CASE STUDY: NIKE, INC. · 2000 [MATRIX-BASED STRATEGIC ANALYSIS]
The analysis of the Nike, Inc. · 2000 case involves the use of three matrix models · (1) the TOWS Matrix (Threats-Opportunities-Weaknesses-Strengths), (2) the I-E Matrix (Internal-External), and (3) the QSPM Matrix (Quantitative Strategic Planning Matrix). The application of these three matrices also requires the use of (4) EFE (External Facto Evaluation and (5) IFE (Internal Factor Evaluation).
The EFE assesses the effectiveness of a firm's responses to conditions and events in its external environment. Such events and conditions are largely beyond the control of a firm; therefore, a firm seeks to minimize threats in the external environment while maximizing opportunities through its responses. The spheres of a firm's external environment are as follows: (1) economic; (2) social; (3) cultural; (4) demographic; (5) environmental; (6) political; (7) legal; (8) technological; and (9) competitive. The opportunities and threats of SWOT (strengths-weaknesses-opportunities-threats) analysis are the key factors evaluated in an EFE. While the capability of a firm to respond to the external opportunities and threats is a function of a firm's internal strengths and weaknesses, the EFE does not measure strengths and weaknesses directly. Rather, the EFE measures the effectiveness of a firm's responses. Table 1 (below) presents the EFE for Nike.
TABLE 1 · EXTERNAL FACTORS EVALUATION: NIKE
1. Shifting Preferences for Boots and Sandals can be Viewed as an Opportunity
2. Strengthening of International Trade Protocols Creates Opportunities in New Markets for Nike
3. Nike has an Opportunity to Strengthen the Brand Name through Increased Emphasis on Eliminating Sweat-Shop Labor Practices by Sub-contractors
4. Increased Brand Consciousness by Consumers Creates Opportunity for Nike in a Changing Marketing Climate
1. Overall Industry Growth is Slowing