1 | P a g e

INTERNATIONAL BUSINESS PLAN AND

EXPANSION STRATEGIES OF FOREIGN

COMPANY IN INDIA-NIKE

Submitted By

VAIBHAV

11llb064

2 | P a g e

INTRODUCTION OF NIKE

Nike is a major publicly traded sportswear, footwear and equipment supplier based in the US which was founded in 1962 originally know as Blue Ribbon Sports. Nike is the world leader in the manufacturing of sportswear and gear with more than 47 market shares across the global

Nike produces a wide range of sports equipments such as running shoes, sportswear, football, basketball, tennis, golf, etc. Now Nike follows the global fashion trends and is well known and popular in the youth culture and hip hop culture to supply some fashion products. Nike recently teams up with Apple Company to produce the Nike+ products which can monitor a runner's performance through a radio in the shoe that can link to the iPods. Besides that, Nike also becomes the top of three companies which are climate-friendly companies which build better image to customers.

Nike's excellence marketing strategies are their energy to achieve their market goals. Nike believes the "pyramid influence" that the preferences of a small percentage of top athletes influence the product and brand choice. So Nike contracted with many athletes' spokesperson, professional teams and college athletic teams to advertise and promote their products to customers. Nike seriously pay attention on the technology producing, design and selling such as e-commerce, high-tech running shoes, Nike+ with Apple, etc. Nike outsourcing their products most of the factories are located in Asia such as China, Indonesia and India.

3 | P a g e

History of the company

Bill Bowerman and Phil Knight founded Nike Inc. as Blue Ribbon Sports in 1962. The partners began their relationship at the University of Oregon where Bowerman was Knight‟s track and field coach. While attending Stanford University, Knight wrote a paper about breaking the German dominance of the U.S. athletic shoe industry with low-priced Japanese shoes. In an attempt to realize his theory, Knight visited Japan and engineered an agreement with the Onitsuka Tiger Company, a manufacturer of quality athletic shoes, to be their sole distributor in the United States.

In 1962, Knight received the first shipment of 200 pairs of Tiger shoes to his parent‟s garage in Oregon. The shoes were bought by Blue Ribbon Sports (BRS), the name of the partnership between Knight and Bowerman that they formed with only $1,000 in capital. Knight peddled Tiger‟s shoes at local track meets grossing $8,000 of sales in their first year. In 1966, Bowerman, who had previously designed shoes for his university athletes, worked with Tiger to design the Cortez running shoe. The shoe was a worldwide success for the Onitsuka Tiger Company and was sold at the first BRS store. In 1971, BRS, with creditor support, started manufacturing their own line of shoes. Later that year, the first BRS shoe was introduced. The shoe was a soccer shoe that bore the Nike brand name, referring to the Greek Goddess of Victory, and the Swoosh trademark. A student designed the Swoosh trademark for a paltry fee of $35. The Swoosh was meant to symbolize a wing of the Greek Goddess.

1972 marked the breakup of the BRS/Tiger relationship. BRS soon changed its name to Nike, Inc. and debuted itself at the 1972 Olympic trials. In 1973, Steve Prefontaine was the first prominent track star to wear Nike shoes. The late 70‟s and early 80‟s also saw John McEnroe, Carl Lewis, and Joan Benoit sporting Nike shoes. Nike popularity grew so much that in 1979 they claimed 50% of the U.S. running market. A year later with 2,700 employees, Nike went public selling 2 million shares on the New York Stock Exchange.

The 1980‟s were marked by the signing of Michael Jordan as a product spokesperson, revenues in excess of $1 billion, the formation of Nike International Ltd., and the "Just Do It" campaign. Nike also expanded its product line to include specialty apparel for a variety of sports. In 1990, Nike surpassed the $2 billion mark in consolidated revenue with 5,300 employees worldwide. In addition, we opened the Nike World Campus in Beaverton, Oregon.

In 1991, Nike pushed revenues to $3 billion, up from $2 billion the prior year. This mark would continue to grow throughout the 90‟s, with revenues in 1999 reaching $8.8 billion. These revenues grew based on improvements in shoe

4 | P a g e

technology and successful marketing campaigns. International revenues fueled a great portion of this growth with an 80% increase in 1991 from the prior year. In 1992 international revenues topped $1 billion for the first time and accounted for over one-third of our total revenues. Such growth continued throughout the 1990's as we continued to focus our marketing efforts on major sporting events like the World Cup, and the next generation of celebrity endorsers, such as Tiger Woods, Lance Armstrong, and the players of women's professional basketball (WNBA). At the end of the 90‟s, Nike‟s goal, as stated in our company web site, is to become a truly global brand.

