Professional Documents
Culture Documents
Submitted to:
A.J. Almaney, Ph.D.
ISS 395
DePaul University
Chicago, IL 60604
March 14, 2000
TABLE OF CONTENTS
Executive Summary…………………………………………………………………….…………p.4
History…………………………..…………………………………………………………………..p.6
Profile of CEO………………….…………………………………………………………………..p.7
Competitor’s Profile………….…………………………………………………………………….p.7
Industry Profile……………………………………………………………………………………..p.8
Company Analysis…………………………………………………………………………………p.9
Industry Analysis………………………………………………………………………………......p.24
Top Competitor Analysis………………………………………………………………………….p.25
Other External Forces…………………………………………………………………………….p.26
Key Opportunity……………………………………………………………………………..….…p.27
Key Threat…………………………………………………………………………………………p.27
Major and Subordinate Problems………………………………………………………….……p.28
Strategic Match…………………………………………………………………………………...p.29
Primary Strategic Match Position……………………………………………………………….p.30
Strategic Plan……………………………………………………………………………………..p.33
Conclusion………………………………………………………………………………………...p.38
LIST OF EXHIBITS
1. Sales Trends Graph……………………………………………………………………………p.5
2. Net Income Trends Graph…………………………………………………………………….p.5
3. Nike Board of Directors Table………………………………………………………………...p.11
4. Table of Key Financial Ratios………………………………………………………………...p.22
5. Net Income Trend Graph………………………………………………………………….…..p.24
6. Primary Strategic Match Position Chart……………………………………………………..p.30
7. Industry Attractiveness Matrix………………………………………………………………..p.31
8. Business Strength/Competitive Position Chart……………………………………………..p.32
9. Grand Strategy Chart………………………………………………………………………… p.34
10. Marketing Short-term Strategy Chart………………………………………………………..p.35
11. Production Short-term Strategy Chart……………………………………………………….p.36
12. Research and Development Short-term Strategy Chart…………………………………..p.37
13. Human Resources Short-term Strategy Chart……………………………………………...p.37
14. Finance Short-term Strategy Chart.………………………………………………………….p.38
EXECUTIVE SUMMARY
Nike Inc. was founded in 1962 by Bill Bowerman and Phil Knight as a partnership
under the name, Blue Ribbon Sports. Our modest goal then was to distribute low-c
ost, high-quality Japanese athletic shoes to American consumers in an attempt to
break Germany s domination of the domestic industry. Today in 2000, Nike Inc. n
ot only manufactures and distributes athletic shoes at every marketable price po
int to a global market, but over 40% of our sales come from athletic apparel, sp
orts equipment, and subsidiary ventures. Nike maintains traditional and non-trad
itional distribution channels in more than 100 countries targeting its primary m
arket regions: United States, Europe, Asia Pacific, and the Americas (not includ
ing the United States). We utilize over 20,000 retailers, Nike factory stores, N
ike stores, NikeTowns, Cole Haan stores, and internet-based Web sites to sell ou
r sports and leisure products. We dominate sales in the athletic footwear indust
ry with a 33% global market share. Nike Inc. has been able to attain this premie
r position through "quality production, innovative products, and aggressive mark
eting." As a result, for the fiscal year end 1999, Nike s 20,700 employees gener
ated almost $8.8 billion in revenue.1
Products
Our primary product focus is athletic footwear designed for specific-sport and/o
r leisure use(s). We also sell athletic apparel carrying the same trademarks and
brand names as many of our footwear lines. Among our newer product offerings, w
e sell a line of performance equipment under the Nike brand name that includes s
port balls, timepieces, eyewear, skates, bats, and other equipment designed for
sports activities. In addition, we utilize the following wholly-owned subsidiari
es to sell additional sports-related merchandise and raw materials: Cole Haan Ho
ldings Inc., Nike Team Sports, Inc., Nike IHM, Inc., and Bauer Nike Hockey Inc.
Our most popular product categories include the following:
• Running
• Basketball
• Cross-Training
• Outdoor Activities
• Tennis
• Golf
• Soccer
• Baseball
• Football
• Bicycling
• Volleyball
• Wrestling
• Cheerleading
• Aquatic Activities
• Auto Racing
• Other athletic and recreational uses
Jill K. Conway
Visiting Scholar, Massachusetts Institute of Technology, Boston, MA
Ralph D. DeNunzio
President, Harbor Point Associates, Inc., New York City, NY
Richard K. Donahue
Vice Chairman of the Board, Lowell, Massachusetts Delbert J. Hayes, Newberg, OR
Douglas G. Houser
Assistant Secretary, Nike, Inc., Partner – Bullivant, Houser, Bailey, Pendergras
s & Hoffman Attorneys, Portland, OR
John E. Jaqua
Secretary, Nike, Inc., Partner – Jaqua & Wheatley, P.C. Attorneys, Eugene, OR
Philip H. Knight
Chairman of the Board and Chief Executive Officer, Nike, Inc., Beaverton, OR
Charles W. Robinson
President, Robinson & Associates, Santa Fe, NM
A. Michael Spence
Dean, Graduate School of Business, Stanford University, Palo Alto, CA
William J. Bowerman
Director Emeritus
High
Leverage
Constraint
Average
Low
Maintenance
Vulnerability
3/1
3/1
3/1
3/1
3/1
3/1 5/1
5/1
4/1
5/31
5/31
5/31
5/1 $400,000
$80,000
$5,000,000
$10,000,000
$1,000,000
$100,000
Total 3 months $16,580,000
* completion date based on a 5/31 fiscal year end.
Production Objectives
Long-Term: Decrease our cost of sales from 62.59% of sales to 59% of sales by fi
scal year end 2004.
Short-Term: Decrease our cost of sales from 62.59% to 62% in fiscal year 2000.
Exhibit 11 Short-Term Strategy
Start Date Completion Date* Budget Savings
Location, Newness, and Layout of Facilities
1. Hire independent industrial engineers and analysts to work with manufact
uring facilities in order to maximize efficiency of operations: shop layout, pro
cesses, etc.
Inventory
1. Reduce inventory at all levels of production: raw materials, work-in-pro
cess, and finished goods.
2. Work with 3rd party shipping agents to manage the flow of orders from fa
ctories to distribution centers.
3. Work with suppliers to implement the next generation of electronic data
interchange (EDI) technology in an attempt to achieve just-in-time inventory.
3/1
3/1
3/1
3/1 5/1
5/31
5/31
5/31 $10,000,000
$10,000,000 $30,000,000
$40,000,000
$1,000,000
$20,000,000
Total 3 months $20,000,000 $91,000,000
* completion date based on a 5/31 fiscal year end.
Research & Development Objectives
Long-Term: Maintain a range of R&D expenditures that does not fluctuate more tha
n 1.5% or less than
.75% of projected sales in the next 5 years.
Short-Term: Increase spending on R&D to 1.2% of projected revenues in fiscal yea
r 2000 to achieve
increased market share.
Exhibit 12 Short-Term Strategy
Start Date Completion Date* Budget Savings
Focus
1. Shift funding to applied research in "up-and-coming" sports. Experiment
with cutting-edge fashion.
Budget
1. Infuse new funding, in addition to shifting current budgetary allocation
s, for researching sports that could be popular in the future. 3/1
3/1 5/31
4/1
$15,000,000
Total 3 months $15,000,000
* completion date based on a 5/31 fiscal year end.
Human Resource Objectives
Long-Term: Increase availability of educational assistance programs for world-wi
de manufacturing
employees from 50% of factories to 100% by 2004.
Short-Term: Increase availability of educational assistance programs for world-w
ide manufacturing
employees from 50% of factories to 70% by 2000.
Exhibit 13 Short-Term Strategy
Start Date Completion Date* Budget Savings
Recruitment and Selection
1. Hire factory workers who express an interest in educational programs. Th
ese employees would achieve the maximum benefit from educational assistance prog
rams by being more loyal and productive.
Training and Development
1. Offer general education classes for factory workers who want to learn ho
w to read, write, or fill any gaps in their childhood education.
2. Conduct seminars and workshops for supervisors in factories so that they
may improve their production and management skills.
Compensation
1. Increase salaries of factory workers who are promoted as a result of com
pleting our educational assistance programs.
3/1
3/1
3/1
3/1 5/31
5/31
5/31
5/31
$5,000,000
$3,000,000
$5,000,000
Total 3 months $13,000,000
* completion date based on a 5/31 fiscal year end.
Finance Objectives
Long-Term: Increase net income 70% to $767 million by fiscal year end 2004.
Short-Term: Increase net income 22% to $550 million in fiscal year 2000.
Exhibit 14 Short-Term Strategy
Start Date Completion Date* Budget Savings
Management of Accounts Receivable
1. Implement stricter credit terms with retailers to minimize bad debt expe
nse.
2. Hire 10 additional employees in the corporate Accounts Receivable Depart
ment to maintain and collect aging accounts.
Management of Total Assets
1. Sell non-productive equipment or buildings to reduce depreciation and ma
intenance expenses.
3/1
3/1
3/1 5/31
4/1
5/31
$400,000
$300,000 $20,000,000
$25,000,000
$50,000,000
Total 3 months $700,000 $95,000,000
* completion date based on a 5/31 fiscal year end.
CONCLUSION
Nike, Inc. is a company rooted in competition. From equipping athletes with the
finest sports equipment in the world to continuously improving our own financial
performance, Nike dominates its competitors. Phil Knight and Bill Bowerman prob
ably could not have imagined in 1962 to what degree their $500 investments would
yield in 2000. They did know that product quality and innovation would help ath
letes to achieve greater goals. Nike still operates on this philosophy today. It
is one that has helped athletes and stakeholders alike to realize athletic and
financial greatness. Despite a changing marketplace for athletic footwear, we wi
ll continue to expand our product lines and marketing reach to become a more pow
erful global brand.
Mission statement
To bring inspiration and innovation to every athlete* in the world
* If you have a body, you are an athlete."