Nike, Inc Term Paper

Pages: 12 (3132 words)  ·  Bibliography Sources: ≈ 5  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

Nike Company Profile

Analyzing the last five years of financial performance of Nike Corporation through extensive financial analysis, industry trend analysis, and completing a SWOT analysis of their current global strengths, weaknesses, opportunities, and threats forms the foundation of this report. The evaluation and recommendations are based on extensive use of financial ratios and analytical tools.

Company and Industry Description

Nike Corporation SWOT Analysis

Five Year Income Statement, Balance Sheet and Geographic Analysis

Five Year Financial Ratio Analysis

Cross-Industry Financial Analysis

Evaluation and Analysis

Company & Industry Description

Identification of the publicly traded company

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Nike is the global leader in the development, design, and production of athletic footwear and athletic apparel, and is considered one of the founders of the athletic footwear industry. The company is primarily engaged in the design, development, and worldwide marketing of footwear, apparel, equipment, and accessory products worldwide, operating in 120 nations currently. While Nike designs their footwear, apparel, and athletic equipment for specific athletic use, a large percentage of its products are worn for casual or leisure purposes. Nike also designs running, basketball, children's, cross-training and women's footwear shoes, and markets shoes designed for outdoor activities, including tennis, golf, soccer, basketball, bicycling, volleyball, wrestling, cheerleading, aquatic activities, hiking, and other athletic and recreational uses.

TOPIC: Term Paper on Nike, Inc. Assignment

In addition to a significant in-house branding effort, the company also operations through wholly-owned subsidiaries including Cole Haan Holdings, Bauer Nike Hockey, Hurley International, and Coverse. Nike sells its line of dress and casual footwear, apparel, and accessories for men and women under the brand names Cole Haan, g Series, and Brangano, through its wholly-owned subsidiary, Cole Haan Holdings. The company's wholly owned subsidiary, Bauer Nike

Hockey, manufactures and distributes ice skates, skate blades, in-line roller skates, protective gear, hockey sticks and jerseys, licensed apparel, and accessories under the Bauer and Nike brand names. Hurley International designs and distributes a line of action sports apparel for surfing, skateboarding, snowboarding, and youth lifestyle apparel and footwear under the Hurley brand name. Coverse designs and distributes athletic and casual footwear, apparel, and accessories under the Coverse, Chuck Taylor, All Star, One Star, and Jack Purcell brand names.

In terms of manufacturing and distribution, the company has opted to outsource the production of the majority of their footwear and apparel products to independent contractors outside the U.S., while the athletic equipment products are produced both in the U.S. And in foreign factories. Nike sees distribution as critical to their business and both own and operates domestic distribution centers for footwear located in Wilsonville, Oregon; Memphis, Tennessee; and Greenland, New Hampshire. The company offers its products to retail accounts and through a mix of independent distributors, licensees and subsidiaries in the 120 countries it operates in, in addition to 22 offices in the U.S. that are used for sales and support (ValueEngine 2006).

Products, Markets, and Industry Trends

Defining the most relevant trends impacting Nike is best organized by grouping these trends into strengths, weaknesses, opportunities, or threats. This is typically referred to as a SWOT analysis and has been completed for Nike. The following is an analysis of their strengths, weaknesses, opportunities, and threats.


Strong instantly recognizable market position and brand name

Nike holds the leadership position in the global footwear and apparel market from a sales and branding standpoint. As the worlds' number one shoemaker and as of the close of 2005 the company holds 40% market share in the footwear industry. The company is also the world's largest manufacturer of athletic apparel. Supporting this leading market share of shoes and athletic goods is a vast network of 28,000 retail accounts in the U.S., and in more than 120 countries outside the U.S. Best known is the company's extensive and coveted celebrity brand endorsements and the Nike swoosh sign is one of the most widely recognized company logos worldwide.

Robust and consistent financial performance

Nike has been reporting strong financial growth since 2000 the company's growth has been consistently strong, as the detailed tables included in this report will illustrate.

