A Project Report

on

SPORTS APPARELS

PUMA
Submited By:(Group No. 5) PGDM-IB
Apurva Bhardwaj (207) Namisha Choudhry (228) Prateek Jaiswal (240) Pratichi Dixit (241) Prerna Karwa (244) Rashmi Sharma (248) Rohit Saha (249)

INTRODUCTION
Sportswear has become a big market today with most of the people showing their interest in sports during their leisure or free time. Now-a-days sports apparel scenario has seen a major makeover with new fabrics being introduced that provide better fit, more comfort and are even fashionable. Apart from apparels, even the footwear trend is changing with the new technological advancements. Sports have become so popular recently that sportswear industry has wide range of options for everyone including from kids, college students to men and women. Having sportswear for children may make them feel special and just as important as the adults. Their attire usually consists of many colorful things just to spice up there sports dressing. Sometimes these colorful spiced up dresses may even inspire some of the young kids to get into sports. With over 40% of female fans interested in sports and increasing number of women athletes, it is very important to have right clothing for them. Most of the stores today offer a complete line of women and girls sports apparel or you can even shop on-line. Recently even the men sportswear has seen a major change with the changing trends. Sports wear are improving with the new technologies and they have become lightweight, durable that offer protection to the wearer as well as provide utmost comfort in any type of condition. Sports apparel today is not only designed for function but most garments today also employ designs that make them more fashionable. Nowadays, its common to designers catering to various segments as and when need arises. So, its only natural to find that under the sports apparel banner, one will find apparels for kickboxing, karate, yoga, tennis etc. you name it; you would find it. Designers are now making their mark by making sports apparel extremely fashionable. No longer are they the same old boring designs. It is now very fashionable to sport designer label when trying to shed that extra weight and get into shape. Sports apparel is now available in all sizes for the extra small woman to the extra tall who is over 5 ft 10 to 6 ft tall. A lot of work goes into the making of sports apparels. They not

just about color and design and being trendy, but also about look, fit and comfort.

Here are a few tips to remember while choosing sports apparel. When you need gear for running, it is ideal to find something other than cotton, as it would lead to chafing as cotton absorbs moisture. Running shorts, tights, and socks are what is needed to make sure the base layer keeps you dry in the long run. Of course, a comfortable pair of running shoes has to go with the apparel. For Golf, one just needs trousers and T -shirt as comfort plays an important part. Nowadays chinos and shirts have made the grade as golf sports apparel. Sports apparels normally sport a combination of numbers, symbols and prints. Colors are normally fresh red, white or blue. They include football sweats; mesh knits, T-shirts, cardigans and hooded styles. Most Sports shops and Malls in India sell sports apparels. Ludhiana, in North India is famous for it's sports apparel industry.

BACKGROUND
Out of the Gym, into the Street, Sports Apparel Has Become a Big, Growing Business. Sports apparel is no longer confined to gyms. In fact, leisure apparel, especially for women, and increasingly for teenagers, has become one of the hottest lines in the garment industry. Last year, the nation’s specialty and department stores rang up U.S. retail sales of sports apparel totaling $43.7 billion, representing 22.8% of the overall clothing market, and increasing 5.6% from 2005, a 40% faster improvement than the rise in overall apparel sales. “The steady growth of athletic-style clothing has forced clothing designers to change the direction of their overall lines to include a broader selection of sports-inspired looks”. Sports apparel now includes casual sports clothing, active sports clothing and licensed sports clothing, and range from basic and inexpensive socks to high-end designer labels. “Consumers are demanding sports apparel and sporting accessories that possess a blend of fashion, function and performance” “However, the largest challenge facing sports apparel companies will be gaining market share in an already maturing market.” “It’s important to also recognize that despite its size and growth, the sports apparel market remains highly fragmented, with the leader – Nike, Inc. – having only a 3.8% market share, and it scales down sharply from there”. “Moreover, consolidation is becoming significant, driven primarily by the need for economies of scale in dealing with suppliers stretched around the globe. The industry has also increasingly become the focus of private equity firms.” The study also points out that with functionality and versatility being so important, vendors have responded with stylish clothing for both men and women to go from the gym to the streets: “World-famous apparel designer John Varvatos has partnered with legendary sports company Converse to design a line of shoes and clothing in an effort to reinvigorate the ‘retro’ brand. Actress Scarlett Johansson has lent her name and input to help design a women's line for Reebok, while actress Eva Longoria recently signed on to be the new face of Bebe Sport (Nasdaq: BEBE). Clothing designer Stella McCartney,

ranging from organic cotton to enhanced natural sourced fabrics. • • Stylish sports wear that is now fashionable in chic restaurants as well as gyms. Growth of women in sports. the gym.” . says the report. And niche players. with both major manufacturers and a slew of smaller companies actively serving particular niches. lends her design expertise and her name on everything from yoga gear to ski pants for global sporting goods giant Adidas (DB: ADS). are: • High-tech clothing that has the ability to reduce the potential for injury or discomfort. Expanding demand for eco-friendly clothing. which is an explosive driving force because of its introduction of advanced performance compression garments that keep muscles warm to lessen chance of injury. dynamic market. while the amplified focus on style necessary for such items allows manufacturers and retailers to charge significantly higher prices”. such as Under Armour (NYSE:UA).” Particularly fast-growing. sports apparel has become a diverse. Among the major trends spurring the growth in sports apparel that can be pointed out. • • Sports apparel is no longer just functional. The expansion of overall usage contributes to increased spending on fitness products. trail running and other rugged outdoor activities. is the number of brands creating crossover lines that may not even be sold through traditional sport goods channels.daughter of the famous former Beatle. are providing technological advancements in clothing that are not only feasible but marketable. “Crossover wear is a primary driver behind the growth of fitness apparel sales relative to overall clothing sales. “With prices ranging from bargains to high end. particularly in canoeing. The fact that consumers are embracing low-maintenance life styles and sports wear. Consumers are willing to wear these new fitness products outside of their traditional location. again while maintaining a fashionable image. but has become a staple of everyday wardrobes. along with “smart fabrics” that help the wearer in their exercises by acting as a heart rate monitor.

Fashion element and design content was minimal in the pre-1990s. There are some 12 million retail outlets in India. Charagh Din. The preference for the branded Western and Indo-western apparels among the working women is on the rise. Proline and Snowhite. At the turn of the century some retailers would have a storefront where people could browse. women’s apparel market is 17 percent of the total apparel market in India. the country is also dotted with low-cost kiosks and pushcarts. Shopper’s Stop and Pantaloons. Over the past couple of years there have been sweeping changes in the general retailing business. Kids’ apparel market is 37 percent of the total apparel market. which is a welcome relief for the manufacturer and retailers of branded apparel. mainly in apparel retailing which was once strictly a made-to-order market for clothing has changed to a ready-to-wear market. Being the brand penetration in this segment lowest at 9 . Park Avenue. picking the color. The retail sector is the second largest employer after agriculture in the country and also the second largest untapped market after China. Recently. Flipping through a catalogue. Liberty. size and type of clothing a person wanted to purchase and then waiting to have it sewn and shipped was standard practice. etc have intensified the competition with their professional retail chains like Westside. Preference for readymade garments is increasing and this has become inevitable with the rise in urbanization. has come of age. Big players like Tata. Men’s apparel market is 46 percent of the total apparel market in India. Biyani. India is increasingly being looked upon as a major supplier of high quality fashion apparels and Indian apparels have come to be appreciated in major markets internationally. Organized retailing is only 2% of the total retail industry. Double Bull. Besides. which was traditionally dominated by small and family-run stores. Raheja. and new pieces being sewn or customized in the back rooms. The dressing habits are getting refined if not changed specifically among the working women.CUSTOMER BEHAVIOUR The Indian retailing industry. Puma. Among the few players who have been catering to the branded market are Reebok. Nike. owing mainly to the lack of national level brands. Adidas. It took a quite long time for brands such as Allen Solly and Van Heusen to create a respectable market share in the ready-to-wear market. Whereas.

