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    PREPARED BY:

    SHALINI CYNTHIA A/P GNANA SELVA KUMAR

    (860703385614)

    S. SRIVITYA A/P SREERAMAMOORTH

    (4072012471)

    THAVAMALAR A/P J A BALAN

    (850315-05-5286)

    VINOTHINI A/P RAMACHANDRAN

    (861215-38-5898)

    PREPARED FOR:

    PN SHARIFAH HILMI BINTI SYED ABDULLAH

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    Philip Knight, a dedicated long distances runner, developed a plan to make low- cost running shoes inJapan and to sell them in United States as part of his work toward an MBA degree at StanfordUniversity. Knight teamed up with Bill Bowerman.

    Then, he starts his plan by starting Blue Ribbon Sports in 1964. In 1971, Blue Ribbon Sports receiveda trademark on its swoosh logo and the Nike brand name was also introduced. Blue Ribbon Sportsofficially changed its name to Nike in 1978. In the late 1970 1nd 1980, Nike researches used theirtechnological expertise to develop several types of athletic shoes that revolutionized the industry.

    In 1988, Nike purchased New Hampshire- based Cole Hoan for $64 million. The subsidiary currentlyhas several brand names including CH, Gseries, by Cole Haan, Bragano, and Cole Haan. Haan. Nikescasual footwear bushes grew 16 percent the following year. Nike acquired the Cole- Hoan Accessoriescompany in 1990.

    Nike opened its first retail store, called Nike town, in Portugal Oregon, it purchased a cap- makingcompany called Sports Specialties (now called Nike Team Sports Inc.) In 1993 and 1994, the outdoordivision added new shoes called Air Mada and the Nike Sport sandal became the top seller in themarket.

    In 1995, Nike acquired Canstar Sports. Inc (the world largest hockey equipment maker) for $ 409million. Canstar, now called Bauer Nike Hockey Inc, manufactures in- line roller skates, ice skates,and

    blades, protective gear, hockey sticks, and hockey jersey.

    The micheal Jordan collection of basketball clothing was launched in1998. Randy Mass and DerekJeter were hired to promote the Jordan brand in 1999.

    Two Nike Goddess stores, geared toward the sell of womens clothing and footwear, were opened inLos Angeles in 2001. Nike purchased Impact Golf Technologies in 2002. In September 2003, Nikeacquired Converse for $305 million The Companys Hurley Brand acquired in 2002.

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    COMPANY VISION

    To bring inspiration and innovation to every athlete in the world.

    COMPANY OBJECTIVES

    1. Nike wanted an innovative solution to be able to deliver an effective

    campaign simply across multiple markets. The main objective was todrive awareness of the Nike themes.

    2. Provide an environment which develops people to maximize their

    contribution to NIKE.

    3. Provide quality and innovative services and products internally and

    externally.

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    Nike is the largest seller (3) of athletic footwearand athletic apparel (2) in the world (2).Performance and reliability of shoes, appareland equipment(2), new productdevelopment(4),price, product identity through

    marketing and promotion(8) and customersupport and service are important aspects ofcompetition in the athletic footwear, appareland equipment industry(2). We believe we arecompetitive in all of these areas (6,7). The

    company aims to lead in corporate citizenship(7) through proactive programs that reflectscaring for the world family of Nike, ourteammates (9) our consumers (1) and those whoprovide services to Nike.

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    Nike strives to be the global leader in the sportinggoods (2) industry with sports brands built on apassion for sports and a sporting lifestyle. Nike isconsumer focused. (1) We continuously improve thequality, look, feel and image (8) of our products andour organizational structures to match and exceed

    consumer expectations (1) and to provide them withthe highest value. (4) (7) We are global organization(3) that is socially and environmentally responsible,creation and financially rewarding for our employees(9) and shareholders. We are producing in order tofulfill customer needs and satisfaction for new

    generation. We believe that our product will beoutstanding from competitors in Sports industries. (6)Profit maximization (5) and quantity of products isgiven priority.

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    General

    environment

    Analysis Opportunity Threats

    Demographic 1. About 40% of the 33million increases in the

    size of the U.S. population

    during the 1990s are

    directly attributable to the

    increases in demand.

    2. The share of whites and

    males in the labor force

    will continue to

    fall min the 21st century.

