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Nike, Inc.

- 2009
Case Notes Prepared by: Dr. Mernoush Banton
Case Author: Randy Harris

A. Case Abstract

Nike, Inc. (www.nike.com) is a comprehensive strategic management case that


includes the company’s fiscal May 31st, 2009 financial statements, competitor
information and more. The case time setting is the year 2009. Sufficient internal
and external data are provided to enable students to evaluate current strategies
and recommend a three-year strategic plan for the company. Headquartered in
Beaverton, Oregon, Nike is traded on the New York Stock Exchange under ticker
symbol NKE.

B. Vision Statement (Actual)

“Bring inspiration and innovation to every athlete in the world.”

C. Mission Statement (Actual)

“To be the leading sports brand in the world.”

Mission Statement (Proposed)

As the largest seller of athletic footwear and athletic apparel in the world (2, 3),
we create products for consumers and athletics (1) who enjoy having quality
products that are high performance and reliable such as shoes, apparel, and
technologically advanced equipment) (4). Our dedicated employees (9)
continuously work on developing new products, price, and product identity
through marketing and promotion (7). The company aims to lead in corporate
citizenship (8) through proactive programs that reflect caring for the world family
of Nike (6) and by ensuring continuous growth and profitability to our investors
and stakeholders (5).

1. Customer
2. Products or services
3. Markets
4. Technology
5. Concern for survival, profitability, growth
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

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D. External Audit
CPM – Competitive Profile Matrix

Nike Adidas Puma


Weigh Ratin Weighte Ratin Weighte Ratin Weighted
Critical Success Factors t g d Score g d Score g Score
Price competitiveness 0.10 3 0.30 2 0.20 1 0.10
Global Expansion 0.07 4 0.28 3 0.21 2 0.14
Organizational Structure 0.04 3 0.12 1 0.04 1 0.04
Technology 0.09 3 0.27 1 0.09 2 0.18
Product Safety 0.15 2 0.30 3 0.45 4 0.60
Customer Loyalty 0.09 4 0.36 3 0.27 2 0.18
Market Share 0.09 4 0.36 3 0.27 2 0.18
Advertising 0.12 4 0.48 3 0.36 2 0.24
Product Quality 0.12 3 0.36 2 0.24 1 0.12
Product Image 0.07 4 0.28 3 0.21 2 0.14
Financial Position 0.06 4 0.24 3 0.18 2 0.12
Total 1.00 3.35 2.52 2.04

Opportunities

1. Younger consumers are less price sensitive and generally spend more on
casual and athletic footwear than older consumers
2. Most footwear companies have outsourced their production abroad in
order to maintain lower cost and R&D expenses
3. US footwear imports totaled 2.36 billion pairs in 2007, or roughly 7.9 pairs
per capita which is was up 0.4 percent from 2006
4. North American Free Trade Agreement (NAFTA) and the World Trade
Organization (WTO), both helped eliminate quotas and tariff barriers for
foreign footwear manufacturers to ship their goods
5. The Internet allows footwear companies to pursue a direct to consumer
sales channel
6. Sales of apparel, accessories, and footwear on the Internet has been
growing at a double digit pace, considerably faster than more traditional
sales models such as retail stores
7. Internet sales of apparel, accessories, and footwear could reach 18
percent of category sales by 2012
8. Companies that added a Web-based sales strategy are able to customize
footwear and other merchandise directly to the customer’s needs and

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.


taste, are enable to achieve considerably better pricing as well as
“deepening” the emotional bond consumers have with the brand

Threats

1. After the age of 40, the typical consumer is not willing to pay more than
$35 to $40 per pair for athletic footwear
2. Competition is strong among athletic footwear and apparel from off brand
companies
3. Fluctuation of foreign currency impacts the cost of importing goods to the
U.S.
4. Increase in unemployment has impacted the household income which
may result in spending less on brand name
5. Barrier to entry is low
6. Level of inventory is increasing in many retail stores due weak economy