SWOT analysis and Supply chain management are provided in this report. . have moved into other industries . Men’s wear. India is being perceived as the next country with the biggest 'Growth Potential' due to its cheap manpower and natural resources. and wants to grow the apparel export business. since it is a major earner of foreign exchange. Taiwan.partly because more industrialized countries like Korea. etc. Michael Porter’s 5-forces analysis. The following report covers various aspects of apparel retailing in India.g. Then there will be lot of demand in the western countries. which includes manufacturing capabilities and exports market. After China. Extensive analysis of consumer behavior while purchasing different apparel categories. The first decade of the 21st century will witness India as the major player in the apparel business .percent shows a lot of potential for the branded players to exploit this segment. Women’s wear and Kid’s wear. The apparel market will be thrown open to competition in the year 2005. The report covers trends and expected market sizes of different product categories e. starting from global overview to future outlook of Indian apparel market. The details of major retailers and their financial dynamics have also been discussed in the report. due to expiry of Multi Fibre Agreement. It also provides an in-depth study of current Indian apparel market scenario.and partly because the Indian Government believes in.

apparel offerings at retail in 2009. These consumers exercised an average of 3. Consumers also appreciate the versatility of athletic apparel.5% by 2014. Nearly half (46%) of young consumers (aged 13 to 24) said they wore athletic apparel to school or class. wearing it for non-athletic purposes as well. from $13. According to Just-Style. as over two-thirds of U. while their elders were more likely to walk or hike.S.3 billion. To gain insight into this growing market. and is projected to grow another 8.S. Women were more likely to participate in walking and cardio training. while men were more likely to weight train. according to Cotton Incorporated’s Lifestyle Monitor. As might be expected. 54%).S. Cotton Incorporated conducted a national survey of consumers who had bought athletic apparel within the past year and who reported exercising regularly. based on data from Cotton Incorporated’s Retail Monitor. Women were more likely to wear athletic apparel while running errands (61%). accounting for 13% of total U. consumers exercise at least once a week. they are willing to pay full price for its functionality — the Retail Monitor found that athletic apparel was significantly less likely to be offered “on sale” than non-athletic clothing (46% vs. to $15. athletic apparel market grew an estimated 8.5% from 2003 to 2008. . Only 13% of respondents said they wore their athletic apparel only for exercise. the U. and differences in exercise frequency by gender and age group were small. the vast majority wear it for other purposes as well. Although consumers buy athletic apparel to wear when exercising. whereas men were more likely to wear it out to lunch or a movie (22%) or to work (15%).8 days a week. Furthermore.1 billion. Consumers were asked how they purchased and used athletic apparel and their attitudes towards its features.Athletic apparel is an important and growing product category. Athletic apparel appeals to a wide range of consumers. younger consumers (aged 13 to 24) were more likely to run. dance.0 billion to $14. and play organized team sports. while 80% reported wearing it around the house.

followed by fit (16%). consumers cared most about fit/comfort. When asked what they liked about their current favorite athletic garment. These same factors drove their purchases when asked their main reason for buying a particular athletic garment. followed by price (14%) and performance features (12%). 44% cited fit/comfort.The most popular retail channels for athletic apparel were mass merchants and sports retailers (29% each). the number-two factor among those who shopped at mass merchants was price (20%). 4%). it is not surprising that consumers look for the same key features in these garments as they do in other types of apparel.KEY FEATURES: COMFORT AND FIT Given the versatility of athletic apparel. while those who shopped at sports retailers were more likely to care about performance features (19%) than price (8%). 39%). However. 9%). while men cared more than women about performance features (15% vs. consumers cited comfort/softness first (47%). . Regardless of retail channel. Women cared more than men about fit/comfort (49% vs. and the youngest consumers (13 to 24) cared more about style than did older consumers (11% vs.

ATHLETIC APPAREL OFFERS VERSATILITY % of consumers who wear athletic apparel for other purposes* Around the house 80 Running errands 58 Shopping 34 Lunch/movie 18 School/class 16 Exercise only 13 Work 10 *Consumers could cite more than one activity. S EGMENT TIONON TH B ISOFPURPOS A E AS E RUNNING ERRANDS SHOPPING LUNCH/MOVIE SCHOOL/CLASS WORK EXERCISE ONLY FAVORED FORMS OF EXERCISE % of respondents who participate in each activity* Walking 58% Cardio training 46% Weight training 44% Running 33% .

Nearly a third of consumers (31%) said they avoided certain fibers when buying athletic apparel. the Retail Monitor found that only 38% of athletic apparel offered at retail contained cotton. PERFORMING UP TO EXPECTATIONS? . most consumers cited comfort (87%) and softness (86%). A key piece of information they glean from labels is fiber content. the comfort of cotton makes it consumers’ favorite fiber to wear when exercising. and performance features but with different fiber content. However. followed by durability (77%) and good fit (77%). When asked what attributes best described cotton athletic apparel. In contrast. most consumers chose cotton (76%) over polyester (12%) or nylon (12%). style. and 64% said that the information provided on labels was likely to influence their purchases. When asked to choose among three athletic apparel products with the same price. and the most-avoided fiber was polyester (35%) — the main reasons being that it was uncomfortable. was too hot.COTTON FOR COMFORT Consumers shopping for athletic apparel like to make informed purchase decisions 77% said they were likely to read labels. despite consumers’ interest in cotton athletic apparel. and didn’t breathe.

Over a third (35%) said they had purchased athletic apparel with a feature that did not perform as expected.In a market dominated by synthetic fibers. Consumers love cotton for its comfort. Of the 35% of athletic apparel offering performance features. Most consumers ( 93%) said they would be upset if they bought a garment for a specific performance feature and it failed to perform. and 90% said they would not purchase the brand again. Dissatisfied customers signal market opportunities. When asked whether they would purchase cotton athletic apparel. % offering each feature* Moisture wicking 67 Quick drying 27 Waterproof/resistant 23 Wind resistant 11 Temperature control 11 Anti-microbial 7 Odor resistant 1 S EGMENT TIONON TH B ISOF A E AS PERF ORMANCEF TURES EA MOISTURE WICKING WATERPROOF TEMPRATURE CONTROL ANTI-MICROBIAL ODORRESISTANT QUICK DRYING PRIMARY SURVEY: DATA FROM STORE MANAGERS OF DIFFERENT RETAIL OUTLETS . only 3% of consumers said they were satisfied with their synthetic performance athletic apparel. and they like the idea of cotton athletic apparel with performance features.

puma and nike. it has got 42 different technologies used to produce the items. their target customers. the manager said that this company uses various technologies in its products which help them creating products according to the need of various people. and 55% from foot wears. This particular data that we collected includes the information about how they manage their outlets. NIKE This showroom has average monthly revenue of around Rs. Till now. we came to know that this brand is known for its comfort level. who play a very key role when it comes to sports apparels category. The following is the information that we collected. 40% from apparels and 10% from accessories. The data was collected by asking a few questions to the store manager. So it easily targets all types of people. The main purpose behind this study was to know the various strategies that the different brands follow. adidas. When asked about their USP. reebok. REEBOK After talking to the store manager we came to know that this showroom’s average monthly revenue is around Rs. The stocks that they have in their . This company concentrates on the collection for women and kids as well. The prices of its products are higher than other brands like adidas. When asked about the USP. they are reebok. The pricing strategy of adidas is almost the same but that of nike is a bit higher. their unique selling point (USP). we see that REEBOK has its main part of revenue from foot wears. The breakup of their revenue as per our survey made is like this: 50% from foot wears. They consider adidas and nike as their main competitors. So. It focuses a lot on the comfort zone of its customers. Noida.Our group has done a survey in which we had been to the various retail outlets of different brands in the Great India Place. 30 lacs. their average monthly revenue. 15 lacs. This survey includes data about 3 major companies. But still these companies stand as a competition for nike. 10% from accessories. The breakup of the sale is: 25% comes from apparels. etc.

