Strategic Analysis of Nike, Under Armour & IMG

STRATEGIC ANALYSIS OF NIKE, UNDER ARMOUR & IMG

GROUP 6K.J. ESTER, ERNEST ROSS, MIKE VIECO, TIANTONG LIU,

ZHONGYANG YI

Florida State UniversitySPM 5116 Strategic Management for Sport OrganizationsFinal Project Presentation

WHY WE CHOOSE THEM?

•Nike• One of the most recognizable global brands in the world• Sponsor some of the world’s best athletes• Number one athletic shoe retailer

•Under Armour• Emerging brand and competitor of Nike• Interesting to analyze areas in which they can better compete with Nike• Emerging in athletic shoe segment

•IMG• One of the most recognizable brands in sports marketing• Large focus on collegiate athletics

• FSU is a client of IMG

MISSION STATEMENT

“To bring inspiration and innovation to every athlete in the world.”

* If you have a body, you are an athlete.

STRATEGIC GOALS

Direct to consumer to drive growth and sales

•Nike is placing a strong emphasis on its direct to consumer, or DTC, growth channel. •The segment includes items sold at Nike stores and online sales through www.nike.com .•The company plans to improve its margin through increased DTC penetration and achieve $8 billion in sales by 2017, compared to $4.3 billion in 2013. $50 billion in revenue by 2020. •It's a goal. CEO Mark Parker called "ambitious." In its most recent fiscal year ended May 2015, Nike had $30.6 billion in revenue, a 10% increase over the previous year.

http://www.nike.com/

How does Nike plan to reach 50 billions?

PESTEL ANALYSIS

Political-Nike is able to benefit though the US government's low

interest rates, stable currency conditions, and

international competitiveness of the tax system.

Economical -Positive: Brand equity

-Negative: Biggest threat held against Nike is if an

economic recession were to hit the market.

Social -Consumers becoming more health conscious

PESTEL ANALYSIS

Technological -Information technology

Environmental-Environmentally friendly and efficient with their

production methods

-Creating Awareness

Legal-Allegations of sweated labour

-Sued under California’s Unfair Competition and False

Advertising Laws

New entrants:Low to Medium

Threat of substitute products:Medium

Competitive rivalry:

High

Bargaining power of consumers: Low to Medium

Bargaining power of suppliers:

Low

FIVE FORCES MODEL ANALYSIS


Bargaining Power of Customers: Low to Medium-Wholesales and Direct-to-customer channels

-Certain big wholesales customers hold the bargaining power

Bargaining Power of Suppliers: Low-Products manufactured by third-party companies outside the U.S.

-Nike have strict terms in the contract with suppliers to protect their rights and

intellectual property

-Suppliers all over the world, none of them can account for more than 6% of the

total production


Threat of new entrants: Low to Medium-The whole industry structure has been established

-Financial problem may become barriers for new entrants

-Internet selling may become a challenge in the future

Threat of substitute products: Medium-Customers are facing plenty of choices for sports apparels and footwear.

-The brand recognition and loyalty of Nike is still in the domination spot.

-The long-term sponsorship to sports organizations can help them to continue

their competitive advantage with others


Intensity of competitive rivalry: High-Nike has several major rivals, including Adidas, Under Armour, Puma etc.

-In the U.S, Nike still has the dominate position, but UA has had the ability to compete with the Giant.

-In Europe, Nike’s biggest competitor is Adidas Group, especially in soccer.

-To the east, Nike also need to compete with local companies, i.e. Li-Ning & Anta in China, Asics in Japan,

Fila in Korea etc.

-Due to Nike’s various kinds of products, Nike also faces challenge from some other companies with a

narrow segmentation.

SUGGESTIONS (PESTEL)

• Nike should continue to find ways to move towards human labor instead of machines in order to create jobs and create more environmental stability.

• Nike should create more “going green” campaigns and continue to find ways to make the production of their products more efficient. New products made from recycled products could be a hit (Air Jordan XX3).

SUGGESTIONS (FIVE FORCES)

• Nike should continue to focus on research and development as well as innovation to debut new sneaker/clothing technology that will protect them from the threat of substitute products. • Nike should continue to focus on maintaining its brand loyalty by catering to its current customer base.

• Nike should continue to build its brand identity by offering products to new customers in market segments. For example, Nike could start producing equipment for upcoming sports such as Lacrosse and MMA. Expansion into other sports could help Nike limit opportunities for new entrants to make an impact on the sports retailer market.

SUGGESTIONS (FIVE FORCES) CONT.

• Nike should continue to exploit advantages they have over their competitors such as, the overwhelming success and notoriety of Nike sponsored athletes. Athletes such as Kobe Bryant, Lebron James, Kevin Durant, Serena Williams, and Tiger Woods are associated with winning and accomplishments and Nike has done a tremendous job making their brand associated with their athletes’ accomplishments.

