UNIVERSITY OF CENTRAL PUNJAB

A Project report submitted to Prof. Rabiha Salman in partial fulfilment of the requirements for the course curriculum of the Business Policy & Strategy

By:

SAIMA ARSHAD SADIA CHAUDHARY AMNA AKBAR KASHAN MUMTAZ JAVED IQBAL OSAMA RIAZ

ACKNOWLEDGEMENT

Praise to be Allah who is Aleem!

We must say that this Business Policy Project was successful because of Allahs blessings and our parents and friends sincere prayers. However, if this project lacks something somewhere, it is solely because: we are human. Acknowledgement of our work can never be complete without sharing our humble words of thanks with our highly respected, talented and esteemed Professor Rabiha Salman, without whose untiring efforts and guidance, it would have been far difficult for us to prepare and complete this project.

We would like to complete this acknowledgement with a prayer: May Allahs help be with us in achieving the best

EXECUTIVE SUMMARY

If you have a body, you are an athlete . When Bill Bowerman made this observation many years ago, he was defining how he viewed the endless possibilities for human potential in sports. He set the tone and directionfor a young company called Nike, and today those same words inspire a new generation of Nike employees. The goal is to carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for the shareholders. It started with a handshake between two visionary Oregonians - Bowerman and his University of Oregon runner Phil Knight. They and the people they hired evolved and grew the company that became Nike from a US-based footwear distributor to a global marketer of athletic footwear, apparel and equipment that is unrivaled in the world. Along the way, Nike established a strong portfolio of affiliate brands including Cole Haan, which designs,markets and distributes luxury shoes, handbags, accessories and coats; Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Hurl ey International LLC, which designs,markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom -based global football (soccer) brand.

INTRODUCTION

Nike, Inc. (NYSE: NKE) is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered near Beaverton, Oregon . It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment wit h revenue in excess of US$18.6 billion in its fiscal year 2008 (ending May 31, 2008).
The company was founded in January 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight,and officially became Nike, Inc. in 1978. The company takes its name from Nike, the Greek goddess of victory.

Nike markets its products under its own brand as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding and subsidiaries including Cole Haa n, Hurley International, Umbro and Converse.
In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name. Nike sponsors many high profile athletes and sports teams around the world, with the highly recognized trademarks of "Just do it" and the Swoosh logo.

BRIEF HISTORY

Nike, originally known as Blue Ribbon Sports, was founded by University of Oregon track athlete Philip Knight 1 and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS), making most sales at track meets out of Knight's automobile.
The company's profits grew quickly, and in 1966, BRS opened its first retail store, located in California. By 1971, the relationship between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh by Carolyn Davidson 2. The Swoosh was first used by Nike in June 1971, and was registered with the U.S. Patent and Trademar k Office on January 22, 1974. The first shoe sold to the public to carry this design was a soccer shoe named Nike, which was released in the summer of 1971. In February 1972, BRS introduced its first line of Nike shoes, with the name Nike derived from the Greek goddess of victory. In 1978, BRS, Inc. officially renamed itself to Nike, Inc. Beginning with Ilie N stase; the first professional athlete to sign with BRS/Nike, the sponsorship of athl etes became a key marketing tool for the rapidly growing company. The company's first self -designed product was based on Bowerman's "waffle" design. By 1980, Nike had reached a 50% market share in the U.S. athletic shoe market, and the company went public in December of that year. Its growth was due largely to 'word-of-foot' advertising (to quote a Nike print ad from the late 1970s), rather than television ads. Nike's first national television commercials ran in October 1982 during the broadcast of the New York Marathon. The ads were created by Portland -based advertising agency Wieden+Kennedy 3, which had formed several months earlier in April 1982. Together, Nike and Wieden+Kennedy have created many print and television advertisements and the agency continues to be Nike's primary today. It was agency co-founder Dan Wieden who coined the now -famous slogan "Just Do It" for a 1988 Nike ad campaign, which was chosen by Advertising Age a s one of the top five ad slogans of the 20th century, and the campaign has been enshrined in the Smithsonian Institution. Throughout the 1980s, Nike expanded its product line to include many other sports and regions throughout the world.

