team nike final presentation
TRANSCRIPT
OMAR ANDAZOLA EMILY MAJORS KRIS LOVIN
Strategic Management CaseAnalysis
June 7th 2016Dr. Isaac Wanasika
NIKE TOP MANAGEMENT
PHIL KNIGHT
FOUNDER OF NIKE
MARK PARKER
CEO
TREVOR EDWARDS
PRESIDENT OF NIKEBRAND
A director since 1968, isChairman of the Board ofDirectors of NIKE, Inc. Mr.Knight is a cofounder ofthe company and, exceptfor the period from June1983 through September
1984, served as itsPresident from 1968 to
1990
For more than 30 years,he’s brought innovative
concepts and engineeringexpertise into such vitalroles as Vice President of
Consumer ProductMarketing, Vice Presidentof Global Footwear andCoPresident of the Nike
Brand.
Is responsible for leading all
category and geographic
business units, the Jordan
Brand and Action Sports,
which includes Hurley
International LLC, Digital
Sport and brand management
throughout the world as well
as leading NIKE's wholesale,
retail and ecommerce
operations.
Net Worth: 28B Net Worth: 250M Net Worth: 5.2M
Short Term Goals
Financial
ROI CapitalAccelerated Cash FlowRevenue GrowthIncreaseEarnings/ShareReturns on capital
Sustainability
ManufacturersMaterialsLabor
ConsumerEngagement Infrastructure
LegacyInfrastructure
Incremental RevenueGross Profit
Efficiency
Optimize Admin & Selling Expense
Political Drivers
Nike is the number one in sportswear. Nike’s profits, turnover, marketing,sponsorship and advertising surmount all other sportswear companies.Nike not only refers to its position as a market leader, but also sees itselfas leading the industry in labour practices initiatives.
Nike refers to themselves as a network firm. This means they employ8000 people in management, design, sales, and promotion, and leavesproduction in the hands of some 75,000 workers hired by independentcontractors.
Most of the out-sourced production takes place in Indonesia, where apair of Nikes that sells in the UK for around £60 is produced for about £3and young women paid as little as £0.10 per hour.
At the moment Indonesia is Nike’s biggest production centre, with 17footwear factories that employ 90,000 workers and produce about 7million pairs of shoes each month.
Nike Sweatshops
“AT NIKE, WE BELIEVE IT IS NOT ENOUGHTO ADAPT TO WHAT THE FUTURE MAY
BRING – WE’RE CREATING THE FUTURE WEWANT TO SEE THROUGH SUSTAINABLE
INNOVATION.”
Nike CEO, Scott Parker
Eliminating waste through more efficient product
design and manufacturing technologies.
WASTE
In FY15 alone, 54 million pounds of factory scrap was
transformed into premium materials used in Nike
performance footwear and apparel.
Footwear manufacturing, diverted 92% of total waste
from landfill and incineration without energy recovery.
ENERGY
Launched Energy and Carbon program in 2008, Nike
footwear contract manufacturers have cut energy use
per unit in half
Meaning today it takes about half the energy and
emissions to make a pair of shoes compared to eight
years ago.
Focus on understanding, reducing and improving
our water use.
WATER
Reduced water use by 18% per unit in apparel materials
and 43% per unit in footwear manufacturing, far
surpassing goals for FY15.
CHEMISTRY
Launched Energy and Carbon program in 2008, Nike
footwear contract manufacturers have cut energy use
per unit in half
Meaning today it takes about half the energy and
emissions to make a pair of shoes compared to eight
years ago.
INNOVATING THE ROLE OFTHE WORKER
Rely on a source base that is high performing, resilient and
agile, with workers that are motivated and fairly compensated
to deliver high productivity and worldclass product.
Running pilot research programs dedicated to engaging
and connecting workers to healthcare, education and
finance networks to make positive changes inside and
outside the workplace.
NIKE’S COMMITMENT TO TRANSPARENCY
Transparency and accountability are fundamental to Nike’s
sustainable business approach.
The Nike Manufacturing Map discloses the names, locations
and demographic information about the workforce at the
factories we contract to make our product, and holds us
accountable for our chosen source base.
MANUFACTURING GOALS FOR 2020
• Source 100% from factories that meetour definition of sustainable
• Ensure contract factory workers sharein productivity gains
• Establish partnerships supporting theneeds of factory workers both inside and
outside the factories
Our mission to bring inspiration and innovation toevery athlete in the world drives us to encourage
every person to reach their full potential, whether it’son the track, field or court, at work or at home. Westrive to help people be active and engaged, fully
participating in the world around them.
