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Nike Case Analysis Slide 1 Nike Case Analysis Slide 2 Nike Case Analysis Slide 3 Nike Case Analysis Slide 4 Nike Case Analysis Slide 5 Nike Case Analysis Slide 6 Nike Case Analysis Slide 7 Nike Case Analysis Slide 8 Nike Case Analysis Slide 9 Nike Case Analysis Slide 10 Nike Case Analysis Slide 11 Nike Case Analysis Slide 12 Nike Case Analysis Slide 13 Nike Case Analysis Slide 14 Nike Case Analysis Slide 15 Nike Case Analysis Slide 16 Nike Case Analysis Slide 17 Nike Case Analysis Slide 18 Nike Case Analysis Slide 19 Nike Case Analysis Slide 20 Nike Case Analysis Slide 21 Nike Case Analysis Slide 22 Nike Case Analysis Slide 23 Nike Case Analysis Slide 24 Nike Case Analysis Slide 25 Nike Case Analysis Slide 26 Nike Case Analysis Slide 27 Nike Case Analysis Slide 28 Nike Case Analysis Slide 29 Nike Case Analysis Slide 30 Nike Case Analysis Slide 31 Nike Case Analysis Slide 32 Nike Case Analysis Slide 33 Nike Case Analysis Slide 34 Nike Case Analysis Slide 35 Nike Case Analysis Slide 36 Nike Case Analysis Slide 37 Nike Case Analysis Slide 38 Nike Case Analysis Slide 39 Nike Case Analysis Slide 40 Nike Case Analysis Slide 41 Nike Case Analysis Slide 42 Nike Case Analysis Slide 43 Nike Case Analysis Slide 44 Nike Case Analysis Slide 45 Nike Case Analysis Slide 46 Nike Case Analysis Slide 47 Nike Case Analysis Slide 48 Nike Case Analysis Slide 49 Nike Case Analysis Slide 50 Nike Case Analysis Slide 51 Nike Case Analysis Slide 52 Nike Case Analysis Slide 53 Nike Case Analysis Slide 54 Nike Case Analysis Slide 55 Nike Case Analysis Slide 56 Nike Case Analysis Slide 57 Nike Case Analysis Slide 58 Nike Case Analysis Slide 59 Nike Case Analysis Slide 60 Nike Case Analysis Slide 61 Nike Case Analysis Slide 62 Nike Case Analysis Slide 63 Nike Case Analysis Slide 64 Nike Case Analysis Slide 65 Nike Case Analysis Slide 66 Nike Case Analysis Slide 67 Nike Case Analysis Slide 68 Nike Case Analysis Slide 69 Nike Case Analysis Slide 70 Nike Case Analysis Slide 71 Nike Case Analysis Slide 72 Nike Case Analysis Slide 73 Nike Case Analysis Slide 74 Nike Case Analysis Slide 75 Nike Case Analysis Slide 76
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Nike Case Analysis

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My team and I did an in-depth overview of Nike's competitive position in the sports apparel and footwear industry as well as suggested strategies to help improve their performance.

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Nike Case Analysis

  1. 1. Blake, Hanna, Maryellen, & Randell Case Analysis
  2. 2. Description of Company ● American Multinational Corporation ● Mainly sell athletic footwear, apparel, accessories, and equipment ○ Largest supplier of athletic footwear and apparel in the world ● Headquartered in Beaverton, Oregon ○ Portland’s Metropolitan area ● Employ more than 44,000 people worldwide ● Fun fact: The brand name is derived from the Greek goddess of victory, Nike
  3. 3. History of Company ● 1964- Phil Knight & Bill Bowerman found Blue Ribbon Sports ● 1971- Cut ties with Onitsuka Tiger (Asics now), changes name to Nike, Inc. ○ Portland State University student, Carolyn Davis, creates the iconic swoosh for $35 ● 1972- First athlete, Romanian tennis player Ilie Nastase, signs an endorsement with Nike ● 1984- signs Michael Jordan, launches Air Jordan series shortly after ● 1988- First “Just Do It” campaign runs ● 1991- Activist, Jeff Ballinger, exposes Nike’s low wages and poor working conditions in Indonesian Factories ○ In response, Nike inducts its first factory code of conduct ● 1996- signs Tiger Woods
  4. 4. History of Company cont. ● 1998- Due to massive protests, Nike raises minimum age of workers, increases monitoring, and adopts U.S. OSHA clean-air standards in overseas factories. ● 2002- acquires Hurley Co. (surf apparel) ● 2003- signs LeBron James and Kobe Bryant ● 2004- acquires Converse for $309M ● 2008- signs Derek Jeter ● 2012- becomes official supplier for the NFL apparel ● 2015- becomes official supplier for NBA apparel ● 2018- reveals “Dream Crazy” ad, featuring Colin Kaepernick. ● 2019- cuts ties with Amazon
  5. 5. Nike Headquarters Sculpture (2018)
  6. 6. Nike Org Chart Andy Campion EVP & CFO Eric Sprunk COO Elliot Hill President of Consumer & Marketplace John Slusher EVP Global Sports Marketing Michael Spillane President of Categories & Product Hillary Krane EVP, CAO, General Counsel Monique Matheson EVP Global Resources Mark Parker Chairman, President, CEO
  7. 7. Nike Subsidiaries Air Jordan Hurley International Nike Sub Lines Golf, Air Force 1, Pro, +, Elite Converse Nike INC.
