Nike is an American multinational company that involves itself in the plan, expansion, creation, and marketing and sales at the global level of various products like footwear, apparel, equipment, accessories, and services. It is popular for its best and largest sports and apparel brands on the international level. Nike designs manufacture and sell products in nine main categories. Nike’s product is designed for athletic purposes. Its products are popular across the world as leisurewear. The focus point for the brand is product quality and innovation.
The company started its establishment during the year 1967 and has attained popularity in the global level based on its outstanding product quality and its marketing strategy. Its popular logo is an easy identification amid the large mass of brands. The brand’s revenue indicates that it has a quick expansion at the international level.
The SWOT analysis of Nike distinguishes the key strengths, weakness, opportunities, and threats that helps the brand to go to the next level. Towards the end of this article, you will get to know where Nike stands.
Before we discuss the SWOT analysis of Nike, let us understand a bit of the background of the company Nike.
The following points provide you a bit of Nike’s background:
- The company is known with the name Nike Inc.
- Nike was established during the year 1967 and is headquartered in Oregon, United States.
- The company logo is shown in Image 1.
- The brand’s share among the non-US revenue touched about 50% during the year 2017.
- It has about 127 footwear factories spanning across 15 countries. The largest suppliers being in Asia, taking about 90% production of Nike’s footwear.
The SWOT analysis of Nike highlights the strengths that the company that has made it to the top level. Its weakness listed allows it to do more work in order to go to the next level. The SWOT also tells about the brand’s threat that the business predicts and the various available opportunities that it can take up to perform better.
To make sure that Nike meets the long-term competitive advantage it must adhere to the concerns highlighted in the SWOT analysis of Nike.
Let us discuss on the SWOT analysis of Nike.
Strengths in the SWOT Analysis of Nike
- Brand Awareness – Nike, having a unique name in the world is a brand that is easily recognizable. It is a popular brand and its name is easy to remember and pronounce as well. When it comes to footwear, people think of this brand. The Nike logo is easily understood, and everyone easily recognizes it without any second thought. Nike has captured about 31% of the global athletic footwear market.
- Huge Customer Base – Nike has a vast customer base worldwide who devotedly follow Nike’s trends. Customers even participate in various Nike events and provide customer feedback as well. As Nike has an enormous customer base, the brand’s market share has grown to about $115.19 billion during the year 2018. This is the main strength of the brand to gain more popularity.
- Designed for Sustainability – The CEO of Nike, Mark Parker has informed that they would accept the various environmental issues that happen in the community. The CEO also makes sure that the brand would work towards contributing to finding a solution against these environmental issues.
- Iconic Relationships – The main strength of the brand is its long-term collaboration with Michael Jordan. This has proven to benefit the sales of the brand. This long-term collaboration has resulted in the shoes ‘Air Jordan 1 Shoes’. In fact, Nike has joined up with the popular basketball player for the design of this shoe.
- Many Side Brands – Nike has managed the ability to maintain and increase its side brands. With this, Nike has seen extraordinary success over the last decades. Increasing its side brands helped to get more sales, thereby reflecting it in revenue.
- Low Cost in Manufacturing – Nike manufactures most of its footwear in foreign countries. During the year 2018, out of the total Nike’s footwear 26% was produced in China, 47% was produced in Vietnam, and 21% was produced in Indonesia. The other operations were seen in India, Brazil, Argentina, Mexico, and Italy.
- In-house Team – Nike has an in-house team of specialists that plans its shoes and various other accessories for athletes. It conducts exhaustive research for each product and due to which the brand has grown to a great level. The in-house team is highly skilled with product making thereby coming out with new designs for the product and that is comfortable wear as well.
- Excellent Marketing Capabilities – Nike has good marketing campaigns and it vastly depends on digital marketing. It spends billions of dollars per year for digital marketing. To get more customers for the brand, Nike has extensively made use of various social media platforms and many marketing campaigns.
- Financial Strength – Nike’s financial position is its main strength. Its financial stand is stronger than its competitor. Its growth in revenue and its earnings per share has achieved a great stand during the year 2017. The revenue seems to be rising every year.
- Large Supply Chain and Distribution Network – Nike maintains a large and properly defined supply chain and distribution network. This is also the main strength of the brand. Nike depends on independent manufactures for the supply of its products. Nike works with almost 500 suppliers that span across 42 nations. It also has a well strategic partnership with about 363 apparel factories in about 37 countries, and 127 footwear factories in about 15 countries.
- Labor Conditions are Poor in Foreign Countries – Over the past 20 years, Nike is being pointed out to be dealing with poor labor conditions. The various issues related to labor are child labor, fewer wages, and terrible working condition. This weakness impacts the brand negatively.
