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NIKE
Management 296 International Business Management December 11, 2002 Jeff Porter Mark Harris Gavin Yeung
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Origins
Nike got its start in 1962 as Blue Ribbon Sports, when Phil Knight started selling shoes
out of the trunk of his car.1 Knight was an avid runner, and thought there was a market for
athletic shoes designed by athletes for athletes. He was right.
In the beginning, Knights company was a grassroots organization. Knight would sell
shoes at local track meets out of his car. His grassroots strategy was born of low capital and
necessity, but became one of the strengths of the company. Blue Ribbon shoes developed a
reputation of authenticity and high quality somewhat due to this grassroots strategy.
Still, the company was not an instant success. It would have been easy for Knight to give
up early. In 1964, Bill Bowerman, Knights track coach, joined the company, and in 1965, Jeff
Johnson was hired as the first employee. Still, the company only made $20,000.00 in sales and a
meager $3,240.00 in profit. Blue Ribbon opened its first retail outlet in 1966. In 1969, Blue
Ribbon posted sales of $300,000.00, and Knight finally quit his job as Assistant Professor of
Business Administration at Portland State University, to concentrate full time on the growing
enterprise. His seven years of devotion to Blue Ribbon Sports, while simultaneously
maintaining a full time job to pay the bills, was finally starting to show signs of success.
In 1973, the new Nike, Incorporated (renamed after a Greek goddess and chosen for
simplicity) had a first of a different kind when they signed Steve Prefontaine to endorse the Nike
brand running shoes. Prefontaine was Nikes first endorsed athlete, and proved to be a vision of
things to come. He was not just a great athlete. He epitomized the companys anti-
establishment, irreverent attitude. Nikes ability to find great athletes who represented
1 Leslie Kimerling and Sanjay Sood, Nike: Building a Global Brand. Reprinted as Appendix E, in Keller, Kevin L., Strategic Brand Management (1998). Prentice-Hall Inc. This case is the primary source of historical information for this paper.
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something that transcended sports and who were able to reach people on many levels would play
itself out over and over again in Nikes future and prove to be one of Nikes biggest competitive
advantages.
Initial Success
In 1980, Nike surpassed Adidas as the number one athletic shoe company in the United
States. Nike had sales of $270 million and almost a 50% share of the U.S. market. Nikes 2,700
employees had a love of sports and a disdain for the status quo. They were anti-establishment
and irreverent.
In 1980, Nikes marketing, which we have all come to know quite well, was in its
infancy. The grassroots marketing techniques were still the norm, and helped establish
authenticity with athletes. Endorsements were big as well. Nike chose athletes who, like Steve
Prefontaine, were not just good at sports, but had distinct personalities too. These athletes
embodied the ideals of determination, individually, self-sacrifice, and winning. Phil Knight
believed that people were heavily influenced by what top athletes were wearing and would
purchase shoes accordingly. He called this the Pyramid of Influence.
Ironically, given the current advertising that Nike does, in 1980, Phil Knight did not
believe in advertising. He thought it hurt the intimate relationship between the runner and his or
her shoes. For the purist athlete, advertising and commercialism were heresy. Nike did a little
bit of advertising, but only in peer-group running journals. It wasnt until 1987, that Nike ran its
first TV advertising campaign.
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Crossroads
Nikes number one position was due in part to its product positioning. Nikes shoes were
firmly rooted as performance shoes with innovative designs and technology. Nike focused on
the male consumer and was dedicated to serious athletes. The athletic shoe industry in 1980 was
growing smartly, due in part to a health and fitness movement sweeping the nation. Nikes core
competencies were marketing, styling and technology, and close relationships (both real and
perceived) with top US athletes. However, Knight felt that Nike would benefit further from both
an international and global presence. It is here that we evaluate the Global Logics facing Nike
and the athletic shoe industry to gain a perspective on whether or not this decision had merit.
