For Nike, Competition Is Only Part Of The Problem

SWOT Analysis of Nike

For Nike, Competition Is Only Part Of The Problem

With a net profit of just under two billion dollars in 2018, Nike is truly a leader in the footwear and sports apparel markets. Nike’s popular catchphrase “Just Do It” and powerful celebrity endorsements have made the sportswear giant a household name across much of the world, as we explained in our PESTLE analysis of Nike.

In this article, we’ll be conducting a SWOT analysis of Nike, where we look at the Strengths, Weaknesses, Opportunities, and Threats influencing their business. That will give us a balanced insight into Nike’s future possibilities, and help us better understand their current and future business decisions.

Strengths

most big companies, Nike has a number of strengths. Needless to say, the most important strengths are Nike’s powerful brand and low product cost.

Strong Core Brand

The Nike brand itself is one of the strongest — if not the strongest — names in the entire sportswear industry.

Across much of the world, Nike is one of the first companies that come to the public’s mind when they think hip, sporty footwear.

Overall, this extremely powerful core brand is one of Nike’s biggest strengths, and you can bet that helps them rake in billions in additional revenue every year.

Diverse Brand Portfolio

Although the Nike brand itself is incredibly strong, the company has a diverse brand portfolio beyond that.

Most notably, this brand portfolio includes Converse as well as dozens of other Nike-centric sub-brands such as Nike Shox, Nike Blazers, and Nike Tiempo.

This suggests that Nike has its foundations well spread across the footwear industry, allowing it to painlessly weather changes in preference.

Low Product Cost

As many of Nike’s products are manufactured in developing South East Asian countries such as Indonesia and Thailand, Nike has extremely low labor costs. What’s more, Nike also uses relatively inexpensive materials for many of its shoes. Together, these two factors — labor cost and material cost — allow Nike to manufacture its footwear for extremely low prices.

Weaknesses

As you’d expect, Nike does indeed have some weaknesses. It’s dependent on the US market, its manufacturers, and the footwear industry.

Dependence on US Market

In 2018, over 40% of Nike’s revenue came from the US market. As you can imagine, this demonstrates a huge dependence on the US market as part of Nike’s business model. If American tax or legal policies were to change, in any way affecting Nike’s ability to sell on the US market, that would significantly hurt the sportswear giant’s profits.

Outsourced Manufacturing

Despite the low cost associated with manufacturing products abroad, there are indeed downsides to doing so. For one, manufacturing abroad requires you either to set up dedicated manufacturing operating in your chosen country or to outsource your work to existing manufacturers. Nike has chosen to do the latter, which means that their products aren’t always top quality.

Footwear Focus

Although Nike is relatively diversified within the footwear industry itself, Nike has not diversified itself much across other industries. Although the footwear industry is probably here to stay, Nike may consider broadening their horizons.

Opportunities

Nike has a growing market in all senses, thanks to healthier consumers and wealthier countries. This presents a few new opportunities.

Growing Market

There are only more and more people in this world, and many of them (especially in developed countries) are becoming gradually more active. Together, these two factors compound to create a constantly growing footwear market. If played correctly, Nike should be able to capture much of the business of this growing market, allowing the company to further grow its profits.

Emerging Markets

As countries across the world become wealthier and wealthier, citizens in developing countries have more disposable income. In areas such as South East Asia, growing disposable incomes present an opportunity for new markets in which to sell products. If Nike is able to market themselves in these emerging markets, they could grow their reach and reduce dependence on the US market.

Responsible Manufacturer

In many Western countries, there is a growing trend of knowing where products have come from and how the environment and workers have been treated. This presents another opportunity for Nike.

If they are able to brand themselves as a responsible manufacturer of sportswear goods, they may be able to increase their market penetration among more ethically and environmentally conscious consumers.

Threats

For threats, Nike has to look at all directions: tax, market competition, and product counterfeiting.

