nike hungama india marketing finance

1. Khattab Al Qrarah Manas Ussenov Victoria Rosca Yousra Zaghdoud Bernichi

2. Agenda
• Introduction
• Nike overview
• Internal analysis
– Corporate Strategy
– Resource-based and
core-competencies
• Innovation and
knowledge
• External analysis

3. About Nike
Largest seller of athletic footwear and athletic apparel in
the world.
Design, development and worldwide marketing of
footwear apparel, equipment and accessory products.
18 000 retails in the US
Product for women, men and children
Top selling product: running, basketball, cross-training
and women’s shoes
Also design sportswear for tennis, soccer, baseball,
football, bicycling, volleyball, wrestling, cheerleading,
aquatic activities, hiking, …
The Swoosh
19713,
represents of the
wing of the
goddess.
Nike a winged goddess
capable of moving at high
speed, personifying victory
The headquarters of Nike in
Beaverton, Oregon.
56 % of its sales abroad

4. About Nike
Manufacturing Footwear & Apparel
98% outside the US: China, Vietnam, Indonesia and Thailand: 98% of
total Nike brand footwear
Raw materials: rubber, plastic compounds, foam cushioning materials,
Marketing and Advertising
• Significant weight on marketing
• Successful and influential
athletes
• Adjusting the mix of existing
product offerings, developing
new products, styles and
categories
Main competitors
Products
Sports-inspired lifestyle apparel (bags, socks,
sport balls, eyewear, protective equipment, …) +
products under other brand names in particular
markets
Owns: Converse, Hurley International, LLC, Nike
Golf (13% of total revenues, $2.5 billion

5. Famous sneakers
Nike Air Jordan
Nike Air Force One
Nike Air Max
Nike + iPod
Chuck Taylor All Star
Nike SB
Nike 6.0
Nike Flyknit Nike Roshe Run

6. Timeline
Blue Ribbon
Sports, is
founded
Phil Knight and
Bill Bowerman
in Portland,
Oregon
1964: 1978: 1979
Nike's Air
technology
patented by
inventor M.
Frank Rudy
BRS, Inc. merges
into Nike, Inc.
officially
becoming Nike,
Inc.
1981
The Air Force 1
basketball shoe
becomes the
first using the
Air technology.
19841982
Phil Knight and
CSR: commits
Nike to
standards for its
affiliated
manufacturing
facilities
1986
Corporate
revenues
surpass $1
billion for
the first time.
1988: 1989 1995 1997
Hockey stars,
including
Sergei Fedorov
and Jeremy
Roenick
19981996 2002
Acquisition of **
And until 2010,
2003
International sales
exceed USA sales.
2004
Creation of
Exeter Brands
Group
Annual revenues
exceed $ 12.25
billion
2005 2006 2008
Nike introduces shoes
featuring new Flywire****
and Lunarlite*****
Annual revenue for fiscal
year 2008 (ending May 31)
of $18.6 billion, a 14%
increase over the previous
fiscal year
Sponsor
2007
1987
Air Max shoe is
introduced
2009 2010 2014
Patent for
automatic
shoes
Greenpeace
finds toxic
product in
their product
Nike became
the first
supplier
worldwide for
football,
before Adidas
.

7. Nike’s SWOT
Strengths
• Brand recognition
• High product quality
• Effective marketing strategy
• Capacity of innovation
• Strong distribution chain
• Strong R&D
• Strong customer
relationship/satisfaction
Threats
• Fierce industry competition
• Revenue relies on consumer’s
discretionary income
• Economic rescission
• Fluctuation in the currency
Opportunities
• Expansion into emerging markets
• Increased demand in product
innovation
• Growing segment of women athlets
• Increase in the number of sports event
like Olympic, FIFA
• Develop the fashion brand image
Weaknesses
• Overseas manufacturing dependency
• Decreasing US market share
• High product price compared to
Adidas
• Currency exposure
• Medium retail presence

8. Biggest opportunity/threat
• Biggest opportunity for Nike
-> Non sport customers
• Biggest threat for Nike
-> Competitors - developing alternative brands to take
away Nike’s market share.