MISSION STATEMENT

To Make All Athletes Better Through Passion, Design And The Relentless Pursuit Of Innovation.

VISION STATEMENT

To Empower Athletes Everywhere

STRATEGIC GOALS

Under Armour anticipates that revenue generated directly through its Connected Fitness initiatives will represent a $200 million business by 2018.

PESTEL ANALYSIS

Political-Struggle against FDI policies in other countries

Economical -Positive: growth of the performance apparel industry

-Negative: China’s increase in inflation rates, labor costs,

and interest rates

Social -Obesity rates increasing in the U.S → Fitness & Healthier

Lifestyle

-Sport participation rising

PESTEL ANALYSIS

Technological -E-commerce

Environmental-Five components to Going Green

Legal-Sued any organization or company that used the

word “Armor”

New entrants:Medium

Threat of substitute products:

Medium


High

Bargaining power of consumers:

Medium


Low to Medium


FIVE FORCES MODELANALYSIS

Bargaining Power of Customers: Medium-Wholesales and Direct-to-customer channels

-Certain big wholesales customers hold the bargaining power

Bargaining Power of Suppliers: Low to Medium-Global strategy of production. UA’s products are produced by

27 manufacturers across 14 countries.

-Due to the fast growing pace of UA Brand, suppliers intend to

share more interests and the raise the cost of labors.


Threat of new entrants: Medium-The whole industry structure has been established

-Other companies also want to enter the athletic performance apparels’

market, i.e. Nike Dri-Fit, Adidas Clima.

Threat of substitute products: Medium-Athletic performance apparels are UA’s competitive advantage in the

market.

-UA is the best in this field.

-But for other categories, UA has limited advantage towards its competitors.


Intensity of competitive rivalry: High-Due to UA’s fast growing, Nike & Adidas has regarded UA as their biggest competitor.

-UA’s brand recognition and brand loyalty is limited outside the U.S.

-UA’s performance outside the U.S. still can not compare to Nike and Adidas. Besides, Nike and

Adidas are also trying to stop UA’s global development.


• Under Armour should try to capitalize as much as possible on the increasing demand for fitness apparel. Under Armour has an advantage in this category and the overall increased demand for these products should help Under Armour in the short run while the trend lasts.

• Under Armour could create a campaign fighting obesity in the U.S.. With Obesity being a very big problem in the U.S., A campaign by a leading performance athletic retailer could be huge to motivate people to be active and get healthy. Under Armour could be the official retailer of the movement.


• Under Armour should continue to innovate and develop their apparel where they have an advantage over their competitors which is in the apparel segment.

• Under Armour should research a way to innovate a technology that would be a good substitute to the technologies their main competitors (Nike and Adidas) are producing in the performance footwear market.

• Under Armour should look to continue to expand in markets where Nike and Adidas are not as prevalent such as Lacrosse and MMA.

MISSION STATEMENT

Using imagination, creativity and energy, our mission is to leverage the unparalleled power of IMG's worldwide resources, capabilities and assets to the benefit of our clients, customers and partners in the areas of sports, entertainment

STRATEGIC GOALS

Rutgers Partnership with IMG Learfield Ticket Solutions (IMGLTS) to lead all new and renewal ticket sales initiatives for 2016

IMG has renewed its agreement with the PGA of America to distribute international broadcast rights for the PGA Championship and the Senior PGA Championship presented by KitchenAid until 2021.The new agreement, which officially begins in 2017, extends the relationship between IMG and the PGA to 35 years

PESTEL ANALYSIS

Political-Government attitude changes

Economical -Currently in a strong financial position

Social -Growing interest in sport

PESTEL ANALYSIS

Technological -Interactive Content Factory

Environmental-Potential opportunity

Legal-Terminated a joint venture with Indian and

Chinese firms

New entrants:Low to Medium

Threat of substitute products:Low to Medium


High

Bargaining power of consumers: Medium to High


Low



Bargaining Power of Customers: Medium to High-Different customers has different level of bargaining power.

-Customers have a high level of bargaining power according IMG’s business service

characters.

-Big organizations have the major bargaining power.

Bargaining Power of Suppliers: Low -IMG can distribute their business to different suppliers. This can reduce the

bargaining power of suppliers

-IMG also has some self-suppliers, i.e. IMG Academy to IMG Talent Representative


Threat of new entrants: Low to Medium-IMG is dominated in the U.S

-In Europe, IMG has weak resources in soccer. New entrants in soccer may challenge it.

-Sport industries in Asia and South America are in explosion. IMG may face challenges from new

local companies in different areas.

Threat of substitute products: Low to Medium-Although there are plenty types of substitute products can threat IMG, a company established on

services is still relying on their reputation and resources.

