FHBM1114 MANAGEMENT
SESSION 202301 (January 2023 Trimester)
GROUP REPORT ASSIGNMENT
Company Name : Nike
Tutorial Group : Tutorial 2
Tutor Name : Ms. Nalini a/p Panneer Selvan
NAME STUDENT ID
Elvan Seah 2105177
Koh Sin Yee 2204690
Lau Ka Hei 2204243
Lim Kai Yang 2205805
Ng Chin Siang 2105505
So Yong Jie 2205805
FHBM1114 Management Assignment Marking Scheme (202301)
No. Items Description Marks Total
1 Introduction Clear information about the history of the founder and the
business, nature of business and the products and services 4–5
rendered.
Information about the history of the founder and the
business, nature of business and the products and services 2–3
rendered provided but lack explanation. /5
Lack of information or irrelevant information were provided.
0–1
2 Planning and Strategic Ideas are organised; well structured; demonstrated full
4-5
Management knowledge; applied critical thinking skills.
(i) SWOT Analysis Ideas are organised; well structured; demonstrated full
3-4
knowledge.
(5m x 4
Ideas are not organised; brief or no explanation. /20
components=20m) 0-2
(ii) Grand Strategy Correctly stated the strategy(s) with clear and sufficient
8 - 10
example(s) based on the company.
Correctly stated the strategy(s) with clear but
4–7
insufficient example(s) based on the company.
/10
Incorrectly stated the strategy(s) or general examples were
0-3
provided.
(iii) Porter’s 5 Ideas are organised; well structured; demonstrated full
3
Competitive Forces knowledge; applied critical thinking skills.
(3m x 5 Ideas are organised; well structured; demonstrated full /15
2
components=15m) knowledge.
Ideas are not organised; brief or no explanation. 0-1
(iv) Porter’s 4 Ideas are organised; well structured; demonstrated full
8 - 10
Competitive Strategies knowledge; applied critical thinking skills.
Ideas are organised; well structured; demonstrated full
4-7 /10
knowledge.
Ideas are not organised; brief or no explanation. 0-3
3 Recommendation Ideas are organised; well structured; demonstrated full
8 - 10
knowledge; applied critical thinking skills.
Utilization of the
Strength and Ideas are organised; well structured; demonstrated full /10
4-7
Opportunities knowledge.
Ideas are not organised; brief or no explanation. 0-3
Ideas are organised; well structured; demonstrated full
8 - 10
knowledge; applied critical thinking skills.
Ideas are organised; well structured; demonstrated full
Overcome the 4-7
knowledge.
Weaknesses and Threats /10
Ideas are not organised; brief or no explanation. 0-3
4 Conclusion Correctly commented on the organisation’s overall
achievements, well-structured and explained; applied 4-5
critical thinking skills.
Correctly commented on the organisation’s overall /5
2-3
achievements, well-structured and explained.
Vaguely commented on the organisation’s overall
0-1
achievements.
5 References and Correctly stated and presented the references and appendices
4-5
Appendices in an orderly manner; well-structured
Correctly stated and presented the references and appendices
2-3 /5
in an orderly manner.
Incorrectly stated or presented the references and appendices
0-1
without proper order, or incomplete.
6 Formatting Complete and well formatted. 4-5
•Font and Size: Times
New Roman, 12
•1.5 spacing on A4 size Partially correct formatting. 2-3
paper /5
•Justified (Alignment)
• Include page number Incorrectly and incomplete formatting.
