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Executive Summary

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NIKE inc. is most famously known for the high quality athletic wear, shoes, and street wear. The three main target market the company focuses on is Women/Men, runners, and young people. The major competitors include, Adidas, Puma, Fila, and Under Armour, but through tremendous amounts of publicity, great reviews and high quality products for affordable prices, NIKE beats the competition in every way. Originally known as Blue Ribbon Sports (BRS), was founded by University of Oregon track athlete Phil Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS), making most sales at track meets out of Knight’s automobile. In 1964, in its first year in business, BRS sold 1,300 pairs of Japanese running shoes grossing $8,000. By 1965 the fledgling company had acquired a full-time employee, and sales had reached $20,000. In 1966, BRS opened its first retail store, located at 3107 Pico Boulevard in Santa Monica, California next to a beauty salon, so its employees no longer needed to sell inventory from the back of their cars. In 1967, due to rapidly increasing sales, BRS expanded retail and distribution operations on the East Coast, in Wellesley, Massachusetts. 

Business Overview:
Nike, Inc. is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is the world’s largest supplier of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than 44,000 people worldwide. In 2014 the brand alone was valued at $19 billion, making it the most valuable brand among sports businesses. As of 2017, the Nike brand is valued at $29.6 billion. The company was founded on January 25, 1964, as Blue Ribbon Sports, by Bill Bowerman and Phil Knight, and officially became Nike, Inc. on May 30, 1971. The company takes its name from Nike, the Greek goddess of victory. Nike markets its products under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk, Air Max, Foamposite, Nike Skateboarding, and subsidiaries including Brand Jordan, Hurley International and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008, and previously owned Cole Haan and Umbro. In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name. Nike sponsors many high-profile athletes and sports teams around the world, with the highly recognized trademarks of “Just Do It” and the Swoosh logo.

Product/Service Listing and Pricing:

Athletic Wear:
women’s- $15.00-$700.00
men’s- $15.00-$750.00

Shoes:
women’s- $15.00-$340.00
men’s- $20.00-$340.00

Mission and Vision Statement

Nike Inc.’s official mission statement is “to bring inspiration and innovation to every athlete in the world.” The company furthers that everybody is an athlete, based on Nike founder Bill Bowerman’s statement, “If you have a body, you are an athlete.” This mission statement represents the company’s strategic goal of reaching out to the global sports shoes, apparel and equipment market. The following main components are in Nike’s mission statement:

1.Inspiration
2. Innovation
3. Every athlete in the world

As a leading manufacturer of sports shoes, apparel and equipment, Nike Inc. inspires people to adopt a winner mindset, which is covered in the “inspiration” component of the mission statement. The company’s slogan “Just Do It” represents this inspirational goal. Also, Nike’s mission statement emphasizes innovation. This component is applied through the company’s strategy of continuous improvement of products through new technologies. The “every athlete in the world” component indicates that Nike’s mission statement pushes the company to target every consumer around the world. Thus, the company’s athletic shoes are designed to attract and satisfy a wide variety of market segments globally.

Nike, Inc. has not published an official vision statement. However, the company’s vision statement for its corporate social responsibility (CSR) is a good approximation for its business. This CSR vision is “to help NIKE, Inc. and our consumers thrive in a sustainable economy where people, profit and planet are in balance.” In this vision statement, the following main components address Nike’s business:

1. Help Nike, Inc. and our consumers
2. Sustainable economy
3. People, profit and planet are in balance

 
Nike’s CSR vision statement includes the company and its consumers as major participants in the desired future goal of sustainability. The corresponding strategic objectives are implied in the “sustainable economy” component of the vision statement. The third component of Nike’s CSR vision statement reinforces sustainability by stating, “people, profit and planet are in balance.” This CSR vision statement shows that, aside from being a manufacturer of athletic shoes and related products, Nike is also concerned with the sustainability and balance needed to ensure that everyone benefits from the business.