Structure
The Nike environment is a collaborative, matrix organization, where team members often report into two areas, such as geography and a global function. In the Nike brand, teams work across footwear, apparel and equipment product engines; Core consumer categories - action sports, basketball, football (soccer), men's training, running, sportswear, and women's training; and in the six geographies North America, Western Europe, Eastern/Central Europe, Greater China, J apan, and Emerging Markets. NIKE, Inc. affiliate brands operate in a similarly collaborative way, as well as critical corporate functions. Below is Nike's global senior team leading the business:Philip H. Knight, Chairman of the Board of Directors Mark Parker, President & Chief Executive Office r, NIKE, Inc. Charlie Denson, President, NIKE Brand

Board of Directors
The Board of Directors is composed of 10 independent directors, one outside director who is not independent, Philip H. Knight, the Chairman of the Board, and Mark G. Parker, President and Chief Executive Officer. There were six meetings of the Board of Directors during the year. Each director attended at least 75 percent of the total number of meetings of the B oard of Directors and committees on which he or she served. The Company encourages all directors to attend each annual meeting of shareholders.

Board Committees
The Board currently has an Executive Committee, an Audit Committee, a Nominating and Corporate Governance Committee, a Finance Committee, a Corporate Responsibility Committee, and a Compensation Committee, and may also appoint other committees from time to time. Each committee has a written charter.

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It is one of the most recognized symbols in the world The Swoosh. Simple. Fluid. Fast. (Quote from Nike s website)

 

    

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Products
Nike sells an assortment of products, including shoes and apparel for sports activities like association football, basketball, running, combat sports, tennis, American football, athletics, golf and cross training for men, women, and children. Nike also sells shoes for outdoor activities such as tennis, golf, skateboarding, association football, baseball, American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and recreational uses. NIKE, Inc.s wholly-owned affiliates, reported as Other Businesses Cole Haan, Converse, Inc., Hurley International, LLC, NIKE Golf, and Umbro, Ltd. play a significant role in the future growth plans. At the end of fiscal 2009, NIKE, Inc.s affiliate businesses contributed approximately $2.5 billion of the companys $19.2 billion in revenue. As part of their growth strategy, they continue to invest in opportunities that will generate the highest possible long -term returns.

Cole Haan
Cole Haan, a wholly-owned subsidiary of NIKE, Inc., is one of Americas leading luxury brands, offering high-quality mens and womens footwear, accessories and outerwear. Each product blends craftsmanship, design and innovation to give it distinctive character and style. Cole Haan operates more than 180 retail locations throughout the United States, Canad a, the Middle East and Asia. Cole Haan is headquartered in New York City and Yarmouth, Maine.

Converse Inc.
Converse, Inc., established in 1908 and based in North Andover, Massachusetts, has built a reputation as Americas Original Sports Company and has been associated with a rich heritage of legendary shoes such as the Chuck Taylor All Star shoe, the Jack Purcell shoe and the One Star shoe. Today, Converse offers a diverse portfolio including premium lifestyle men's and women's footwear and apparel. Converse product is sold globally by retailers in over 160 countries and through more than 50 company -owned retail locations. Converse realized $915 million in sales in fiscal 2009.

Hurley International LLC

Headquartered in Costa Mesa, California, Hur ley International LLC designs and distributes a line of action sports apparel for surfing, skateboarding and youth lifestyle apparel and footwear under the Hurley brand name. Hurley realized $203 million in sales in fiscal 2009.

NIKE Golf
Located at NIKEs World Headquarters in Beaverton, Oregon, Nike Golf designs and markets golf equipment, apparel, balls, footwear, bags and accessories worldwide. Nike Golf is passionately dedicated to ushering in the future of this great sport by developing ground -breaking innovations that enable and inspire athletes .

Umbro Ltd.
Founded in 1924 and headquartered in Manchester, England. Umbro, Ltd. designs, distributes, and licenses athletic and casual footwear, apparel and equipment, primarily for the sport of football (soccer), under the Umbro trademarks. Umbro Ltd. has been associated with football since the 1930s and its relationship with leading national teams and professional clubs includes exclusive endorsements and distribution rights for playing kit, apparel and equipment, including playing and training kits for Englands National Team. Umbro realized $174 million in sales in fiscal 2009.

aiming to lead, in every way.

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reen ankings is a a a riven New week's assessment f the largest mpanies in the .S. and in the w rld. n the industry f nsumer goods, Nike was rated for the green score and number for the number reputation score.

Nike Named as One of t e 100 Best Corporate Citizens for 2010

orporate esponsibility aga ine (the new name of aga ine) released the th annual best orporate i tizens i st arch , featuring Nike on the list.