• Less than 15 pages
• Language and 0-1
spelling Content page,
standard cover page,
marking Scheme
7 Peer Evaluation Calculated based on the average received by each member. 0-5
/5
Total /100
Remarks/Comments:
Contents
Introduction Of Nike.............................................................................................................................................5
Planning And Strategic Management Of Nike...................................................................................................6
SWOT Analysis..................................................................................................................................................6
Nike’s Grand Strategy Analysis........................................................................................................................8
Porter’s 5 Competitive Forces..........................................................................................................................9
Porter’s 4 Competitive Strategies...................................................................................................................11
Recommendation.................................................................................................................................................13
Conclusion............................................................................................................................................................14
Reference And Appendices.................................................................................................................................15
4
Introduction Of Nike
Nike is one of the most well known brand that is famously known for sports attire and gear. The brand is an
American multinational association that is responsible for designing, creating, marketing and manufacturing
high quality apparels, footwears, accessories etc. It was founded by a man named Bill Bowerman which was
once a track and field coach at the University of Oregon and together partnering with one of his formal student
Phil Knight at the year 1964. The brand was once called Blue Ribbon Sports from the year (1964-1978) then the
year after it was named Nike, INC. Since then, the American sportswear company has landed its company
headquarters in Beaverton, Oregon. During the year 1966, Bill Bowerman and Phil Knight opened their very
first retail store until 4 years later they’ve decided to launch the Nike brand shoe with the swoosh logo. The
company went public 2 years after 1978 where after they renamed it.
By the early 21st century, Nike has grown large and popular owning abundant number of franchises and
distributors in more than 170 countries. And the swoosh logo, which was appeared in almost every product,
retail outlets is now highly recognized through the world. The footwear designed by Nike are designed
primarily for specific athletic purposes and high intensity. Although there are also shoes categories and products
designed by Nike for customers to wear for casual or leisure purposes. But it’s main focus is to bring out the
quality for people to carry out various sports. Currently, the brand Nike and Jordan are both offering same
products under the same website with the category: running, basketball, football, men’s training, women’s
training, NIKE sportswear and action sports. It also markets products for kids as well as other category of sport
events such as cricket, golf and so on.
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Planning And Strategic Management Of Nike
SWOT Analysis
Nike’s Strengths - Internal Strengths
Nike is the world’s leading sporting goods brand, and it has a huge customer base. There are millions of Nike
fans around the world, it includes people of all ages, and the number of customers is increasing year by year.
We may confirm this point via the Nike financial report at the end of 2022. From this report, we can know that
Nike have earned 12.7billion dollars (about $39 per person in the US), it is 4% more than the prior year and
were up to 10% on a currency-neutral basis. It means Nike is successfully attracting consumers through
advertising, promotion, and sponsorship to keep increasing the number of consumers.
Besides, the following strength of Nike is it has a huge category and a lots of side brands. In 1972 Nike brands
shoe was just launched, but nowadays Nike not only a shoe brands but fashion for kids, women, man and sports
shoes, balls and so on. Nike also have a lot of famous side brands such as Converse and Jordan on these side
brands and huge categories, Nike have satisfied the most customer’s need. Although some designs do not fit to
the aesthetics of some groups, Nike still have lots of side brands good may supply for the customer. This is one
of the strengths that let Nike stay as a world’s leading sporting goods brands.
Nike’s Weakness - Internal Weakness
A long with Nike became the world’s leading sporting goods brand, Nike have spread its business to
globalization with online or physically and set up many factories. Although this action brings a lot of revenue
for Nike but there is also a weakness, pending debts. Pending debt is one of the major weaknesses that Nike is
facing until nowadays. Below the equity ratio of Nike from 2010 until 2022 we can see that the debts of Nike
facing is providing an upload sloping pattern although recent years have decrease but there it still 8.92billion
dollars (about $27 per person in the US) debt for Nike.
The continues major weakness is Nike company too dependency of North America especially in the US market.
Below the Nike’s revenue worldwide from the fiscal years of 2017 to 2022 North America at least occupies
40% of the total revenue of Nike. And the others 50%more of sales is come from globally such as Europe,
Middle East, Africa, China, and others country. This let Nike stay in a very passive state, if something
unpredictable led to the North America consumer reduce their purchasing power or boycott Nike’s product, it
will be facing plummeting sales.
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Nike’s Opportunities - external opportunities
Although Nike became a world’s leading sporting goods brand, it still has many opportunities like emerging
markets. Over the years, some of the Asian country like Mainland China, Indonesia, Thailand is gradually
flourishing. Despite Nike have set up may factories at these Asian countries but it does not promote their
products. Nike still focuses on the US market; I have reason to believe that this is one of the opportunities for
Nike to expand its market and consolidate its world leading sporting position.
