Business Plan For Nike Products Business Essay

Nike Inc. is one of the renowned and largest manufacturers and importers of footwear and apparel. The present study aims at introducing the Nike products in a country where there are some restrictions upon women to select items that are not matched according to their religious ideology.

For this a detailed market plan ahs been prepared and write up has been made for initial feasibility of necessary funds for cost allocation and advertisement. The study also made a SWOT analysis in such countries and view whether there are certain implications for the introduction of NIKE products or not.

Introduction to NIKE Business:

NIKE Inc. is renowned as worldwide importer of Japanese shoes and has proved it t to be the largest dealer in footwear and apparel. The estimation for the likeness of the NIKE products can be sketched from the overview that Nike products are sold on almost 20,000 retail accounts in USA only and about in 110 different countries. Apart from the athletic footwear, the company also sells Nike and Bauer brand sporty tools brand by Cole Haan and informal footwear and the Sports etc. The company is directly involved in the designing, development and marketing of its products while manufacturers are located in overseas. The company has a strategy to made consistent innovation in design of its products and heavy promotion in order to excel growth all over the world.

Nike products were introduced by Philip H. Knight in 1962, who with an idea to eliminate the monopoly of German products on American market, started to import its products to USA on small scale. Along with the introduction of large range of products (Blue Ribbon sports shoes, Boston Shoes, soccer shoes) to satisfy customers demand, the firm ultimately shaped into Nike, Inc.

By the end of the decade, the company has opened many retail stores within the region but the main problem faced by Knight was the lack of capital that has been financed by Japanese trading company “Nissho Iwai Corporation”. The availability of external financing enables Knight to arrange the manufacturing of its products overseas with the help of independent contractors. In order to import its products overseas, the company has introduced its brand name “Nike” in the whole world.

The Company has tried to introduce new line of products in athletic shoes range but the growth of the company truly begun to take-off with the introduction of jogging shoes that were sold in United States in late 1970s. Nike’s revenues turned to be tripled within two years in 1976 and then became doubled in just one year in 1977. To satisfy demand, the company opened new manufacture outlet, in Taiwan and Korea. An acceleration of sales was expanded with the introduction of NIKE products in Asian and South American markets in 1977.

By 1982, in the company’s line of products, more than 200 different kinds of footwear has been introduced by the company including the Air Force, basketball footwear, and shoe for racquet sports, the Air Ace, the newest models of innovative shoe designs that had pressed Nike’s earnings to annually increment of almost 100 percent. In addition, 200 different types of clothing have been introduced by the company.

Nike Mission Statement:

The Mission statement of Nike introduced the concept

“*To bring inspiration and innovation to every athlete in the world *If you have a body, *you are an athlete*.”

The main aim of the Nike Inc. is to facilitate the athlete all over the world regarding the comfort of shoe and make every one to feel like an athlete if he has potential to use Nike products. Secondly, they want to bridge the gap between the provisions of goods overseas for this they started importing their products in order to boost growth and break down the monopoly of German products that have captured the United States market at that time. . Today, Nike always tries to find new and innovative style to make a competitive athletic goods and innovative methods to get a feedback directly from their consumers.

Business Idea in Conservative Country:

A conservative country may be defined as “a place where the resources are scarce but people still believe to achieve most through hard work and dedication”. In the pursue of introducing the products of “NIKE” in any conservative country, we have decided to use Pakistani women as sample filed because now a days Pakistan is economically conservative and women are specially restricted to wear dresses that represent their Islamic ideology. Per capital Income of average person is declining and conditions are getting even more worse still people in Pakistan believe that the conditions can be overcome. Low per capital Income is the basic for the savings and if people have savings they can enjoy the facilities of luxuries like NIKE products. Similarly, women prefer their family needs than their own needs and they do not want to spend money on such kind of unnecessary items. To excel the demand of the products, Strategies are hard to define in a country like Pakistan where resources are scarce but we have made an attempt to focus the attention of people.

Executive Summary:

For this, we have made first the executive summary of the person who will initiate a

Company like environment as Sale center of NIKE products.

The executive slogan is that “behind great Company, there are strong leaders”

At Nike, environment is mutual, matrix organization where team members are allowed to report in two areas i.e. geography and global function. Nike brand include footwear, apparel and equipment product engines. The core customer’s categories include sports things, basketball, football (soccer), men’s training, running, sportswear, and women’s training; the business is being conducted in three main cities.