Global Logics for Nike
Before a company decides to go global, it must first show an ability to appreciate the
degree of globalization that exists in a given industry, or sector, and to provide the required
strategic response.2 This level of understanding is also termed global logic and allows a
company to evaluate and determine whether or not globalization is in its best interests. Global
logic is evaluated from two perspectives, the customer base and the industry/competitive
environment.3 Within the customer base perspective, customer logic, purchasing logic, and
information logic are evaluated to determine whether pressure (logic) exists to be a company that
is Local, National, Regional (or Multi-National), or Global. Within the industry/competitive
environment perspective, evaluation is conducted on competitive logic, industry logic, size, and
2 Jeannet, Jean-Pierre, Managing with a Global Mindset, pg. 44. Pearson Education Limited (2000). 3 Ibid.
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regulatory logic. Once the results are realized, a firm can then make a strategic determination on
whether or not to expand its presence.
Customer Base Perspectives Customer Logic Customer logic is derived from evaluation of a company and its product based upon
customer needs, customer benefits, and product features. Each of these areas is researched to
determine what level of pressure logic exists. For branded athletic shoes, Nike is facing
customer needs on a global level. This is because there is global demand for brand name athletic
shoes and there is opportunity available for growth. However, customer benefits are on a
regional level. Though there is global demand for products in Nikes competitive industry,
customers view the product differently and therefore derived benefits based on age, maturity and
cultural standards or outlooks. For instance, in the U.S., Nikes Air Jordan basketball shoes are
considered for their performance characteristics, their association with a popular U.S. sport, and
the endorsement from the pre-eminent star of that sport (Michael Jordan). Yet, in Europe,
although awareness of basketball exists, the identification and technical aspects of the shoe are
lost. The Europeans are known for their desire of things with a Western culture association and
like fashion with trend associations. Therefore, because of this regional level of logic, marketing
strategy becomes the focus as a key success factor in going global. Finally, for product features,
the performance shoe is basically a standardized product and its designs can be easily
reproduced. This represents an opportunity to expand into other markets and provides a global
level pressure to go beyond the U.S. border.
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Purchasing Logic Purchasing Logic is determined primarily from how customers buy the products in the
given industry. Customer buying patterns, the extent of distribution and delivery, and the
existence of gray markets are researched to determine the degree of presence needed. Within
Nikes industry, buying patterns exist on a global level. This is due to customers having the
ability to scan wide areas for the best deals. Customers can do this by canvassing several local
stores, taking a special trip to a regional provider (i.e., outlet stores), travel to a distant area
(i.e., purchases during a business trip), or by searching the internet. Distribution and product
delivery to the customer also requires a global level focus, as competitors exist globally and in
order to compete effectively, your product must be available within the same competitive
markets. Gray markets are those that develop when price differentials between two countries
exist to the level that arbitrage becomes attractive.4 This results in so-called Black markets,
where purchases occur in the market where product is available and resold in another areas with
little or no supply. These elements for arbitrage does exist for Nike, and provides global logic
pressure to eliminate this lost profit opportunity.
Information Logic
Information Logic focuses on the information acquisition means of customers. In other
words, it is the way customers scan the environment, via media or other means, and the extent
to which they will obtain information about products and services not available in their local
area.5 In terms of Nike products, information about them can be gathered through print, media
and the Internet. As for print, information exists globally in fashion and athletic magazines that
4 Ibid, pg. 51. 5 Ibid, pg. 52.
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are printed in numerous languages (i.e., GQ, Elle, and Maxim). The advent of satellite
broadcasting and the advances of cable television, including foreign language program sources,
have made this medium global as a source of product information. In addition, the Internet
search capabilities make this medium global in nature, as it literally has no restrictions on the
type and depth of information that can be gathered.
Industry/Competitive Perspectives Competitive Logic
Competitive logic can be evaluated by looking at three areas: 1) worldwide competitive
similarity, 2) barriers to entry, and 3) tastes and cultures. Nike is facing competition from shoe
manufacturers worldwide. Reebok (Great Britain), Adidas (Germany), Puma (Germany) and
Converse (U.S.) designed and manufactured performance athletic shoes, while Reebok, K-Swiss
(U.S.) and L.A. Gear (U.S.) created shoes with a fashion twist. All of these competitors exist
within Nikes area of expertise and create global logic pressure. In addition, with regard to
barriers to entry, there are no protected sanctuaries that keep shoe manufacturers from entering
Nikes competitive sphere or vice-versa. In other words, all existing markets (local, regional,
and global) are accessible to the competitors and opportunities for growth may be exploited.
