1. Nike, Inc. Strategic Analysis 2009
Jarryd Phillips, Jermaine West, Spencer Jacoby, Othniel Hyliger, Steven Pelletier

2. OVERVIEW HISTORY FINANCIAL TRENDS MAJOR MILESTONES
CURRENT VISION & MISSION STATEMENTS
PROPOSED VISION & MISSION STATEMENTS
EXTERNAL ASSESSMENT
POSITIONING MAP
CPM MATRIX
OPPORTUNITIES & THREATS
EFE MATRIX
INTERNAL ASSESSMENT
ORGANIZATIONAL CHART
2009 INCOME STATEMENT
2009 BALANCE SHEET
CURRENT FINANCIAL RATIOS
FINANCIAL TRENDS
STRENGTH & WEAKNESSES
IFE MATRIX
STRATEGIC ASSESSMENT
SWOT MATRIX
SPACE MATRIX
GRAND STRATEGY MATRIX
BCG MATRIX
IE MATRIX
MATRIX ANALYSIS
QSPM
RECOMMENDATIONS
OBJECTIVES
STRATEGIC IMPLEMENTATION
PROJECTED INCOME STATEMENT
PROJECTED BALANCE SHEET
PROJECTED FINANCIAL RATIOS
EVALUATION
BALANCED SCORECARD
SOURCES
QUESTIONS

3. HISTORY

4. MAJOR MILESTONES
1970- The Swoosh first appears on a football/soccer cleat called the Nike.
1978- Tennis "bad boy" John McEnroe is signed by Nike to an endorsement contract.
1989- Nike enters the European football market
Nike wins Advertiser of the Year at the Cannes Advertising Festival.
1996- Nike signs Tiger Woods
1999- Bill Bowerman, co-founder of Nike, dies on Dec. 24 at age 88.
2002- Nike purchases Hurley International
2003- Nike acquires once-bankrupt rival Converse for $305 million
2004- Phil Knight steps down as CEO and President of Nike, but continues as chairman
2005- Nike Signs Tennis Pro Rafael Nadal.
2006- Nike and Apple release the Nike+iPod sports kit
2008- Nike sells its Nike Bauer hockey equipment division & purchases Umbro.

5. CURRENT VISION STATEMENT
"To bring inspiration and innovation to every athlete in the world"
If you have a body, you are an athlete.
Nike co-founder Bill Bowerman

6. CURRENT MISSION STATEMENT
To lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike.

7. PROPOSED VISION STATEMENT
To equip every athlete with products that combine performance, quality, and fashion.

8. PROPOSED MISSION STATEMENT
At Nike, we desire to deliver superior products to customers and athletes that are both safe and dependable (1, 2 and 6). Our well trained employees and experienced executives will ensure a competitive advantage for our markets, growth for the company, and profits for our shareholders (5). Our commitment to social responsibility and the communities in which we operate will ensure business relationships and alliances for the future and a perception of concern with our stakeholders (6, 8). We will continue to utilize innovation and technology to provide our employees with the best possible work environment while adapting to the many changes in the global market (3, 4, 7, and 9).
1. Customers
2. Products or services
3. Markets
4. Technology.
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

9. EXTERNAL ASSESSMENT

10. POSITIONING MAP
High Performance
Low Price
High Price
Low Performance

11. Critical Success factors
CPM MATRIX
NIKE
ADIDAS
PUMA
Critical Success factors
Weights
Rating
Weighted Score
0.0 to 1.0
1 to 4
Advertising
0.10 3
0.30 4
0.40
0.20
Product Quality
0.08
0.32
0.24 2
0.16
Price Competitiveness 1
Management
0.06
0.18
0.12
Financial Position
Customer Loyalty
0.05
0.15
Global Expansion
Market Share
Brand
0.09
0.36
0.27
Endorsement Deals
Portfolio Diversification
Product Placement
Research & Development
Totals
1.00
3.35
3.13
1.57

12. OPPORTUNITIES
Creating sportswear that would incorporate recycled materials from their own production lines and other places.
Promotion as a fashionable wear, not just sportswear.
Growing segment of the female athletes.
International expansion into emerging markets – e.g.. India
Additional marketing of existing products to appeal to new demographic groups.
Develop new alliances with companies that are respected regarding social responsibility.
Brand reorganization by market regions

13. THREATS High competitive industry
Failure to respond to market trends in timely manner could greatly affect financial position.
Production of counterfeit goods, and generic products.
Negative public perception created by environmental, child labor, contracted manufacturing issues, and sponsored athletes.
International currency changes could decrease profits.
Federal Trade regulations in dealing with foreign manufactures.

