Nikes Core Competency The Risky Business of Fairy

Nike’s Core Competency: The Risky Business of Fairy Tales Jason Cumiford Tran Pham Daniel Hockaday Morgan Mc. Grath Pam Barrington

Agenda v “Hype” videos v Background v “Scandal” video v Diagnosis v Analysis (AFI) v Analysis (VRIO) v Analysis (SWOT) v Case questions BMBA 523 Spring 2016 v Recommendations v Managerial implication v Case update 2

“Hype” Videos BMBA 523 Spring 2016 3

Case Background v v v 1964: Founded by Bill Bowerman and Phil Knight Blue Ribbon Sports 1971: There is no finish line 1979: 50% market share The 1990’s and 2000’s BMBA 523 Spring 2016 4

“Scandal” Video BMBA 523 Spring 2016 5

Diagnosis v v v Idea of “creating heroes” Mythicizing the everyman can be a slippery slope Nike has to sidestep the backlash Tipping point- Too many “eggs in one basket” Fragile nature of mythicizing the everyman BMBA 523 Spring 2016 6

Analysis | AFI v Analyze Ø Limited component innovation= Competitive parity v Formulate Ø Competitive advantage by altering marketing approach Ø Shift current endorsement strategy to “Hero Creation” v Implement Ø Michael Jordan Endorsement of 1984 BMBA 523 Spring 2016 7

Analysis | VRIO v Valuable Ø Value from expanded customer base→ Casual fans now interested in products v Rare Ø Underdog stories not easy to replicate. v Costly to Imitate Ø Several multi-million dollar campaigns to achieve Nike’s brand equity. v Organized to take advantage Ø Existing advantage as leader in industry allows Nike to take advantage. BMBA 523 Spring 2016 8

Analysis | SWOT Analysis Internal External BMBA 523 Spring 2016 Helpful Harmful Strengths: -Established as number one footwear seller in the world. -High brand equity based on current competency. -Major foothold in basketball and football with licensing contracts Weaknesses: -Contracts terminated with Pistorius and Armstrong. -Lack of drastic component innovation. Opportunities: -Viral Marketing -Amateur Sports -Team endorsement Threats: -Reebok and Adidas catching up in component innovation. -Potential future scandals involving endorsed athletes. 9

Case Questions v Creating Core Competencies Ø Meaning Ø How is it done? Ø VRIO attributes v Nike’s Approach Ø Strength → Weakness Ø Tipping point BMBA 523 Spring 2016 10

Case Questions v Recommendations for Phil Knight and Nike Ø Reframing the idea of Heroes v Competitor Recommendations Ø Create Heroes at a younger age Ø Product focus Ø Exploit Nike failures BMBA 523 Spring 2016 11

Class Activity BMBA 523 Spring 2016 9 12

Recommendations v Guiding policies Ø Re-position towards product innovation Ø Re-define the definition of what it means to be a hero v Guiding Policy #1 Ø Ø Increase R&D Acquisition Strategic partnerships Re-focused marketing campaign BMBA 523 Spring 2016 13

Recommendations v Guiding policy #2 Ø Ø Ø Social Media Research Cell Partnership creation/expansion Outreach programs Test gear distribution Renewed advertising campaign v Guiding policy to adopt moving forward BMBA 523 Spring 2016 14

Managerial Implications v Find the “sweet spot” v Figure out what the competition ISN’T doing v Will the strategy your company picks have any tipping points? BMBA 523 Spring 2016 15

Case Update v v Still #1 in industry; 5% revenue growth to 8. 4 billion dollars in Q 1 2016 Contracts voided for scandals: Ray Rice 09/2014 and Manny Pacquiao 02/2016. Amateur athletes such as Mary Cain featured in commercial campaigns. Several commercials highlighting heroic qualities in average people. BMBA 523 Spring 2016 16

Case Update BMBA 523 Spring 2016 17

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