MAJOR MILESTONES

1970- The Swoosh first appears on a football/soccer cleat called the Nike.

1978- Tennis "bad boy" John McEnroe is signed by Nike to an endorsement contract.

1989- Nike enters the European football market

1994 +2003- Nike wins Advertiser of the Year at the Cannes Advertising Festival.

1996- Nike signs Tiger Woods

1999- Bill Bowerman, co-founder of Nike, dies on Dec. 24 at age 88.

2002- Nike purchases Hurley International

2003- Nike acquires once-bankrupt rival Converse for $305 million

2004- Phil Knight steps down as CEO and President of Nike, but continues as chairman

2005- Nike Signs Tennis Pro Rafael Nadal.

2006- Nike and Apple release the Nike+iPod sports kit

2008- Nike sells its Nike Bauer hockey equipment division & purchases Umbro.

5 | P a g e

Nike’s business plan

Mission Statement

Our mission at Nike is to be a company that surpasses all others in the athletic industry. We will maintain our position by providing quality footwear, apparel and equipment to institutions and individual consumers of all ages and lifestyles. We pledge to make our products easy available worldwide through the use of retail outlets, mail order and our company web site. Nike‟s management believes that our success lies in the hands of our teammates, customers, shareholders and the communities in which we operate. We vow to keep this in mind with the execution of every decision within our company.

Vision Statement

At Nike, our vision is to remain the leader in our industry. We will continue to produce the quality products that we have provided in the past. Most importantly, we will continue to meet the ever-changing needs of our customers, through product innovation.

Nike‟s Global Business Strategy

When first founded in1 9 6 2 under the name of Blue Ribbon Sports, the strategy

was “to distribute low-cost, high-quality Japanese athletic shoes to American

consumers in an attempt to break Germany‟s domination of the domestic industry.”

Today Nike offers athletic shoes at every marketable price point to a global

market.

Nike sustains its leading position through emphasizing quality products,

constant innovation, and aggressive marketing. Nike sells its products in more

than 180 countries under not only its namesake brand but brands such as Cole

Haan, Converse, Hurley International, and Umbro.

It uses distribution channels such as company-owned stores and websites or

sports retailers, such as Foot Locker.

As mentioned earlier, Nike is a truly global company, which means that its

success story is transferrable over borders. It divides its sales into four main

regions- the US, Europe, Middle East and Africa (EMEA), Asia Pacific, and

Central and South America. For 2009 each of these regions accounted

respectively for 34.1%, 28.7%, 17.3%, and 6.7% of total revenue.

6 | P a g e

Segmentation Strategy:

Nike realizes that in order to be number one they need to offer a wide range of

products to be able to develop a culture and fulfill their loyal customers‟ needs. Nike‟s strategy in terms of segmentation is excellent. Their core product is footwear but they also manufacture apparel and equipment and thus, they spread

their influence in other sport-related markets. Nike also has several sub-brands

to grasp different consumer groups.

Nike‟s main source of revenue is athletic footwear, which is also its core competency. It accounts for 54% of total revenues. It is designated for running,

cross-training competency. It accounts for 54% of total revenues. It is

designated for running, cross-training, basketball, soccer and it includes even a

casual footwear line. Sales in this segment increased by 14% in 2009 from

which a big portion was a result of the increase in sales in the Asia Pacific

region.

The second most profitable segment for Nike is a p p a r e l, such as t-shirts,

shorts, sweatpants, and licensed apparel made specifically for universities with

their own logos. With an increase of only 0.2%, apparel sales accounted for 27%

of the company‟s revenue in 2009.

However, sales in this segment grew by 14% in the previous period, between

2007 and 2008, due to the growth of 25% of revenues in emerging markets, such

as Russia, and other EMEA countries but also a substantial revenue growth of

50% in China. Unlike footwear, which main market is the US, the majority of

apparel sales come from the EMEA region accounting for 38% of total apparel

revenue Equipment, such as balls, golf clubs etc. accounts for 6% of total

revenues in 2009 and 13% come from other brands under Nike, such as Cole

Haan, Converse, Umbro etc. these different sub-brands supplement Nike product

lines. For instance, Umbro specializes in selling soccer apparel and footwear.

Nike Golf targets golf players and offers specialized golf equipment, apparel and

footwear. Cole Haan on the other hand offers premium dress and casual

footwear. Hurley International offers products suitable for snowboarding,

skating, and surfing.

7 | P a g e

Market Segments:

The market segments that Nike can mainly differentiate are high, medium and

low end customers with varying income levels. Thus, Nike needs to segment on

various fronts such as economic, demographic, geographical differentiations.

Economic segmentation:

High, medium and low income levels that can be clubbed with here lifestyles of

high, medium and low end customers.