14. EFE MATRIX External Opportunities
1.  Creating sportswear that would incorporate recycled materials from their own production lines and other places.
0.05 3
0.15
2.      Promotion as a fashionable wear, not just sportswear.
0.06 2
0.12
3.      Growing segment of the female athletes.
0.08
0.24
4.      International expansion into emerging markets – e.g. India 4
0.48
5.      Additional marketing of existing products to appeal to new demographic groups.
0.07
0.14
6.      Develop new alliances with companies that are respected regarding social responsibility. 1
7.      Brand reorganization by market regions
External Threats
1.      High competitive industry
0.56
2.      Failure to respond to market trends in timely manner could greatly affect financial position.
0.09
0.36
3.      Production of counterfeit goods, and generic products.
4.      Negative public perception created by environmental, child labor, contracted manufacturing issues, and sponsored athletes.
0.27
5.      International currency changes could decrease profits.
6.      Federal Trade regulations in dealing with foreign manufactures.
Totals
1.00
3.03

15. INTERNAL ASSESSMENT

16. Eric D. Sprunk Vice President Global Footwear
ORGANIZATIONAL CHART
Philip H. Knight
Chairman of
the Board
CEO and President
Mark G. Parker
Gary M. Destefano
President of Global
Operationsitle
Hans van Alebeek
Vice President,
Global operations &
Technology
Donald W. Blair
Vice President and
CFO
David J. Ayre
Vice President
Global Human
Resoursces
Ronald D. McCray
Chief Administrative
officer
Bernard F. Pliska
Corporate Controller
Trevor Edwards Vice
President Global
Brand & Category
Management
President Nike Brand
Charles D. Denson
President Affiliates
Lewis L. Bird III
John Slusher
Global
Sports Marketing
Eric D. Sprunk Vice President Global Footwear

17. (In millions, except per share data)
2009 INCOME STATEMENT
Year Ended May 31
(In millions, except per share data)
2009
2008
2007
Revenues
$ 19,176.10
$ 18,627.0
$ 16,325.9
Cost of sales
$ 10,571.70
$ 10,239.6
$ ,165.4
Gross margin
$ 8,604.40
$ ,387.4
$ ,160.5
Selling and administrative expense
$ 6,149.60
$ ,953.7
$ ,028.7
Restructuring charges (Note 16) $ $
Goodwill impairment (Note 4) $
Intangible and other asset impairment (Note 4) $
Interest income, net (Notes 1, 7 and 8)
$ (9.50)
$ (77.1)
$ (67.2)
Other (income) expense, net (Notes 17 and 18)
$ (88.50) $
$ (0.9)
Income before income taxes
$ 1,956.50
$ ,502.9
$ ,199.9
Income taxes (Note 9) $ $ $
Net income
$ 1,486.70
$ ,883.4
$ ,491.5
Basic earnings per common share (Note 12) $ $ $
Diluted earnings per common share (Note 12) $ $ $
Dividends declared per common share $ $ $