What’s good for our consumers is also good for ouremployees and our communities. We believe thatinvesting in our employees and communities isessential to achieving our ambitious growth and
innovation agenda.
Our 2020 Targets to Unleash HumanPotential:
• Invest at least 1.5% of pretaxincome to positively impact
communities• Attract and develop diverse talent to
drive the future of the industry
North America Performance DriversNike experienced doubledigit growth in its top line across several major categories including Jordan,
Sportswear, Running, and Men’s Training.
Nike introduced several product innovations including Tech Pack, Aeroloft, and Flyknit.
Sales growth trends were strong in both the wholesale and directtoconsumer (or DTC) channels.
Analyzing Nike’s performance in Greater ChinaGreater China was the fastestgrowing Nike segment in fiscal 2Q16. Segment sales grew 23.7% yearoveryear to
$938 million. The segment accounted for 12.2% of Nike’s sales and 24.4% of pretax income in the quarter.
Nike experienced growth in almost all categories in Greater China with sportswear, running, and NIKE basketball
being the major sales drivers.
OverallRobust Growth In Running, Basketball And Soccer Categories
Strong Growth In North America, Emerging Markets And Central And Eastern Europe
Increasing Profitability
Innovative Product Portfolio
Economic Drivers
Social DriversINNOVATING TO GET
KIDS MOVING
CREATING POSITIVEIMPACT IN LOCAL
COMMUNITIES
ACCELERATING GLOBAL CHANGE
Technological Drivers
3D motion analysis (kinematics)Ground reaction forces and loading rates (kinetics)Footpressure measurement (inshoe and external)AccelerometersFoot morphology (anthropometrics)Electromyography (muscle activity)Highspeed video (>30,000 frames/second)HumacNorm (isokinetic muscle strength testing and measurement)Metabolic cart (oxygen consumption)Electrocardiograms (ECG)Skin and coretemperature sensorsSkin humidity sensorsCopper Sweating MannequinThermal cameraBlood chemistry analyses
TESTING METHODS
Technological Drivers
PHYSIOLOGYPhysiology team conducts research with the goal of creating footwear and apparel solutions thatenhance athlete performance. The goal of this research is to create footwear and apparel solutions
that lower an athlete’s body temperature and reduce his or her energy expenditure, therebyallowing him or her to train longer and harder.The team focuses on three primary athlete needs:
Thermoregulation
Recovery
economy
PORTERS FIVE FORCES
Threat Of NewEntrants
Low to Medium
BargainingPower OfSuppliers
Low
CompetitiveRivalry WithinThe Industry
Threat OfSubstituteProducts
BargainingPower OfCustomers
Low to Medium
Medium to High Low to Medium
KEY ORGANIZATION RESOURCES AND CAPABILITIES
Research and development Innovative
Variety of products
Major Manufacturing and distribution facilities
Marketing strategies
VALUE CHAIN ANALYSIS
Firm infrastructure: It system across supply chain, strong financial position and CRS,empowerment of top management, great financial discipline with low debt, strongbrand product market place solution delivery and support, effective complianceprocess through strategic knowledge and verificationHuman resources management: strong management team, global learning and stafftraining, excellent employee relationship, minimum hierarchy concept, greatmanagement and efficient corporate strategy globally, blend of new hires andpromotion, high ethical values among employees, well monitored labor audit addbrand auditsTechnology development: research and product development, leading edge intechnology development, product improvement, ability to change, great producttechnology such as motion analysis metabolic rate and blood work, airsoletechnology expert Procurement: long term and trusting relationship with supplies, localized and bulkprocurement, just in time strategy as finished goods are shipped as soon as they areready for sale, buffer and safety stock in hand
VALUE CHAIN ANALYSIS
