BUSINESS STRATEGY, CORPORATE STRATEGY,

SWOT ANALYSIS & SWOT MATRAX

REPORT: BUSINESS STRATEGY
CASE STUDY: NIKE INC

BY

ALI IBRAHIM JILI'OW

MBA

OPEN UNIVERSITY
MALAYSIA

MAY, 2016

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 NIKE STRATEGIC REPORT
TABLE OF CONTENTS
1.0 INTRODUCTION.....................................................................................................................4

1.1 BACKGROUND.......................................................................................................................4

1.2 WHAT DOES NIKE DO...........................................................................................................5

1.3 PIONEERS FOR NIKE.............................................................................................................5

1.4 MISSION STATEMENT FOR NIKE.......................................................................................5

1.5 NIKE'S VISION .......................................................................................................................5

1.6 NIKE'S GOALS ........................................................................................................................6

1.7 OBJECTIVES............................................................................................................................6

1.8 NIKE'S INDUSTRY..................................................................................................................6

2.0 SWOT ANLYSIS IN FORM OF MATRIX..............................................................................6

2.1.1 EXTERNAL OPPORTUNITIES............................................................................................6

2.1.2 NIKE'S KEY EXTERNAL THREAT....................................................................................7

2.1.3 KEY INTERNAL STRENGHTS...........................................................................................7

2.1.4 KEY INTERNAL WEAKNESSES........................................................................................7

2.1 NIKE'S PRODUCTS.................................................................................................................9

2.2 TARGET MARKET..................................................................................................................9

2.3 SALES AND MARKETING.....................................................................................................9

2.4 NIKE AS A LEADER IN ATHLETIC INDUSTRY................................................................9

2.5 NIKES MAJOR COMPETITORS............................................................................................9

2.6 NIKE'S APPROACH FOR MANAGING SUPPLIER...........................................................10

2.7 BUSINESS SUSTAINABILITY.............................................................................................10

3.0 NIKE'S COMPETITIVE PROFILE MATREX......................................................................10

4. 0EXTERNAL FACTOR EVALUATION.................................................................................11

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5.0 INTERNAL FACTOR EVALUATION..................................................................................12

6.0 NIKES'S STRATEGY.............................................................................................................13

6.1 NIKE'S CORPORATE STRATEGY......................................................................................15

6.2 NIKE'S BUSINESS STRATEGY...........................................................................................15

6.2.1 NIKE'S BUSINESS LEVEL STRATEGY...........................................................................15

6.3 NIKE'S CORPORATE STRATEGY .....................................................................................15

6.4 FUNCTIONAL STRATEGY FOR NIKE...............................................................................15

6.5 NIKES GLOBAL STRATEGY...............................................................................................16

6.6 NIKE'S RELATIONS WITH SUPPLIERS.............................................................................16

6.6.1 NIKE'S CURRENT STRATEGY........................................................................................16

6.7 NIKE'S BUSINESS PERFORMANCE FOR THIS YEAR....................................................16

6.7.1 NIKES PERFORMANCE IN THE THIRD QUARTER OF THE YEAR..........................17

7.0 NIKE'S FUTURE OUTLOOK................................................................................................17

7.2 EVALUATION NIKE'S CURRENR CORPORATE & BUSINESS STRATEGY...............17

7.3 NIKE'S STRATEGIC ANALYSIS AND EVALUATION.....................................................18

7.3 SUMMARY AND CONCLUSION........................................................................................19

RECOMMENDATIONS...............................................................................................................21

REFERENCES..............................................................................................................................23

APPENDICES...............................................................................................................................25

APPENDIX A: SWOT ANALYSIS..............................................................................................25

APPENDIX B: COMPETITIVE PROFILE MATRIX.................................................................26

APPENDIX C: EXTERNAL FACTOR EVALUATION.............................................................27

APPENDIX D: INTERNAL FACTOR EVALUATION..............................................................28

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1.0 INTRODUCTION

Business strategy has been concern for many managers and investors, in order for any
organization to be successful in its missions and vision, organization should establish and
implementing the best strategy that can conform to all organization's corporate and business
levels. As famous scholar has already said ''business without strategy is like a ship without
compass''.

Nevertheless, this report discusses the background of Nike Corporation, mission and vision
statement of the company, the company's SWOT analysis in the form of Matrix, the corporation's
competitive Profile matrix, External factor evaluation matrix, Internal factor evaluation matrix,
the report also identifies and evaluates Nike's current corporate and business level, finally the
this report recommends the best strategy that Nike should pursuit in order to be successful in the
athletic market. Nike Corporation is being chosen because there are no corporations that operate
officially here in Mogadishu, Somalia and what is more, data availability is relatively difficulty.
1.1 BACKGROUND
Based in Beaverton, Oregon, Nike is the world’s largest designer, marketer, and distributor of
athletic footwear and athletic apparel. The company also designs, markets, and distributes sports-
related apparel, equipment, and accessories. Led by the company’s flagship Nike brand footwear,
as well as Nike Golf, the company also owns a number of subsidiaries, such as Cole Haan,
Converse, Hurley International, an d Umbro Ltd . (David, Strategic Manegement, 2009).