18. LIABILITIES AND SHAREHOLDERS’ EQUITY
2009 BALANCE SHEET
May 31,
2009
2008
(In millions)
ASSETS
Current assets:
Cash and equivalents
$ 2,291.10
$ 2,133.90
Short-term investments
$ 1,164.00 $
Accounts receivable, net (Note 1)
$ 2,883.90
$ 2,795.30
Inventories (Notes 1 and 2)
$ 2,357.00
$ 2,438.40
Deferred income taxes (Note 9) $ $
Prepaid expenses and other current assets $ $
Total current assets
$ 9,734.00
$ 8,839.30
Property, plant and equipment, net (Note 3)
$ 1,957.70
$ 1,891.10
Identifiable intangible assets, net (Note 4) $ $
Goodwill (Note 4) $ $
Deferred income taxes and other assets (Notes 9 and 18) $ $
Total assets
$ 13,249.60
$ 12,442.70
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt (Note 8) $ $
Notes payable (Note 7) $ $
Accounts payable (Note 7)
$ 1,031.90
$ 1,287.60
Accrued liabilities (Notes 5 and 18)
$ 1,783.90
$ 1,761.90
Income taxes payable (Note 9) $ $
Total current liabilities
$ 3,277.00
$ 3,321.50
Long-term debt (Note 8) $ $
Deferred income taxes and other liabilities (Note 9) $ $
Commitments and contingencies (Notes 15 and 18) $
Redeemable Preferred Stock (Note 10) $
Shareholders’ equity:
Common stock at stated value (Note 11):
Class A convertible — 95.3 and 96.8 shares outstanding $
Class B— and shares outstanding $
Capital in excess of stated value
$ 2,871.40
$ 2,497.80
Accumulated other comprehensive income (Note 14) $ $
Retained earnings
$ 5,451.40
$ 5,073.30
Total shareholders’ equity
8693.1
7825.3
Total liabilities and shareholders’ equity

19. 2009 FINANCIAL RATIOS Liquidity Ratios Current 2.97 Quick 2.25
Leverage Ratios
Debt to total assets
0.06
Debt to equity
0.09
Long-term debt to equity
0.05
Times-interest-earned ratio
61.06
Activity Ratios
Fixed Assets Turnover
9.8
Total Assets Turnover
1.45
Inventory Turnover
8.14
Profitability Ratios
Gross profit margin 
0.45
Operating profit margin
0.13
Net profit margin
0.08
Return on assets
0.11
Return on equity
0.17
Price-earnings ratio
18.83
EPS
3.03
Growth Ratios
3 Years
Sales Growth%
Net Income Growth%
Earnings per share Growth%
Dividends per share Growth%

20. FINANCIAL TRENDS Date Sales EBIT DEPRECIATION TOTAL NET INCOME
LONG TERM DEBT
May-09
19.18 Bill
1.96 Bill
Mill
1.49 Bill
Mill
May-08
18.63 Bill
2.50 Bill
Mill
1.88 Bill
Mill
May-07
16.33 Bill
2.20 Bill
Mill
Mill
May-06
14.95 Bill
2.14 Bill
Mill
1.39 Bill
Mill
May-05
13.74 Bill
1.86 Bill
Mill
1.21 Bill
Mill

21. STRENGTHS Recognized brand name – ‘Swoosh’ is ubiquitous
Strong in research and development – innovative product development
Strong marketing campaign - sponsors top athletes. Marketing practices enables them to expand the athletic market.
Diverse portfolio
Successful advertising campaigns.
Customer loyalty
Strong financial position
Strong international presence

22. WEAKNESSES Products are highly priced
Revenues are still mostly dependent upon footwear sales
History for violations of minimum wages, child labor and over times in its manufacturing countries.
Little control over quality of products from 3rd party contractors
Anti-globalization groups
Price sensitivity of products

23. IFE MATRIX Internal Strengths
Recognized brand name – Swoosh is ubiquitous
0.10 4
0.40
Strong in research and development – innovative product development
0.07 3
0.21
Strong marketing campaign - sponsors top athletes. Marketing practices enables them to expand the athletic market
0.09
0.36
A very professionally competitive company
0.08
0.24
Diverse portfolio
Successful advertising campaigns
Customer loyalty
0.06
0.18
Strong financial position
Strong international presence
0.4
Internal Weaknesses
Products are highly priced 2
0.12
Revenues are still mostly dependent upon footwear sales
0.05
History for violations of minimum wages, child labor and over times in its manufacturing countries.
Little control over quality of products from 3rd party contractors 1
Anti-globalization groups
0.04
Price sensitivity of products
Totals
1.00
3.10

