Blue Ocean Strategy: Focus on The Big Picture, Not the Numbers Nike

1. Blue Ocean Strategy: Focus on The Big Picture, Not the Numbers Nike Team 1: Matthew Pastrano, Mami Yamamoto, Alex Jouganatos, Shawnee Moreland

2. Drawing Your Strategy Canvas • Primary Goal is to develop a strategy to break away from Competitors • This process builds on multiple paths to stimulate and unlock people's creativity • Drawing a strategy canvas helps to visualize the companies current strategic position in the marketplace and chart its future strategy • Managers focus their main attention on the big picture as opposed to being caught up in the operation details

3. Nike’s Strategy Canvas • Shows the strategic profile of an industry by depicting the factors that affect competition among industry players • Nike Dominates North America, while Adidas is more popular in other parts of the World • This exposure factors into the sports the Company focuses on • Nike has more popular figures(athletes) who endorse the products, but they also spend more on sponsorships that Adidas does but both companies keep their marketing/endorsements at about 10% of total sales • The profit margins Nike works with are much greater than Adidas, so Nike can be more efficient and bear highers costs than their competition which makes it dominate

4. Nike Strategy Canvas Cont’d 2. Shows strategic profile of current and potential competitors, identifying what factors they invest in • Adidas has larger reach outside North America, the primary sport is Soccer in countries that Adidas has a larger influence than Nike, Adidas has invested more heavily in Soccer players as sponsors than Nike • In North America Nike’s monopoly on football over adidas largely contributes to sales that Adidas just doesn’t have access too • Nike invests in basketball and football based products while Adidas tries to compete in that sense but also invests in soccer products with the hopes of overtaking Nike in the long run

5. Nike Strategy Canvas Cont’d 3. Lastly shows the company's strategic profile and how it might invest in the future • “The product will come alive”-self lacing shoe from Nike • Continued international growth - sales in China this past year grew 17% • Digital Investments -Focus on driving online sales to reach customers who might not be able to make it into a shop • Manufacturing Revolution - furthuring innovation looking to use 3D printing and innovative materials and processes, goal is to increase speed which it can get a product to consumer

6. Step1:Visual Awakening • Revenue Revenue

7. Stock Price Adidas 118.09 Nike 87.82 Under Armour 19.85

8. In 2013 Kanye West signed a $10 million deal with Adidas and introducing the highly anticipated Yeezy Season 1 apparel and footwear collection. • Jordan Brand made $3.1 billion in fiscal year 2017, while Adidas reported sales of 4.8 billion euros ($5.8 billion) for fiscal year 2017 • According to NPD Group, Adidas now owns 13% of the sneaker market in the United States • That number puts Adidas at number two behind Nike, which holds about 44% market share in the region, down from 60% in 2014. • Lack of excitement for the basketball and running sneakers for Nike

9. Nike‘s equipment has negative sales growth.

10. Step 2:Visual Exploration • Nike should stop making equipment and focus on apparel and footwear. • More deals with celebrities. • Innovation, new technology needed.

11. Step 3:Visual Strategy Fair / Top 5 Nike deals 1. Michael Jordan: $60 million/year 2. Rory McIlroy: $25 million/year 3. Tiger Woods: $20 million/year 4. LeBron James, Basketball: $15 million/year 5. Rafael Nadal, Tennis: about $10 million/year

12. Step 3:Visual Strategy Fair continue • Hyperadapt self lacing shoe • House of Innovation in Shanghai and New York. NikePlus members can have one-on-one sessions with a designer to customize select shoes. • Nike React, which is the softest, smoothest and most resilient foam Nike has ever created, provides consistent cushioning stride after stride; Nike ZoomX foam, which delivers 85 percent energy return — the greatest of any Nike foam — allows runners to go fast and far; and Nike Air, which, through expressive new designs, has redefined ride for all-day wear. • Nike Free

13. Step 4:Visual Communication • After the future strategy is set, the last step is to communicate it in a way that any employee can understand. • Provides clarity to the employees on the direction the company is headed. • Mission statement - “To bring inspiration and innovation to every athlete in the world.” • Vision statement - “to remain the most authentic, connected, and distinctive brand.” • The corporate mission and vision statements compel the company’s strategic management to develop policies to ensure competitiveness against its main competitors Adidas and Under Armour. These companies make the global athletic and leisure shoes, apparel and equipment market a challenging business environment.

14. Using the Strategy Canvas • Business need to deepen their understanding of the other businesses in the corporate portfolio, how to communicate across business units, and they need to determine whether the low performing units to blame for their competitive situation. If they don’t, visualizing and sharing the strategy canvas will help them better understand them. • Nike’s innovation is often determined by its competitors. For example, Adidas’ Ultra Boost Vs. Nike React. • Adidas is outpacing Nike by more than a mile. • Nike reported North American sales of $15.2 billion in fiscal 2017 versus $5.1 billion for Adidas.

16. Using the Pioneer-Migrator Settler (PMS) Map Used to predict and plan future profit. • Pioneers: offer unprecedented value. • Settlers: me-too businesses. • Migrators: offer improved value.

17. Using the Pioneer-Migrator Settler (PMS) Map Nike PMS Map: Pioneer Migrator • Air Max • Zoom • React Settler

18. Questions?