Tax Clampdowns

many other big companies, Nike has its tax strategies optimized down to the dollar. This has for many years allowed Nike to avoid paying large amounts of tax, even on its billion dollar profits.

However, there is growing controversy about the amount of leeway large organizations are afforded when it comes to tax matters, and their freedom to pay low amounts of tax may one day come to a close.

This would afford Nike significantly smaller net profits.

Competition

Nike is competing in the fiercely competitive sports apparel market, with other big names such as Adidas, PUMA, and Reebok ready to pounce on any new opportunities. As such, Nike needs to tread extremely carefully to ensure it isn’t replaced by one of these, or — somewhat less dramatically — doesn’t lose out on potential revenue.

Counterfeiting

many valuable branded goods, Nike apparel is subject to large amounts of counterfeiting. Counterfeit Nike goods are available everywhere — even on the internet.

Nike needs to develop a strategy to ensure that the counterfeiting of their goods doesn’t affect their core business model, perhaps by taking legal action against counterfeiters or with a clever marketing campaign that encourages consumers to buy the real thing.

SWOT Analysis of Nike: Final Thoughts

Nike is a giant organization competing in a tough market, but it’s doing incredibly well. With its extremely powerful brand and low costs, Nike has been able to net several billions of dollars on an annual basis.

Unfortunately, Nike is very much dependent on the US market and is little diversified beyond the footwear and sports apparel markets. Nike needs to watch out for threats associated with these weaknesses, and others such as tax clampdowns or counterfeiting.

Thankfully, Nike has several opportunities for growing its business, including making the most of the rapidly expanding sportswear market.

Image by Pexels

Источник: https://pestleanalysis.com/swot-analysis-of-nike/

Nike Inc. SWOT Analysis & Recommendations

For Nike, Competition Is Only Part Of The Problem
A pair of Nike Air Max IV (Air Classic BW). Nike Inc.’s SWOT analysis highlights capability to maintain leadership in the sport shoes, apparel and equipment market. (Photo: Public Domain)

Nike Inc.

’s leadership in the global sports shoes, equipment and apparel market shows the significance of its strengths in competing against other giants Adidas. A SWOT Analysis of Nike outlines how these strengths relate with the company’s weaknesses, opportunities and threats.

Established in 1964 as Blue Ribbon Sports, Nike Inc. is now one of the world’s biggest players in the athletic footwear market.

An understanding of the company’s strengths and weaknesses (internal strategic factors), and weaknesses and threats (external strategic factors) yields insights on how a manufacturing and retail business can achieve global success despite tough competition.

Nike Inc.’s SWOT Analysis emphasizes the importance of product development to maintain a competitive edge. However, the results of this SWOT Analysis point out some possible new strategic directions to further enhance Nike’s global performance and leadership.

Nike’s Strengths (Internal Strategic Factors)

Nike’s strengths are the primary drivers of the company’s growth and global leadership in the sports shoes, apparel and equipment market. This component of the SWOT Analysis deals with the internal strategic factors that support business development and competitiveness. The following strengths are the most notable in the case of Nike Inc.:

  1. Strong brand image
  2. Rapid innovation processes
  3. Extensive global production and distribution network

Nike’s strong brand image evolves product quality. The company’s effective marketing campaigns also contribute to this strength.

Also, rapid innovation processes are a core factor in Nike’s ability to create cutting edge designs for its athletic footwear, equipment and apparel.

The company’s extensive global production and distribution network is a strength that enables the business to support global market dominance. This part of the SWOT Analysis shows that Nike Inc. has capabilities to retain its global market leadership.