9. Financial overview

10. 5 Forces Analysis: US & Developed
Markets
Internal Rivalry (High)
Fierce Competition
Mostly Non-Price competition
Differentiation strategy
Loyal customers (other cies)
E-commerce
Threat of New entrants(Low)
High Barriers to Entry
Capital Intensive
Strong & well established brand name
Economies of scale
High Marketing & R&D Costs
Industry in consolidation phase
Bargaining Power of
Buyer (High)
End user brand loyalty
Price sensitivity issues
Retail and vendor
consolidations
Growing power of retail chains
Good Infrastructure
Threat of Substitutes
(Low)
Other types of shoes
Other sport apparel
Bargaining Power of Supplier
(Low)
Abundantly available raw
materials
Cheap resources-commodity
item
10
• Large amount of buyers relative to the
number of firms on this industry
• Nike needs to seek continously for high
quality to keep its clients
• Competitive products all compete in
diffentiations
• Many online buyers are proce sensitive &
switching costs is low for the buyer
• Buyers of sports footwear have changed
in the past decade
• An increase in women buying the shoes
• Generation Y has a different taste &
purchasing methods
• Sub contracts to more than 500
small scal factories
• Suppliers are dependent on sport
firms
• Selling footwear online is highly
competitive: barriers to enter into this e-
commerce industry are quite low
• Cheap copies from the Far East
• Fashion brand
• Innovation and confort
• Buyer’s prepensity to substitute is low
• Consumer substitues for athletic
footwear products are low
• Boots, flip-flops, sandals
• Reebok, offering more choice of shoe,
introducing endorsment by sports
personalities, sponsoring sporting
leagues etc
• Adidas have recovered from the
problems that plagued them, and have a
good product mix, covering a wide range
of sports
• Each company has a stron brand identity

11. Porter’s force which has the biggest
impact: Rivalry
Facing fierce competition in product
quality/technology
Price
Marketing
Capability
Celebrity endorsement
Distribution
Manufacturing.
Industry rapidly changing, even if it’s at its maturity stage
Market experiencing a slowdown in sales because products have achieved acceptance by buyers
-> Difficult to sustain its competitive advantage
-> Need to develop new products with higher quality than its competitors
NIKE invests heavily in R&D to offer innovative products and services in order to stay consumer’s
first choice.

12. Industry life cycle
• Nike is in the stage at which the efficiency of dominant business model
provides the company competitive advantage over the competition
• Factors
– Strong Product Awareness
– Barrier of New entry
– Share market
– Quality of product

13. Strategy

14. NIKE corporate strategy
Focus on innovation and emphasis on
their research and development in order to be:
• Profitable in the long run.
• Reduce or eliminate athletes injury.
• Help in athletic performance and maximize comfort.
Dermesropian, Drage, Grigaite and Lopez
(2004,p.15)

15. NIKE COMPETITIVE STRATEGIES
Nike has a combination of two strategies:
• Best cost provider strategy.
(by outsourcing and most of their products are manufactured
outside the United States ,and by economic of scale)
• Broad differentiation strategy.
 Nike emphasize on key elements such as design of products ,
High quality products, brand advertising and product development
 Nike differentiates its products for athletics in three ways:
Firstly, it manufactures for three different segments of people: men, women and
children.
Secondly, differentiates it products by offering a variety of accessories and apparels
like gym bags, gloves and skates.
Thirdly, Nike has the licensees to manufacture and sell Nike brand products aside from
athletic products like school supplies, electronic media devices and timepieces.
Dermesropian, Drage, Grigaite and Lopez
(2004,p.15)

16. NIKE COMPETITIVE STRATEGIES

17. NIKE Competitive Advantage
• Technology in Products– Historically had some of the most
cutting-edge products on the market. E.g. Nike + iPod
This technology allows consumers to connect their iPod devices to
sensors inside the shoes to record time, distance, pace, and calories
burned.
• Manufacturing Skills:
 Use of low cost contract manufacturers,
based outside USA, outsourcing to Asia).
 Massive economic of scale.
 Economic of scope and customization

18. NIKE Competitive Advantage
• Strength of patents
Nike Air
Nike Zoom
Nike Air Max
Nike Shox.
• Marketing
Nike work very hard in their marketing strategies and which one of the
primary reasons behind its success, they do a large campaigns
associated with sport stars Such as, Michael Jordan and Rafael Nadal.