- Debts Pending – Event though Nike has a good income statement and proved to be rich, it does have some debt as per its balance sheet. Nike still faces a huge financial threat and has a total debt of about $3.49 billion. That is a huge amount and it does affect the brand image and it is indeed a great weak point of the brand.
- US Market Dependency – Nike brand still depends largely on the US market for its sales and revenue. During the year 2017, almost 46% of its revenue has been originated from the US market and the rest from the markets outside of the US. Even though the brand has seen a huge expansion in many countries, the US market is seen as its highest income source. This is also a weak point as if the US market falls, then it hits the brand largely.
- Faced Lawsuit – About four ex-Nike employees have filed a lawsuit during the year 2018 against the company. As per these women, Nike company has a deadly company culture for women. These women filed against the sportswear company, mentioning that the act ‘Equal Pay Act’ was violated by the company. The women also mentioned that the company’s pay is gender-biased. This kind of controversies is a weak point for the brand, and it affects its brand image.
- Market Increase and more operating expenses – There is a rise in the competition for sports shoes and the apparel market. This has caused an increase in Nike’s marketing expenses. During the year 2016-17, the company has spent about three billion on its marketing, that is indeed a huge amount. The overhead operating expense for the same year is also increased.
Opportunities in the SWOT Analysis of Nike
- Developing Market – Even though Nike has an international presence in many foreign countries, there see many opportunities for the brand. This is because, all its outside markets like China, India, and Brazil are regularly flourishing. There are many people across the globe, and many are in the developing countries and many are gradually more active. These main factors see more growth in the footwear market. When properly monitored, Nike should be able to get into these growing markets thereby gaining more profits.
- Innovation – Nike has introduced many new products, but there is still more that they could innovate. Nike has stretched its influence in technology in linkage with health and fitness. Various products like wearable technology, monitoring physical activities is a major step in innovative products. When technology and athletic wear get combined it proves it to be beneficial.
- Acquisitions – To get more growth for the brand, an acquisition could be an excellent idea. The brand grows faster by gaining related business.
- International Expansion – Yet another great opportunity for Nike is its international expansion and can bring a faster growth for the brand. Currently, the company operates its e-commerce websites in about 45 countries. Nike should consider expanding both its physical and e-commerce retail channels for global expansion. Especially, Nike should expand more in Asia as it is the fastest-growing market will a lot of space and opportunities for market growth.
- Backward Integration – Currently, the brand tends to depend on independent manufactures for its supply and production. Either the brand could acquire a few of them or create a few on its own that would help the brand to have a stronger supply chain and get faster growth.
- Responsible manufacturer – In many of the Western countries, there is an increasing trend to know where the products have come and the way the environment and workers and treated by the brand. This provides a good chance for the brand if they can brand and show themselves as responsible manufacture of various products.
Threats in the SWOT Analysis of Nike
- Increase in Competition – The competition for Nike is increasing and requires more investment in marketing and operations as well. Nike sees more competition from Adidas and Under Armour where they invest more in marketing and innovation. When there are huge competitors around, Nike should retain its focus on innovation, supply chain management, and product quality. Hence, competitors are a huge threat to the brand.
- Legal Pressures – There has been an increase globally over the legal pressures for the brand that is leading the company to great pressures with regards to compliance and ethics. This has also impacted a lot and has increased in compliance-related costs for the company. When the company fails to obey various regulatory standards, it would lead to a threat for the brand in terms of reputation and finance.
- Fake Products – Nike faces a huge threat from a fake replica of its products. It can drastically affect the reputation and revenue of the brand. The company deals at the global level and there is a high risk for fake products. Many merchandisers and retailers produce fake products of Nike and sell it at a low price. These products are manufactured using inferior materials and would have the label of Nike. This would damage Nike’s image as the customer would feel that Nike is involved in the production of products using inferior material.
- Fluctuating Foreign Currencies – As the brand has a lot of business with the international market, its finance is impacted by the global fluctuating foreign exchange rates. The financial earnings of the brand are highlighted in US dollars. When US dollars are affected, then the brand’s revenue gets impacted.
The SWOT analysis of Nike mentioned in this article has highlighted the main strengths of the brand that comes up from its brand value, huge customer base, product quality, iconic relationship, manufacturing cost, business process, and its marketing abilities. The major weakness is its labor issues, financial issues, and more dependency on the US market.
Nike sees a huge opportunity in the industry on expanding to international markets, innovating on more products, and acquisitions. The brand sees a threat in many legal issues and fake products replica of the Nike products produced by many merchandisers