External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating Weighted


Score

Opportunities
1. Younger consumers are less price sensitive and 0.08 3 0.24
generally spend more on casual and athletic
footwear than older consumers
2. Most footwear companies have outsourced their 0.07 4 0.28
production abroad in order to maintain lower cost
and R&D expenses
3. US footwear imports totaled 2.36 billion pairs in 0.07 3 0.21
2007, or roughly 7.9 pairs per capita which is was up
0.4 percent from 2006
4. North American Free Trade Agreement (NAFTA) and 0.06 4 0.24
the World Trade Organization (WTO), both helped
eliminate quotas and tariff barriers for foreign
footwear manufacturers to ship their goods
5. The Internet allows footwear companies to pursue a 0.07 4 0.28
direct to consumer sales channel
6. Sales of apparel, accessories, and footwear on the 0.08 3 0.24
Internet has been growing at a double digit pace,
considerably faster than more traditional sales
models such as retail stores
7. Internet sales of apparel, accessories, and footwear 0.07 4 0.28
could reach 18 percent of category sales by 2012
8. Companies that added a Web-based sales strategy 0.06 3 0.18
are able to customize footwear and other
merchandise directly to the customer's needs and

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.


taste, are enable to achieve considerably better
pricing as well as "deepening" the emotional bond
consumers have with the brand
Threats
1. After the age of 40, the typical consumer is not 0.07 3 0.21
willing to pay more than $35 to $40 per pair for
athletic footwear
2. Competition is strong among athletic footwear and 0.08 2 0.16
apparel from off brand companies
3. Fluctuation of foreign currency impacts the cost of 0.06 2 0.12
importing goods to the U.S.
4. Increase in unemployment has impacted the 0.09 3 0.27
household income which may result in spending less
on brand name
5. Barrier to entry is low 0.06 2 0.12

6. Level of inventory is increasing in many retail stores 0.08 2 0.16


due weak economy
Total 1.00 2.99

Positioning Map

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Customer Loyalty
(High)

Nike

Adidas

Puma
Price (low) Price (High)

Customer Loyalty
(Low)

E. Internal Audit

Strengths

1. Nike is the dominant competitor for athletic footwear priced above $60 per
pair, holding better than a 50 percent market share for athletic footwear
priced $85 per pair or higher
2. Nike characterizes its organization as a collaborative matrix organization
3. The Jordan brand has a 10.8 percent share of the overall U.S. shoe
market, which makes it the second biggest brand in the country and more
than twice the size of Adidas’ share
4. Three out of every four pairs of basketball shoes sold in this country are
Jordan, while 86.5 percent of all basketball shoes sold over $100 are
Jordan
5. Nike’s 2009 revenues increased 2.9 percent to $19.1 billion
6. Inside the United States, Nike has three significant distribution and
customer service facilities
7. Nike estimates that they sell products to more than 25,000 retail accounts
in the United States and more than 27,000 retail accounts, including Nike-
owned stores and a mix of independent distributors and licensees outside
the United States
8. The company’s Internet Web site, www.nikebiz.com, allows customers to
design and purchase Nike products directly from the company

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.


9. Nike has five wholly owned subsidiaries: Cole Haan, Converse, Hurley
International, NIKE Golf, and Umbro Ltd

Weaknesses

1. Nike’s 2009 net income decreased 21 percent to $1.48 billion


2. Almost all of Nike’s footwear is manufactured outside the United States by
independent contractors
3. In fiscal 2008, contract manufacturers in China, Vietnam, Indonesia, and
Thailand manufactured 99 percent of Nike’s footwear worldwide
4. Because Nike competes primarily in athletic footwear, apparel and related
sporting equipment, its sales are heavily concentrated in the youth and
young adult market
5. Accounts payable has increased by almost $1.0 billion in 2009
6. Negative publicity and boycotting of the Nike products due to outsourcing
jobs overseas and the use of child labor in such factories

Financial Ratio Analysis (December 2009)


Growth Rates % Nike Industry S&P 500
Sales (Qtr vs year ago qtr) -4.00 -2.10 -4.80
Net Income (YTD vs YTD) -1.50 -2.00 -6.00
Net Income (Qtr vs year ago qtr) -4.00 -1.60 26.80
Sales (5-Year Annual Avg.) 9.37 14.53 12.99
Net Income (5-Year Annual Avg.) 9.47 11.78 12.69
Dividends (5-Year Annual Avg.) 21.51 14.72 11.83