    Social 1. In mid 1990s women havepurchased more athletic

    shoes than men have,

    therefore demand

    increases.

    2. Athletic shoe companies

    began having some

    difficulty selling their

    product to the youth

    market in 1977 due toyouth market shift.

    Political/ Legal 1. Stable politic condition inUS before 2001.

    2. September 11, 2001 attack

    in US destroys the market

    and low demand.

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    General

    Environment

    Analysis Opportunity Threats

    Economic 1. Positive global GDPgrowth and low

    unemployment rate.

    GDP was 7.8% in 2003

    and 3.8 % of

    unemployment rate.

    2. Olympic game in 2004

    give good market profit.

    3. Many restrictions suchas NAFTA and GATT

    which control imports

    Technology 1. Electronic datainterchange (EDI)

    technology used in an

    attempt to achieve just-

    in-time inventory.

    2. Conduct seminars and

    workshops forsupervisors in factories

    so that they may

    improve their

    production and

    management skills.

    3. High cost in using

    technology in

    production.

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    PORTES 5FORCES

    DETAIL INDUSTRY

    PROFIT

    Rivalry among

    competing firm

    HIGH The major competitors inthe athletic shoe industry

    are Nike and Reebok.

    Some of the other

    competitors in the

    industry include Adidas-

    Salomon AG, New

    Balance, K- Swiss, FilaAsics, and Ked.

    LOW

    Potential of new

    competitors

    HIGH Reebok designs anddevelops athletic shoes

    and clothing for sale

    worldwide. It develops

    marketing campaigns

    around sports stars in an

    effort to increase its

    market share

    LOW

    Potential

    development of

    substitute

    product

    HIGH The price differentialbetween manufacturers is

    not bug and consumer can

    easily change from one

    product to another

    HIGH

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    PORTES 5FORCES

    DETAIL INDUSTRY

    PROFIT

    Bargaining

    power of supplier

    HIGH Nike makescontract with

    famous athlete or

    team to promote

    and advertise itsproduct

    LOW

    Bargaining

    power of

    consumers

    HIGH Switching cost aweare typically very

    low and may due

    switch to rivals

    products if the rivalof trendier

    HIGH

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    NIKE ADIDAS REEBOK

    Rating Weighted

    ScoreWeight Weighted

    ScoreWeighted

    ScoreRatingRating

    Domestic

    marketpositioning

    0.1 2 0.2 4 0.4 3 0.3

    Internation

    al market

    positioning

    0.1 3 0.3 4 0.4 3 0.3

    Consumer

    loyalty

    0.8 3 0.24 3 0.24 3 0.24

    Brandrecognition

    0.1 4 0.4 4 0.4 4 0.4

    Pricecompetitiveness

    0.09 3 0.27 3 0.27 4 0.36

    Productquality

    0.07 4 0.28 4 0.28 3 0.21

    Relationshipithanufacturer

    & Supplier

    0.07 4 0.28 3 0.21 3 0.21

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    NIKE ADIDAS REEBOK

    Weight Rating Weighted

    Score

    Rating Weighted

    Score

    Rating Weighte

    d Score

    Product

    research

    development

    0.1 4 0.4 4 0.4 3 0.3

    Productdiversity

    0.1 3 0.3 4 0.4 2 0.2

    Financial

    position

    0.07 3 0.21 3 0.21 2 0.14

    Marketing 0.08 4 0.32 4 0.32 3 0.24

    Organizationalstructure 0.04 3 0.12 3 0.12 3 0.12

    TOTAL 1.00 2.72 2.85 2.42

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    ADIDAS is in the first rank among the competitors followed by NIKEand finally REEBOK.

    There are same rating for NIKE and competitors such as ADIDAS andREEBOK in term of consumer loyalty, organizational structure and brandrecognition.

    NIKE has high weighted score in term of relationship with manufacturersupplier. It also has the lowest ranking in domestic market positioning

    compare to ADIDAS REEBOK.

    ADIDAS has the highest ranking in term of product diversity, domestic

    marketing positioning and product research development.

    REEBOK have a lowest rank in product diversity. In term of pricecompetitiveness it is in the highest rank compare to ADIDAS NIKE.

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    OPPORTUNITIES WEIGHT

    0.0-1.0

    RATING

    1-4

    WEIGHTED

    SCORE

    (WxR)

    1. Attract generation Y

    which is the biggest

    population in an

    organization.