Nike Corporation was established by University of Oregon track athlete named Phil Knight and
his coach Bill Bowerman in January 1964. Its original name was Blue Ribbon Sports (BRS). The
company primarily operated as a distributor for Japanese shoemaker Onitsuka Tiger , which meet
Knight's automobile. (Nike Inc., 2016)
Nike, Inc. is an American multinational corporation that is engaged in the design, development,
manufacturing and worldwide marketing and selling of footwear, apparel, equipment,
accessories and services. The company is headquartered near Beaverton, Oregon, in the Portland
metropolitan area, United States of America. (Hussain A. Ali Mahdi M. A., 2015).

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1.2 WHAT DOES NIKE DO?
Sporting industry has been active and contest for the twenty first century, sporting activities are
taking place across the world wide, without any obstacles and limitations. Sports became now
days a universal language.
NiKE INC. it's a popular company in Sports industry that produces, designs, makes for athletic
clothes and shoes, most competitive sports and Fitness Corporation on the earth is Nike now. Its
headquarters is in Beaverton, Oregon. The Pacific Northwest is Nike's place of origin. It has
expanded their horizons to every corner of the globe. Nike's labour forces estimated
approximately 24,300 people. Nike operates on six continents. It employs suppliers, shippers,
retailers and service providers amounting to a total workforce of close to 1 million people.

1.3 PIONEERS FOR NIKE

Earlier, Nike was established as an importer of Japanese shoes in 1962, the founders, Bill
Bowerman and Phil Knight worked as a partnership under the name, Blue Ribbon Sports.
However Nike holds a global market share of approximately 37 percent (answers.com).
In 1958, Phil Knight, a business major at the University of Oregon, and a miler on the track
Team, shared with his coach, Bill Bowerman, dissatisfaction with the clumsiness of American
running shoes. They formed a company in 1964 to market a lighter and more comfortable shoe
designed by Bowerman. In 1968, this company became NIKE, Inc. named for the Greek goddess
of Victory.

1.4 MISSION STATEMENT FOR NIKE

According to Divids, 2009, Nike’s mission is to carry on Bowerman’s legacy of innovative
thinking, develop products that help athletes of every level of ability reach their full potential,
and to create business opportunities that set Nike apart from the competition and provide value
for their shareholders.
1.5 NIKE'S VISION
To “bring inspiration and innovation to every athlete in the world
Corporate Vision
”Nine has corporate vision, so Nike’s corporate vision is
To help Nike.INC and our customers thrive in sustainable economy where people profit and
planets are in balance. (Smithson, 2016).
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1.6 NIKE'S GOAL
Nike's goal is to bring inspiration and innovation to every athlete in the world. 'The Nike goal is
to carry on his legacy of innovative thinking, whether to develop products that help athletes of
every level of ability to reach their potential, or to create business opportunities that set Nike
apart from the competition and provide value for our shareholders.’
Nike's Long Term Goals
Nike's long term goals will be eliminating the concept of waste in our product design, use of
materials, energy, and any resource that cannot be readily recycled, renewed or reabsorbed back
into nature, eliminating all substances that are known or suspected to be harmful to human health
or the health of biological or ecological systems.
1.7OBJECTIVES
Nike’s objectives are to provide an environment in which develops people to maximize their
contribution to Nike. To Identify focused consumer segment opportunities Provide quality and
innovative services and products internally and externally
1.8 INDUSTRY FOR NIKE
The industry that Nike competes was growing over that past generation and actually it is still
growing with its new challenges, if we look back the profile of shoe industry it seems that it has
faced a dramatic evolution over the last fifty years, however the industry faces many challenges
from those who produce identical products.
2.0 SWOT ANALYSIS IN THE FORM OF MATRIX

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''.

2.1.1 EXTERNAL OPPORTUNITIES

1. E- Commerce is growing and it will have a positive effect on Nikes sells

2. There is emerging and new markets that Nike can grow
3. Female's dependence on athletic footwear and clothing is increasing substantially
4. The clients who use Nike's products change from athletic purpose to fashion items
5. Nike's Product development offers many opportunities.
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 6. Nike's new technology and innovation make possible to stay on top of market needs
7. The company might also be developed globally, building upon its strong worldwide brand
identification
8. There is also the chance for Nike to develop new products such as sport wear

2.1.2 NIKE'S KEY EXTERNAL THREAT

i. Nike is facing Strong competition from Adidas, Puma, Reebok and many others
ii. Consumer Preferences is dynamic due to technology and many choices
iii. Currency Fluctuation and interest charge is another treat that Nike will suffer
iv. Piracy of footwear and appeal design could decrease sells and adversely affect Nike's image
v. Political un-rest in the supplier countries, due to coup, new legislation, rules and regulations
vi. ongoing challenges in import and export duties
vii. Negative image created by the sponsored athletes
viii. Negative image due to "sweatshops"
ix. Increase in the Price of Raw materials

2.1.3 KEY INTERNAL STRENGHTS

1) Nike has a Brand name that is so familiar worldwide

2) Nike is Financially strong that makes possible to remain in the market and competitive
3) Strong competition position, it can defeat its major competitors
4) Sell variety of models not only one or two types of products
5) Nike has Effective Research and Development that makes it to be innovative
6) Effective promotional activities, it also sponsored many sports
7) Successful experience for being competitive because it had been in operation for ages
8) Nike engages in many international marketing efforts
9) Nike Strongly controls over its own distribution channels
10) Nike doesn't own any Factories
11) Diverse portfolio & Customer Loyalty
12) Innovative designs