  8. 8. Competitors ● Under Armour ● Adidas ● Asics ● Ping ● Champion ● New Balance
  9. 9. Vision Statement “To remain the most authentic, connected, and distinctive brand.” Very vague about what it does and does not mention the company
  10. 10. Revised Vision Statement “Nike’s vision is to remain the most authentic, connected, and distinctive brand in the world by offering unmatched quality in all things sports.” ● Identifies company ● Specifies industry
  11. 11. Mission Statement “To bring inspiration and innovation to every athlete* in the world.” *If you have a body, you are an athlete “Our mission is what drives us to do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”
  12. 12. Purpose “Our purpose is to unite the world through sport to create a healthy planet, active communities and an equal playing field for all.”
  13. 13. Revised Mission Statement Our mission is to bring inspiration and innovation (2) to every athlete* in the world (1,3). We strive to do everything possible to expand human potential (2). We do that by creating groundbreaking sport innovations (2,4), by making our products more sustainably (5,8), by building a creative and diverse global team (9) and by making a positive impact in communities where we live and work (6,7,8). Our team is made up of athletes* from every lifestyle and it fuels our continued innovation (9). We hope to unite the world through sport to create a healthy planet (6), active communities and an equal playing field for all (7). *If you have a body, you are an athlete Components 1. Customers 2. Product or services 3. Markets 4. Technology 5. Concern for survival 6. Philosophy 7. Self-concept 8. Public image 9. Employees
  14. 14. Company Objectives ● To carry on founder’s innovative thinking style ● Help athletes reach their full potential ● Create business opportunities that set Nike apart ● Dare to Design the future of sport ● Build a team that's empowered, diverse and inclusive ● Improve our community around us (The World) ● Protect the future of sport (sustainability)
  15. 15. Company Strategies ● To carry on founder’s innovative thinking style ○ Nike is looking for ways to be at the cutting edge of designs (Oregon Football) ● Help athletes reach their full potential ○ Provide products that meet the needs of everyone (everyone's an athlete) ○ Create environments for all athletes to compete ● Create business opportunities that set Nike apart ○ Partnerships with tech companies ○ Create new markets that don’t exist before Nike ● Dare to Design the future of sport ○ Constantly researching new products (Medical Shoe) ○ Continue to works with industry professionals to meet their needs
  16. 16. Company Strategies cont. ● Build a team that's empowered, diverse and inclusive ○ Driven by passion for sport ○ “Demanding better of ourselves” ○ Everyone's an athlete ○ Foster creativity from workers ● Improve our community around us (The World) ○ Harness the power of sport to unify everyone ○ Fund opportunities for 16 million kids to play sports ○ Nike Community Impact Fund ○ 5,700 nike employees are coaches around the world ● Protect the future of sport (sustainability) ○ Circular design (products designed to be recylceled at the enf of life) ○ Inspiring kids to get involved in sports
  17. 17. Overarching Theme of Organization “We believe in the power of sport to move the world”
  18. 18. Competitive Profile Matrix (CPM)
  19. 19. CPM Nike Under Armour Adidas Critical Success Factors Weight Rating Score Rating Score Rating Score Brand Recognition .24 4 .96 2 .48 3 .72 Product Diversity .20 4 .80 2 .40 2 .40 Product Quality .16 4 .64 2 .32 3 .48 Investment Opportunity .10 2 .20 3 .30 4 .40 Public Image Endorsement/ advert. .15 .15 2 3 .30 .45 3 3 .45 .45 3 2 .45 .30 Total 1.00 3.35 2.40 2.75
  20. 20. CPM Breakdown The Ratings are simply a comparison and hold no value based on numerical standings Each Factor holds a different weight based on its importance in the industry Based on comparison Nike has the best position
  21. 21. External Opportunities 1. Forbes reports that Gen Z is swaying towards leading a more healthy and active lifestyle (31% of world population in 2021) 2. Business Insider conducted a study about favorite clothing brands among millennials with Nike placing 3rd 3. The number of female athletes at NCAA schools has increased from less than 30,000 to over 193,000 since 1972 4. The International Data Corporation predicts that sales of wearable technologies market will double by 2021 5. According to research firm, Newzoo, E-sports are growing at a 41% year-on- year growth rate
