Nike BCG Matrix 2018
Mariam Peyton is a professional Financial Analyst. She holds a Masters degree in Economics. She specialises in financial analysis and forecasting. Her expertise includes studying the financial performance of companies, markets and entire industries looking for trends, insights and information that can help you glean rich insights for use in academic and market research.
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Nike is an American company that is engaged in the design, manufacture and marketing of apparel, footwear, equipment, services and accessories. The global clothing apparel market is oligopolistic with for players Nike, adidas, H&M and Zara having a combined market share of 7.0%. Considering the US footwear market, Nike accounts for 21.1% market share with major competitor adidas having 4.7% according to Statista (Statista 2018d). Using BCG we identify Nike's raid growth in the market.
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NIKE Business Strategy Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Understand what the BCG (Growth-share) matrix is.
- Analyse the various strategic business units in Nike's portfolio and assess which ones are the stars and cash cows generating the most value, or the question marks, and dogs that may need further investment or divesting to achieve a balance of the portfolio.
- To apply strategy business models and frameworks such as the BCG matrix to real company cases.
Analyse Nike using BCG Matrix with strategy recommendations.
1.0 Nike BCG Matrix Analysis 2018
Nike has six major business units that include, Footwear, Apparel that sells athletic clothing, and equipment that sells athletic equipment, global brand divisions, converse and corporate. In 2018, Nike had an annual revenue amounting to $36.40bn that was a 6% increase from its $34.35billion revenue in 2017 with a net profit of $1.93bn a 54% decrease from its $4.20bn profit in 2017 according to its annual report (Annual report 2017).
1.1 Stars
With its rapid growth and 2.8% market share in the clothing and apparel market, Nike’s apparel business is categorized as a star in the group. (Statista 2018a). In 2018, its annual revenues increased by 9% to $10.73bn from $9.65bn in 2017 fueled by growth in several key categories most notably sportswear, Nike basketball and football according to its annual report (Annual report 2018). The unit contributed 29.5% to Nike’s annual revenue in 2018. However, the apparel market is expected to grow at a CAGR of 7.1% from 2017 to 2023 which gives Nike several market opportunities to improve its market share and revenues (Allied Market Research 2018). Since growth needs heavy investments, Nike can invest in the apparel business to facilitate its growth into a cash cow with large market share and revenues to support other businesses.
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