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2.1.4 KEY INTERNAL WEAKNESSES

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 sells
4) Nike uses contract manufacture in foreign countries, this create potential financial problem
due to foreign currency fluctuations and increases interest change
5) Negative image portrayed by poor working conditions in its overseas factories
6) Nike only concentrates on youth and young adult market ignoring others
7) Luck of stores serving females
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.
NIKE'S SWOT MATRIX

SO Strategies
 With the help of brand image and effective
research and development, Nike can focus
on growing E-Commerce (S2,S3,S7,O2)
 Market development ( S1,S5 and O1)
 As Nike's Brand name that so familiar
worldwide it can reach new and emerging
markets (S1, O2)
 Nike is effective in R& D, so it can
develop a new products (S5,O8)
ST Strategies
WO Strategies
 Product development (W3,W4)
 Nike uses contracts for manufacturers that
makes difficult to control quality of its
products, it should sell these to control the
quality of its products (W1,w4,O2)
 Heavy dependence on footwear sells
 Nike is heavy dependence on footwear
sells, so it should produce new other items
(W3,O2,,O5,O8
WT Strategies

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 Alternative Brand ( S1, S2, S5,T1)
 Market penetration ( S6,52)
 Backward integration (S2, T5)
 Nike e is Financially strong, so it can
defeat its competitors by constant doing
research and development, invention and
innovation (S2,S3, S5,T1)
a) Innovative Products (W3,T1 and T2)
b) Nike is currently facing strong competition
,because of its negative image due to
"sweatshops" (W8,T8)
c) Market is becoming saturated and
consumers may become sick of Nike brand
and move to other smaller, more individual
brands (W9,T1)

2.2 NIKES PRODUCTS

Nike’s athletic footwear products, the most important revenue segment, are intended primarily
for, but not restricted to, specific athletic use. The main emphasis that the Company places on its
products are quality and innovation in products designed for men, women, and children. Nike
sells sports apparel and accessories relevant to each sport mentioned above as well as sports-
inspired lifestyle apparel, including bags, socks, sport balls, eyewear, protective equipment, basic
sport equipment, etc. (Ruiz, 2010).

2.3 TARGET MARKET

We focus our NIKE Brand product offerings in eight key categories: Running, Basketball,
Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear (our sports-
inspired lifestyle products) and Golf. Basketball includes our Jordan Brand product offerings and
Men’s Training includes our baseball and American football product offerings. We also market
products designed for kids, as well as for other athletic and recreational uses such as cricket,
lacrosse, tennis, volleyball, wrestling, walking and outdoor activities (Nike A. R., 2015).
2.4 SALES AND MARKETING: Nike is exposed to a number of demand factors in different
geographic and product markets. The mix of product sales might differ significantly as a result of
changes in seasonal and geographic demand for particular kinds of footwear, apparel and
equipment (Ruiz, NIKE, Inc. (NKE), 2010)

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2.5 NIKE AS A LEADER IN ATHLETIC INDUSTRY

“Companies that have taken leadership positions in their industries in the last decade such as
Nike have done so by narrowing their business focus, not broadening it. They have focused on
delivering superior customer value in line with one of three value disciplines: operational
excellence, customer intimacy, or product leadership (Treacy and Wiersema 1993).”

Although Nike was still considered to be the number three athletic footwear brand back in 1987
they were working as if they were on top. They applied new ideas, game changing innovations,
and infused profitable creative assets into their business. With the development of the “Just Do
It” campaign, the brand expansion via the creation of new products and top of the line
communication programs, Nike was making moves (Neiderhauser, 2013)

2.6 NIKES MAJOR COMPETITORS

Nike is currently facing touch completion from many companies like, Adidas, Reebok, Under
Armour, Puma, Li Ning, Toys R us, Taylormade, PVH, Crocs, Rebook, PhatFarm, Atac,
Sketcher, these companies compete with Nike in different ways as Brand, Price, Quality and
other factors social responsibility, Nike is facing better completions from Puma, Rebook and
Adidas in price, quality and brand.

2.7 NIKE'S APPROACH FOR MANAGING SUPPLIER

Nike's move toward to managing supplier responsibility significantly evolved over the past two
decades, with the company launching a robust system of supplier monitoring, auditing, and
remediation. Even though using an expansive monitoring program, Nike found that many
factories continued to yo-yo in and out of conformity (Rammohan, 2013).

2.8 NIKE'S SUSTAINABILITY

“Sustainability will be at the nexus of change in business, economies, and markets,” stated
NIKE, Inc. President and CEO Mark Parker in the company’s 2011 corporate sustainability
report. Like several multinational firms, the world’s largest footwear, apparel and sporting goods
company faces numerous difficulties in managing social and environmental issues among its
seven hundred-plus contract factories in 42 nations (Rammohan, Integration, Incentives and

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Innovation Nike’s Strategy to Improve Social and Environmental Conditions in its Global
Supply Chain, 2013)

3.0 COMPETITIVE PROFILE MATREX (CPM)

NIKE ADIDAS PUMA
Critical Success Factor Weight Rating Score Rating Score Rating Score
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's major competitors, Adidas and Puma, Nike faces tough
completion from a number of companies, and here we can identify particular strengths and
weakness from Nike's major competitors, at this point Nike Corporation is performing pretty
well, its weight score is 3.31, it's excellent compared to its major competitors.

