous, a quick glance at their balance sheet could paint a
different picture. Nike is still facing financial threats. Currently, they have a total debt of
$3.49 billion.
5. Negative image portrayed by poor working conditions in its overseas factories. In the last
20 years, Nike has been consistently targeted regarding their poor labour conditions. These
issues include child labour, low wages, and horrific working conditions that were deemed
“unsafe”.
6. Nike only concentrates on youth and young adult market, ignoring others.
7. Lack of stores catering to the active females. Moreover, lawsuits and sexual harassments,
four former female Nike employees filed a class-action lawsuit against the company in
August 2018. According to these women, Nike has a toxic company culture for women.
The women filed their case against the sportswear company claiming that the company
violated the Equal Pay Act. The women said the company engaged in systematic gender
pay bias where men were paid more than women for the same amount of work. Former
female employees also pointed out that sexual harassment and misconduct was very
common in the company. The New York Times conducted interviews with 50 former and

4
 present Nike employees to investigate the company culture. Through the interviews, it was
established that Nike did have a toxic working environment, where sexual misconduct was
rampant.

Multiple female employees reported that they had complained to the HR but saw no action
being taken from their part. The women were left devastated and felt unsafe while working
at Nike. Some even left their jobs. The entire controversy has significantly affected the
company’s image.

8. Strong competition from some of its major challengers in all branches of the business.
9. Market is becoming saturated and consumers may become sick of Nike brand and move to
other smaller, more individual brands. Additionally, retailers have a stronger hold. Nike’s
retail sector makes Nike weak due to its sensitivity against pricing. About 60-70 % of
Nike’s stocks are sold directly to retailers. With retailers serving as their core customers,
Nike does not put up a fight against their pricing structures whatsoever.
10. Issues with Footlocker.

 Nike’s Opportunities – External Strategic Factors

1. E-Commerce is growing and it is having a positive effect on Nike’s sales.

2. There are emerging and new markets where Nike can grow. Although Nike already has a
presence in many foreign countries, there is still plenty of opportunities for Nike. This is
because external markets like India, China, and Brazil are gradually flourishing.
3. Female's dependence on athletic footwear and clothing is increasing substantially.
4. There is a chance for Nike to develop more new products. Nike's new technology and
innovation make possible to stay on top of market needs. Although Nike has produced
many products, there is still a lot to innovate. Nike has extended its reach in technology in
association with fitness and health. Products like wearable technology that monitors
physical activities, is the first step in building innovative technology products. Combining
technology with athletic wear can prove to be beneficial as it is an aspect of the fashion
industry that still hasn’t been explored much.
5. Efficient integration, the supply and production of Nike’s products depend on independent
manufacturers. The brand can either acquire a few of these or make some of its own for a
more efficient and streamlined supply chain.

5
 Nike’s Threats – External Strategic Factors
1. Nike is facing strong competition from Adidas, Puma, Reebok and many others. Although,
Nike is dominating the athletic industry, competition and new emerging brands are still
potential threats to the company. With higher competition ratio, Nike has to spend more
money on marketing and advertising. Nike spent almost 3.5 Billion dollars specifically on
marketing in 2018. To overpower competition, Nike’s safest bet is to design innovative
products that are tailored according to the needs of athletes.
2. Consumer preferences is dynamic due to technology and many choices.
3. Currency fluctuation and interest charge is another treat that Nike will suffer. Since the
brand operates globally, it is affected by fluctuating foreign exchange rates. Nike reports
its financial earnings in U.S dollars. This affects its revenue as the U.S dollar is exposed to
volatility against other financial currencies.
4. Piracy of footwear could decrease sales and adversely affect Nike's image. Counterfeit
products can significantly affect the revenue and reputation of Nike. The company deals
globally and the risk of counterfeit products has become higher. A number of
merchandisers and retailers offer counterfeit Nike products at lower prices. The low-priced
products are made from low-quality materials but still have the Nike label. This can tarnish
the image of the brand as the customers might feel that Nike has started producing products
that have low quality.
5. Political un-rest in the supplier countries, due to coup, new legislation, rules and
regulations.
6. Ongoing challenges in import and export duties.
7. Negative image created by the sponsored athletes.
8. Negative image due to “sweatshops”.
9. Increase in the price of raw materials.
10. Marketing budget pressure, companies like Under Armor and Adidas are spending more
on marketing and advertising campaigns, increasing the pressure on Nike.

6
STAGE I: THE INPUT STAGE

EXTERNAL FACTOR EVALUATION FOR NIKE (EFE)

EFE (External Factor Evaluation) matrix is the strategic tool used to evaluate external
environment or macro environment of the firm including economic, social, technological,
government, political, legal and competitive information.

