Strategic Analysis of Nike, Inc.

TABLE OF CONTENTS
Executive Summary.p.4 History....p.6 Profile of CEO...p.7 Competitors Profile..p.7 In ustry Profile..p.! Company "nalysisp.# In ustry "nalysis......p.$4 %op Competitor "nalysis.p.$& Ot'er External (orces.p.$6 )ey Opportunity...p.$7 )ey %'reatp.$7 *a+or an Su,or inate Pro,lems.p.$! Strate-ic *atc'...p.$# Primary Strate-ic *atc' Position.p../ Strate-ic Plan..p... Conclusion...p..!

LIST OF EXHIBITS
0. $. .. 4. &. 6. 7. !. #. 0/. 00. 0$. 0.. 04. Sales %ren s 1rap'p.& 2et Income %ren s 1rap'.p.& 2i3e 4oar of 5irectors %a,le...p.00 %a,le of )ey (inancial 6atios...p.$$ 2et Income %ren 1rap'...p.$4 Primary Strate-ic *atc' Position C'art..p../ In ustry "ttractiveness *atrix..p..0 4usiness Stren-t'7Competitive Position C'art..p..$ 1ran Strate-y C'art p..4 *ar3etin- S'ort8term Strate-y C'art..p..& Pro uction S'ort8term Strate-y C'art.p..6 6esearc' an 5evelopment S'ort8term Strate-y C'art..p..7 Human 6esources S'ort8term Strate-y C'art...p..7 (inance S'ort8term Strate-y C'art..p..!

EXECUTI E SU!!A"#
2i3e Inc. 9as foun e in 0#6$ ,y 4ill 4o9erman an P'il )ni-'t as a partners'ip un er t'e name: 4lue 6i,,on Sports. Our mo est -oal t'en 9as to istri,ute lo98cost: 'i-'8;uality <apanese at'letic s'oes to "merican consumers in an attempt to ,rea3 1ermany=s omination of t'e omestic in ustry. %o ay in $///: 2i3e Inc. not only manufactures an istri,utes at'letic s'oes at every mar3eta,le price point to a -lo,al mar3et: ,ut over 4/> of our sales come from at'letic apparel: sports e;uipment: an su,si iary ventures. 2i3e maintains tra itional an non8tra itional istri,ution c'annels in more t'an 0// countries tar-etin- its primary mar3et re-ions? @nite States: Europe: "sia Pacific: an t'e "mericas Anot inclu in- t'e @nite StatesB. Ce utiliDe over $/:/// retailers: 2i3e factory stores: 2i3e stores: 2i3e%o9ns: Cole Haan stores: an internet8 ,ase Ce, sites to sell our sports an leisure pro ucts. Ce ominate sales in t'e at'letic foot9ear in ustry 9it' a ..> -lo,al mar3et s'are. 2i3e Inc. 'as ,een a,le to attain t'is premier position t'rou-' E;uality pro uction: innovative pro ucts: an a--ressive mar3etin-.E "s a result: for t'e fiscal year en 0###: 2i3e=s $/:7// employees -enerate almost F!.! ,illion in revenue. 0 $ro%&cts Our primary pro uct focus is at'letic foot9ear esi-ne for specific8sport an 7or leisure useAsB. Ce also sell at'letic apparel carryin- t'e same tra emar3s an ,ran names as many of our foot9ear lines. "mon- our ne9er pro uct offerin-s: 9e sell a line of performance e;uipment un er t'e 2i3e ,ran name t'at inclu es sport ,alls: timepieces: eye9ear: s3ates: ,ats: an ot'er e;uipment esi-ne for sports activities. In a ition: 9e utiliDe t'e follo9in- 9'olly8o9ne su,si iaries to sell a itional sports8relate merc'an ise an ra9 materials? Cole Haan Hol in-s Inc.: 2i3e %eam Sports: Inc.: 2i3e IH*: Inc.: an 4auer 2i3e Hoc3ey Inc. Our most popular pro uct cate-ories inclu e t'e follo9in-?

6unnin4as3et,all Cross8%raininOut oor "ctivities %ennis 1olf Soccer 4ase,all (oot,all 4icyclinGolley,all CrestlinC'eerlea in";uatic "ctivities "uto 6acinOt'er at'letic an recreational uses

Sales an% Inco'e Tren%s 6evenues in t'e fiscal year en e *ay .0: 0###: ecline ,y !> over t'e prior year to F!.777 ,illion. "s illustrate in t'e -rap' ,elo9: t'is mar3e t'e first time since 0##4 t'at revenues 'ave ecline . 6e-ar less of t'is year=s ecline: 2i3e Inc. ac'ieve .//> revenue -ro9t' over a 0/8 year perio : risin- from 0##/ sales of F$.$.& ,illion. Exhibit 1

H O,taine from 2i3e: Inc. 0### "nnual 6eport

"lt'ou-' revenues ecline in 0###: net income increase ,y 0.> over t'e prior year. "s t'e -rap' ,elo9 illustrates: net income 'as ,een volatile in t'e latter 'alf of t'e #/=s. S'arp ecreases in 0##! an 0### net income 9ere ue to restructurin- c'ar-es. If t'ese c'ar-es 'a not ,een incurre : income 9oul 'ave ,een flat for ,ot' years. Efficiency in cost control an inventory mana-ement 'as allo9e net income to increase 9'ile revenues ecrease in 0###. 2ote t'at t'e lar-est -ro9t' rate 9as 4.> in 0##7 over t'e prior year 9it' net income of F7#&.! million. Exhibit 2

H O,taine from 2i3e: Inc. 0### "nnual 6eport

C(allenges Our -reatest c'allen-e in $/// 9ill ,e to maintain t'e operational an financial initiatives 9e 9or3e so 'ar to implement in 0##! an 0###. Ce must maintain our inventory levels lo9 enou-' t'at 9ill allo9 us to a apt to ;uic3ly c'an-in- mar3et tren s. (inancially: 9e must remain

conservative in our cost structure. Cuts to operatin- expenses of almost F$// million t'is past year emonstrate t'at 9e are in a position to ,e nim,le in li-'t of our in ustry8 ominatin- siDe. Cit' t'e -ra ual economic recovery in t'e "sia Pacific re-ion: 9e can capitaliDe on customers 9'o are financially stron-er. Our sponsors'ip of t'e $/// Olympic 1ames in Sy ney: "ustralia: an t'e $//$ Corl Cup in <apan an )orea 9ill ,e t'e start of many opportunities to ,rin- sports events into t'e mainstream for re-ional an -lo,al mar3ets. Cit' a e exposure: 9e are c'allen-e to respon to a mar3et eman for fas'iona,le at'letic foot9ear an apparel. In t'is ;uest: 9e 9ill succee if 9e 3eep ;uality an performance at t'e core of our ,usiness. %'e Internet is a rapi ly c'an-in- me ium. "s t'e first company in our in ustry to offer e8 commerce capa,ilities: 9e must procee 9it' caution an stealt' in or er to select an en urinstrate-y t'at 9ill complement our existin- istri,ution c'annels.

HISTO"#
4ill 4o9erman an P'il )ni-'t foun e 2i3e Inc. as 4lue 6i,,on Sports in 0#6$. %'e partners ,e-an t'eir relations'ip at t'e @niversity of Ore-on 9'ere 4o9erman 9as )ni-'ts trac3 an fiel coac'. C'ile atten in- Stanfor @niversity: )ni-'t 9rote a paper a,out ,rea3in- t'e 1erman ominance of t'e @.S. at'letic s'oe in ustry 9it' lo98price <apanese s'oes. In an attempt to realiDe 'is t'eory: )ni-'t visite <apan an en-ineere an a-reement 9it' t'e Onitsu3a %i-er company: a manufacturer of ;uality at'letic s'oes: to ,e t'eir sole istri,utor in t'e @nite States. In 0#6$: )ni-'t receive t'e first s'ipment of $// pairs of %i-er s'oes to 'is parents -ara-e in Ore-on. %'e s'oes 9ere ,ou-'t ,y 4lue 6i,,on Sports A46SB: t'e name of t'e partners'ip ,et9een )ni-'t an 4o9erman t'at t'ey forme 9it' only F0:/// in capital. )ni-'t pe le %i-ers s'oes at local trac3 meets -rossin- F!:/// of sales in t'eir first year. In 0#66: 4o9erman: 9'o 'a previously esi-ne s'oes for 'is university at'letes: 9or3e 9it' %i-er to esi-n t'e Cortez runnin- s'oe. %'e s'oe 9as a 9orl 9i e success for t'e Onitsu3a %i-er Company an 9as sol at t'e first 46S store. In 0#70: 46S: 9it' cre itor support: starte manufacturin- t'eir o9n line of s'oes. Iater t'at year: t'e first 46S s'oe 9as intro uce . %'e s'oe 9as a soccer s'oe t'at ,ore t'e 2i3e ,ran name: referrin- to t'e 1ree3 1o ess of Gictory: an t'e S9oos' tra emar3. " stu ent esi-ne t'e S9oos' tra emar3 for a paltry fee of F.&. %'e S9oos' 9as meant to sym,oliDe a 9in- of t'e 1ree3 1o ess. 0#7$ mar3e t'e ,rea3up of t'e 46S7%i-er relations'ip. 46S soon c'an-e its name to 2i3e: Inc. an e,ute itself at t'e 0#7$ Olympic trials. In 0#7.: Steve Prefontaine 9as t'e first prominent trac3 star to 9ear 2i3e s'oes. %'e late 7/s an early !/s also sa9 <o'n *cEnroe: Carl Ie9is: an <oan 4enoit sportin- 2i3e s'oes. 2i3e popularity -re9 so muc' t'at in 0#7# t'ey claime &/> of t'e @.S. runnin- mar3et. " year later 9it' $:7// employees: 2i3e 9ent pu,lic sellin- $ million s'ares on t'e 2e9 Jor3 Stoc3 Exc'an-e. %'e 0#!/s 9ere mar3e ,y t'e si-nin- of *ic'ael <or an as a pro uct spo3esperson: revenues in excess of F0 ,illion: t'e formation of 2i3e International It .: an t'e E<ust 5o ItE campai-n. 2i3e also expan e its pro uct line to inclu e specialty apparel for a variety of sports. In 0##/: 2i3e

surpasse t'e F$ ,illion mar3 in consoli ate revenue 9it' &:.// employees 9orl 9i e. In a ition: 9e opene t'e 2i3e Corl Campus in 4eaverton: Ore-on. In 0##0: 2i3e pus'e revenues to F. ,illion: up from F$ ,illion t'e prior year. %'is mar3 9oul continue to -ro9 t'rou-'out t'e #/s: 9it' revenues in 0### reac'in- F!.! ,illion. %'ese revenues -re9 ,ase on improvements in s'oe tec'nolo-y an successful mar3etin- campai-ns. International revenues fuele a -reat portion of t'is -ro9t' 9it' an !/> increase in 0##0 from t'e prior year. In 0##$ international revenues toppe F0 ,illion for t'e first time an accounte for over one8t'ir of our total revenues. Suc' -ro9t' continue t'rou-'out t'e 0##/=s as 9e continue to focus our mar3etin- efforts on ma+or sportin- events li3e t'e Corl Cup: an t'e next -eneration of cele,rity en orsers: suc' as %i-er Coo s: Iance "rmstron-: an t'e players of 9omen=s professional ,as3et,all AC24"B. "t t'e en of t'e #/s: 2i3es -oal: as state in our company 9e, site: is to ,ecome a truly -lo,al ,ran .

$"OFILE OF THE CEO

P'illip H. )ni-'t: C'airman an C'ief Executive Officer: is t'e co8foun er of 2i3e: Inc. He 'as ,een t'e rivin- force ,e'in our company=s success since its inception in 0#64 un er t'e name 4lue 6i,,on Sports. )ni-'t is 60 years of a-e an 'ol s an un er-ra uate e-ree from t'e @niversity of Ore-on an an *4" from Stanfor @niversity. )ni-'t practice as a CP" an tau-'t at Portlan State @niversity prior to foun in- t'e company 3no9n to ay as 2i3e. He 'as ,een an innovative visionary in t'e in ustry of at'letic foot9ear an apparel. His efforts 'ave 'elpe to esta,lis' 2i3e as an in ustry lea er in ,ot' national an international mar3ets. )ni-'t=s mana-erial mo e is one t'at is c'aracteriDe ,y strate-ic plannin-. %'is mo e is representative of an open8min e CEO: one 9illin- to ta3e calculate ris3s an ma3e conservative ecisions ,ase on careful analysis of external an internal environments. )ni-'t=s ecision8ma3in- style favors t'e participative approac'. He is not 'esitant to ma3e unilateral ecisions: ,ut prefers to loo3 to 'is truste mana-ement team for t'eir insi-'t an i eas ,efore c'oosin- a course of action.

$"OFILE OF THE CO!$ETITO"

6ee,o3: in terms of t'eir pro ucts: is not entirely ifferent from 2i3e. 6ee,o3 is involve in t'e esi-n an mar3etin- of ,ot' at'letic an non8at'letic foot9ear an apparel: as 9ell as ot'er various fitness pro+ects. 6ee,o3s mar3et s'are is a istant t'ir in t'e foot9ear in ustry at 00.$> Acompare to ./.4> an 0&.&> for 2i3e an " i as respectivelyB. 6ee,o3s financial position 'as ,een -ra ually slippin- for a num,er of years. %'is is evi ent in t'eir eclinin- stoc3 price: 9'ic' 'as fallen ,y over !/ percent in t'e last four years. 6ee,o3s financial 9oes are illustrate in t'eir eclinin- net sales. 6ee,o3s net sales ecline #> urin- t'e first t'ree8;uarters of fiscal year 0###. 5urin- t'at same perio : net income ecline 07>. %a3in- t'ese an ot'er factors into account leaves 6ee,o3s current financial position: as a 9'ole: loo3in- ,lea3.