19. BCG Analysis
ADIDAS BCG
• Air Jordan: shoes and athletic clothing
designed and produced only for Michael Jordan,
and released for public consumption in 2001.
• Converse: Nike subsidiary primarily consist of
life style footwear and sport wear.
• Cole Haan: Nike subsidiary markets
and distributes luxury items such as shoes,
handbags and coats.
• Athletic Electronics:
Stopwatches, Headsets , etc

20. NIKE Business units and synergies
• Knowledge sharing and
synergies between Nike
business units among
the value chain function
to obtain economies of
scope that increase
profitability.
• Nike relies heavily on
application of IT to
support synergy among
value chain.

21. NIKE Business units and synergies
CONVERSE NIKEiD
ELECTRONICs
NIKE LIFE STYLE

22. Value chain Analysis
Firm Infrastructure
HR Management
Technology
Development
Procurement
Operations
Outbound
logistics
Marketing&
Sales
Service
SupportActivities
• High brand recognition and
reputation
• Scale advantage
• Price leadership and value
based pricing strategy
• First mover advantage in e-
commerce in the industry
• Agressive marketing
• Celebrety endorsement
• High allocation on marketing
budget
• Strong customer base
• Diversity of products offered
online
• Low production costs
• Locally purchase most raw
materials in bulk
• Specialised materials
importantion
• Local logistics providers
• Inventory control and reduced
inventory risk
• Focus on product design
marketing and product
technology
• Nike IHM specialized in rubber,
foam and raw material
•Strong management team
•Global learning & staff training
•Excellent employee relationship
•Minimum hierarchy concept
Long-term and trusting relationship with suppliers
Localised and bulk procurement
Just in time strategy as finished goods are shipped as soon as they are ready for sale
Buffer and safety stock in hand
Inbound
logisitcs
• Outsourcing manufacturing
and assembly
• Design (R&D)
• Technological innovation
• Effective supply chain
management
• Heavy investment in R&D
• Quality control
• Low and no packing options
• Nike personals to assist
factory management
• No heavy metal, glue or
solvent used
• Strong control over global
distribution channel
• Just in time delivery
• Good supplier relation
• Ability of forward
integration
• Use of strong servers to
support and manage
supply chain projects
• Customer care
• Pre-sales & after
sales services
• Use of IT to improve
customer service
(touch screen)
• Increased customer
satisfaction
• Customization
•IT system across supply chain
•E-commerce infrastructure
•Strong financial position & CSR
•Emprowement of top management
• Great financial discipline with low debt
• Strong brand, product, marketplace solution, delivery and
support
• Effective compliance process through strategic knowledge and
verification
• Great management and efficient corporate strategy globally
• Blend of new hires and promotion
• High ethical values among employees
• Well monitored labor audit add brand audits
•Research and product dvp:
leading edge in technology dvpt
•Product improvment
•Ability to change
• Great product technology like Motion Analysis, metabolic
rate, blood work
• Air-sole technology expert
Primary Activities

23. NIKE Business units and synergies
CONVERSE COLE HAAN
ELECTRONICs
NIKE LIFE STYLE
Resource-based view
and core competencies

24. NIKE Resource Based-View
Tangible resources
 Physical assets- land, buildings (858 Stores worldwide, research
centers, HQ, distribution facilities), machinery, equipment;
 Financial assets- strong financial position (constant growth); ROI,
ROA is higher than industry’s average;
 Technological resources- patents (Nike Air, Nike Zoom, Nike Air
Max, Nike Shox), trademarks (Swoosh), contracts with sport legends
to promote their brand;
 Organizational resources- big and loyal customer base, effective
distribution network and control system over the Supply Chain
(teaming with Hewlett-Packard to supply hardware, software and
consulting services to host the worldwide Nike Supply Chain (NSC)
project)

25. NIKE Resource based-view
Intangible resources
 Human resources- 56.500 employees worldwide, powerful
research team (specialists such as bio mechanics, industrial
designers, and exercise physiologists).
 Innovation resources- knowledge transfer, integrated research
laboratories, dynamic technological innovation design,
exclusive worldwide patents, an online website ideal for
customization (“customer-designer”).
 Reputation resources- brand name, identifiable distinctive
trademarks (“Just Do It”), logos (Swoosh logo).

26. NIKE Resource based-view
Organizational capabilities
 A streamlined management structure => cost
effectiveness
 Human resource management strategy focused on
training (training programs with contract manufacturers)
 Good inventory management
 Distinctive customer service (NikeSupport, best e-
commerce experience)
 Product design capabilities (perfect combination of
performance, comfort and fashion)

27. NIKE Core Competencies
“CREATING BRAND THROUGH PAST EXPERIENCE”
Strong MARKETING strategy
 distinctive competence, especially in consumer brand awareness and brand
power
 involvement of world top-class athletes and sportsmen in advertising campaigns -
“Edorsment effect”
 centring on the brand image: a distinctive logo (the Swoosh ) and the advertising
slogan "Just Do It“ => Image differentiation
Extensive R&D capabilities
 innovative product design (focus on technology & innovation)
 main focus is on new product development (updating shoe models every six
months, in order to maintain a high speed to the market).
 Comfort and performance - Nike has pioneered four shoe-cushioning systems
that reduce shock, distribute pressure, protect from impact and offer comfort.
provide value and benefits to Nike’s consumers, not easy to imitate, can
be leveraged widely to most of their products and markets

28. NIKE Core Competencies
Extensive SCM (supply-chain management) capabilities
 strongly connected with the previous core competences – all
Nike competitors have outsourced in Asia
 BUT, Nike outperforms its rivals with its unique business
model in which its brand name dominates, suggesting high
quality and stylish sports footwear
 Nike makes use of suppliers anywhere in the world (global
sourcing). They have 715 contract factories and 984.136
contract workers in 44 countries. Most of the facilities are
located in China, Thailand, Indonesia, Malaysia, Vietnam,
Turkey, Sri Lanka, Cambodia, Taiwan, El Salvador, Mexico,
India and Israel.
Source: http://manufacturingmap.nikeinc.com/

29. Core Competencies
NIKE vs Adidas
• Product innovation => strong brand
based on high quality, innovative
products
• Marketing & Distribution
• Customer focus
• Supply chain
Core skills setting Nike and Adidas apart from the competition:
- marketing, distribution and technological expertise
- outsourcing capacity => gaining efficiencies like shifting of risk, reduced capital
requirements, lower wages, ability to focus on valuable core competences
 Main difference: Nike consistent brand image; aggressive but
integrated marketing model (including social media – “Run For”),
different markets (identifying markets with more growth potential),
integration of sustainability in company’s operations
"Nike is talking to the right people, instead of the most people”
Joseph Jaffe, president of Jaffe, marketing consulting firm

30. Resources + Competences =
Sustainable Competitive Advantage
• Imitability – innovative product quality, inventory
management&turnover
• Value – brand recognition experience & know-how, use of resources
& capability to exploit new market opportunities, effective in-store
operations
• Rarity –brand recognition, product quality
• Non substitutable - product features and performance (hard to
duplicate, neither matched in short-term)
 Competitive superiority – Nike is positioned ahead its competitors
in many ranks
 Resources and activities with great potential for competitive
advantage are internalized, while lower value-adding activities
are outsourced => focus more extensively on market research and
R&D
"They have so many resources and such clarity of vision“
"They've had a laser focus“
Matt Powell, footwear analyst at SportsOneSource

31. Criteria for Sustainable Competitive Advantage
Is a resource or capability…
Valuable? Rare? Difficult
to
Imitate?
Without
Substitutes
?
Implications for
Competitiveness?
1. Outsourcing
and cost
efficiency
Yes No No No Competitive parity
2. Reputation
and brand
recognition
Yes Yes No Yes Sustainable CA
3. Human
resources
Yes No Yes No Temporary CA
4. Innovative
Product&Desig
n
Yes Yes Yes Yes Sustainable CA
5. Marketing Yes No No Yes Temporary CA
6. Effective in-
store operations
Yes No Yes No Temporary CA

32. Criteria for Sustainable Competitive Advantage
Is a resource or capability…
Valuable? Rare? Difficult
to
Imitate?
Without
Substitutes
?
Implications for
Competitiveness?
1. Outsourcing
and cost
efficiency
Yes No No No Competitive parity
2. Reputation
and brand
recognition
Yes Yes No Yes Sustainable CA
3. Human
resources
Yes No Yes No Temporary CA
4. Innovative
Product&Desig
n
Yes Yes Yes Yes Sustainable CA
5. Marketing Yes No No Yes Temporary CA
6. Effective in-
store operations
Yes No Yes No Temporary CA
Knowledge and Innovation

33. The main 5 concepts of Design innovation:
- Learning by doing
- Keeping the balance
- Design as direction
- Abandon the past and embrace the future
(ex. Flyknit technology)
- Staying focused on beauty and athletic
products
Concept of design Innovation

34. - Established in Exeter (1980)
- athletes, scientists, engineers and designers
converge to develop the key performance
- focus is on biomechanics, physiology, perception
and athletic performance
- 3D motion capture and environmental chambers to
collect the data
- analysis and insights that provide the foundation
for innovative Nike product
The Nike Sport Research Lab (NSRL)

35. The FuelBand, a $150 electronic bracelet
measures movements throughout
the day, whether you play tennis, jog, or just
walk to work. The device won raves for its
elegant design and a clean interface that lets
users track activity with simple color cues
(red for inactive; green if you've achieved your daily
goal).
The Flyknit Racer
featherlight shoes that feel more like a sock atop a
sole.
Created from knit threading rather than multiple
layers of fabric, it required a complete rethink of Nike's
manufacturing process.
Examples of Innovative products 1/2

36. • Nike with Apple: The Nike+ package: pair of specially
designed Nike+ running, an Ipod nano, and a Nike + iPod
sport kit.
Sensor: iPod tells the distance, pace, and calories burned via
voice feedback that adjusts music volume as it plays
• Design your own shoes
Pre-defined designs. Customer can choose their own colors
and mascots to create shoes. Screen technology in store
• Nike self lacing automatic shoes: Coming up with the new
automatic self lacing sneakers. It provides a set of straps
thant can be automatically opened and closed to switch
between a loosened and tightened position.
Patent in 2009
Examples of Innovative products 1/2

37. Penalties and Incentives: The Manufacturing
Index
-The MI provides a consistent framework for
measuring performance across Nike’s
supply chain
- The index is used to monitor, measure,
and reward suppliers on quality, on-time
delivery, cost, and sustainability performance.
- Each of the four categories are awarded a
score between 0 and 100, putting them in a
gold, silver, bronze, yellow or red category.
- Aim is to change supplier behavior for the
better.
Process Innovation to maintain sustainability

38. Innovation in Adidas
• Sustainability:
- DryDye technology is a polyester fabric dyeing process that uses no
water, 50% fewer chemicals and 50% less energy than the
traditional fabric dyeing process
- In apparel, Adidas produced a full running line featuring t-shirts,
tanks, tights, skirts and shorts with 95% pattern efficiency (only 5%
waste).
• Usage of the powerful communication tool in its supply chain, to be
closer to factory workers and to really hear from them directly.
Example: Pilot project: As part of the project, workers’ mobile
numbers are anonymously gathered so factory management can
send out group texts reminding workers of safety issues
or letting them know about changes in policy.

39. • Nike spends enormous sums on continuous
strategic knowledge development and innovation
• The knowledge areas: buying behavior, product design and
development, marketing, supply chain management.
• Each of these knowledge areas is a highly complex
combination of tacit and explicit knowledge relating to
customers, design, marketing and supply chain management
• Nike’s leaders encourage its employees to think creatively
and there is a strong but informal team-based work ethic
• Design teams work in informal and picturesque surroundings
to develop new concepts and products
• Laboratories and test tracks to test out new products are also
located onsite.
Strategic Knowledge
Management

40. Global Organizational structure
Portland, Oregon (USA)
In charge of U.S, the Americas and
Asia Pacific
Regional headquarters is located in the
Netherlands and is responsible for
27 countries in the EMEA region
Subsidiaries enjoy some autonomy
within clearly set boundaries
*Nike was able to communicate and control the Corporate Strategic Plan throughout
the Global organization