pullovers. Their main aim is not to compete with other sports brands. Puma has targeted customers of every age equally. Their main focus is on status and style. their USP.). All the customers are made aware of this club and they can join in that club. suggestions. Their target customers mostly include the youth. They do not specifically target a particular age group. 20% from shorts. They give the most importance to the comfort level of the customers and that also becomes their USP. PUMA This brand is mostly considered as a lifestyle brand. etc. This activity also gives them an opportunity to be in regular contact with their customers. The average monthly revenue of this particular showroom is Rs. They have also been providing a very good after sales services to their customers. about their products being a part of that club. On the other hand the revenue break up as per the items is: 55% foot wear. Their target customers are of all age group. their revenue break ups. The prices of the products are higher. 20% from collar t-shirts. The main aim was achieved as to understand the various strategies that these brands use. They provide a feeling of high lifestyle to their customers. 30 lacs per month.showrooms keep changing every 3 months and they keep bringing in new and fresh stocks. Their revenue break up as per the items for male and female is 65:35. They consider nike and reebok as their main competitors. This was all about the survey of the outlets . and 10% accessories. 37 lacs. 20% from t-shirts. This was the total study that we made on the retail outlets of various brands. The customers can provide their feedbacks. ADIDAS The data collected about adidas showroom says that their average monthly revenue is around Rs. There is a club called adiclub opened by adidas for its customers. 10% from accessories and 15% from others (jackets. 35% apparels. etc. Their revenue break up goes like this: 15% from track pants. etc. Their main focus while making their products is comfort.

in terms of revenue. attracting and retaining the right people is a challenge in a highly competitive job market. Retailers are willing to invest money in setting up showrooms but generally their understanding of retailing is poor. The top management had the belief and commitment that it would weather the initial loss-making years. Currently out of the 13 subsidiaries in Asia.The domestic demand was not high when the company started India operations. The merger with Reebok will strengthen adidas in India. It brought in Indian sports icons Sachin Tendulkar and Leander Paes to endorse the brand. . Focused approach to the market and support from parent company adidas entered India with aggressive marketing campaigns. However in India. cutting edge technology. Keys to success adidas’ success factors include strength in supply chain management. India was the smallest sub-division in Asia. The company believed that India had the potential to become a huge market considering India’s large young population and the changing demographics. Reebok has a larger share of the market. India provides advantages in terms of lower labor costs and a highly-skilled work force. adidas is significantly bigger than Reebok. before India could gain critical mass and become a profitable operation. In the first 9 years. However. The parent company has been very supportive. a strong retail network and effective advertising. India is ranked number 7 and the management believes it has the potential to climb up to number 3. In most countries.MARKETING STRATEGIES AND COMPETITION ADIDAS Entered India as part of global strategy Adidas decided to enter India as part of the company’s global strategy – to take direct control of the markets in Asia.

Realising the importance of localising its brand. Reebok has trained and certified more then 900 trainers till now. in December 2005. and increased brand awareness among the Indian sportswear customers. 1 sportswear company in the world. The Company's brand vision is fulfilling potential. Reebok roped in top Indian cricket players to endorse its brand. However. Reebok reaches out to its target customers through its 500 exclusive Reebok Stores. Headed by Managing Director Mr. Reebok swayed away with the lion's share of the Indian market. Subhinder Singh Prem. Reebok’s positioning is to celebrate individuality in sports and life. in spite of Nike being the No. While Nike was wasting dollars on promoting its brand through international sports persons. 200 Shop in the shop outlets & 2500 dealer outlets. Reebok grabbed the attention of cricket viewers across India by placing its logo on the bats of the Indian cricket players. its mission – Always challenge and lead through creativity.REEBOK Reebok started its operations in India in 1995. In an intensively competitive environment. which is dedicated to fitness instructors. Reebok India commands 40% market share in the premium sports wear industry. Reebok’s prime strategy was to associate itself with the cricket frenzy Indians. Reebok has introduced its internationally acclaimed fitness programs in India. . Comparison The entry of foreign players into the Indian sportswear industry post-liberalisation brought in a new sophistication. Reebok and Nike emerged as sportswear giants. Nike won the bid to supply official kit to the Indian cricket team. In spite of this. conducted under the banner of Reebok Instructor Alliance. Among others. personal trainers and health club owners. Kolkata and Bangalore and ranks at the top amongst international footwear companies in India. It plans to increase the store count from the existing 500 to over 600 before the next financial year. Reebok India has a pan-India presence with branch offices in Mumbai.

accounting for 50 percent of the sports footwear market alone. The industry of athletic apparel is vastly growing in today’s society. All of these . one must identify different issues. and future plans provided by the two companies.7 billion. the competition between companies. market.NEW BALANCE: A CASE STUDY vs. To compare which company has any possible competitive advantage over the other.NIKE . About Nike Nike is one of the largest sports apparel brands. With this rapidly expanding industry. Nike also has annual sales of around $13. controversies.S. is extremely fierce. such as New Balance and Nike. Nike leads the athletic footwear with an estimated 36 percent share of the U.

this is called Nike ID. Adverting and Marketing Strategies Nike is also extremely popular because they lead the industry in advertising and marketing strategies. Some collegiate teams include The University of . marketing strategies. Large Endorsers/Team Sponsorship To also help them establish a dominant name brand. Nike has sponsored many team sports such as collegiate teams and professional athletic teams. Competitive Advantage--Innovative Designs Nike gains competitive advantage over New Balance through innovative designs. Nike has endorsed many popular athletes and team sports. makes Nike extremely hard to compete with. Terrell Owens. Besides designing new shoes weekly. and more international recognition. to Nike without even thinking twice. along with the slogan “Just Do it”. Some of their key sponsorships are LeBron James. Nike is the biggest company to take advantage of this innovative technology. Along with individual athletes. and Lance Armstrong. Another way Nike remains ahead of its competitors is by anticipating customers’ desires and then supplying large orders based on these predictions. plus more discussed later. “…Nike has simply learned that young shoppers now demand ways to differentiate the products they buy and that the customization trend will only get bigger”. Since Nike has the largest sales they can afford to spend a lot of money on advertising. which largely gives them competitive advantage in this area. Consumers can pick their favorite colors and personally customize their own shoes. Michael Jordan. customers can also design their own shoes on Nike’s webpage. Nike is known for their innovative designs because they come out with a new model every week. All of these athletes have been hand picked by Michael Jordan to become a part of the subsidiary Nike brand “Jordan”. giving them competitive advantage. These quick recognitions to Nike make them a dominant name brand. The average American connects the “swoosh” logo.attributes. big endorsements. This connection is the magical work of marketing.

Even in respect with cultural relativism. However. factory workers are also being exposed to toxic fumes while producing goods. Nike has shifted their focus to soccer in order to gain more international acknowledgement. Even though currently Nike’s sales have been decreasing in the U. there has been controversy that Nike’s employees were not being treated fairly. has also made promises to improve the working conditions of their oversea factories. South Korea. For professional teams. most of it good.S. One of their embarrassing moments has been about their overseas factories. Nike factory workers are still forced to work an insane amount of hours per week. Nike is not treating their workers fairly because . Vietnam. Worldwide. and were also denied at least one day off during a week. workers reported being treated with physical and verbal “abusive treatment. In response to this harmful press. Nike employs around 650. Current Issues--Sweat Shops Quoting the founder Phil Knight. However. For example.. International Recognition For more international recognition. it seems these promises were made just to quiet the concern for sweatshops. Nike’s response to their declining sales in the U. Nike’s CEO and founder. This is due to the recent change in footwear taste. In some of their Asian factories. and others in Asia.North Carolina and Ohio State University. the average being 70 hours per week and are humiliated in front of their employees or threatened if they refuse.000 workers. was its acquisition of Converse. Nike sponsors teams such as Denver Broncos and San Antonio Spurs. such as retro styles. Nike has extended their sponsorship to other country’s sports. workers were denied access to toilets. These factories locations consist of China. drinking water during the workday. “A lot has happened at Nike in the 30 years since we entered the industry. Thailand. some of it downright embarrassing. Nike has a total of 700 factories that produce its footwear and clothing. their international sales have been growing.S. Nike has joined the Fair Labor Association which conducts independent audits designed to improve the standards across the industry.” In these same factories. Along with working too many hours. Phillip Knight.