Objectives & Goals

Nike’s first objective is to make a profit for the shareholders. In order to meet objectives, Nike makes a number of small aims and objectives. This includes manufacturing superior products, maintaining the integrity of the global operation in area of design the product. The aim of this company is to balances these profit-driven goals with a number of social and sustainable aims, including use small water, reducing waste of material they use and strengthening communities . Nike as company within athletics industry also operates in Low Countries, moving all over the country but depending on factor cost. Their aim is to move easily is often cause of difficulty for many less developed countries, which has become economically depended on how they operate. An aim is a goal which this company wants to achieve.  Another business can sell much as possible whilst others aim to improve the quality of their mission statement. The Nike mission statement in extremely particular in the way that it is worded during Nike investor day, management provided a long term revenue tom forecast of achieving 65 billion in revenue by 2015. This objective translates to a roughly 8% compounded annual growth rate based on Nike. Nike’s marketing objective
is to employ a range of marketing communication tactics that can cater to the organization’s target market, who have different nationalities, genders, cultures, and ages. Nike has to achieve the highest sales. Have a highly competitive advantage in the industry… Increase revenue from 2 million to 3 million in next financial period. Increase market share from 24% to 28% and profit by 30% in the next year. Nike brick and mortar stores will serve as testing grounds for new products and merchandising initiatives. Results from these experiments will be shared with Nike’s wholesale customers to further improve sales. The company is about to embark on an ambitious, yet realistic plan that presents investors a great opportunity to invest in a well-established company that is still experiencing growth.

Ownership:
Nike is a partnership created by Phill Knight and Bill Bowerman. 

Marketing
Target Market:
Most of the consumers of Nike’s products are mainly sportsmen. This is so because of the utility that comes with the products. An athlete is more likely to go a sports shoe designed and marketed by Nike more than a person who detests sporting and exercises. Nike targets these consumers by agreements between Nike and athletic teams, college’s athletic teams etc for product sponsorship and eventual promotion to the members of these teams. In this way, Nike is able to reach a wide number of consumers and consumers who are more likely to buy. Even though others are likely to buy the products,Nike pays specific emphatic targeting to the athlete more than any group of individuals even though it also targets the youth who have embraced the hip hop culture.

Targeting strategies:
Nike lays a number of strategies to target their immediate consumers; athletes and other sportsmen. The targeting strategies include among others the sponsorship of products by professional athletic teams, celebrity athletes and college athletic teams. This strategy is specifically successful because of its ability to reach a large number of athletes. If the athletic team manager prescribes a specific type of track shoes made by Nike, the trainees  have no option other than to buy them. The teams can as well buy the track shoes in bulky and supply them to the team members.The second strategy that Nike applies is the designing of product destination. It does this by associating success with the product. For example, when a celebrity athlete sponsors a specific brand of athletic shoes, the brand will be associated with success. This psychological effect is reinforced with advertisements that affirm this position.Finally, Nike targets the consumers who are likely to develop product intimacy; those who care more about the utility and quality of the product than the price. In this way, the pricing is not affected too much in a bid to accommodate a large number of consumers.

Pricing Strategies:
 As stated in the foregoing section, Nike targets the consumers who embrace products intimacy and thus care less about the product. This has enables Nike to set relatively  higher prices than its competitors. This is a strategy that calls for higher pricing points so as to push the perceived product value. It has been established that consumers who consider a product to be of high quality are likely to pay the high price more often and consistently. Once consumers develop product intimacy, they come to associate their person with the product and will pay whatever price quoted on the product provided it has the Nike logo on it.Another very important thing to note is the fact that Nike uses the vertical integration pricing strategy in which they take ownership of the participants at channel levels that differ and they also engage in multifarious channel level operations both in a bid to control costs and thus influence pricing function 

Distribution Strategies:
Distribution strategies embraced by an organization can either give them an edge in market or make them lag behind the winners in the market. The more efficient the product distribution is the more sales and thus more profits. The delivery of the right product and at the right time to the consumer not only effects utility but also leads to high degree of consumer satisfaction and loyalty. Nike distributes its products on level basis. The high priced premium products are given to certain distributors while leaving the low priced to be sold at highly discounted prices at mega retail stores such as WalMart. Whereas Reebok embraced a limited distribution strategy Nike ventured more into a global3 market capitalization

  SWOT Analysis 

Strengths:
– Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that ‘Business is war without bullets.’ Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.