Nike Named for Apparel & Innovation on Fort ne's 2008 Most Admired Companies ost dmired For the third consecutive year, Nike was ranked as the ompany in merica in the pparel industry, according to Fortune agazine. Nike was second behind pple in nnovation in the overall rankings of more than companies. n addition to placing first in innovation in pparel, Nike also topped the industry in social responsibility up from third a year ago as well as financial soundness and long-term investment.

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Nike Named to Fast Company's "Fast 50" Most Innovative Compani es List Nike was called out th on the list for its innovative consumer experiences like un m ericas, the Nike omen's arathon, Nike+ Supersonic, House of Hoops and NikeiD Studios. he magazine said Nike's "latest masterstroke is social networking. From events to the eb to unique retail hubs, Nike is blurring the line between brand and experience." I.D. Magazine 2007 Best Of Consumer Products 2007 hree Nike products Best of onsumer roduct have been recognized by .D. magazine in its category. Nikes evolutionary Support Sports Bra (described by the generation), the magazine as a piece of apparel worthy of the itle onsidered K shoe ( reen doesnt have to be ugly) and Nike+ ir Zoom oir ( as a reflection of an active digital lifestyle, this has no equal) were selected.

Business Week 2007 Nike placed # on Business eeks op l aces to aunch areer list. Students gave us even higher marks ranking us based on a survey of , undergraduates. ll companies are # featured online. FORTUNE Magazine 2006 2007 & 2008 Nike has been recognized three times by
Best ompanies To ork For" list for employee benefits FORTUNE magazine on its " like paid sabbaticals, on-site childcare, and a percent discount on company products, as well as for corporate responsibility efforts in addressing conditions in overseas contract factories.

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Nike 5K for Kids Recognized As Yout Program of t e Year , , Running US and outhRunner.com On February named the Nike K for Kids Series the outh rogram ontributor of the ear.

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Diversity Helps Drive Success

Diver it I l i i f me t l t i e m e m rter It el r i e r erf rm el e It tm e t it e etter It mer

Its simple. At Nike, we consider diversity and inclusion to be an integral part of the business. The differences allow the brand to be creative and innovative with a universal, global reach. Diversity helps us recruit the brightest minds. The more we work together, the more we can offer the consumer. From the earliest days at Nike, diversity has been a priority. Weve had diversity recruiters on staff for 15 years. A few years ago, we established the U.S. Leadership Team Diversity Steering Committee to monitor and measure the progress in driving and promoting diversity. We also have a 12 -member U.S. Retail Diversity Council whose sole goal is to foster and grow multiplicity within the U.S. retail locations. Diversity means different things in different regions and Nike continually strives to ensure that the diversity initiatives are truly global. For example, in the European headquarters we currently employ over 70 different nationalities, with recruits from 10 of the top MBA schools across Europe. Nike also joined Stonewalls Diversity Champions program for employers in 2006. We embrace equality and fairness in the workplace by recruiting from employment sources worldwide. Some of these organizations include, but are not limited to, the European PWN (Professional Womens Network), the National Black MBA Association Career Fair, Portland Latino Career Fair, the Diversity, In c. /NY Times Career Fair, and the National Society of Hispanic MBAs.

Human Resources
Nike does more than outfit the worlds best athletes. We are a place to explore potential, obliterate boundaries, and push out the edges of what can be. Were looking for people who can grow, think, dream and create. We thrive in a culture that embraces diversity and rewards imagination. We seek achievers, leaders and visionaries. At Nike, its about bringing what you have to a challenging and constantly evolving game.

At Nike, Human Resources take care of the team. From scouting out the best talent in Staffing to getting equipped for the next challenge through the Learning and Development department, Nike HR keeps us in top form.

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Partnering with each division, we find the right individuals to staff the departments, placing them in the perfect environment. We are dedicated to creating a dynamic and diverse work environment just ask Fortune magazine. Nike Human Resources include: y y y y y y y y Staffing Employee Relations Compensation BusinessHR HR Service Center Global Learning & Development Diversity

Location
Nike's world headquarters are surrounded by the City of Washington County, Oregon, United States, Near Beaverton, Oregon.

Ot er Facts
Type Area served Revenue Employees Website Public (NYSE: NKE) Worldwide $19,014 million (2010) 30,200 (2008) www.nike.com

Nike in Pakistan
The year 2001 has seen the sport shoes, apparel and accessories market transform in Pakistan as Speed (Pvt) Li ited , an Akbar Group co pany 4, acquired the exclusive distribution rights for Nike in Pakistan. Nike Flagship Stores in Karachi and Lahore offer the latest range of authentic Nike products for men and women, including shoes, apparel, time ware and vision as well as sports accessories fo r tennis, running, cross training, golf, soccer, basketball and an extensive selection of childrens wear.