Hard-to-replicate manufacturing strategy

Nike has a difficult-to-replicate manufacturing strategy, relying on production partners and outsourcers throughout several of the world's developing nations. Nike's footwear products are primarily produced outside the U.S., with subcontractors in China, Indonesia, Vietnam, and Thailand, manufacturing the majority of its products. The company also manufactures its products in Argentina, Brazil, India, Mexico and South Africa, for sale in those countries through a variety of manufacturing operations located in those specific regions. Nike also produces apparel products are produced in Bangladesh, China, Greece, Honduras, India, Indonesia, Malaysia, Mexico, Pakistan, Sri Lanka, Taiwan, Thailand, and Turkey. By establishing and manufacturing its products in developing countries, Nike is accomplishing significant cost savings through low wages and low cost of production in these areas. Nike has long held that their supply chain is their greatest competitive advantage in that there is no single vendor they purchase greater than 7% of their total materials. Nike operates its six domestic distribution centers for footwear in the U.S., and ships its apparel and equipment products from the six distribution centers. The company's strong manufacturing and distribution operations enable Nike to maintain low operating costs.

Globally Diversified Business Operations

Nike has a globally strong product line-up and has diversified its business to include sports apparel and equipment for nearly ten years of its many years of existence Nike continues to aggressively pursue reducing its once sizeable dependence on footwear, to include equipment, and apparel. The company also offers specialized sports gear for a number of sports including golf, hockey, skateboarding, and cycling. Nike also operates through four subsidiaries: Cole Haan Holdings (offers dress and casual footwear, apparel, and accessories for men and women), Bauer Nike Hockey (manufactures and distributes ice skates, skate blades, and a diversified business structure enables Nike to spread its risk across its various divisions and cater to the expanse of the sporting goods industry.


Claims of Human Rights Abuses and Issues

Nike continues to face significant criticism and bad publicity as a result of human right issues and claims of human rights abuses. Nike has been criticized for mistreatment of its employees at its manufacturing units in Indonesia, Pakistan, Cambodia and Mexico. There have been several documentaries and CNN segments on the human rights abuses of Nike in its manufacturing processes. The company has worked very hard to overcome the claims of human rights violations, specifically of unfair wage practices.

Culturally precarious advertisement campaigns

Nike has been accused on several occasions of being insensitive to the cultural norms and mores of the countries they manufacture in, sell to, and serve. An example of this is from an advertising campaign launched in December 2004. China ended up banning the company's television advertisement, showing LeBron James battling a cartoon kung fu master, as an insult to its national dignity. In November 2004, a series of Nike advertisements in Singapore designed to resemble graffiti drew censure and anger in that nation, a bastion of civic order. In another part of the world, Nike tennis advertisements were pulled in Australia, as they were termed insensitive by child protection groups. The company had to pull out several advertisements during 2000, including those charged with offending people with spinal cord injuries. The company's lack of sensitivity in its advertising campaigns can negatively impact the efficacy of its marketing expenses. Chinese competitors want to replicate this strategy, where Nike is spending $37M in their country in 2006, Wall Street Journal (2006).


Positive outlook for the sports footwear and apparel market

The demand for sporting goods is estimated to grow through 2006 according to the latest forecasts from the National Sporting Goods Association (NSGA), retail sales of sporting goods in the U.S., which reached $48.9 billion in 2004, is expected to grow to $53 billion to 2006.

Globally Growing Popularity of Branded Products

Nike has successfully penetrated and grown its global market share in the active sportswear and athletic footwear sectors.

According to the National Sporting Goods Association (NSGA) more than 75% of the active sportswear market is dominated by branded items and almost 80% of athletic footwear is sold under brand names.

Growing popularity of customized and build-to-order products

Nike is finding in customization and build-to-order products the strength to counter the mass merchandisers including Wal-Mart's pricing pressure on them for new product introductions. Customizing products is a growing trend in the U.S. market, which enable companies to tailor and customize their products to the exact needs and requirements of lucrative young shoppers by giving them the power to personalize their products.

During March 2005, Nike introduced the 'Just do-it-yourself' campaign which was revolutionary at the time. As part of the campaign, the company re-launched its website, where customers design their own shoes, choosing everything from the color of the famous Nike swoosh to personalizing the tongue (of the shoe) with a word or phrase. The company's ability to take advantage of this growing trend will enable Nike to increase its revenues from customers and… [END OF PREVIEW] . . . READ MORE

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APA Style

Nike, Inc.  (2006, July 10).  Retrieved September 17, 2021, from

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Chicago Style

"Nike, Inc."  July 10, 2006.  Accessed September 17, 2021.