Nike has an eye on the ball

Implications: Focusing on profitability puts Nike in a strong position.  Keeping an eye on the potential for its divisions instead of the performance will have lasting long term effects.

Analysis:

It’s exciting to see Nike working on its swing.  Hitting the ball more by increasing profitability will result in more wins.  Letting Nike Bauer and Exeter Brands group go will allow Nike to reinvest capital into brands that have a much higher run scoring potential.  If Nike is serious about reaching $23 billion in revenue by 2011 it will have to have many more big hits, and Nike Bauer and Exeter Brands group don’t have the power to produce big numbers. <!--[if !supportEmptyParas]--> <!--[endif]-->

Hockey is not getting any bigger.  In fact, the popularity is shrinking.  The boom for street hockey and inline skating is quickly being overcome by lacrosse.  Overpowering a market is usually a fantastic business objective, but hockey has a small market that will take vast amounts of marketing dollars to increase.  Chasing after currently booming markets just makes a lot more sense.

<!--[if !supportEmptyParas]-->Exeter Brands group will be easy to replicate.  Marketing to the masses with lower cost goods can be duplicated with growth from within Nike.  A creation of a new way to reach the budget audience will also fall in line with Nike's strategy to streamline operations.  The Starter and Team Starter brands have had brand recognition washed away making them much less likely to sell versus the same merchandise under a Nike brand.