24. STRATEGIC ASSESSMENT

25. SWOT MATRIX WT Strategy
SO Strategy
- S1, O2, O3: The swoosh is so well known that recycled materials and fashionable lines of clothing would definitely create a whole new dimension for Nike.
- S3, O3, O4: With some of the most recognizable and followed athletes globally, expanding into places like India and forming alliances with different kinds of sports leagues will be a viable strategy to expand.
- S5, O6, O7: Use the company`s successful competitiveness and alliances to reorganizing the brand name and appeal to new/ different demographic groups.
WT Strategy
- W3, W5, T4, T5: Due to Nike`s history of low labor wages to the thousands of factory workers, a recession may spell the end of many jobs and the production of many more important products. Improving the working conditions and pay of its factory workers is an ideal strategy to prevent such circumstances.
- S6, S7, T3: The quality of material throughout Nike`s diversified portfolio, may be able to help combat counterfeit goods and generic products. Especially now that many consumers associate cost with quality.
- S3, S9, T1, T2: Nike is well known for some of the athletes that it endorses, as well as its international presence, which will help maintain and attract customers even if there are high prices and challenging economic times, as long as it remains at the forefront of market trends.
ST Strategy
WO Strategy
- W1, W2, O1, O2:Creating sportswear and even fashionable wear from recycled materials, would be an opportunity to sell products at a lower cost.
- W4, O4: Use 3rd party contractors to manufacture cheap/ lower cost products in order to appeal to the group of consumers who end up buying generic products, because official merchandise is too expensive.

26. SPACE MATRIX ES average -1.29 CA average -1.43 IS average 5.29
Financial Strength
rating is 1 (worst) to 6 (best)
Ratings 1
Liquidity
6.0 2
Leverage 3
Working capital 4
Return on assets
4.0 5
Return on equity 6
Price per earnings 7
Earnings per share
5.0
Industry Strength
FS Total
37.0
Profit potential
Extent Leveraged
Economies of scale
Growth potential
Financial stability
Resource utilization
Diverse Portfolio
Environmental Stability
rating is -1 (best) to -6 (worst)
IS Total
Price range of competing products
-2.0
Competitive pressure
Ease of exit from market
-1.0
Successful and recognized advertising
Endorsement agreements
Price elasticity of demand
Risk involved in business
Competitive advantage
ES Total
-9.0
Market share
Global presence
Strong investor reputation
Technological innovation
Product life cycle
Customer loyalty
Control over suppliers and distributors
-3.0
CS total
-10.0
ES average
-1.29
CA average
-1.43
IS average
5.29
FS average
X Coordinate
3.86
Y Coordinate
4.00
Strategy ->>>>
Aggressive

27. GRAND STRATEGY MATRIX Market Development Market Penetration
Rapid Market Growth
Quadrant II
Quadrant I
Weak Competitive Market
Strong Competitive Market
Quadrant III
Market Development
Market Penetration
Product Development
Forward Integration
Backward Integration
Horizontal Integration
Related Diversification
Quadrant IV
Slow Market Growth

28. BCG MATRIX II I III IV Stars Question Marks Dogs Cash Cow
High
Low
+25
+20 II I
+15
Stars
Question Marks +5
(4) 11%
(3) 17%
(1) 35%
IGR
(2) 37% -5
Cash Cow
Dogs
-15
III IV
-20
-25
Low
Divisions
Revenue
% Revenue
Profits
% Profits
RMSP
IG Rate%
(1) U.S.
6,542.9
39%
837.2
35% 1
1.20%
(2) AMEA
5,512.2
33%
877.1
37%
-2.20%
(3) Asia Pacific
3,322.0
20%
394.6
17%
2.70%
(4) Americas
1,284.7 8%
263.6
11%
Total
16,661.8
100%
2,372.5