Nike’s Weaknesses (Internal Strategic Factors)

Weaknesses could disrupt Nike’s growth trajectory in the sports shoes, apparel and equipment market. This component of the SWOT Analysis addresses the internal strategic factors that prevent or reduce business performance. In the case of Nike Inc., the following weaknesses are the most significant:

  1. Labor controversies
  2. Limitations in the product mix
  3. Limited presence in developing markets

Labor controversies continue to plague Nike’s business, especially in considering production facilities in developing countries. This weakness negatively impacts the company’s brand image. Also, even though Nike Inc.

has expanded its product mix through the years, the resulting product lines are still limited in capturing a larger share of the sports shoes, equipment and apparel market. Moreover, the company suffers from limited presence in developing markets, partly because of issues with pricing, imitation and patent protection. This weakness limits Nike’s global growth.

this part of the SWOT Analysis, Nike Inc. must improve its policies and strategies in the areas of labor and employment, product mix development, and penetration in developing markets.

Opportunities for Nike Inc. (External Strategic Factors)

Nike Inc. has opportunities to enhance its performance in the athletic footwear market. The external strategic factors that facilitate business growth are covered in this component of the SWOT Analysis. The following are the major opportunities in the case of Nike Inc.:

  1. Improve labor/employment practices
  2. Improve the product mix
  3. Increase market presence in developing countries

Nike has the opportunity to improve its labor practices to address controversies in this area of the business. Proactive strategies for this concern can lead to an improved brand image. Another opportunity is for Nike to improve its product mix to attract more customers, especially non-athletes.

The company also has the opportunity to improve its presence in developing markets to benefit from these markets’ high growth potential. This part of the SWOT Analysis indicates that Nike Inc.

must reform some of its policies and strategies to ensure its continued leadership in the global athletic footwear, apparel and equipment market.

Threats Facing Nike Inc. (External Strategic Factors)

Even though Nike is one of the major players in the sports shoes, equipment and apparel market, some threats could limit or reduce the company’s performance. This component of the SWOT Analysis deals with the external strategic factors that negatively impact business performance. The following threats are most notable in Nike’s case:

  1. Tough competition
  2. Rapid technological innovation
  3. Imitation

Nike faces tough competition, considering other major players Adidas. Also, rapid technological innovation could further increase competitive pressure if Nike does not innovate as rapidly.

In addition, imitation remains a threat, especially in developing countries with poor legal protection for patents.

This part of the SWOT Analysis shows that, for Nike to maintain its leadership in the global sports shoes market, product innovation and legal protection must be included in its major strategies.

Nike’s SWOT Analysis – Recommendations

This SWOT Analysis of Nike Inc. shows that the company has the strengths needed to support its global leadership in the sports footwear, equipment and apparel market.

However, the company must address concerns regarding competition, labor practices, imitation and patent protection. Thus, it is recommended that Nike Inc. must reform its strategies in these areas.

The company must also collaborate with government units to address patent protection issues.

References

  • Bernroider, E. (2002). Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. European management journal, 20(5), 562-573.
  • Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of management, 29(6), 801-830.
  • Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.
  • Nike, Inc. Form 10-K, 2015.
  • U.S. Department of Commerce. The Retail Services Industry in the United States.
  • Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of Marketing theory and Practice, 54-69.

Источник: http://panmore.com/nike-inc-swot-analysis-recommendations

Policy Example: Should Public Schools Require Students to Wear Uniforms?

Exploring the Policy Question

  1. How are fashion and sportswear companies able to charge so much for clothes?
  2. Would requiring the use of generic uniform clothes improve welfare?

19.1 What is Monopolistic Competition?

Learning Objective 19.1: Describe the structure of the monopolistically competitive market.

19.2 Equilibrium in Monopolistic Competition

Learning Objective 19.2: Explain how equilibrium is achieved in monopolistically competitive markets.

19.3 Policy Example: Should Public Schools Require Students to Wear Uniforms?

Learning Objective 19.3: Use knowledge of monopolistically competitive markets

To explain how switching to generic uniforms can improve welfare.

19.1 What is Monopolistic Competition?

Learning Objective 19.1: Describe the structure of the monopolistically competitive market.

Monopolistically competitive markets are markets in which low fixed costs and free entry and exit of firms make them competitive but firms are able to differentiate their products which causes them to face downward sloping demand curves imperfectly competitive firms such as monopolists.