Finally, tastes and cultures lead to a regional level logic. As mentioned within the customer
logic, peoples perspectives change from one region to the next. In order to take advantage of
the differing views and benefits derived, it would be better for Nike to adapt their product to the
local or regional environment. This is where the marketing strategy takes priority in determining
the message to send to prospective customers as the region varies.
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Industry Logic
With industry logic, the areas of manufacturing scale, distribution scale, and
logistics/delivery scale are considered to determine whether global logic pressure exists. A
global logic for manufacturing scale exists because of the similar product design nature of
athletic and performance shoes. This requires manufacturers to scan the world for the best labor
productivity in terms of cost and maximize economies of scale in order to compete globally. As
for distribution scale, there also exists a global level need. Because of the global level demand
determined under the customer perspective, distribution needs to be economically scaled with
one or more central distribution points to minimize costs. This is because both the competitive
nature of the industry and customers require continual availability of product. As a result,
constant delivery in a reliable manner is a key success factor and achieving a cost advantage here
adds to ones competitive advantage. Finally, logistics and delivery scale must be viewed as a
regional logic level. This is because regional relationships between the manufacturer and
exporters and retailers are key in getting the product to market. In addition, this relationship
achieves a relative balance between being global vs. local, or big vs. small, which can influence
customers in terms of marketing and sales.
Size Logic
Size logic is based upon the idea that a certain company size via market coverage or
other factor is necessary in order to compete on a certain level. With Nikes industry, a
worldwide market presence is needed as determined by the competitive logic. However, in order
to compete as a global company, a critical mass or minimum size in one or more activities is
required to sustain and allow growth, as well as profits. Two key factors for success in this
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industry center around global scale distribution and economies of scale. This is because
availability of product is a significant competitive factor, as lack of product can inhibit market
penetration and dominance. In addition, achieving economies of scale through minimizing
manufacturing costs is necessary for manufacturers to meet their financial goals and to erect a
barrier to entry via market prices. For example, companies like Asics and New Balance cannot
compete on global scale with Nike, Adidas, and Puma in multiple categories simply because they
cant achieve the scale economies needed and are therefore restricted to niche markets.
Regulatory Logic With regulatory logic, a firm looks at the regulatory forces that exist which may inhibit or
promote its competitive expansion. Within Nikes industry, a global logic exists because of the
lack of both regulatory standards and regulatory barriers. This is due to the fact that shoes and
apparel are not mandated to meet stringent quality standards (like foods and drugs (FDA) or
other consumer goods). Nor are they subject to strict customs controls (like agriculture or
alcohol) that inhibit the free movement of certain products. However, global firms must be
aware of ethical issues that may bring about negative comments or judgments. Firms that
achieve manufacturing economies of scale through strategic manufacturing locations must
evaluate whether or not abuse exists within the local conditions, lest they be condemned for
operating sweatshops or incorporating slave labor. Literally, it comes down to an evaluation
of labor wages vs. conditions, as well as product quality vs. cost.
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Global Logics Summary As a result of the analysis above, it should be acknowledged that extensive global logic
pressure exists and that a global strategy for Nike is appropriate. Utilizing a perceptual map of
the logics reveals a large footprint, which supports the analysis that forces exist to go global.
For Nike to pursue global competition, it must ensure its size is appropriate for the markets it
wishes to enter and that it is sensitive to the regional logics as indicated earlier. This should be
of no surprise, as consumer goods of a homogeneous nature tend to be appropriate for global
competition.
Competition
Size Information
Purchasing
Industry
Customer
Regulatory
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European Strategic Overview
In 1980, Nike overtook Adidas as the number one athletic shoe company in the United
States. That same year also marked Nikes European expansion. In order to understand the logic
behind the initial expansion and the companys continued investment in the European market, we
will analyze Nike Europe using the framework shown in Exhibit 1. Analysis will be given for
each category in a chronological fashion starting from 1980 to 2001.