29. IE MATRIX EFE I F E High 3-4 Medium 2-2.99 Low 1-1.99 Strong 3-4
Average
Weak
I F E

30. MATRIX ANALYSIS Alternative Strategies IE SPACE GRAND BCG Count
Forward Integration x 4
Backward Integration
Horizontal Integration
Market Penetration
Market Development
Product Development
Related Diversification 2
Unrelated Diversification 1
Horizontal Diversification
Joint Venture
Retrenchment
Divestiture
Liquidation

31. Prod/Recycle/Materials Add. Sports Accessories
QSPM
Market Expansion
Prod/Recycle/Materials
Add. Sports Accessories
Key factors
Weight AS
TAS
External
1 to 4
Create products from recycled materials
0.1 3
0.3 2
0.2 4
0.4
Promotion as a fashionable wear, not just sportswear.
0.07
0.21 1
0.14
Growing segment of the female athletes
0.08 -
International expansion into emerging markets - India
0.12
0.48
0.24
Add. marketing of existing prod - appeal to new groups
New alliances with co. respected for social responsibility
0.06
0.18
Brand reorganization by market regions
High competitive industry
0.32
0.16
Failure to respond to market trends in timely manner
Negative public perception
Federal Trade regulations with foreign manufactures
International currency changes could decrease profits
Production of counterfeit goods, and generic products
total should be 1.0
Internal
Recognized brand name – Swoosh is ubiquitous
Strong in research and development/innovation
0.09
0.36
0.27
Strong marketing campaign/sponsors top athletes
Diverse portfolio
Successful advertising campaigns
Customer loyalty
Strong financial position
Strong international presence
Products are highly priced
Revenues still mostly dependent upon footwear sales
0.05
0.15
Violations for wages and child labor in manuf. countries
Little control over quality of prod. from 3rd party contract.
Anti-globalization groups
Price sensitivity of products
4.95
3.75

32. RECOMMENDATIONS
Invest $500 million in India that will increase revenue by 4.5% through product development, market development, and market penetration in the next 3 years.
Open a new Nike Super store in each of India’s largest cities: Mumbai, Delhi, and Bangalore at $5 million per store.
Invest $235 million in R&D and manufacturing contracts over the next 3 years.
Invest $220 million on marketing and advertisement over the next 3 years.
Sign an endorsement bat sponsorship deal with Sachin Tendulkar, India’s biggest cricket star to a multi-year contract. The terms include apparel, footwear, and his own name brand. The deal is worth $30 million over 3 years.

33. OBJECTIVES
To continue being the world leader in sports equipment and apparel.
To complete brand reorganization within market regions that will lower cost of sales.
To create sportswear that would incorporate recycled material.
To develop new alliances with companies who are well respected regarding social responsibility.
To invest in additional marketing of existing products that will appeal to new demographic groups.
To promote products as fashion wear, not just sportswear.

34. STRATEGIC IMPLEMENTATION

35. PROJECTED INCOME Year Ended May 31 Projected 2009 2010
(In millions, except per share data)
Revenues
$ 19,176.10
$ 19,463.74
Forecasted 1.5% revenue increase.
Cost of sales
$ 10,571.70
$ 10,730.28
1.5% increase.
Gross margin
$ 8,604.40
$ 8,733.47
Selling and administrative expense
$ 6,149.60
$ 6,351.95
3.3% increase from previous year.
Restructuring charges (Note 16) $ $
Goodwill impairment (Note 4) $ $
Intangible and other asset impairment (Note 4) $
Interest income, net (Notes 1, 7 and 8)
$ (9.50)
$ (9.50)
Other (income) expense, net (Notes 17 and 18)
$ (88.50)
Income before income taxes
$ 1,956.50
$ 2,429.52
Income taxes (Note 9) $ $
Based on 24% from 2009
Net income
$ 1,486.70
$ 1,846.43
Basic earnings per common share (Note 12) $ $
Diluted earnings per common share (Note 12) $ $
Dividends declared per common share $ $