Price Ratios Nike Industry S&P 500


Current P/E Ratio 22.0 25.7 26.7
P/E Ratio 5-Year High 23.5 0.9 16.6
P/E Ratio 5-Year Low 10.7 0.2 2.6
Price/Sales Ratio 1.75 2.10 2.25
Price/Book Value 3.49 3.96 3.48
Price/Cash Flow Ratio 17.50 17.70 13.70

Profit Margins % Nike Industry S&P 500


Gross Margin 44.5 49.2 38.9
Pre-Tax Margin 10.3 14.4 10.3
Net Profit Margin 8.0 10.1 7.1
5Yr Gross Margin (5-Year Avg.) 44.5 51.7 38.6
5Yr PreTax Margin (5-Year Avg.) 12.9 18.2 16.6
5Yr Net Profit Margin (5-Year Avg.) 9.0 12.1 11.5

Financial Condition Nike Industry S&P 500

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Debt/Equity Ratio 0.06 0.06 1.09
Current Ratio 3.5 3.5 1.5
Quick Ratio 2.7 2.6 1.3
Interest Coverage 223.8 139.0 23.7
Leverage Ratio 1.4 1.4 3.4
Book Value/Share 18.94 15.21 21.63
Adapted from www.moneycentral.msn.com

Net Profit
Avg P/E Price/ Sales Price/ Book
Margin (%)
05/09 17.80 1.46 3.19 7.8
05/08 16.40 1.85 4.29 10.1
05/07 16.10 1.77 4.05 9.1
05/06 16.00 1.42 3.27 9.3
05/05 18.00 1.62 3.80 8.8
05/04 18.40 1.57 3.91 7.7
05/03 17.20 1.40 3.70 6.9
05/02 21.30 1.48 3.73 6.8
05/01 20.10 1.18 3.16 6.2
05/00 23.00 1.33 3.69 6.4

Book Value/ Debt/ Return on Return on Interest


Share Equity Equity (%) Assets (%) Coverage
05/09 $17.91 0.09 17.1 11.2 NA
05/08 $15.93 0.08 24.1 15.1 NA
05/07 $14.00 0.08 21.2 14.0 NA
05/06 $12.28 0.11 22.1 14.1 NA
05/05 $10.81 0.14 21.5 13.8 NA
05/04 $9.09 0.17 19.8 12.0 36.6
05/03 $7.57 0.21 18.5 10.9 26.8
05/02 $7.21 0.29 17.4 10.4 22.1
05/01 $6.51 0.37 16.9 10.1 15.7
05/00 $5.82 0.46 18.5 9.9 20.4
Adapted from www.moneycentral.msn.com

Internal Factor Evaluation (IFE) Matrix


Key Internal Factors Weight Rating Weighted
Score

Strengths

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1. Nike is the dominant competitor for athletic 0.08 4 0.32
footwear priced above $60 per pair, holding
better than a 50 percent market share for
athletic footwear priced $85 per pair or higher
2. Nike characterizes its organization as a 0.02 3 0.06
collaborative matrix organization
3. The Jordan brand has a 10.8 percent share of 0.06 4 0.24
the overall U.S. shoe market, which makes it
the second biggest brand in the country and
more than twice the size of Adidas' share
4. Three out of every four pairs of basketball 0.08 4 0.32
shoes sold in this country are Jordan, while
86.5 percent of all basketball shoes sold over
$100 are Jordan
5. Nike's 2009 revenues increased 2.9 percent 0.09 4 0.36
to $19.1 billion
6. Inside the United States, Nike has three 0.05 3 0.15
significant distribution and customer service
facilities
7. Nike estimates that they sell products to more 0.04 3 0.12
than 25,000 retail accounts in the United
States and more than 27,000 retail accounts,
including Nike-owned stores and a mix of
independent distributors and licensees
outside the United States
8. The company's Internet Web site, 0.07 4 0.28
www.nikebiz.com, allows customers to design
and purchase Nike products directly from the
company
9. Nike has five wholly owned subsidiaries: Cole 0.07 3 0.21
Haan, Converse, Hurley International, NIKE
Golf, and Umbro Ltd
Weaknesses
1. Nike's 2009 net income decreased 21 percent 0.07 2 0.14
to $1.48 billion
2. Almost all of Nike's footwear is manufactured 0.08 1 0.08
outside the United States by independent
contractors
3. In fiscal 2008, contract manufacturers in 0.06 1 0.06
China, Vietnam, Indonesia, and Thailand
manufactured 99 percent of Nike's footwear
worldwide
4. Because Nike competes primarily in athletic 0.08 1 0.08
footwear, apparel and related sporting
equipment, its sales are heavily concentrated
in the youth and young adult market.
5. Accounts payable has increased by almost 0.08 2 0.16
$1.0 billion in 2009

