this slide describes how Nike create shared value porter 5 forces, Channel and distribution, SWOT analysis and PESTLE analysis

2. .
Company profile & background
 Phil Knight and Bill Bowman founded
Nike Inc. as Blue Ribbon sports in 1962,
the first Blue Ribbon sports shoe was
introduced as a soccer shoe which bore
the Nike brand name referring the Greek
Goddess of Victory and Swoosh
trademark

3. Products
 Running
 Basketball
 Soccer
 Sport-inspired urban
shoes
 Children’s Shoes
 Bags
 Socks
 Sport Balls
 Eyewear
 Timepieces
 Electronic Devices
 Bats
 Gloves
Footwear
Performance Equipment

4. PESTLE analysis
 Nike’s standings and potential future through the lens
of a PESTLE analysis, which looks at the Political,
Economic, Social, Technological, Legal, and
Environmental factors that affect an organization.
 But first of all we see the ratio of Pakistan people who
are living below the standard of living,
 suffering from disease,
 how many athletic players in Pakistan,
 how many people go to the jogging?
 Child labor in Pakistan from decades how Nike violet
it,
 How health and brand conscious we are and how we
see online shopping.

6. Nike through the Lens of Porter’s Five Forces
 Sports massive Nike has shown solid growth momentum in
the past few quarters, which has resulted in more than 50%
increase in its stock price year to date.
 The performance has been underscored by broad based
growth across geographies (excluding China and Japan) and
different product categories.
 In this analysis, we look at how Nike stacks up along Porter’s
Five Forces, to analyze where it could gain or lose going
forward.

7. Porter’s
Five
Forces
Rivalry
among
existing
Competitors
High
Threat of
Substitutes
Low
Bargaining
Power of
Suppliers
LOW
Bargaining
power of
buyers
Medium
Barriers to
Entry Low

8. Competitive Rivalry Within The
Industry
 Nike footwear global market share has consistently grown over the years and
stood at 24% at the end of 2015
 Nike also faces rising competition from local players in emerging markets,
who are increasingly improving their product quality.
 Nike has a strong brand reputation which likely will continue to propel strong
demand for its products. Further, Nike continues to differentiate its products
within an innovative product portfolio, leveraging a particularly strong brand
with enhanced marketing activities.

9. in the recent past Under Armour and Adidas have caused problems for Nike.
The company is still significantly in the lead, but UA and Adidas are
continuously level the playing field. Despite this, we expect this figure to
increase and cross 32% in the long run

10. Bargaining Power Of Suppliers
Nike’s footwear production is largely conducted in Vietnam, China and Indonesia
as contract factories in these countries in fiscal 2013 comprised around 42%,
30%, and 26% of total Nike brand footwear production, respectively.
Hence,both sovereign issues and currency effects could be a cause for concern for
Nike.
No single footwear factory or apparel factory accounted for more than 6% of total
Nike brand footwear production and Nike brand apparel production respectively in
fiscal 2013;
due to a large base of suppliers, we believe their bargaining power is limited.
The switching costs in changing suppliers is significant.
However, suppliers generally share the inflationary pressure

11. Bargaining Power of Customers
Nike caters to its customers through both the wholesale and direct-to-
consumer channels, which accounted for 80.6% and 18.9% of total Nike
brand’s sales respectively, in fiscal 2013.
Direct-to-consumer sales rose by 23% in fiscal 2013, as compared to 6%
growth in the wholesale channel; hence Nike is looking to strengthen its direct
channel.
Bargaining power of end-customers is low as Nike has a very strong brand
image and holds an innovative product portfolio.
However, customers could also choose other brands owing to factors such as
price, advertising, product sponsorship, and changing styles.

12. Threat Of New Entrants
Significant capital resources are required for creating a new
brand as large investments are needed for marketing and
procuring floor space; hence, this restricts the entry of newer
players.
Nike enjoys a great degree of brand recognition and loyalty,
and it will be a difficult for a new player to match its level.

13. Threat Of Substitute Products
The worldwide demand for athletic footwear, apparel and
equipment is expected to grow in the future as customers
cannot substitute these products.
However, the problem of fake products is an area to watch.
As the quality of fake products has been improving over the
recent past, we believe this could threaten the company’s
sales in emerging markets and could also potentially weak
Nike’s brand value

14. Channels & Distribution
 Currently Nike operates 3 distribution centers
for footwear. Internationally, Nike operates 21
distribution centers in Europe, Asia, Australia,
Latin America, Africa and Canada
 they sells theirs products to retail accounts,
through NIKE owned retail, including stores
and Internet sales, and through a mix of
independent distributors and licensees over
160 countries worldwide.