$"OFILE OF THE IN)UST"#

In%&stry Si*e In 0##!: "mericans spent approximately F.! ,illion to purc'ase more t'an 0.0 ,illion pairs of s'oes. %'e 9'olesale value of at'letic s'oes for t'e @S mar3et totale F!.7 ,illion in 0##! o9n !.&> from t'e year ,efore. "ccor in- to t'e Sportin- 1oo s *anufacturers "ssociation: at'letic foot9ear accounts for almost .&> of all foot9ear purc'ases. In -eneral: consumers are spen in- less 9orl 9i e for at'letic foot9ear. %'e current omestic in ustry focus is on casual an comforta,le s'oes. "lt'ou-' at'letic foot9ear sales appear to ,e recoverin-: eman is still leanin- to9ar t'e E,ro9n s'oeE casual foot9ear 9it' a comforta,le an ru--e esi-n. %'is s9itc' is ue to t'e increasin- num,er of 9or3places a optin- casual ress co es. In%&stry $rofita+ility %'e at'letic foot9ear in ustry is a c'allen-in- an saturate mar3et. Intense competition: fas'ion tren s: an price conscious consumers 'ave slo9e -ro9t' in t'is in ustry. *anufacturers are com,atin- slu--is' sales 9it' ra ical ne9 styles: alon- 9it' offerin- more styles at lo9er price points. Companies are loo3in- for ne9 9ays to ,oost sales ,y capitaliDin- on irect Internet sales to consumers. *any companies are also increasin- profita,ility ,y transferrin- pro uction to c'eaper offs'ore facilities. %'is se-ment 'as reac'e a point of maturity in t'e omestic mar3et an can loo3 for9ar to only mo est sales -ro9t' for t'e lon- term. Ho9ever: sales are improvin- sli-'tly: especially in t'e areas of runnin- s'oes: cross8trainers an ,as3et,all s'oes. %'erefore: companies 9it' stron,ran s 9ill increasin-ly turn to international mar3ets for -ro9t'. In%&stry Seasonality Overall: sales in t'e at'letic foot9ear in ustry remain sta,le t'rou-'out t'e year. %'e -lo,al variance in our mar3et ,alances t'e seasonal fluctuations. %ypical tren s in seasonality appear for sprin- apparel: t'e ,ac38to8sc'ool season: an t'e C'ristmas 'oli ay season. In%&stry Cyclicality In fiscal year 0###: t'e economy 9as relatively favora,le for foot9ear manufacturers. %'e foot9ear in ustry an its profita,ility are closely tie to economic cycles. *o est inflation: lo9 unemployment: an a ,oomin- stoc3 mar3et 9ill all contri,ute to 'ealt'y consumer spen in-. %'e t'eory ,e'in t'e slo9 o9n in sales is t'at -ro9t' in at'letic foot9ear an apparel is cyclically sensitive to t'e Olympics. Historically: years of t'e Olympic 1ames 'ave emonstrate sur-es in -ro9t' follo9e ,y ifficult sales perio s. %'e outloo3 for increase sales tren s is optimistic ue to t'e upcomin- Olympic 1ames slate for t'is year. 2i3e can also loo3 for9ar to a ,oost in eman from t'e Corl Cup events.

In%&stry Entry an% E,it Barriers Entry 4arriers %'e at'letic foot9ear in ustry is a very competitive an mature mar3et. %'e lea ers of t'is in ustry are very 9ell esta,lis'e . Iea ers li3e 2i3e an 6ee,o3 'ave ma e t'e in ustry 9'at it is to ay. Conse;uently: lon-8time competitors li3e Saucony an )8S9iss 'ave ,een stru--lin- for years +ust to 3eep t'eir ,ran s alive. %'is cutt'roat environment 'as 'in ere t'e entry of ne9 competitors. Economies of scale also contri,ute to t'e lac3 of ne9comers into t'is mar3et. In or er to 'ave an e -e over t'e lea ers: companies must ,e a,le to compete at all levels suc' as reasona,le pricin-: efficient pro uction: an 'i-' pro uct ;uality. %'ese t'in-s are ifficult to ac'ieve 9it'out t'e resources of an esta,lis'e manufacturer. "not'er 3ey ,arrier to entry is t'e access of tra itional istri,ution c'annels. C'en com,in- t'e s'elves at stores li3e Sports "ut'ority an (ootIoc3er: it is evi ent t'at t'e lea ers ominate t'e s'elves. Iesser83no9n ,ran s are vie9e ,y retailers as ,ein- too ris3y to replace an esta,lis'e ,ran name li3e 2i3e or 6ee,o3 on t'e s'elf. %'ese 9alls seem to ,e ,rea3in- o9n 9it' t'e 'elp of t'e Internet. %'e costs of over'ea t'at come alon- 9it' tra itional ,ric3 an mortar retail istri,utors are ,ein- si-nificantly iminis'e . 2e9 entrants are no9 a,le to sli e into mar3ets 9it'out t'ese 'i-' startup costs: ma3in- it more profita,le to ,e-in pro uction. Exit 4arriers C'en a company eci es to exit from t'is in ustry it must ,e a9are of t'in-s suc' as in e,te ness an its a,ility to meet t'ose o,li-ations. " company must also ,e co-niDant of la9suits file ,y its sta3e'ol ers an claims ma e on any resi ual assets.

CO!$AN# ANAL#SIS
Strengt(s an% -eaknesses of t(e Cor.orate/B&siness Le0el Strategic !anagers 4oar of 5irectors 8 Stren-t' 2i3es ,oar of irectors consists of ,ot' mana-ement irectors an in epen ent irectors. %'e com,ination of t'ese t9o types of irectors ,enefits 2i3e in t'at t'ere is a presence of t'ose irectly involve 9it' 2i3e as 9ell as ot'ers in irectly involve 9'o ,rin- outsi e experience: provi e anot'er frame of reference an can assist t'e overall ,oar in t'in3in- Eoutsi e t'e ,ox.E 2i3es ,oar 9oul ,e classifie as an oversi-'t ,oar : playin- an active role 9it' re-ar s to mana-ements ecisions in t'e area of strate-y formulation.

4oar of 5irectors 8 Cea3ness %'e avera-e a-e of 2i3es ,oar is 6$: t'e youn-est mem,er ,ein- 4# an ol est ,ein- 7#. %'is constitutes a possi,le 9ea3ness in t'at t'ere is a lac3 of youn-er mem,ers of t'e ,oar 9'o coul serve to ,rin- a ne9 perspective to t'e company an assist in ac'ievin- 2i3es -oals.

Exhibit 3 Nike, Inc. 1222 Boar% of )irectors3

%'omas E. Clar3e Presi ent an C'ief Operatin- Officer: 2i3e: Inc.: 4eaverton: O6

<ill ). Con9ay

Gisitin- Sc'olar: *assac'usetts Institute of %ec'nolo-y: 4oston: *"

6alp' 5. 5e2unDio

Presi ent: Har,or Point "ssociates: Inc.: 2e9 Jor3 City: 2J

6ic'ar ). 5ona'ue

Gice C'airman of t'e 4oar : Io9ell: *assac'usetts 5el,ert <. Hayes: 2e9,er-: O6

5ou-las 1. Houser

"ssistant Secretary: 2i3e: Inc.: Partner K 4ullivant: Houser: 4ailey: Pen er-rass L Hoffman "ttorneys: Portlan : O6

<o'n E. <a;ua

Secretary: 2i3e: Inc.: Partner K <a;ua L C'eatley: P.C. "ttorneys:

Eu-ene: O6

P'ilip H. )ni-'t

C'airman of t'e 4oar an C'ief Executive Officer: 2i3e: Inc.: 4eaverton: O6

C'arles C. 6o,inson

Presi ent: 6o,inson L "ssociates: Santa (e: 2*

". *ic'ael Spence

5ean: 1ra uate Sc'ool of 4usiness: Stanfor @niversity: Palo "lto: C"

<o'n 6. %'ompson: <r.

(ormer Hea Coac': 1eor-eto9n @niversity: Cas'in-ton: 5.C.

Cilliam <. 4o9erman

5irector Emeritus

H 2i3e: Inc. 0### "nnual 6eport

%op *ana-ement 8 Stren-t' Co8foun er: P'ilip H. )ni-'t: 'as ,een 9it' 2i3e since its inception. "s a result: 'e 'as muc' 3no9le -e an experience a,out t'e company an t'e in ustries in 9'ic' it competes. )ni-'ts strate-ic plannin- mana-erial style serves as a stren-t' in t'at 'is actions are planne an calculate : allo9in- for ,ot' ris3y an conservative ecisions ,ase on careful t'ou-'t an analysis. His participative ecision8ma3in- style can also ,e vie9e as a stren-t' suc' t'at )ni-'t is 9illin- to listen to ot'ers to -enerate i eas. He oes not limit t'e companys options to one8si e i eas an ecisions.

En0iron'ental Analysis Internal K Stren-t' 2i3es mana-ement analyDes its internal environment an ma3es ecisions ,ase on t'at analysis. 4ecause of 2i3es mar3etin- researc': t'e company 'as eci e to revamp its apparel ivision to ,e more fas'ion savvy. "s a result of pro uct an pricin- researc': 2i3e 'as eci e to continue to focus on t'e 'i-' en mar3et 9'ile increasin- its mar3et s'are in t'e mi le an lo9 price ran-es in an attempt to ,roa en 2i3es pro uct spectrum. External 8 Cea3ness 2i3es failure to foresee pro,lems in relation to la,or an factory con itions at pro uction locations 'as resulte in ,a pu,licity an eclinin- sales as society an consumers call for more Esocially responsi,leE companies. Strategy For'&lation *ission 8 Cea3ness 2i3e=s Corporate *ission Statement? E%o ,e t'e 9orl =s lea in- sports an fitness company.E 2i3es mission statement resem,les a vision statement an is t'erefore a 9ea3ness. C'ile t'e mission oes ,roa ly i entify t'e ,usiness 9e are in: namely t'e sports an fitness in ustry: it is not specific as to 9'at pro ucts an services 9e provi e. %'e mission statement also omits any mention of istri,ution c'annels an customers. It oes: 'o9ever: portray mana-ements ,eliefs an values of our esire to ,e num,er one an maintain t'e lea in- position in t'e sports an fitness s'oe an apparel in ustry. Corporate O,+ectives K Cea3ness 2i3e 'as no pu,lis'e corporate o,+ectives in relation to t'e overall company. %'is lac3 of corporate o,+ectives represents a 9ea3ness. Sta3e'ol ers s'oul ,e 9ell a9are an informe of a companys corporate o,+ectives to ,etter un erstan t'e nature of t'e company an its irection. 2i3e 'as esta,lis'e corporate o,+ectives in relation to our perceive corporate responsi,ility. Our o,+ective is to Elea in corporate citiDens'ip t'rou-' pro-rams t'at reflect carin- for t'e 9orl family of 2i3e: our teammates: our consumers: an t'ose 9'o provi e services to 2i3e.E %'is corporate o,+ective represents a 9ea3ness as it oes not meet t'e t9o re;uirements of ,ein- measura,le an 'avin- a time frame in 9'ic' to complete or accomplis' sai o,+ective. 2i3es o,+ective is immeasura,le an ,roa lac3in- any time specifications for implementation of pro-rams to meet t'is o,+ective.

1ran Strate-ies 8 Stren-t' (or our -ran strate-y: 2i3e utiliDes innovation to pro uce top ;uality at'letic foot9ear an apparel. "s a result of evotin- vast resources to t'e researc' an evelopment of its pro ucts: 2i3e 'as capture t'e lar-est mar3et s'are in t'e at'letic foot9ear an apparel in ustry an continues to ,e t'e lea er of ;uality pro ucts. Competitive Strate-ies 8 Stren-t' %'e competitive strate-y t'at 2i3e intro uce at t'e en of t'e 0##/=s concentrates on 'onin- t'e focus of our mar3etin- strate-ies an pro uct offerin-s t'rou-' pro uct ifferentiation. Ce realiDe t'at t'e team8mentality t'at capture t'e spirit of at'letics in t'e late 0#!/=s an early 0##/=s 'as ,een replace ,y a sense of in ivi ualism. Joun-er consumers especially: loo3 to extreme sports an retail outlets suc' as "m,ercrom,ie L (itc' an Ol 2avy to fin a sense of in ivi ual style. Ce are respon in- to t'is movement in a num,er of 9ays. C'ile retainin- our company=s lon-8 stan in- tra ition of placin- performance t'rou-' ne98pro uct evelopment as a top priority: a never8,efore seen element of fas'ion 9ill receive a secon 8place priority ,uilt into our pro ucts an ima-e. (or t'e 0### ,ac38to8sc'ool season: 9e con ucte fas'ion s'o9s in t9elve @.S. cities. In a ition: an element of in ivi ualism is most o,vious in our Ce, site. Customers can select t'e color an esi-n a mono-ramme 'eel8insi-nia for our ma e8to8or er at'letic s'oes. Strategy I'.le'entation Corporate Culture 8 Stren-t' 2i3e 'as create a corporate culture ric' 9it' employee loyalty an team spirit. 6e ES9oos'esE float across everyt'in- from screen savers to coffee cups at t'e company=s 'ea ;uarters in 4eaverton: Ore-on. %'e company c'ooses to call its 'ea ;uarters a EcampusE instea of an office. Employees are calle Eplayers:E supervisors are Ecoac'esE an meetin-s are E'u les.E %'ese terms -o a lon- 9ay to ma3e t'e aily 9or3 experience less t'an ull for t'e luc3y employees in 4eaverton. In 0#!&: t'irteen years after t'e company 9as foun e : 2i3e 9as ,lin si e 9'en 6ee,o3 evelope its multicolore aero,ic s'oes. It 9as t'en t'at 9e eci e to reinvent our ,usiness an culture: ,ecomin- 'i-'ly motivate a,out sellin- sports an a E2i3e 9ay8of8life.E Cit' t'is ecision t'e company also restructure its mar3etin- campai-n: focusin- more on an ima-e rat'er t'an +ust pro uct a vertisin-: a strate-y 9'ic' le to t'e E<ust 5o ItE mantra. Since t'en: 2i3e 'as ,een strivin- to9ar s an inner culture t'at reflects t'is mantra. Employees are -iven an 'our an a 'alf for lunc' to play sports or simply 9or3out. %'e ne9 2i3e is not +ust a,out s'oes an slam8 un3s: ,ut a,out promotin- a lifestyle. "ll ne9 employees vie9 a vi eo of sports 'i-'li-'ts accompanie ,y a soun trac3 t'at iscusses t'e soul of t'e at'lete an t'e competitive spirit. In a ition: mana-ement sen s 9ee3ly emails to up ate employees on t'e recent successes of 2i3e8sponsore at'letes: an often 'osts spo3espeople to motivate an t'an3 its staff for contri,utions to t'e sports 9orl . It is not surprisin- t'at an at'letic ,ac3-roun 'elps a prospective employee. In 3eepin- 9it' its sports approac' 2i3e as3s its players to 9or3 ,y t9o