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6. Negative publicity and boycotting of the Nike 0.07 1 0.07
products due to outsourcing jobs overseas
and the use of child labor in such factories
Total 1.00 2.65

SWOT Strategies

Strengths Weaknesses
1. Nike is the dominant 1. Nike’s 2009 net income
competitor for athletic decreased 21 percent to
footwear priced above $1.48 billion
$60 per pair, holding 2. Almost all of Nike’s
better than a 50 percent footwear is
market share for athletic manufactured outside
footwear priced $85 per the United States by
pair or higher independent contractors
2. Nike characterizes its 3. In fiscal 2008, contract
organization as a manufacturers in China,
collaborative matrix Vietnam, Indonesia, and
organization Thailand manufactured
3. The Jordan brand has a 99 percent of Nike’s
10.8 percent share of footwear worldwide
the overall U.S. shoe 4. Because Nike competes
market, which makes it primarily in athletic
the second biggest footwear, apparel and
brand in the country and related sporting
more than twice the size equipment, its sales are
of Adidas’ share heavily concentrated in
4. Three out of every four the youth and young
pairs of basketball adult market
shoes sold in this 5. Accounts payable has
country are Jordan, increased by almost
while 86.5 percent of all $1.0 billion in 2009
basketball shoes sold 6. Negative publicity and
over $100 are Jordan boycotting of the Nike
5. Nike’s 2009 revenues products due to
increased 2.9 percent to outsourcing jobs
$19.1 billion overseas and the use of
6. Inside the United States, child labor in such
Nike has three factories
significant distribution
and customer service
facilities
7. Nike estimates that they

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.


sell products to more
than 25,000 retail
accounts in the United
States and more than
27,000 retail accounts,
including Nike-owned
stores and a mix of
independent distributors
and licensees outside
the United States
8. The company’s Internet
Web site,
www.nikebiz.com,
allows customers to
design and purchase
Nike products directly
from the company
9. Nike has five wholly
owned subsidiaries:
Cole Haan, Converse,
Hurley International,
NIKE Golf, and Umbro
Ltd

Opportunities W-O Strategies


S-O Strategies
1. Younger consumers are 1. Expand into 1. Develop new products
less price sensitive and international market for small kids based on
generally spend more more where the cartoon characters (W4,
on casual and athletic economy is stronger O1, O3)
footwear than older (S1, S3, S4, S7, O1) 2. Sponsor more athletics
consumers 2. Increase advertising and programs, mostly for
2. Most footwear promotion through young generation (W1,
companies have social networking such W4, W6, O1, O2, O3)
outsourced their as Twitter and
production abroad in Facebook (S8, O1, O5,
order to maintain lower O7)
cost and R&D expenses
3. US footwear imports
totaled 2.36 billion pairs
in 2007, or roughly 7.9
pairs per capita which is
was up 0.4 percent from
2006
4. North American Free
Trade Agreement

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.