Adidas and Puma offer products that are so similar to those provided by Nike, what is more, the
products provided by Nike and its competitor Adidas are used in same purpose and subsumable,
so Nike is facing a tough competition from Adidas.

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4.0 EXTERNAL FACTOR EVALUATION FOR NIKE (EFE)

Organization's External Factor Evaluation is aimed at evaluating organization's external factors,

these are the opportunities that are outside of the organization and of course the outside threats
that the business faces, so here we evaluate the Nike's external factors, firs we list the
opportunities it has and then the threats it facing at this point, finally we can make the judgment
about Nike's Opportunities and threats.

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 & 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 branches 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
1.00 3.18

How does Nike handling the threats it faces and taking the opportunities? Let' as see, based on
these figures, Nike is performing well, the Weighted Score is beyond the average, meaning that
the company taking many opportunities and can resist the threats it faces outside even thought
these listed factors are smaller in number. The worse case that Nike faced in its recorded history
is its harsh policies regarding labour and working conditions in parts of its facilities in Asia. But
Nike had earlier initiated some measures to tackle this bad image by improving its working
conditions in its facilities across the world.

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5.0 INTERNAL FACTOR EVALUATION MATRIX

INTERNAL FACTOR EVALUATION ( IFE)

Strengths Weight Rate Score
Nike is World's largest sports appeal producer 0.08 4 0.32
Customer Loyalty 0.05 3 0.15
Nike is strong at research and development. 0.08 4 0.32
Nike is a very competitive organization. 0.05 3 0.15
Nike is a global brand 0.05 4 0.2
Innovative designs 0.02 4 0.08
Nike Strongly controls over its own distribution channels 0.05 3 0.15
Customization availability 0.08 4 0.32
Nike is Strong in Marketing and R & D 0.02 4 0.08
Diverse portfolio & Customer Loyalty 0.05 3 0.15
Strong Financial Position 0.05 3 0.15
Nike doesn't own any Factories 0.05 3 0.15

Weakness
Nike does have a diversified range of sports products. 0.1 1 0.1
Nike only concentrates youth and young adult market 0.15 1 0.05
Luck of stores serving females 0.05 1 0.05
Heavy dependence of footwear sales 0.07 1 0.07
Total Score 1.00 2.49
What does Nike's internal factor Evaluation indicates?

As the matter of fact, internal factor Evaluation of a company evaluates organization's major
strengths and weaknesses within the organization's functional areas. so its strategy-formulation
tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a
business, and it also provides a basis for identifying and evaluating relationships among those
areas (David, 2009).

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Nonetheless, Nike's internal factor Evaluation indicates that corporations internal is so strength
and above beyond the required level, its performance is nice, so Nike is taking advantage of the
opportunities and ready to handle appropriately to its weakness.

6.0 NIKES STRATEGY

The strategy is a roadmap towards for accomplishing the optimum goals of individuals, groups
and organizations. What is more, it guides to a best use of corporation's available resources and it
also guides the company to remain successfully in the market and continuous development for its
processes (Hussain A. Ali Mahdi, 2015)
According to Mahdi1, Abbas & Mazar3, (2015), there are more types of strategies that are
followed by the companies; Such as cost leadership, differentiation and the focus strategies
(Porter, 1985), services strategies, growth strategies. Based on the goals, form of the companies,
those strategies and they rank them upon the priorities.
According to Nike, Innovation is at the heart of Nike’s business growth strategy and it uses this
innovation in order to become more sustainable company and to keep up with the competition
and customer demands (nikeandunderarmour.com, 2015).
Strategies of Nike
Nike follows many strategies in order to become the world’s leading designer, marketer and
distributor of athletic footwear, apparel and accessories. One of its strategies is continuous focus
on innovation and Emphasis on its research and development department and they do their best
to produce footwear, apparel and athletic equipment that reduce or eliminate injury, help in
athletic performance and maximize comfort and enjoyment. (Dermesropia et al., 2004).
According to Nike, Innovation is at the heart of Nike’s business growth strategy and it uses this
innovation in order to become more sustainable company and to keep up with the competition
and customer demands (nikeandunderarmour.com, 2015).
Strategies that Nike employs
The following are some of the strategies that Nike adopts to lead athletic markets in the world
1) Continuous focus on innovation and emphasis on its research and development
2) Closed-Loop Business Model which aims to move closer to achieving zero waste by
completely reusing, recycling and composting all materials.

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3) Market Segmentation Strategy, which assists Nike in advertisement of its products by
entering into the sponsorship agreements with celebrity athletes, professional teams, and
apart from the college athletic teams.
4) Broad differentiation strategy. Based on that Strategy, Nike produces its products for
athletics in three ways. Nike Uses Intensive Strategy But Some Times Combined Strategy
1) Market penetration
2) Market Development
3) Product Development
Market penetration: Nike uses this strategy to increase its market share; however Nike could
attract non-users of their products potential customers, or endeavors to get present customers to
buy more through advertising or other promotions.
Market Development: Nike always tries to develop its products in order to reach new
geography, new markets that doesn't exist before, and this will affect Nike as they are constantly
developing products for the same market, thus, new product development can be a essential
development strategy if Nike desires to keep on competitive.
Product Development: Nike always tries to bring innovation, this is one of the most important
strategies that Nikes all the time to remain competitive and market leader, this strategy makes
possible for her to be first mover in the market