Speed (Pvt) Li ited has nationwide presence through strategic partnerships and Nike only stores.

Vi ion

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To continue to offer quality products with increasing growth in the industry and expanding globally. The mission has always been to provide a competitive edge by developing the most technological products. Keeping in mind fair labor practices in all the suppliers factories, while maintaining a competitive advantage, with the shareholders interests, and company profits in mind. e also believe the employees are one of the most important assets. To increase the responsibility towards the environment by evaluating the impact of day to day operation and attempts to change operations that have a negative impact.

Economic Performance: Revenues by Regions (2007 2009)

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Internal Strengt and Weakness

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Strength            Strong brand recognition Internet sales Growing international presence Superior research and development department Strong financial returns Strong sense of culture in the working environment Great celebrity spokespersons Automatic replenishment system Successful experience being competitive Nike doesnt own any factories Successful marketing campaigns

Weakness  Nike doesnt own any factories  Lack of stores catering to the active females  Poor employment practices at their international manufacturing sites giving a bad reputation  Heavy dependency on footwear sales  Issues with Footlocker

IFE Matrix

ALIGNING THE 7 S
STRUCTURE:
y y

Matrix-structure Balances creative with structure and discipline

STAFFING:
y y y y

Mix of new hires and promotions Promotions, consistency/company knowledge New-hire employees, business minded Socializing

SHARED VALUES:
y y

Balance of individualistic atmosphere and structure of matrix Calculated risk taking

SYSTEMS:
y y

Encourages work ethics State of the art computer systems

SKILLS:
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Financially disciplined

STYLE:
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Empowerment of top management

STRATEGY:
y

Diversify business portfolio with new acquisitions

PORTER'S FIVE FORCES BA GA N NG POWER OF B

y y y y

Consumer s participation in improving conditions in LDCs Segmented buyers High price points surveys show people are willing to pay more People do not usually do what they say

BARGAINING POWER OF SUPPLIERS - LOW

y y y

Really powerful suppliers. One company is producing 40% of worldwide shoes How can you impose your standards on them? What about the other companies They can forward integrate, they have the technology

BARRIERS TO ENTRY - LOW (NEW ENTRANTS)

y Competing shoes and new companies coming in market

RIVALRY A ONG EXISTING COMPETITORS - HIGH

y y Competitors are doing the same thing Low production cost / High marketing

THREATS OF SUBSTITUTES

ERS - HIGH

LOW

Industry Overvie

Athletic footwear manufactures captured nearly one -third of the total footwear market in the early 1970s. Over a span of more than 25 years, American consumers spent $300 billion on 7.5 billion pairs of athletic shoes. Reebok international Ltd. and Adidas became $ 3.5 Billion companies, while Nike Inc. became the first ever $ 9.5 Billion company. By 1996 the number of establishments had dropped to about 52, with 12 factories closing since 1995. China's imports increase by 6 percent to 1.26 billion pairs in 2008. Brazil's share increased 2.3 percent to 83.5 million pairs in 2008. Vietnam's share jumped 91.9 percent to 23.5 million pairs in 2008. The US markets continue to be dominated by imports from countries with low -cost labour. From 1997 to 2008, the value of industry shipments declined from $ 219.6 million to $106.5 million.

Management Ratio
RATIOS 2010 2009 2008

ROA ROI ROE Financial Ratio

RATIOS
QUICK RATIO CURRENT RATIO
LONG TERM DEBT TO EQUITY

13.8% 4.6 20.7%

11.6% 4.4 18.0%

16.3% 4.5 25.4%

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2009

2008

2.18 3.3 6.57

2.07 3.00 6.45

1.99 2.7 6.35

External Opportunities and T reats

y Opportunities

 Customer use of companys products change from athletic purpose to a fashion item  Development of international trade (GAAT and NAFTA)  Generation Y children (born between 1979 and 1994) will reach 60 million  General demand for clothing/footwear for leisure activities continues to increase  Growing e-commerces positive effect since one of companys competitive advantages is Internet sales  Women demand for athletic footwear and clothing is increasing significantly
y Threats

 Competitors which copy company's business model (high value branded product manufactured at a low cost)  Reebok's strong presence with 204 factory direct stores  Adidas-Salomon AG, top European competitor  The impact of foreign currency fluctuation and interest rates, and political instability  Labor and political unrest in the suppliers countries  Cost orientated customers vs. Companys higher-end market.