(NAFTA) and the World
Trade Organization
(WTO), both helped
eliminate quotas and
tariff barriers for foreign
footwear manufacturers
to ship their goods
5. The Internet allows
footwear companies to
pursue a direct to
consumer sales channel
6. Sales of apparel,
accessories, and
footwear on the Internet
has been growing at a
double digit pace,
considerably faster than
more traditional sales
models such as retail
stores
7. Internet sales of
apparel, accessories,
and footwear could
reach 18 percent of
category sales by 2012
8. Companies that added a
Web-based sales
strategy are able to
customize footwear and
other merchandise
directly to the
customer’s needs and
taste, are enable to
achieve considerably
better pricing as well as
“deepening” the
emotional bond
consumers have with
the brand
Threats W-T Strategies
S-T Strategies
1. After the age of 40, the 1. Develop a new 1. Make low priced
typical consumer is not moderately priced footwear made in the US
willing to pay more than product line (S1, S2, S3, and promote it as “Made
$35 to $40 per pair for S4, T2, T4, T6) in America” (W2, W6,
athletic footwear 2. Expand distribution by T2, T3, T4, T6)

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2. Competition is strong selling to stores other 2. Acquire a less
among athletic footwear than their own retailers expensive brand of
and apparel from off (S7, T2) accessories and
brand companies sportswear and promote
3. Fluctuation of foreign them as an off brand of
currency impacts the Nike (W4, W6, T1, T4,
cost of importing goods T6)
to the U.S.
4. Increase in
unemployment has
impacted the household
income which may
result in spending less
on brand name
5. Barrier to entry is low
6. Level of inventory is
increasing in many retail
stores due weak
economy

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G. SPACE Matrix

FS
Conservative 7 Aggressive

CS IS
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7

-1

-2

-3

-4

-5

-6

Defensive -7 Competitive

ES

Financial Stability (FS) Environmental Stability (ES)


Return on Investment 4 Unemployment -4
Leverage 5 Technological Changes -4
Liquidity 3 Price Elasticity of Demand -5
Working Capital 3 Competitive Pressure -5
Cash Flow 4 Barriers to Entry -5

Financial Stability (FS) Average Environmental Stability (ES) Average

Competitive Stability (CS) Industry Stability (IS)


Market Share -1 Growth Potential 5
Product Quality -2 Financial Stability 4
Customer Loyalty -3 Ease of Market Entry 1
Competition’s Capacity Utilization -1 Resource Utilization 3
Technological Know-How -4 Profit Potential 4

Competitive Stability (CS) Average Industry Stability (IS) Average

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Y-axis: FS + ES = 3.8 + (-4.6) = - 0.8
X-axis: CS + IS = (-2.2) + (3.4) = 1.2

H. Grand Strategy Matrix


Rapid Market Growth
Quadrant I
Quadrant II

Strong
Weak
Competitive
Competitive
Position
Position

Quadrant IV
Quadrant III Slow Market Growth

1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification

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I. The Internal-External (IE) Matrix
The IFE Total Weighted Score

Strong Average Weak


3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
I II III

High
3.0 to 3.99

IV IV VI

The EFE Total


Nike, Inc.
Weighted
Score Medium
2.0 to 2.99

VII VIII IX

Low
1.0 to 1.99

J. QSPM

Increase Acquire a less


advertising expensive
and brand of
promotion accessories
through and
social sportswear
networking and promote
such as them as an
Twitter and off brand of
Facebook Nike
Key Factors Weight AS TAS AS TAS
Opportunities

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1. Younger consumers are less price sensitive 0.08 1 0.08 4 0.32
and generally spend more on casual and
athletic footwear than older consumers
2. Most footwear companies have outsourced 0.07 --- --- --- ---
their production abroad in order to maintain
lower cost and R&D expenses
3. US footwear imports totaled 2.36 billion 0.07 --- --- --- ---
pairs in 2007, or roughly 7.9 pairs per capita
which is was up 0.4 percent from 2006
4. North American Free Trade Agreement 0.06 2 0.12 3 0.18
(NAFTA) and the World Trade Organization
(WTO), both helped eliminate quotas and
tariff barriers for foreign footwear
manufacturers to ship their goods
5. The Internet allows footwear companies to 0.07 --- --- --- ---
pursue a direct to consumer sales channel
6. Sales of apparel, accessories, and footwear 0.08 2 0.16 4 0.32
on the Internet has been growing at a
double digit pace, considerably faster than
more traditional sales models such as retail
stores
7. Internet sales of apparel, accessories, and 0.07 4 0.28 1 0.07
footwear could reach 18 percent of category
sales by 2012
8. Companies that added a Web-based sales 0.06 4 0.24 1 0.06
strategy are able to customize footwear and
other merchandise directly to the
customer's needs and taste, are enable to
achieve considerably better pricing as well
as "deepening" the emotional bond
consumers have with the brand
Threats
1. After the age of 40, the typical consumer is 0.07 1 0.07 4 0.28
not willing to pay more than $35 to $40 per
pair for athletic footwear
2. Competition is strong among athletic 0.08 --- --- --- ---
footwear and apparel from off brand
companies
3. Fluctuation of foreign currency impacts the 0.06 --- --- --- ---
cost of importing goods to the U.S.
4. Increase in unemployment has impacted 0.09 1 0.09 3 0.27
the household income which may result in
spending less on brand name
5. Barrier to entry is low 0.06 --- --- --- ---
6. Level of inventory is increasing in many 0.08 4 0.32 2 0.16
retail stores due weak economy
TOTAL 1.00 1.36 1.66
Strengths
1. Nike is the dominant competitor for athletic 0.08 --- --- --- ---
footwear priced above $60 per pair, holding