Reprinted from Mgmt 296A class notes.
Environmental Analysis
Resource Analysis Competitive Analysis
Leads to
Opportunity Assessment
Org. Objectives Personal Values
Leads to
Strategizing
Strategy Implementation
Managerial Control
Exhibit 1
Resource Analysis
Resource analysis is the process of assessing the firms capabilities, strengths, and
weaknesses. For our context, we will review Nikes financial and physical resources.
Financial Resources
During Nikes initial European expansion period (early 1980s), Nike in the United States
was struggling due to an economic downturn. Driven by the need to establish presence in
Europe and gain shelf space as well as a need to raise money to finance US business operations,
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Nike chose to sell licensing rights to some of the European local distributors. In doing so, Nike
lost control over both which products found their way onto the retail shelves and how the Nike
message was delivered. Because Phil Knight disliked advertising, advertising budget initially
remained low and under funded. This also meant that grassroots effort, like that of Nikes early
years that made the company so successful, was not possible.
The stringy advertising policy was reversed in the later years as US business picked up
with the dominant basketball line of footwear. Advertising campaign doubled from $5 million in
1987 to $10 million in 1988. However, this increase in financial resource did not initially help as
European consumers saw Nike as an aggressive, expensive American brand. This problem is
later alleviated with the introduction of more middle market shoes and a better distribution
technique discussed later. With the more effective distribution system in place, revenue grew
and advertising budget grew as well. From 1989-1992, advertising budget grew from 10 million
to 50 million. Nike allocated 100 million to European advertising and promotion in 1993.
Physical Resources
In 1980, Phil Knight dispatched five employees to Europe to establish presence for the
U.S shoe manufacturer there. The initial office was set up in Amsterdam; the current, a state of
the art complex designed by William McDonough & partners, opened in 1999, in Hilversum,
The Netherlands. Nike has entrenched local representation in the region; it currently has 21
offices in the Europe, Middle East, & Africa (EMEA) region. The distribution center in Laakdal,
Belgium, and the headquarters in The Netherlands make up most of the employees in the region.
Nike has the centralized European distribution point at Laakdal, Belgium since 1994. In 1980,
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Nike had only 2,700 employees and sales of $270 million. Today, Nike has 5,000 employees in
Europe alone.
Nike follows the offshore outsource manufacturing strategy. The basic idea is that Nike
contracts other firms to carry out its foreign manufacturing operations; thereby, utilizing the
abundance of cheap labor in third world countries. In a sense, this is a combination of the
centralization and specialization strategy. The functions are carried out according to the
specialization pattern, but the firm itself does not carry out the offshore activities. Thus, the
firms own activities are centralized. The manufacturers are typically independent companies in
various Asian countries. Nike currently has more than 50 independent footwear contact factories
in the Asia Pacific region, providing more than 250,000 jobs to local communities. There are
over 300 apparel factories, providing more than 150,000 jobs to local communities.
Nike uses its FUTURES program as the basis for its ordering and distribution system.
Retailers must order up to 80% of their merchandise inventory in order to get substantial
discounts and guaranteed delivery times. However, European retailers bristled at the Nikes
FUTURES program and product mix, viewing the company as arrogant.
Environmental Analysis
In this section, we will analyze Nikes business environment through a reflection of the
domestic and European market conditions.
European Market Condition
European environmental conditions have not changed much since Nike entered the
market in 1980. The liberal business environment has remained. The region is regulated with
strong social laws. While some smaller countries enjoy more favorable tax laws, conditions in
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general have been relatively stable, even through bull and bear markets. The region has strong
intellectual property protection and contract enforcement laws. This makes the European market
a highly favorable place for Nike to enter in light of the distinctiveness in language and some
cultural differences. Germany, France, Italy, and Spain accounted for the bulk of the European
sports shoe and apparel sales. (See Exhibit 2)
Currency fluctuations in overseas markets are inevitable. Nikes profit margin was hurt
by the strong U.S. dollar against European currencies in the 1990s.