Chairman (CEO)

Chief executive

President

President & chief Executive Officer

CFO

VP Financial Officer

Treasurer

Assist Treasurer

Accountant

Book keepers

VP, Global Human Resource

VP, Creative Design Resources

VP, Commerce Affiliates

President,Busines development

P Marketing

P Research

Idea Generation:

The recent survey conducted by us revealed that there was a tremendous growth and demand for the Nike products in Pakistan but females are specially deprived of using the same products as they are not too much involved in sports. Thus the promoter of the Idea takes an initiative along with other members to set up the business plan for execution of NIKE products for women in Pakistan. Later they

Explored various aspects as whether to conduct plan and develop a web site or use other effective tools with some other unique ideas.

Market Survey:

As per the survey, Lahore and Islamabad has one of the highest demands for Nike products, since the willingness of the people for getting quality/branded products at cheap rates and within the geographical distribution is high. Also women in these areas are now stepping forward shoulder to shoulders with men to achieve the same success in every field as the man can. Thus, we analyzed the business scenario & prepared a SWOT analysis.

Strengths:

Nike is the top most and highly competitive organization in the sports world. Phil Knight often quoted that ‘Business is war without bullets.’ The major strength of the business is that Nike has no factories still it is the largest importer of athlete products because it ahs managed manufacturer overseas. Due to this ability the demand of the customers can easily be met within the country at low cost.

Nike is not bound to spend its cash in premises and manufacturing workers. This makes a very tilt organization. Nike makes it strong with the help of research and development apart from assets. The Nike outlet in Pakistan will increase its revenues also the people will be introduced with different range of products.

NIKE is a global brand, that make it’s the top most sports brand in the World. Its famous ‘Swoosh’ is recognizable all over the world and even it is tattooed on the ankle. Therefore, the customers who never compromise on quality can be good target market for the NIKE products.

NIKE products are especially comfortable for women as these can fulfilled the needs according to their ideology therefore, they can excel the use of the products in country.

Weaknesses:

One of the major weaknesses is that the organization must have a multiple line of products of sports goods while the business income still takes most of the share of the footwear promote. It means that all other products revenues could not offset if footwear market erodes. If the business will erode in parent Country that will affect the business in other countries as well.

Opportunities:

Nike can create many opportunities regarding its Product development. As the brand is protected by owners who do not considered Nike as a fashion brand. However, the demand of the consumers depends upon their willingness to buy Nike products apart from their likeness for NIKE products. If some argue that youth consider Nike a fashion brand, this could be an opportunity for NIKE products,

There is also opportunity to innovate products such as sports clothing, sports cycling and jewellery.

There is an opportunity of international business development. As Nike share strong brand recognition, many international markets that have such kind of income which can be spend on high price sports commodities can manage to enter the range of Nike brand.

Threats:

As Nike is exposed to international trade, it can buy and sell in different currencies which are the major threats of revenues fluctuations due to different currencies involved. Such an exposure means that Nike could be manufacturing its product at loss as well as at selling. This is an important point that every big brand has to face just because to maintain its reputation in the market in the global world.

“As the Model used by Phil Knight in his Stamford Business School days” is now commonly used there is major threat that the edge of competitive advantage will be lost. Competitors of the Nike can take away Nike’s share from the market by introducing substitute products.

Regional Review:

Pakistan is a highly riches resources country in agriculture and industrial point of view as well. It exports almost 60% of of its products on international standard the total population of the country is almost 18 crore and women are almost 45% of the total population. People their love to play support because Pakistani weather is very famous in the world. Now a day’s women are much aware readings the importance of sports and games and they are more conscious about their fatnesses and health. However there are some cultural and religious restrictions in the country but women are trying to participate in gyms activities in the ladies gyms as well.

Now we will analysis the ratio of the women fitness trend in the major’s cities of Pakistan like Lahore, Islamabad, Karachi, Multan etc.

There is more participation in women fitness’s centers. It has been increase from 2004 to 2009 up to 22% in Pakistan.

Now a day’s Pakistani women are working in the offices whether part timer or as a full timer so they are more concerned about their fitness and almost 45% of the members of the gyms are women aged 18 to 45 years.

The women fitness activities have been increased in the last 3 years and there is more chances to increment so if the Nike product is launch in

Pakistan than the total estimated market share might be 6% to 7%.