6.1 NIKES CORPORATE STRATEGY

Nike’s overall corporate strategy focuses on Delivering value to its shareholders, consumers,
suppliers, employees and the community at large. Nike can achieve this by focusing on
continuing to its mission: that is to bring inspiration and innovation to every athlete in the world.
And according to Nike co-founder Bill Bowerman, if you have a body, you are an athlete. Nike
will pursue this strategy to be the leader in athletic industry.
6.2 NIKE'S BUSINESS STRATEGY

According to Mahdi1, Abbas & Mazar3, (2015), Strategy has different perspectives and points of
views most of them lies in the concepts of (cost leadership, differentiation and focus strategies)
or a combination of them. Porter (1980) suggested the cost leadership strategy for the first time.

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6.2.1 Nike's Business Level Strategy
Business-level strategy contains overall business's positioning in the company. NIKE stays
competitive due to its cost leadership, product differentiation, and industry segment management
(Ros, 2011).Nike's business strategy is to maintain its market share and to deliver value to its
stake holders, and to make that happen it engages in continuous research and development.

According to Phil Knigh, Nike's CEO, Nike is a marketing-oriented company, and the product is our
most important marketing tool.”
6.3 CORPORATE STRATEGY FOR NIKE

Corporate-level strategy usually concentrates on the corporation's capacity to focus on specific

businesses that make best use of the long-run profitability of the organization.

NIKE Corporation is capable to continue its long-run business success and even carry on its
growth within its industry for the reason that it produces what it knows best, as well as, develops
and innovates its products (Ros, NIKE Strategy: Strategy Management, 2011).

6.4 FUNCTIONAL STRATEGY FOR NIKE

Nike's functional-level strategy is heading for enhancing the effectiveness of its operations
within the corporation. NIKE is utilizing this strategy within its manufacturing, marketing,
product development, and customer service processes. Consequently, in order to develop its
client services, NIKE struggles to represent the highest service standard within its industry, and
try to establish loyal customer relationships throughout the universe (Ros, NIKE Strategy:
Strategy Management, 2011) .

6.5 NIKE'S GLOBAL STRATEGY

Global strategy is far beyond others, it points out the firm’s requirements to expand its
operations outside the home country and compete on a global scale. NIKE is employing this
strategy to its fullest extent getting its customers on all on out planets almost the six continents:
Africa, Asia, Europe , Middle East USA, Americas Regions and the Pacific (Ros, 2011).

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6.6 NIKE'S RELATIONS WITH SUPPLIERS
Nike has always been trying to maintain good relations with its suppliers, however Nike’s
technique for managing supplier responsibility has to a great extent evolved since the 1990s,
when the media discovered declared child labor, low paid workers, and poor working conditions
in several Asian countries (Rammohan, 2013).

According to Porteous & Rammohan , (2013). ''Suppliers performing at yellow or red levels can
be subject to serious review. When issues arise such as detection of uncontrolled hazardous
waste, a supplier must create an action plan to address and remediate the issues within a defined
time period after which a follow-up audit is conducted''
.According to Mahdi1,Abbas2,& Mazar, (2015),Nike has been the dominant leader in sports
apparel industry for several decades. They achieved this position by taking an aggressive
approach towards building relationships with celebrity athletes.
6.6.1 NIKE'S CURRENT STRATEGY
Some of Nike's current strategic moves include entering into new athletic areas such as golf and
soccer. Another strategic move identified by Holmes (p. 130) occurred at the business level when
Chairman Phil Knight handed over day-to-day control of the company to a pair of veteran Nike
executives
6.7 NIKE'S BUSINESS PERFORMANCE FOR THIS YEAR

Our principal business activity is the design, development and global marketing of high quality
footwear, apparel, equipment, and accessory products. NIKE is the largest seller of athletic
footwear and athletic apparel in the world. We sell our products to retail accounts, through
NIKE-owned retail including stores and internet sales, and through a mix of independent
distributors and licensees, in over 170 countries around the world (Nike's Annual report, 2009).
6.7.1 Nikes Performance In The Third Quarter Of The Year
 Revenues up 8% to $8 billion; 14% growth excluding currency changes
 Diluted earnings per share up 22% to $0.55
 Worldwide futures orders up 12%; 17% growth excluding currency changes
 Inventories as of February 29, 2016 up 8 percent
 Revenues for NIKE, Inc. rose 8 percent to $8 billion, up 14% on a currency neutral basis.

