Nike Inc. Case Study

Brief Background

Nike Inc. is an American multinational company which is engaged in designing, development, manufacturing and worldwide marketing and sales of footwear, apparel, accessories, equipment, etc. It is one of the largest suppliers of footwear and apparels. It has headquarters in Beaverton, Oregon in the Portland Metropolitan Area, U.S.A. It currently has a revenue of $ 30.6 billion (May, 2017). As of 2015 there were around 63000 Nike employees worldwide. As of 2016, Nike is one of the most valued brand among sports business. Nike was founded on January 25, 1964 as Blue Ribbon Sports, by Bill Bowerman and Phil Knight and it officially became Nike on May 30, 1971. The company takes its name from Nike, Greek goddess of victory. Nike products are named in its own brand as well as Nike Pro, Nike+, Nike Air, Nike Golf, Nike Blazers, Air Max, Nike Dunk, Nike Skateboarding, Air Force 1. It has subsidiaries including Brand Jordan, Converse and Hurley International. It previously owned Cole Haan and Umbro. Nike also sponsors many high profile athletes around the world and has a recognized trademark of “Just Do It.”

Competitive Landscape (2016)

Nike major competitors are Adidas, Reebok, Puma, New Balance, Asics, Skechers.

Financial Track Record (In billion)                         (Source: gurufocus.com)

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Technology

Nike has always been a frontrunner in footwear and apparel technology and this is the main reason it has been a market leader. As of 2016 Nike produces a variety of innovative technology ranging from Free to Flywire. Nike is one of the 8 companies in the world to use 3D printing in large scale to manufacture its products. It has 19500 patents and patents applications whereas its competitor Adidas has only 2400. Nike also plans to use 71% of recycled products and send zero waste from footwear manufacturing by 2020.

Nike Consumers

There are 3 segments in which Nike is focusing the most, they are:

1. Women: Nike is expanding its women apparel collection especially tights and sport bras. The company has also launched new collection with items like skirts and lace-trimmed jerseys. Nike believes the women’s line could add $2 billion in additional sales by 2017.
2. Young Athletes: Nike gets young athletes to wear its items through sponsorships with neighborhood alliances, clubs, and organizations. It likewise observes organizations with proficient athletes as an imperative approach to attract young customer in.
3. Runners: A lot of Nike's advancement endeavors are engaged in the running classification. Nike is likewise advancing running attire to better compete with Lululemon, Under Armor, and Adidas. Nike supports grassroots running occasions far and wide to enlist new customers.

Regulatory Environment

Political: As Nike produces physical goods, it is always subject to changes in tax and manufacturing laws. Various political conflicts can make customs processes difficult or prevent exports and imports.

Economic: A market collapse can prove to be bad news for Nike as many customers can shift to lower end cheaper products. Nike revenues also depend a lot upon cheap labour from Asian countries, any change in their economic conditions can lead to changes in the manufacturing cost of Nike products.

Social: With people becoming more health consciousness, this means that people are moving towards better lifestyles. These people will buy plenty of sports products from Nike.                                      

 Technology: Nike is using social media to successfully to build their brand but this can also prove to be lethal if not used properly. Nike has also used innovative technology in its shoes and apparels which had helped it regain its market leader position.                                                                                                      

 Legal: Nike occasionally meets legal notifications for its shady marketing practices, which includes false discount.                                                                                        

Environmental: Currently Nike’s mass production factories are without a doubt harming the environment and they release plenty of pollution like most of the factories. But Nike also shows a promise to resolve this issue and become more environment friendly by 2020.

Innovation Agenda

• Nike is moving towards using less and recycling more so that it could make a difference. In 2016 Nike used 7 million kg of cotton and used recycled polyester in 31.5 million products
• The company is also focusing more on supply chain and manufacturing improvements to create greater continuity from design to retail
• Nike also provides a lot of more innovative technologies for its product such as Nike Air, Nike Dynamic Fit, Nike Flylease, Nike Flyknit, Nike Flywire, Nike Free, Nike Hyperfuse, Nike Max Air, Nike Shield, Nike Shox, Nike Zoom (for shoes), Nike Aeroloft, Nike Dri-Fit, Nike Storm Fit, Nike Therma-Fit (for apparels).

Innovation funnel