“We attribute this success to our ongoing commitment to integrity. On behalf of the public. Kasky claimed that Nike made false statements of fact in letters to newspapers.Nike workers are not even paid enough to meet the most basic needs to tend for their families. About New Balance New Balance has a different perspective than Nike on how to run a company. it . Although it has had such a small budget and a low-key message. teamwork. This in effect. Kasky argues. performance and fit over fashion. Controversial Advertisements Another controversial issue with Nike has been their strategy of advertising. but which critics said glorified violence against women. Kasky filed suit against Nike for false statements. lately this kind of strategy has caused problems. investment in domestic manufacturing. technological innovation. and by being concerned first and foremost with producing high-quality performance products” . and our anti-endorsement philosophy. and total customer satisfaction. and other public documents about their working conditions and labor practices overseas. “NBC yanked a Nike ad in which track star Suzy Hamilton narrowly escaped a masked chainsaw killer – a commercial intended as a spoof on horror movies. press releases. Nike’s commercials have often been successful but have often come close to offending people. Their mission is broad but thorough in stating. Kasky argues that Nike did this in response to the public criticism of their alleged sweatshops in effort to encourage their customers to continue buying their products. We have remained true to who we are by remaining focused on manufacturing as opposed to marketing. is false advertisement and unfair competition. Suit Filed Against Nike Another recent issue to consider is a recent suit that was brought against Nike.” Historically. Nike has always produced edgy and controversial advertisements on purpose to attract the younger audience. unlike larger companies like Nike. However. New Balance has always relied on a small budget for advertising.

contrary to Nike. The population of people that range between the ages of 45-64 is growing by 16 million consumers. Doing this allows retailers to keep the New Balance inventory longer and not have to downsize in order to make more room for new products. Mike May explains the age issue when he says. New Balance strives to become the worldwide leader for high performance athletic footwear and apparel for the serious athlete. New Balance offers a unique variety to its shoes. Unlike other companies. “These people are incredibly passionate about sports. To help achieve a higher level of satisfaction for their customers. has a marketing strategy that is greatly based on age. The athletes and stars which larger companies like Nike use to advertise their products grow older and retire. Many companies always advertise to younger crowds. Its products appeal to an older (ages 35-59). Obviously. give New Balance a great outlook on the future. Great marketing strategies. and the ability to focus on age rather than popularity. shoes made for big and wide feet. it offers five different widths in shoe size (unlike the average of 3) and releases new products every 17 weeks (rather than the average 6). Globalization has had a high effect on companies such as Nike. while the age group that New Balance promotes to is growing in great numbers. Whether you win or lose is neither here nor there. that’s just not as important as it used to be” . the youthful age group in which Nike advertises to is falling. they have teamed up with . but a high amount of products made by New Balance are made in the United States. less fickle group of people. Function Over Fashion According to The Walker’s Warehouse. but it’s not high intensity. At 50. Marketing Strategy New Balance. Current Issues Recently New Balance is reported to be the fourth largest shoe company in the world. Total spending by consumers is falling among 25-44 year olds by $4. but what they don’t realize is that these younger crowds eventually grow up. New Balance focuses on function over fashion.is now one of the top athletic brands in the world.3 million this decade.

Eventually . In other current news. It seems that New Balance is more appealing to the more family-oriented target market and wants to do good for the community. because of Nike’s marketing strategies. New Balance has been fighting to stop a former supplier in China from making counterfeit shoes for domestic sales and export to Europe. However. The fact that Nike has a much bigger budget to work with and tends to meet the needs of customers more by allowing them to customize their own shoes. it is hard for New Balance to keep up with the competitive and always changing Nike. and Australia. Nike has a flaw in their marketing strategy by only appealing to the younger audience. New Balance is a growing company and we feel that with more brand recognition they will be able to compete even more with Nike. Currently. they try to contribute a little more. we still feel that Nike has a competitive advantage over New Balance. Conclusion Even though Nike has more negative controversy issues in the media than New Balance. It is also easy for the Chinese to copy the shoes because even though New Balance started out being an American company. In their larger cities where the plants are located. only helps Nike’s competitive advantage over their competitors. Recently. Along with making their mark in the press. Japan. and innovative designs.Hewlett Packard to implement new servers into their business to help with management and efficiency in the data center to get better organized. the company has moved in many directions. The Teen Health Initiative at the Allston-Brighton Oak Square Branch of the Greater Boston YMCA has been awarded a $500. particularly in China. Also.” The Chinese officials along with New Balance have recently confiscated the counterfeit “New Barlun” brand from retail stores in China because this brand is guilty of infringement on New Balances trademark. New Balance representatives are more worried about protecting the image and the brand more than anything. New Balance is very involved in their community. extending dominance in other countries. multiple endorsements of major athletes. This foundation is to increase the amount of exercise and reduce the risk of obesity and diabetes among teens.000 grant by the New Balance Foundation. The counterfeit shoe brand is calling themselves “New Barlun. This is another emphasis on how New Balance is more in touch with their community.

the decision makers have to determine whether the objective is attainable. Opportunities: external conditions those are helpful to achieving the objective. Threats: external conditions performance. in the future New Balance may have competitive advantage over Nike because of this. given the SWOTs. Weaknesses: attributes of the person or company those are harmful to achieving the objective. If the objective is NOT attainable a different objective must be selected and the . This is where New Balance’s marketing strategy will take effect because they appeal to the older target market by promoting function over fashion. Therefore.this audience will grow up.  Strengths: attributes of the person or company those are helpful to achieving the objective. A SWOT analysis may be incorporated into the strategic planning model. and discover different issues other than looks. First. Brands REEBO K ADIDAS NIKE OTHERS SWOT Analysis Meaning A SWOT analysis must first start with defining a desired end state or objective. which could do damage to the business's    Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.

000 people worldwide. 2004. It is particularly helpful in identifying areas for development. Inc is listed in NYSE and positioned as a US headquartered worldwide sportswear trader and supplier that: Contracts with about 700 shops worldwide. Vietnam. and Malaysia. SWOT Analysis of Nike Strengths • Nike. Starter athletic clothing. Thailand. India. Leads its international business operations through acquisitions and re-branding: Converse Inc. runs offices in 45 countries. Pakistan. Taiwan. weaknesses. • • • • Belongs to Fortune 500 companies which 2007 total revenue exceeded 16 b. USD Employs more than 30. 2008. Owns strong marketing strategy under Nike brand that assumes the involvement of world top-class athletes and sportsmen in Nike’s ‘Just do it’ advertising campaigns. 2003. Indonesia. and manages factories in China.process repeated. . The SWOT analysis is often used in academia to highlight and identify strengths. Umbro. Philippines. • • Operates a chain of Nike town retail stores. opportunities and threats.

• Nike’s premium brand is used to manufacture and promote a wide variety of products for all types of sport-oriented and leisure activities. involving child labor. • . Forced Labor applications in partnering apparel factories in Malaysia. especially in free trade zones where. Indonesia. Contracts overseas companies that apply non-transparent and inadequate labor regulations. Violated overtime laws minimum wage rates and in Vietnam. Emphasis on corporate marketing strategy through the promotion of corporate brand and sponsorship agreements. 1996 Provides poor working conditions. • • • • • • • • Opportunities • • Producing sportswear products from manufacturing waste. which caused harsh criticism from CorpWatch and other companies. Contracts factories in Vietnam. and therefore the company is permanently striving to maintain its eco-friendly reputation. Some of Nike’s ads are associated with US female empowerment. Financial crisis may lead to job shortages in a number of Nike’s worldwide subsidiaries. China. • Threats • Textile industry adversely affects the environment. Mexico. Positioned as a permanent subject of criticism by anti-globalization groups. Nike was reported to apply child labor in Pakistan and Cambodia to produce soccer balls. In 1990s. Extension of eco-friendly projects like ‘Reuse-A-Shoe Program’ aimed at further recycling. Manages the US premier training program SPARQ Training Program. Applies lunarlite foam and fly wire materials to reduce the weight of manufactured shoes • • Weaknesses • Unwilling to disclose information concerning its partnering companies. involving forced Labor and poor living conditions. and tends to exploit cheap workforce overseas.

