Nike Competitive Advantage

* 1. MGMT65000 Strategic trouble spring 2011 Test 1 By Divya Mishra School of Management Purdue University Calumet Submitted to Dr. Arifin Angriawan1 knave * 2. go with profile & angstrom backgroundNIKE, Inc. is in aim(p) in the flesh, development and worldwide merchandise of footgear, vesture, equipment and accessory proceedss. . It sells its crossroads to around 18,000 retail accountsin the joined States and through a mix of freelance distributors, licensees and subsidiaries innearly 200 countries. NIKE is the largest seller of athletic footwear and athletic apparel in the world. The Company names designs for men, women and children.The top selling ware categoryincludes travel rapidly, basketb tout ensemble, childrens, cross-training and womens clothes. It in similar manner designs shoesfor outdoor activities like tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling,cheerleading, aquatic activities, hiking and opposite athletic and recrea tional uses. Index social rank Sector Industry EmployeesS& adenineP 500 Consumer Cyclical Footwear 23,300 ingatheringsNIKE sells sportsmans dress up and accessories relevant to each sport mentioned to a higher place as well as early(a)sports-inspired lifestyle apparel, like bags, socks, sport balls, eyewear, protective equipment,basic sport equipment, etc.In addition to NIKEs footwear, apparel, and accessories businesses, the Company sells harvestingsunder other brand names in particular(a) commercializes. NIKE wholly- induces five footwear and apparelcompanies that specialize in different sports Cole Haan, Converse Inc. , Hurley InternationalLLC, Umbro Ltd. , and NIKE Golf. These subsidiaries have together account for 13% oftotal revenues, $2. 5 billion, in fiscal 2009. Manufacturing Footwear & ApparelAll of NIKEs footwear is manufactured outdoor(a) the United States in the factories of China,Vietnam, Indonesia, and Thailand and account for 98 percent of total NIKE br and footwear in2009.The main raw materials apply in NIKE footwear are rubber, plastic compounds, and foamcushioning materials, nylon, leather, movevas, and polyurethane films used for cushioningcomponents. NIKE brand apparel is also manufactured almost entirely outdoors of the United States, in 34different countries. The main materials used in NIKE apparel are innate(p) and synthetic fabricsand threads, plastic and metal hardware, and body of water and heat resistant fabrics. marting and AdvertisingNIKE places a significant weight on selling the company and its products.NIKE vulturinelybonds the contracts with highly successful and authoritative athletes, coaches, teams, and leagueslike Michael Jordan, Serena Williams, and Tiger Woods to popularize its footwear, apparel andsports accessories. In order to sustain its potence in the assiduity and stay hawkish stay, NIKE activelyresponds to trends and changes in consumer preferences by adjusting the mix of actual productof ferings, developing new products, styles and categories, and influencing sports and fitnesspreferences through aggressive marketing.Its primary areas of marketing remain exonerate TV andmagazines. 2 rogue * 3. CompetitorsThe contest in the sports wear intentness is actually high. NIKE competes with numerous athletic andleisure shoe companies worldwide. It faces rough competition in product offerings, technologies,marketing intakes, pricing, cost of production, and customer services. The maincompetitors are Adidas, Reebok, Timberland, Woodland, and Puma.SWOT abstract for NIKE Strengths Weaknesses home run recognition Overseas manufacturing high product quality dependency Effective marketing Decreasing United States strategy market share Capacity of innovation High product price toughened dissemination chain compared to Adidas Strong R&D Currency exposure Strong customer Medium retail bearing relationship/satisfaction SWOT Analysis Opportunities Threats Expansion into em erging Fierce industry competition markets Revenue relies on change magnitude demand in product consumers discretionary innovation income Growing segment of women economical rescission athletes Fluctuation in the funds Increase in the number of sports events like Olympic, FIFA3Page * 4.NIKE Innovations NIKE with Apple The NIKE+ package consists of a pair of specially designed NIKE+ running shoes, an iPod nano, and a NIKE + iPod sport kit. The kit consists of a sensor that fits into a built-in carrier bag beneath the insole of the left shoe and a receiver that fits into the iPod nano dock connector. As a person runs, iPod tells the distance, pace, and calories burned via articulate feedback that adjusts music volume as it plays. (Google image) soma your own shoes NIKE allows customers to design their own shoes from a catalogue of predefined designs. clients can choose their own colors and mascots to create shoes which define their personality.It provides Touch secrete engine ering science in store allowing customers to design shoes of choice. (Google image) Nike self slaughter willing shoes NIKE is also coming up with the new automatic self lacing sneakers. The automatic lacing system provides a set of straps that can be mechanically opened and closed to switch amidst a loosened and tightened position. 4Page * 5. Critical data of Nike Annual written report$ Millions 2010Net Income 1,906. 7Current Liability 3,364. 2Total Assets 14419. 3Tax Rate 24. 2% fill Rate 6. 35%Long-Term Debt 445. 8Return on rightfulness 19. 54%Total Equity 9753. 7Weighted Average Cost of Capital 8. 9%Capital Employed 11055. 1Interest Expense 6. EBIT 2516. 9NOPAT 1907. 81Return On Capital Employed 20. 7% economical Value Added 1267. 25Cash Flow From Operations* 3164. 2Capital expenditure* 335. 1Free Cash Flow 2045. 31Five class Nike stress performance vs. S&P500* (Fiscal year 2006-2010) 2% Nike S&P500 90%5Page * 6. 2010Nike revenue reaping 2006-2010 Nike Revenue 25000 20000 Revenue 15000 10000 5000 0 2006 2007 2008 2009 2010 YearNike revenue generation by product 2010 Revenue Generation by Product 6% 34% Footwear 60% Apparel Equipment6Page * 7. 1. Please use Figure 2. 3 page 53 (Grants textbook, 7th edition) as your boilersuit guide to draw a equilibrise scorecard for the firm.Please draw a equilibrize scorecard for the firm that you choose. Identify all cardinal perspectives, each perspectives objectives and their relationships. See example in the appendix. olfactory modality free to modify it. On the other pages please elaborate on the four perspectives and their elements. For the financial performance perspective, at least(prenominal) you need to discuss ROCE, EVA, and FCF. Conclude what the add up mean to you as a private instructor (e. g. neat, bad, or neutral and why). Why do firms need to prepare a equilibrate scorecard? (20 points) Balance Scorecard for NIKE 2010FINANCIAL favourableNEUTRAL ROCE 17. 8% Neutral EVA 1267. 25 mi llions strong FCF 2045. 1 millions wakeless roe 19. 54% Good Profit security deposit 10. 03% Good NIKE growth 7% vs. industry growth Good 4. 5% mischievous High advertising cost Good Better COGS% than competitorsCUSTOMER adept-NEUTRAL Customer Satisfaction Good Customer Loyalty Good Customer retention ratio Good Market Share Good Competitive charge Bad Number of Customers Good Good Design own shoes optionINTERNAL GOOD Marketing Innovative Products Good honor endorsement Good Diversity of online product Good R&D Integrated researches Good Product technology Good High quality product design Good Good provider relation Good IT for inventory wangle Good7Page