Krane was responsibilities in global appointed to Executive Vice President, sportsmarketing. From to , she was a and Vice President, Global Sports partner and assistant general counsel at Marketing in November Slusher was an Bernard F. Pliska, 51, Myers from to Sprunk, Chief Operating Officer He was appointed Vice President, — Mr. Sprunk, 49, joined NIKE in Corporate Controller in Region in , Finance Director for Pliska is a certified public accountant.
Sprunk was appointed Chief Operating Officer in Sprunk was a certified Footwear in , Vice President of public accountant with Price Waterhouse Merchandising and Product in and from to Our principal business activity is the design, development and worldwide marketing and selling of athletic footwear, apparel, equipment, accessories and services. NIKE is the largest seller of athletic footwear and athletic apparel in the world. Virtually all of our products are manufactured by independent contractors.
Virtually all footwear and apparel products are produced outside the United States, while equipment products are produced both in the United States and abroad. We place considerable emphasis on high quality construction and innovation in our products.
We sell sports apparel and accessories covering most of the abovementioned categories, which feature the same trademarks and are sold predominantly through the same marketing and distribution channels as athletic footwear.
We also market apparel with licensed college and professional team and league logos. We sell a line of performance equipment under the NIKE Brand name, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities.
Our wholly-owned subsidiary, Converse Inc. In addition to the products we sell to our wholesale customers and directly to consumers through our Direct to Consumer operations, we have also entered into license agreements that permit unaffiliated parties to manufacture and sell certain apparel, digital devices and applications and other equipment designed for sports activities.
As part of our long-term growth strategy, we continually evaluate our portfolio of businesses to ensure we are investing in those businesses that are accretive to the NIKE Brand with the largest growth potential and highest returns. On February 1, , and November 30, , we completed the divestitures of the Cole Haan and Umbro businesses, respectively, allowing us to better focus our resources on driving growth in the NIKE, Jordan, Converse and Hurley brands.
Each NIKE Brand geography operates predominantly in one industry: the design, development, marketing and selling of athletic footwear, apparel, equipment, accessories, and services. We sell to thousands of retail accounts in the United States, including a mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops, and other retail accounts.
We make substantial use of our futures ordering program, which allows retailers to order five to six months in advance of delivery with the commitment that their orders will be delivered within a set time period at a fixed price. We utilize NIKE sales offices to solicit sales in the United States as well as independent sales representatives to sell specialty products for golf, skateboarding, and snowboarding.
Converse and Hurley products are shipped primarily from Ontario, California. International Markets In fiscal , non-U. We sell to thousands of retail accounts and operate 16 distribution centers outside of the United States. In many countries and regions, including Canada, Asia, some Latin American countries, and Europe, we have a futures ordering program for retailers similar to the United States futures ordering program described above.
This futures orders amount is calculated based upon our forecast of the actual exchange rates under which our revenues will be translated during this period.
Reported futures orders are not necessarily indicative of our expectation of revenues for this period. This is because the mix of orders can shift between futures and at once orders and the fulfillment of certain of these futures orders may fall outside of the scheduled time period noted above.
In addition, foreign currency exchange rate fluctuations as well as differing levels of discounts, order cancellations and returns can cause differences in the comparisons between futures orders and actual revenues. Moreover, a significant portion of our revenue is not derived from futures orders, including at-once and closeout sales of NIKE Brand footwear and apparel, sales of NIKE Brand equipment, sales from our Direct to Consumer operations, and sales from our Other Businesses.
Product Research and Development We believe our research and development efforts are a key factor in our success. Technical innovation in the design and manufacturing process of footwear, apparel, and athletic equipment receive continued emphasis as NIKE strives to produce products that help to reduce injury, enhance athletic performance and maximize comfort. Manufacturing Virtually all of our footwear is manufactured outside of the United States by independent contract manufacturers.
We also have manufacturing agreements with independent factories in Argentina, Brazil, India, and Mexico to manufacture footwear for sale primarily within those countries. Almost all of NIKE Brand apparel is manufactured outside of the United States by independent contract manufacturers located in 28 countries. The principal materials used in our footwear products are natural and synthetic rubber, plastic compounds, foam cushioning materials, nylon, leather, canvas, and polyurethane films used to make Air-Sole cushioning components.
Louis, Missouri, as well as independent contractors in China and Vietnam, were our largest suppliers of the Air-Sole cushioning components used in footwear. The principal materials used in our apparel products are natural and synthetic fabrics and threads, plastic and metal hardware, and specialized performance fabrics designed to repel rain and snow, retain heat, or efficiently wick moisture away from the body.
Most raw materials are available and purchased by those independent contractors and suppliers in the countries where manufacturing takes place. We have thus far experienced little difficulty in satisfying our raw material requirements. Such a disruption could result in canceled orders that would adversely affect sales and profitability. However, we believe that any such disruption would be short-term in duration due to the ready availability of alternative sources of financing at competitive rates.
