SBU Analysis of Nike: Apparel has Higher Growth Rate, Footwear faces Major Competition

SBU Analysis of Nike

Case Study

Nike has three major SBU’S, which include apparel, equipment, and footwear. Footwear holds the majority share of the company and is leading as compared to the other SBU’s. This means that it has a high growth rate than the other SBU’s (Rankine& Ferris, 2005). Apparel SBU follows in the market share because of competitions from the Puma and Adidas companies. The SBU that holds the least percentage is the equipment category due to high competition in the market from companies that solely focus on types of equipment (Rankine& Ferris, 2005). Another reason for the equipment’s category to hold the least share in the market is because of its recent ventures into the market as compared to other categories that have been in the market for a long time. 

I would increase investments in the apparel sector since it has a higher growth rate as compared to the other SBUs making it most likely to produce more returns. I would maintain investments in the equipment sector since it is new in the market and has the opportunity to grow. Maintaining investments in the equipment sector will allow the company sector to research on its market and identify ways in which their products will be marketed and made better for people to buy. I would divest current investments in the footwear sector because of the major competition it faces from companies like Adidas and Puma. Divesting in this sector will allow the company to invest in the Apparel sector since it has a larger market share. Divesting in the footwear sector will also mean that the footwear sector will keep producing its products, but the main focus for the company will be on apparel. The apparel SBU has the cost leadership business-level strategy since it has the largest market share. The footwear SBU uses the focused differentiation business-level strategy and the equipment SBU uses focused cost leadership business-level strategy. 

Requirements

1.Read the annual report for your selected firm- create an SBU analysis based on their SBUs from their annual report. Review chapter two in your book. Where would you increase investments, maintain current investments, divest of current investments (or get rid of lines). Then based on the mini-lectures or chapter 9 in your book what is the business level strategy for each SBU?

2.If you were to segment the market (I want you to define your segments) how would you describe the typical decision making process for selecting a supplier for each of your segments? You may use the Positioning graph from the mini-lecture to illustrate this. Remember keep it simple to be useful and do not segment by product but customer characteristics.

3.Complete the following table based on your segments in Q2.  You may add additional rows based on your segmentation of the market in Q2.  You may find module 2 mini-lectures helpful when identifying marketing mix strategies (see product life cycle documents).

4.Based on the segments described in question 2 &3, which market would you target and what would be your marketing strategy for that target market. 

5.In thinking about the types of world market or global strategies that your selected organization uses, what "Global or World Market' strategy (refer to corporate strategy mini-lecture) do you recommend and why?