SWOT Analysis of Nike

Introduction

This SWOT analysis looks at Nike, a global retailer that specialises in sportswear, including shoes, clothing and accessories. It is listed on the NYSE and is headquartered in the United States. Nike has offices all over the world and contracts with shops on a global basis as well as factories throughout developing economies like China, India, Vietnam and the Philippines just to name a few. To help with reviewing its strategy and how it is performing against external and internal factors, these strengths, weaknesses, opportunities and threats can be considered as the basis for recommendations on how the company might change its short-term and long-term strategic direction.

Strengths

• Nike has a significant amount of brand equity in terms of recognition and appeal around the world tied to its status among celebrities and sportsprofessionals. Its ongoing sponsorship of events also has built brand recognition for the company, including being known for quality, performance, reliability and innovative style.
• It has a recognisable tag line of "Just Do It," which continues to inspire consumers.
• The company is highly profitable due to its strategy to outsource all of its production overseas to keep manufacturing costs as low as possible whilst focusing on design, research, and development in the U.S. to create the most efficient labour cost structure possible.
• Nike is able to stand out in a crowded sportswear retailing marketplace because the competition is fragmented and not focused like Nike on its audience, messaging, and product lines.

Weaknesses

• The company is not forthright in terms of its strategic partnerships, which has created suspicion and brought attention to the company's overall lack of transparency.
• Nike has been cited numerous times for poor working conditions in what have been described as sweatshops, low wages, and child workers in its manufacturing facilities, which has tarnished some of its brand image.
• Nike is focused on its footwear business, which can be somewhat risky considering that market trends change and most companies sustain themselves through a product diversification strategy.
• Because the company chooses to do business with retailers that also stock their competition's brands, there is a loss of exclusivity and the risk that consumers may opt for the other brand based on price and selection.
• The overall high prices of Nike products often positions it as a premium brand that is out of reach for many and has even become the subject of criminal cases when people have been shot for their Nike shoes. This adds to the company's brand dilemma and pricing strategy in terms of what type of brand they are and could cause alienation and eventual migration among more price-conscious consumers.

Opportunities

• The company can enhance its brand image as a socially responsible manufacturer of retail products by creating products from manufacturing waste, encouraging shoe recycling programmes, and helping local communities where manufacturing facilities are to improve their economy.
• Nike should continue to focus on emerging markets where consumers are getting more disposable income and interest is growing in western brands. This can include increasing sponsorships of local sports stars and celebrities. Areas of focus could include India and China.
• Nike should continue to look at accessories and other clothing products to further diversify its product portfolio as well as continue to look for brand extensions by partnering with sporting good equipment makers to put the Nike brand on sports equipment.
• There is an opportunity to create custom footwear for the luxury segment so that they could have their own shoe design, which could tie with its brand image and create an exciting new marketplace through the use of technology to help the consumer design the shoe online similar to the way they can customise a car they were buying.
• Additionally, there is an opportunity to create niche brands for other consumer segments that are looking for more affordable pricing. Other premium brands have been able to produce other product lines under the primary brand without diluting the brand's existing attributes so Nike could be able to follow the same strategy.

Threats

• Threats may come from international trade practices, labour strikes, currency fluctuations and other issues related to doing business in an international setting, including the implementation of its entire supply chain.
• Any continued use of unethical or questionable business practices with its emerging market manufacturing facilities could further harm the Nike brand image, including losing consumers that are environmentally and socially conscious and who will migrate to a different brand if Nike continues to not take social responsibility more serious.
• Economic conditions can be a threat, especially when there are recessions and many consumers forego purchasing extras like sportswear and designer sports shoes. Instead, these consumers will seek out lower priced brands and this may lead to a price-cutting war.
• Nike cannot follow suit to other brands' mistakes by not adhering to their core competencies and staying focused on what they do best.

SWOT Analysis Resources

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