1. Nike and Deckers Acquistion
Andrew Dingler
Brian Gilroy
Ramsen Golphasin
Robby Morrissey
David Paulson

2.  Description of Nike
 Nike’s competition
 How does Nike compete?
 How successful has Nike been?
 Nike’s major challenges going forward?
 Action Plan and Recommendations
 Description of Plan
 Strategic implications for Nike
 How Nike will assess their success
 Nike’s expected financial implications?

3.  In 1962 Bill Bowerman and Phil Knight founded Blue
Ribbon Sports (BRS).
 In 1966, Bowerman, who had previously designed
shoes for his university athletes, worked with Tiger to
design the Cortez running shoe.
 In 1971, BRS, with creditor support, started
manufacturing their own line of shoes.
 The shoe bore the Nike brand name, referring to the
Greek Goddess of Victory, and the “Swoosh”
trademark, meant to symbolize the Greek Goddess’
wing.

4.  BRS and Tiger ended their relationship in
1972. BRS soon changed its name to Nike, Inc.
and debuted at the 1972 Olympic
 In 1973, Steve Prefontaine was the first
prominent track star to wear Nike shoes.
 The 1980’s were marked by the signing of
Michael Jordan as a product spokesperson

5.  Extremely team-oriented
 Environment is a collaborative, matrix organization, where
team members report into two areas, geographic and
global.
 Team work across footwear, apparel and equipment
product engines.
 Their core consumer categories are action sports,
basketball, football, soccer, men's training, running,
sportswear, and women's training.
 These are focused in 6 geographic sales locations- North
America, Western Europe, Central and Eastern Europe,
Greater China, Japan, and Emerging Markets
 Nike’s also owns and operates under the Jordan, Cole Haan,
Converse, Hurley International, and Umbro Inc. brand
names.

6.  Nike uses factories and subcontractors to
manufactures their products.
 They do this by outsourcing to companies
throughout Asia and Europe.
 Most of their suppliers are located within
factories in China, Indonesia, and Vietnam,
with smaller manufacturing firms in Italy, the
Philippines, Taiwan, and South Korea.

7.  Nike sells to retailers in 170 countries
globally.
 Nike can be found in sporting goods stores, as
well as department stores.
 Some of the major sporting goods stores that
sell Nike products are Footlocker, Sports
Authority, Big 5, Dick’s Sporting Goods, and
Champs.
 Major department stores like Nordstrom,
Macy’s and Kohl’s sell Nike products as well.
 Nike operated factory and retail stores

8.  Main
competitors are Adidas and Under
Armour
 Adidasis 2nd largest athletic footwear and
apparel manufacturer
 Adidasrelies on Europe to drive company
revenues
 UnderArmour is small, but one of the fastest
growing companies in the industry

9. FOOTWEAR APPAREL
 Threat of New Entrants- Low  Threat of New Entrants-
 Powers of Suppliers- Low Moderate
 Power of Buyers- Low  Power of Suppliers- Low
 Threat of Substitutes- Low  Power of Buyers- Low
 Rivalry- High  Threat of substitutes- Low
 Rivalry- High

10.  Usestrong brand image to demand higher
prices
 Strong
advertising campaigns help brand
image – endorsements
 Outsourcing maintains strong gross margins
 Use website to sell directly to customers

11.  Largest
Market Share in Both Athletic
Footwear and Apparel

12.  International Distribution Channels
 Research and Development
 Globally Recognized Brand
 Sponsorship is key
High Profile Athletes
Team Deals
New NFL Contract

13.  7.8% compound sales growth
 industry average of -5.3%
 Increased ROA so increased Efficeny
NKE UA ADDYY DECK COLM NKE UA ADDYY DECK COLM
2003 2010
Gross Margin 41% 44% 43% 42% 46% Gross Margin 46% 50% 43% 46% 42%
Profit Margin 7% 5% 4% 8% 13% Profit Margin 10% 6% 2% 14% 5%
Asset Turnover 1.6 2.1 1.4 1 1.2 Asset Turnover 1.4 1.6 1.2 1.4 1.1
Return on Assets 11% 11% 6% 8% 15% Return on Assets 14% 10% 3% 20% 6%
Financial Leverage 1.635 4.56 2.84 1.72 1.22 Financial Leverage 1.42 1.31 2.24 1.18 1.29
Return on Equity 18% 48% 17% 13% 18% Return on Equity 20% 13% 6% 24% 7%

14.  Imitation and Counterfeits
 Toning Shoes Trend
 Lack of Casual Women’s Shoe
 Sponsored Athletes
 Under Armour
 NFL Contract

15.  Acquire Deckers
Outdoor
Corporation
 Discontinue
Current
Female Boot Line
 Leverage new NFL
deal

16.  Manufacturers of the
popular UGG boots
 Would spark an
immediate increase in
female casual footwear
market share for Nike
 Nike can help Deckers
achieve its goal of
broadening its target
market

17.  Currently not competing well in the market
 Nike has slashed the prices on all five boots in
the female line
 Sales figures are down

18.  Find unique ways to  Do not tinker with NFL
add value to deal traditionalists
 Follow blueprint of  Expected to increase
popular college revenues anywhere
uniforms from $350-500 million
VS.

19.  Nike has been successful in strategy of acquiring
other companies, notably Cole Haan, Hurley,
Converse
 Deckers has enterprise value of $3.01 billion, while
Nike has $4.6 billion available in cash and short-
term investments
 Instead of reinvesting money in company, or
paying out higher dividends, Nike can choose to
acquire Deckers to boost revenues and market
share

20.  Donot pursue NBA
league deal
Ambush
Continue to use
strength of player
endorsements to lead
the basketball
industry
 Avoidentering
toning shoe
industry

21.  The NFL Contract
Rebooks success with the NFL contract as a
benchmark
Create a brand awareness survey for NFL fans to
measure the awareness of the Nike-NFL contract
Ultimate measure for success for the NFL
contract would be a renewal of the contract

22.  Acquisition of Deckers
2010 2011
Nike's Market Share 26.77% 28.33%
Increases Nike’s market share
Deckers outperforming their old bench
marks
Increased UGG product awareness globally

23. Forecasted Net Income
Revenue 2011 2012 2013
Nike's Current Path 20,683 22,749 24,720
Deckers Added Revenue 930 1,952 2,300
Nike's New Path 21,613 24,701 27,020

24. Operating income needed to sustain
original ROA and ROE
Improving benchmarks
Current Path 2010 2011 2012 2013
ROA 18.48% 20.94% 21.74% 23.06%
ROE 27.71% 30.97% 32.00% 33.59%
New Path 2010 2011 2012 2013
ROA 18.48% 18.43% 24.72% 25.53%
ROE 27.71% 27.14% 35.94% 36.28%

25. In conclusion, acquiring Deckers Outdoors
will improve Nike’s financial position within
their market. This acquisition is feasible
and within Nike’s traditional strategy.
Looking forward for the next three years
Nike will be in great shape if they are able
to capitalize on the acquisition of Deckers
and the NFL deal.