NIKE’s market share fell to 32. Beatles song. while Reebok currently comes second (2) in US sales in this area. on the other hand. Chinese-themed at. Many new sports conglomerates are attracted to this market due to high and promising profits. and equipment. Horror ad etc). since it is ranked number one (1) in US and International sales. NIKE is still considered to be the leader in the footwear industry.5% in 2002. PORTER’S MODEL FOR ANALYSIS OF COMPETITVE FORCES: NIKE Rivalry Rivalry in the apparel and footwear industry is very proactive. Another fast growing company Skechers. Minor Threat at.5% in 2002. However. is the fourth (4) largest US seller of athletic footwear and the second (2) largest globally. Skechers’ market share rose to 5. the latter of which is a privately held company. but compared to the top athletic footwear manufacturers such as NIKE. During the 1990’s. The ability to test and examine footwear products . Nike. NIKE controlled nearly half of the market. Barriers to Entry Product Technology NIKE has always striven to provide a competitive edge to foster the best possible performance in their athletes.• The company has experienced negative publicity feedbacks due to its extensive advertising in mass media (Kasky v. Once competitors started rapidly entering this market. has acquired a significant market share in the past few years. Reebok. and Fila USA. Solomon. apparel. Adidas-Solomon. Skechers is still a very small player in this colossal industry. This is the reason NIKE continues to lead innovation in footwear. NIKE faces only few competitors that come close to its size and product differentiation. The company’s major competitors include Adidas. Nevertheless.

Nike Sphere Thermal. where it carefully examines each of its new products. tennis. NIKE is already highly advanced in the Research and Development area. and provide comfort for athlete’s feet. Physiology (study of the integration of the body’s energy systems and responses to the environmental stresses). Specifically. and fencing. invests heavily in having researchers perform a number of scientific techniques to quantify their findings. NIKE continues to develop an array of innovative designs for different types of sports such as basketball. swimming. here is a list of some exams NIKE’s athletic shoes are tested for: ■ Motion Analysis (kinematics) ■ Foot-pressure Measurement ■ Ankle Range of Motion ■ Metabolic Cart ■ Heart-rate Monitors ■ Blood-work Proprietary Knowledge NIKE has invested and achieved the most amongst any other sports company in developing cushioning systems that reduce shock. which is a garment that serves as a thermal insulation.serves as one of the major barriers for any footwear company that considers entering the market. distribute pressure. Zoom Air shoes are very light and they are designed to bring the athlete’s foot closer to the ground to allow greater maneuverability. Three primary areas that researchers work on include: Biomechanics (study of human movement). usability and durability). golf. and Sensory/Perception (subjective evaluation of product attributes. The company’s scientists have also engineered a new model called “Zoom Air” for NIKE’s running shoe-line. which uses a special fabric that absorbs the sweat and then brings it to the . which is a double-brushed micro-fiber fleece that retains energy and resists heat loss. For the apparel category. NIKE is credited with being the first to design footwear that encapsulates air to cushion foot-strike. or Dry-FIT. Among numerous tests performed. NIKE Inc. NIKE operates its own Sport Research Lab. NIKE is also an expert in manufacturing highperformance fabrics that enhance athletes’ performance under various conditions. Nike Sphere Dry. volleyball. track-andfield.

Companies in the apparel and footwear industry that concentrate on manufacturing a single product are at a great disadvantage since their revenues depend . NIKE still holds a number of subsequent NIKE AIR patents. the company also has a trademark for the ‘Swoosh Design’ logo that identifies NIKE Inc. and thus makes it illegal for other companies to infringe upon the NIKE name. NIKE considers its name and the ‘Swoosh’ symbol to be the most valuable assets. The only competitor nearly has an identical business is Adidas-Solomon. therefore. Its name carries a trademark. NIKE is also leading the market. and patents that cover specific features in various athletic and leisure shoes that will not expire for several years. Production and Marketing. Besides the brand name. Another advantage of manufacturing a number of product lines is the reduction of risk in that if one product fails there are numerous other products to compensate for this loss. In fact. the company registered these trademarks in over 100 countries. “The process utilizes pressurized gas encapsulated in polyurethane.”1 Although some NIKE AIR patents have expired. Product differentiation is healthy in the footwear industry and allows the company to increase its profits through the sale of different products. and Design departments to maintain its competitive edge. Product Differentiation In terms of product differentiation. the company places a significant emphasis on its Research and Development. are few of the designs that NIKE engineered so far.surface of the fabric where it evaporates leaving the athlete’s skin dry. In addition. Brand Identity NIKE enjoys the popularity of its brand name. Patents One of the exclusive licenses that distinguishes NIKE from the rest of its competitors is the patented “Air” technology that the company uses to sell footwear. which is recognized all around the world.

timepieces. Specifically. it manufactures sports goods and accessories for three different groups of people: men. Each segment is carefully examined in terms of physical capabilities. and others in virtually every type of sport: running. are yet another way the company segments its product lines. . subsidiary manufactures and distributes ice skates.. aquatic activities. basketball. this product differentiation is accomplished through strategic management planning by having the company sell NIKE brand timepieces. such as NIKE watches or gym bags. bicycling. electronic media devices. The company segments its products in variety of ways. NIKE designs most of its footwear for athletic use. First of all. apparel.” To follow its mission. MANAGEMENT STRATEGIES NIKE’s mission statement is very straightforward. baseball. NIKE subsidiaries. accessories. football. wrestling. tennis. and other items. protective gear. as well as performance equipment. hockey sticks and many other licensed apparel and accessories that make NIKE stand out in its industry. In part. hiking. cheerleading. children’s clothing. in order to diversify its products. soccer. women and children. volleyball. bats. sociological needs. apparel. skates. such as Bauer NIKE Hockey Inc. therefore. increasing the potential default risk. fencing. in-line roller skates. eyewear. gloves. Besides the two segmentations described above. NIKE’s managers are concerned with elaborating on the strategies listed below: • Functional-level strategy: is directed at improving the effectiveness of operations within the company. NIKE also has agreements for licensees to produce and sell NIKE brand items aside from athletic footwear and apparel. golf. and others. NIKE is employing this strategy within its manufacturing.exclusively on the sales of only one type of product. skate blades. By referring to legendary track-and field coach Bill Bowerman’s quotation. NIKE states that the vision of their company is “To bring inspiration and innovation to every athlete in the world. however. Another type of segmentation used by NIKE that helps to increase product diversification is achieved by offering footwear. a large percentage of their products come from sales of footwear. including sport balls. school supplies. and accessories for casual and leisure purposes. and design preference. the Bauer NIKE Hockey Inc.

product differentiation. In FY2003. 2 Another key to success for NIKE Inc. Europe. product development. Virtually all footwear products are produced outside the United States. which helps NIKE reduce costs and increase product quality with new developments in technology. as well as. Independent contractors located in 35 countries manufactured the remainder. is its exploitation of the network structure. Thus. which allows it to replace the non-performing alliance partners that fail to meet NIKE’s standards with new partners. Middle East. NIKE is able to maintain its long-run profitability and even continue to grow within its industry because it produces what it knows best. Asia Pacific. Vietnam. Africa. NIKE depends heavily on Strategic Outsourcing.marketing. In addition. The Republic of China. the company works closely with its suppliers. 27%. thereby “killing” demand for competing companies. 18% and 16% of total NIKE footwear respectively. killer applications help NIKE to jump-start demand for the new . Generally. and tries to build loyal customer relationships around the world. There were seven (7) contract suppliers outside the US that manufactured NIKE brand footwear in 2003. NIKE stays competitive due to its cost leadership. • Global strategy: addresses the company’s needs to expand its operations outside the home country and compete on a global scale. and customer service processes. NIKE strives to represent the highest service standard within its industry. and industry segment management. and the Americas Regions. in order to improve its customer services. Indonesia.3 NIKE’s use of killer applications allows it to use new technology to manufacture superior products that are so compelling that the company persuades customers to adopt the new format. and Thailand manufactured 38%. only approximately 1% of total NIKE brand apparel was manufactured in the US. improves and innovates its products. NIKE is applying this strategy to its fullest extent reaching its customers on all six continents: USA. • Business-level strategy: encompasses the business’ overall positioning in the market. • Corporate-level strategy: concentrates on the firm’s ability to focus on particular businesses that maximize the long-run profitability of the organization.