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.


better than a 50 percent market share for
athletic footwear priced $85 per pair or
higher
2. Nike characterizes its organization as a 0.02 --- --- --- ---
collaborative matrix organization
3. The Jordan brand has a 10.8 percent share 0.06 3 0.18 1 0.06
of the overall U.S. shoe market, which
makes it the second biggest brand in the
country and more than twice the size of
Adidas' share
4. Three out of every four pairs of basketball 0.08 3 0.24 1 0.08
shoes sold in this country are Jordan, while
86.5 percent of all basketball shoes sold
over $100 are Jordan
5. Nike's 2009 revenues increased 2.9 percent 0.09 --- --- --- ---
to $19.1 billion
6. Inside the United States, Nike has three 0.05 --- --- --- ---
significant distribution and customer service
facilities
7. Nike estimates that they sell products to 0.04 3 0.12 4 0.16
more than 25,000 retail accounts in the
United States and more than 27,000 retail
accounts, including Nike-owned stores and
a mix of independent distributors and
licensees outside the United States
8. The company's Internet Web site, 0.07 4 0.28 1 0.07
www.nikebiz.com, allows customers to
design and purchase Nike products directly
from the company
9. Nike has five wholly owned subsidiaries: 0.07 1 0.07 3 0.21
Cole Haan, Converse, Hurley International,
NIKE Golf, and Umbro Ltd
Weaknesses
1. Nike's 2009 net income decreased 21 0.07 1 0.07 3 0.21
percent to $1.48 billion
2. Almost all of Nike's footwear is 0.08 --- --- --- ---
manufactured outside the United States by
independent contractors
3. In fiscal 2008, contract manufacturers in 0.06 --- --- --- ---
China, Vietnam, Indonesia, and Thailand
manufactured 99 percent of Nike's footwear
worldwide
4. Because Nike competes primarily in athletic 0.08 1 0.08 3 0.24
footwear, apparel and related sporting
equipment, its sales are heavily
concentrated in the youth and young adult
market
5. Accounts payable has increased by almost 0.08 --- --- --- ---
$1.0 billion in 2009
6. Negative publicity and boycotting of the 0.07 --- --- --- ---

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Nike products due to outsourcing jobs
overseas and the use of child labor in such
factories
SUBTOTAL 1.00 1.04 1.03
SUM TOTAL ATTRACTIVENESS SCORE 2.4 2.69

K. Recommendations
Acquire a company who manufactures and sells less expensive products than Nike. The
company should have established distribution and retail shelf space with non-competing
product lines. It would be ideal if the company is a U.S. based corporation with domestic
manufacturing facilities.