  22. 22. External Threats 1. Counterfeit/imitation products increased by 1.9% in the past year 2. Increasing industry competition (Adidas rose 3% in market share since 2017) 3. Survey showed 75% of economists predict economic slowdown/recession by 2021 4. 20.4% of clothing sales in 2019 came from online retailers, a majority of that came from stores such as Amazon which eliminates potential profits from “direct to customer sales”
  23. 23. External Factor Evaluation Matrix (EFE)
  24. 24. EFE Breakdown EFE (External Factor Evaluation) The EFE looks at a company’s response to an industry’s external threats and opportunities The Ratings range from 1-4 4- Superior Response 3- Above Average Response 2- Average Response 1- Below-Average Response Each Factor holds a different weight based on its importance in the industry
  25. 25. EFE Key External Factors Weight Rating Weighted Score Opportunities 1. Increase in more active lifestyles in younger generations .05 3 .15 2. Business insider review placed Nike and Adidas as favorite brands among millennials in 2019 .15 4 .60 3. Increase in sporting events popularity (7 times as many women college athletes compared to 1972) .10 3 .30 4. Product diversification (technology) .20 2 .40 5. Drastic increase in e-sports popularity .10 2 .20
  26. 26. EFE Key External Factors Weight Rating Weighted Score Threats 1. Increase in counterfeit products by 1.9% .10 2 .20 2. Increasing industry competition with Adidas owning 12% of the apparel market, a 3% increase since 2017 .15 3 .45 3. Predicted economic slowdown by 2021 .05 2 .10 4. Increased difficulty to sell directly to consumers (online shopping/ third parties) .10 2 .20 Total 1.00 2.60
  27. 27. Internal Strengths ● Ranked by Forbes as the world's 14th Most valuable Brand in 2019 ● Official supplier of NFL, NBA, and MLB apparel as of January 2019 ● Low manufacturing costs compared to industry average ● Committed to sustainability by stating they plan to have all European and North American properties running on renewable energy by 2020 ● Dream Crazy Campaign showed commitment to social issues and created $6 Billion increase in revenue even after the boycotts
  28. 28. Internal Weaknesses ● History of low wages/ poor working conditions in foreign countries (1996 Vietnam) ● Bad work environment for women (sexual harassment/pay) ● August 2018 lawsuit (4 women, claim violation of equal pay act) ● Does business with retailers who also stock competition’s brands (900 Nike stores and 30,000 retail partners) ● 100% of production is by independent manufacturers (554 factories in 42 countries)
  29. 29. Internal Factor Evaluation Matrix (IFE)
  30. 30. IFE Breakdown IFE (Internal Factor Evaluation) The IFE looks at a company's internal strengths and weaknesses The Ratings range from 1-4 4- Major Strength 3- Minor Strength 2- Minor Weakness 1- Major Weakness Each Factor holds a different weight based on its importance in the industry
  31. 31. IFE Key Internal Factors Weight Rating Weighted Score Strengths 1. Ranked 14th most recognizable company by Forbes in 2019 .10 4 .40 2. Currently official supplier of NFL, NBA, & MLB apparel .15 4 .60 3. Low manufacturing costs compared to industry average .05 3 .15 4. 100% renewable energy at all Nike locations by 2020 .10 4 .40 5. Willingness to embrace stance on social issues .05 3 .15
  32. 32. IFE Key Internal Factors Weight Rating Weighted Score Weaknesses 1. Poor public image from past foreign employee wages/ treatment .15 1 .15 2. Unfavorable workplace culture for women .25 1 .25 3. Only 3% of retail locations are Nike only .05 2 .10 4. All production performed by independent manufacturers .10 1 .10 Total 1.00 2.30
  33. 33. Strengths-Weaknesses Opportunities-Threats Matrix (SWOT)