External Factor Evaluation Matrix

Key External Factors Weight Rating Weighted
Score
Opportunities
1) Product development 0.20 4 0.8
2) Building strong worldwide brand 0.09 3 0.27
3) Increased female participation in athletics 0.09 3 0.27
4) New technology and innovation to stay on top 0.09 4 0.36
Threats
5) Continuing challenges in import/export duties 0.10 2 0.2
6) Strong competition from some of the brands 0.09 2 0.18
7) Negative image due to "sweatshops" 0.08 4 0.32
8) Increase in the price of raw materials 0.09 3 0.27
9) Negative image created by sponsored athletes 0.09 2 0.27
10) Nike will face threats from pressure groups 0.08 3 0.24
Total 1.00 3.18

The weighted score of EFE matrix is 3.18, which is more than average. It shows that Nike is
performing up to the mark to avail the opportunities and avoid the threats from the market.

7
INTERNAL FACTOR EVALUATION FOR NIKE (IFE)

IFE (Internal Factor Evaluation) matrix is the strategic tool used to evaluate the company’s
internal strength and weakness to identify the company’s abilities against the competitors to
win the business game.

Internal Factor Evaluation Matrix

Key Internal Factors Weight Rate Weighted
Score
Strengths
1) Nike is world's largest sports items producer 0.08 4 0.32
2) Customer loyalty 0.05 3 0.15
3) Nike is strong at research and development 0.08 4 0.32
4) Nike is a very competitive organization 0.05 3 0.15
5) Nike is a global brand 0.05 4 0.2
6) Innovative designs 0.02 4 0.08
7) Nike strongly controls over its own distribution channels 0.05 3 0.15
8) Customization availability 0.08 4 0.32
9) Nike is strong in marketing 0.02 4 0.08
10) Diverse portfolio 0.05 3 0.15
11) Strong financial position 0.05 3 0.15
12) Nike doesn't own any factories 0.05 3 0.15

Weakness
13) Nike only concentrates on youth and young adult market 0.12 2 0.24
14) Lack of stores serving females 0.08 2 0.16
15) Heavy dependence on footwear sales 0.10 2 0.20
16) Issues with Footlocker 0.07 2 0.14
Total 1.00 2.96

The total score of IFE matrix is greater than average score, which indicates that the company
majorly focuses on its strengths and is in ability to overcome the weaknesses.

8
 COMPETITIVE PROFILE MATRIX (CPM)

NIKE ADIDAS PUMA

Critical Success Weight Rating Score Rating Score Rating Score

Factors
Advertising 0.1 2 0.2 3 0.3 3 0.3

Product quality 0.08 4 0.32 3 0.24 2 0.16

Price competitiveness 0.08 2 0.16 3 0.24 1 0.08

Management 0.06 3 0.18 3 0.18 2 0.12

Financial position 0.08 4 0.32 3 0.24 1 0.08

Customer loyalty 0.05 3 0.15 2 0.1 1 0.05

Global expansion 0.05 3 0.15 3 0.15 2 0.1

Market share 0.08 4 0.32 2 0.16 1 0.08

Technology 0.09 4 0.36 3 0.27 1 0.09

Brand recognition 0.1 4 0.4 4 0.4 3 0.3

Portfolio diversification 0.08 3 0.24 4 0.32 2 0.16

Product positioning 0.09 3 0.27 3 0.27 1 0.09

R&D 0.06 4 0.24 3 0.18 1 0.06

Total 1.00 3.31 3.05 1.67

Here, we are comparing Nike with its major competitors, Adidas and Puma. Nike faces tough
competition from a number of companies, and here we can identify particular strengths and
weaknesses from Nike's major competitors. Nike’s weighted score is 3.31, which is more than
that of its major competitors, indicating Nike’s better performance.

Adidas and Puma offer products that are so similar to those provided by Nike. The direct
competition of Nike has always been the sports brand Adidas. The products provided by Nike
and its competitor Adidas are used for same purpose and are substitutes, so Nike is facing a
tough competition from Adidas. Nike has a market capitalization of around $132.6 billion and
Adidas has a market capitalization approaching $49.4 billion as of April 2019. Adidas acquired

9
the Reebok firm, a substitute brand of sporting goods, this decision was made in order to topple
the market leader. However, Adidas has never been able to pass the figures of Nike. Another
competitor, Puma does not compete strongly with these brands. Their products are also
substitutes, but it does not has a wide range and variety. In 2019, the global market
capitalization of the Puma Group amounted to about 10.2 billion euros.