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 Revenues for the NIKE Brand were $7.6 billion, up 15 percent on a currency neutral basis
driven by growth in every geography and nearly all key categories. Revenues for Converse
were $489 million, down 5 percent on a currency neutral basis, mainly driven by a major system go-
live that accelerated orders from the fourth quarter to the third quarter in the prior year (Nike, 2016)
7.0 NIKE'S FUTURE OUTLOOK

NIKE's wholesale market would keep on persistently and be the key driver for deal
Development, for retail accomplices at present foreseen that might represent able more than
eighty percent of the organization's general business by 2017.
7.2 EVALUATION NIKE'S CURRENR CORPORATE & BUSINESS STRATEGY
In athletic market, Nike is a number one, because of its strategies for invention and innovation,
research and development is another key element of course that makes possible for Nike to be
the leader in this industry with in this competitive era. By glancing Nike's factor evaluation
matrix, it becomes very clear that Nike is so strong in every aspects compared to its major
competitors Adidas and Reebok. The company is taking advantage of its opportunities and
handling its internal threats, in its business activities the company is performing well enough
compared to its rivals.
7.2.1 Corporate level strategy
Nikes Ceo one remarked '' Business is like a battle without bullets' 'so to survive and remain in
the market in this intensive competition, effective strategy becomes essential. Nike's
Management has always been engaged in enhancing its business performance in a corporate
level not only thinking about the profitability of Nike but also its stake holders as whole and
finally enhancing its share holder's wealth.
7.2.2 Evaluation Nike's business strategy
Nike as a leader in athletic market is performing great, the company employs many diverse
strategies, but more often than not, it initiates intensive strategy as market penetration, market
development and product development, other times it using combined strategy becomes very
essential for Nike, but really what makes possible for Nike to lead the industry and to remain
competitive is its excellent management, team work, collaboration and of course its constant
research and development. nowadays, the company introduced a code of conduct that guides its
working principles after having been witnessed Nike a widespread scandal regarding its factories

© Jili'ow, Business strategy, corporate strategy, Report: Business Strategy 18

located abroad, its widely reported earlier poor working condition in its facilities in Asia, where
its employees work a long hours while the rate is very less than standard.
7.3 NIKE'S STRATEGIC ANALYSIS AND EVALUATIONS

As the matter of fact, internal factor Evaluation of a company evaluates organization's major
strengths and weaknesses within the organization's functional areas. so its strategy-formulation
tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a
business, and it also provides a basis for identifying and evaluating relationships among those
areas (David, 2009).

Nonetheless, Nike's internal factor Evaluation indicates that corporations internal is so strength
and above beyond the required level, its performance is nice, so Nike is taking advantage of the
opportunities and ready to handle appropriately to its weakness.

How does Nike handling the threats it faces and taking the opportunities it has is a question that
so questionable, so based on the figures and strategies that employs, Nike is performing pretty
well, the Weighted Score is beyond the average, meaning that the company taking many
opportunities and can resist the threats it faces outside even thought these listed factors are
smaller in number.

When it come competition, Nike is very competitive and stays at the top of the market due to
tough competition from Adidas, Puma and Reebok, one of the strategies that makes possible for
Nike to remain in market is it's constant research and development, so when compared its major
competitors Nike is a better position and at its competitors in terms of Brand, Financial position,
Technology, Research and Development, invention and innovation

The worse case that Nike faced in its recorded history is its harsh policies regarding labour and
working conditions in parts of its facilities in Asia. But Nike had earlier initiated some measures
to tackle this bad image by improving its working conditions in its facilities across the world.

Nevertheless, Nike may pursuit a number of potential strategies to remain competitive and lead
the athletic industries as Market development Market penetration, Product development
Backward development, Forward integration, Horizontal integration and related diversification

© Jili'ow, Business strategy, corporate strategy, Report: Business Strategy 19

SUMMARY AND CONCLUSION

Based in Beaverton, Oregon, Nike is the world’s largest designer, marketer, and distributor of
athletic footwear and athletic apparel. The company also designs, markets, and distributes sports-
related apparel, equipment, and accessories. Nike's goal is to bring inspiration and innovation to
every athlete in the world. Nike's long term goals will be eliminating the concept of waste in our
product design, use of materials, energy, and any resource that cannot be readily recycled,
renewed or reabsorbed back into nature.

Strength: Nike is strong at research and development, Nike is a very competitive organization,
Nike has no factories. It does not tie up cash in buildings and manufacturing workers, Nike is a
global brand, Innovative designs & Nike Strongly controls over its own distribution channel
Weaknesses: Nike does have a diversified range of sports products, Market is becoming
saturated and consumers may become sick of Nike brand and move to other smaller, more
individual brands and Negative image portrayed by poor working conditions in its overseas
factories.
Opportunities: Nike's Product development offers many opportunities, The brand is severely
defended by its owners whom truly believe that Nike is not a fashion brand There is also the
chance for Nike to develop new products such as sport wear, The company might also be
developed globally, building upon its strong worldwide brand., Increased female participation in
athletics and New technology and innovation to stay on top of market needs
Threats: Continuing challenges in import/export duties, Strong competition from some of its
major challengers in all branches of the business, Negative image due to "sweatshops" , Increase
in the Price of Raw materials and Negative image created by the sponsored athletes

Target Market: We focus our NIKE Brand product offerings in eight key categories: Running,
Basketball, Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear
(our sports-inspired lifestyle products) and Golf.
Nike as Leader in Athletic Industry

“Companies that have taken leadership positions in their industries in the last decade such as
Nike have done so by narrowing their business focus, not broadening it. They have focused on

© Jili'ow, Business strategy, corporate strategy, Report: Business Strategy 20

delivering superior customer value in line with one of three value disciplines: operational
excellence, customer intimacy, or product leadership.