As an example, consider the market for athletic shoes. In the United States in 2017, Nike had a 35% share of the athletic shoe market, it’s Jordan brand had an 12% share, Adidas had an 11% share and Sketchers, New Balance, Converse and Under Armour had 6.3%, 3.7%, 3.6%, and 2.4%, respectively.

The process of designing and making athletic shoes is not very capital intensive, so there are low fixed costs and there are no barriers to entry – any company who would to sell shoes in the United States may do so.

Athletic shoes are largely similar and, despite high-end shoes that may include special materials or technologies that enjoy patent protection, a regular pair of running shoes are relatively the same: cloth upper, foam padding and a rubber sole.

Despite this, Nike is able to charge considerably more for their shoes than a generic equivalent, why? Part of the reason is that through branding and marketing Nike has differentiated its shoes from those of competing companies.

Though athletic shoe companies expend a lot of time and effort into product differentiation, even firms that produce very similar products might be monopolistically competitive with a small amount of differentiation if the market is small enough.

In perfectly competitive markets the assumption is that firms are price takers because each individual firm is such a small part of the overall market. But if the market is so small that it only supports a few firms, each firm could have a downward sloping demand curve.

For example, in a very small town with only two coffee shops, if the shops are able to attract a particular type of customer, they might be able to charge more because the customers prefer their shop to the rival shop.

Perhaps one shop has a décor and music that appeals to a younger customer while the other has décor and music that appeals to older customers.

19.2 Equilibrium in Monopolistic Competition

Learning Objective 19.2: Explain how equilibrium is achieved in monopolistically competitive markets.

To think about equilibrium in monopolistically competitive markets, we begin by assuming firms with identical costs and homogeneous products. Un perfectly competitive firms that take the market equilibrium prices as given, monopolistically competitive firms achieve some pricing power through product differentiation.

In essence, these firms ‘capture’ part of the market for themselves. This doesn’t mean they can charge any price they , but that they create for themselves a downward sloping demand curve. In the absence of competition, such a scenario would potentially lead to monopoly rents and economic profits.

However, the free entry and exit of firms will guarantee that there will be no economic profits in the long-run because any positive economic profits will induce new firms to enter. The resulting equilibrium looks the graph in Figure 19.2.

1 which shows how one firm can both face a downward sloping demand curve and have zero economic profits.

Figure 19.2.1: Equilibrium in Monopolistically Competitive Markets

In Figure 19.2.1 the red line is the firm’s marginal revenue curve. Since the firm faces a downward sloping demand curve, they have a downward sloping marginal revenue curve similar to a monopolist.

The difference is this marginal revenue curve is from their individual demand curve with is only a part of total demand. Monopolistically competitive firms are profit maximizing firms and therefore set their output where marginal revenue equals marginal cost.

To find this point we look at the firm’s cost curves, in blue, and find the intersection of marginal revenue and marginal cost. In the figure this occurs at the quantity q*. The maximum price the firm can charge and sell q* is p*.

The firm’s average cost at q* is equal to p*, so its total cost is equal to its total revenue and therefore its economic profits are zero.

Figure 19.2.2: Achieving Equilibrium in Monopolistically Competitive Markets

How is this equilibrium reached? Start by considering a firm that is making positive economic profits whilst facing a downward sloping demand curve as in Figure 19.2.2, panel a. As other entrepreneurs observe the profits being made by incumbent firms, they will decide to enter the market.

This will whittle away some of the demand for the incumbent firm as seen in panel b. This will continue as long as any positive economic profits remain, but will stop once economic profits arrive at zero, as seen in panel c.

Note that on the firm level this outcome is not the same as the competitive market outcome where firms’ price is equal to marginal cost. This means that there is some welfare loss from firms’ ability to differentiate products.

It can also be true that if the process of product differentiation can be costly, for example when Nike pays athletes to wear its shoes and advertises its brand. This leads to higher costs and further diminishes welfare produced by the athletic shoe market.

