Research Paper on "Business Strategy Report for Nike"

Research Paper 25 pages (6524 words) Sources: 5 Style: APA

[EXCERPT] . . . .

Nike manufactures and markets sports apparel and equipment on a global scale. They operate in 160 different countries, and have revenues of $18.6 billion. Yet, they are a growth company. Without any significant acquisition, they have consistently grown revenues and profits over the past several years by shifting emphasis on brands they own in growth sectors.

Nike's marketing strategy revolved around two concepts - premium positioning and everyone with a body is an athlete. These concepts drive their strategies, including endorsements from the world's most popular athletes, and the development of products for both the serious athlete and the mass market.

Financially, Nike is strong. They are liquid and are on a steady growth trajectory. They are, however, underleveraged. The company derives significant strength from its global production and logistics network. Despite this, the company faces many threats, both competitive and economic.

Nike is well-positioned to defend against these threats. Their move into growth sectors of the market shows savvy. It is recommended that their convoluted organizational structure to reduce operational duplication. They should also adjust their capital structure to make it more efficient. It may also be time for Nike to make a major acquisition, capitalizing on slumping equity markets to strengthen their defenses against economic downturn and competitive threats. If Nike is able to make these adjustments and strategic recommendations, they are in a good position to maintain their steady growth trajectory for years to come.

Overview

Nike is in a strong position to address these

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threats. It is recommended, however, that they take steps to shore up their operational efficiency. This may require a less convoluted organizational structure. The time may have come for Nike to make a major acquisition as well, to take advantage of depressed stock markets and strengthen their defenses against a maturing core market. By making a few operational adjustments and possibly an acquisition, Nike can continue on its growth trajectory for several more years

Nike was founded in 1968 and has grown into a global powerhouse. The companies designs, manufactures, markets and retails athletic footwear, apparel and equipment. Based out of Beaverton, Oregon, Nike today operates in 160 countries and has 32,500 employees. The company is involved in most sports, and also makes some casual footwear. Major competitors include Adidas, Puma, New Balance and Reebok. Nike sells products mainly under its own name, but also owns Umbro, a major soccer brand; Cole Haan, a casual wear subsidiary; Converse, another athletic brand; and Hurley, a player in the board sports industry.

In recent years, Nike has enjoyed substantial success. They have increase revenues, margins and profits consistently, expanding their market share in the process. Their Nike Golf, Cole Haan and Hurley lines have enjoyed tremendous success, the last two with record revenues last year. The firm has strong growth in several key emerging markets, such as China, Brazil and Russia. The company acquired premier soccer brand Umbro and is in the process of integrating that business into the Nike family. Nike has had a couple of failure, however. They have recently divested two of their businesses, Starter and Bauer. The latter, a major hockey equipment manufacturer, represented a major failure for Nike as they failed to make any headway into that sport, and the balance of power shifted towards Reebok, forcing Nike out of the business.

Nike's revenues in 2008 were $18.6 billion. Of these revenues, 43% were derived from the United States market, and 57% derived from international markets. The U.S. market was worth an estimated $19.33 billion in 2006, giving Nike an approximate market share in the U.S. Of 41%. Nike characterizes itself as a growth company, a claim borne out in their net profit figures, which have increased steadily in the past few years. The company's diluted EPS has increased 113% in the past five years.

Nike is the U.S. And global market leader in the broad category of athletic apparel. Nike has expanded its market share in recent years, and is the market leader in its six core businesses - basketball, running, football, men's training, women's training and sportswear.

Vision/Mission

According to the Nikebiz.com website, Nike's corporate portal, the mission statement for Nike is "To bring inspiration and innovation to every athlete in the world." Central to this mission is Nike's definition of the term athlete. In the formative days of the company, co-founder Bill Bowerman defined athlete the following way: "If you have a body, you are an athlete." That definition is at the heart of Nike's business model, and has been central to their vision and consequently to their spectacular growth. Envisioning every person as an athlete changed the company's perspective of their target market. This in turn laid out their growth potential, and guided product and marketing strategy development. Ultimately, this concept helped change the perspective of the American consumer with regards to the definition of the term. Nike's ability to market its definition of "athlete" and its ability to consistently develop products that help bridge the gap between the traditional view and the Nike view has been critical to their ascendency as a major global apparel company.