principals a,ove all ot'ers 88 EHonesty first: an competition secon . Compete 9it' yourself not your collea-ues.E 2elson (erris: a 47 year8ol 'ea of its corporate e ucation epartment states t'at: E%'e S9oos' represents somet'in- ot'er t'an +ust a company. It represents a 9'ole value system.E $ (erris: a lon-time employee: even 'as a S9oos' tattooe a,ove 'is an3le. EIt stops ,ein- a +o, an starts to ,ecome a 9ay t'at your are efinin- t'e 9ay your are livin- on eart'.E $ Communication 8 Stren-t' In late sprin- of 0###: 2i3e 6etail: 2i3e=s su,si iary consistin- of t'e 2i3e %o9n s'ops an employee stores aroun t'e 9orl : up-ra e t'eir 'ar 9are an soft9are. Our former tec'nolo-y offerin-s consiste of I4* 46#/8series point8of8sale cas' re-isters runnin- on t'e OS7$ operatinsystem. Ce 'ave up-ra e to PC8,ase systems runnin- t'e more sop'isticate Cin o9s 2% operatin- system. %'e soft9are 9e 'ave ,een usin- for t'e past fe9 years calle : Connect? 6emote: ma e ,y Sterlin- Commerce Inc.: is also ,ein- up-ra e to t'e ne9 operatin- platform. Corporate office communications capa,ilities 9it' t'ese ,ranc' locations 9ill ,e improve ramatically. Sales an inventory ata can ,e monitore in real8time. Electronic +ournalin-: cre it aut'oriDation: an sales reconciliation processin-8efficiency 9ill increase ue to t'e a ition of in8 store ata,ases. *o ems transmittin- ata at &6) 4PS: or even 9it' i-ital tec'nolo-y: 9ill replace t'e #6// 4PS mo ems an provi e for ;uic3er processin- times. "ll of t'ese innovations 9ill allo9 executives at t'e corporate office an in ot'er ,ranc'es to ,etter mana-e operations. Iea ers'ip 8 Stren-t' 2i3es top mana-ements lea ers'ip style can ,e c'aracteriDe ,y t'e team mana-ement approac'. %op mana-ement consists of a committe -roup of executives all ,rin-in- to-et'er vast experience an 3no9le -e. %'e -roup is team oriente : ,ut is capa,le an oes 9or3 in epen ently reco-niDin- t'e common sta3e t'at eac' places in 2i3e. %'is style of lea ers'ip lea s to relations'ips of trust an respect. %'e company culture len s a 'an to t'e fact t'at top mana-ements team9or3 style 'as sprea t'rou-'out t'e or-aniDation. *otivation 8 Cea3ness C'ile 2i3e employees 'ave ,een loyal an committe 9or3ers: after t'e cost8re uctions t'at too3 place in t'e fourt' ;uarter of 0##! resultin- in a re uction of t'e num,er of employees: 9e 'ave 'a to place -reater emp'asis on motivation amon- t'e retaine employees. *orale also fell as a result of ,a me ia covera-e over reports of su,stan ar 9or3in- con itions for our "sian factory 9or3ers. C'ile initiatives 'ave ,een set to increase overall employee morale: t'is area remains a c'allen-e to t'e company. Strategy Control Esta,lis'ment of Stan ar s 8 Stren-t'

" compre'ensive esta,lis'ment of profita,ility stan ar s 'as assiste 2i3e in our evaluation of in ivi ual performance as 9ell as a comparison to ot'er competitors. 2i3e utiliDes stan ar s suc' as net profit: earnin-s per s'are: return on investment: return on e;uity: sales -ro9t' an asset -ro9t'. Performance stan ar s are also esta,lis'e an c'ec3e re-ularly. Some of t'e areas in 9'ic' our company 'as esta,lis'e stan ar s are pro uctivity of pro uctions sites: competitive position in t'e @nite States relative to t'e -lo,al mar3et: tec'nolo-ical lea ers'ip in comparison to competitors an overall social responsi,ility an t'e pu,lics perception. Evaluation of Performance 8 Stren-t' 2i3e t'orou-'ly examines an compares t'e aforementione performance stan ar s to t'e actual results t'at 'ave occurre as a result of implementin- strate-ies to meet or excee performance stan ar s. %'ese stan ar s are important to 2i3e as a comparison of past performance to present performance as 9ell as in our attempt to forecast future results in t'ese areas. Correction of 5eviation 8 Stren-t' %'ou-' 2i3e 'as esta,lis'e profita,ility an performance stan ar s: correction of iscovere eviations 'as ,een a slo9er an less timely process. *ana-ements slo9 response time can ,e attri,ute to t'e careful analysis t'at is performe prior to ma3in- any ecisions. C'ile in -eneral t'is is a -oo policy to a,i e ,y: at times 2i3e 9oul ,e ,etter serve ,y a mana-ement team t'at can react more ;uic3ly to -iven information. Strengt(s an% -eaknesses of t(e F&nctional Le0el !arketing *ar3et S'are 8 Stren-t' 2i3es -lo,al mar3et s'are 9as an impressive ./.4> in 0##!. 5espite a sli-'t ecline from prior years: 2i3e continues to 'ave t'e -reatest mar3et s'are in t'e @.S. ,ran e at'letic foot9ear mar3et. In 0##!: t'e closest competitor: " i as: 'el 0&.&> of t'e mar3et s'are 9'ile 6ee,o3 'el 00.$>. %'e remainin- competitors: inclu in- (ila: %im,erlan : "sics: Converse: an 2e9 4alance: amon- ot'ers: eac' 'ol approximately .8&> of t'e remainin- mar3et s'are. C'ile 2i3es mar3et s'are is still in t'e lea : it is expecte to increase 9it' ne9 pro ucts. 2i3es mar3et s'are is expecte to o especially 9ell as a result of sponsorin- t'e summer Olympics in $/// in Sy ney: "ustralia: t'e $//$ Corl Cup in <apan an )orea: an t'e @.S. Spee s3atin- team in t'e $//$ Cinter Olympics in Salt Ia3e City: @ta'. 5istri,ution t'rou-' E8commerce 8 Stren-t' 2i3e 'as ta3en t'e lea in e8commerce ,y ,ein- t'e first to mar3et 9it' its e8commerce 9e,8site. 2i3e launc'e its e8commerce site in "pril 0### ,y offerin- 6& styles of s'oes to t'e @.S. mar3et for purc'ase. 2i3e increase its e8commerce presence ,y launc'in- 2I)Ei5 in 2ovem,er 0###. 2I)Ei5 ena,les online consumers to esi-n 3ey elements of t'e s'oes t'ey purc'ase. %'e pro-ram represents t'e first time a company 'as offere mass customiDation of foot9ear. 2i3es

future plans inclu e openin- an online s'op for t'e <apanese mar3et next year follo9e ,y -lo,al rollout. 4y ,ein- t'e first to mar3et: 2i3e ena,les itself to ,ecome esta,lis'e 9'ile competitors rus' to +oin us. " vertisin- an Promotion 8 Stren-t' 2i3es ,ran ima-es: inclu in- t'e 2i3e name an t'e tra emar3 S9oos': are consi ere to represent one of t'e most reco-niDa,le ,ran s in t'e 9orl . %'is ,ran po9er translates into ,ottom8line revenues. %'e 2i3e name an associate tra emar3s 'ave appeare every9'ere from players= s'irts: pants: an 'ats to sta ium ,anners an 9alls. "--ressive a vertisin- campai-ns: cele,rity en orsements: an ;uality pro ucts en'ance t'e ,ran . 2i3e emonstrate an example of 2i3es ,ran presence at t'e 0### 2C"" 4as3et,all tournament 9'en 4$ of t'e 64 teams participatin- 9ore s'oes provi e . 2i3e=s most recent ,ran 8,uil in- en eavors are focuse on stren-t'enin- our association 9it' 9omens sports. Some examples are our sponsors'ip of t'e 0### Comen=s Corl Cup Soccer %ournament an our sponsors'ip of t'e @.S. Spee s3atin- team in t'e upcomin- $//$ Cinter Olympics. Pro ucts 8 Stren-t' %'ou-' 2i3e lea s t'e apparel ivision amon- in ustry competitors: 2i3e 'as not claime to ,e lea in- t'e race amon- t'e apparel in ustry as a 9'ole. 5ue to increase emp'asis ,y consumers on fas'ion in relation to sports9ear: 9e 'ave 'a to ma3e stri es to appeal to a fas'ion savvy mar3et. Our apparel line is not only ,ein- c'allen-e ,y our typical in ustry competitors suc' as " i as an 6ee,o3: ,ut also ,y clot'in- an accessories retailers suc' as Ol 2avy an ",ercrom,ie L (itc'. Continuous mar3etin- researc' coul prove to ,e 3ey in assessin- t'e mar3et. 2i3e is plannin- on initiatin- five structures 9it'in t'e apparel ivision to focus on t'e follo9in- areas?
o o o o o

Comen *en )i s sports -rap'ics an caps strate-ic response in epen ently

Ce are also spen in- more time on continuin- to support an evelop pro-rams to -ain a ,etter un erstan in- 9'at our customers 9oul li3e to see in t'e mar3et. Pro ucts 8 Cea3ness 2i3e 'as 'a muc' success as a result of colla,oratin- 9it' ot'er companies 9it'in t'e sports an fitness in ustry. Ho9ever: at times 9e expan e into mar3ets for 9'ic' 9e 9ere not strate-ically suite . "n example is t'e ecrease in ,ran s ma e availa,le ue to eclinin- sales of in8line s3atin- an roller 'oc3ey pro ucts at 4auer 2i3e Hoc3ey. "s a result: 9e 'ave 'a to exit t9o manufacturin- operations at our 4auer 2i3e su,si iary. Ce 'a to terminate &0 employees. Ha 9e anticipate t'e ecline sooner: per'aps -ra ual c'an-es coul 'ave ,een ma e so t'at t'e en result may not 'ave ,een as finite in nature. %'e esire to prevent situations suc' as t'ese

from continuin- to occur: 9e 'ave initiate a more a--ressive pro-ram to revie9 pro uct colla,orations t'at are outsi e of our core ,asis of pro ucts. Pricin- 8 Cea3ness In -eneral: 2i3es pro ucts are consi ere to ,e of 'i-'er ;uality an as a result 'ave 'i-'er prices relative to our competitors. C'ile t'e prices are realistic -iven t'e nature of t'e pro ucts 9e offer to our consumers: at times our consumers may not a-ree. %'is presents a 9ea3ness. %o miti-ate any future pro,lems in our 'i-' ;uality7'i-' price lines: 9e are placin- a rene9e emp'asis on emer-in- tec'nolo-y an innovation to9ar s t'e evelopment of ne9 pro ucts: specifically t'e 2i3e "lp'a Pro+ect: a revolutionary ne9 line of at'letic s'oes. 5espite t'e fact t'at in t'e past 9e may 'ave overloo3e t'e mi 8 to lo9er8price8point pro ucts: presentin- anot'er 9ea3ness 9it' room for improvement: 9e are e icatin- our time an money to ,etter evelop our competitive position at all price points to ,uil stren-t's at eac' of t'ese levels. Ce see muc' potential in t'e lo9er price points an plan to meet t'e nee s of t'ose mar3ets. *ar3etin- 6esearc' 8 Stren-t' 2i3e primarily con ucts mar3etin- researc' on a continual ,asis to assist in maintainin- our companys position as t'e lea er in t'e at'letic foot9ear an apparel in ustry. 4ecause of suc' researc': 9e 'ave eci e to revamp our apparel ivision: an area in 9'ic' 9e can still -reatly improve. 2i3e 9ill ,e or-aniDin- t'e internal ,usiness ,y -en er as oppose to sport cate-ory an con uctin- increasin- amounts of researc' a ressin- t'e ,uyin- 'a,its of men: 9'o ten to ,e item8 riven: an 9omen: 9'o ten to ,e collection8 riven: 9it' specifically tar-ete pro uct lines. $ro%&ction Iocation of (acilities 8 Stren-t' 2i3es facilities are locate t'rou-'out "sia an Sout' "merica. %'e locations are -eo-rap'ically isperse 9'ic' 9or3s 9ell in our mission to ,e a truly -lo,al company. %'e pro uction facilities are locate close to ra9 materials an c'eap la,or sources. %'ey 'ave ,een strate-ically place in t'eir locations for +ust t'is purpose. In -eneral: t'e facilities are locate furt'er from most customers: resultin- in 'i-'er istri,ution costs. Ho9ever: t'e cost savin-s ue to t'e placement of our pro uction facilities allo9s for c'eaper pro uction of our pro ucts espite t'e 'i-'er costs of transportin- our pro ucts. "s 2i3e continues to expan in t'e -lo,al economy an increase its mar3et t'rou-'out t'e 9orl : t'ese isperse facilities 9ill prove to ,e ,eneficial. 2e9ness of (acilities 8 Cea3ness Our facilities a,roa 'ave attracte ,a pu,licity in recent years. %'ou-' our facilities comply 9it' local la,or stan ar s: -enerally: t'ey 'ave not met @.S. stan ar s. Ce 9ant to ,e a lea er an set a responsi,le corporate example for ot'er ,usinesses to follo9. "s part of 2i3es ne9 la,or initiative: 9e commit to?

o o

Expan in- our current in epen ent monitorin- pro-rams to inclu e non8 -overnmental or-aniDations: foun ations an e ucational institutions. Ce 9ant to ma3e summaries of t'eir fin in-s pu,licM " optin- @.S. Occupational Safety an Healt' " ministration AOSH"B in oor air ;uality stan ar s for all foot9ear factoriesM (un in- university researc' an open forums to explore issues relate to -lo,al manufacturin- an responsi,le ,usiness practices suc' as in epen ent monitorin- an air ;uality stan ar s.

