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Economic Forces

The US economy, which remains Nike's largest revenue source, is continuously expanding. This is a good sign, as Nike's revenue is elastic in relation to consumer spending. The overall global economy is slowly expanding as well, and in many developing countries (who represent Nike's greatest opportunities for growth) the economy is rapidly expanding. Industry analysts predict a 10% market growth in FY 06 (finance.yahoo.com).
Nike is very sensitive to consumers' spending patterns. "Nike is the largest seller of athletic footwear and athletic apparel in the world" (Nike, Inc.). The firm's revenues are generated in over 160 countries around the world, which are split up into four regions: United States, EMEA (Europe, Middle East, and Africa), Asia Pacific and Americas. The table below divides Nike's revenues based on its operating regions.

Region $ (in millions) % of Total Revenue
US 5,7225.5 38.3%
EMEA 4,326.6 28.9%
Asia Pacific 2,053.8 13.7%
Americas 904.9 6.1%
Other 1, 947.1 13.0%
Total Revenue 14, 954.9 100%
Table 1: Fiscal 2006 Revenues Breakdown by Region
Source: Nike, Inc. 2006 Form 10K, p.26
Technology continues to change the way business is conducted. The internet will continue to be an important resource, both in terms of customers relations and increased sales.
The Internet continues to be a powerful customer service tool, because companies use it to provide 24/7 product and service information, and develop customer relationships, all at a relatively low cost. The cost of an email is a fraction of a letter, and the cost of an Internet 'chat' is a fraction of a telemarketing call. The medium can also provide virtual evidence of intangible services, so that, for example, one can now see online shipping and buying agreements. Mobile Internet creates further opportunities to improve customer service.
Industry Environment
Porter's Five Forces
The athletic footwear industry has experienced...