19.3 Policy Example: Should Public Schools Require Students to Wear Uniforms?

Learning Objective 19.3: Use knowledge of monopolistically competitive markets

To explain how switching to generic uniforms can improve welfare.

There are a number of rationales for school uniforms in public schools: so that kids from poorer households don’t feel disadvantaged, to reduce problems with inappropriate attire, to eliminate the possibility of gang-related attire and so on. All of these are potentially good reasons, but good policy analysis requires that we think about the social welfare of the market itself.

By removing the incentive to differentiate through fashion and brands, school districts are forcing pupils to move from a monopolistically competitive market to one that is closer to a perfectly competitive market.

The cost to individuals could be a loss of utility from being unable to express individual style but the potential gain to the community is a lower cost of attending school.

19.1 What is Monopolistic Competition?

Learning Objective 19.1: Describe the structure of the monopolistically competitive market.

19.2 Equilibrium in Monopolistic Competition

Learning Objective 19.2: Explain how equilibrium is achieved in monopolistically competitive markets.

19.3 Policy Example: Should Public Schools Require Students to Wear Uniforms?

Learning Objective 19.3: Use knowledge of monopolistically competitive markets

To explain how switching to generic uniforms can improve welfare.

Graphs

Figure 19.2.1: Equilibrium in Monopolistically Competitive Markets

Figure 19.2.2: Achieving Equilibrium in Monopolistically Competitive Markets

Источник: https://open.oregonstate.education/intermediatemicroeconomics/chapter/module-19/

Nike SWOT 2021 | SWOT Analysis of Nike

For Nike, Competition Is Only Part Of The Problem

Last updated: Oct 6, 2020

 Company: Nike 
CEO: John Donahoe
Year founded: 1964
 Headquarter: Beaverton, Oregon, USA
Number of Employees (FY2020): 75,400
Type: Public
Ticker Symbol:  NKE
Market Cap (feb 2021): $224 Billion
Annual Revenue (FY2020): $37.4 Billion 
Profit | Net income (FY2020): $2.54 Billion

Products & Services:   Athlete wear | Apparel | Sports equipment | Leisure footwear | Accessories
Competitors:
Adidas | Puma | Anta | New Balance | Under Armour | Lululemon | ASICS | V. F. Corporation
  

Did you know?

Nike swoosh logo is inspired by the Greek goddess of victory, Nike

Greek goddess of victory – Nike

An Overview of Nike

Nike, Inc. is an American multinational corporation. Nike is headquartered in Beaverton, Oregon, USA. It was found by Bill Bowerman and Phil Knight in the year 1964. The company specializes in athletic wear, providing footwear, apparel, athletic equipment, and accessories.

Nike’s primary goal is to supply athletes with exceptional products and wearable that aids them in better sports performance. However, due to the success, Nike has gotten the company now provides athleisure wear as well. Currently, Mark Parker is the CEO of Nike.

Key Facts about Nike

SWOT Analysis of Nike

Here’s a detailed breakdown of Nike SWOT analysis. 

Nike’s Strengths – Internal Strategic Factors

  1. Strong Brand Awareness – Nike is one of the most recognizable brands in the world as its name alone is memorable, easy to pronounce, and very unique. Its swoosh symbol is easily recognized by everyone. Nike has captured approx.31% of the global athletic footwear market.
  2. Huge Customer base – Nike has millions of customer from around the world who loyally follow Nike’s trends, participate in Nike events, and even provide customer feedback. Due to its huge customer base, Nike’s market cap has grown to $224 billion as of Feb 2021.
  3. Aimed For Sustainability – Nike’s CEO Mark Parker has addressed that they will continue to acknowledge the environmental issues in the communities. The CEO ensures that Nike will help to contribute in finding a solution against these environmental issues.
  4. Iconic Relationships – Nike’s long-term partnership with Michael Jordan has proved to be beneficial in terms of sales for the company. Their collaboration resulted in “Air Jordan 1 Shoes”. Additionally, Nike teamed up with the famous basketball player to help design the “Air Jordan 1 Shoes”.
  5. Side Brands – Nike’s ability to maintain and enhance its side brands such as converse and hurley have enabled it to enjoy unparalleled success for decades.
  6. Low Manufacturing Cost – Most of Nike’s footwear is manufactured in foreign countries.