-Low penetration in the soccer market and lack of properties in the new markets (i.e. BRIC

countries) may become a problem.


Intensity of competitive rivalry: High-IMG is facing a lot of challenges in different businesses in the world.

-Some of noticeable competitor of IMG are Octagon, CSM Group, Sport Entertainment Group, Creative

Artists Agency.

-Different types of company can challenge IMG in different areas.


• IMG should look to sponsor an environmental sustainability campaign in order to get their brand name associated with protecting the environment. The campaign would help strengthen the brand and image of IMG.

• IMG should develop Web 2.0 software in order to level the playing field with their competitors in that technological aspect. In today’s modern world, the best companies are always ahead of the curve technology wise.


• IMG should continue to look for opportunities to take advantage of emerging markets such as China and India. In China they have taken advantage of the growth in golf interest. It would beneficial to do the same in countries such as India. IMG could also look to a South American country like Brazil.


• In order to expand, IMG should try to penetrate the international soccer market in order to increase their brand recognition. For example, IMG could contact some international club teams and offer sponsorship deals for these franchises.

• IMG may be under threat by other substitute products but in order to nullify this threat as best as possible IMG should continue to focus on providing elite service. Their reputation and results help to fend off the appeal of substitute products.


• IMG can focus on strengthening their relationships with their current businesses in order to protect from outside companies taking a segment of their business.

• IMG could look to expand business interests into Asia and South America. In Asia, IMG could look to make partnerships in sports such as soccer, baseball, and basketball. The same could be said for South America with more of an emphasis on soccer and baseball. IMG could look to forge a relationship with the major leagues in Asia and South America.

COMPARISON OF THREE ORGANIZATIONS

STRENGTH

1. Its own reputation among the world--The most famous sports brand.

2. The design and innovation ability

3. The huge marketing network which reach almost every corner of world.

4. Produce from worldwide factories. i.e.Many shoes are made in China or Thailand.

5. The diversify of product’s category including: clothes, shoes, bag, sports equipment.

6. Getting the top athletes to wear and sponsor their products

WEAKNESS

1.The price is expensive for some classes.

1.The single way of making profit. Although Nike’s product

including many kinds of sports equipment, its main profit is made

from the shoes. It means once other big rival organization such as

Adidas just only do better on the shoes area than Nike, Nike’s entire

sports equipment profit will be effected deeply.

3.Intensity of competition. The most famous brand= The biggest

target to every potential rival organization.

STRATEGIC IMPLICATION

To achieve sustainable, long-term growth across its global portfolio of brands and

businesses.

STRENGTH

1.Under Armour shares have outdistanced Nike’s over the past year, rising 64 percent to Nike’s 46 percent

2.Under Armour also has the hottest NBA star, Stephen Curry, to offset Nike’s all world talent LeBron

James.

3. Built a strong brand by engaging certain market segments really well

4.To focus on building special and unique characters(tough guy)--leotard. Some products are involved with

American comic hero such as Iron Man, Captain America, Quicksilver, Black Widow.

WEAKNESS

1.Compared with Nike, UA is still only popular in America not the whole world.

2.Its shorts history--only 20 years. It’s still a very young organization.


When Nike and Adidas began to transfer

from professional sports to leisure sports

equipment, UA as a young organization ,still

only focus on professional sports equipment

which can avoid some competition from the

senior organizations. And this strategy can

also attract many real fans who prefer

profession sports equipment than leisure

sports equipment.

STRENGTH

1.The diversity of their products and business: worldwide companies--over 30 countries.

Involved many kinds of business such as sports, entertainment and media.

2.The sports area includes holding top sports games, sponsor sports game, the agents of sports stars and

world-class sports training school.

Its sports area includes soccer, basketball, table tennis, tennis and golf.

3.Strong financial position

4.Strong partnership(SNTV and AP)

5.Strong Negotiation Skills

6 . IMG is the first foreign company which produce and broadcast international live game in China.

7.Few rival organization can compete with IMG(main competitors are Octagon (Marketing) and Sunset)

WEAKNESS

1.Unlike Nike and UA, IMG are not focus on commodity producing and selling which results that their

influence are not reach to every class of society. IMG only focus on top sports game and superstar and their

fame and reputation is not high among normal people.

2. Although the IMG sports area involved many kinds of sports, some sports have become their weakness

such as soccer. The invest in soccer game didn’t make too much profit especially in North America and

Europe.

3.Not many properties in BRIC nations

4.Web 2.0 absence


- Market entry into growing economies i.e. India

- Develop Branded TV content which can be country/sport specific i.e. IPL related programs such as

Indian market.

- Acquiring businesses that will grow. Evaluating new acquisitions in the web 2.0, m-streaming and

content development space.

THANK YOU!

Strategic Analysis of Nike, Under Armour & IMG

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