Threats:

Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.

The market for sports shoes and garments is very competitive. The model developed by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors are developing alternative brands to take away Nike’s market share.

– As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are shopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare prices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike.

Weaknesses:

The organization does have a diversified range of sports products. However, the income of the business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes.

– The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike.

Opportunities:

Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.

There is also the opportunity to develop products such as sport wear, sunglasses and jewellery. Such high value items do tend to have associated with them, high profits.

– The business could also be developed internationally, building upon its strong global brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilized to support the brand such as the World Cup (soccer) and The Olympics.

Competitive Analysis/Competitive Advantage

The rivalry among existing competitors in the footwear industry is very high. Large firms such as NIKE, Reebok and Adidas have grown immensely and established their foot firmly in the industry. These firms are also globally recognized and have a huge loyal customer population.The firms also engage in online selling, allowing them to increase sales while minimizing operating costs. The giant firms of the industry invest heavily in building a strong brand identity.The competition is fierce and thus the rivalry is very high.Threat of SubstituteThe substitution for the athletic footwear is low, as there are little alternatives available to choose from. The other substitutes available in the footwear industry are boots, flip-flops, and sandals.But these cannot be used in place of sports shoes, in any sporty event. For instance, a soccer player would not wear boots or flip flops to play soccer. Therefore, there are no real substitutes for athletic footwear. And similarly there are lesser substitutes available for athletic garments.Threat of New EntrantsNIKE has always striven to provide a competitive edge to foster the best possible performance in their athletes. This is the reason NIKE continues to lead innovation in footwear, apparel, and equipment. NIKE is a globally recognized brand and has a huge population of loyal customers.For the younger generation i.e. youth especially, NIKE is a fashion brand. Even being a sports brand, it attracts the sports as well as non-sports population. One of the major reasons NIKE is so successful in popularizing its footwear, apparel and sports accessories is because it hires sports celebrities as their spokespeople, including legendary basketball player Michael Jordan, SerenaWilliams, Tiger Woods. Thus threat of new entrants is low for NIKE.Bargaining Power of SuppliersThe raw material required to produce sport footwear are leather, rubber, and cotton. These are available in the market in abundance. At the same time there are many suppliers of such raw materials in the industry. NIKE definitely has an advantage over their suppliers. Thus the suppliers are dependent on the firms like NIKE and Adidas as their means of their earnings. Thus the supplier power of the suppliers is low.Bargaining Power of BuyersThe power of buyers in the footwear industry is distributed among several companies. There area large number of buyers relative to the number of firms in this industry. For a company to succeed in competition there is a continuous need to develop new products with higher quality than its competitors. The price of NIKE products is comparatively high as compared to the other brands. Customers are price sensitive. There are other options in sports footwear available in the industry at a lower price. Thus the bargaining power of buyers is high

Promotions Plan

Goals:

initially the goal was to distribute low-price, high-quality Japanese athletic shoes to American consumers to break the domination of Germany in the shoe industry
to maintain its quality and make it easily available at every marketable place
to meet the requirements of all types of customers (male, female, young)
promote the sustainable development of product design and novelty 
to encourage the development of designs allowing the young people to cash the maximum benefits from exercising 
to reduce packaging waste and use of organic volatile compounds to make it environmentally friendly 
to attain climate neutrality 

Stratagies:

the mission is to exceed from all leading athletic companies and make it widely available across the globe 
maintain the leading position in the market by supplying quality products and innovative designs and attract maximum number of customers belonging to all ages and lifestyles
guarantee the availability of all kinds of products at all leading stores and markets
to meet the changing demands of customers 
value the labourers, stake holders and other communities in the implementation of every strategy and decision
encourage the environmentally friendly and pollution free development by reducing the emission and waste minimizing activities with the help of various projects sponsored by WWF and other organizations 
the company will now focus on providing quality products on low prices to have greater share in the market