The threat of substitutes is also affected by the cost of supplies that are used for manufacturing. When a product’s demand is affected by the price changes of substitute products. to understand its business. NIKE is less affected than other companies because of its product quality. NIKE Inc. Supplier Diversity: Supplier diversity is a very important part of a successful business and it holds several key aspects. and it has a solid brand name that is recognizable worldwide. Furthermore. is a well . However. NIKE is able to have a strong presence in the markets it operates. in the case of NIKE. the company needs as broad a base of suppliers as possible to actively and significantly reflect the world in which it operates. with strong credibility.standard and allow it to lead the market. the company ought to adjust its prices by reducing manufacturing costs or other unnecessary costs. NIKE products are distributed on all continents and target different age groups. began a realignment of the company’s US footwear distribution to address the challenging retail market. the company is to some extent able to keep its prices higher than other competitors because of its recognizable brand name. In terms of fear of the buyer inclination to substitute. NIKE Inc. its low default risk. and geographic diversification. we see that NIKE is able to keep those costs lower than other competitors because of its good supplier relationships. since NIKE’s customers are on a worldwide scale. brand recognition. However. with such a large and diverse supplier base. It is about understanding the importance of consumers and satisfying their needs. Again. and its continuous productivity all year long for all seasons. and to help it reach its goals. and its customer loyalty that it heavily depends on. THREAT OF SUBSTITUTES A threat of substitutes is highlighted with the ability to replace the company’s existing products with one of its competitors or other industries. NIKE relies heavily on its supplier relationships to help the company arrive at innovative and creative solutions. Currently.

and Converse. at very competitive prices. with quality products. Because of its rigorously established situation in the markets it operates. which essentially increases the possibility of default. NIKE joined with some great partners over the years to extend and improve its products’ quality. supplier registrations.established company. Being a very large corporation with a very large consumer base. Bauer. This characteristic gives NIKE an advantage over other sports companies that carry a smaller product line by limiting their control over the market and product diversification. The latter qualities dramatically decrease the threat of substitutes for its products. This new system will assist the company in sourcing for certified diverse suppliers. Hurley International. and reporting and tracking of their supplier . variety and efficiency. Analysis of Management Strategies To offer a better service quality to their customers. manufactures. NIKE is able to acquire other competitors or producing firms. Even though the number of buyers is around 25 companies. the company is also able to control its supplies by increasing the number of suppliers and therefore increasing competition and lowering costs. there are a small number of them that control the market. the company is about to launch a new Supplier Diversity Management System. suppliers and other parties interested in doing business with NIKE. clothing. Buyer Power The power of buyers in the footwear industry is distributed among several companies. and markets a much diversified portfolio of products which includes footwear. and other equipment for almost every existing type of sport. NIKE designs. sports accessories. Some of those companies include: Cole Haan.

women. and those who are physically challenged. • Dedicating to supplier diversity not only contributes to the enhancement of our brand. but it also creates and strengthens our relationship with our customers who also value diversity. The year of 2003 brought a lot of challenges and obstacles to NIKE and other companies in general. a crushed European supply chain. It's accomplished in several ways: • Creating more competition in the supply chain results in lower costs of goods and services.diversity goals and expenditures. West Coast port closures. the unforgettable mystery of the virus SARS. NIKE’s management focuses on delivering high earnings8 year after year by increasing sales and by establishing company growth. Some of the problems that they had to face were a global economic recession. Management focuses in large on supplier diversity initiatives that afford solid benefits that can have a favorable impact on business. Even with such high hurdles to face. To achieve high earnings. management promises long-term potential which is broken down as follows: . NIKE’s management had their best year ever in sales and in earnings per share before an accounting change. • Providing economic stimulus to the community as a result of increased business with a wider range of diverse suppliers. • Maintaining a connection to the broad consumer base that is populated with increasing numbers of minorities. and a major cut in demand from Foot Locker.

Bauer. The dividends that NIKE paid out through the years are increasing gradually reaching its second highest of $0.1. 4. the men and women of this company who have never accepted failure. With all the competition in the market. and it's the company’s job to help them get there. By doing so. NIKE’s employees are considered the “back bone” of the company. which allows it to pay out dividends since it was a start-up company in 1987. Growth is one of NIKE’s main goals. 3. Great quality. “The regenerative nature of sports itself. Advertising and marketing are becoming one of the essential factors to a successful business. It enjoys growing sales revenue every year. is NIKE’s product. being able to gain an advantage over other competitors through advertisements and marketing has become a must. The footwear industry is one of the industries where new products and new designs are a must for the survival of the company. Being a growth company. which is considered a key factor in the past and future success of the company. and Converse. For that fact.”9 New athletes are born every day. and today's generation of athletes promises to reach new levels of human potential. aid athletic performance and maximize comfort. Behind it all are the people of Nike. 2. one of NIKE’s managerial strategies is the emphasis on the research and development section. Hurley International. Behind the performance and greatness of athletes and teams. NIKE has acquired several other competitors like Cole Haan. as NIKE strives to produce products that reduce or eliminate injury. and athletic equipment receives continued contribution and attention. NIKE grew even bigger and stronger. even when sales go down. and great innovations and technology put into the manufacturing and design of NIKE’s products is a key factor to success of the company. apparel. which generated higher returns. and was able to control a larger part of the market and serve a larger customer base. Technical innovation in the design of footwear.25 per share.20 per share in March 2004. NIKE Historical Ratios . who consider us a growth company. With a lot of dedication and a competitive edge in their work. having paid its highest in 1994-95 of $0.

88 in 2001.14% between 2001 and 2002 and then 6.54% between 2002 and 2003.14% showing that NIKE continuously earned more returns on the employment of its assets throughout the years.NIKE’s Return on Equity rose 36. 2001 to 2003 showed an .97% resulting in an overall increase in operating margin from 1999 to 2003 of 19.36%. After 2000 the company’s liquidity then steadily increased from 2000 to 2003 to highlight an overall increase in liquidity of 2. while a shaky position between 2000 and 2001 resulted in a fall in the return on equity gained from the previous yr by 8. In terms of the ratio of debt to equity in financing between 1999 and 2000 NIKE showed an increase in debt in its financing as compared to equity but then in 2000 the company showed a reversal in its position with more reliance on equity compared to debt. This position was reversed in the following two years with return on equity rising by 3. Operating Margin also steadily grew from 1999 to 2003 with a slight drop by 2.37% in 2001 but then rose again by 0.61% to stand at 16.77% as represented by the quick ratio.66% but the company was still able to meet its short term obligations with its current assets.94% and then 7. Liquidity Indicators NIKE’s liquidity fell between 1999 and 2000 by 25.41% between 1999 and 2000.65%.77% but then the company steadily improved its liquidity throughout the following years to result in an overall increase in liquidity of 10. Liquidity dropped between 1999 and 2000 by 30. Return on Assets steadily increased for NIKE from the period from 1999 to 2003 with an overall increase of 28. The quick ratio also highlights a similar movement in liquidity.

and then continuously fell between 2000 and 2003 by an overall 35.84% in 2001 but then declined again in 2002 by 5. Comparison Data for 2003 Financial Ratios .59 in revenues.18 times.24% to stand at 1. Asset Management Revenues as a percentage of total assets dropped between 1999 and 2000 by 7.59. Even with these fluctuations.52% and then improved in 2003 by 3.increased use of debt compared to equity in NIKE’s capital structure and therefore showed NIKE to be more leveraged at the end of 2003.11%.78% then improved by 5. Revenues as a percentage of working capital fluctuated throughout the years moving up between 1999 and 2000. NIKE achieved positive gains on its total assets in the form of revenues for example in 2003 for every $1 in total assets NIKE generated $1. The Interest covered figures showed improvement between 1999 and 2000. a drop between 2000 and 2001 but then a continuous increase from 2001 to 2003 showing that NIKE is able to cover its interest expenses 27.