C'ile esta,lis'in- t'ese policies is a step in t'e ri-'t irection for 2i3e: t'e ifficult tas3 at 'an 9ill ,e t'e implementation of t'e aforementione -oals to ensure t'e success of t'e pro-ram. "esearc( an% )e0elo.'ent (ocus 8 Stren-t' "lt'ou-' 2i3e con ucts continuous: ,asic researc' t'at ,enefits numerous facets of t'e sports an fitness in ustry: our primary focus is irecte to9ar s applie researc'. "pplie researc' focuses on s'ort8term initiatives suc' as successfully evelopin- ne9 pro uct lines. %'is proves to ,e a stren-t' in t'at t'is met'o of researc' is less costly t'an ,asic researc': an less ris3y ue to t'e s'ort8term nature. Successful pro+ects can realiDe imme iate profita,ility 9'ile unsuccessful pro+ects may ,e iscontinue 9it'out en urin- materially lar-e losses. (ocus K Cea3ness (ocusin- on applie researc' can ,e a 9ea3ness as 9ell. *any ne9: innovative i eas come into existence as a result of ,asic: unspecific researc'. %'ou-' more ris3y an expensive: 2i3e 9oul ,enefit from increasin- t'e amount of ,asic researc' 9e con uct 9it' 'opes of uncoverinpotential opportunities of 9'ic' 2i3e coul ta3e a vanta-e. Posture 8 Stren-t' Our posture is primarily innovative: 9'ile at times a +ustin- to a protective position: an ot'er times a catc'8up stance. 2i3e pri es itself on ,ein- a premiere provi er of 'i-' ;uality sports foot9ear an apparel. Innovation 'as ,een t'e 3ey to ai in- 2i3e in securin- its position as t'e lea er in t'e mar3et. 5ue to t'e lea 2i3e possesses in t'e in ustry: 9e can affor to loo3 lon-8term an place a -reater emp'asis on innovation as oppose to ot'er companies 9it' a s'ort8term outloo3 attemptin- to improve upon existin- pro ucts an services. "t times: 9e nee to a +ust our posture in relation to a particular pro uct line or area of pro ucts. In t'ese instances: 2i3e may c'oose a efensive strate-y to reme y t'e current situation. Ce may also c'oose a catc'8up strate-y an mimic 9'at is 9or3in- 9ell for ot'er companies in t'e in ustry.

H&'an "eso&rces Human Capital 8 Cea3ness 2o successful company can exist an succee 9it'out utiliDin- its 'uman capital. C'ile 2i3e 'as 'a various policies in place: 9ea3nesses still exist in re-ar s to la,or policies in overseas locations. Ce receive muc' ,a pu,licity as 9ell as experience a ecrease in sales as a result of poor la,or policies an lac3 of policies esta,lis'e a,roa . 4ecause of t'is an 2i3es -oal to ,e a responsi,le citiDen of t'e corporate 9orl : 2i3e 'as committe to -oals to ,etter t'e pro,lems as part of t'e aforementione la,or initiative?
o o o

Increasin- t'e minimum a-e of foot9ear factory 9or3ers to 0!: an minimum a-e for all ot'er li-'t8manufacturin- 9or3ers Aapparel: accessories: e;uipmentB to 06M Expan in- e ucation pro-rams: inclu in- +unior an 'i-' sc'ool e;uivalency courses: for 9or3ers in all 2i3e foot9ear factoriesM Increasin- support of its current micro8enterprise loan pro-ram to 0:/// families eac' in Gietnam: In onesia: Pa3istan: an %'ailan .

C'ile esta,lis'in- t'ese policies is a step in t'e ri-'t irection for 2i3e: t'e ifficult tas3 at 'an 9ill ,e t'e implementation of t'e aforementione -oals of t'e ne9 la,or initiative to ensure t'e success of t'e pro-ram. $&+lic Affairs Et'ics K Cea3ness "ccusations of unet'ical ,e'avior: 9'et'er or not t'ey are true: only serve to in+ure 2i3es ima-e: an : as a result: pro uct sales. One suc' example of ;uestiona,le ,e'avior relates to Gietnam an t'e tra e em,ar-o place on t'e communist country as a result of @nite States POCs7*I"s. In 0##.: @nite States Presi ent: 4ill Clinton: promise to 3eep t'e em,ar-o in place until t'e @.S. receive an accurate picture of t'e situation. Ho9ever: t9o years later Presi ent Clinton normaliDe tra e relations to t'e ismay of t'e POC7*I" families involve : yet to t'e eli-'t of t'e corporations operatin- in Gietnam. C'ite House ocuments 'ave reveale lar-e onations to t'e 5emocratic 2ational Committee ,y companies 9it' an interest in seein- t'e em,ar-o lifte . %'e aut'or of t'e article: E2i3es 5irty Iittle Secret:E allu es to t'e fact t'at 2i3e 9as present on t'is list. %'e ima-e of profita,ility ,ein- more important t'an "merican POC7*I"s 'as le to an unfavora,le ima-e 9it' arme forces: families an "mericans as a 9'ole. %'is: com,ine 9it' t'e Es9eats'opE operations in 2i3e facilities in Gietnam an ot'er countries: 'as ne-atively impacte 2i3es ima-e. C'ile t'e 9orst is over: 2i3e is still 9or3in- on initiatives to c'an-e t'e current situations t'rou-'out factories. C'et'er true or not: t'e company still suffers from t'is unet'ical ima-e an must s9ay t'e min s of t'e consumer an -ive t'em a rene9e fait' in t'e responsi,ility of 2i3e.

Social 6esponsi,ility 8 Stren-t' In response to accusations ,y consumer -roups over unfair la,or practices: 2i3e 'as evelope a Corporate 6esponsi,ility Policy t'at iscusses 'o9 9e 9ill improve 9or3in- con itions for our international employees. %'e Policy outline on our 9e,8site 'as t'e follo9in- mission: E%o lea in corporate citiDens'ip t'rou-' operations t'at reflect carin- for t'e 9orl family of 2i3e: our teammates: our consumers: an t'ose 9'o provi e services to 2i3e.E %'e policy inclu es: ,ut is not limite to: t'e follo9in- initiatives? raisin- a-e limits in factories to 0! years: securinin epen ent monitorin- for our factories: exten in- a commitment to t'e environment: improvinsafety an 'ealt' con itions: an evelopin- pro-rams to provi e e ucational pro-rams. %'e policy s'o9s 2i3es commitment to respon in- to t'e concerns of consumers: as 9ell as a commitment to our employees aroun t'e 9orl . Finance/Acco&nting 4For t(e follo5ing, see E,(i+it 6, Ta+le of 7ey Financial "atios on .age 889 *ana-ement of Cas' 8 Cea3ness Our companys current ratio is $.$6: +ust sli-'tly ,elo9 t'e in ustry avera-e of $.$!. %'e current ratio: 9'ile not a ma+or stren-t': s'o9s t'at 2i3e is inline 9it' t'e in ustry concernin- ease of convertin- assets to cas' to cover s'ort8term o,li-ations. %'e ;uic3 ratio of 0.4. is a,ove t'e in ustry avera-e of 0.07. 4ein- sli-'tly a,ove t'e in ustry in icates t'at 9e coul sell less of our inventory t'an 9'at ot'er companies in t'e in ustry 9oul 'ave to sell to meet current o,li-ations. 2eit'er t'e current or ;uic3 ratio excee s t'e in ustry avera-e su,stantially enou-' to ,e consi ere a true stren-t'. %'e fact t'at 9e are not lea ers is ultimately a 9ea3ness. *ana-ement of Inventories 8 Stren-t' 2i3es inventory turnover of 7..$ excee s t'e in ustry avera-e of 4..4. 6e ucin- inventory levels 9as a 3ey initiative for 2i3e in fiscal year 0###. 5ue to our a,ility to ;uic3ly turnover inventory: 2i3e ,enefits from -reater cas' flo9s: re uce stora-e costs: an less spoila-e. In a ition: ;uic3 turnover re uces 2i3es inventory of out8of8style s'oes an clot'in-. Company mana-ement state : ECe put a consi era,le amount of effort into improvin- pro uct ,uyin- po9er patterns an as a result t'e composition an levels of inventory resulte in improve -ross mar-ins relative to a year a-o.E Inventory levels are ,ein- re uce ue to increase sales in t'e company=s o9n ,ranc' retail stores.

*ana-ement of "ccounts 6eceiva,le 8 Cea3ness 2i3e oes permit sales in cas': cas' e;uivalents an on cre it. Our collection proce ures 'ave ,een lax compare to ot'ers in t'e in ustry resultin- in slo9 payers an efaultin- customers. Our collection perio calculates to 6..07 ays 9'ile t'e in ustry avera-e is only 7.70 ays. Steps are ,ein- ta3en to alleviate t'e pro,lem of collectin- accounts receiva,le in a more timely fas'ion. Ce

'ave +ust recently c'an-e our collection perio from #/ ays to 6/ ays as an attempt to encoura-e faster payment. *ana-ement of 5e,t 8 Stren-t' Our e,t8to8total8assets ratio is 0&..6>: 9'ic' is far ,elo9 t'e in ustry avera-e of 4/.6#>. 2i3e is not as levera-e as competitors in t'e in ustry an uses less e,t financin- to finance firm operations. %'is can ,e interprete as a stren-t' as 9e o not rely as 'eavily as our competitors on e,t financin-. Ho9ever: our 'i-'ly li;ui position -ives us t'e a,ility to increase e,t financins'oul 9e nee or esire a itional capital for company operations: researc' an evelopment: or ot'er c'an-es as top mana-ement sees fit. *ana-ement of 5e,t 8 Cea3ness 5espite t'e lo9er percenta-e of assets t'at are ,orro9e to finance 2i3e: our times interest earne ratio is 9ea3er t'an t'e in ustry avera-e. Our ratio of 0#.4. reflects t'e num,er of times fun s availa,le from earnin-s can cover interest payments. %'e in ustry avera-e of $0.!! in icates t'at t'e in ustry as a 9'ole is in a sli-'tly ,etter position to cover its interest c'ar-es. Profita,ility 8 Cea3ness 2i3es profita,ility is 9averin- in comparison to t'e in ustry avera-e. Our profit mar-in of &.04> to t'e in ustrys &.6#> is partially ue to ecreasin- sales. %'ou-' net income i increase from 0##! to 0###: t'is 9as in part ue to a re uction of our mar3etin- ,u -et ,y F0// million an terminatin- 7> of our employees. Our return on e;uity of 0..&4> in relation to t'e in ustry mean of 0!.77 in icates t'at 2i3e is realiDin- a lo9er percenta-e of earnin-s on stoc3'ol ers investment. 2i3es lo9 6OE can ,e lin3e to t'e roppin- stoc3 price as a reflection of stoc3'ol er confi ence in our company.

Exhibit 4 Ta+le of 7ey Financial "atios Calc&lation : "ATIO: For'&la: Ain millionsB Li;&i%ity Current Current assets7current lia,ilities Current assets8 Inv.7current .$64.# 0446.# .$64.#800##.. Ouic37aci test N0.4. times 0446.# N0.07 times N$.$6 times N$.$! times NI7E: In%&stry :

lia,ilities

!776.# Acti0ity Inventory turnover Collection perio Sales7inventory 00##.. "ccounts 6ec.7"vera-e sales per ay Sales7total assets 0&4/.0 !776.#7.6/ !776.# %otal assets turnover &$47.7 N0.67 times N0.6# times N6..07 ays N7.70 ays N7..$ times N4..4 times

!/6.$ Le0erage 5e,t to total assets %otal e,t7total assets &$47.7 !&6.! 44.0 N0#.4. times N$0.!! times N0&..6> N4/.6#>

%imes interest 2et operatinearne income7Interest expense

4&0.4 $rofita+ility Profit mar-in 2et income7net sales 2et income7net 9ort' !776.# 4&0.4 6eturn on E;uity )istincti0e Co'.etency 2i3es istinctive competency lies in t'e area of mar3etin-: particularity in t'e area of consumer ,ran a9areness an ,ran po9er. C'ile t'e reasons t'at 2i3e is successful in mar3etin- our pro ucts are numerous: t'is 3ey istinctive competency to9ers over our competitors. "s a result: ...4.# N0..&4> N0!.77 > N&.04> N &.6#>

2i3es mar3et s'are is num,er8one in t'e at'letic foot9ear in ustry. Catc' p'rases li3e: E<ust 5o It:E an sym,ols li3e t'e 2i3e ES9oos':E couple 9it' sports icons to serve as instant remin ers of t'e 2i3e empire. %9o 3ey attri,utes of a istinctive competency are its ina,ility to ,e easily replicate an t'e value or ,enefit it offers to consumers. "s 2i3e ,ecomes a more inte-rate part of "merican an 9orl culture: our ,ran po9er ,ecomes increasin-ly ifficult to replicate. %'e premise of a tra emar3 an a slo-an is t'at t'ey are a companys fin-erprints. 2i3e is a,le to capitaliDe on its uni;ue i entity ue to our in ustry8lea in- financial stren-t'. 2i3e reac'es millions of consumers t'rou-' lar-e8scale mar3etin- campai-ns ma e possi,le ,y si-nificant ,u -etary appropriations. (e9 companies 'ave suc' a reco-niDa,le ima-e an t'e resources to promote it. %'is ultimately translates into a e value for consumers. %'e pu,lic ,enefits from t'e stren-t' of 2i3es ima-e at t'e point of purc'ase. (or eca es: consumers 'ave come to associate t'e 2i3e ima-e 9it' ;uality pro ucts. 4y associatin- star at'letes an motivational slo-ans li3e: E<ust 5o It:E 9it' mar3etincampai-ns t'at emp'asiDe fitness: competition: an sportsmans'ip: consumers i entify t'eir purc'ases 9it' t'e prospect of ac'ievin- -reatness. Joun-er consumers especially ,enefit from t'is positive influence. %'is ima-e is somet'in- t'at competin- companies can not easily uplicate ,y simply en'ancin- t'e p'ysical c'aracteristics of t'eir pro ucts. 7ey -eakness %'e 3ey 9ea3ness of 2i3e: Inc. resi es in our financial status. C'ile 9e are not in financial trou,le: 9e reco-niDe t'at stren-t'enin- t'e financial 9ell ,ein- of t'e company can only assist our company in t'e s'ort8 an lon-8run. Ce 'ave many areas c'allen-in- our continue success suc' as increasin- our profita,ility an ,etterin- our mana-ement of cas': accounts receiva,le: an e,t. 2i3e suffere a ,lo9 to sales an revenue spar3e ,y ,a pu,licity in 0##7 a,out our international la,or policies. Since t'en: 9e 'ave attempte to overcome t'e ,a press ,y raisinan enforcin- minimum a-e re;uirements for employees in overseas factories. 2i3e attempte to re-ain its mi 8#/=s momentum as s'o9n in 0##!s recovery: ,ut t'e loss of *ic'ael <or an as our spo3esman an t'e "sian financial crisis put a amper on -ains t'at year. 5urin- 0###: t'e company ma e some c'an-es in its pro ucts an eeply cut costs. %'ese initiatives: in a ition to t'e sta,iliDation in t'e "sian financial picture: 9ill com,ine to fuel t'e recovery t'at 2i3e expects in t'e near future. 2i3e=s recent alliance 9it' (o- o- Sports: an Internet sportin- -oo s retailer: an our presence in t'e $/// Sy ney Olympic -ames 9ill also ai in sales -ro9t'. Exhibit 5

H 2i3e: Inc. 0### 2i3e "nnual 6eport

"s a result of re ucin- our mar3etin- ,u -et ,y F0// million an eliminatin- 7> of our employees: 2i3es net income 'as increase for fiscal year 0###. In fiscal year 0##!: t'e company incurre a one8time restructurin- c'ar-e to ,etter ali-n our overall cost structure an planne revenue levels. Overall: 2i3e is recoverin- from a lar-e ecline in 0##7s num,ers. "s note a,ove: t'e la,or controversy 'as ,een t'e ,i--est factor in t'e c'an-es s'o9n. Competitors can exploit our financial 9ea3ness ,y emp'asiDin- t'eir o9n in ivi ual stren-t's an attemptin- to -ain -reater s'ares in t'e mar3et 9'ile 9e are revampin- processes from 9it'in. %'is coul ,e a 3ey time urin- 9'ic' ot'er companies in soun financial con ition: suc' as " i as: coul utiliDe t'eir resources in an attempt to overs'a o9 our existin- an ne9 pro uct lines.