Our current agreements with Sojitz America expire on May 31, International Operations and Trade Our international operations and sources of supply are subject to the usual risks of doing business abroad, such as possible revaluation of currencies, export and import duties, anti-dumping measures, quotas, safeguard measures, trade restrictions, restrictions on the transfer of funds and, in certain parts of the world, political instability and terrorism.
We have not, to date, been materially affected by any such risk, but cannot predict the likelihood of such material effects occurring in the future. In recent years, uncertain global and regional economic conditions have affected international trade and caused a rise in protectionist actions around the world. These trends are affecting many global manufacturing and service sectors, and the footwear and apparel industries, as a whole, are not immune. Notwithstanding our efforts, such protectionist measures, if implemented, could result in increases in the cost of our products, which may in turn adversely affect our sales or profitability as well as the imported footwear and apparel industry as a whole.
We monitor protectionist trends and developments throughout the world that may materially impact our industry and engage in administrative and judicial processes to mitigate trade restrictions.
In Brazil, we are actively monitoring for dumping investigations against products from China and other countries that may result in additional anti-dumping measures and could affect our industry. We are also monitoring for and advocating against other impediments that may increase customs clearance times for imports of footwear, apparel and equipment.
Where trade protection measures are implemented, we believe that we have the ability to develop, over a period of time, adequate alternative sources of supply for the products obtained from our present suppliers. If events prevented us from acquiring products from our suppliers in a particular country, our operations could be temporarily disrupted and we could experience an adverse financial impact.
Competition The athletic footwear, apparel, and equipment industry is highly competitive in the United States and on a worldwide basis. We compete internationally with a significant number of athletic and leisure footwear companies, athletic and leisure apparel companies, sports equipment companies, and large companies having diversified lines of athletic and leisure footwear, apparel, and equipment, including adidas, V.
We also compete with a number of vertical retailers such as Lululemon and Uniqlo. The intense competition and the rapid changes in technology and consumer preferences in the markets for athletic and leisure footwear and apparel, and athletic equipment, constitute significant risk factors in our operations.
NIKE is the largest seller of athletic footwear, apparel, and equipment in the world. We believe that we are competitive in all of these areas. Trademarks and Patents We utilize trademarks on nearly all of our products and believe having distinctive marks that are readily identifiable is an important factor in creating a market for our goods, in identifying our brands and the Company, and in distinguishing our goods from the goods of others.
In addition, we own many other trademarks that we utilize in marketing our products. We continue to vigorously protect our trademarks against infringement. The process utilizes pressurized gas encapsulated in polyurethane. We also file and maintain many U.
These patents expire at various times, and patents issued for applications filed this year in the U. We believe our success depends primarily upon our capabilities in design, research and development, production, and marketing rather than exclusively upon our patent position.
However, we have followed a policy of filing patent applications for the United States and foreign patents on inventions, designs, and improvements that we deem valuable. Employees As of May 31, , we had approximately 48, employees worldwide, including retail and part-time employees. Management considers its relationship with employees to be excellent. None of our employees are represented by a union, except for certain employees in the Emerging Markets geography, where local law requires those employees to be represented by a trade union.
Also, in some countries outside of the United States, local laws require employee representation by works councils which may be entitled to information and consultation on certain Company decisions or by organizations similar to a union. NIKE has never experienced a material interruption of operations due to labor disagreements.
In addition, rapid changes in technology preferences in the markets for athletic and leisure footwear and apparel, and athletic equipment, constitute to significant factors that drives competition and challenges in operations. Our ability to replace those instruments on the same or similar terms may be limited under poor market conditions. Continued volatility in the markets and exchange rates for foreign currencies and contracts in foreign currencies could have a significant impact on our reported financial results and condition.
Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have an adverse impact on our business, financial condition and results of operations. In addition, disease outbreaks, terrorist acts and military conflict have increased the risks of doing business abroad. The principal materials used in our footwear products — natural and synthetic rubber, plastic compounds, foam cushioning materials, nylon, leather, canvas and polyurethane films — are also locally available to manufacturers.
Knight, Co-founder and Chairman of our Board of Directors, beneficially owns over Knight would own over These shares are available for resale, subject to the requirements of the U. The sale or prospect of the sale of a substantial number of these shares could have an adverse effect on the market price of our common stock. Puma ranks third with 2.
We lease more than retail stores worldwide, which consist primarily of factory outlet stores. We lease 1 more than retail stores worldwide, which consist primarily of factory outlet stores. Net Income x 5 Four Method Average Primary distribution centers in the United States.
No hold on Sojitz Corporation of America import-export financing 2. A lease over sales offices and approximately 90 services administrative offices worldwide. We lease more than retail 2. Purchase products from manufacturers outside of our futures stores worldwide, which consist primarily of factory outlet stores.
Have license agreements that permit unaffiliated parties to 3. Virtually all of our athletic footwear and apparel is manufactured manufacture or contract for the manufacture of products using our outside of the United States trademarks. Dependent on information technology systems and networks, 4. Distinctive marks or utilization of trademarks registered these including the Internet and third-party hosted services trademarks in almost jurisdictions.
