Nike Case Study
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Introduction:
This paper is a case study of Nike Inc. I will give a brief overview of the history, products, company goals, company challenges, financial report and sourcing strategies. My main sources of information are internet databases, company annual reports, and financial articles.
Company Overview: Nike
Nike incorporated, the worlds leading designer and marketer of authentic athletic footwear, apparel, equipment, and accessories for a wide variety of sports and fitness activities, was formed in Oregon in 1968 as the successor to a partnership organized in 1964. This partnership was formed when Philip Knight, who had just graduated for Stanford with a degree in business, contacted Bill Bowerman, his track coach at the University of Oregon, about starting a company to sell well- designed running shoes made in Japan. The company did well, and in 1972 began to produce its own shoes and market them under the Nike name. The success of the shoes and the running craze of the 1970s led Nike to design new products, and business grew rapidly.
The company began to offer public stock in 1980. Phillip Knight remained CEO until 2004, where he stepped down but still continues as chairman. Knight started a two-man operation importing Japanese running shoes and turned it into a multibillion-dollar corporation. Nike great success is mainly due to Nikes understanding of the power of imagery and how to market those images.
In 1987, Knight began to reorganize Nike by splitting the footwear division into units focused on individual sports. He also linked the units through a team system with production, sales, and advertising. Another of Nikes strengths is its inventory control system. Nike forces its retailers to order up to eighty percent of their purchases six to eight months in advance, in return for guaranteed delivery and end up to ten percent discounts. This method nearly eliminates excess inventories. Although Nikes competitors practice this same method, Nike has a reputation for delivering on its end.
Young males are Nikes main market and substantially to Nikes success, are they are caught up in the superhero imagery of being like Lebron James or Kobe Bryant. One market that Nike sees as potential for growth is the womens market.
Products:
Nike products are designed, developed, manufactured, transported, sold, and marketed in more than ninety countries on six continents. Also, a large numbers of factories though our Asia produces Nike shoes. In the United States, approximately seventy percent of the money spent on footwear by thirteen to eighteen-year-old boys is spent on Nike shoes. Nike Inc. used to think that everything started in the lab. Now executives realize that everything comes for the consumer, although technology is still important. Nike now understands that the consumer has the lead in innovation.
Nike offers a wide variety of products, for shoes to apparel. Although the company began selling running shoes, it now sells shoes for all different types of sports, using athletes to market products. Working with these athletes, Nike develops a shoe for a players specific sport and sells it with the athletes endorsement. In 2002, Nike introduced Nike SB, its highly successful skateboarding line. As the Nike name became better known, the company began to move into other markets. Nike started by developing clothes for runners who ran in a cold climate. This product line evolved into everything form casual dress clothes to clothes for every type of sporting event.
Company Goals:
Nikes goal is to be the largest athletic supplier of the world. To accomplish this, it must revise its international strategy. In the past, Nike had independent distributors selling its shoes internationally. However, the distributors were not prepared to market the shoes effectively and were not concerned with how well Nike shoes sold, as long as they were able to sell shoes. As a result, Nike felt that it was losing valuable customers. As an alternative, Nike started its own subsidiaries in the international market. Nike now has a direct hand in how a product is marketed and displayed. Image is extremely important to Nike and by producing a wholesome image throughout the world, it believe sales will increase.
With the increase of European players in the National Basketball Association, Nike is targeting Europeans aged twenty-two to thirty five. Nike feels its “Just Do It” campaign will be successful all over the world. However, for success in Europe, a different strategy was developed. Europeans are not as driven by physical excellence as are Americans. Therefore, Nike created a new image analogous with the idea that “there is a natural marriage between intellectual and physically pursuits.”
In December 1998, Nike announced the formation of a stand alone category business unit for its line of licensed sports products by combining its existing Organized Team Sports (OTS) operation with Sports Specialties Corporation (SSC). The new unit will be named Nike Team Sports (NTS), and will service the retail licensed products marketplace and establish a leadership position in the category. According to Mark Duggan, the director of United States sales, “Relationships with Nike retailers are a key component of nike.com”
Nike.com started early in 1999. It also partnered with UPS worldwide Logistics to provide overnight, second-day, and ground delivery services. Nikes outsourcing of logistics services ensured the best, most secure delivery and fulfillment available.
Challenges:
Nike has been faced with several challenges, beginning with the slowdown of the United States Market. The American market