NIKE CASE STUDY is the worlds #1 athletic shoe and apparel seller.

Nike currently employs 0,700 employees, with total sales of $8.78 billion. Nike and the athletic shoe industr y have evolved into one of the most competitive market in recent years. But, ana lysts believe that athletic shoe sales will slow down over the next few years. T he slowdown will come with the change in consumer trends. For instance, the youn ger market is beginning to buy more casual shoes and work boots. Another reason for the slowdown is that people are buying more medium priced athletic shoes and not going for the high price brand name shoes. As a result, this is bringing Ni ke a lot more competition to surpass. In order for Nike to remain on top of the athletic shoe industry they must establish an exceptional global strategy. If Ni ke penetrates the global market successfully than this will give the company an overall competitive advantage. Nike doesnt only sell athletic shoes, but a wide variety of sporting goods and clothing. They also design, develop, and market hi gh quality active sports apparel, equipment, and accessory products. Their huge lines of products are designed for just about every sport in existence. Their pr oducts are made for men, women, and children of all ages. Nike has 0,000 retail accounts throughout the U. S. using independent distributors and also has contra cts with 110 other countries. The company also has agreements with Internet comp anies and subsidiaries. Nike, Inc. has many retail outlets around the world, inc luding their famous outlet NIKETOWN located in major cities. NIKETOWN gives cust omers the experience to become more educated on the companys goals and objective s for their products. The store educates its customer while at same time enterta ining them too. This store gives customers a chance to become more brand loyal t o Nike, Inc. Over the years Nike has gained an enormous amount of consumer aware ness that they have eliminated the company name from all other products. The swo osh logo is automatically associated with the company name by just about anyone in the world. The meaning for Nike has lived up to the companys expectations. Ni ke means the goddess of victory, which is exactly what the company has had since its creation. HISTORY A competitive runner, Phil Knight, incorporated Blue Ribb on Sports in Oregon in 168. Blue Ribbon Sports was the first to receive the swoo sh logo, but changed its name to Nike in 178. Nikes research and development dep artment used technological expertise to produce several different athletic shoes , which changed the whole outlook on the industry. After being in business for f ive years Nike, Inc. had a 44% annual growth. Shortly after Nike didnt pay atten tion to the sale of aerobic shoes, which hurt them slightly. International opera tions were the main focus for Nike, Inc. in the early 180s. An excess of invento ry in 185 caused Nike to reduce prices and lose manufacturing contract in the Fa r East. This pushed Nike from the top spot in the market. As a result, Nike had to lay off 50 employees in 186. Nike began their climb back in 188 with the intr oduction new advertising strategies and the development of the new footwear. The main focus was on the customers wants and needs their purchase of Nikes athleti c shoes. In 188, Nike bought a subsidiary called Cole Haan based in New Hampshir e. The company Cole Haan cost Nike $64 million, but was worth every cent. The Co le Haan subsidiary manufactures casual footwear, something Nike was lacking for years. This purchase helped Nikes casual footwear operations grow 16% within the year. In 10, Nike, Inc. purchased Cole Haan Company Accessories, which distribu tes top quality braces, belts, and small leather goods. As Nike grew in 10 they opened their first retail store NIKETOWN. In 11, the company purchased Tetra Pla stics, which was used for the development of the air sole shoes. In 1, they then bought a cap-making company named Sports Specialties. Then in 14, Nike introduc ed a new line of air sandals called Air Mada. Nike acquired Canstar Sports, Inc. the world largest hockey equipment manufacture in 15. Throughout Nikes history their international sales have lagged due to strong overseas competition. COMPET ITION Nikes major competitor is Reebok, which also designs and develops athletic shoes and apparel. These two companies compete in the U.S. and internationally. Each company uses their own type of advertising strategy to reach their target