  34. 34. SWOT (SO) Strengths 1. Ranked 14th most recognizable company by Forbes in 2019 2. Currently official supplier of NFL, NBA & MLB apparel 3. Low manufacturing costs compared to industry average 4. 100% renewable energy at all Nike locations by 2020 5. Willingness to embrace stance on social issues Opportunities SO Strategies 1. Increase in more active lifestyles in younger generations 2. Business insider review placed Nike and Adidas as favorite brands among millennials in 2019 3. Increase in sporting events popularity (7 times as many women college athletes compared to 1972) 4. Product diversification (technology) 5. Drastic increase in e-sports popularity 1. Nike can penetrate the e-sports market by extending their product line to include the highly regarded new sport in order to become the official supplier for all e- sports competitions. (O5, S2) 2. Create exclusive apps for each team of the NFL, NBA, and MLB to have an overarching database that tracks performance statistics in practices and games. (S2, O4)
  35. 35. SWOT (WO) Weaknesses 1. Poor public image from past foreign employee wages/ treatment 2. Unfavorable workplace culture for women 3. Only 3% of retail locations are Nike-only 4. All production performed by independent manufacturers Opportunities WO Strategies 1. Increase in more active lifestyles in younger generations 2. Business insider review placed Nike and Adidas as favorite brands among millennials in 2019 3. Increase in sporting events popularity (7 times as many women college athletes compared to 1972) 4. Product diversification (technology) 5. Drastic increase in e-sports popularity 1. Mandate more enhanced sexual harassment training for all existing and new employees and implement zero-tolerance policy regarding discriminatory wage gaps. (W2, O2) 2. Create a women’s division “Nika” (like Aerie to AE) in brick and mortar locations run for women by women. A portion of proceeds will go to women’s athletic programs. (W2, W3, O3)
  36. 36. SWOT (ST) Strengths 1. Ranked 14th most recognizable company by Forbes in 2019 2. Currently official supplier of NFL, NBA & MLB apparel 3. Low manufacturing costs compared to industry average 4. 100% renewable energy at all Nike locations by 2020 5. Willingness to embrace stance on social issues Threats ST Strategies 1. Increase in counterfeit products by 1.9% 2. Increasing industry competition with Adidas owning 12% of the apparel market, a 3% increase since 2017 3. Increased difficulty to sell directly to consumers (online shopping/ third parties) 4. Predicted economic slowdown by 2021 1. Implement woven security ribbon into footwear to combat counterfeit products. (S1, T1) 2. Create new product line in the outdoors/hunting market capitalizing on our brand recognition and increasing market share and diversity. (S1, T2, T4)
  37. 37. SWOT (WT) Weaknesses 1. Poor public image from past foreign employee wages/ treatment 2. Unfavorable workplace culture for women 3. Only 3% of retail locations are Nike only 4. All production performed by independent manufacturers Threats WT Strategies 1. Increase in counterfeit products by 1.9% 2. Increasing industry competition with Adidas owning 12% of the apparel market, a 3% increase since 2017 3. Increased difficulty to sell directly to consumers (online shopping/ third parties) 4. Predicted economic slowdown by 2021 1. Create our own manufacturing facilities and market our corporate responsibility of how we changed our conditions and provided raises to all workers. (T2, W1, W4) 2. Create more Nike locations in regions that lack a Nike store presence such as Northern California. (T3, W3)
  38. 38. Product Positioning Maps Low Brand Recognition High Brand Recognition High Revenue Low Revenue Low Market Share High Market Share High # of Countries Operating in Low # of Countries Operating in
  39. 39. Strategic Position and Action Evaluation Matrix (SPACE)
  40. 40. SPACE Matrix Internal Analysis External Analysis Financial Position (FP) Stability Position (SP) Return on investment is 32.22 compared to 26.7 in 2017 7 Risk involved in business -2 Revenue increase by 1.06 in the past year 4 Competitive pressure -5 Pre-tax profit margin increased from 11.88 to 12.27 in the past year 6 Price range of competitors -4 Cash Flows increase from 2.98 to 3.65 in the past year 5 Barriers of Entry into Market -2 Financial Position (FP) Average 5.50 Stability Position (SP) Average -3.25
  41. 41. SPACE Matrix cont. Internal Analysis External Analysis Competitive Position (CP) Industry Position (IP) Market Share -2 Growth Potential 4 Customer Loyalty -3 Ease of Entry into Market 2 Product Quality -2 Profit Potential 6 Control over Suppliers/ Distributors -7 Financial Stability 5 Brand and Image -1 Competitive Position (CP) Average -3 Industry Position (IP) Average 4.25