Nike's Strategies

Nike follows many strategies in order to become the world’s leading designer, marketer and
distributor of athletic footwear, apparel and accessories. One of its strategies is continuous focus
on innovation and emphasis on its research and development department and they do their best to
produce footwear, apparel and athletic equipment that reduce or eliminate injury, help in athletic
performance and maximize comfort and enjoyment. (Dermesropia et al., 2004).
Nikes Corporate Strategy: Nike’s overall corporate strategy focuses on Delivering value to
shareholders, consumers, suppliers, employees and the community, Nike can achieve this by
continuing to focus on its mission: To bring inspiration and innovation to every athlete in the
world. And according to Nike co-founder Bill Bowerman, if you have a body, you are an athlete.
Nike will pursue this strategy to be the leader in athletic industry
Nike's Business Strategy: According to Mahdi1, Abbas & Mazar3, (2015), Strategy has
different perspectives and points of views most of them lies in the concepts of (cost leadership,
differentiation and focus strategies) or a combination of them. Porter (1980) suggested the cost
leadership strategy for the first time Nike's Business Level Strategy
Business-level strategy contains overall business's positioning in the. NIKE stays competitive
due to its cost leadership, product differentiation, and industry segment management.
Corporate Strategy: Corporate-level strategy usually concentrates on the corporation's capacity
to focus on specific businesses that make best use of the long-run profitability of the
organization. NIKE Corporation is capable to continue its long-run business success and even
carry on its growth within its industry for the reason that it produces what it knows best, as well
as, develops and innovates its products.
RECOMMENDATIONS
Nike's business performance is pretty well, but being a leader in the market doesn't necessarily
mean to be a leader forever. So Nike is currently facing a tough competition from Adidas and
Reebok. Adidas's products are quite similar with that Nike and they are used also in the same
purposes. Although Nike is the leader of the industry in terms of brand recognition and quality it
should be careful when sitting the price and not so aggressive any more. Nike also employs
© Jili'ow, Business strategy, corporate strategy, Report: Business Strategy 21
many strategies to increase its presence in the global market but using multiple strategies can be
disastrous some times. Careful selection for the best strategy with right time becomes perquisite,
Nevertheless the following recommendation would be essential for Nike to be successful in the
global market for the generations to come.

 Nike should maintain its research and development and that is the only strategies that makes
possible for Nike to remain in the market in this competitive in this digital age.
 As Nike's brand became very recognizable in the global markets, it's recommended for
diversification by entering other markets, possible electronics.
 Nike should improve its facilities' working conditions to enhance its image locally and
globally.
 Conforming Nike's corporate strategy with business strategy is also recommended
 Although Nike employs backward strategy and manages it suppliers, good relationship with
its different supplies is also recommended in order to maintain smooth production.
 Improving its image by enhancing labour working conditions is also important
 As Nike's Brand became very familiar and maintains large percentage of the athletic market
share, using intensive strategy is highly recommended. Intensive strategy is very useful for
Nike as it has full controls its suppliers and its channels of distribution is reliable, this
strategy is also very useful for Nike , because Nike's athletic industry is growing rapidly and
Nike's performance has been perfect for the past decades.
 Product development strategy is specifically recommended, because Nike's industry has now
been characterized by a rapid growth, to make matters worse, its major competitor Adidas
provides high quality product at subsumable price, Nike's product are same as those
produced by Adidas and can be used as same purpose. Compared to its competitors Nike is
excellent for its research & development and maintaining this is also highly recommended.
Nevertheless, Nike may pursuit a number of potential strategies, to remain competitive and
lead the athletic industries the following strategies are strictly recommended

 Market development
 Market penetration, Product development
 Backward development, Forward integration &Horizontal integration and related
diversification
© Jili'ow, Business strategy, corporate strategy, Report: Business Strategy 22
 REFERENCES

(2009). Annual Report Pursuat to Section 13 or 15 (d) of the Securities Exchange

Act of 1934.Washington: Nike.

David, F. R. (2009). Strategic Manegement (13 edition ed.). New york.

David, F. R. (2009). Strategic Manegement: Concepts and Cases. New york:

Prentice Hall.

Hanrahan, W. (N/A). Introduction to Management. Newcastle, UK.

Hussain A. Ali Mahdi, M. A. (2015). A Comparative Analysis of Strategies and Business

Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the

context of a Dynamic and Competitive Environment. International Journal of Business

Management and Economic Research , 167.

Hussain A. Ali Mahdi, M. A. (2015). A Comparative Analysis of Strategies and Business

Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the

context of a Dynamic and Competitive Environment. International Journal of Business

Management and Economic Research(IJBMER) , 170.

Neiderhauser, J. E. (2013). How Nike’s Leadership Affects Brand Image Internally and
Externally. Journal of Undergraduate Research XVI .

Nike. (2016). Nike, inc. Reports fiscal 2016 third quarter results. Beaverton,: Nike.

Nike, A. R. (2015).Nike, Inc. Annual Report on Form 10-K.Washington: Nike.

Rammohan, A. P. ( 2013, November 19). Integration, Incentives and Innovation Nike’s Strategy
to Improve Social and Environmental Conditions in its Global Supply Chain.

Rammohan, A. P. (2013, Nov 19). Integration, Incentives and Innovation Nike’s Strategy to
Improve Social and Environmental Conditions in its Global Supply Chain.
© Jili'ow, Business strategy, corporate strategy, Report: Business Strategy 23
Rammohan, A. P. (2013, November 19). Integration, Incentives and Innovation Nike’s Strategy
to Improve Social and Environmental Conditions in its Global Supply Chain.