10
 STAGE II: THE MATCHING STAGE
NIKE'S SWOT MATRIX
Following is the SWOT analysis for the brand Nike using the previously mentioned strengths,
weaknesses, opportunities and threats.
STRENGTHS (S)
 Strong brand recognition. Nike is a global
brand. Growing international presence.
 Nike is strong at research and development.
 Nike is a very competitive organization.
 Innovative designs.
 Nike strongly controls over its own distribution
channels.
 Customization availability.
 Nike is strong in marketing. Successful
marketing campaigns.
 Great celebrity spokespersons.
 Diverse portfolio and customer loyalty.
 Strong financial position.
 Nike doesn't own any factories.
 Internet sales.
OPPORTUNITIES (O)
 Nike's product development offers many
opportunities.
 Growing e-commerce’s positive effect.
 Customer use of products as a fashion item.
 The company might also be developed globally,
building upon its strong worldwide brand
identification.
 Women demand for athletic footwear and
clothing is increasing.
 New technology and innovation to stay on top
of market needs.
WEAKNESSES (W)
 Negative image portrayed by poor
working conditions in its overseas
factories.
 Market is becoming saturated and
consumers may become sick of Nike
brand and move to other smaller, more
individual brands.
 Nike only concentrates on youth and
young adult market.
 Lack of stores catering to the active
females.
 Heavy dependence on footwear sales.
 Issues with Footlocker.
THREATS (T)
 Continuing challenges in import/export
duties.
 Strong competition from some of its
major challengers in all branches of the
business. Competitors which copy
company’s business model.
 Negative image due to “sweatshops”.
 Increase in the price of raw materials.
 Negative image created by the
sponsored athletes.
 Nike will always face threats from
pressure groups and human rights
campaigners over fair trade and wages in
the third world, which can potentially
damage brand and customer loyalty.
11
According to David (2009), ''SWOT Matrix is an essential matching tool that assist managers
develop four kinds of strategies: SO means strengths-opportunities Strategies, WO means
weaknesses-opportunities Strategies, ST means strengths-threats Strategies, and WT means
weaknesses-threats Strategies''.
SO Strategies
 With the help of brand image and
effective research and development,
Nike can focus more on growing E-
Commerce and can develop new
products (S2, S3, S5, S7, O1, O4)
 Market development (S1, S5, O1, O2)
 As Nike's brand name is so familiar
worldwide, it can reach new and
emerging markets. Nike can boost its
international presence by enhancing its
online reach and availability via social
media platforms and e-commerce
websites. (S1, O1, O2)
 Since women’s demand for clothing
wear is increasing, the company can use
this opportunity to showcase its
collection for women wear via good
celebrity endorsements (S6, O3)
 The brand can create unique marketing
strategies focusing on leisure activities
(S8, O4)
ST Strategies
 Alternative brands. Nike should take
advantage of its exceptionally strong
brand recognition capacity and
distinguish itself easily from brands
who imitate Nike’s business model (S1,
S2, S5, T1)
 Market penetration (S6, S2)
 Backward integration (S2, T5)
WO Strategies
 Product development (W3, W4)
 Nike uses contracts for manufacturers
that makes difficult to control quality of
its products, it should in-house
manufacture to control the quality of its
products (W1, W4, O2)
 As international trade is on a rise, Nike
should switch its manufacturing units to
a place where there are fair
employment practices (W5, O5)
 Nike stores should focus more on
catering to the needs of women as there
is a surge in the demand of women wear
(W7, O3)
 Nike is heavily dependent on footwear
sales, so it should produce new other
items (W3, O2, O5, O4)
WT Strategies
 Innovative Products (W3, T1, T2)
 Nike is currently facing strong
competition, because of its negative
image due to "sweatshops". While
finalizing the location for
manufacturing units in a country, the
brand needs to keep in mind the labour
unrest of the country (W5, T8)
 Market is becoming saturated and
consumers may become sick of Nike
12
  Nike is financially strong, so it can brand and move to other smaller, more
defeat its competitors by constant individual brands (W9, T1)
research and development, invention
and innovation (S2, S3, S5, T1)
 The global presence of the brand should
be so efficient that fluctuations in
currency should have minimal effect on
the brand’s presence (S1, T3)

BCG MATRIX
When a firm’s divisions compete in different industries, a separate strategy often must be
developed for each business. The Boston Consulting Group (BCG) Matrix and the Internal
External (IE) Matrix are designed specifically to enhance a multidivisional firm’s efforts to
formulate strategies.

