Nikes Swot Analysis
Nike which began just as an importer of Japanese shoes has grown to the largest marketer of athletic shoes in the world where has a market share of about 37%. The company’s products are sold in more than 160 countries around the world with the shoes being manufactured by contractors who are independent while the company is involved in marketing, design, and development. While the company specializes in athletic footwear it also sells other footwear under All-Star, Converse and Jack Purcell brands, they also specialize in athletic equipment among them snowboarding, surfing and skateboarding footwear and apparel (“NIKE, Inc. – Company Profile, Information, Business Description, History, Background Information on NIKE, Inc.”, 2015). The discussion below will shed light on the strengths, weaknesses, opportunities, and threats the company faces and utilizes them while converting the weaknesses to strengths and threats to opportunities.
According to Gurel 2017, the company have various strengths among them, Nike is a brand that is recognized globally for its footwear, because of its high-quality products the company have a very strong reputation and is a very competitive one. Additionally, Nike uses independent contractors hence it’s a lean organization, the employers under the company are more than 30,000 and it belongs among the Fortune 500 companies. Nike is also known for its innovative marketing where it uses top athletes example, Cristiano Ronaldo and Eliud Kipchoge, and it have a very strong team in development and research which is evident in the innovative and evolving range of products. Additionally, while the company does not compromise on quality the products are affordable and it has been to change the production places in the event the cost of production leads to increased prices.
While the company’s success is widely known it also has various defects. The company is prone to vulnerability in the event its market share is affected this is because while the company specializes in a range of sports products most of the income relied on the business is dependent on the share from the footwear market. The company has about 20,000 retail outlets in the United States, these retail stores are usually sensitive to prices and in most cases offer consumers cheaper alternative products, this, in turn, passes the pressure of lower prices to the company. Unfortunately, the company reputation took a toil when it was reported of using child labor in soccer balls production in Cambodia and Pakistan, there were many criticisms by anti-globalization groups. Also, overseas, the company have been said to exploit cheap labor and have the poor working condition regarding 1996 in Vietnam when it was charged with violating both the minimum wage and overtime (Gurel 2017).
They are various ways the company has changed the weaknesses to strengths, the company while experiencing competition in the retail sector the quality of its products is still superior and in the exploitation charges, the company pledged to remove the underage workers and improve the working conditions which restored their reputation. Lastly, to ensure there is no waiver in the market share of its footwear it has developed innovative and evolving designs of high quality that have been recognized by the sports boards.
The company despite its stand in athletics footwear there are various avenues that it is yet to exploit. According to Gurel 2017, while the brand itself is not a fashion one some of its consumers are not engaged in sports and are among the youth culture who recognize it as a brand and just like in every market trend they tend to replace some footwear that has not worn out with the upcoming trend. The company also have the opportunities t not only specialize in sports products but diversify to jewelry and sunglasses which are usually associated with high returns, the company also places effort in the corporate marketing through sponsorship agreements and promoting of corporate brands. Additionally, while the product is recognized globally it can also build on its recognition internationally by immersing in markets whose consumers have a high disposable income example, India and China.
Unfortunately, with global recognition and the company’s success, it has also associated with various threats. Since the brand is globally recognized the different exchange rates across different states expose the margins of the company to instability which could result in losses. The sensitivity of the prices in the retail outlets leaves the consumers with preferring to purchase cheaper products and the market of sports garments is very competitive with other brands joining the market. Recently, there has been an uproar with a need for shifting to eco-friendly products, this poses a challenge for the textile industry that produces the sports garments (Gurel 2017).
However, the company has been able to shift these threats to opportunities, while it is not inevitable to the different exchange rates it has ensured that the market base in those countries continues to increase hence, increasing the returns. In regards to eco-friendly products, the recent products are being made of recycled waste and produced with renewable energy while its high-quality products give it a fighting chance in the price competition. Lastly, Nike has used all the above factors to ensure that it remains competitive with the upcoming brands, this is by using the weaknesses and converting them to strengths while exploring other areas for better opportunities.
Nike continued success in a world with more upcoming brands can be attributed to its innovative and better designs for its products which while are affordable there has been no quality compromise. Every company’s success including Nikes must be reliant on ensuring that both the internal and external factors are analyzed and reformed to maximize the returns.
GÜREL, E. (2017). SWOT ANALYSIS: A THEORETICAL REVIEW. Journal Of International Social Research, 10(51), 994-1006. https://doi.org/10.17719/jisr.2017.1832NIKE, Inc. – Company Profile, Information, Business Description, History, Background Information on NIKE, Inc.. Referenceforbusiness.com. (2015). Retrieved 1 April 2020, from https://www.referenceforbusiness.com/history2/99/NIKE-Inc.html.
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