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					                              NIKE CORPORATION



Introduction



     k , the ancient Greek goddess of victory, helped people to succeed in times of war.
 IKE, world’s major public trader of athletic footwear and apparel, currently enjoys a
47% market share of the domestic footwear industry, with sales of $3.77 billion is
dominating the US athletic shoe market. It designs and sells wide range of footwear and
uniforms for variety of sports. It markets its products under its own brand name as well as
Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding, Team Starter, and
subsidiaries including Cole Haan, Hurley International, Umbro and Converse. Overall,
the company has more than 700 retail stores worldwide and about 23000 retail accounts
in US and operates under independent distributors and licensees in other countries. Most
of the manufacturing units are located in Asia, including Indonesia, China, Taiwan, India,
Thailand, Vietnam, Pakistan, Philippines, and Malaysia.




Major Competitor

   Nike has been the leader of sportswear in the US markets from last four decades.
Adidas AG is the major competitor of Nike Inc. Adidas, is not completely different from
Nike in terms of products they offers. It is engaged in the manufacturing and marketing
of athletic as well as non-athletic footwear and apparel in the market. The Adidas Group
competes in the overall sporting goods market. Like Nike, the Adidas Group is also much
larger than Puma in terms of sales. Nike has a notable advantage when it comes to
economies of scale. Adidas Group is second only to this company in terms of sales and
market share. It enjoys 22% of the worldwide athletic footwear and apparel market.
Source: Daily Finance




Despite of different economic status, Nike has maintained its share and sales in the US
markets. Nike earned slightly less revenue of 19014M in the year 2010 as compared to
19176M in year 2009. It had 42% rises in its total net income in the year 2010 from
1486.7 to 1907.7M respectively (Nike income statement, 2010). On the other hand,
Adidas Group had total sales of $15,889.1M in 2010 (Adidas income statement, 2010)
which was remarkably low as compared to the sales of Nike Corporation.




Core Competency

The top notch athletic footwear companies compete with one another in terms of
advertising; focusing on creating the brand image and the products they are trying to
market (Drbul et al. 2006).

Endorsing products with Celebrity marketing campaigns is the key component in which
athletic shoe makers tries to differentiate their brands and associate their shoes with
professional athletes and other celebrities to leverage brand image. The most admirable
examples are of Nike, Adidas, and Reebok with the professional basketball players. The
most remarkable of these relationships is between Nike and Michael Jordan. Despite
Jordan’s retirement several years ago, the Air Jordan line is the huge source of profit and
brand support for Nike (Kang 2006).

The success of the Jordan and other celebrity endorsements has changed the ike’s
image to a stylish performance brand. This has helped Nike to differentiate its products
from its competitors especially Adidas whose brand image has so far failed to break the
typical technical image. (Karnitschnig & Kang 2005).

Nike employed unique distribution tactic in 2005 allowing its customers to design their
own shoes. This personalization allows customers to choose colors, materials etc of their
own choice to the shoes (Holmes 2006).




Operations Strategy

   Nike has maintained 42% market share in the domestic footwear industry. Nike is
actively engaged in the outsourcing of its products to the Asian markets for over two and
half decades and there are over 500,000 people directly engaged in the production of their
products. Their majority of output is produced by their factories in China, Indonesia and
Vietnam respectively. These production units are 100% owned by subcontractors, with
the majority of their output consisting solely of Nike products. However, due to the
magnitude of their manufacturing business, they have been the victim of various
International regulations cases against them. Nike has completely outsourced all of its
operations but has kept only two main operations to in-house production- product
designing and brand management. Nike is completely offering global products to its
customers.

Inventory Management
    ike’s inventory turnover ratio is 4.4 (Forbes) which exceeds the industry average of
4.34. A slight Reduction in the inventory level is required. Inventory turnover
management will benefit Nike greater cash flows, reduced storage costs and less product
spoilage. It can also reduce ike’s inventory of out-of-fashion shoes and clothing.

Nike employed MRP software to keep the track of the demand and supply of materials
but the system was not free of glitches as a result it ignored some of the orders passed by
the customers causing Nike to pay for the losses. However, Nike soon learned from its
failure, and subsequently rebounded. MRP helps the store managers to keep the track of
the materials to be purchased through an online exchange result in significant cost and
time saving to the company (Shah, 2009).
References

Adidas: Income statement (2010). Retrieved on May 20, 2011 from
http://www.hoovers.com/company/adidas_AG/stjyti-1-1njea5.html

Dogiamis, G. & Vijayashanker, N. (2009) Adidas: Sprinting Ahead of Nike, Retrieved on
May 20, 2011 from http://www.mcafee.cc/Classes/BEM106/Papers/2009/Adidas.pdf

Drbul, Robert, et al. (2006, January). Textiles, Apparel & Footwear: Outlook for 2006.
Lehman Brothers

Dunsen V. S. (1998). The Manufacturing Practices of the Footwear Industry: Nike vs. the
Competition, UNC - Chapel Hill, INTS 092

Dw Staff, (2006).EU Approves Adidas-Reebok Merger Retried on May 20, 2011 from
http://www.dw-world.de/dw/article/0,,1870303,00.html

Holmes, S. & Bernstein, A. The new Nike. (2004, September). Bloomberg Business Week,
Washington. Retrieved on May 20, 2011 from
http://www.businessweek.com/magazine/content/04_38/b3900001_mz001.htm

Holmes, S. (2006). Adidas’ World Cup Shutout: U.S. Fans of Soccer’s Big Event Will
See Only Adidas Ads on Television. ike’s Response: A MySpace-style Site for Soccer
Nuts. Business Week, pp. 106-107

Karnitschnig, Matthew & Kang. (2005, August). Leap Forward: For Adidas, Reebok
Deal Capps Push to Broaden Urban Appeal; Known for Its Engineering, German
Company takes on Nike in Lifestyle Market; Teaming Up with Missy Elliot. Wall Street
Journal, p. A1

Kang, Stephanie. (2006, January). Sports Shoe Rivals Step Up. The Wall Street Journal.

Nike (NKE) stock quote, Retrieved on May 20, 2011 from
http://www.wikinvest.com/wiki/Nike_%28NKE%29

Nike Stock Performance, Daily Finance Retrieved on May 20, 2011 from
http://www.dailyfinance.com/company/nike-inc/nke/nys/top-competitors

Nike: Income statement (2010). Retrieved on May 20, 2011 from
http://www.hoovers.com/company/NIKE_Inc/rcthci-1-1njea5.html

Nike Inc, Forbes.com. Retrieved on May 20, 2011 from
http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=NKE
Shah, J. (2009, May). Supply Chain Management: Text and Cases, Prentice Hall

				
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