  42. 42. SPACE Matrix Coordinate Calculation FP Average + SP Average = 5.50 + (-3.25) = 2.25 y-axis CP Average + IP Average = (-3) + 4.25 = 1.25 x-axis Coordinate (1.25,2.25) Conclusion: Vector points in the Aggressive Quadrant
  43. 43. Space Diagram (1.25,2.25) +7 -7 -7 +7 Conservative Defensive Aggressive Competitive FP SP IPCP
  44. 44. Potential Strategies Based on Space Matrix Conclusion: Vector point in the Aggressive Quadrant Potential Strategies: ● Backward, forward, horizontal integration ● Market penetration ● Market development ● Product development ● Diversification (related or unrelated)
  45. 45. Boston Consulting Group Matrix (BCG)
  46. 46. BCG Division $Revenues (in millions) Percent Revenues $Profits (in thousands) Percent Profits Largest Rival’s Market Share Our Market Share Relative Market Share Industry Growth Rate (%) Footwear 22,268 64.74 9,949 62.36 27.4-Nike 27.4 1 3 Apparel 10,733 31.2 5,756 36.07 11.6-Adidas 10.8 93.1 4.3 Equipment 1,396 4.06 251 1.57 6.25-Nike 6.25 1 3.4 Total 34,397 100 15,956 100
  47. 47. BCG Stars Dogs Question Marks Cash Cows Medium 0.5 High 1.0 Low 0.0 Medium 0 High +20 Low -20 Relative Market Share Position in the Industry Industry Sales Growth Rate (%) 62.36 Footwear 36.07 Apparel 1.57Equipment
  48. 48. BCG Relative Market Share Position in the Industry Industry Sales Growth Rate (%)
  49. 49. Potential Strategies Based on BCG Conclusion: All divisions are “Stars” Potential Strategies: ● Backward, forward, horizontal integration ● Market penetration ● Market development ● Product development
  50. 50. Grand Strategy Matrix (GSM)
  51. 51. GSM II III I IV Rapid Market Growth Weak Competitive Position Slow Market Growth Strong Competitive Position
  52. 52. Two Potential Strategies ST Strategies 1. Create a new product line in the outdoors/hunting market by capitalizing on our brand recognition and experience in creating new outdoor apparel. This specific market is relatively untouched by Nike and entering will both diversify the company’s product mix as well as increase market share. 1. Implement woven security ribbon (similar to $100 bill) in all footwear. This will allow for easier authentication of legitimate Nike products as well as increasing effectiveness of combating counterfeits.
  53. 53. Strategy 1 - Outdoors Line ● Nike Currently has no products that serve the outdoor/hunting market ● There are over 36 million hunting licenses sold in the U.S. every year that Nike sells no products for in a 17.8 Billion dollar market ● One of Nike's biggest competitors is already established in the industry (Under Armor) ● Allows for expansion of the product base which matches the findings of the SPACE Matrix needs ● We chose outdoors over other potential lines like formal apparel because it is a large base of “Sportsmen” that Nike is not helping reach their fullest potential ● They have also tried many other branches like Ski and Snowboard ● This can be easily added under Nikes Action Sports Line of products
  54. 54. Cost Breakdown- Strategy 1 ● Product development and tooling - $2,000,000 ○ Average per item cost is 20,000 for Nike ○ UA has 129 outdoor products if Nike starts with 100 that would be 2,000,000 ● Advertising costs - $160,000,000 ○ 1.44b (spent domestically)/9 = 160M per product line ● Assuming Nike produces 2,000,000 units... ○ Nikes average production per new item is 20,000 ○ Nike runs at a 46% profit margin after overhead is factored into initial run ○ (2,000,000 + X)/ 2,000,000 = (66.85 x .54)36.10 X= production costs ○ Production costs of new line = 70,198,000 ● Total costs $162,198,000 ○ If all products are sold at average costs it results in 133,700,000 in revenue
  55. 55. Strategy 2 - Security Ribbons ● Counterfeit products are an issue for larger well known companies, especially for Nike. These counterfeit goods take away potential profits and run the risk of harming the company’s reputation if the consumer is unaware of the good not being legitimate. ● Begin by designing a unique ribbon that reflects Nike’s motto when under UV light. One ribbon will be placed along the tongue of each shoe produced. They will function similar to the strip on the U.S. $100 bill. ● They will be hard to duplicate as well as make the Nike footwear line more unique.