Financial Plan

In 2013 Nike came up with a 4 year plan to help grow the business. They hoped to increase revenues to $36.0 billion by 2017, meaning a 42% rise from the $25.31 billon revenue in 2013. Nike believes that its NIKE Brand segment alone will generate incremental revenues of $10.0 billion by 2017, while the Converse segment’s revenues are expected to grow over twofold to $3.0 billion from $1.45 billion in fiscal 2013. The company expects that its apparel, women’s and e-Commerce businesses to support NIKE Brand’s growth. The company expects revenues from the segment’s Direct-to-Consumer (DTC) business to reach $5.0 billion by 2015 and $8.0 billion by 2017, primarily driven by increased e-Commerce sales as well as new store expansion.

Cash Flow Statement

Nikes cash flow statement for the past 4 years (2014-2017):
Period Ending: Trend 5/31/2017 5/31/2016 5/31/2015 5/31/2014
Net Income
 $4,240,000 $3,760,000 $3,273,000 $2,693,000
Cash Flows-Operating Activities
Depreciation
$716,000 $662,000 $649,000 $586,000
Net Income Adjustments
($175,000) $254,000 $502,000 $222,000
Changes in Operating Activities
Accounts Receivable
($426,000) $60,000 ($216,000) ($298,000)
Changes in Inventories
($231,000) ($590,000) ($621,000) ($505,000)
Other Operating Activities
($120,000) ($161,000) ($144,000) ($210,000)
Liabilities
($364,000) ($889,000) $1,237,000 $525,000
Net Cash Flow-Operating
$3,640,000 $3,096,000 $4,680,000 $3,013,000
Cash Flows-Investing Activities
Capital Expenditures
($1,105,000) ($1,143,000) ($963,000) ($880,000)
Investments
$118,000 $93,000 $785,000 ($328,000)
Other Investing Activities
($21,000) $16,000 $3,000 $1,000
Net Cash Flows-Investing
($1,008,000) ($1,034,000) ($175,000) ($1,207,000)
Cash Flows-Financing Activities
Sale and Purchase of Stock
($2,734,000) ($2,731,000) ($2,020,000) ($2,245,000)
Net Borrowings
$1,421,000 $868,000 ($26,000) ($77,000)
Other Financing Activities
$0 $0 $0 $0
Net Cash Flows-Financing
($1,942,000) ($2,671,000) ($2,790,000) ($2,914,000)
Effect of Exchange Rate
($20,000) ($105,000) ($83,000) ($9,000)
Net Cash Flow
$670,000 ($714,000) $1,632,000 ($1,117,000)

Risks and Contingency

There are 3 main risks when it comes to Nikes brand, and 3 things that may prove to be a set back and they include:

1. Athletic wear goes out of fashion
While the popularity of yoga pants and sneakers is often cited as a fashion trend, Morgan Stanley analysts believe that shoppers are hooked on casual comfort. Women in their 20s and 30s are largely driving the “athleisure trend,” in which customers buy leggings with the intent of wearing them to the gym, errands, and brunch. The analysts believe that shoppers will continue to choose this kind of apparel over denim. But if consumers start shifting toward a more formal look again, Nike’s sales could slow down. 

2. Under Armour keeps growing
Under Armour is the second-largest US sportswear company behind Nike, with more than $3 billion in revenue last year. The brand still has only a fraction of Nike’s $28 billion in annual revenue. But Under Armour’s sneaker with spokesman Stephen Curry is selling out, proving it has real potential as a sneaker brand. Before Stephen Curry was Under Armour’s biggest star, he was rejected by Nike. Nike passed over the basketball star twice, Darren Rovell at ESPN reports. If Under Armour keeps making savvy moves like the Curry partnership, it could experience explosive growth and put a dent in Nike’s business. 

3. China disappoints
The rising middle class in regions like China are increasingly demanding athletic apparel. These largely untapped markets could provide big opportunities for companies like Nike. But Chinese consumers can be unpredictable, which could lead to problems for Nike. For instance, luxury brands who moved into China several years ago are now struggling as shoppers choose fast fashion retailers like Zara instead. China is a big growth opportunity for Nike, but the market is highly unstable.