Nike.

inc SWOT analysis

Strengths:
 Nike is a globally recognized for being the number one sportswear brand in the
World.
 Nike being a competitive organization has a healthy aversion towards its competitors
i.e. during Atlanta Olympics, Reebok expensed on sponsoring the games; Nike
however sponsored the top athletes and due to this step, it gained valuable
coverage.
 Nike has no factories; rather it uses contract factories to get the work done which
makes it quite a lean organization. It has contracts with above 700 shops globally in
about 45 different countries.
 Nike is quite strong regarding its research and development; quite evident regarding
its evolving and innovative product range.
 They manufacture high quality at the lowest possible price, if prices rise due to price
hike then the production process is made cheaper by changing the place of
production.
 It has a strong sense of marketing campaign by sponsoring top athletes.
 It uses lunarlite foam and flywire materials in order to make the manufactured shoes
lighter and more controllable.
 Nike, Inc is listed in NYSE and positioned as a US headquartered worldwide
sportswear trader and supplier that:
 Contracts with about 700 shops worldwide, runs offices in 45 countries, and manages
factories in China, Indonesia, Taiwan, Thailand, India, Vietnam, Philippines, Pakistan,
and Malaysia.
 Belongs to Fortune 500 companies which 2007 total revenue exceeded 16 b. USD
 Employs more than 30.000 people worldwide;
 Owns strong marketing strategy under Nike brand that assumes the involvement of
world top-class athletes and sportsmen in Nike’s ‘Just do it’ advertising campaigns;
 Operates a chain of Niketown retail stores;
 Leads its international business operations through acquisitions and re-branding:
Converse Inc, 2003; Starter athletic clothing, 2004; Umbro, 2008;
 Nike’s premium brand is used to manufacture and promote a wide variety of
products for all types of sport-oriented and leisure activities;
 Manages the US premier training program SPARQ Training Program;
 Nike is a global brand. It is the number one sports brand in the World. Its famous
‘Swoosh’ is instantly recognizable, and Phil Knight (born February 24, 1938 is the co-
founder and Chairman of Nike, Inc.) even has it tattooed on his ankle.

Weakness:
 Even though the organization has a diversified range for sportswear, the income of
the business, however, is still heavily dependent upon its share of the footwear
market which leaves it at a quite vulnerable spot if for any reason its market share
erodes/falls.
 The retail sector is very price sensitive. Nike does have its own retailer in Nike Town.
However, most of its income is derived from selling into retailers. Retailers tend to
offer a very similar experience to the consumer. Can you tell one sports retailer from
another? So margins tend to get squeezed as retailers try to pass some of the low
price competition pressure onto Nike
 Nike was for quite some time unwilling to disclose any type of information
concerning its partnering companies.
 It was charged with the violation of overtime and minimum wage rates in Vietnam,
1996
 It was positioned as a subject of criticism by anti-globalization groups due to its
unruly and exploited manner that was quite a disaster for its reputation.
 Unwilling to disclose information concerning its partnering companies, which caused
harsh criticism from CorpWatch and other companies;
 Contracts factories in Vietnam, China, Mexico, Indonesia;
 Provides poor working conditions, and tends to exploit cheap workforce overseas,
especially in free trade zones where;
 Some of Nike’s ads are associated with US female empowerment;
 In 1990s, Nike was reported to apply child labour in Pakistan and Cambodia to
produce soccer balls;
 Contracts in overseas companies that apply non-transparent and inadequate labour
regulations, involving child labour.
 Forced Labour applications in partnering apparel factories in Malaysia, involving
forced Labour and poor living conditions
 Opportunities:
 Product development: The brand is sternly defended by its owners who believe that
Nike is not a fashion brand, however, a large number of consumers wear Nike
product because they derive a fashion trend rather than to participate in a sport. It is
mostly argued that in youth culture, Nike is a fashion brand which also creates
opportunities for Nike since its products would become outdated before even the
product wears out i.e. consumers will feel the need to replace the product with a
newer trend.
 There are many international regions that still need tapping and there is need for
sportswear and with Nike’s strong global brand recognition, it can initiate in many
markets that have the disposable income to spend on high value sports goods. For
example, emerging markets such as China and India have a new richer generation of
consumers. There are also global marketing events that can be utilized to support the
brand such as the World Cup (soccer) and The Olympics.
Nike gives a lot of effort on its corporate marketing mainly through the promotion of
corporate brand and sponsorship agreements.
 Producing sportswear products from manufacturing waste;
 Extension of eco-friendly projects like ‘Reuse-A-Shoe Program’ aimed at further
recycling;
 Emphasis on corporate marketing strategy through the promotion of corporate brand
and sponsorship agreements;

Threats:
 Textile industry adversely affects the environment, and therefore the company is
permanently striving to maintain its eco-friendly reputation;
 Financial crisis may lead to job shortages in a number of Nike’s worldwide
subsidiaries;
 The company has experienced negative publicity feedbacks due to its extensive
advertising in mass media (Kasky v. Nike; Minor Threat at; Beatles song; Chinese-
themed at, Horror ad etc).

 Nike is exposed to the international nature of trade so it sells its product in different
currencies which destabilizes the costs and margins for profits over long periods of
time. This type of exposure may make Nike to be manufacturing and/or selling at a
loss, although that is not the case for a giant as itself.
 The market for sports shoes and sportswear is quite competitive; the competitors are
constantly developing alternative brands and techniques to take away Nike’s market
share. The model developed by Phil Knight in his Stamford Business School days (high
 value branded product manufactured at a low cost) is now commonly used and to an
extent is no longer a basis for sustainable competitive advantage.
 Consumers are constantly shopping around for a better deal that conveys a good
quality and if one store charges a higher price for the products, the consumer would
try to seek a better deal of the same product in the premises that delivers the same
value but cheaper of the two, this type of price sensitivity among the consumers is a
potential threat to Nike.
 The textile industry unpleasantly upsets the atmosphere, and therefore the
organization is constantly struggling to retain its eco-friendly reputation.
 A recession may lead to job shortages in most of Nike’s worldwide branches.
 The organization has experienced many adverse publicity feedbacks due to its
widespread advertising.