No control of counterparty financial institutions 5. Patented Air-Technology 6. Limited ability to replace on the same or similar terms credit and 6. Established relationship to high quality endorsers derivative instruments 7. Strong research and development 7. Subject to periodic litigation and other regulatory proceedings 8. Excellent relationship with employees 8. Failure to adequately protect or enforce our intellectual property 9. Worldwide recognition iconic brands rights could adversely affect our business.
Direct distribution centers 9. Our success depends on our global distribution facilities Provisions articles of incorporation and Oregon law to protect Our products are subject to risks associated with overseas shareholder interests sourcing, manufacturing, and financing.
We depend on key personnel, the loss of whom would harm our Water and Chemicals in Dyeing business. China and Vietnam, largest suppliers of the Air-Sole cushioning 1. Trade protectionism trade restrictions A components 2. Uncertain global and regional economic conditions N 2. Seasonal demand fluctuations in sales L orders reported for the comparable prior year period 5.
Currency exchange rate fluctuations Y 3. Subject to income taxes in the United States and numerous I 4. A majority of our products are sold outside of the United States foreign jurisdictions S 8.
Laws of certain foreign countries may not protect or allow enforcement of intellectual property rights 9. Slower consumer spending Unstable market prices for commodities and raw materials Order cancellations, reduced orders, and inability of retailers to timely meet their payment obligations Retailers who cease business operations reduces availability of our products to consumers Financial factors concerning contract manufacturers may result in delays or non-delivery of shipments of our products Changes in our credit ratings or macroeconomic conditions may affect our liquidity, increasing borrowing costs and limiting our financing options.
Natural disasters Changes in tax laws and unanticipated tax liabilities could adversely affect our effective income tax rate and profitability.
Anti-takeover provisions may impair an acquisition of the Company or reduce the price of our common stock. The market for prime real estate is competitive. The sale of a large number of shares held by our Chairman could depress the market price of our common stock.
Prioritize having manufacture contracts with countries 1. Establish control measures and success indicators with developing new design offerings S4, S5, S7, S13 - O2 overseas sourcing, manufacturing, and financing. W10 - O1, 3.
Have the products manufactured and delivered outside the U. Develop more product designs and diversify product lines 1. Impose strict guidelines concerning contract manufacturers to cater unpredictable consumer preferences using strong reliability and timeliness of product shipments W3 - T13 research and development S7 - T6 2. Lease more retail stores worldwide S2 - T12, T18 3. S but also outside the country.
Nike has a new program in fiscal , which it allows retailers to order five to six months In advance. Nike also sells Sports Apparel and accessories. Technical Innovation, which the Nike has a specialist in knowing what the -2 customer needs and wants.
Swoosh brand is ubiquitously. IKEA's policy of hiring the same genre of people leads to inhibiting diversity and innovation to meet change in new markets. Recommendation: IKEA should broaden its selection base of hiring people. Whilst not changing the core competencies required of key staff, a new emphasis should be placed on the hiring of people from a mix of backgrounds and personalities.
This will promote diversity, infusion of new ideas and ensure the richness of the culture. Limitation: This diversity may however lead to lack of goal congruence and a distraction from the common goals.
There may be a waste of resources to get such a diverse group to agree to a common viewpoint. Recommendation: There are two options to solve this issue. Firstly, a solution would be to hire more Swedes with similar work ethos and cultural similarities. Secondly, another option is to promote successful managers from various countries to expatriate jobs in other geographies. This would not only achieve strong transplantation of talent but also build strong and committed global managers.
Limitation: There may not be enough capable candidates in the overseas poll of Scandinavian expats. Additionally, looking at the second option of transplanting foreign mangers in businesses outside their home countries may foster feelings of resentment of locals, inhibiting individual advancement. With a deep knowledge about life at home and the challenges most of us have with limited space and wallets on one hand and big dreams on the other, IKEA often develops its products directly on the factory floor.
Together with our very skilled suppliers, we make sure to get the most out of the possibilities in the production plants. We adapt the sizes and constructions of our products so we can produce, package and transport them in the most efficient way. We also put a lot of effort into developing materials, to improve them and save resources. A limited range of articles and big sales volumes make it possible for us to keep costs and prices down. On top of this, our customers contribute to the low prices by collecting, taking home and assembling the products themselves.
Today, they can even design their kitchen or wardrobe themselves using our computerized planner tools. We do our part, you do yours — together we save money. The Potential benefits of international expansion are increased market share, revenues, profit, and buyer awareness. Low price and good quality more than competitors. Good service 3. High quality of design. Wide varieties. IKEA has a special team develops new products, updating technology, promoting technological development.
It not only brings new strategy and model to their competitors, but also brings the new life style and service to the customers. All rights reserved Related Papers. By Phuong Pham. By Hanaa Elsayad. Download pdf. Log in with Facebook Log in with Google. Remember me on this computer. Enter the email address you signed up with and we'll email you a reset link. Need an account? Click here to sign up.
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