    In the fiscal year 2020, Vietnam produced 50%, China produced 22%, and Indonesia produced 24% of total Nike’s footwear. Other operations are in Argentina, Brazil, India, Italy, and Mexico.

  7. In-house Professionals – Nike has a team of professionals that design its shoes and other athletic accessories.

    Nike believes that their business has flourished due to the thorough research that is conducted for each product.

  8. Superior Marketing Capabilities – Nike has excellent marketing campaigns. The brand heavily relies on demand generation expense. In the fiscal year 2019 and 2020, Nike spent $3.7 billion and $3.5 billion respectively.

    The brand has successfully utilized social media and marketing campaigns to target more customers.

  9. Black Community Support – The brand has excellent marketing campaigns and recently released Don’t Do Itad campaign in support of Black communities against racism.

Nike’s Weaknesses – Internal Strategic Factors

  1. Poor Labor Conditions in Foreign Countries – In the last 20 years, Nike has been consistently targeted regarding their poor labor conditions. These issues include forced labor, child labor, low wages, and horrific working conditions that were deemed “unsafe”.

  2. Retailers Have a Stronger Hold – Nike’s retail sector makes Nike weak due to its sensitivity against pricing. 65% of Nike products are sold directly to wholesalers or retailers. With retailers serving as their core customers, Nike does not put up a fight against their pricing structures whatsoever.
  3. Pending Debts – Although Nike’s income statements prove to be prosperous, a quick glance at their balance sheet could paint a different picture. Nike is still facing financial threats. As of Aug 2020,Nike’s total long term debt was $9.

    54 billion

  4. Dependency on US Market – Even after having established itself globally, Nike still relies on the U.S Market in terms of sales and revenue. In the fiscal year 2020, about 41% of Nike’s sales came from the U.S, while the rest of 59% came globally. Despite its fame, Nike depends on the U.S for substantial sales and growth.

  5. Lawsuits: 
    • Recently, a former employee accused Nike of discrimination his Croatian origin.
    • Four former female Nike employees filed a class-action lawsuit against the company in August 2018. According to these women, Nike has a toxic company culture for women.

      The women filed their case against the sportswear company claiming that the company violated the Equal Pay Act. The women said the company engaged in systematic gender pay bias where men were paid more than women for the same amount of work.

  6. Lack of Diversification: Nike’s over-dependence on sporting apparel or lack of diversification is a major weakness. The pandemic has discouraged physical interaction and gathering with sporting events canceled or postponed. Several sporting teams are on the brink of collapse. If the crisis discourages sporting events for longer, Nike’s losses can be catastrophic.

  7. Contradicting Strategies: Nike pledged to shift all its facilities to 100% renewable energy with net-zero carbon emissions under the “Move to Zero” scheme.

    While the strategy is great and welcomed, it contradicts Nike’s strategy that favors innovation over sustainability.

    This creates the perception that Nike is not committed to addressing climate change and its pledge is just a marketing stunt.

  8. Sexual Harassment: Former female employees also pointed out that sexual harassment and misconduct was very common in the company. The New York Times conducted interviews with 50 former and present Nike employees to investigate the company culture. Through the interviews, it was established that Nike did have a toxic working environment, where sexual misconduct was rampant.

Multiple female employees reported that they had complained to the HR but saw no action being taken from their part. The women were left devastated and felt unsafe while working at Nike. Some even left their jobs. The entire controversy has significantly affected the company’s image.

Nike’s Opportunities – External Strategic Factors

  1. Emerging Markets – Although Nike already has a presence in many foreign countries, there is still plenty of opportunities for Nike. This is because emerging markets India, China, and Brazil are gradually flourishing.