Demographic segmentation:

The company can segment the market into age, gender and class segments.

Geographical segmentation:

The company can segment the market into segments of north, west, east and

south.

Target Market:

The company needs to target the market as per the brand image and equity in

different markets. Thus, the company has targeted the market of high-end, high

income level between the age of 16-55. Thus the market segment it is targeting

is quite essential to differentiate itself from its competitors i.e. Reebok, Puma,

Fila and local brands like Bata

Marketing Strategy:

Significant role for the competition of market share in the footwear industry

plays marketing in order to strengthen the brand image, develop product identity

and expand customer loyalty. Competition between players is n o n - p r I c e but

rather based on differentiation in brand image and product innovations.

Therefore, substantial investments in marketing campaigns are required. Nike

invests annually between 11% and 13% of revenue in marketing.

Nike focuses all of their attention on the Athlete, but delivers much more

than shoes; they deliver all the surrounding products that the Athlete needs

for experience. It is part and parcel of what makes Nike such a great

consumer-focused brand.

8 | P a g e

Marketing mix

1. Product:

Nike offers a wide range of shoe, apparel and equipment products, all of which are currently its top-selling product categories. Nike started selling sports apparel, athletic bags and accessory items in 1979. Their brand Cole Haan carries a line of dress and casual footwear and accessories for men, women and children.

They also market head gear under the brand name Sports Specialties, through Nike Team manufactures and distributes ice skates, skate blades, in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories.

2. Price:

Nike‟s pricing is designed to be competitive to the other fashion Shoe retailer. The pricing is based on the basis of premium segment as target customers. Nike as a brand commands high premiums. Nike‟s pricing strategy makes use of vertical integration in pricing wherein they own participants at differing channel levels or take part in more than one channel level operations. This can control costs and influence product pricing.

9 | P a g e

3. Place:

Nike shoes are carried by multi-brand stores and the exclusive Nike stores across the globe. Nike sells its product to about 20,000 retail accounts in the U.S. and in almost 200 countries around the world. In the international markets, Nike sells its products through independent distributors, licensees and subsidiaries. The company has production facilities in Asia and customer service and other operational units worldwide

4. Promotion:

Promotion is largely dependent on finding accessible store locations. It also avails of targeted advertising in the newspaper and creating strategic alliances. Nike has a number of famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially Ronaldo, Renaldo, and Roberto Carlos), Lebron James and Jermane O‟Neal for basketball, Lance Armstrong for cycling, and Tiger Woods for Golf.

Nike also sponsors events such as Hoop It Up and The Golden West Invitational. Nike‟s brand images, the Nike name and the trademark swoosh; make it one of the most recognizable brands in the world. Nike‟s brand power is one reason for its high revenues. Nike‟s quality products, loyal customer base and its great marketing techniques all contribute to make the shoe empire a huge success.

Advertising strategy:

Nike‟s strategy was to create dominant presence in media. Nike created media

presence in several trend setting United States cities. TV ads linking Nike to a

city were used, but real drivers were huge oversized billboards and murals on

buildings that blanketed cities with messages featuring key Nike-sponsored

athletes, not products. The company focuses its marketing on celebrity

endorsement, i.e. athletes in basketball, golf, soccer, and tennis. Lately, Nike has

also began to sponsor big sporting events so as to create huge awareness and

brand following. In 2008, Nike spent significant amount on advertising in the

Beijing 2008 Olympics and the Football Championship. After the recent Tiger

Woods scandal Nike plans on revisiting it celebrity endorsement strategy. It can

be noted that the „swoosh logo‟ is one of the most famous in the world due to these huge advertising efforts.

10 | P a g e

Branding Strategy:

Nike‟s strategy in this front is to develop a premium brand associated with high quality product that satisfies customer needs. Nike‟s brand is associated with an

aggressive attitude portrayed by, “you don‟t win silver, you lose gold,”12 which clearly suggests that winning is vital. The Nike customer associated the Nike

brand with being the „American‟ way: Being individual and aggressive like Michael Jordan and John McEnroe.

Nike built its brand around sports, attitude and lifestyle. Nike backed this

strategy with marketing campaigns like “Just do it” and with the companies front athletes like Michael Jordan and Tiger Woods.

Selling Strategy:

Nike‟s strategy in early 2000s was to develop, flag ship stores, Nike Town shops

in bigger cities, first national, and then abroad. Nike was the first company to

establish flagship stores and it turned out to be a sensation.

There are independent small retail stores that sell Nike products all around the

world as well. Also, on seeing the potential of the low price market, Nike took

efforts in 2005 to tap in to the low price segment by striking a deal with big