41. Organizational Structure in
Regional headquarters

42. EXTERNAL ANALYSIS

43. PESTEL
POLITICAL
Positive US government policies that foster
business growth
Political unrest in outsources manufacturers,
nations such as Vietnam, Indonesia, and
Thailand
Potential risk of terrorism
Favorable foreign nations’ relationship
Risk of diverse tariffs and non-tariffs, law and
regulations between countries
Adverse Trade Protection in global business
affects sales and service
Opportunities
Macroeconomic stability, low interest rates,
stable currency conditions and the international
competitiveness of the tax system
ECONOMICAL
Global Economic downturn affects consumer
purchases
Reduced consumer confidence
Risk of currency exchange rates, and interest rates
Economic benefits from low cost outsources
manufactures
Increasing material prices and labor costs in the
production countries because of gradual increase
of living standards
International expansion, building upon its strong
global brand recognition
Strong economic conditions in other countries
SOCIAL
Consumers are becoming brand conscious
Change in lifestyle – health awareness,
sport participation on the rise: higher
demand for sport products
Consumer conscious in CSR
Change in buying habits in youth
Increasing market share of female
customers
Diversity of consumer preferences and
demands
TECHNOLOGICAL
Lean manufacturing because of technological
advances
Up-to-date technology adoption
Speed of technology transfer, and speed of
change of product
High rate of technological obsolescence
Internet and information technology systems
development
Innovative and technically superior products
Opportunities: Use of IT in marketing
information system
Scientific research in product quality &
innovation
ECOLOGICAL
Growing popularity of “green products”
Challenges of tackling climate change
Waste disposal, recycle and reuse policies
adoption
Sustainability philosophy by using natural
materials
Reduce energy consumption
LEGAL
Risk of legal violation in terms of human
rights, environmental issues
Risk of contract manufacturers copying of
product (intellectual property rights)
Corporate social responsibility beyond legal
obligation
Trade agreements to safeguard for
business operation

44. References
• http://www.nikebiz.com
• http://www.nikeresponsibility.com
• http://www.dailyfinance.com/quote/nyse/nike/nke/financial-ratios
• http://www.businessinsider.com/adidas-shows-soccer-is-overrated-2014-8
• https://econsultancy.com/blog/65598-nike-vs-adidas-which-provides-the-best-ecommerce-experience
• http://repucom.net/media/nike-vs-adidas
• http://www.statista.com/statistics/250287/total-number-of-nike-retail-stores-worldwide/
• http://www.statista.com/statistics/243199/number-of-employees-of-nike-worldwide/
• http://es.scribd.com/doc/29013150/Nike-VS-Adidas
• http://www.nikeresponsibility.com/report/uploads/files/Nike_FY05_06_CR_Report_China.pdf
• http://www.nike.com/
• http://investors.nikeinc.com/files/doc_financials/AnnualReports/2014/index.html
• http://lostlagoon.info/…/7PCS%20Making%20and%20Doing%20Know…
• http://epub.wu.ac.at/3791/1/Nike__WU-CaseSeries.pdf
• http://www.nikeresponsibility.com/how/products/energy_co2
• “Who's leading the way in web marketing? It's Nike, of course” O'Malley, Gavin, Advertising Age, 00018899,
10/16/2006, Vol. 77, Fascículo 42, Source: Ebscohost
• “Nike faces ultimate marketing challenge in China: Make running cool”. Advertising Age. 10/31/2011, Vol. 82 Issue
39, p1-56. 2p,
• “3 Features a Nike-Apple Wearable Absolutely Must Have”. Vella, Matt, Time.com, 10/24/2014, Source: Ebscohost
• “Nike assays blog as marketing tool”. Advertising Age. 6/14/2004, Vol. 75 Issue 24, p26-26. Source: Ebscohost
• “Walk a mile in Nike's shoes”. Holloway, Andy, Canadian Business, 00083100, 2/2/2004, Vol. 77. Source: Ebscohost
• “NIKE”. Mullman, Jeremy, Advertising Age, 00018899, 10/20/2008, Vol. 79. Source: Ebscohost
• “LEADERSHIP & STRATEGY: Sustainability: Just Do It.” Industry Week/IW, February 1, 2014, p.22-23. Source:
Ebscohost
• Nikegobalsupplychain_Amini-case.pdf
• Dermesropian, Drage, Grigaite and Lopez (2004,p.15)