Product Selection:

The target market (Pakistani women) selected is available in various ranges (age size), which are as follows…

From 18- 20 years

From 20-25 years

From 25-30 years

From 35-40 years

And the above-mentioned ranges sizes are available mostly in Lahore, Karachi and Islamabad because these areas are labor intensive. Most of the labor is

Cheap

Technical knowhow:

There in no need to hire technical staff as the products at display centers will only require selling strategies and financial matters. However the sale experience must be required or there should be proper training sessions for the sale person who will stand in the retail stores and the person should know all the products as trained by the company.

Availability of funds:

After collecting the necessary funds, we would commence our business. We can borrow from bank as well. We can borrow from bank as well.

Recruitment:

The recruitment required is for 4 sales managers initially the specifications are as follows:

They should be literate at post graduate level

They should have enough knowledge about Nike brands

Pleasant personality having skills to attract customers

Feasibility Plan

Capital Contribution = Rs. 3,000,000

FIXED COST PALN:

 

 Rs.

Building (Store room)

850,000

Conveyance

650,000

Equipment

60,000

Furniture

125,000

Land

70,000

Total

1,755,000

Variable Cost Plan:

 

1 month

2 month

3 month

Total

Salaries expense

250,000

250,000

250,000

750,000

Maintenance expense

50,000

50,000

50,000

150,000

Wages

60,000

60,000

60,000

180,000

Utilities expense

25,000

25,000

25,000

75,000

Rent expense

125,000

125,000

125,000

375,000

Entertainment expense

10,000

10,000

10,000

30,000

Misc. Exp

10,000

10,000

10,000

30,000

Total

530,000

530,000

530,000

1,590,000

Loan Requirement Plan

 

Rs.

Rs.

Capital Investment

 

30,00,000

Cost of Sales

3,345,000

 

Requirement for General Reserve

635,000

3,980,000

 

 

 

Short Fall / loan requirement (Rs.)

 

980,000

On the basis of the projection report and the above given table, there is a requirement of a sum of Rs. 980,000/- for which we have applied for a loan from Bank.

FORECASTED FINANCIAL STATEMENT

NIKE Incorporation,

Trading Profit & Loss Account

For 3 months

 

Rs.

Revenues

1,000,000

Cost of Sales

250,000

Gross Profit

750,000

Operating Expenses

530,000

Interest Expense @ 9.5%

23,275

Net Income

196,725

Nike Incorporation

Feasibility Balance Sheet

For three months

ASSETS

Rs.

Liabilities and Equity

Rs.

Cash

1771725

A/P

980000

Land

70000

Capital 3000,000

Building

850000

 Add: NP 196,725

  3196725

Conveyance

650000

 

 

Equipment

60000

 

 

Furniture

125000

 

 

Stock

650000

 

 

Total

4,176,725

Total

 4,176,725

Terms of Repayment of Loan:

As per the agreement between Bank & NIKE Inc both have agreed on the terms that loan will be repaid over a period of 5 years @ 9.5 %.

MARKETING:

The basic market research instrument was the survey in the TOI that told us about a possible potential in this field. All the partners then carried out research by collecting primary data ourselves. We spoke to existing manufacturers, locals etc.

Though the market for our product is very huge, the competition is quite tough. But flags are used by everyone in the nation. Hence, like all of our competitors we are using Mass Marketing.

There is range of product line i.e. the flags with a fair amount of variations in the product itself (as mentioned earlier).

The pricing method we have chosen is the cost plus method where we plan to gradually increase the profit margin.

Our products will be sold both in almost every city of Pakistan.

We are using Quality Assurance as a key marketing strategy as the raw materials we use are of a good quality and the products are manufactured and stored in a good environment.

Conclusion/Recommendations:

The capital invested is of Rs.3, 00,000 and the total cost of production is Rs. 250,000 and thus resulting in a profit of Rs. 196,725. Since there is less availability of funds and thus as a company need a loan from the bank. Also the sales are expected to grow by 10% every year.

It is strongly recommended that in order to excel the demand of the NIKE products in conservative countries like Pakistan, the business has to change its strategy and made a range of the products that is only for females and according to their likeness. As females like to be fashion oriented, the design should be made of unique style that are according to the fashions and taste of women style. This needs strong advertisement as well. Following all such the business can generate a strong demand for women footwear and apparel in NIKE products.