Exhibit 2
Domestic Market Conditions
As mentioned earlier, in the early 1980s, Nikes European expansion was hurt by a
downturn in the U.S. market. However, as sales and revenue picked up in the U.S, Nike was
further looking to expand their dominance worldwide.
Related and Supporting Industries
To reach its growth goals in Europe, Nike needed to find a way to change local consumer
perceptions of Nike as an expensive, aggressive American brand. Nike also embarked into other
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industries like sports apparel and equipment. As part of a complete overhaul in 1993, Nike
decided to refocus its apparel business. Before, with the exception of track and field, apparel
was mostly designed only to complement shoes. Nike decided to put more emphasis on top-of-
the-line performance wear (uniforms and apparel worn in actual competition). It broadened the
Nike brand meaning to encompass performance in sports and not just shoes. Nikes sports
apparel market had been relatively successful in Europe, as it accounts for more than 50% of the
revenues from that region.
Competitive Analysis Adidas and Puma
Besides the difficulties with its marketing intermediaries, Nike faced formidable
competition in Europe. Adidas, the German shoe company, dominated the European sports
market. Together with Puma, a spin-off of Adidas, the two companies controlled over 75% of
Europes athletic shoe and apparel market. For decades, the two companies had developed the
grassroots allegiance of local sports teams; in particular, soccer, track and field, tennis, and
rugby. They both had endorsements contracts with top European athletes in each of these sports
and sponsored many local teams in cities and towns across Europe. Adidas, in particular, was
respected for the quality of its shoes and had earned the reputation as the European performance
brand.
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Reebok
Reebok sold its shoes direct to retailers through seventeen independent sales
organizations. Reebok followed a limited distribution strategy. Its shoes were sold only through
specialty athletic retailers, sporting goods stores, and department stores. With the exception of
Britain, Sweden, and Denmark, Reebok had relatively little success in Europe.
Organizational Objectives
With the companys strong heritage in track and field, Nike initially decided to attack this
market in 1980. Track and field is the second most popular sports in Europe behind soccer.
Whereas Nike was easily able to attract top U.S. athletes to endorse its products with its
grassroots heritage as described in the company history, finding such athletes to work with Nike
in Europe proved to be an elusive task. Without a grassroots approach to develop its brand, Nike
was forced to partner with the largest local athletic shoe and apparel distributor. This bootstrap
solution distanced Nikes contact with customers. Later, we will describe how Nike had to buy
back the licenses from its distributors in order to grow its brand in Europe and manage its own
local grass roots and branding efforts. Please refer to Exhibit 3, Exhibit 4, and Exhibit 5 for a
listing of the different types of entry strategies and a brief comparison of the strategies that Nike
undertook.
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REPRESENTATIVES IN LOCAL COUNTRIES
PURE TRANSLATIONMARKET ENTRY
JOINT VENTURESTRATEGY
LICENSING AND/OR FRANCHISING
OWN SUBSIDIARY
Reprinted from Virtual Consulting.
Exhibit 3
REPRESENTATION - High setup cost IN LOCAL COUNTRIES - Partial loss of control
- Cultural shock exposure for management - How to find the appropriate and credible person
+ Direct contact to customer
+ No profit sharing - Danger of own business concept misuse + Possibility for direct market
research - Difficulties in establishing contacts without previous experience
+ Knowledge of environment, - Communication could be problematic
Reprinted from Virtual Consulting.
Culture and values due to cultural differences
Exhibit 4
- Short term solution LICENSING - Lack of brand control & development - Distant contact to customer - You never know what the licensee is going to do
+ Immediate cash inflow + Fast and low cost expansion
Reprinted from Virtual Consulting.
- (Property rights violation)
Exhibit 5
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Opportunity Assessment
Industry experts segmented athletic shoe consumers into serious athletes, weekend
warriors who used their shoes for sports but were not zealous athletes, and casual wearers who
used athletic shoes only for street wear. The pyramid of influence model, traditionally used in
marketing athletic shoes, positioned that the serious athlete was a very small segment of the
market but an important opinion leaders for both weekend warriors and casual wearers.