IN)UST"# ANAL#SIS
O..ort&nities

%'e at'letic foot9ear an apparel in ustries 9ill ,enefit from t'e currently stron- economic ,ac3 rop in t'e @nite States. Spen in- is 'i-' an is expecte to result in sales -ro9t' in ustry89i e. "t'letic s'oes an apparel 'ave ,ecome a staple in 9ar ro,es 9orl 9i e. %'is is ue to ,ot' t'e increasin- num,ers of people exercisin- an t'e tren to9ar s casual apparel. Competition is fierce at all levels in 9it'in t'e in ustry: especially amon- t'e lea ers. %'is creates a sense of security for t'e companies t'at 'ave ,een a,le to create a nic'e. Cost cuttin- ue to restructurin- of operations 9ill -ive many companies t'e c'ance to price pro ucts more competitively. One area in t'e in ustry t'at is ever c'an-in- is researc' an evelopment. %'e stronepartments 9ill surely capitaliDe on t'e tren s of tomorro9 if t'eir efforts are successful. Increasin- financial recovery in overseas mar3ets proves to ,e an area of expansion for t'e at'letic foot9ear an apparel in ustry.

E8tailin-: or customer8 esi-ne internet merc'an ise: is t'reatenin- t'e tra itional istri,ution c'annels: t'us eliminatin- t'e Emi le8manE istri,utors an allo9in- for increasin- profita,ility.

T(reats

%'e in ustry 'as reac'e a level of maturity. C'ile style an tec'nolo-y in at'letic apparel an foot9ear 'as reac'e a levelin-8off point: t'e important aspect no9 is for companies to ifferentiate t'eir lines. Inflation is loomin- over t'e @.S. economy: 9'ic' may spar3 a cut,ac3 in consumer spen in-. Consumers are ,ecomin- savvier an may lean to9ar s iscounte items. In terms of mar3et saturation: many of t'e 3ey manufacturers in t'is in ustry 'ave ,een aroun for many years. Consumers may ,e scannin- t'e mar3et for ne9 an ifferent foot9ear an apparel pro ucts.

TO$ CO!$ETITO" ANAL#SIS

)istincti0e Co'.etency < !arketing 4Cons&'er Loyalty9 5espite t'e tou-' times 6ee,o3 'as recently come upon: reasons for optimism remain. 6ee,o3 'as mana-e to 'ol t'e loyalty of a lar-e portion of t'e in ustrys female consumers mar3et. C'ile 6ee,o3s spen in- on a vertisin- 'as fluctuate : in ivi ual pro uct esi-ns 'ave come an -one: female consumers 'ave: as a -roup: remaine loyal to 6ee,o3 an t'eir pro ucts. Can Reebok use this distinctive competency to inflict damage on ike! Jes: 6ee,o3 can use t'eir istinctive competency to 9oun our company. If 6ee,o3 can expan t'eir appeal to incorporate female consumers 9'o are not currently 6ee,o3 customers: 6ee,o3 coul expan t'eir mar3et s'are an ta3e customers a9ay from 2i3e pro ucts. Can ike protect itself against this threat! Jes: 9e can protect our mar3et s'are amon- female consumers 9it'in t'e in ustry ,y tar-etinsome of our promotions to female consumers. 2i3es sponsors'ip of t'e 0### Comens Corl Cup Soccer %ournament 9as a -reat example of 'o9 2i3e is appealin- to female at'letes. Co'.etitor=s 7ey -eakness > !arketing > 4A%0ertising/$ro'otion9 %'e lea in- cause of 6ee,o3s recent tum,les stemme from pro,lems relatin- to poor mar3etin-. 6ee,o3s s'ortcomin- in t'e area of mar3etin- is t'eir 3ey 9ea3ness. C'ile ot'er at'letic s'oe companies ,om,ar t'e air9aves 9it' commercials pus'in- t'eir pro uct lines: 6ee,o3 remains out of si-'t an out of min . C'ile 6ee,o3s competitors are 3no9n ,y familiar slo-ans li3e 2i3e=s

E<ust 5o It:E 6ee,o3s: E"re Jou (eelin- It:E oes not e;uate to t'eir ,ran name in t'e eyes of most consumers.

Can Reebok"s key #eakness damage their competitive position! Jes: 6ee,o3s c'ances of -ro9in- t'eir mar3et s'are are slim as lon- as t'eir a vertisinen eavors remain to ,e so unsuccessful. (or 6ee,o3 to re,oun from t'eir current economic 9oes: t'ey 9ill 'ave to improve t'e ;uality of t'eir overall mar3etin- operations. Can ike take advantage of our competitor"s key #eakness! Jes: 2i3e can ta3e a vanta-e of 6ee,o3s mar3etin- 9oes ,y oin- one of t'e t'in-s 9e o ,est? mar3etin-. Continuin- our successful mar3etin- pro-rams s'oul allo9 2i3e to court t'e customers 6ee,o3 fails to ra9 in 9it' t'eir 9ea3 mar3etin- initiatives.

OTHE" EXTE"NAL FO"CES

)e'ogra.(ics Opportunity 2i3e=s once loyal mar3et is currently a-in-. %'is means t'at our customers are not as at'letic as t'ey may 'ave ,een in t'e past. Ho9ever: t'is poses as an opportunity for 2i3e ,ecause t'ey 'ave t'e a,ility to influence t'e next -eneration of 2i3e customers. %'e ol er -eneration of 2i3e ,ran purc'asers 'ave t'e po9er to influence t'eir c'il ren 8 part of t'e next -eneration of 2i3e loyalists. In a ition: ,y mar3etin- ifferent types of s'oes to t'is mar3et: t'ese existin- customers 9ill continue to ,e loyal to 2i3e. %'reat %'e p'enomenon of t'e a-in- of our most loyal mar3et se-ment ;uestions 9'et'er t'ere is a t'reat t'at t'e ne9 -eneration 9ill not ,e exclusively loyal to 2i3e. In t'e current mar3et t'ere are a num,er of ot'er competitors t'at are not mainly at'letically oriente . Examples inclu e suc' manufacturer8retailers as %'e 1ap an Ol 2avy. %'eir clot'in- an s'oes are competin- 9it' 2i3e=s. In a ition: 2i3e is not 3eepin- up 9it' t'e latest tren s an styles li3e some of its

competitors 'ave ,een. (or t'at reason: t'e ne9er -eneration is attracte ,y " i as an %ommy Hilfi-er. $ress&re gro&.s Opportunity "n opportunity pro uce ,y pressure -roups is t'e a,ility to react in a positive manner to concerns of t'e pu,lic as 9ell as customers. Consumer 9atc' -roups are payin- especially close attention to 2i3e=s use of s9eats'ops an c'il la,or to pro uce our pro ucts. 2i3e=s opportunity lies in ,eina,le to s'o9 t'e consumer force t'at 9e are in ee ta3in- steps to re uce an eventually eliminate s9eats'ops an c'il la,or t'rou-' ne9 policies an strict implementation proce ures. "lso: ,y respon in- to suc' consumer activism: 9e are portrayin- a positive ima-e in t'at 9e are promotin- et'ics even 9'ile 9e are tryin- to ,e efficient an economical. %'reat In t'e same manner: not respon in- to t'ese consumer activist -roups poses a t'reat to 2i3e. %'e ne-ative pu,licity t'at 2i3e 'as receive t'us far 'as lo9ere its ima-e to t'at of ,ein- an et'ical company. Suc' pu,licity 'as t'e potential to ruin a company permanently. 4y isre-ar in- t'e voice of concerne citiDens: 9e are isre-ar in- our customers: one of our most important sta3e'ol ers.

7E# O$$O"TUNIT#
%'e 3ey opportunity for 2i3e: Inc. currently is t'e ,oomin- economy of t'e @nite States. Currently t'e company 'as t'e a,ility an t'e resources to exploit t'is opportunity. 2i3e 'as capitaliDe on t'e recent economic ,oom 9it' 'i-'er sales an income. Ho9ever: 9e are not usin- our resources to t'e fullest e-ree. %'ere are currently many areas in 9'ic' 2i3e is not payin- attention. Ce 'ave not catere to a lar-e portion of t'e ne9 -eneration t'at eman t'e latest tren s an styles. "lso: 2i3e must ta3e into account t'e c'an-in- emo-rap'ics in t'is country. %'ere is a muc' 'i-'er proportion of Hispanics: "sians: an "frican "mericans t'an t'ere 9as ,efore. %'ese -roups 'ave some9'at ifferent tastes t'at 2i3e s'oul ,e a,le to satisfy. %o exploit t'is opportunity: 2i3e nee s to focus on 9'o t'e next -eneration of loyal customers 9ill ,e an cater to t'eir nee s. In a ition: t'e 9orl economy is recoverin- currently: 9'ic' allo9s 2i3e to ma3e an impression in forei-n mar3ets as 9ell. 2i3e is stron- in many forei-n countries: ,ut 9e nee to focus on t'e youn-er mar3et of consumers. 2i3e 'as ,een oin- a -reat eal of researc' an evelopment: ,ut if 9e 9ant to 3eep t'e lea in mar3et s'are: 9e must loo3 at tren s 9'ile maintainin- our 'i-' stan ar s of ;uality.

7E# TH"EAT

%'e 3ey t'reat for 2i3e: Inc. is mar3et saturation. %'e pro,lem is t'at t'e at'letic s'oe mar3et is alrea y full of ifferent ,ran s an companies. 2o9: t'ere is very little room for ne9 companies. %'ere is also very little room for ne9 pro uct innovation an -ro9t' of mar3et s'are for companies li3e 2i3e: Inc. Since 2i3e is currently 'ol in- t'e lea in t'e mar3et as far as mar3et s'are: t'ere is little room for t'em to expan . In fact: 9e must 'ol onto our mar3et s'are ,ecause if anyt'in- it is ours to lose. 2i3e: Inc. is no9 competin- 9it' ot'er at'letic companies as 9ell as companies t'at +ust sell clot'in- or ot'er types of s'oes. If all of t'ese ot'er companies merely -ain a small percenta-e of t'e mar3et: 2i3e 9ill ,e one of t'e main companies to start losin- mar3et s'are. In response to t'is t'reat: 9e 9oul focus on 3eepin- our mar3et s'are an ma3in- sure t'at competitors li3e Ol 2ay o not steal a9ay our mar3et s'are. Ce 9ill o t'is ,y focusin- our efforts on a ,roa er mar3et. %'is 9oul inclu e t'e youn-er -eneration t'at is intereste in sports as 9ell as extreme sports. Ce nee to ma3e sure t'at 9e not only stay a,reast of t'e at'letic s'oes mar3et ,ut also are competitive in t'e at'letic apparel mar3et.

!A?O" AN) SUBO")INATE $"OBLE!S

!a@or $ro+le': (inance Sy'.to': 5eclinin- stoc3 mar3et price Ca&ses: 0. $. .. 4. 5eclines in net income of F.44* from 0##7 to 0###. 5eclines in sales revenues of F40/* from 0##7 to 0### 0$. 6ecent eclines in mar3et s'are in t'e @nite States. Operatin- in a mature mar3et 9it' minimal opportunity for -ro9t'.

Subordinate Problem: Strate-y (ormulation: Competitive Strate-ies Symptom? Ioss in mar3et s'are for s'oes an apparel to non8tra itional at'letic companies Ae.-. Ol 2avyB. Causes? 0. Poor mana-ement foresi-'t in pre ictin- consumer an fas'ion tren s movin- a9ay from at'letic s'oes. $. Cyclicality in foot9ear an apparel in ustries. .. 2i3es pro uct offerin-s are limite to at'letic foot9ear an apparel. Subordinate Problem: *ar3etin-

Symptom$ 5rop in sales revenues in 0### from 0##!. Causes: 0. "n over reliance on *ic'ael <or an as a central mar3etin- fi-ure: 'is eparture cause a ecline in sales. $. 6ecent mar3etin- campai-ns are va-ue: focusin- on relatin- 2i3e to a non8relate item. Poor reception of t'ese a s ,y consumers. Subordinate Problem: Pu,lic "ffairs Symptom? Pu,lic outra-e over manufacturin- an la,or practices.

Causes? 0. @n era-e employment in forei-n operations iscovere ,y consumer 9atc' -roups. $. Poor 9or3 environments in forei-n operations reporte in t'e national me ia. .. (orei-n 9a-es pai are consi ere un+ust 9'en compare to @.S. 9a-es. -(y FinanceA Ce c'oose finance as our ma+or pro,lem ,ecause continuin- success for 2i3e is ,ase on our a,ility to -enerate future cas' flo9s ,y pro ucin- 'i-'er revenues an net income. (uture positive cas' flo9s are re;uire to invest in researc' L evelopment: mar3etin- campai-ns: an capital improvements re;uire ,y our pro uction activities. %'is c'oice is also consistent 9it' finance ,ein- i entifie as our companys 3ey 9ea3ness Asee pa-e $.B. " itionally: financial performance effects t'e pu,lic perception of 2i3e in t'e mar3etplace. (or t'ese reasons: 9e c'ose finance as our ma+or pro,lem.

ST"ATEBIC !ATCH
Le0erage Stren-t'? Opportunity? Effective %arketing Recovering &nternational Economies Constraint Cea3ness? Opportunity? 'eclining (rofitability Robust Economy

!aintenance Stren-t'? %'reat? )argest %arket *hare %arket *aturation &lnera+ility Cea3ness? %'reat? (oor Competitive *trategy Changing 'emographics

$"I!A"# ST"ATEBIC !ATCH $OSITION

B&siness Strengt(/Co'.etiti0e $osition !atri,

Exhibit + S&ccess Factors 0. *ar3et S'are ./7 P 4rea t' of Pro uct Iine .0/ P Sales 5istri,ution Effectiveness P Price Competitiveness .0/ P " vertisin- Effectiveness .04 P (acilities location an ne9ness P Pro uction Capacity ./4 QH ./6 -eig(t

Against A%i%as "ating33 & & 4 . & Q & Score ..& .&/ .$4 ../ .7/ Q .$/

Against "ee+ok "ating33 4 . . $ . Q 4 Score .$! ../ .0! .$/ .4$ Q .06

P 6elative Pro uct Ouality .0/ P 6 L 5 position .0! P Cali,er of top mana-ement ./. P Customer Service QH P Experience Curve ./& P Corporate Culture ./& P Profita,ility 6atios ./! %O%"I 0.// & .4/ 4.46 4 ..$ ..07 & .$& . .0& & .$& 4 .$/ Q Q Q Q & .0& 4 .0$ 4 .7$ . .&4 4 .4/ . ../

H Q means t'at t'e criterion is not applica,le HH 0 means t'at t'e firms competitive position is very 9ea3 & means t'at t'e firms competitive position is very stron-

Exhibit , In%&stry Attracti0eness !atri,

E0al&ation Criteria 0. In ustry 1ro9t'

-eig(t ./!

"anking $ 4

-eig(te% Score .06 .$4

P SiDe ./6

P Profita,ility ./6 P Cyclicality ./. P Seasonality ./. P Entry7exit ,arriers ./0 P Customers ./& P Competitors ./! P Suppliers ./6 P 1overnment 6e-ulations P Ia,or unions ./$ P 5emo-rap'ics .0$ P Culture .0/ P Economy .0$ P Politics ./$ P %ec'nolo-y .0/ P Pressure -roups ./4 $ ./! . ../ 4 ./! & .6/ $ .$/ . ..6 4 ./! ./$ . $ .0! ./4 $ .06 4 .$/ $ ./$ . ./# . ./# $ .0$

%O%"I 0.// H Q means t'at t'e evaluation criterion oes not apply to t'e particular in ustry HH 0 means t'at t'e evaluation criterion Aor t'e in ustry con itionB is very unattractive & means t'at t'e evaluation criterion is very attractive Primary Strate-ic *atc' Position ..//

"vera-e 4usiness Stren-t'7Competitive Position In ex N ..!$ In ustry "ttractiveness In ex N ..//

Exhibit -

B&siness Strengt(/Co'.etiti0e $osition Lo5 Hig( In%&stry Attracti0eness A0erage

Hig(

)everage

Constraint

A0erage

%aintenance

Lo5

.ulnerability

THE ST"ATEBIC $LAN

!ission State'ent Our mission at 2i3e is to ,e a company t'at surpasses all ot'ers in t'e at'letic in ustry. Ce 9ill maintain our position ,y provi in- ;uality foot9ear: apparel an e;uipment to institutions an in ivi ual consumers of all a-es an lifestyles. Ce ple -e to ma3e our pro ucts easy availa,le 9orl 9i e t'rou-' t'e use of retail outlets: mail or er an our company 9e, site. 2i3es mana-ement ,elieves t'at our success lies in t'e 'an s of our teammates: customers: s'are'ol ers an t'e communities in 9'ic' 9e operate. Ce vo9 to 3eep t'is in min 9it' t'e execution of every ecision 9it'in our company.

al&es State'ent 2i3e 9ill focus its commitment to all sta3e'ol ers ,y continuin- to ma3e stri es to9ar s ,ein- a company t'at sets t'e prece ents in social responsi,ility. 2i3e is continuously ma3in- efforts to ensure t'at all employees an mem,ers of its surroun in- communities are treate in a manner t'at is inline 9it' our mission. 2i3e 'as ma e many alliances 9it' 'uman ri-'ts or-aniDations in an attempt to ensure la,or ri-'ts for employees of t'e in ustry overseas. Ce are committe to treatinour employees 9it' t'e utmost respect: 9'ic' is reflecte in our compensation an 'uman resource policies. Ce are also committe to ma3in- soun ecisions in re-ar s to our environment: resources: an t'e fi-'t a-ainst pollution.

ision State'ent "t 2i3e: our vision is to remain t'e lea er in our in ustry. Ce 9ill continue to pro uce t'e ;uality pro ucts t'at 9e 'ave provi e in t'e past. *ost importantly: 9e 9ill continue to meet t'e ever8 c'an-in- nee s of our customers: t'rou-' pro uct innovation. Alternati0e Strategic Slogan 2i3eas al9ays: a step a'ea of t'e restR Alternati0e !arketing Slogans

2i3e: try to catc' us. AIisaB 1ive yourself an e -e. A4rianB (or t'e top at'lete in all of us. A)imB (inis' (irst. AS'eetalB

HHH%HE CI22E6Secon Place is for Iosers A5anB Long<Ter' Cor.orate O+@ecti0es %'e follo9in- are 2i3e Inc.=s &8Jear lon-8term corporate o,+ectives?
o

Continue our improvement in stoc3'ol ers= return on e;uity to ac'ieve a $/./> return in $//4. %'is 9oul ,e an increase of almost 6.&> from 0###. Increase earnin-s per s'are to F$.7/ per ilute s'are ,y $//4 in an overall effort to ,olster t'e lon-8term resilience of our stoc3=s value. %'is 9oul surpass our 0##7 recor 'i-'.

S(ort<Ter' Cor.orate O+@ecti0es %'e follo9in- are 2i3e Inc.=s s'ort8term corporate o,+ectives for fiscal year $///?
o

Increase net income to F&&/ million ,y t'e en of fiscal year $/// in or er to reac' our lon-8term -oals of improve return on e;uity an 'i-'er EPS. %'is $$> increase from 0### is realistic in li-'t of com,ine 0 st L $n Ouarter income alrea y .$> 'i-'er compare to t'e same time last year.

6ecover t'e mar3et price of our stoc3 from its &$89ee3 lo9 of F$6.&/ per s'are on (e,ruary !: $///: to a value t'at approximates its &$89ee3 avera-e of F&/ per s'are.

Bran% Strategy 2i3e Inc. can utiliDe t'e complete structure approac' to select a -ran strate-y in carryin- out t'e a,ove corporate o,+ectives. %'e ta,le ,elo9 conclu es t'at focusin- on pro uct evelopment 9ill allo9 2i3e to continue to ,uil upon our foun in- tenant t'at 'as secure us a position t'at ,or ers on levera-e an maintenance 9it'in t'e at'letic foot9ear: apparel: an accessories mar3ets. 4ecause 2i3e 'as suc' a stron- 'istory of effective mar3etin- in 3ey -lo,al re-ions: concentration is an alternate strate-y. *ar3et evelopment is a t'ir strate-y for consi eration ue to 2i3e=s a,ility to -eo-rap'ically expan our pro uct offerin-s. %'e t'ree strate-ies are very closely lin3e . %o etermine 9'ic' 9oul prevail as our overri in- strate-ic position: four evaluation criteria 9ere 9ei-'te accor in- to eac' strate-y? istinctive competency: culture: timin-: an emo-rap'ics. Cit' a total 9ei-'te score of 4.4/ pro uct evelopment surpasses secon place: concentration: an t'ir place: mar3et evelopment.

Exhibit /

E0al&ating Le0erage/!aintenance Strategies << Str&ct&re% A..roac( $ro%&ct )e0elo.'ent -eig(te% Score333 0.7& 0.$& .6/ .!/ 4.4/

Concentration -eig(te% Score333 0.4/ 0.// .!/ .!/ 4.//

!arket )e0elo.'ent -eig(te% Score333 0./& 0.// .!/ .6/ ..4&

E0al&ation Criteria 0. 5istinctive Competency $. Culture .. %imin4. 5emo-rap'ics %otal

-eig(t3 ..& .$& .$/ .$/ 0.//

"ating33 4 4 4 4

"ating33 & & . 4

"ating33 . 4 4 .

H represents t'e value of t'e criteria to 2i3e

HH effectiveness of strate-ic option in terms of its a,ility to satisfy t'e criteria? 0 N un esira,le & N esira,le HHH A9ei-'tB x AcriteriaB %'e core of our ,usiness is our pro ucts. Pro ucin- merc'an ise t'at is 'i-' in ;uality: tec'nolo-ically a vance : an fas'iona,le 9ill allo9 us to ac'ieve our corporate o,+ectives of profita,ility an s'are'ol er value. @tiliDin- t'is strate-y 9ill also allo9 us to capitaliDe on our 3ey opportunity. %'e -lo,al economy is ,ecomin- so stron- t'at ,y improvin- our pro ucts in or er to exten t'eir life cycle 9e 9ill ,e ma3in- a lon-8term investment in t'is financial ,oom. Our pro ucts 9ill ,e a,le to ,etter 9it'stan t'e ris3 of passin- fa s. Incorporatin- fas'ion into our pro ucts is one 9ay to ac'ieve t'is strate-y. %'e t9o alternate mar3etin- strate-ies 9ill ,e +ust as necessary in or er to incorporate our pro ucts into t'e s'oppin- 'a,its of consumers. Co'.etiti0e Strategy In t'e past: our company 'as utiliDe pro uct ifferentiation as our competitive strate-y. "s our reputation ictates: 9e 9ill continue to place our emp'asis in t'is area. 2i3e 'as ,uilt its ,usiness on provi in- pro ucts t'at rise a,ove all ot'ersM it 'as ma e us t'e success t'at 9e are to ay. 2i3e is 3no9n for its tec'nolo-ically a vance pro ucts. Ce are t'e lea ers in t'is area: 9'ic' allo9s our pro ucts to stan out from t'e rest. Our focus also allo9s us to maintain a some9'at narro9 nic'e t'at ena,les us to effectively capture t'e nee s an 9ants of our consumers. 2i3e 9ill also focus on ma3in- a stron- effort in price lea ers'ip. Our pro ucts in t'e past 'ave ,een concentrate in t'e 'i-'er en of t'e pricin- cate-ory. Ce 9ill no9 ma3e an entrance into lo9er price cate-ories 9it' our ;uality pro ucts. %'is 9ill ena,le us to capture an even -reater 'ol on mar3et s'are. O.erational 4F&nctional9 Strategies !arketing O+@ecti0es Ion-8%erm? Increase our mar3et s'are in t'e "sia Pacific re-ion from $6> to ./> ,y $//4. S'ort8%erm? Increase our mar3et s'are in t'e "sia Pacific re-ion from $6> to $7> ,y fiscal year en $///. Exhibit 10 S(ort<Ter' Strategy

Start )ate %arket Research 0. Hire a mar3et researc' firm familiar 9it' "sia: specifically t'e ,oominmar3et of <apan: to stu y t'e ,uyin'a,its of "sian consumers. 5etermine 9'at factors motivate t'eir at'letic foot9ear an apparel purc'ases. $. Con uct focus -roups in "sia to -et fee ,ac3 on our existin- pro ucts: as 9ell as our prototypes. .70

Co'.letion )ate3 &70

B&%get F4//:///

Sa0ings

&70 .70

F!/:///

(ricing 0. 5etermine price points for our "sian pro uct offerin-s t'at are properly a +uste for re-ional ,uyin- po9er: competition: an currency valuation. 1dvertising and (romotion 0. Sponsor re-ional sportin- events for professional: amateur: an colle-iate teams. Inclu e sponsors'ip of t'e $//$ Corl Cup in )orea an <apan. $. 6un a vertisements in t'e most popular forms of re-ional me ia? television: ne9spaper: ma-aDines: ,ill,oar s: an 7or ra io. .. Offer re,ates an iscounts for certain late8mo el s'oes to encoura-e sales an inventory turnover. 4. Con uct fas'ion s'o9s at top retail venues to isplay our latest merc'an ise offerin-s to consumers 470 .70

&7.0 .70 F&:///:///

&7.0 .70 F0/:///:///

an t'e me ia. &7.0 .70 &70 .70 %otal H completion ate ,ase on a &7.0 fiscal year en . $ro%&ction O+@ecti0es Ion-8%erm? 5ecrease our cost of sales from 6$.&#> of sales to &#> of sales ,y fiscal year en $//4. S'ort8%erm? 5ecrease our cost of sales from 6$.&#> to 6$> in fiscal year $///. Exhibit 11 S(ort<Ter' Strategy Start )ate )ocation2 e#ness2 and )ayout of 3acilities 0. Hire in epen ent in ustrial en-ineers an analysts to 9or3 9it' manufacturin- facilities in or er to maximiDe efficiency of operations? s'op layout: processes: etc. &nventory 0. 6e uce inventory at all levels of pro uction? ra9 materials: 9or38in8 process: an finis'e -oo s. $. Cor3 9it' .r party s'ippin- a-ents to mana-e t'e flo9 of or ers from factories to istri,ution centers. &7.0 .70 &7.0 F0:///:/// F4/:///:/// .70 Co'.letion )ate3 &70 . mont's F0//:/// F06:&!/:/// F0:///:///

B&%get F0/:///:///

Sa0ings F./:///:///

.. Cor3 9it' suppliers to implement t'e next -eneration of electronic ata interc'an-e AE5IB tec'nolo-y in an attempt to ac'ieve +ust8in8time inventory.

.70

&7.0 .70 F0/:///:/// %otal H completion ate ,ase on a &7.0 fiscal year en . "esearc( C )e0elo.'ent O+@ecti0es . mont's

F$/:///:///

F$/:///:/// F#0:///:///

Ion-8%erm? *aintain a ran-e of 6L5 expen itures t'at oes not fluctuate more t'an 0.&> or less t'an .7&> of pro+ecte sales in t'e next & years. S'ort8%erm? Increase spen in- on 6L5 to 0.$> of pro+ecte revenues in fiscal year $/// to ac'ieve increase mar3et s'are. Exhibit 12 S(ort<Ter' Strategy Start )ate 3ocus 0. S'ift fun in- to applie researc' in Eup8an 8comin-E sports. Experiment 9it' cuttin-8e -e fas'ion. 4udget 0. Infuse ne9 fun in-: in a ition to s'iftin- current ,u -etary allocations: for researc'in- sports .70 470 F0&:///:/// .70 Co'.letion )ate3 &7.0

B&%get

Sa0ings

t'at coul ,e popular in t'e future.

%otal H completion ate ,ase on a &7.0 fiscal year en . H&'an "eso&rce O+@ecti0es

. mont's

F0&:///:///

Ion-8%erm? Increase availa,ility of e ucational assistance pro-rams for 9orl 89i e manufacturinemployees from &/> of factories to 0//> ,y $//4. S'ort8%erm? Increase availa,ility of e ucational assistance pro-rams for 9orl 89i e manufacturinemployees from &/> of factories to 7/> ,y $///.

Exhibit 13 S(ort<Ter' Strategy Start )ate Recruitment and *election 0. Hire factory 9or3ers 9'o express an interest in e ucational pro-rams. %'ese employees 9oul ac'ieve t'e maximum ,enefit from e ucational assistance pro-rams ,y ,ein- more .70 Co'.letion )ate3 &7.0

B&%get

Sa0ings

loyal an pro uctive. 5raining and 'evelopment 0. Offer -eneral e ucation classes for factory 9or3ers 9'o 9ant to learn 'o9 to rea : 9rite: or fill any -aps in t'eir c'il 'oo e ucation. $. Con uct seminars an 9or3s'ops for supervisors in factories so t'at t'ey may improve t'eir pro uction an mana-ement s3ills. Compensation 0. Increase salaries of factory 9or3ers 9'o are promote as a result of completin- our e ucational assistance pro-rams. &7.0 .70 F.:///:///

&7.0 .70 F&:///:///

&7.0 .70 %otal H completion ate ,ase on a &7.0 fiscal year en . Finance O+@ecti0es Ion-8%erm? Increase net income 7/> to F767 million ,y fiscal year en $//4. S'ort8%erm? Increase net income $$> to F&&/ million in fiscal year $///. Exhibit 14 S(ort<Ter' Strategy . mont's F&:///:/// F0.:///:///

Start )ate %anagement of 1ccounts Receivable 0. Implement stricter cre it terms 9it' retailers to minimiDe ,a e,t expense. $. Hire 0/ a itional employees in t'e corporate "ccounts 6eceiva,le 5epartment to maintain an collect a-in- accounts. .70 .70

Co'.letion )ate3 &7.0 470

B&%get

Sa0ings F$/:///:/// F$&:///:///

F4//:///

%anagement of 5otal 1ssets 0. Sell non8pro uctive e;uipment or ,uil in-s to re uce epreciation an maintenance expenses. %otal

&7.0 .70 F.//:///

F&/:///:///

. mont's

F7//:///

F#&:///:///

completion ate ,ase on a &7.0 fiscal year en .

CONCLUSION

2i3e: Inc. is a company roote in competition. (rom e;uippin- at'letes 9it' t'e finest sports e;uipment in t'e 9orl to continuously improvin- our o9n financial performance: 2i3e ominates its competitors. P'il )ni-'t an 4ill 4o9erman pro,a,ly coul not 'ave ima-ine in 0#6$ to 9'at e-ree t'eir F&// investments 9oul yiel in $///. %'ey i 3no9 t'at pro uct ;uality an innovation 9oul 'elp at'letes to ac'ieve -reater -oals. 2i3e still operates on t'is p'ilosop'y to ay. It is one t'at 'as 'elpe at'letes an sta3e'ol ers ali3e to realiDe at'letic an financial -reatness. 5espite a c'an-in- mar3etplace for at'letic foot9ear: 9e 9ill continue to expan our pro uct lines an mar3etin- reac' to ,ecome a more po9erful -lo,al ,ran .

NIKE SWOT ANALYSIS

Nike was founded in 1964 by a track coach named Bill Bowerman and track runner Phil knight. They started with the name blue ribbon sports and went public in 19!" with their new name N#$% which came from the mythological winged goddess of &ictory. Their motto is that if you ha&e a body you are an athlete and this company makes sure to pro&ide as each athlete with the e'uipment they need to thri&e. (hile this company has pro&en itself to be &ery popular all o&er the world it has its weakness and threats along with their opportunities and strengths.

Strengths

Weaknesses

Swoosh logo Number one global brand

#i erse $ange

Sponsors Joint entures! allian"es

%ri"e margins s&uee'ed

Opportunities

Threats

Teens desire Strengthen brand( I%L )Indian %remier League*+

0hild labor and sweat shops

0ompetition( $i als1 $eebok and Adidas

Ol,mpi" -ames+ .ootball tournaments/

Emerging Asian e"onomies( 0hina and India

Strengths
)ne of the greatest things about the N#$% *ompany is that e&eryone knows it. +ou can go anywhere in the world with the Nike symbol and most people would recogni,e the brand. (hich goes to show their hardwork in the ad&ertising department- .trength about this company is that they are great at e/panding their product. The company that started out making 0ust sneakers now makes things from sports e'uipment to apparel. Nike definatly knows how to e/pand well into the athletic market. This company also has strong international presence and sales their product worldwide. They always ha&e the hottest celebrity athletes promoting their product. 1ight now they e&en ha&e 2ebron 3ames and before they had 4ichael 3ordan.

Weaknesses
)ne huge weakness with the N#$% *ompany is that they fail to see problems in relation to their labor and factory conditions. 5or e/ample in 1996 Nike was e/posed for child labor in Pakistan. This led to lots of bad publicity which hurt the company in sales. 4any people began to boycott their product. 6nother issue this company has is that it has such a high price point compared to its competitors which means that they must then rely more on the 'uality of the product but also rules out many customers because of this. 6nother problem is their e/panding into different markets. .ome of these markets are not so suited for the company since they started off with sneakers and try making footballs and such. This e/pands production cost and may be more trouble than it is worth.

Opportunities
)ne great opportunity for the N#$% *ompany is to promote their brand as fashion forward as well as athletic wear. This is something that N#$% as a company has been deterring from so that they may be taken seriously in the athletic field. 7owe&er there are more consumers who see Nike this way and wear their sneakers for that purpose instead of 0ust athletic wear. N#$% should come out with 0ewelry and sunglasses to e/pand their brand into a more fashion forward brand.

Threats
.ome threats that the Nike *ompany may ha&e are their competiti&e brands. .ince N#$% is about the highest priced athletic brand that puts them at risk for losing many of their customers. 6nother threat to the Nike

*ompany can be the international trade and different currencies being used. This could ultimately mean a loss of profit when it comes to dealing with different types of currency.

www.nike.com

.trengths
1. Nike is a worldwide recognized to be the number one sportswear brand in the World. 2. Nike being a competitive organization has a healthy aversion towards its competitors ieduring Atlanta Olympics !eebok e"pensed on sponsoring the games# Nike however sponsored the top athletes and due to this step it gained valuable e"posure. $. Nike has no %actories# rather it uses contract %actories to get the work done which makes it &uite a lean organization. 't has contracts with above ()* shops globally in about +, di%%erent countries. +. Nike is &uite strong regarding its research and development# &uite evident regarding its evolving and innovative product range. *. there are near about *)) -ortune companies. ,. 't has employs about more than $) thousand people all over the world.

Weaknesses
1. Al though it has a e"pand range %or sportswear however it is still heavily reliant upon its share o% the %ootwear market which leaves it at a &uite de%enseless place i% %or any reason its market share corrode. 2. .very business retail sector is price sensitive that means trader usually have a propensity to o%%er a very similar know-how to the customers with a new cheaper product. $. Nike was %or pretty some time loath to reveal any type o% in%ormation relating to its colleague companies. +. /his company was also accounted to have practical child employment in 0akistan and 1ambodia to produce %ootballs. *. Anti-globalization groups due to its unruly and e"ploited manner that was &uite a disaster %or its reputation positioned.

)pportunities
1. A large number o% customers put on Nike product 2ust because they develop a %ashion style rather than to take part in any type o% sport. 't is mostly seems in young generation. 2. Nike is a trendy brand which also provides chances %or Nike since its products would become old-%ashioned be%ore even the product wears out that is consumers will sense the need to replace the item with a newer %ashion. $. Nike through the advertisement o% corporate brand and sponsorship agreements give a bunch o% e%%ort on its business marketing.

Threats
1. /here are heavy competitors o% Nike in the market that always seeking the way to overtake it by applying new techni&ues.. 2. A slump in international economy may lead to 2ob scarcity in most o% Nike3s worldwide shops. $. 1lients which are always shopping around %or a better deal that e"press a good &uality 4 i% one store takes higher price %or the products the buyer would try to seek a better deal o% the same product in any other place that convey the same value but cheaper. +. 5ue to atmospheric pollution Nike is careworn to maintain its ecological reputation in the whole world.

Nike - A Case Study

Anyones shortlist of the worlds leading brands would surely include Nike, the global icon for the athletic set. Anyone under the age of 20 probably thinks Nike has been around since the beginning of time, but in reality the story of Nike is only three decades old. While todays consumers know Nike as a broad based athletic footwear, e!uipment and apparel company, Nikes beginning was rooted e"clusi#ely in shoes for elite distance runners.

$he story of Nike pro#ides a compelling case study of how a company entered one target market, then used its success therein as a springboard to e"pand into other segments. %ere, we look in greater depth at Nikes entrepreneurial roots, at how the capabilities Nike de#eloped in running shoes enabled the company to e"pand into other market segments, and at how a company started on a mere &'000 in#estment became one of the worlds best known brands. (ne waffle iron plus two entrepreneurs e!uals better shoes for distance runners )t was '*+,, and -hil .night was still thinking about the business plan he had de#eloped for a class assignment at /tanfords 0raduate /chool of 1usiness. .nights plan had argued that there was an opportunity to build a business around American designed, 2apanese made shoes for distance runners. .night, a former distance runner at the 3ni#ersity of (regon with a ,4'0 personal best in the mile, and .nights former track coach at (regon, 1ill 1owerman, thought the 0erman made shoes e#eryone wore at the time were too e"pensi#e. 5ore crucially, in their #iew the 0erman shoes werent really designed with the uni!ue needs of distance runners in mind. 6istance runners, especially elite distance runners like .night and others that 1owerman had coached, had different needs in athletic footwear from other athletes, different e#en from sprinters who did most of their running on tracks. 6istance runners ran se#eral miles e#ery day, often more than '00 miles a week. 5ost of these miles were run on dirt trails, whose une#en surfaces and the occasional rock led to sprained ankles, or on

country roads, where the miles and miles of pounding could lead to shin splints or stress fractures of the bones in the feet, ankles and legs. 1owerman, a lifelong tinkerer and inno#ator, belie#ed distance runners could benefit from shoes that pro#ided greater cushioning 7against the repetiti#e impact from the miles and miles of training8, that ga#e better lateral stability 7to protect against ankle sprains8, and that were more fle"ible and lighter than the shoes then on the market 7to impro#e his runners race times8. .nights work at /tanford had shown him that athletic shoes could be sourced from factories in Asia at costs that were low enough to compete fa#ourably with the dominant 0erman competitors. $he !uestion, then, was how to design a shoe that would meet distance runners needs. $he now legendary answer was found in 1owermans kitchen, where, with his wifes waffle iron and some late", he created the waffle sole, which, together with a lightweight nylon upper, would re#olutioni9e the running shoe. .night, now with a day :ob as an accountant, and 1owerman each chipped in &;00 to form a new company, 1lue <ibbon /ports, that would import 1owerman designed shoes made by (nitsuka $iger in 2apan. $here was no angel in#estor, no #enture capital, and no inkling of the potential that lay ahead. )n '*+,, 1lue <ibbon /ports sold about '=00 pairs of running shoes, generating a mere &>000 in re#enues. 6uring their first fi#e years in business, .nights aging station wagon could be found at track meets all o#er ?alifornia and the -acific Northwest, where .night peddled his shoes to an increasingly accepting market. As runners wearing $igers won more and more races, word spread. 1y '*+*, with the business ha#ing grown to 20 employees and a handful of retail outlets, .night !uit his day :ob and began to de#ote all his energies to the growing business. ?reating a brand At the 3/ (lympic trials in '*@2, 1lue <ibbon /ports introduced its Nike brand after a dispute led to the break up of the relationship with (nitsuka $iger. )n the '*@2 (lympic marathon that soon followed, four of the top se#en finishers wore Nike shoes. 1y '*@,, after ten years of effort, the Nike shoe with the waffle sole had become Americas best selling training shoe. Nike was on the map at last, and in '*@> 1lue <ibbon /ports changed its name to Nike. (ne segment leads to another 1y the mid '*@0s, Nike had de#eloped some capabilities that would ser#e it well. )t had mastered low cost outsourced production, using factories in Asia that could produce the inno#ati#e shoes created by .nights designers. $hese designers had learned how to build relationships with elite athletes to identify their footwear needs and design shoes that would not only contribute to better performance but also protect them from in:ury. .night and his team reali9ed that these capabilities could now be applied in other athletic shoe segments to de#elop high performance shoes tailored specifically to the needs of each sport. )n '*@>, tennis great 2ohn 5cAnroe signed with Nike, and tennis became another growth

business. $hat same year, the 1oston ?eltics and the Bos Angeles Bakers began wearing Nikes new basketball shoes. 1y '*>=, Nike had e"panded its offerings to include apparel as well as shoes. )n '*>;, a promising rookie basketball player named 5ichael 2ordan signed a deal with Nike for a new line of basketball shoes based on the air cushioned technology de#eloped by Nike for its running shoes. Air 2ordan shoes became the en#y of e#ery American teenager, as 2ordan became the best player e#er in basketball. /oaring results 1y '*>;, after 20 years in business, .nights and 1owermans little company reached the billion dollar mark in worldwide sales, and Nike was acknowledged as the technological leader in the athletic footwear industry. $hough it stumbled for a time in the late '*>0s, as <eebok won the aerobics market with sleek, stylish shoes that consumers preferred to Nikes clunky, more functional designs, Nike regained its touch by renewing its focus on the customer and understanding both the psychological and functional benefits that its brand offered. )ts progress continued4

)n '**0, .night said4 C(ur goal is simple4 to be the market share leader and the most profitable brand in all =* footwear apparel and accessory lines in which we compete. 1y 2000, with worldwide re#enues ha#ing passed the &'0 billion mark, with 22,000 employees doing business in '20 countries, and with more than a one third share of the worlds athletic footwear market, Nike was named the number one consumer goods and ser#ices company to work for in Dorbes maga9ines annual ranking.