EPS/EBIT Analysis
$ Amount Needed: $350 million
Stock Price: $65.65
Tax Rate: 24%
Interest Rate: 4.75% (Estimated)
# Shares Outstanding: 487 Million

Common Stock Financing Debt Financing


Recession Normal Boom Recession Normal Boom
EBIT $1,800,000,000 $2,500,000,000 $3,500,000,000 $1,800,000,000 $2,500,000,000 $3,500,000,000
Interest 0 0 0 16,625,000 16,625,000 16,625,000
EBT 1,800,000,000 2,500,000,000 3,500,000,000 1,783,375,000 2,483,375,000 3,483,375,000
Taxes 432,000,000 600,000,000 840,000,000 428,010,000 596,010,000 836,010,000
EAT 1,368,000,000 1,900,000,000 2,660,000,000 1,355,365,000 1,887,365,000 2,647,365,000
# Shares 492,331,302 492,331,302 492,331,302 487,000,000 487,000,000 487,000,000
EPS 2.78 3.86 5.40 2.78 3.88 5.44

70 Percent Stock - 30 Percent Debt 70 Percent Debt - 30 Percent Stock


Recession Normal Boom Recession Normal Boom
EBIT $1,800,000,000 $2,500,000,000 $3,500,000,000 $1,800,000,000 $2,500,000,000 $3,500,000,000
Interest 13,300,000 13,300,000 13,300,000 3,325,000 3,325,000 3,325,000
EBT 1,786,700,000 2,486,700,000 3,486,700,000 1,796,675,000 2,496,675,000 3,496,675,000
Taxes 428,808,000 596,808,000 836,808,000 431,202,000 599,202,000 839,202,000
EAT 1,357,892,000 1,889,892,000 2,649,892,000 1,365,473,000 1,897,473,000 2,657,473,000
# Shares 490,731,912 490,731,912 490,731,912 488,599,391 488,599,391 488,599,391
EPS 2.77 3.85 5.40 2.79 3.88 5.44

M. Epilogue

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Analysts expect that Nike will be able to boast of its strong earnings, growing
gross margins, lean inventories and all-important futures orders. The company
has booming international business, especially its China expansion plans, as well
as next month’s World Cup, where Nike is sponsoring nine teams. And investors
may find out what management has planned for that $7 a share in net cash on
the balance sheets. (CNBC.com)

Nike unveiled its supercharged Nike Elite Series football boots providing new
levels of performance. Nike’s Mercurial Vapor SuperFly II, CTR360 Maestri,
Total90 Laser III and Tiempo Legend III all feature new performance upper to
improve on-field visibility and a reengineered outsole to deliver lightweight
performance for every style of player. Nike designers have reduced the weight
of each boot so players can perform at their best. Lightweight construction,
intricate engineering, carbon-enforced strength and high contrast colors
distinguish the boots. The high contrast colors (Metallic Mach Purple and Total
Orange) are engineered together for enhanced visibility. For a footballer this
unique combination is designed to increase visual performance enabling them to
quickly spot their teammates and execute a game-changing pass. “At Nike, we
have a relentless focus on product innovation to give athletes a real competitive
edge and deliver the best products in the world,” said Andrew Caine, Nike Design
Director for Football Footwear. “The Nike Elite Series delivers lightweight and
highly engineered boots for the leading players in the world to perform on the
biggest stage this summer.” (finance.yahoo.com)

Jordan Brand, a division of NIKE, Inc., announced that the top 10 ranked ESPNU
100 players – No. 1 Harrison Barnes (Ames, IA/North Carolina), No. 2 Jared
Sullinger (Columbus, OH/Ohio State), No. 3 Brandon Knight (Coral Springs,
FL/Undecided), No. 4 Kyrie Irving (West Orange, NJ/Duke), No. 5 Tobias Harris
(Dix Hills, NY/Tennessee), No. 6 Will Barton (Baltimore, MD/Memphis), No. 7
Josh Selby (Baltimore, MD/Undecided), No. 8 C.J. Leslie (Holly Springs,
NC/Undecided), No. 9 Perry Jones (Duncanville, TX/Baylor) and No. 10 Tristan
Thompson (Brampton, ONT/Texas) – will headline the nation’s best high school
senior basketball players at the 2010 Jordan Brand Classic, presented by Foot
Locker, at Madison Square Garden in New York City on Saturday, April 17 at
8:00 p.m. EST. This year’s event will once again be televised nationally live on
ESPN2. The Jordan Brand Classic will also continue to include a Regional
Game, showcasing the top prep players from the New York City metropolitan
area in a City vs. Suburbs showdown. In its third year of the event, an
International Game will feature 16 of the top 17-and-under players from around
the world.

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall.