nike-ethics-

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NIKE: CASE ANALYSIS Dima Jennifer Nicolas Saadia Sergiu Group 3:

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What they show you What they don’t

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Who costs them money Who make them save money

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Seller of athletic footwear and apparel Produces in 45 countries worldwide Headquarters in Oregon, USA Founded in 1964 Brand name created in 1971 Just do It campaign in 1988

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Criticism started in early 90’s: -child labour -safety and health problems -physical harming of employees Review of Labour Practices in 1995 Nike’s response to growing criticism

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Matrix Structure Each department overlapped by geographic divisions and product categories Overlap in managerial responsibilities Fluid leadership structure No formal communication link between regional and product heads Organizational Structure

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Labor-intensive: -Manufacturing location -Outsourcing production -Reassess production methods Rising crude oil prices: 65% increase in one year -Transportation, raw materials and energy -Consumer’s disposable income Change of consumer taste: -Athletic shoes  Brown shoes General Environment

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Globalization Opportunity: -Lower import tariffs/duties -Access to cheap labor and raw materials Threat: -Increased competition from Asia General Environment

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Consumer Demographics Sales : -Ages 30 – 34 -Teenagers & Men (early 40s) -Men (20s) General Environment

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Financial Outlook

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Infringement statistics

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Operations: -Footwear, apparel, equipment -Other businesses: Business-Level Strategy: -Integrated cost-leadership and differentiation strategy Business Model

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Resources: -Tangible: Fit, Sphere, Air, Shox technologies -Intangible: brand name / reputation for innovation Core Competency: -Distribution and subcontractors’ networks -Mass marketing Competitive advantage: -Brand name and celebrity endorsements Value Chain

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Overview Challenges internal ANALYSIS Porter’s Five Forces Model Bargaining Power of Suppliers: -Subcontracts to more than 500 small scale factories -Low bargaining power due to Nike’s big volume Bargaining Power of Buyers: -Competitive products all compete on differentiation -Low switching costs INDUSTRIAL ANALYSIS RECOMMENDATIONS

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Overview Challenges internal ANALYSIS Porter’s Five Forces Model Threat of Substitute Products: -Non-existent Threat of Potential New Entrants: -Economies of Scale -Strong and Well Established Brand Name -High Capital requirements -Low threat INDUSTRIAL ANALYSIS RECOMMENDATIONS

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Overview Challenges internal ANALYSIS Porter’s Five Forces Model Intensity of Rivalry between Firms in the Industry: -High competitive in an Oligopoly (other leading firms include Adidas, Puma, Fila, New Balance) -Strong brand identity and product differentiation -Intensity of Rivalry is moderate INDUSTRIAL ANALYSIS RECOMMENDATIONS

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Overview Challenges internal ANALYSIS Porter’s Five Forces Model INDUSTRIAL ANALYSIS RECOMMENDATIONS

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Overview Challenges internal ANALYSIS Alternatives Partnership / independent organization Benefits: -Knowledge -Credibility Drawbacks: -Control surrender: -Information leakage INDUSTRIAL ANALYSIS RECOMMENDATIONS

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Overview Challenges internal ANALYSIS Alternatives Vertical Integration benefits: -Full control -More profits -Drawbacks -Very costly -Less flexible INDUSTRIAL ANALYSIS RECOMMENDATIONS

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Alternatives Balanced scorecard Benefits: -Control -Competitive advantage Drawbacks: -Commitment

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Alternatives

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Overview Challenges internal ANALYSIS INDUSTRIAL ANALYSIS RECOMMENDATIONS Conclusion Balanced scorecard: -Competitive advantage -Less expensive -Preservation of control -Preservation of flexibility

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We are one step ahead Thank you for your attention. Feel free to ask if you have any question.