Beyond that, undeniable Nike have produced many products and collection such as Nike Air Force, Jordan,
Pegasus, Air max or co-produce with other brands. It also combines its unique technology and ergonomics to
produce products its almost perfect. But with the development and popularization of science and technology,
most sports enthusiasts start wearing smart watches or some others technological product when they exercise.
This is a new and emerging market, Nike could have developed and rolled out its “Nike watch” as the
opportunities for this new market.
Nike’s Threats - External Threat
The threat that Nike might face is the uncertainty of economics. Despite the industry, all companies will be
affected by the global recession. For example, Covid-19 has been causing an economic downturn around the
world for several years. This made many companies go out of business even Nike was affected because it has
reported a decline in sales during the lockdown. Even though after the emergence of vaccines and the strict
control of countries Covid-19 was successfully managed but there are still some of the countries faced with the
problem of economic depression. This might seriously affect Nike’s revenue because those countries will
reduce purchasing power.
The other threat that Nike may facing is about the counterfeiting. With the development of technology and
science it is easier to communicate or convey a message. This lets all kinds of data become transparent online
and it makes it easier to counterfeit. According to the OECD (Organization for Economic Cooperation and
Development) (Organization for Economic Cooperation and Development) I Library data, footwear is the most
counterfeit product especially Nike’s footwear. The scammers will use inferior quality materials to counterfeit
Nike’s product to fool the customers, this will let Nike’s credibility and sales volume be seriously affected.
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Nike’s Grand Strategy Analysis
Growth Strategy
Nike continuously increase their new branches in Malaysia. Based on their official website we could found that
during 24 June 2022 Nike open a new stall in Sunway pyramid shopping mall. Nike has spent 3.85 billion
dollars in year 2022 for advertising, promotion cost and open new store. Nike choose to focus on direct sales.
Nike’s direct sales from its own stores including digital were up 32% reaching over $16 billion and
representing 37% of total revenue in 2021. Beside that the CEO of Nike also is committed to
reaching 50% digital business by 2025. In Malaysia Nike has 12 stores, which are located at Johor, Penang,
Kulaijaya, Pahang, Penang, Perak, Sabah, Kuala Lumpur and Selangor. Nike always prepare to explore new
market. Nike introduce their new product to attract new customer. Beside that, Nike plan to increase their store
overworld and all their stall is design by famous designer. During Covid-19 pandemic, Nike also train their
worker to improve their customer services and comply with the epidemic prevention.
Defensive Strategy
During pandemic Covid-19 Nike reported an unexpected quarterly loss - its first in more than two years, hurt by
closures of department and retail stores due to lockdowns. The wholesale business, through which Nike sells
merchandise to other retailers. That led to a 50% fall in shipments, increased inventory and higher costs due to
order cancellations. Nike gross margin fell 820 basis points in the fourth quarter, when company-owned stores
and other retailers were closed for nearly eight weeks.
Stability Strategy
During Covid-19, Nike stop their plan to open new store to reduce unnecessary lost. For example, Sunway
pyramid Nike store opening delay to 2022. Nike make their focus on online sale and Nike had success to
increase their online sale about 38%.
8
Porter’s 5 Competitive Forces
Porter’s 5 force analysis of Nike has competitive rivalry or competition, bargaining power of buyers or
customers, bargaining power of suppliers, threat of substitutes or substitution and threat of new entrants or new
entry.
Competitive rivalry or competition with Nike is a strong force. The following external factors that create the
strong force of competitive rivalry in Nike’s case are high marketing aggressiveness of sporting good firms,
large number of shoes, equipment, and apparel companies of various sizes and low market growth rate. Nike
faces the aggressive marketing strategies of competitors, such as Puma, Adidas, Under Armour, ASICS, New
Balance, and Lululemon. There are many companies saturate the athletic shoes, apparel, and equipment market.