    0.06 3 0.18

    2. Awareness of health

    among people makesthem involve in sports

    activities.

    0.10 3 0.30

    3. Government

    encourages women to

    involve in sports.0.11 4 0.44

    4. Strong economic

    condition and annual

    growth in GDP.0.09 3 0.27

    5. Nike using high

    technology and

    research to design their

    product.

    0.14 3 0.42

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    THREATS WEIGHT

    0.0-1.0

    RATING

    1-4

    WEIGHTED

    SCORE

    (WxR)

    1 . Consumer preference

    changes 0.06 3 0.18

    2. Amount of competitors is

    increasing 0.0 0. 2

    3. Many legal restriction bygovernment limited the

    import quantity.

    0.0 1 0.0

    . Slow general economic

    growth and economic crisis

    makes product demand

    decreases.

    0.12 2 0.2

    5. Long term productdevelopment. 0.16 1 0.16

    TOTAL(OPPORTUNIT

    IES & THREATS)

    1.00 2.98

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    The WEIGHTS are industry based and RATINGSrepresent the effectiveness of firms strategy. Thus, the

    2.98 weighted score in NIKEs EFE Matrix represents

    NIKE is excellent way in responding to its

    opportunities and threats in the industry. In other words we can conclude that NIKEs strategies

    efficiently and effectively take advantage of its

    opportunities and take serious steps to minimize

    potential threats.

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    (IN MILLION)ENDED 31 MAY

    2002

    $

    DIFFERENCE 2003

    $

    TOTAL CURRENTASSETS

    4154.7 525.2

    12,64%

    4679.9

    TOTAL

    NONCURRENT

    ASSETS

    2285.3 251.3

    -11%

    2034

    TOTAL CURRENT

    LIABILITIES

    1833.2 182

    9.93%

    2015.2

    TOTAL

    NONCURRENT

    LIABILITIES

    766.8 58.8

    -7.67%

    708

    TOTAL

    SHAREHOLDERS

    EQUITY

    3839.0 151.7

    3.95%

    3990.7

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    It can be concluded that NIKE performed better in

    2003 compared to 2002. This can be seen through

    the increase in total current asset, total current

    liabilities and total shareholders equity.

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    DESCRIPTION 2002($MILLION)

    2003($MILLION)

    DIFFERENCES

    REVENUE 9893.0 10697.0 o804

    8.13%

    6004.7 6313.6 o308.9

    5.14%

    GR M RGIN 3888.3 4383.4 o495.1

    12.73%

    ING

    DMINI R IV

    2820.4 3137.6 o317.2

    11.25%

    IN R

    XP N

    47.6 42.9 q4.7

    - 9.87%

    H R IN M 3.0 79.9 q76.9

    25.63%

    IN M R

    X

    1017.3 1123.0 o 105.7

    10.39%

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    INCOME

    TAXES

    349.0 382.9 o33.9

    9.71%

    INCOME

    AFTER TAX

    668.3 740.1 o 71.8

    10.74%

    NET INCOME 663.3 474.0 q189.3

    28.54%

    A IC E 2.50 2.80 o0.30

    12%

    DILUTED E 2.46 2.77 o0.31

    12.6%

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    It can be conclude that Revenue has increase because of the

    product development in the market. Net Income has decrease

    because of the payment of tax is high. Overall, it can be said that

    the Nike company has performed well in year 2003 when

    compared with previous year.

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    NO RATIO FORMULA YEAR 2002 YEAR 2003

    1CURRENT RATIO

    CURRENT ASSET / CURRENT

    LIABILITIES

    4154.7/1833.2

    =2.27

    4679.9/2015.2

    =2.32

    2QUICK RATIO

    (CURRENT ASSET- INVENTORY) /CURRENT LIABILITIES

    (4154.7-1373.8)/

    1833.2

    =1.52

    (4679.9-1514.9)/

    2015.2

    =1.57

    3DEBT RATIO

    TOTAL LIABILITIES / TOTAL ASSET

    2601/6440.0

    =0.40

    2723.3/6713.9

    =0.41

    4 INVENTORY TURNOVER

    COST OF GOODS SOLD / INVENTORY

    6004.7/1373.8

    =4.37

    6313.6/1514.9

    =4.17

    5 NET PROFIT MARGIN

    NET INCOME/SALES

    663.3/6004.7

    =0.11

    474.0/6313.6

    =0.08

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    NO RATIO FORMULA YEAR 2002 YEAR 20036. RETURN ON ASSETS

    NET INCOME/TOTAL ASSETS

    663.3/6440.0

    =0.10

    474.0/6713.9

    =0.07

    7. RETURN ON INVESMENTNET INCOME/ TOTAL

    INVESTMENT

    8. TIME INTEREST EARNED

    EBIT/INTEREST

    1017.3/47.6

    =21.4

    1123.0/42.9

    =26.2

    . AVERAGE ECTIERI

    SALES/( EBTOR/ )