Current Ratio: With this current ratio. Reebok’s ratio is slightly higher at 3.27 but still more leveraged than Nike. Liquidity ratios express the variability of liquid resources relative to potential claims. outweighs equity in capital structure. A liquid asset is one that can be quickly converted into cash. Focusing on its main competitors in the form of Reebok and Adidas. Quick/Acid Test Ratio: This means that with the exclusion of its most illiquid asset in the form of inventory. Nike is able to cover its current liabilities 2.41. Debt-to-Equity: Nike’s debt-to-equity ratio of 0.32 times with its current assets. Nike is still able to cover its current liabilities. Operations Indicators for 2003 . The market as a whole stands at a more balanced position with a 1 to 1 ratio. Leverage Ratios: A leveraged company uses more debt than equity including stock and retained earnings in its capital structure. Nike’s liquidity is at a viable position and the higher liquidity of Reebok and the industry may mean that other companies are leaving its cash idle and not using it to its full potential.05 and Adidas is slightly lower at 2. which shows that debt. In comparison the industry is more liquid than Nike and the market is less liquid.19 shows that Nike uses more equity in its financing than debt and is therefore not highly leveraged.Liquidity Ratios: Liquidity is a measure of a company’s ability to meet its short-term obligations. The market as a whole however is highly leveraged represented by a figure of 1.07. Reebok and Adidas are more leveraged but the industry as a whole shows capital structures that weigh more on the equity side with a figure of 0. The industry to which NIKE belongs is more liquid with ADIDAS being less liquid than NIKE and REEBOK being even more liquid than industry.

Average Collection Period: Highlights how effective the company’s credit. Inventory turnover for REEBOK and ADIDAS is 9.89 and 5. and collection procedures are.59 days to receive its cash after making a sale.64 days less to receive its cash after making a sale. This highlights that REEBOK turns over its inventory much faster than NIKE and the industry as a whole.6 days more than the industry but takes 3. the industry as a whole and much better than the market.Activity Ratios: These ratios assess the efficiency with which the firm manages its assets.06 times. the higher this ratio is the more efficiently inventory is being managed. Asset Turnover: Measures how efficiently a company uses its assets to generate sales. REEBOK and the industry takes 6. billing.60. More specifically. This shows that it takes NIKE approximately 61. The industry position is much lower at 3.61 and 8.38 times respectively.70 and the market turns over its inventory faster than the industry with a figure of 7.04 days less than NIKE to receive its cash. REEBOK however utilizes its assets to generate sales approximately 10% better than NIKE does. Inventory Turnover: This means that NIKE turned over its entire inventory 7. Profitability Ratios for 2003 . they describe how efficiently or intensively a firm uses its assets to generate sales. The market takes 5. Even though NIKE is less liquid than its closest competitor REEBOK this can be accounted for by NIKE’s wider and more extensive range of products in comparison to REEBOK and other competitors. NIKE uses its assets to generate sales better than ADIDAS. As long as a company is not running out of stock and thereby foregoing sales.

ADIDAS $0.17 for every $1 of capital invested in the company while. NIKE realizes a higher percentage of its revenue in total net income compared to its main competitors.08. Reebok’s figure is slightly less at 38.19. Gross Profit Margin: This calculation represents the amount of each dollar of revenue that results in Gross Profit. REEBOK was able to generate less with a $0.55% return on its shareholders investments. the industry . that is. Return on Equity: Because shareholders benefit is the main goal.11. In comparison the industry as a whole generated $0. For every dollar of assets in NIKE the company generated approximately $0. According to this calculation NIKE an 18.02% on its total assets. A number of different ratios can be used to assess different aspects of profitability in relation to a company’s performance.12 and the market was even lower at $0. with a net profit margin of 7.Profitability Ratios: These ratios measure the efficiency with which a company uses its resources and the more efficient a company is the higher its profitability. Approximately forty-one percent of NIKE’s revenues result on gross profit.55%.20. for every dollar of shareholder investments NIKE was able to generate approximately $0.30% on its assets. This turnaround between the positions realized with the gross profit margin suggests that NIKE manages its expenses better than the other groups with which it is compared. Return on Total Assets: This measures the profit earned on the employment of assets and this shows that NIKE earned 11. REEBOK was able to generate $0. Return on Invested Capital: This represents the profits earned on the capital invested in the company and highlights a continuation of the trend realized by the previous figures. This shows a better return when compared to its main competitors.40% with ADIDAS. the industry and a superior position over the market which only earned 1.11 in returns. but ADIDAS was slightly higher at $0.15 return. Net Profit Margin: This represents the amount of each dollar of revenue that results in Total Net Income. NIKE was able to generate approximately $0.65. the industry and the market. the industry and the market reaping higher results. ROE is one of the most important measurers of performance.

40. there still remains some negative backlash from previous linkages to sweat shops and poor working conditions in factories of its foreign suppliers. Despite this. Any resurgence in this sort of negativity can lead to a drop in consumer confidence and ultimately NIKE’s stock price as experienced in the past. To combat this NIKE. Like all companies Pall Corporation faces risk and these risks can stem both internally and externally. Some organizations not in favor of NIKE’s touted affiliations with poor working conditions continue to protest sporadically at NIKE store locations and also post websites that make false advertisements about the company and try to gain the support of consumers through these means.10 and the market approximately $0. should position itself as a trendsetter and not a trend follower. Like all companies NIKE faces risk and these risks can stem both internally and externally. Bad Publicity and False Advertisements: Even though NIKE has implemented a new code of ethics in carrying out its business. From an internal standpoint the company itself is the focus and from an external standpoint the industry in which the company operates is the source. Under the umbrella of market risk lie foreign exchange risk. As such.$0. NIKE was able to generate or garner higher profits on the capital invested. the company is still experiencing growth and has taken a vigilant look at these groups. From an internal standpoint the company itself is the focus and from an external standpoint the industry in which the company operates is the source. production and funding activities. Risks: Risks are not inherently bad but left un-addressed can cause serious harm to a company. all of which Nike undoubtedly faces due to its international stature. NIKE faces the risk that fashion trends may change that fail to incorporate NIKE’s styles. Under the umbrella of market risk lie foreign exchange risk. all of which Pall Corporation undoubtedly faces. As with other companies in this position NIKE faces this threat but the company has attempted to rectify the situation and should continue to foster good relationships with its suppliers and continue checks of working conditions. as well as. NIKE is exposed to foreign currency fluctuation as well as translations risk as a result of international sales. Fashion Changes and changes in consumer tastes and preferences: NIKE needs to stay on top of changes in consumer tastes and preferences as evidenced by changes in fashion. translation and interest rate risk. be responsive to its consumers. translation and interest rate risk. The .