Second, the bargaining power of Nike’s customers is a moderate force. The following external factors that
contribute to the moderate bargaining power of customers on Nike are low to moderate buyer switching costs,
moderate availability of substitutes to Nike’s sporting goods and low buyer concentration. Low to moderate
switching costs make it easy for customers to buy from Nike’s competitors. The moderate availability of
substitutes also enables customers to buy alternative products, such as non-athletic footwear, instead of buying
from the company.
Third, the force bargaining power of suppliers is weak. The following external factors that create the weak
bargaining power of suppliers are high supply availability for sporting goods manufacturing, low to moderate
supplier concentration relative to Nike and moderate number of suppliers. High supply availability weakens the
bargaining power of suppliers on the company’s access to materials. Also, the low to moderate supplier
concentration means that many suppliers are relatively small in comparison to the sporting goods giant’s supply
chain.
Fourth, the threat of substitutes or substitution is a moderate force. The following external factors contribute to
the moderate force of the threat of substitution against Nike are moderate availability of substitute shoes,
apparel, and equipment, moderate price-performance ratio of substitutes and low to moderate buyer switching
costs between sporting goods and substitutes. The substitutes impose a moderate force against Nike, as
customers have alternatives, such as non-athletic footwear and casual clothing. Also, many substitutes have a
moderate price-performance ratio, which means that alternative shoes and clothes have considerable quality and
performance that satisfy customers.
9
Firth, the threat of new entrants of new entry is a moderate force. The following external factors that create the
moderate threat of new entry against Nike are high cost of brand development, high economies of scale in
sporting goods production and high-level access to distribution channels. Nike are costly to develop, with brand
development efforts often involving advertising and sponsorship. Also, high economies of scale in
manufacturing sporting goods challenge the growth of new entrants.
10
Porter’s 4 Competitive Strategies
Nike has implemented the competitive strategy which is the differentiation to make sure they can appeal to a
vast range of consumers.
First and foremost, Nike has reduced the price competition. In this generic strategy, Nike’s company minimizes
production costs to maximize profitability or reduce selling prices. In the late 1990s, Nike reduced costs and the
selling prices of its athletic shoes and other products. This generic competitive strategy helped the company
regain its competitiveness, especially against Adidas.
After that, Nike’s differentiation generic strategy also provides unique products. For example, the company
integrates cutting-edge designs for its shoes. The combined cost leadership and differentiation generic strategies
boost Nike’s performance in the global industry.
Additionally, Nike’s differentiation generic strategy also provides better profit margins. A financial objective
based on the differentiation generic strategy is used to maximize Nike’s profit margins, such as on new sports
shoes. Nike implemented this intensive strategy in its early years, such as when it introduced apparel and sports
equipment to its product mix. Initially, the Nike brand was on athletic shoes only. Diversification can support
Nike’s generic competitive strategy of differentiation through new businesses that supply materials for product
innovation in the athletic shoes, apparel and equipment business. A strategic financial objective based on this
intensive growth strategy is to improve Nike’s financial risk by entering other industries.
Furthermore, Nike’s differentiation generic strategy helps company to maintain their consumers brand loyalty.
According from the data, around 43% of sports and outdoor online shop users in the United States say they are
likely to use Nike again. Set in relation to the 48% usage share of the brand, this means that 90% of their
customers show loyalty to the brand. Nike retains consumers by using many ways. Loyalty members are given
access to Nike events and priority tickets for sports events. Collections are released that have members only
access and they’re given the privilege to shop collections and product launches pre-release to the public.
Customers who are loyal to Nike appreciate these benefits because many of these products are limited edition
and later down the line will become collector’s items.
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Last but certainly not the least, differentiation makes Nike’s product to become the no perceived substitutes. In
the early 1970s, NIKE found a competitive advantage by redesigning the classic track shoe, making it more
comfortable, durable, and light. They differentiated themselves from the established companies of Adidas and
Puma by creating a shoe that lasted longer and cost less than the German competitors. From there, a loyal
customer base was secured, strong marketing actions were taken, and positive reviews were spread. While their
footwear is still of high quality, Nike also has an edge in the market due to the brand loyalty shown by
consumers, high demand for products, a diverse range of product types, strong marketing campaigns and social
media content, collaborations with other brands, investment in innovation, and an emergence into the streetwear
scene. This set of measures ensures that no other product available on the market to substitute it with.