EFE Matrix

At letic S oe Market S are

Competitive Profile Matrix CPM

SWOT Analysis

SO Strategies
1. Promote International sales as International trade develop 2. Increase promotion of NIKE not only as athletic but leisure clothing 3. Increase marketing to the generation Y market for Current and Future sales boost.

WO Strategies
1. Market Products, create more products and open more stores to and for women and 2. Develop better employment practices, especially in other countries to help maintain a positive image with most consumers 3. Offer more products other than focusing on just footwear

ST Strategies
1. Promote products more aggressively through endorsements with more high profile athletes 2. Promote company as an ethical company and one for the people 3. Work on promoting to countries within the EU rather than countries with a weak currency

WT Strategies
1. Promote NIKE town and develop more of an outline presence to overcome obstacles such as footlocker and other online footwear stores 2. Provide a more diversified product mix to appeal to more of the population 3. Offer a female subdivision to be more appealing and to focus on the improving the female market before competitors do.

Space Matrix

STRATEGY: AGRESSIVE * Y axis Financial Strength: Environmental Stability: * X axis +4 -1 => Y coordinate: +3

Competitive Advantage: - 2 Industry Strength: +5 => X coordinate: +3

Business Structure
Operating Segments: Footwear and Apparel

Operating Regions: US, EMEA, ASIA Pacific

BCG Matrix

Corporate Culture
The corporate culture of Nike has some values they explain it as:
y y y y y

Hungry for change Innovative beyond customer imagination Globally integrated Disruptive by nature Genuine, not just generous

Decisions
Pri ary:

Alternative:
y y y y

W y Aggressive Strategy?
y y y

Implementation
Actions: Wo en:

Focus on finding the most promising customers (kids and women) and introduce more products or improve current ones to satisfy potential increase in demand

Keep expanding into current and future foreign markets by being aggressive and the worldwide leader of the footwear industry Accelerate funding for numerous marketing campaigns in order to get to specific markets or customer groups Focus on improving working conditions and human righ ts at international manufacturer centres and at the same time increasing their productivity Implement product diversification with companys newest technologies so resulting increased earnings could be reinvested into R&D plans

Women: Prefer fashion, not footwear, they prefer clothing; we must create a shopping style. Kids : E-commerce, influenced by innovation and design, not only comfort or sports We need to consolidate US sales compared to international sales and international competitors

y y y

Open 25 specific stores specialized only for women Increase R&D expenses by 7% in women products Increase Marketing expenses by 10%, designing a specific campaign for women using female endorsements

Create a new logo for women market which would be associated with fashion trends and introduce new products

Kids:
y y y y

Increase R&D expenses by 7% in kids products Increase Marketing expenses by 10%, designing a specific campaign for kids Introduce more soccer and basketball products targeting potential youth market Research in international market to find out what are the new trends related with women and kids products (Long -term)

Evaluation
y y y

Nike annual financial reports Sales and profits reports (on -line and off-line) based on Women stores and Kids products Frequent management meetings between VP Global Brand Management (US), VP Global Footwear, VP Global Apparel, and VP Subsidiaries and New Business Development Evaluation reports

References
1. Philip Hampson "Phil" Knight (born February 24, 1938) is the co -founder and Chairman of Nike, Inc. He resigned as the company's chief executive officer in 2004, while retaining the position of chairman of the board. As of 2010, Knight's stake in Nike gives him an estimated net worth of US$11.1 billion, making him the 23rd richest person in the U.S. 2. Swoosh is the symbol of the athletic shoe and clothing manufacturer Nike. It is among the most easily recognized brand logos in the world. 3. Wieden+Kennedy (W+K; earlier spelled Wieden & Kennedy) are an independently owned American advertising agency best known for its work for Nike. Founded by Dan Wieden and David Kennedy on April 1, 1982, in Portland, Oregon, it is one of the largest independently -owned advertising agencies in the world. 4. A giant in the aviation sector in Pakistan, the Akbar Group represents Amadeus, a travel services provider whose products and services form the back bone of the aviation sector in the country through the Premier Aviation Division. It also is the General Sales Agent (GSA) for 15 major international airlines including Singapore Airlines, Thai Air and Alitalia. Other than those Commercial Divisions caters to consumers products.

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8. The Gigaton Awards recognize companies that are making a difference in regards to carbon reduction and climate change.

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