17. NIKE distributes its products through three major channels

18. NIKE’s sales mix and retail
 Sales to wholesalers are the largest revenue category.
However, this category’s contribution in the sales mix
contracted from 83.3% in fiscal year 2012 to 79.2% of
revenues in fiscal year 2014. DTC sales, on the other hand,
increased from 16.2% to 20.3% over the same period. This
is significantly lower than the ratio of DTC revenues for
NIKE’s rivals in the space.
 The company is attempting to grow the DTC category to $8
billion in sales by fiscal year 2017, up from $5.3 billion in
fiscal year 2014. That’s an annual growth rate of 14.7%,
compounded.
 On a currency neutral basis, DTC revenues grew 22% in
fiscal year 2014 and 30% in 1Q15, year-over-year.

19. NIKE’s DTC approach is three-
pronged:
 NIKE brand and category experience stores
 Online sales through its online portal www.nike.com
 NIKE factory stores

20. Online sales through www.nike.com
 Online sales made up ~15% of total NIKE brand DTC
revenues in fiscal year 2014, compared to ~12% in
fiscal year 2013. Online selling is one of key future
growth drivers of NIKE’s retail strategies. The
category grew by 42% in fiscal year 2014, and was up
by 70% year-over-year in 1Q15.
 In comparison, Amazon.com, Inc. (AMZN), the
world’s largest online retailer, grew sales by 20.4%
year-over-year in its most recent quarter, ended
September 30, 2015

21. Pricing Strategy
 We look at pricing every season in every geography as
a normal part of the product creation process and move
prices in various parts of the world every season.
Pricing is an important tool for managing our
profitability, and we certainly consider product cost
trends in our overall financial goals when setting
prices, said Eric Sprunk
 “psychological pricing“
 "segmented pricing".
 “Price Skimming"
 “Higher Pricing"

23. STRENGTHS
 • Product Innovation
Year Product Milestones
1995 Shift from petroleum-derived solvents to water-based adhesives
2000 Nike endorsed Principles of the UN Global Impact and phased out
completely SF6 and PVC
2002 Introduced environmentally preferred rubber
2008 Nike, Inc. released Jordan XX3, Trash Talk shoes
2010 Introduced environmental-friendly and technologically advanced
jerseys
2012 Introduced high-performance Nike fly knit racer

24. • Strong Global Brand
• Low Cost Manufacturing with Strong Cash Flow
 The capital expenditures of Nike, Inc. increased rapidly in the last five years,
from $432 million in the year 2011 to $963 million in the year 2015
(Marketwatch.com, 2016).
• Global Presence and Influence
 It has enjoyed rising revenue globally since the last ten years with 27.8 billion
US dollars in the year 2014 from 13.7 billion US dollars in 2005.

25. WEAKNESSES
 •Excessive Dependence on Footwear
 •High Prices of its
 Products

26.  • High Advertising Spending
• Nike Sweatshop Problem
Year Advertisement Spending in
billion USD
2009 0.56
2010 0.89
2012 1
2013 1.15
2014 1.31

27. OPPORTUNITIES
 • Explore Emerging
Markets
• Product Development
 • Initiatives towards
Better Environment
 • The Rise of e-
Commerce Trade
 The marketing strategists
projects that by 2020, e-
commerce sales will be
responsible for one-third of
overall growth .They also
project that the total sales
in the fiscal 2020 will reach

28. THREATS
 • Intense Competition

 The Rising Fake Cases

29.  Dangerous Supply Chain
Management
This confused supply chain failed in
February 2001 and Nike, Inc.
incurred a loss of over 100 million
US dollars. The stock price of the
company also fell by 20% at that
time (Scdigest.com, 2016).
 Recession
figure is minutely noticed, then it can
be seen how the annual revenue of
Nike. suffered in two years
successively (2009 and 2010) which
was also the recession years. The
growth rate was negative as it
earned less globally especially
witnessing drastic fall in sales in
North America and European
markets. Hence, every global
recession pose a serious threat for
this company Nike, Inc.

30. NIKE’s Future Spending Plans
 Higher retail revenue potential
 The digital experience and e-commerce
 Research on innovative manufacturing
technologies
 As a percentage of sales, capex has risen from 2.4% in fiscal
year 2013 to 3.2% in 2014. NIKE, Inc. (NKE) expects capex
to range from 3% to 4% of sales over the next few years. You
can read about the impact of higher capex on the return on
invested capital in the next part of this series