Traditionally, development of foreign markets lagged three or four years behind the
United States. In 1987, the aerobics boom was just taking off in Europe and the womens
athletic shoes market was largely untapped. Nike had a good opportunity to disrupt Reeboks
aerobic lead in the U.S. market by entering the European aerobics market. At the time, 400
million pairs of athletic footwear were sold in the United States. Europe with 130 million more
people than the States brought 280 million fewer pairs of shoes. Exhibit 6 shows Nike in terms
of reaping rewards from global integration.
Jet engines Benefits Telecommunications of Nike global equipment
integration
Packaged grocery products Household
Services
Benefits of national differentiation
Exhibit 6
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Personal Values
Nike employees have a true love for sports and they were eager to see their athletes
succeed. Nike was able to get athletes to try the latest innovations. Because of this, it was
important for Nike not to over rely on advertising and American sports heroes in Europe. It was
more important for Nike to authenticate the brand as they have so carefully done in originally
building the brand in the United States.
Strategizing
By the end of 1987, Nikes European revenues had grown to 150 million, representing 5
percent of the European athletic shoe market. Nike decided to take greater control of the brand
by directing its advertising and product strategies. To enable this to happen, Nike repurchased
licensing rights to its products from their licensed distributors in Europe. This process took
several years. Exhibit 7 shows the R&D, production, and marketing positions.
R & D Production Marketing European
headquarters in Hilversum, The Netherlands
Central European research and development arm
Offshore outsourcing strategy
Centralized distribution at Laakdal, Belgium
Hybrid marketing strategy o Strong brand control
Endorsement o Tailor for individual
countries Grassroots effort
(Local clubs and leagues)
Exhibit 7
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By 1992, Nike had successfully regained control of 90% of Nikes European
distributions. Nikes European sneaker revenues were approximately $1.1 billion, nearly six
times that of revenues earned in 1987. Nike today enjoys a strong brand image and centralized
distribution control in Europe. In addition, Nike employs a local grassroots marketing efforts
tailored for specific countries, and performs endorsements of local clubs and leagues. A limited
number of shoes and apparels are developed exclusively for certain countries. Nikes value
creation strategy is listed in Exhibit 8.
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VALUE CREATION STRATEGY
HOW VALUE IS CREATED BARRIERS TO CREATING VALUE
Brand/Image
Ability to charge premium price by establishing an image
Access to new/different markets Premium product placement in
retail leading to higher sales Image and celebrity endorsements
create hopes/dreams/emotional attachment to product
Influence of negative activities on brand name (i.e. sweatshops)
Products are expensive decreasing customer base
Trademark infringement from fake products resulting in decreased customer satisfaction (i.e. poor quality products carrying the stolen Nike logo)
Presence of copy cat competitors (i.e. Reebok) decreasing market share and driving Nikes prices down
Economies of Scale
Shared distribution channels among varied product lines lower costs
Large size provides opportunity for more leverage against competition
Able to support campaigns/sponsorships increasing brand recognition
Efficient use of production facilities lowers costs
Size of company may be difficult to control leading to operating inefficiencies
Large scales may lead to more Federal Regulation
Geographical Outreach
Ability to reinforce brand and create loyalty across cultures leading to a broad customer base
Increased company growth potential
Cross-subsidization of weaker markets
Difficult to coordinate company activities across cultural norms (i.e. marketing, distribution)
Foreign currency risk Language barriers creating difficulty to
advertise effectively International regulatory issues
Innovation & Production
Innovation may be difficult for competitors to imitate
Difficult for competitors to compete with rate of innovation/production
Ability to capture market for different attitudes/values across cultures with product variety
