As indicated in tables 1 and 2, the EFE Matrix shows Nike’s significant opportunities and threats. Table 1 shows Nike’s opportunities, including its annual income generation above $ 15 billion and a projected 3% growth rate. Its major competitor (Foot Locker) sells 70% of its merchandise. The drop in Under Armour’s stock price is another significant opportunity for Nike. Global Industry Analysts project an increased revenue by 2024 due to a shift to a healthy lifestyle. Additionally, the expansion of the market in China contributed to increased interest in soccer. The women segment is also growing as well as the sport and fitness market.
Table 1. EFEM for Nike (Opportunities)
| Opportunities | Weight | Rating | Weighted Score | |
| 1 | The athletic shoe store industry in the United States generates over $15 billion in revenue annually, with a growth of around 3% expected through 2022. | 0.11 | 4 | 0.44 |
| 2 | 70% of Foot Locker’s inventory for sale is Nike merchandise | 0.10 | 4 | 0.4 |
| 3 | Under Armour’s stock price dropped 75% from the high in 2015 to the low in 2017. | 0.08 | 3 | 0.24 |
| 4 | According to Global Industry Analysts, Inc., the global sports and fitness clothing market is projected to reach $231.7 billion by 2024. More and more people are living healthier lifestyles, and participation in sports and fitness activities is growing. | 0.07 | 3 | 0.21 |
| 5 | The boom in China’s sports market, especially the soccer market (the interest in soccer increased by more than 5% over the last three years) | 0.05 | 1 | 0.05 |
| 6 | Women’s training segment is growing more than the men’s training segment (grew by 20%, that’s twice the rate of the men’s segment) | 0.04 | 1 | 0.04 |
| 7 | The sport and fitness market is growing significantly because of a healthy lifestyle (Memberships in Gyms have grown by 18.6%) | 0.04 | 2 | 0.08 |
| 8 | There is increased momentum in the athletic sportswear industry for direct-to-consumer sales through factory shops, thus using the Internet to bypass traditional retailing merchants. An advantage to Internet sales other than cutting out a middleman is that firms can design customer products as Nike does with NikeID. | 0.03 | 2 | 0.06 |
| 9 | A growing trend referred to as athleisure grew over 40% between 2009 and 2016, where consumers are increasingly wearing athletic apparel in everyday settings, including at work. | 0.02 | 3 | 0.06 |
| 10 | The market for virtual reality is growing significantly (Revenue forecast revised to hit $120 billion by 2020). | 0.01 | 1 | 0.01 |
Table 2 shows Nike’s threats, such as stiff competition from Adidas, which operates over 2800 stores. Adidas also has a strategic plan that resembles that of Nike. Foot Locker, another rival of Nike, sells 70% of Nike’s merchandise, and it operates approximately 3,500 stores with 15,000 full-time workers. Nike also faces high competition from Under Armour, which uses mega stars for marketing its products. Additionally, Under Armour has contracts with many colleges to outfit their teams. Another threat for Nike is the high price range that is not affordable to the lower-income groups. The company also faces a reduction in the brand image due to athletes it sponsored who were banned for drug abuse. There is also a decline in inventory turnover ratios which may indicate a decrease in sales.
Table 2. EFEM for Nike (Threats)
| Threats | Weight | Rating | Weighted Score | |
| 1 | Adidas was founded in 1949 and operates over 2,800 stores. Adidas is the largest sportswear manufacturer in Europe and the second largest globally, behind Nike. Adidas owns Reebok, TaylorMade, and CCM Hockey products. Adidas reported USD 54 billion in 2016, with a net income of 1.3 billion. | 0.11 | 4 | 0.44 |
| 2 | Adidas’s strategic plan is very similar to Nike’s; both companies use product development followed by heavy marketing, signing teams and players across almost all sports to market and promote their products. | 0.09 | 4 | 0.36 |
| 3 | Founded in 1879, the company operates nearly 3,500 stores and employs 15,000 full-time workers across the United States, Europe, Australia, New Zealand, and Canada. However, 80 percent of company sales come from the U.S. Also, 70 percent of Foot Locker’s inventory for sale is Nike merchandise. | 0.05 | 2 | 0.1 |