The BCG Matrix graphically portrays differences among divisions in terms of relative market
share position and industry growth rate. The BCG Matrix allows a multidivisional organization
to manage its portfolio of businesses by examining the relative market share position and the
industry growth rate of each division relative to all other divisions in the organization.

BCG matrix (also referred to as Growth-Share Matrix) is a portfolio planning model which is
based on the observation that a company’s business units can be classified into four categories:
 Cash Cows
 Stars

Product Market Market Market Relative Revenue Revenue Profit Profit

Division Growth Share Share Market in billion % In %
of Nike of Share billion
in Adidas
% in %
Footwear 5% 26.94 21.1 1 22.2 67.4 1.12 50.5
Apparel 4% 18.3 6 1 10.7 32.6 1.1 49.5
Total 32.9 2.22
 Question Marks
 Dogs

The brand Nike which comes in the market of premium lifestyle brand. Its biggest competitor
is Adidas.

13
Data used:

The global athletic footwear is growing at a CAGR of slightly over 5.0% in 2019.
(Athletic footwear market, 2019)

Low
High

Industry
Market
Growth

Graph: The Larger circle display Nike’s footwear segment. The orange portion display its
profit percentage. The smaller circle displays Nike’s apparel segment. The green portion
represents its profit percentage.

Analysis
According to the required calculations, it can be seen that the pie chart is formed in the
‘Stars’ grid. This grid contains high growth and high market share. Star units are leaders in
the category. Nike is a star in athletic sports category. Its products are attractive as they are
located in a robust category and are highly competitive.

14
SPACE MATRIX

Financial Strength Rating is 1 (worst) to 6 (best) Ratings

1 Liquidity 6.0
2 Leverage 6.0
3 Working capital 6.0
4 Return on assets 4.0
5 Return on equity 4.0
6 Price per earnings 6.0
7 Earnings per share 5.0
Industry Strength Rating is 1 (worst) to 6 (best) FS Total 37.0
1 Profit potential 6.0
2 Extent Leveraged 5.0
3 Economies of scale 5.0
4 Growth potential 5.0
5 Financial stability 6.0
6 Resource utilization 5.0
7 Diverse Portfolio 5.0

Environmental Stability Rating is -1 (best) to -6 (worst) IS Total 37.0

1 Price range of competing products -2.0
2 Competitive pressure -2.0
3 Ease of exit from market -1.0
4 Successful and recognized advertising -1.0
5 Endorsement agreements -1.0
6 Price elasticity of demand -1.0
7 Risk involved in business -1.0
Competitive advantage Rating is -1 (best) to -6 (worst) ES Total -9.0
1 Market share -1.0
2 Global presence -1.0
3 Strong investor reputation -1.0
4 Technological innovation -1.0
5 Product life cycle -2.0
6 Customer loyalty -1.0
7 Control over suppliers and distributors -3.0
CS total -10.0
Sources: Perleybrook.umfk.maine.edu

15
Plot the coordinates
The sum of the elements in the same axis is derived to plot the coordinates. For example, sum
of average value of financial positions and stability position is taken to find the y-coordinate.
Similar thing is done for x-coordinate.
Financial strength Average: 5.29
Industry Strength Average: 5.29
Environmental Stability Average: -1.29
Competitive advantage Average: -1.43
X axis coordinate: CA+IS= -1.43+5.29=3.86
Y axis coordinate: FS+ES=-1.29+5.29=4

SPACE MATRIX

Conservative
Aggressive

Defensive Competitive

Analysis Nike’s major strength lies in its industrial position. Since it lies in the first quadrant,
hence it need to adopt aggressive market strategies like market penetration, market
development, product development, integration of all types like forward, backward, horizontal
and vertical , and diversification.

16
GRAND STRATEGY MATRIX

Rapid market growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Position Position

Quadrant III Quadrant IV

Slow market growth

Analysis Nike’s major strength lies in its industrial position. Since it lies in the first quadrant,
hence it has excellent strategic position, Concentration on current markets/products, Take risks
aggressively when necessary.
Potential Strategies:
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification

17
 IE MATRIX
The Internal-External (IE) Matrix positions an organization’s various divisions in a nine cell
Display.
The IE Matrix is based on two key dimensions: the IFE total weighted scores on the
X-axis and the EFE total weighted scores on the y-axis. The IFE weighted score of Nike is
2.96 which is shown in the IFE matrix, earlier in the document. The EFE weighted score is
3.18.
Grow and Build
Hold and Maintain
Harvest or Divest

IFE Scores
Strong Average Weak
3-4 2-2.99 1-1.99

I II III

High
3-4
NIKE

IV V VI
Scores

Medium
EFE

2-2.99

VII VIII IX

Low
1-1.99

Analysis
The intersection of x and y coordinates fall in the IInd cell. The products here can be managed
best by grow and build strategies.

