Strategic Analysis Of Nike

opinionated Essay
1544 words
1544 words

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-cost, 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. not only manufactures and distributes athletic shoes at every marketable price point to a global market, but over 40% of our sales come from athletic apparel, sports equipment, and subsidiary ventures. Nike maintains traditional and non-traditional distribution channels in more than 100 countries targeting its primary market regions: United States, Europe, Asia Pacific, and the Americas (not including the United States). We utilize over 20,000 retailers, Nike factory stores, Nike stores, NikeTowns, Cole Haan stores, and internet-based Web sites to sell our sports and leisure products. We dominate sales in the athletic footwear industry with a 33% global market share. Nike Inc. has been able to attain this premier position through "quality production, innovative products, and aggressive marketing." As a result, for the fiscal year end 1999, Nike's 20,700 employees generated almost $8.8 billion in revenue. Our primary product focus is athletic footwear designed for specific-sport and/or 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, we sell a line of performance equipment under the Nike brand name that includes sport balls, timepieces, eyewear, skates, bats, and other equipment designed for sports activities. In addition, we utilize the following wholly-owned subsidiaries to sell additional sports-related merchandise and raw materials: Cole Haan Holdings 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 Sales and Income Trends Revenues in the fiscal year ended May 31, 1999, declined by 8% over the prior year to $8.777 billion. As illustrated in the graph below, this marked the first time since 1994 that revenues have declined. Regardless of this year's decline, Nike Inc. achieved 300% revenue growth over a 10-year period, rising from 1990 sales of $2.235 billion. Exhibit 1 * Obtained from Nike, Inc. 1999 Annual Report Although revenues declined in 1999, net income increased by 13% over the prior year. As the graph below illustrates, net income has been volatile in the latter half of the 90's.

In this essay, the author

  • Illustrates how nike inc. achieved 300% revenue growth over a 10-year period, rising from 1990 sales of $2.235 billion.
  • Explains that although revenues declined in 1999, net income increased by 13% over the prior year. sharp decreases in 1998 and 1999 were due to restructuring charges.
  • Explains that phillip h. knight, chairman and chief executive officer, is the driving force behind nike's success since its inception in 1964.
  • Compares reebok's products with nike, and explains that their financial position has been slipping for a number of years.
  • Explains that nike inc. was founded in 1962 by bill bowerman and phil knight as a partnership under the name blue ribbon sports.
  • Opines that the greatest challenge in 2000 will be to maintain operational and financial initiatives we worked so hard to implement in 1998 and 1999.
  • Describes how bowerman and knight founded nike inc. as blue ribbon sports in 1962.
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