strategic-management

eliminate quotas and tariff barriers for foreign footwear manufacturers to ship their goods
into the United States. China alone accounts for 86.4 percent (by volume) of all U.S.
imports of footwear into the United States.
Virtually all of Nike’s footwear is produced outside of the United States. In fiscal 2009,
contract suppliers in China, Vietnam, Indonesia, and Thailand manufactured 36 percent,
36 percent, 22 percent, and 6 percent of total Nike brand footwear, respectively. The company
also has manufacturing agreements with independent factories in Argentina, Brazil,
India, and Mexico to manufacture footwear for sale primarily within those countries. Nike’s
largest single footwear factory accounted for approximately 5 percent of total fiscal 2009
footwear production.
Almost all of Nike brand apparel is manufactured outside of the United States by
independent contract manufacturers located in 34 countries. Most of this apparel production
occurred in China, Thailand, Indonesia, Malaysia, Vietnam, Turkey, Sri Lanka,
Cambodia, Taiwan, El Salvador, Mexico, India, and Israel. Nike’s largest single apparel
factory accounted for approximately 5 percent of total fiscal 2009 apparel production.
Technological Changes
The Internet allows footwear companies to pursue a direct to consumer sales channel.
Sales of apparel, accessories, and footwear on the Internet has been growing at a doubledigit
pace, considerably faster than more traditional sales models such as retail stores.
Forrester Research predicts that Internet sales of apparel, accessories, and footwear could
reach 18 percent of category sales by 2012, up from 6.5 percent of all sales in 2006.
Companies that added a Web-based sales strategy are able to customize footwear and other
merchandise directly to the customer’s needs and taste, which enables companies to
achieve considerably better pricing as well as “deepening” the emotional bond consumers
have with the brand.
The Future
Nike needs a clear three-year strategic plan to succeed in the future. Provide this for Nike’s
top management team.
Endnotes
1. This case study was prepared as a basis for class discussion rather than to
illustrate either effective or ineffective handling of an administrative situation.
Not for reproduction or distribution without permission of the author. Contact
info: Randall Harris. Dept. of Management. CSU. Stanislaus. 801 W. Monte Vista
Avenue. Turlock. CA 95382. raharris@csustan.edu (209) 667–3723. Review copy
for Strategic Management, 13th Edition. © 2009 by Randall Harris. Draft dated
May 8, 2009.
CASE 27 • NIKE, INC. — 2010 271