12
Recommendation
Utilization Of The Strength And Opportunities
Nike is one of a sport brand that recognized by the world. It is not only selling sport shoes but also sport
accessories for all types of people such as sport shirt and pants for kids and women. However, Nike should be
looking into new market such as smart watch. Nowadays, many teenagers and adult would buy smart watch
since it is multi-function and convenience. Some of them will use it while doing some sport activities because it
can records individual’s heart rate, steps of the individuals had walk and how many calories has been burnt. In
year 2021, smart watch global market size is around 30billions dollars USD. It is a quite large numbers and the
market size will be expanding larger in the future. This is a good opportunity for Nike to expand a new side
brand for selling smart watch since there are less competitors in smart watch market than sport accessories
market. Nike can produce a good quality and unique function on the smartwatch to increase market shares. Nike
will be recognized by more people and more profits can be earn by the company in the future.
Furthermore, Nike should build more factories in Oceania and Africa countries. There are 499 factories but only
37 countries involved in year 2022. There are around 21% of the factories which is 108 factories were built in
mainland China and there is almost no factory build in Oceania and Africa countries. Therefore, Nike need to
build factory in populated countries such as Australia and Nigeria to increase company’s productivity.
Overcome The Weaknesses And Threats
One of the weaknesses of Nike is their market too depend on North America. In year 2022, there are 1046 Nike
stores in the worldwide but nearly 360 stores are in United States (U.S). If U.S facing economy issues or
customers leaving, it will affect half of the sales of Nike and their debt will be increases especially during
pandemic Covid-19. Hence, Nike need to open at least one or more than one branches in every country to
decentralized market currently Nike having.
In addition, Nike should expand their online system to let their customer able to buy the products anywhere in
anytime. To do so, Nike need to hire more workers on delivery product to customer house. Nike could also do
promotion and advertising on media social to attract more people to buy their products. This able to decrease
the debt of Nike currently having.
Other than that, another problem Nike facing is counterfeiting product. Nike able to reduce counterfeiting issues
by working with law enforcements. Nike can collect the information of the counterfeiting products sells around
the world by working with it. Nike can sue the seller that making fake products with enough evidence.
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Conclusion
Nike is a globally recognized brand that has achieved numerous accomplishments over the years. These are
some of their outstanding accomplishments and achievements. In terms of marketing, Nike is one of the world’s
largest athletic shoe and apparel companies, with a market share of around 27% as of [Link] famously
known Nike’s “swoosh” logo and its “Just Do It” slogan are some of the most recognized branding elements
globally. In terms of innovation and front leading technologies, Nike has been at the forefront of innovation in
athletic shoes and apparel, with breakthrough technologies like Air Max, Flywire, and Flyknit. Throughout
these years, Nike has successfully collaborated with a big amount of athletes, sports teams, and designers to
create limited edition products that have been highly sought after by consumers and also to improve the image
of the company. Something I would like to mention is that Nike has made significant strides in promoting social
and environmental responsibility in their operations, including reducing waste and carbon emissions, and
promoting diversity and inclusion. Which I think is their most notable accomplishments in terms of generosity
and kindness. Nike has contributed millions of dollars to charitable causes, including supporting youth
programs and fighting social injustice.
Overall, Nike’s achievements have made it one of the most successful and influential companies in the world,
with a significant impact on the athletic industry and popular culture.
14
Reference And Appendices
Introduction And Conclusion
[Link]
[Link]
Nike’s Grand Strategy
[Link]
[Link]
[Link]
[Link]
Porter’s 4 Competitive Strategies
[Link]
[Link]
[Link]
[Link]
states
[Link]
Porter’s 5 Competitive Forces
[Link]
Recommendation
[Link]
[Link]
[Link]
SWOT Analysis
[Link]
[Link]
[Link]
[Link]
[Link]
Inc.-Reports-Fiscal-2021-Fourth-Quarter-and-Full-Year-Results/[Link]
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