Inbound logistics: Low production costs, locally purchase most raw materials in bulk,specialized materials importation, inventory control and reduced inventory risk, focuson product design marketing and product technology, Operations: Outsourcing manufacturing and assembly, design, technologicalinnovation, effective supply chain management, heavily investment in R and D,Quality control, low and no packing options, no heavy metal, glue or solvent usedOutbound logistics: strong control over global distribution channel, just in timedelivery, good supplier relations, ability of forward integration, use of strong servers tosupport and manage supply chain projectsMarketing and sales: high brand recognition and reputation, scale SD vantage, priceleadership and value based pricing strategy, first mover advantage in ecommerce inthe industry, aggressive marketing, celebrity endorsement, high allocation onmarketing budget, strong customer base, diversity of products offered onlineService: customer care, presales and after sales service, use of IT to improvecustomer care, increased customer satisfaction, customization
Areas where internal efficiency and cost savings can be obtained
Research and development
Customization
SWOT ANALYSIS
STRENGHTS OPPORTUNITIES
WEAKNESESS THREATS
Brand RecognitionHigh Quality ProductEffective MarketingStrategyStrong R&DStrong Distribution Chain
Overseas Manufacturing DependenciesMedium Retail PresenceHigh Price Compared to CompetitorsDecreasing U.S. Market Share
Expansion into emergingmarkets (CHINA)Growth in SustainabilityIncrease Demand inproduct InnovationGrowth in Female Athletes
Fierce Competition Within IndustryRevenue Reliance on Consumers DiscretionaryincomeFluctuation In CurrencyLosing out on Signing Big Time Athletes
Company Value & Competitor Value
Nike is number one with a brand value of 19 billion dollars
Adidas is number 2 with a brand value of 5.8 billion dollars
Under Armor number 3 with a brand value of 4.1 billion dollars
THE MARKET IS CURRENTLY IN A MATURE STATE
MARKETING STRATEGIES
Celebrity Endorsements
Word of Mouth
Sponsorship
Innovation
Selling Benefits Advertising
PROBLEMS/ISSUES
The growth of competitors
Going out of style keeping
up with trends
Recovery from ethical issues
CORE COMPETENCIES
Strong Marketing Strategies Extensive R&D Capabilities
Customer Focus Supply Chain Capabilities
CONTINUE MAINTAINRESEARCH &
DEVELOPMENT IN
ENVIRONMENTAL
PRODUCTS
DO NOT STRAY AWAY
FROM PROPER LABOR
PRACTICES &
PROTECT EMPLOYEES
CONNECT WITH LOCAL
COMMUNITIES AND
KIDS THROUGH
ADVERTISING
CONNECT
CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL RECOMMENDATIONS
DONT SLEEP RESEARCHOBTAIN NEW BIG
TIME ATHLETES TO
THE NIKE TEAM AS
ENDORSEMENT PAY
CONTINUE TO
INNOVATE PRODUCT
PERSONALIZATION IN
EACH ATHLETE
ADVERTISE THE FACT
THAT NIKE HAS
FIXED THEIR SUPPLY
CHAIN ISSUES
SUPPLY CHAIN AD
SHORT TERM RECOMMENDATIONS
EXPANSION INTEGRATELOOK FOR EMERGING
MARKETS TO EXPAND
(CHINA,BRAZIL)
NIKE HAS THE
CAPACITY TO
INTIGRATE NEW
TECHNOLOGY . USE IT!
BECOME THE MAIN
SPONSOR OF MAJOR
SPORTING EVENTS
WORLD EVENTS
LONG TERM RECOMMENDATIONS
SOURCES
About Nike The official corporate website for NIKE, Inc. and its affiliate brands.. (2016). About.nike.com.
Retrieved 6 June 2016, from http://about.nike.com/
(2016). Retrieved 6 June 2016, from http://www2.warwick.ac.uk/alumni/services/eportfolios/bsqjfb/nike.pdf
(2016). Retrieved 6 June 2016, from
http://s1.q4cdn.com/806093406/files/doc_financials/2015/ar/docs/nike2015form10K.pdf
Forbes Welcome. (2016). Forbes.com. Retrieved 6 June 2016, from
http://www.forbes.com/sites/panosmourdoukoutas/2014/09/28/hownikewins/#665cf9166ebe
Key Trends Impacting Nike's Performance In 2013 Trefis. (2016). Trefis. Retrieved 6 June 2016, from
http://www.trefis.com/stock/nke/articles/205350/keytrendsimpactingnikesperformancein2013/201309
11
Nike. (2016). MIT Sloan Sustainability Initiative. Retrieved 6 June 2016, from
http://mitsloan.mit.edu/sustainability/profile/nike
Nike Through The Lens Of Porter's Five Forces Trefis. (2016). Trefis. Retrieved 6 June 2016, from
http://www.trefis.com/stock/nke/articles/217421/marynikethroughthelensofportersfiveforces/201312
02
Nike, Competitive Advantages. (2016). Slideshare.net. Retrieved 6 June 2016, from
http://www.slideshare.net/divyamishra/nikecompetitiveadvantages
North America Is Nike's Most Significant Growth Driver Market Realist. (2016). Marketrealist.com.
Retrieved 6 June 2016, from http://marketrealist.com/2015/12/northamericasignificantgrowthdrivernike/