Nike does not have a vision statement as such, but CEO Mark Parker illustrates the company's vision in its 2008 Annual Report. Nike sees itself as a growth company, driven by innovation and industry leadership. Nike sees itself as deriving success from its immersion into each sport's culture, building deep relationships with consumers that help to drive Nike's innovation. The company has a strong vision of growth in the future, including further penetration of international markets, and the addition of more product lines. The firm views itself as defined by "epic moments" such as championships and individual triumphs, and their vision is to bring this power - the power of sport - to the mass market

Strategies

Nike approaches its business with several key strategies. With regards to businesses, they focus their efforts on six main segments of the market. Their core groups amount to over 70% of the sports apparel industry in the United States. Each group operates autonomously, with its members immersing themselves in the sport and the culture. This is done to help them stay on the cutting edge of trends, and achieve first-mover advantages. Nike prefers to be an innovator of new product and design ideas, and views this is a central part of its business plan.

Nike has several key operational strategies. Procurement is focused on low-cost production centers. This helps Nike to develop high margins for their products. China is the largest producer of Nike goods, at 36%. This is followed by Vietnam (33%), Indonesia (21%) and Thailand (9%). In several countries, Nike produces footwear domestically. Production is widely dispersed, with the largest plant producing just 6% of footwear. All told, Nike uses nearly 700 factories in 52 countries.

Nike attains a degree of market saturation by retailing through multiple channels. They operate 260 of their own stores, but also retail through other athletic stores, department stores and other channels as appropriate. Nike has begun in recent years to increase licensing of its brand, extending its portfolio beyond athletic ware and expanding brand exposure.

Functional Points of Emphasis

Nike sees itself as an innovator in research and development, and views the field as an area where they can gain competitive advantage. Their strategy of cultural immersion allows them to get a sense of the direction in which a particular market is going. This information is then combined with product development teams. Nike uses a wide range of synthetic materials, along with natural rubber and leather. Technological development focuses on aspects of performance, durability, and weather resistance. The industry in the U.S. is trending towards casual wear, which should reduce Nike's research and development costs as a percentage of sales, since this will decrease focus on the high-tech performance aspect of product development.

Nike has a multifaceted marketing strategy. A key aspect of their success is the use of celebrity endorsements. Elite athletes such as Michael Jordan and Tiger Woods have propelled Nike in their respective segments. The company prefers to build long-term relationships with these athletes. Jordan, for example, still works with Nike years after his retirement. The firm uses multiple channels to sell its products, including its own branded stores, resulting in a significant degree of market saturation. A recent move towards increased branding of non-athletic products has helped Nike increase its brand proliferation.

To facilitate sales, Nike operates several regional sales offices. They have 18 such offices in the United States. They also employ 6 independent sales representatives for specialty products like golf and skating. The company uses a mix of their own sales channels, plus independent distributors. For much of the world, Nike runs its sales operations in a manner similar to the way they run sales in the U.S. Over four dozen countries have their own sales offices.

Nike finances its growth through a balanced capital structure, with emphasis on retained earnings. They have a debt-equity ratio of… READ MORE

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Quoted Instructions for "Business Strategy Report for Nike" Assignment:

“

This report will be on Nike, Inc.

The Financial Information has to be based on factual information using the company*****s 10K/10Q Report. The rest of the paper is a strategic plan for Nike.

The Executive Summary has to be at least one page and answer who, what, when, where & why. Be precise and concise and write in the third person.

The Background information should include a look back (three years) using the financial statements from the 10K and 10Q reports and give marketing report results. For the Successes and Strategies answer the question where have they made and lost money?

The Vision and Mission statement must be in line with the strategy taken for this company. Under vision answer the question what do you want to become? For the Mission give the purpose of the company.

Strategies - plan, processes & systems for the corporation, management and functional areas of the business.

Research and Development - what*****s new - what do customers want, how much and what % are we to the industry. Focus on quality here.

Sales and Marketing - where are their sales and marketing demographics and psychographics - hot buttons.

Finance - how much money did you make last year - dividend policy.

Human Resources - are you a good company to work for? Do they develop their employees, wages, # of employees, organizational chart, leadership, chain of command, bonuses, compensation packages.

Operations - how do you make your product?

Information Technology - are we in line with our competitors, do we need to upgrade - what will that cost?

Distribution & Logistics - are we using the best methodology - can we do it better?

SWOT Analysis - compare ourselves to the competitor, how can we innovate and imitate

Very important - if it doesn*****t impact the financial statements - don*****t include it - this paper needs to be quantitative.

Policy Analysis - Quality of Corporate direction, business ethics - do they do things around the gray area? Social responsibility - do they pollute?

Financial Analysis - show the 3 year income statement, balance sheet and cash flow.

Proposed future strategies - very important to be factual, quantitative and based on the industry.

Below is the outline for the paper and instructions on the formatting.

