INTRODUCTION Founded in 1968 in Oregon, Nike's business activities involve design, development and the worldwide marketing of high quality apparel, equipment, footwear and accessory products.
Nike sells to approximately 140 countries around the world and currently boasts an approximate revenue of $8,776,900,000 These revenues are based on product sales of shoes, clothing, and other sports products. Advertising expenditures currently total $223,300,000 and include the following allocations: $64,975,000 for network television, $31,447,000 for consumer magazines, $7,700,000 for spot television, $343,000 for newspapers, $134,000 for outdoor postings, and $36,000 for radio. (Reed Elsevier) Most footwear products are made outside of USA. However apparel products are produced in the USA and abroad. (www.statcan.ca) In this article we will try to explore the interaction between the company Nike and its external business environment, as well as the internal strengths and weaknesses of the company. We will attempt to discover some of the significant changes and events in the external environment that have occurred in the last 5 years and have directly impacted Nike. We will describe how the company adapted and responded to these changes and what the effects of these events were. Also we will identify and describe some of Nike's internal strengths and weaknesses.
CHANGES AND EVENTS IN THE EXTERNAL ENVIRONMENT INTERNATIONAL CRISES One of the most recent global environmental changes are the events of September 11th 2001, when airplanes crashed into each of the World Trade Center towers in New York, the Pentagon near Washington, D.C., and near Pittsburgh, P.A. (www.geocities.com/Athens/Acropolis/5232/) U.S. government officials reported that the crashes were a coordinated terrorist attack. Since this catastrophe was not expected, no one was ready to respond to it. Cole Haan store (owned by Nike), located in the World Trade Center plaza has been completely demolished. However, all of approximately 250-260 Nike and Cole Haan employees based in New York are safe and accounted for. In addition, no Nike employees were on board any of the planes involved in the terrorist attacks in New York, Pennsylvania and at the Pentagon. (www.centrum.sk) After closing on Tuesday, September 11th, and Wednesday, September 12th, all other Nike and Cole Haan stores in New York and Washington D.C. are open. (www.nike.com) This disaster affected not only the American people but also the world economy and many areas of business, including Nike Inc. The value of American dollar dropped rapidly and is recovering very slowly. Nike has a large amount of their products in inventory, which they are unable to sell and are preparing to cut down the production. This would mean a significant downsizing in number of employees. (www.geocities.com/Athens/Acropolis/5232/) Many consumers have reduced their travel to certain retail destinations; in general consumers are purchasing few non-essential products. Nike expects lower sales and profits over the next several months as consumers closely monitor the U.S. attacks on Afghanistan. (www.nike.com) When a military campaign, like the one in Afghanistan, brings new developments or intensifies, U.S. consumers buy less, prompting retailers to become more cautious with their product orders. These events caused a 12 percent decline in shares since September 11th of Nike Inc., the industry's leader. (www.nike.com) The company said the September 11th attacks on the United States have disrupted most of its long-range strategy plans. Analysts have predicted a modest decrease in quarterly earnings estimates for Nike. They also said they expect fourth-quarter 2001 sales to be hurt by the slowdown in consumer spending.(www.msn.com) Decline and slow recovery of Nike's stock since Sept. 11th 2001 (www.moneycentral.msn.co.uk) The company expects to scale back advertising and production next year. (www.nike.com) Nike, as a global company,...
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