Nike: Corporate Strategy

1. Competitiveness and External
Factors Analysis of Nike
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2. Contents
1. Introduction
2. Company profile
3. Competitiveness analysis
3-1. Porter’s Five Forces
3-2. Porter’s Generic Strategies
3-3. Ansoff Matrix
3-4. Product Life Cycle
4. External factors analysis
4-1. Social
4-2. Technological
4-3. Environmental
5. Conclusion
6. References
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3. 1. Introduction
Purpose of this Presentation
1. To analyse Nike’s core competences and competitiveness
by using models and frameworks.
2. To identify and explain three external business environment
factors which will impact on Nike’s competitiveness over
the next five years.
 To hypothesise three external business environment factors
that will impact on Nike’s core competencies and
competitiveness over the next five years.
Objectives
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4. 2. Company Profile
Nike, Inc.
The leading company in the world sportswear industry
3
Design, development, marketing and sales of
Adapted from: FY2012 Annual Report (Nike Inc, 2012) and FY2014 Annual Report (Nike Inc, 2014a)
1968
Established in
Oregon, US 56,500
employees in
52countries
45
Made
in
countries by
manufacturers 190
Sold
in
countries by
retailers, Nike
stores and online
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5. 10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Stable finance: Growing revenue and net income
1.0
1.5
2.0
2.5
3.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Revenue ($ billion)
Net Income ($ billion)
13.7
27.8
2.7
1.2
Adapted from: Nike, Inc. Ten Year Financial History (Nike Inc., 2014b)
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6. 4. External Factors Analysis
Legal
Political
Economic
Technolo
gical
Social
Environm
ental
• Direct impact on
competitiveness
• Certainty to occur
• Longevity: Over 5 years
Source: Adapted from; Johnson et al. (2011) Exploring strategy: text & cases, 9th
ed., Harlow: Pearson Education Limited
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7. 4-1. Social Factor`
Consumer Trend:
•“Because NIKE is a consumer products company, the relative
popularity of various sports and fitness activities and changing
design trends affect the demand for our products”
Nike, Inc. (2014a: 48)
Consumer trend in sport and fashion will impact on Nike’s
competitiveness
Since a trend is ever-changing, Nike will fail unless it catches
the current trend and supplies innovative products.
Social Factor:
•Changing culture and demographics (Johnson et al., 2011),
income, education, life-style changes, attitudes to work and
leisure (Bowman and Faulkner, 1997).
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8. Sport Participation Trend
Individual and team sports have dropped while outdoor
and fitness sports have grown in the US.
(The Sports and Fitness Industry Association, 2013)
Adapted from: 2013 Sports, Fitness, and Leisure Activities Topline Participation Report
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9. Among the key sports in which Nike has invested, only
running, yoga and ice hokey have been growing in the US.
(The Sports and Fitness Industry Association, 2013)
Adapted from: 2013 Sports, Fitness, and Leisure Activities Topline Participation Report
0
20
40
60
2008 2009 2010 2011 2012
Sports Participation (million people) and Growth Rate 2008 to 2012
Tennis, -4%
Baseball, -16%
Football, -7%
Basketball, -9%
Yoga, +32%
Running, +25%
Ice Hokey, +26%
Skateboarding, -23%
American Football, -20%
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10. Sportswear Trend
Yoga trend has boosted the “activewear” market in the
US.
Activewear:
•Clothes that combine sportswear and everyday apparel,
functionality and fashionability (Burn-Callander, 2015).
•Predominantly women’s wear, e.g. leggings (Rizzo, 2015).
Market:
•$33.7 billion market with 7% growth (NPD Group, 2014),
•Outpacing the sportswear market’s rate, 6% (Euromonitor
International, 2014).
•Lululemon Athletica and Athleta founded in 1998, then Nike
and Adidas have followed since 2004 (Sherman, 2014).
•Nike aims $2 billion sales increase in women’s wear, to $7
billion, by 2017 worldwide (Paton, 2014).
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11. Consumer attitude changes:
“Wearing gym clothes beyond the gym”
“This is not a fashion trend, it’s a lifestyle trend” (Sherman, 2014)
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