  56. 56. Cost Breakdown- Strategy 2 ● 2.5% of all universal trade is from counterfeit products ○ $22 billion x .025 = $550 million in annual losses (footwear) ● Nike averages $500 million per year on R&D ○ Add additional $100 million to cover R & D for ribbons ● Include cost of materials to make & apply ribbons ○ $.05 per ribbon x 200 million per year = $10,000,000 ● Total Cost ○ First Year: $110,000,000 ○ Following Years: $10,000,000 ● Potential Increase in Revenue: $550,000,000 ○ Estimated Annual increase in Revenue: $225,000,000
  57. 57. Quantitative Strategic Planning Matrix (QSPM)
  58. 58. QSPM Strategic Alternatives Strategy 1: Outdoors Line Strategy 2: Security Ribbons Key Factors Weight AS TAS AS TAS Opportunities 1. Increase in more active lifestyle in younger generations. 2. Business Insider review placed Nike and Adidas as favorite brands among millennials in 2019. 3. Increase in sporting events popularity (7 times as many women college athletes compared to 1972). 4. Product Diversification (technology) 5. Drastic increase in e-sports popularity .05 .15 .15 .10 .10 2 2 1 3 - .10 .30 .15 .30 - 2 3 3 4 - .10 .45 .45 .40 - Threats 1. Increase in counterfeit products by 1.9% 2. Increasing industry competition with Adidas owning 12% of the apparel market, a 3% increase since 2017 3. Increased difficulty to sell directly to consumers (online shopping/third parties) 4. Predicted economic slowdown by 2021 .15 .10 .15 .05 1 4 2 2 .15 .40 .30 .10 4 4 4 2 .60 .40 .60 .10 Total 1.00
  59. 59. QSPM Strategic Alternatives Strategy 1: Outdoors line Strategy 2: Security Ribbons Key Factors Weight AS TAS AS TAS Strengths 1. Ranked 14th most recognizable company by Forbes in 2019 2. Currently official supplier of NFL, NBA & MLB apparel 3. Low manufacturing costs compared to industry average 4. 100% renewable energy at all Nike locations by 2020 5. Willingness to embrace stance on social issues .20 .15 .05 .05 .05 4 2 3 - - .80 .30 .15 - - 4 2 3 - - .80 .30 .15 - - Weaknesses 1. Poor public image from past foreign employee wages/treatment 2. Unfavorable workplace culture for women 3. Only 3% of retail locations are Nike only 4. All production performed by independent manufacturers .10 .10 .15 .15 - - - 1 - - - .15 - - - 1 - - - .15 Total 1.00 3.2 3.6
  60. 60. Chosen Strategies ● Security Ribbons We have chosen to implement our security strip strategy. It is addressing a weakness that not only affects us but also the entire industry. Nike holds its customers and environment in high regards and protecting them with this strategy is right inline with that value. ● Workplace Equality Also, we feel it is necessary to implement additional workplace training and equality measures. Nike’s major issue internally is that it has a reputation of not being a great place for women to work. This is something that needs to be fixed immediately regardless of what other strategies are being implemented.