BUSINESS STRATEGY REPORT OUTLINE

Preliminary Material

1. Title Page

2. Table of Contents

3. Executive Summary

Section I*****”Organization Profile

1. Background Information

a. Brief Description

b. Recent Successes and Struggles

c. Current Industry Position

2. Major Areas of Focus

a. Vision and Mission

b. Strategies

c. Functional Points of Emphasis

i. Research and Development

ii. Sales and Marketing

iii. Finance

iv. Human Resources

v. Operations

vi. Information Technology

vii. Distribution and Logistics

Section II*****”Organizational Assessment

1. SWOT Analysis

a. Strengths

b. Weaknesses

c. Opportunities

d. Threats

2. Strategy Analysis

a. Low Cost Provider Strategy

b. Best Cost Provider Strategy

c. Niche Market Strategy with Lower Cost

d. Focused Strategy Base on Differentiation

3. Policy Analysis

a. Corporate Direction

b. Business Ethics

c. Social Responsibility

d. Practices and Procedures

4. Financial Analysis

a. Income Statement

b. Balance Sheet

c. Cash Flow Report

Section III*****”Recommendations

1. Proposed Future Strategies

a. Products and/or Services

b. Marketing

c. Technologies

d. Distribution

e. Operations

f. Alliances

2. Required Changes

a. Organizational Structure

b. Culture

c. Resources

d. Policies

3. Conclusions and Summary

Post Material

1. Exhibits

2. Reference List

STRATEGIC PLAN REPORT GUIDELINES

1. All learners are required to submit a word-processed, laser-printed copy to the instructor. The report shall be placed in a black binder. Approved black binders are available at the Olivet Nazarene University Bookstore and at most office supply stores. Only ACCO #25071 or ACCO #25101 black folders will be accepted.

2. All reports are to be written in the APA format outlined in the Publication Manual of the American Psychological Association. Any deviations will be at the discretion of the instructor.

3. Times New Roman font with a 12-point font size must be used for all pages of the report. All characters shall be of this font and size. No unusual or bold headings will be accepted.

4. White 8Â½-by-11-inch paper is required. The paper shall be 20-pound bond paper. The same paper will be used for the entire report.

5. Margins should be 1Â½ inches on the left and 1 inch on the top, right side, and bottom of each page. Preliminary pages should use the same margin requirements. Left margin justify only. The right margin will be uneven.

6. Page numbers are to be placed in the upper right-hand corner of the page inside of the margins. Preliminary pages: The title page should not be numbered. All other preliminary pages are numbered consecutively in lower-case Roman numerals. Arabic numbers will be used for all other pages of the report including the exhibit pages and the reference list. All pages shall be numbered except the title page.

7. Each report should include the proper citing of sources. It is preferred that learners paraphrase the content of any sources and use the end of paraphrase citing method. For example, after paraphrasing an author's works, the learner would place the following citation: (Author's Last Name, Year). Because the majority of the report is intended to be in the learner's words, citing will be at a minimum. It is important to properly cite sources.

8. Double space all lines and leave two spaces between each sentence. Indent the first word of each paragraph. The report will be a minimum of 15 textual pages and a maximum of 25 textual pages. Only Sections I, II, and III are considered for this textual page requirement. The preliminary pages, the exhibits, and the reference list are not part of the textual page requirement.

9. A grade of less than a B- will not be accepted. The report will be returned for revision until the minimum grade requirement is achieved.

10. Content Requirements. Each report must include the following:

a. Title Page. This is the first preliminary page of the report. Do not include the page number on this page. The title page includes the title of the project, the learner's full name, the most recent degree already earned, and the year for meeting the requirements for the BBA must be the year in which the degree is conferred.

b. Table of Contents. This preliminary page(s) will show the principal divisions of the report and the page number where the sections begin. Each table of contents page will be numbered in the upper right-hand corner starting with page number ii.

c. Executive Summary. This preliminary page which should be written after the entire report is finished. This is a one-page summary of the project briefly addressing the following questions: What was the purpose and importance of the report? What were the major highlights of the report? What were the final conclusions? This page will be numbered in the upper right-hand corner with the next consecutive lower-case Roman numeral.

d. Textual Pages. The following MUST be included in the report. Each page will be numbered in the upper right-hand corner with Arabic numbers.

Section I*****”Organizational Profile

i. Background Information

ii. Major Areas of Focus

Section II*****”Organizational Assessment

i. SWOT Analysis

ii. Strategy Analysis

iii. Policy Analysis

iv. Financial Analysis

Section III*****”Recommendations

i. Proposed Future Strategies

ii. Required Changes

iii. Conclusions and Summary

e. Post Material. The post material includes exhibits and the reference list. The exhibits are intended to provide the necessary and valuable, detailed spreadsheets and specific writings referenced in the report. There is no particular limit to the number of pages included as exhibits. They are not part of the 15- to 25-page textual requirement of the report. The reference list shall meet APA format requirements. All post material pages shall be numbered.

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