/howing that it had not forgotten its running shoe roots, Nike also won /mart 5oneys readers choice award for best running shoe. Nike was still committed to pro#iding athletes in #irtually e#ery sport imaginable with the #ery best performance footwear. Bessons learned from Nike Drom Nike, we#e seen how entry into one segment, if successful, can lead to success in additional segments. $he additional #alue that such a successful entry offers can constitute an important part of the #alue that entrepreneurs bring to in#estors who back them. 3nderstanding these options before writing a business plan and articulating them effecti#ely can help entrepreneurs pitch the upside of what they propose to in#estors, thereby making their opportunity more compelling. 3nlike the 5iller Bite story, where the entrepreneurial beha#iour took root in an established firm, Nikes story began with two runners passionate about running. And unlike i5ode, where the technology came first and made the concept possible, in Nikes case the #enture was dri#en by customers needs, needs that .night and 1owerman, as runners themsel#es, knew intimately.

Nike learned its trade in one segment, elite distance runners, clearly a niche market then and now. $here it built crucial capabilities4

$he art of understanding the needs of such athletes. $he engineering of products that appealed to these athletes. $he business of sourcing these products in low cost offshore manufacturing locations. $he marketing sa##y to build on the performance of these runners to attract interest from the rest of the athletic pyramid.

Nike then used these capabilities when entering other segments. )n almost e#ery segment it entered, Nike won the match. Nikes segment by segment success raises se#eral !uestions that entrepreneurs should ask4

What can ) learn from this first market segment that will allow me to make wa#es in additional segmentsE What other segments e"ist that could benefit from a related offeringE ?an we de#elop capabilities that are transferable from one segment to anotherE

1y answering these !uestions, entrepreneurs can identify additional #alue in the opportunity at hand F #alue that lies beyond the market targeted originally. As the Nike case history shows, that e"tra #alue can be more than small changeG

This content comes from The New Business Road Test by Professor John Mullins of the London Business School

6iterature !eview7 8rand image7

For every business uniqueness is important to distinguish themselves from their competitors. This is important because when a brand is unique, people associate themselves with the brand. Therefore it allows them to value your brand (Heaston, 2002 . !wareness about the brand comes through different range of ideas, advertising, word of mouth, company portfolio, personal e"perience with that particular brand, and many more (!rmstrong and #otler, 200$ . %owadays, the trend is to follow and adapt something that sounds cool and loo&s cool, even if its meaningless to the audience ('esce 2002 (trong brand image pulls a customer to buy the company)s product, even if they are paying more ((ims 200* and success of a brand depends on how well a brands image and meaning is maintained over long term (+ichell, #ing and ,east, 200*

-ompanies must manage their brands by creating awareness so the brand)s positioning must be continuously communicated to the consumers. 'ositioning is how you want to be perceived in the mar&etplace, and branding is a further modification of that positioning (Moran, 200.

9arketing 9i"7
'roduct/ !ccording to 0obber (2001 , 2'roduct decision) is the type of service or product that should be offered. 3f a company has a strong brand image customers will buy company)s product even if they have to pay more for it ((ims, 200* . 'roduct prototype should be sampled before launching their products li&e %i&e. !s (4ury 200* states that managing the product is therefore vital to a brand)s success. For a company to succeed it needs to improve its services, revise its mar&et position, and its image besides managing it.

'romotion/ 'romotion covers the communication areas which include, sales promotion, advertisement, public relations, internet mar&eting etc ((ims, 200* . These help enhance the awareness of the products benefits among the consumers.

!ll of the communication areas mentioned have their own strengths and wea&nesses (0obber, 2001 .

'eople/ 'eople can turn out to be a great asset or a great wea&ness for businesses. The impact of variables highlighted as attached in appendice during mar&et research help in critically analy5ing the mar&et research factors and opting for best tools of pricing of %iche products. 4ury 200*, mentions that brand interaction is important with customers to create awareness of the brand. 4i&ewise, for a company to overcome its wea&nesses the targeted audience (people plays a pivotal role and helps a company, li&e %i&e to shift from a brac&et of threats to opportunities/ Timely understanding and mar&et research of a company)s wea&nesses will prove helpful in overcoming the threats and shift towards opportunities in short and long run.

'lace/ 'lace is li&e a &ey of branding strategy, because if customers do not have a guide as to where to find the product how will they buy the brand (4ury 200* . 6usinesses have to Target their audience and then setup their shops according to the demand of their products. %i&e has been promoting its products globally and has targeted every country according to their mar&et demand. -ustomers e"pect that a company delivers them high quality products in shortest time available. !ccess is improved through multi site locations (li&e +c7onalds, #F-, 'i55a Hut , where customers dont have to wait for long for their product delivery. %i&e synchronises supply in almost every ma8or countries in 9urope, !sia, +iddle 9ast and !frica and productivity problems are solved through its +ultisite chains.

!esearch %indings and Analysis :uestionnaire %indings

2/ Yes 3a e ,ou heard about Nike4 No

The aim o. this &uestion is to .igure out how man, people are aware about Nike brand/ This resear"h aims to identi., the lo"als and students in 56bridge+ mostl, .rom 7runel 5ni ersit,/ A""ording to m, resear"h 89: students were aware o. the brand+ ;: were not aware o. this brand name/ One o. the reasons wh, people were not aware "ould be "ommuni"ation and writing problems as some international students are still learning the basi" language English/ It "ould be that di..erent people "ome .rom di..erent ba"kgrounds and "ultures where di..erent languages are spoken and understood/ <a=orit, o. people answered >Yes? whi"h shows that the, re"ogni'e the Nike brand/ Nike is seen to be su""ess.ul here in ad ertising their produ"t/ 7, "reating the Swoosh logo Nike has made itsel. &uiet popular b, its simple ,et e6tra agant st,le/

I. ,es+ where did ,ou hear the name4 T@+ .riends+ internet+ stores+ other

<ost people answered ad erts+ whi"h "learl, shows ad ertisements su"h as T@ as the .ore most su""ess .a"tor/ Aollowed b, this was .riends in.luen"e upon pur"hase de"ision/ This shows that keeping personal relations with "ustomers is an important .a"tor in Nike?s su""ess/ 0ustomers are the main market .or an organi'ation+ without "ustomers+ "ompanies "an not sell their produ"t/ ;/ Yes Are ,ou brand "ons"ious4 No

<a=orit, o. respondents stated that the, are lo,alists towards Nike brand/ Those who answered No were shoppers that looked .or an,thing "heap or were either brand lo,alists towards adidas or $eebok/ 7rand lo,alitists towards Adidas were not impressed This pro es m, Null 3,pothesis part A as wrong and shows that there is ma6imum 7rand lo,alt, towards Nike produ"ts/

B/ Yes

#o ,ou bu, this produ"t due to .riends in.luen"e4 NO Sometimes

<a=orit, o. people answered ,es/ This shows that most people are brand .ollowers/ Se"ond highest responses were >Sometimes? showing that still people are interested in bu,ing Nike produ"ts but not alwa,s/

C/

3ow o.ten do ,ou pur"hase Nike produ"ts4 E er, week on"e a month on"e in a ,ear ne er bu,

Sur e, showed that 2D: students pur"hase Nike brands e er, week+ BD: bu, the produ"t on"e a month and 2E: bu, on"e e er, ,ear and E: ne er bu,/ This again shows that brand lo,al "ustomers not onl, shop at their respe"ti e shops but also a oid swit"hing to another brand e en i. there are "heap sale o..ers/

D/

What do ,ou like about Nike4 Logo+ design+ "olor+ other

$espondents Like the logo >Swoosh? in ma=orit,+ .ollowed b, design+ "olor and others/ It shows su""ess.ul promotional marketing b, Nike/ Swoosh designs su""ess lies in its uni&ue promotions+ its market strength and its brand position/

F/

What attra"ts ,ou towards this brand4 Aamous+ .ashion brand+ logo+ pri"e+ other <ost respondents answered that the, are attra"ted towards this brand as it is .amous/ Aollowed b, %ri"e+ logo and others/ %upil who answered Nike as a .amous brand were teenagers and ,oung males and .emales/ Nike "ould be witnessed also as a street brand when seen in highstreet "orners+ wheres street thugs and street bo,s were wearing Nike trainers+ and long tGshirts/ The se"ond most important .a"tor was pri"e/ Some teens e6pressed their positi e .eelings about the brand but e6pressed that as the, were not gi en enough po"ket mone, .rom their parents the, "ould not a..ord it/

H/ Yes

#o ,ou think Nike is a .ashion brand4 NO

<ost respondents that answered >Yes? were ,oung age people .rom LI7T/ Youngsters are .ashion .ollowers and most in.luen"ed b, .ashion brands/ This is be"ause o. 0elebrit, endorsement that ,oungsters get in.luen"ed to a great e6tent/ Young males and .emales stars e6pressed their happ, .eelings about stars like 7e"kham endorsing Nike produ"ts/

9/

Whi"h one would ,ou "hose Nike or Adidas4 Nike Adidas <ost respondents answered Nike/ This was also isible .rom their dressing/ This also shows m, appendi"e stud, as "orre"t where most respondents answered the, like Nike "ompared to Adidas/ Adidas though has a good market share and is =ust "lose to Nike+ but respondents were too la', to talk about adidas/

8/

3ow mu"h would ,ou rate the brand+ out o. D4 <ost people with the most ratings were C/ Aollowed b, B and D/ This is how I made a market re iew o. Nike and pro ed some .a"tors that make Nike su""ess.ul b, pro ing m, appendi"es right and null h,pothesis wrong/

-ocus ;roup -indings7

The aim o. the .o"us group .indings was to .igure out the "onsumers bu,ing beha iours and their per"eptions towards the brand Nike "ompared to its "ompetitor Adidas/

Appendi6 shows an ad ert about m, resear"h where di..erent people were asked to "omment and show their liking .or the produ"t/ As it was not eas, to get an audien"e to .ill these .orms i ga e awa, D pounds to e er,one interested in .illing awa, these .orms/

8rands <Nike or Adidas=7

A""ording to the resear"h .indings+ Adidas has not showed strength in its marketing strategies espe"iall, ad ertising/ Though the market looks weak+ there are still lo,al "ustomers who do not want to shi.t towards other "ompanies+ whether its their personal e6perien"e with the brand or their taste/ <a=orit, o. the students+ taken .rom leisure sports "entre and 7runel 5ni ersit, were students a"ti e in sport a"ti ities or somehow related to sports/ When .a"ts were shown that Nike is number one sports brand+ I was able to "on in"e one Adidas "ustomer towards tr,ing Nike )as seen in appendi6+ IB*/ 3owe er two respondents re.used to swi.t .rom their brand )Adidas*+ showing that brand lo,alt, is another important ke, to su""ess .or a "ompan,/

Nike >ports wear and athletic shoes

Nike?s sportswear market was seen to ha e the most positi e responses "ompared to athleti" shoes+ whi"h were belie ed to ha e a strong market hold/ $espondents thought Nike Sportswear?s were on good o..ers+ trend,+ se6, and some "onsidered it as a .ashion brand/ Athleti" shoes also had some good a""eptan"e .rom the audien"e but it was too less "ompared to Nike Sportswear/ The most .amous sour"e o. ad ertisement .ound out was T@+ .ollowed b, internet and others/

1onclusion 4 !ecommendations7
E er,one in Nike should pla, their indi idual roles in promoting their brand irrespe"ti e o. their hierar"h, le el+ ranging .rom Top 0EO?s o. the "ompan, to the sta.. and .rom manu.a"turing sites till it rea"hes its "ustomer "o ering all marketing team and e6pertise?s in between/

A thorough "he"k and understanding o. the International "ode o. "ondu"t regarding "hild labor and sweat shops needs to be maintained and stress should be on team work rather than pushing it on a single person/ <istakes made in these sweat shops should not be .orgi en in .uture/

0arr,ing out our pre ious resear"hes and sur e,s and as the appendi"es show+ Nike is doing well due to its promotional methods+ like ad erts+ and has sa ed huge reser es to be used .or .uture o. the "ompan,/ 0elebrities! stars and ad erts should also tr, to .o"us older generation+ rather than =ust .o"using on ,outh and sportsmen/ Nike should be introdu"ed as a "asual brand whi"h "an be worn at an, time+ an,where and without an, age restri"tion/

Nike needs to reali'e that inorder to bene.it in the long run+ it needs to o er"ome its weaknesses and threats+ whi"h will automati"all, lead to opportunities and strengths being .ollowed/

All important issues su"h as market segmenting+ di..erentiation o. produ"ts+ pri"e skimming+ "omparati e anal,sis and market resear"hes and sur e,s are ke, to a "ompan,?s su""ess/ I ha e linked all o. them to "ome to a "on"lusion that it might be a hard time .or Nike as it "o ers a large market se"tor and .a"es both internal and e6ternal threats/ 7ut it must be noti"ed that Nike has a "ompetiti e ad antage o er its "ompetitors .or being number one brand in sports/ With more detailed online and door to door sur e,s and &uestionnaires+ Nike "an ben"hmark and a"hie e a better market anal,sis resulting in a .ar better market strength/

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