  61. 61. EPS/EBIT Common Stock Financing Common Stock Financing (In millions) Recession Normal Boom EBIT Interest EBT Taxes EAT # Shares EPS *Not necessary with in-house financing*
  62. 62. EPS/EBIT Debt Financing Debt Financing Recession Normal Boom EBIT Interest EBT Taxes EAT # Shares EPS *Not necessary with in-house financing*
  63. 63. EPS/EBIT 50% Stock - 50% Debt 50% Stock - 50% Debt Financing Recession Normal Boom EBIT Interest EBT Taxes EAT # Shares EPS *Not necessary with in-house financing*
  64. 64. Projected Balance Sheet (in millions) May 31, 2019 May 31, 2020 May 31, 2021 May 31, 2022 ASSETS Current assets: Cash and equivalents $4,466 $4,584 $4923 $5,175 Short-term investments 197 197 197 197 Accounts receivable, net 4,272 5,217 6,371 7,781 Inventories 5,622 6,007 6,420 6,860 Prepaid expenses and other current assets 1,968 2,164 2,381 2,619 Total current assets 16,525 18,280 20,303 22,644 Property, plant and equipment, net 4,744 5,052 5,381 5,732 Identifiable intangible assets, net 283 281 279 277 Goodwill 154 154 154 154 Deferred income taxes and other assets 2,011 1611 1291 1,035 TOTAL ASSETS $23,717 $25,270 $27,400 $29,833
  65. 65. Projected Balance Sheet (in millions) May 31, 2019 May 31, 2020 May 31, 2021 May 31, 2022 LIABILITIES AND STOCKHOLDERS EQUITY Total current liabilities $7,866 $8,652 $9,517 $10,469 Long-term debt 3,464 3,456 3,456 3,452 Deferred income taxes and other liabilities 3,347 3,625 3,625 3,772 Shareholders’ Equity: Common stock 3 3 3 3 Capital in excess of stated value 7,163 8,037 9,017 10,118 Accumulated other comprehensive income 231 231 231 231 Retained earnings 1,643 1,266 1,551 1,788 Total Shareholders’ equity 9,040 9,537 10,802 12,140 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $23,717 $25,270 $27,400 $29,833
  66. 66. Projected Income Statement (dollars in millions) For the year ended May 31, 2019 2020 2021 2022 Revenues $39,117 $42,265 $45,407 $48,813 Cost of sales 21,643 22,916 24,263 25,689 Gross profit 17,474 19,349 21,144 23,124 Demand creation expense 3,753 3,937 4,131 4,334 Operating overhead expense 8,949 10,093 11,385 12,841 Total selling and administrative expense 12,702 14,031 15,516 17,176 Interest expense (income), net 49 44 40 36 Other expense (income), net (78) 92 -108 128 Income before income taxes 4,801 5,182 5,696 5,784 Income tax expense 772 834 911 925 NET INCOME $4,029 $4,348 $4,784 $4,859 Diluted earnings per common share $2.49 $2.69 $2.96 $3.00 Diluted weighted avg. common shares outstanding 1,618 1,618 1,618 1,618
  67. 67. Implementation Strategy Steps: 1. Put together a team of existing designers to create the design for models of shoes containing the security strip 2. Have the team modify existing designs to contain the security strip if possible 3. While completing steps one and two help our manufacturers tool up to product the new designs. 4. Pass on the design down to our manufacturers to begin the implementation 5. Advertise the new more secure design and begin the new product sales
  68. 68. Long Term Objectives ● Convert all shoe designs to incorporate the new security strip ● Train all sales representatives to identify the security strip to help identify counterfeits (will create additional costs but worth it for customer safety) ● Create a safe and equal work environment for all of our employees ○ Mandatory sexual harassment training yearly for existing and new employees ○ Implement zero-tolerance policy of discriminatory wage gap
  69. 69. Recommended Annual Policies 1. Ensure all quality is kept at a high level with the introduction of new technology 2. Enforce a zero tolerance policy for harassment of any kind 3. Review workers quarterly on their experience within the company and take suggestions on things they would like to change 4. Promote people solely on the basis of merit or experience 5. Create more-open communication between lower and upper management to have more transparency within the company
  70. 70. Security Ribbon Strategy Over the next three years: 1. Periodically buy products from suspected counterfeit sellers to check to see if they have recreated our security measures 2. Watch standard Revenue streams to see if there is a percentage increase in both numbers and revenue 3. Bring in black market experts to see if/how they can replicate the security ribbon technology
  71. 71. Gender Equality Strategy 1. Every Nike location, as well as upper management, will implement the sexual harassment trainings within the first year. 2. Whistleblowers for pay-gaps will be rewarded so we can track the effectiveness of the new policy. 3. Encourage the type of culture we promote outside of the company (inspiring, uplifting) internally
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  • HaileyHarrington

    Jul. 19, 2021

My team and I did an in-depth overview of Nike's competitive position in the sports apparel and footwear industry as well as suggested strategies to help improve their performance.

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