Strong emphasis on R&D leads to continuous improvement in products
Significant resources required to support constant R&D/ innovation
Product development cycle typically long
Large number of products may create customer confusion and frustration
With presence in a number of market segments (i.e. shoes, apparel, watches) it may be difficult to constantly innovate
Product Diversification
New products introduced by Nike will be more readily accepted by customers due to strong brand image
Reduced exposure to demand fluctuations
Significant resources required to support product diversification
Difficult to be the best in all product segments
Product processes vary (i.e. apparel vs. shoes) making it difficult to implement constant innovation and improvement
Reprinted from Tim Pollocks MHR 713 Business Strategy class. Exhibit 8
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Nike Footwear Manufacturing
From Nike 2002 10-K Country % of Nike Footwear Manufactured People's Republic of China 38 Indonesia 30 Vietnam 15 Thailand 14 Italy 1 Taiwan 1 South Korea 1 Item 2. Properties Following is a summary of principal properties owned or leased by NIKE. Our leases expire at various dates through the year 2017. U.S. Administrative Offices: Distribution Facilities: Beaverton, Oregon (10 locations) 9 leased Greenland, New Hampshire leased Memphis, Tennessee (2 locations) 1 leased Wilsonville, Oregon Yarmouth, Maine Forest Park, Georgia Charlotte, North Carolina leased Memphis, Tennessee (2 locations) 1 leased Greenland, New Hampshire leased Costa Mesa, California leased Costa Mesa, California leased Europe (5 locations) 4 leased Asia Pacific (11 locations) 9 leased International Administrative Offices: Canada (2 locations) leased Europe (23 locations) leased Latin America (2 locations) leased Africa (1 location) leased Asia Pacific (16 locations) leased International Production Offices: Canada (2 locations) leased Europe (3 locations) leased Latin America (2 locations) leased Latin America (2 locations) leased Asia Pacific (24 locations) leased Sales Offices and Showrooms: United States (22 locations) leased Manufacturing Facilities: Europe (63 locations) leased United States (3 locations) 1 leased Africa (1 location) leased Canada (3 locations) 2 leased Asia Pacific (24 locations) leased Europe (2 locations) leased Canada (3 locations) leased Asia Pacific (1 location) Latin America (2 locations) leased Retail Outlets: United States (160 locations) 157 leased Europe (40 locations) leased Asia Pacific (99 locations) leased Latin America (16 locations) leased Canada (7 locations) leased
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Financial Results The following graph shows Nike revenue from 1991 to 2002, with US and European revenues broken out. Obvious from the graph is a sharp increase in revenue in the early and mid 1990s, and downturn, and a further incline starting again in 2000. US revenue increased until around 1998, but as a percentage of total revenue, US revenue has declined steadily. European revenue has increased steadily, but as a percentage of total it has remained relatively flat, with a slight upward trend recently.
Revenue
0
2,000
4,000
6,000
8,000
10,000
12,000
1990 1995 2000 2005
Thou
sand
s of
$
0%10%20%30%40%50%60%70%80% US
Europe
Total
US % ofTotalEurope %of Total
Nike Revenue, From Various Nike 10-Ks The following graph shows operating revenue for Nike overall, and is broken out for the US and Europe. Operating income has been on a sharp incline since 1995. US operating income have mirrored this trend, but as a percentage of the total it has remained fairly constant. European operating income has remained flat and it has decreased as a percentage of the total.
Operating Income
0200400600800
1,0001,2001,400
1992 1994 1996 1998
Thou
sand
s of
$
0%10%20%30%40%50%60%70%80% US
Europe
Total
US % ofTotalEurope %of Total
Nike Operating Income, From Various Nike 10-Ks.
OriginsInitial SuccessCrossroadsCustomer Base PerspectivesCustomer LogicPurchasing LogicInformation Logic
Industry/Competitive PerspectivesCompetitive LogicIndustry LogicSize LogicRegulatory Logic
Global Logics SummaryEuropean Strategic OverviewResource AnalysisFinancial ResourcesPhysical Resources
Environmental AnalysisEuropean Market ConditionDomestic Market ConditionsRelated and Supporting Industries
Competitive AnalysisAdidas and PumaReebok
Organizational ObjectivesOpportunity AssessmentPersonal ValuesStrategizingFinancial Results