customers. Many of the advertisements feature athletic stars and commercials tha t relate to the customers. Nike and Reebok are major competitors, but also have to worry other national and international competitors. Nikes other competitors a re Callaway Golf, Converse, Deckers Outdoor, FUBU, Fila, Fortune Brands, Fruit o f the Loom, Hi-Tec Sports, Levi Strauss, Nautica, New Balance, Polo, Puma, Rawli ngs, Rollerblade, Russell Corp., Sara Lee, Skechers, Spalding, Stride Rite, Timb erland, Tommy Hilfiger, Wolverine, and Adidas. In Europe the competition is grow ing and is a major area for Nike to strike. Nike is second in sales in Europe, j ust behind Adidas. International sales for Nike have been increasing but are los ing other opportunities by competitors signing large contracts with sports figur es and teams. These contracts are giving competitors an edge nationally and inte rnationally. In 18, 1,00 jobs were cut due to falling sales and the reduction of costs in Asia. CHANGES IN THE ATHLETIC SHOE INDUSTRY The growth of athletic sho e and apparel industry is the direct result from consumer changes for the better . The baby boomer generation is becoming more health conscious and living much m ore active lifestyles. Along with Generation Xs interest in living a healthy lif e. Also, there is more women playing sports than ever, which means more shoes to buy. The more sports these kids and young adults play throughout their life the more accessories and equipment they will need to compete. Nike gives their cust omers the feeling of self-confidence and the advantage over their competition. T he only problem Nike has is the aging adults who do not participate in any sport s or fitness programs. Adults aged 5-55 only one in five exercise up to two time s a week. Also, the growing obesity problem that is affecting Americans more and more each year. Nike has established many contracts with international countrie s for manufacturing their products. Even with changing exchange rates and tariff s Nike feels its still cost effective to manufacture their shoes internationally . Another reason for these contracts is the labor costs and benefits, which make s it cheaper to manufacture the products. There are some problems with the idea of these types of contracts. For example, some countries are becoming less inter ested in manufacturing shoes and starting to produce their own electronics. Ther e may also be problems with labor situations, shipping and unreliable quota syst ems. Nike must also consider the many legal restrictions that the global market may pose. INTERNAL FACTORS Nikes research and development expenses for 1 were $7 .50 million, which only represented 1.1% of sales. R & D in the athletic industr y are based on innovation and does not cost a company a lot of money on equipmen t. Nike continues to depend on developments to modify its products from competit ors. The company presently sells roughly 00 models of athletic shoes in 00 style s for 5 different sports. Nikes target market for their shoes are males and fema les between 18 and 5 years old. The product are altered and improved frequently. Nike distributes one new shoe style every single day. Nike advertises its produ cts in a variance of ways and targets its ads to particular groups or types of p eople. The company continues to disburse advertising cash on TV ads during profe ssional and college sports events, prime-time programs, and late-night TV progra ms. Many or most of their ads feature professional sports figures that are role models for Nike customers. Advertising cost Nike $78. million in 17. Along with endorsement fees of $100 million for those sports stars everyone loves. Nike has been criticized for its social responsibility throughout its lustrous history. Nike was known to have 6,700 Indonesian employees from Asia working 100-degree f actories. These factories were poorly vented and the workers were forced to inha le toxic fumes while working. There was also evidence of abuse by Nike a factory manager on Vietnamese production workers. Nike has developed many programs to s how their improving social responsibility issues. For example, Nike and the Boys and Girls Clubs of America began a program called Kids Movement. This program t eaches young people about fitness awareness. Nike, Inc. also provides funds for the Childrens Television Workshop for literacy TV programs. The company firmly i ncorporated the N.E.A.T. (Nike Environmental Action Team) in 1. This program was implemented to maintain environmental initiatives by recycling old shoes and ut ilizing them to make new shoes. Nike, Inc. happens to employ mostly health-consc ious corporate employees. About 40% of Nikes employees are under the age of 0. T he corporate campus helps apply this type of culture with the benefits it offers

their employees. For instance, the company has wooded areas, running trails and fitness centers for their active employees. This is a major part of Nikes corpo rate culture, which then trickles down to Nikes management styles. Nike lets man agers keep lines of communication open and lets them determine their own decisio n making. The company also offers their employees something called LifeTrek. Thi s is a benefit and compensation program that gives their employees a sense carin g and trust. THE FUTURE With the increase in competition and limit of growth the U.S. athletic shoe industry, Nike is still slated to be a major leader in the m arket. The advertising and innovative marketing in the industry should still lea ve it extremely competitive. The only problem that Nike worries about are custom ers becoming less brand-loyal and buying cheaper athletic shoe brands. Nike is t rying to make the point that it is worth spending more money on better quality m ade shoe, than buying a cheap shoe that will only last a little while. One major area that brings unlimited opportunities to Nike is the international market. I n the United Sates, there are 4 people for every pair of Nikes, France has 11, J apan has 50, and China has 11,81. These figures show that the greatest growth fo r Nike is overseas. Word Count 1706