     

  2. Innovative Products – Although Nike has produced many products, there is still a lot to innovate. Nike has extended its reach in technology in association with fitness and health. Products wearable technology that monitors physical activities, is the first step in building innovative technology products.

    Combining technology with athletic wear can prove to be beneficial as it is an aspect of the fashion industry that still hasn’t been explored much.

  3. Efficient Integration – The supply and production of Nike’s products depend on independent manufacturers.

    The brand can either acquire a few of these or make some of its own for a more efficient and streamlined supply chain.

  4. Cutting ties with big retailers: Nike has decided to cut ties with some of the biggest multi-brand retailers and wholesale partners.

    According to the report, Nike will no longer work with wholesale retailers such as Zapoo’s, Dillard’s, Fred Meyer, Bob’s Stores, etc. The step is taken for better product positioning and greater customer experience.

  5. Acquired Artificial Intelligence Start-up – With its vast financial resources, Nike can acquire small or medium companies or startups. It recently acquired predictive analytics platform – Celect to expand its online sales capabilities and predict customer’s shopping behavior.
  6. Consumer Direct Strategy –  Nike has accelerated the consumer-direct strategy, which means shifting its focus to digital business and subsequently closing physical stores. In fiscal year 2020, 35% of its Nike brand revenue comes from online sales. Clearly, the pandemic is shaping up how Nike interacts with its customers. 

Image source: Statista

Nike’s Threats – External Strategic Factors

  1. Counterfeit Products – Counterfeit products can significantly affect the revenue and reputation of Nike. The company deals globally and the risk of counterfeit products has become higher. A number of merchandisers and retailers offer counterfeit Nike products at lower prices.

    The low-priced products are made from low-quality materials but still have the Nike label. This can tarnish the image of the brand as the customers might feel that Nike has started producing low quality products.

  2. Increased competitive pressure – Although, Nike is a dominating the athletic industry, competition, and new emerging brands are still potential threats to the company. With higher competition ratio, Nike has to spend more money on marketing and advertising. Nike spent $3.

    5 Billion specifically on marketing and demand generation in fiscal year 2020. To overpower competition, Nike’s safest bet is to design innovative products that are tailored according to the needs of athletes.

  3. Marketing Budget Pressure – Companies Under Armour and Adidas are spending more on marketing and advertising campaigns, increasing the pressure on Nike.
  4. Currency Foreign Exchange Risks – Since the brand operates globally, it is affected by fluctuating foreign exchange rates. Nike reports its financial earnings in U.

    S dollars. This affects its revenue as the U.S dollar is exposed to volatility against other financial currencies.

  5. Patent Disputes – Regardless of whether a company is wrong or right, patent disputes are hotly and fiercely contested in the public domain and expose some dirty secrets about sides in the dispute.

    Nike and Adidas have been engaged in a fierce patent disputes over Primeknit and Flyknit shoes in U.S. and German courts.

  6. Economic Uncertainty – Regardless of the industry, all companies are susceptible to the negative effects of a global recession.

    Already, Nike has registered a 38% decline in sales in Q2 of 2020 and can drop further in the future if the recession strikes as hard as predicted by experts.

  7. Trade Tensions – Nike depends on different markets across the world evidenced by the recent increase in its stocks rallied by an increase in sales in China. With China and the US as its biggest markets, a large chunk of Nike’s sales will be threatened if the trade tensions between the two giants escalate.
  • Nike SWOT Analysis

Final Thoughts

The fiscal 2020 proved to be successful for Nike. Although the brand is still in debt, the next few years look promising. Nike has grown exponentially in the last decade.

From releasing new product lines to building new brands, to outsourcing, and establishing a global presence alone is an extraordinary achievement.

Through this SWOT analysis of Nike, you will be able to understand the business model of the brand.

References & more information

Tell us what you think? Did you find this article interesting?                                                   
Share your thoughts and experiences in the comments section below.

Источник: https://bstrategyhub.com/swot-analysis-of-nike-nike-swot-analysis/

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