    . /

    ( . / )

    =1215.5

    . /

    ( . / )

    =1096.1

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    STRENGTH WEIGHT

    0.0- 1.0

    RATING

    1-4

    WEIGHTED

    SCORE

    (WxR)1) Revenue has increased

    by 8.13% over 2002

    shows a good

    indicator of financial

    health.

    0.13 4 0.52

    2) 30,000 international

    retail outlets

    location.

    0.09 3 0.27

    3) Nike holds 39% of

    market share in

    athletic shoe industry.

    0.10 3 0.30

    4) Using foreign contract

    manufacturing

    requires no capital

    investment.

    0.11 4 0.44

    5) Strong innovation and

    does not require a

    large investment in

    equipment.

    0.06 3 0.18

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    WEAKNESSES

    WEIGHT RATING

    1-4

    WEIGHTED

    SCORE

    (WxR)

    1) R D time spending 0.08 2 0.16

    2) Issues with Foot Locker 0.08 1 0.08

    3) Main suppliers China

    and Indonesia subject tohigh EU duties

    increasing costs and

    reducing profit.

    0.05 1 0.05

    4) Heavy dependency on

    footwear sales.

    0.05 2 0.10

    5) Online activities

    limited.0.13 2 0.26

    TOTAL 1.00 2.84

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    The WEIGHTS are industry based and RATINGS

    represent the effectiveness of firms strategy. Thus, the

    2.84 weighted score in NIKEs IFE Matrix representsNIKE is excellent way in responding to its strength

    and weaknesses in the industry. In other words we can

    conclude that NIKEs strategies efficiently and

    effectively take advantage of its strength and take

    serious steps to minimize potential weaknesses.

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    Y axis: - Financial Strength: +4.00

    - Environmental Stability: - 2.57

    X axis: - Competitive Advantage: - 2.33

    - Industry Strength: + 4.40

    =>Y coordinate: + 1.43

    => X coordinate: +2.07

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    INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

    Financial strength(FS) Environmental stability(ES)

    1.Return on investment 1.Technology changes - 22.Leverage +4 2.Rate of inflation - 2

    3.Liquidity +6 3.Demand variability - 3

    4.Working capital +2 4.Price range of competing - 2

    5.Cash flow 5. Barrier to entry into markets - 3

    6.Competition pressure - 4

    7.Easeof exit in Market

    8.Risk involved in business - 2

    TOTAL +4.00 TOTAL -2.57

    Competitive Advantage(CA) Industry strength

    1.Market share - 2 1.Growth Potential + 5

    2.Product Quality - 4 2.Profit Potential + 4

    3.Product life cycle - 1 3.Financial Stability + 5

    4.Customer loyalty - 3 4.Technological know-how + 4

    5.Competitors capacity utilization - 1 5.Resource utilization + 4

    6.Technological know-how - 3 6.Ease of entry into market

    7.Control per supplier and distributors 7.Productivity capacity utilization

    TOTAL -2.33 TOTAL +4.40

    Average

    Financial Strength (FS) = +4.00 Industry Strength (IS) = + 4.40

    Environmental Stability (ES) = -2.57 Competitive Advantage (CA) = - 2.33

    +1.43 + 2.07

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    Strength

    1)Revenue has increased by 8.13%

    over 2002

    2)30,000 international retail outlets

    location

    3) Market share holds 39%

    4) Foreign contract

    5)Strong innovation

    6)Purchase Impact Golf Technology

    Weaknesses

    1)R&D time spending

    2)Issues with Foot Locker3)Main suppliers China and

    Indonesia

    4)Heavy dependency on Footwear

    5)Online activities limited

    1) Gen Y

    2) Baby boomers

    3) Women in sports

    4) Online footwear/Apparel sales

    5) European Union (EU)