| 4 | Colleges such as the Maryland Terrapins, Auburn Tigers, South Carolina Gamecocks, and many more have contracts with U.A. to outfit their teams. English soccer team Tottenham Hotspur, Greek team Aris F.C. and Mexican club Deportivo Toluca F.C. are all outfitted by U.A. Megastars such as Tom Brady, Cam Newton, Bryce Harper, Michael Phelps, and many more, all sponsor and market U.A. products currently or at one time. | 0.05 | 2 | 0.1 |
| 5 | Under Armour was one of the pioneers to produce the compression and performance workout gear and, in 2017, introduced bioceramic materials in their sleepwear line of clothing that are supposed to reduce inflammation. | 0.04 | 1 | 0.04 |
| 6 | Nike has a high price range, which is not affordable to the lower-income groups. (A pair of running shoes in the USA retailed at an average price of $66.85; NIKE’s average price is $100). | 0.03 | 3 | 0.09 |
| 7 | Some experts in the apparel field are dubbing customers today as being “brand polygamists,” referring to customer decrease in brand loyalty over the last decade. Customers are now purchasing increasingly based on price, or extra product features rather than simply buying for the status of a logo or brand name. The trend has cut into gross margins and increased rivalry within the athletic sportswear industry. | 0.03 | 3 | 0.09 |
| 8 | Reduction of the good image through sponsored athletes who were banned because of drug abuse or bad behavior (at least 6 athletes who lost their NIKE endorsement). | 0.02 | 2 | 0.04 |
| 9 | Many work environments are calling workers back to the office and requiring increased levels of dress code, so it remains to be seen if the athleisure industry can continue to grow at such a rapid pace. | 0.02 | 1 | 0.02 |
| 10 | Inventory turnover ratios have been declining for the past 10 years in the athletic sportswear industry. In 2006, for example, the inventory turnover ratio for the industry was 4.0, but in 2017 the ratio steadily dropped to 3.0. Nike is doing better than its peers on this ratio, reporting an inventory turnover ratio of 3.8 in 2017. | 0.01 | 2 | 0.02 |
| Total EFE Score | 1 | 2.89 |
Competitive Profile Matrix
Table 3 shows the competitive profile matrix for Nike and its rivals (Adidas and Under Armour). The critical success factors considered include revenues, financial profit, advertising, product quality, brand recognition, customer loyalty, market share, global expansion, employee dedication, price competitiveness, technology, research, and development. Nike performs better in all the factors under consideration compared to its competitors Adidas, which comes behind Nike, and Under Armour is less competitive than the two companies. Nike should use its competitive advantage to enhance its brand value.
Table 3. Competitive Profile Matrix (Nike and its competitors)
| NIKE | Adidas | Under Armour | |||||
| Critical Success Factors | Weight | Rating | Score | Rating | Score | Rating | Score |
| Revenues | 0.2 | 4 | 0.8 | 3 | 0.6 | 2 | 0.4 |
| Financial Profit | 0.15 | 4 | 0.6 | 3 | 0.45 | 2 | 0.3 |
| Advertising | 0.15 | 4 | 0.6 | 2 | 0.3 | 3 | 0.45 |
| Product Quality | 0.12 | 3 | 0.36 | 2 | 0.24 | 1 | 0.12 |
| Brand Recognition | 0.08 | 4 | 0.32 | 3 | 0.24 | 2 | 0.16 |
| Customer Loyalty | 0.06 | 4 | 0.24 | 3 | 0.18 | 1 | 0.06 |
| Market Share | 0.06 | 4 | 0.24 | 3 | 0.18 | 2 | 0.12 |
| Global Expansion | 0.05 | 3 | 0.15 | 2 | 0.1 | 4 | 0.2 |
| Employee Dedication | 0.05 | 4 | 0.2 | 3 | 0.15 | 2 | 0.1 |
| Price Competitiveness | 0.04 | 4 | 0.16 | 3 | 0.12 | 2 | 0.08 |
| Technology | 0.03 | 3 | 0.09 | 2 | 0.06 | 4 | 0.12 |
| R&D | 0.01 | 4 | 0.04 | 2 | 0.02 | 3 | 0.03 |
| Totals | 1 | 3.8 | 2.64 | 2.14 | |||
Internal Factor Evaluation Matrix (IFEM) NIKE
Table 4 shows Nike’s strengths, including high revenues that are on an upward trend. The company has a good marketing strategy of using famous star athletes to advertise its products. The company has increased sales in footwear and apparel sales in emerging markets. Contractors produce 97% of Nike’s products in overseas markets, and the company reports an annual growth of revenues by 5%. The footwear segment generates high revenue, accounting for 66% of sales in 2017 and growing. The company operates many stores inside and outside the USA leading the retail footwear business. The company also has applications that help users track their progress; in return, it uses the data to design products. Nike continuously introduces new products and has given its customers the opportunity to design their own shoes or apparel through the NIKEiD program.