Ros, A. A. ( 2011). Nike Strategy: Strategy Management. International Journal of Competitive

Intelligence, Strategic, Scientific and Technology Watch , 4.

Ros, A. A. (2011). Nike's Strategy: Strategy Management. International Journal of Competitive

Intelligence, Strategic, Scientific and Technology Watch .

Ros, A. A. (2011). Nike Strategy: Strategy Management. International Journal of Competitive

Intelligence, Strategic, Scientific and Technology Watch Sciwatch Journal, , 4, 1.

Ros, A. A. (2011). Nike Strategy: Strategy Management. International Journal of Competitive

Intelligence, Strategic, Scientific and Technology Watch Journal.

Ruiz, J. L.(2010). Nike, Inc.(Nke). N/A: Nike Inc.

Ruiz, J. L. (2010). NIKE, Inc. (NKE), Investment report. Nike.

Smithson, N. (2016, May Friday). Panama.com. Retrieved July, Friday, 2016

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 APPENDICES
APPENDEX A: NIKE'S SWOT ANALYSIS
STRENGTHS
1) Nike is strong at research and development.
2) Nike is a very competitive organization.
3) Nike is a global brand
4) Innovative designs
5) Nike Strongly controls over its own
distribution channels
6) Customization availability
7) Nike is Strong in Marketing and R & D
8) Diverse portfolio & Customer Loyalty
9) Strong Financial Position
10) Nike doesn't own any Factories
OPPORTUNITIES
i. Nike's Product development offers
many opportunities.
ii. The brand is severely defended by its
owners whom truly believe that Nike is
not a fashion brand There is also the
chance for Nike to develop new
products such as sport wear.
iii. The company might also be developed
globally, building upon its strong
worldwide brand identification.
iv. Increased female participation in
athletics
v. New technology and innovation to stay
on top of market needs
© Jili'ow, Business strategy, corporate strategy, Report: Business Strategy
WEAKNESS
1. Nike does have a diversified range of
sports products.
2. Market is becoming saturated and
consumers may become sick of Nike
brand and move to other smaller,
more individual brands.
3. Negative image portrayed by poor
working conditions in its overseas
factories
4. Nike only concentrates youth and
young adult market
5. Luck of stores serving females
6. Heavy dependence of footwear sales
THREATS
1) Continuing challenges in import/export
duties
2) Strong competition from some of its
major challengers in all branches of the
business
3) Negative image due to "sweatshops"
4) Increase in the Price of Raw materials
5) Negative image created by the
sponsored athletes
6) Nike will always face threats from
pressure groups and human rights
campaigners over fair trade and wages
in the third world can potentially
damage brand and customer loyalty.
25
APPENDEX B: COMPETITIVE PROFILE MATRAX

3.0 COMPETITIVE PROFILE MATREX (CPM)

NIKE ADIDAS PUMA

Critical Success Factor Weight Rating Score Rating Score Rating Score

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

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 APPENDEX C: EFE MATRAX

External Opportunities
1. Creating sportswear that would incorporate recycled materials from their own
production lines and other places. 0.05 3 0.15
2. Promotion as a fashionable wear, not just sportswear. 0.06 2 0.12
3. Growing segment of the female athletes. 0.08 3 0.24
4. International expansion into emerging markets – e.g. India 0.12 4 0.48
5. Additional marketing of existing products to appeal to new demographic groups. 0.07 2 0.14
6. Develop new alliances with companies that are respected regarding social
responsibility. 0.06 1 0.06
7.Brand reorganization by market regions 0.07 2 0.14
External Threats
1.High competitive industry 0.14 4 0.56
2. Failure to respond to market trends in timely manner could greatly affect
financial position. 0.09 4 0.36
3. Production of counterfeit goods, and generic products. 0.06 2 0.12
4. Negative public perception created by environmental, child labor,contracted
manufacturing issues, and sponsored athletes. 0.09 3 0.27
5. International currency changes could decrease profits. 0.06 2 0.12
6. Federal Trade regulations in dealing with foreign manufactures. 0.05 2 0.27
Totals 1.00 3.03

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APPENDEX D: IFE MATRAX

Internal Strengths

1) Recognized brand name – Swoosh is ubiquitous 0.10 4 0.40

2) Strong in research and development – innovative product development 0.07 3 0.21

3) Strong marketing campaign - sponsors top athletes. Marketing practices
enables them to expand the athletic market 0.09 4 0.36
4) A very professionally competitive company 0.08 3 0.24
5) Diverse portfolio 0.08 3 0.24
6) Successful advertising campaigns 0.09 4 0.36
7) Customer loyalty 0.06 3 0.18
8) Strong financial position 0.09 4 0.36
9) Strong international presence 0.10 4 0.4
Internal Weaknesses
10) Products are highly priced 0.06 2 0.12
11) Revenues are still mostly dependent upon footwear sales 0.05 2 0.10
12) History for violations of minimum wages, child labor and over times in its
manufacturing countries. 0.06 2 0.12
13) Little control over quality of products from 3rd party contractors 0.05 1 0.05
14) Anti-globalization groups 0.04 2 0.08
15) Price sensitivity of products 0.06 2 0.12
Totals 1.00 3.10

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APPENDEX E: 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

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Sources: Perleybrook.umfk.maine.edu

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