NIKE also adopts innovative ideas with the use of extensive research and development and technology. The Company continues to venture into new. but related areas by applying key management strategies in its approach. and high market share. These have translated in increased earnings for the past three quarters and much of our valuation of this company is based on expected future increases in earnings for the upcoming quarter and year. The Olympics is an event that always pushes consumer desire to be more athletic but also patriotism. Also. NIKE continuously searches for new opportunities for partnerships and alliances that not only build brand loyalty and support but also generate sales. “our foreign currency risk management objective is to reduce the variability of local cash flows as a result of exchange rate movements”. with this in mind along with back to school shopping coming up around August this can also result in increases sales as these . Unlike many companies that remain sluggish in a stagnant economy NIKE seems able to overcome these setbacks and still realize high earnings as well as pass on dividends to its shareholders. This approach. Two key events also occur soon. Investment Drivers: The economy as experiencing an upswing and this has been translated to an upswing in the athletic footwear. These increases in positive feelings will ultimately spill over into support for NIKE who sponsors an enormous amount of athletes and sports teams. suppliers as well as athletes. children. apparel and equipment segments of consumer products industry. which have proven to drive consumer purchases. mainly teenagers accounted for the majority of sales recently. Existing investment drivers include NIKE’s strong brand recognition. quality products at affordable prices. The company uses forward exchange contracts and options to hedge certain anticipated but not yet firmly committed transactions as well certain firm commitments and the related receivables and payables. differentiation of products.company however realizes and accounts for this risk by hedging. Nikes propriety knowledge pushes the company to the top of its industry while maintaining a competitive edge. has proven to be successful in the past. including third party or inter-company transactions. These partnerships come in the form of relationships with buyers. According to the company’s annual report.

Sports wear are improving with the new technologies and they have become lightweight. Their attire usually consists of many colorful things just to spice up there sports dressing. Sometimes these colorful spiced up dresses may even inspire some of the young kids to get into sports. NIKE also benefits from its first mover status by always being innovative and pushing itself to take advantage of all opportunities that appear. Recently even the men sportswear has seen a major change with the changing trends. it is very important to have right clothing for them. more comfort and are even fashionable.teenagers demand the latest styles and products offered by NIKE. college students to men and women. even the footwear trend is changing with the new technological advancements. Sports apparel today is not only designed for function but most garments today also employ designs that make them more fashionable. durable that offer protection to the wearer as well as provide utmost comfort in any type of condition. Sports have become so popular recently that sportswear industry has wide range of options for everyone including from kids. Having sportswear for children may make them feel special and just as important as the adults. Most of the stores today offer a complete line of women and girls sports apparel or you can even shop on-line. NIKE: A Compendium . Now-a-days sports apparel scenario has seen a major makeover with new fabrics being introduced that provide better fit. CONCLUSION Sportswear has become a big market today with most of the people showing their interest in sports during their leisure or free time. Apart from apparels. With over 40% of female fans interested in sports and increasing number of women athletes.

Cricket. Reebok had cornered the younger. Inc. has become a household name on the same level as mogul companies McDonald’s. the sportswear and equipment supplier made $16 billion in revenue in 2007. The first professional athlete endorser was Ilie Natase – a Romanian tennis player. Golf. Baseball. Nike was founded in 1964 by track coach and runner duo Bill Bowerman and Phillip Knight as Blue Ribbons Sports. Baseball. and Skateboarding. Tennis. Nike’s steady competition in the 1980s was Reebok. Now Nike products are sold in numerous shoe and apparel stores worldwide as well as in specialty Niketown stores and online at Nike. Nike has come a long way from when its founders used to sell the shoes out of the trunk of their cars until the first Nike store was built in 1966. Nike currently employs 30. later becoming Nike.com. Soccer. Converse. Nike has numerous websites dedicated to each of their target audiences including Nikebasketball.com and Nikefootball. Oregon. Nike Golf.000 people worldwide. Nike SB (Skateboarding). Previously.com. Nike Pro. Nike has signed top athletes in the sports of Football.2 billion in 1997. Cycling. Nike didn’t run TV ads until 1982. To break any similarities they had to Reebok. so Nike started concentrating their ads around the person wearing the product rather than the product itself. In 1988. Nike+. Coca-Cola and Budweiser. In the 80s. Nikerunning.com. Nike sells products under Nike. with subsidiaries Cole Haan. Nike sells clothing and equipment for sports like Track and Field. the number one manufacturer of footwear and apparel. and Hurley International. One of Nike’s best PR decisions was signing Michael Jordan as a celebrity endorser in 1984.. in 1978. Inc. Umbro (since 2007). up from 9. Football.Nike. The name Nike was chosen in reference to the Greek Goddess of victory. Skateboarding. and Team Starter. Track and Field and Formula 1 Racing. Nike began promoting its shoes as fashion accessories. Boxing. Nike employees met with advertising agency Wieden and Kennedy (formed in . Nike grew to hold 50% of the market share in the athletic shoe market. aerobics audience. Air Jordan. Soccer. Nike concentrated on sponsorships and celebrity athletes’ endorsements – including both professional athletes and college teams. Basketball. Headquartered in Portland. Tennis. The first track and field athlete to endorse the brand was Steve Prefontaine. Basketball.

Nike keeps down the numbers of its NikeSB’s produced and ships them to shops with a $65 – $100. a program for high school basketball players. Thrasher. and Aaron Gonzalez. 18-40 year old males. NikeSB. Through the celebrity endorsement of John McEnroe. Nike sponsors Hoop It Up. in 2002 in an attempt to gain market share in the quickly growing skateboarding craze. The strictly print campaign . The sassy.” And so the infamous Just Do It tagline was born. Stefan Janoski. Over the years. To keep up its collectible aspect. Bo Jackson and Michael Jordan. NikeSB released a Skateboarding video titled “Nothing But The Truth” starring Brian Anderson. but rejecting its commercial aspects. “You Nike guys. Nike released a series of ads aimed at women athletes. Omar Salazar. Skateboarder. The Fund issues grants for equipment and uniforms. the Just Do It ads helped Nike be seen as a hip brand that people wanted to wear whether exercising or not. The ads worked to shame people into exercising. Skateboarding Mag. The Just Do It campaign was chosen by the magazine Ad Age as one of the top five advertising slogans of the 20th century. In 2007. and when exercising to wear Nike’s. Wieger Van Wageningen. as well as their great comfort level. you just do it. In 2005. Slap. for high school track and field players. Paul Rodriguez Jr. skateboarders have had fluctuating opinions of Nike enjoying the brands’ quality products. Big Brother. and The Golden West Invitational.. Dan Weiden turned to the Nike employees and said. Nike also donates money to the Let Me Play Fund – named after a 1995 Nike advertisement. skateboarders wore Nike basketball sneakers because of their strong grips and ankle support.1982). humorous ads urged women to celebrate their Thunder Thies and Big Butts. as well as younger teens and females. In the midst of the meeting. The original Just Do It campaign was aimed at Nike’s traditional target. Nike’s two main competitors for skateboard shoes are Vans and DC Shoes. The campaign reached consumers on a humorous level and tapped into the fitness craze happening at the time. Occasionally the NikeSB shoes get ruined quickly if used for skateboarding – leading their users to steer away from skating in the shoes and instead wear them for their collectible value. although the shop owners often sell them for much more. Nike launched their skateboard collection.00 suggested retail price. NikeSB promotes their products in hip-magazine ads in skateboard magazines like Transworld. Before Nike SB.

print ads. These included ads on MTV. Recently.com. video clips on MTV2. and a “Retro-Chic. Nike released the fourth pair of sneakers sponsored by LeBron James – Nike Air Zoom LeBron IV. TV commercials. Not only was the shoe the single sponsor of an airing of ESPN Sports Center. The campaign stars female athletes Serena Williams.drove women to the website NikeWomen. second or third versions. there were also 400.com and ESPN. . after radio host Don Imus made his infamous comments on air.com. There were many advertising outlets used for the fourth shoe in the series that were not used as heavily in the first.com along with the release of the movie Transformers through a TV commercial in which a large Nike shoe on a billboard transforms into a transformer. Nike created a spin-off ad campaign defending women athletes. In 2006. Nike promoted NikeLab. Nike recently teamed with Apple to create the Nike+ series which links the runner’s shoes to their iPod Nano to monitor their performance.” neon billboard placed near Madison Square Garden that showed LeBron dunking continuously. Gabby Reece and Picabo Street. The campaign discussed 6 body parts and mirrored the Dove Real Women campaign.000 DVDs distributed that showed the making of the shoe and its unique ad campaign.

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