    6) High technology and research to

    design their product

    SO Strategy

    1) Use youthful ads, to promote sales

    and develop fashionable sportswear or

    footwear to Gen Y (S1,O1,O6)

    2)Make women ads to promote sales of

    sports products to women in sports

    (S1,O3)

    3) Expand further into Europe (S3,O5)

    4)Acquire European company to

    support further penetration into EU

    (S4,O5)

    WO Strategy

    1) Increased R D expenditures to

    support producing new

    innovations to meet future

    market segment needs (W5,O6)

    2) Expand further into Europe

    partnering with Adidas by taking

    advantage of their distribution

    channels (W4,O5)

    3) Sell youth oriented products

    online since Gen Y are Internet

    Savvy (W5,O1)

    4) Acquire an outsourcing Web

    services computer company to

    direct sell online (W5,O1)

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    Threat

    1. Consumer preference changes

    2. Intense competition

    3. Competitor breakthrough

    4. Poor economy

    5. EU quotas/duties

    6. Political instability

    ST strategy

    1. Develop products to match the

    casual shift (S1,T1)

    2. Develop product for different

    market segments (fitness,

    performance, lifestyle, sports) and

    to stay ahead of competitors

    (S1,S5,TI,T3)

    3. Develop new accessory Golf

    products. The exclusive

    relationship minimizes

    competition. (S6,T2)

    WT Strategy

    1. Use production from stable countries with

    low labor costs possibly not subject to EUquotas and possible lower duties imposed

    (W3,T5,T6)

    2. Promote Nike town and develop more of

    an online presence to overcome obstacles

    such as Foot Locker and other online

    footwear stores. (W2,T2)

    3. Provide a more diversified product mix to

    appeal to more of the population. (W4,T1)

    4. Pause strategy where no risky new

    strategies are employed allowing focus on

    increasing sales (W1,T4)

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    CORPORATE LEVEL

    ISSUES WITH FOOT LOCKER

    Foot Locker canceled millions of dollars in Nike orders in protest of high wholesale prices,

    and Nike retaliated by stopping shipments of its most popular shoes to Foot Locker stores.

    This disagreement will be a significant cost to Nike in the short run.

    BUSINESS LEVEL

    COMPETITION IN EUROPE

    Competition is increasing in Europe. Adidas-Salomon AG, a German company, is the

    number one seller of athletic shoes in Europe and number two worldwide. Adidas, the top

    European-owned competitor, will be fighting to maintain its percent worldwide share of the

    competitive market for athletic shoes.

    FUNCTIONAL LEVEL

    EXPLOITIVE PRACTICES OF MANAGER

    There are exploitive practices of managers in Some Asian countries. Indonesian factory

    managers making Nike products were charged with sexual harassment, physical and verbal

    abuse, restrictions in health services, and forced overtime. Some of these managers were

    charged with requiring employees who misbehave or are late for work to run laps or clean

    toilets.

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    CORPORATE LEVEL

    ISSUES WITH FOOT LOCKER

    According to the issues with Foot Locker who had cancelled the order, Nike should able to develop

    their market. Market development strategy should be imposed and new market for Nike should be

    created. In addition, horizontal acquisition should be implemented to increase a firms market power

    by exploiting cost-based and revenue based synergies. As examples, Adidas and Nike can merge

    together to integrate their operations and increase their market power.

    BUSINESS LEVELCOMPETITION IN EUROPE

    Nike should implement the focused on differentiation strategy in terms of their product uniqueness.

    As examples, Nike should focus on womens yoga shoe in an attempt to appeal to health conscious

    women who do not see themselves as an athletic. Nike also must focus on their goddess stores and

    began marketing more toward women. Nike must be able to complete various primary and support

    activities in a competitively superior manner to develop in sustain a competitive advantage and earn

    above average returns. Developing product for different market segments as fitness, performance,

    lifestyle, sports and to stay ahead of competitors must be focused.

    FUNCTIONAL LEVEL

    EXPLOITIVE PRACTICES OF MANAGER

    Nike must create code of leadership in order to prevent sexual harassment, physical and verbal abuse,

    restriction in health services, and forced overtime. Besides that, Nike must provide suitable professional

    ethics code and update existing code to prevent exploitive practices.

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