36. PROJECTED BALANCE SHEET
Year Ended May 31,
Projected
2009
2010
ASSETS
Current assets:
Cash and equivalents
$ 2,291.10
$ 2,163.80
Minus $ in investment.
Short-term investments
$ 1,164.00
Accounts receivable, net (Note 1)
$ 2,883.90
$ 2,976.18
3.2% previous
Inventories (Notes 1 and 2)
$ 2,357.00
$ 2,628.00
Influenced by the cricket line
Deferred income taxes (Note 9) $
Prepaid expenses and other current assets $ $
Total current assets
$ 9,734.00
$ 10,104.38
Property, plant and equipment, net (Note 3)
$ 1,957.70
$ 1,972.70
Plus $15 million for three new stores.
Identifiable intangible assets, net (Note 4) $
Goodwill (Note 4) $ $
Deferred income taxes and other assets (Notes 9 and 18) $ $
Total assets
$ 13,249.60
$ 13,617.04
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt (Note 8) $ $
Notes payable (Note 7) $ $
Accounts payable (Note 7)
$ 1,031.90
$ 1,051.50
Accrued liabilities (Notes 5 and 18)
$ 1,783.90
Income taxes payable (Note 9) $ $
Total current liabilities
$ 3,277.00
$ 3,307.30
Long-term debt (Note 8) $ $
Less portion of $32.0
Deferred income taxes and other liabilities (Note 9) $ $
Commitments and contingencies (Notes 15 and 18) $
Redeemable Preferred Stock (Note 10) $
Shareholders’ equity:
Common stock at stated value (Note 11):
Class A convertible — 95.3 and 96.8 shares outstanding $
Class B— and shares outstanding $
Capital in excess of stated value
$ 2,871.40
$ 2,995.40
Accumulated other comprehensive income (Note 14) $
Retained earnings
$ 5,451.40
$ 5,665.83
Total shareholders’ equity
$ 8,693.10
$ 9,031.53
Total liabilities and shareholders’ equity

37. PROJECTED FINANCIAL RATIOS
2009
Projected 2010
Liquidity Ratios
Current 
2.97
3.06
Quick
2.25
2.26
Leverage Ratios
Debt to total assets
0.06
Debt to equity
0.09
Long-term debt to equity
0.05
0.04
Times-interest-earned ratio
48.55
65.66
Activity Ratios
Fixed Assets Turnover
9.8
9.87
Total Assets Turnover
1.45
1.43
Inventory Turnover
8.14
7.41
Profitability Ratios
Gross profit margin 
0.45
Operating profit margin
0.1
0.12
Net profit margin
0.08
Return on assets
0.11
0.14
Return on equity
0.17
0.20
Price-earnings ratio
18.83
17.83
EPS
3.03
3.20
Growth Ratios
3 Years
1 Year
Sales Growth%
1.50
Net Income Growth%
24.20
Earnings per share Growth%
4.23
Dividends per share Growth%
2.04

38. EVALUATION

39. Primary Responsibility
BALANCED SCORECARD
Area of Objectives
Measure
Time Expectation
Primary Responsibility
Customers
1. Customer satisfaction
Customer and online surveys
Quarterly
Managers/ Marketing
2. Customer Loyalty
Product and purchasing reviews. Memberships and number of returning and new customers.
Marketing
3. Accessibility
Open more stores in various countries.
Biannually- Annually
Managers/Employees
1. Improve working conditions
Increase in productivity, employee surveys.
CEO
2. Improve employee training
Increase in productivity and overall operating efficiency
Human Resources
Community/Social Responsibility
1. Business Ethics
Endorse positive role model athlete`s. Increase promotion of sports and wellness.
Annually
2. Environmentally Friendly
Recycle materials, improve reputation and customer perspective.
Biannually
3. Community involvement
Run local sports camps, community/ city events- increase customer awareness.
Regional Managers
Operations/ Processes
1. Improve Brand Image
Increase in sales and customer recommendations.
2. Product Innovation
Number of new stores, products and marketing
CEO/ Marketing
3. Market Penetration
Number of stores and sales in new/ other countries
Financial
1. Reduce Cost of production
Decrease in production expenses.
CFO
2. Increase Revenue
Increase in annual sales

41. SOURCES
Datamonitor.com – UMFK library sites
Strategic Management Concepts and Cases 13th Edition. Fred R. David.