A Case Study on Nike

Students Name: Student Number: Degree Programme: Module Code:

Goh Kim Hua Jian Chen 089150526 089106383 MSc E-business and Information Systems
NBS8053

Introduction Nike, a brand with the famous slogan, just do it was founded in 1980 and is a company of innovation that aims to bring its innovation to develop products that would help athletics achieve their potential, and at the same time, create business opportunities that will set themselves aside from all other competitors. (Nike, 2009a) By 2006, the running category of Nike owns a total of 48% of market share in the United States. (Mininni, 2008)So how then can Nike grow beyond 48% and gain a foothold over its rivals in this segment of market? With the availability of IT at their disposal, this case study about Nike aims to address the importance and the impact of IT, particularly the influence of social media has over Nikes branding and market share in the United States after its introduction in 2006. Business Challenges Nikes global brand promotion is a key factor for its success. Owing to its extensive advertising strategy and off-shore business model in industry, Nike is acknowledged widely by the public and becomes a major company for sportswear and equipment especially for its athletic shoes. It is definitely a nice switch on market strategy from domestic to international market, which can be seen from its annual reports in recent years (Nike AR, 2008). The percentage of Nikes revenue distribution from international market reaches 50% in 2008 from 42% in 2000, and for domestic market it shrink to 34% in 2009 from 52% in 2000. 5-Year CAGR of Nike between 2003 and 2008 achieves 12% and Nike gave an excellent performance on Fiscal Year 2008 Revenue of $18,627 million. . However, as the market becomes global, how to maintain attracting the eyeballs in advertising age should be one of the challenges for Nike. Due to the diversity of culture all over the world, it is really a challenge to satisfy the customers taste, and most consumers accepting sport brand are youngsters, who prefer novelties and uniqueness, how does Nike lead the sports fashion in their way? Trevor Edwards, who is Nike's VP for global brand and category management, commented on Nike's vision for advertising: We're not in the business of keeping the media companies alive, and he told many media executives, We're in the business of connecting with consumers. (Nike Budget, 2007a) Nike has ever spent 55 percent of its ad budget on TV networks 10 years before, and in 2007 it came to 33 percent (Nike Budget, 2007b). It is released in mid 2008 that Nike is the only apparel company in Advertising Ages 2007 list of 100 Largest National Advertisers (Nike advertisement, 2008). Facing the credit crunch today, lots of enterprises has to cut off the marketing budget. With paring down expenses budget for advertising, can Nike maintain its share of global market? Furthermore, as personal computer facilitates both our work and life greatly and ICT develops rapidly, the constituent of social media varies according to the blooming

of internet throughout the world; how Nike can adapt itself to deploy it to draw the mass attention?

Via all kinds of advertising, Nike, Inc has been working hard on delivering its product value to customers and enhancing public relationship with them as well. As a consequence, Nike, Inc does not only bring customers high quality products but also the internal feeling such as proud and belonging (Danny, 2009). As long as Nike becomes a focus among the worldwide sports brands, it turns out to be a target for both competitors and the masses. The case of Nike VS Kasky happened in 1998 not long after Nike initiated its global campaign (Ethicalcorp, 2003). Marc Kasky, an anti-globalisation activist from San Francisco, launched a legal action against Nike that its public statements were in breach of California statutes prohibiting false and it misled advertising by misrepresented factory working conditions. In 2001, it was exposed by the BBC that Nike did employed child labors in Third World countries and Nike admitted it as a mistake again, such as the situation in Pakistan and Cambodia (Steve, 2001). It was settled out of court in September 2003 by $1.5 million paying out to Washington-based Fair Labour from Nike. "Sweatshop labour", as it was known to us for Nikes practice, hundreds of criticism on Nike by media and stakeholders became a raging torrent throughout internet, TV or broadcasting. As the global enterprises in textile industry, which results in the new peaks of the amount of the industrial dust CO2 every year, negatively affects the environment, and therefore such companies like Nike should take environmental lead (Kirk, 2004) , as well as permanently strive to maintain its word-of-mouth reputation. After Nike released its first corporate responsibility report, in which it emphasizes on reducing climate impact and improving factory compliance (CSR Press Release, 2001), people brought another challenge to Nike, disclosing the list of Nike contract factories in public (Lisa, 2004), which can be not only responsibility for society but also confidential information for its competitors. How can Nike keep the balance between friendly PR relationship and the management risks in its supply chain? Moreover, Team Sweat demanded for disclosure of wage rates at all partner factories (Team Sweat, 2009). Along the path towards greater transparency, whats the next of Nike? Targeted competencies (participation and innovation) With various business propositions from Nike poses several business challenges, various techniques has been deployed to ensure that these challenges will be properly dealt with and at the same time, increasing the prospect of the companys competency in a global scale. The first is innovation. By 2006, Nike has 48% of the running shoe market in the United States, and everyone (Nike and their competitors) are doing roughly the same thing produce a running shoe that will hopefully looks better than their competitors and making their customer

feel better. Since 2006, Nike has been aggressive in promoting their running section of their business, and its innovation leads to Nike plus (Nike). Nike is a device placed in a Nike compatible shoe that is able to give a real time feed back to the runner.