18
MATRIX ANALYSIS
Alternative Strategies BCG IE SPACE GRAND COUNT

Forward Integration X X X 3

Backward Integration X X X X 4

Horizontal Integration X X X 3

Market Penetration X X X X 4

Market Development X X X 3

Product Development X X X X 4

Concentric X X 2
Diversification
Conglomerate X 1
Diversification
Horizontal X 1
Diversification
Joint Venture

Retrenchment

Divestiture

Liquidation

19
 STAGE III: THE DECISION STAGE (QSPM)

Backward Market Product

Integration Penetration Development

Key External Factors Weight AS TAS AS TAS AS TAS

Opportunities
1) Product development 0.20 2 0.4 1 0.2 4 0.8

2) Building strong 0.09 2 0.18 4 0.36 3 0.27

worldwide brand

3) Increased female 0.09 1 0.09 4 0.36 3 0.27

participation in athletics

4) New technology and 0.09 2 0.18 1 0.09 4 0.36

innovation to stay on top

Threats
5) Continuing challenges 0.10
in import/export duties

6) Strong competition 0.09

from some of the brands

7) Negative image due to 0.08 3 0.24 2 0.16 1 0.08

"sweatshops"

8) Increase in the price of 0.09 3 0.27 1 0.09 2 0.18

raw materials

9) Negative image 0.09

created by sponsored
athletes

10) Nike will face threats 0.08

from pressure groups

Total 1.00 1.36 1.26 1.96

20
 Backward Market Product
Integration Penetration Development
Key Internal Factors Weight AS TAS AS TAS AS TAS
Strengths
1) Nike is world's largest 0.08 3 0.24 4 0.32 2 0.16
sports items producer
2) Customer loyalty 0.05 1 0.05 4 0.20 2 0.10
3) Nike is strong at research 0.08 2 0.16 1 0.08 4 0.32
and development
4) Nike is a very competitive 0.05 2 0.10 3 0.15 4 0.20
organization
5) Nike is a Global brand 0.05 2 0.10 3 0.15 1 0.05
6) Innovative designs 0.02 2 0.04 1 0.02 4 0.08
7) Nike strongly controls over 0.05 4 0.20 2 0.10 1 0.05
its own distribution
channels
8) Customization availability 0.08
9) Nike is strong in marketing 0.02
10) Diverse portfolio 0.05 2 0.10 1 0.05 4 0.20
11) Strong financial position 0.05 3 0.15 1 0.05 4 0.20
12) Nike doesn't own any 0.05 4 0.20 1 0.05 3 0.15
factories
Weakness
13) Nike only concentrates on 0.12
youth and young adult
market
14) Lack of stores serving 0.08
females
15) Heavy dependence on 0.10 1 0.10 3 0.30 4 0.40
footwear sales
16) Issues with Footlocker 0.07
Total 1.00 1.44 1.47 1.91
Sum TAS 2.8 2.73 3.87
Priority 2 3 1

21
Analysis: From the QSPM Matrix above we can see that Product development has a highest
STAS of 3.87 followed by backward integration (2.8) and market penetration (2.73)
simultaneously. Since, Product development has highest Sum Total Attractiveness Score it
should be first Priority.

CONCLUSION
Nike is the world’s largest sports shoe and apparel brand which has focused on product
innovation and marketing for growth. Its excellent marketing capabilities have helped it
outshine among the crowd of brands. Nike has gained a competitive advantage over its rivals
such as Adidas and Puma. This is achieved through giving consumers a greater value and
offering high quality products.
Nike’s e-commerce websites are now active in 45 countries. However, despite its international
growth, the brand depends heavily on US market for revenue and income. A stronger US dollar
and regulatory pressures are some of the most important threats before Nike. Competitive
pressures against the brand have also kept growing. We can say that Nike has to maintain its
position in its existing market and grow in the new markets to increase or maintain its EPS and
Return on Invested Capital. If Nike wants to maintain its market leadership it has to focus its
strategies on product development to provide its loyal customer base with new, captivating and
innovative products. Along with product development, Nike also has to penetrate new and
emerging market if it wishes to grow be number one in its industry. Furthermore, the strategy
to implement on new products and new markets will be a new gate for Nike to break boundaries
that any other footwear company has done.
It can also try backward integration since it is heavily dependent on independent manufacturers
down its supply chain. Apart from these things, Nike must focus on the customer experience
in its stores and on its websites to improve it using modern technologies like AI.

22