Table 4. IFEM for NIKE (Strengths)
| Strengths | Weight | Rating | Weighted Score | |
| 1 | Nike has over 70,000 full-time employees and operates 384 U.S.-based stores and 758 international stores. Nike reported 2017 revenues and net income of about $34 billion and $4 billion, respectively, both figures increasing nicely from the prior year. | 0.12 | 4 | 0.48 |
| 2 | Nike has always been famous for hiring star athletes to market their brands; the company has three athletes, Michael Jordan, LeBron James, and Cristiano Ronaldo, signed to lifetime endorsement deals. Based on data in 2016. of the 15 top athlete endorsement deals, Nike owns 11, with rival Adidas responsible for 3 and Li Nian accounting for one with their relationship with Dwayne Wade. | 0.11 | 4 | 0.44 |
| 3 | Notable 2017 changes in revenue by region and product type are as follows: apparel sales up 15% in Western Europe; footwear and apparel sales each up 13% in China and 17% and 21% respectively in Japan: footwear sales up 11% in emerging markets. | 0.1 | 4 | 0.4 |
| 4 | Nike produces 97% of its products through contractors in overseas markets, with Vietnam, China, and Indonesia accounting for 44%, 29%, and 21%, respectively. In total, 127 footwear factories in 15 different nations supply Nike, with no single factory responsible for more than 8% of total footwear sales. | 0.08 | 4 | 0.32 |
| 5 | Being very transparent, Nike reports revenues in several different categories. Two principal brands owned by Nike are Nike and Converse; Converse accounts for only 6% of revenues. Men account for about $7% of Nike revenues, followed by women with 26%, and kids account for 17% of revenues. Revenues from all three groups are growing about 5% annually. | 0.06 | 4 | 0.24 |
| 6 | Footwear is far and away the largest revenue-generating segment of Nike, representing 66% of 2017 sales and up 6% in 2017. | 0.05 | 4 | 0.2 |
| 7 | Nike is in the retail business, having forward integrated over the years. Nike operates 384 factory stores in the United States and 758 factory stores outside the U.S. | 0.04 | 3 | 0.12 |
| 8 | Nike offers two applications that include Nike Run Club and Nike Training Club, used on mobile devices and Apple Watch, whereby users can track their progress through running or cross-training programs. Nike has a partnership with Apple where the Nike logo appears on select Apple watches. Nike benefits by tracking tons of data on workouts from users across the world. | 0.03 | 4 | 0.12 |
| 9 | Nike recently introduced the Air Tech Challenge, a strategy whereby the company offers tennis shoes with synthetic leather, stabilizers, and better heel cushioning, all in a lighter shoe. Two new running shoes developed by Nike are Free Flyknit and Free Hyperfcel. The firm also has a new pair of self-lacing shoes called the HyperAdapt 1.0. | 0.02 | 3 | 0.06 |
| 10 | Nike, for example, now has a NIKEiD program where they allow shoppers to design their own shoes, apparel, bags, and other items online in an attempt to attract more customers through personalization. However, such schemes are expensive, and firms like Nike are often unable to charge significantly more to offset the extra costs of, say, producing 100,000 of the same blue shirts. | 0.01 | 3 | 0.03 |
Table 5 reveals Nike’s weaknesses, including a drop in EBIT in Europe by 16%. The company also uses middlemen to rise its revenue, with only 28% of revenues derived from direct sales. The company rises its revenue from shoe sales with only 30% revenue from apparel sales. Nike uses independent suppliers, which reduces product control. The company lacks inroads with women hence decreasing its revenue in that segment. Nike faces decreased revenues in Japan, with only $ 1 billion in 2017. Nike had decreased equipment sales in 2017, accounting for only 4% of revenues. Additionally, the company faces a reduction in brand reputation from the bad conduct of sponsored athletes that has caused problems in the past.
Table 5. IFEM for NIKE (Weaknesses)
| Weaknesses | Weight | Rating | Weighted Score | |
| 1 | Both regions in Europe suffered from a 16% drop in their respective EBIT contribution for 2017 | 0.08 | 1 | 0.08 |
| 2 | Only 28% of revenues are derived directly from the consumer, whereas over 70% are through a middleman such as Foot Locker or other stores. | 0.07 | 1 | 0.07 |
| 3 | Apparel sales only account for 30% of total revenues as the firm remains largely a shoe company, with 66% of revenues derived from shoes. | 0.06 | 2 | 0.12 |
| 4 | The use of independent suppliers decreases product control (the company was supplied by 150 footwear factories in 14 countries). | 0.05 | 2 | 0.1 |
| 5 | Nike has not made inroads with women as well as the firm should with men accounting for 2/3 of all revenues. | 0.04 | 2 | 0.08 |
| 6 | Revenues in Japan were only $1 billion in 2017, significantly worse than any other region. | 0.03 | 1 | 0.03 |
| 7 | Equipment sales were down 6% in 2017. | 0.02 | 2 | 0.04 |
| 8 | Labor controversies due to considering production facilities in developing countries. | 0.01 | 2 | 0.02 |
| 9 | Sponsored athletes represent the brand and conduct or doping issues with athletes has caused problems for Nike in the past. | 0.01 | 2 | 0.02 |
| 10 | Equipment sales only account for 4% of total revenues. | 0.01 | 2 | 0.02 |
| Total IFE Score | 1 | 2.99 |
