Nike SWOT & PESTLE Analysis
COMPANY PROFILE -Nike
Business Sector :Sports Goods
Operating Geography :North America, United States, Global
About Nike :
Nike, Inc. is an American multinational corporation that was founded in the year 1964 as blue ribbon sports by Bill Bowerman and Phil Knight, went on to become the world’s largest manufacturer of sport shoes, apparels and accessories. It is headquartered in Washington County, Oregon, U.S and the retail stores are named as Niketown. Nike's core business model is the design, development, production, and global marketing and sales of footwear, apparel, equipment, accessories, and services. Nike is the largest seller of athletic footwear and apparel in the world, as of 2019. NIKE Brand offers its products mainly in six categories viz., Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Training and Sportswear. The company sells its goods through NIKE-owned retail stores and digital platforms. The company also markets products designed for recreational uses such as American football, baseball, cricket, lacrosse, skateboarding, tennis, volleyball, wrestling, walking, and outdoor activities. Nike's key success factors are its impeccable efforts in research, design, technical innovation, and development.Nike Inc.’s mission statement on its official website reads “Our mission is what drives us to do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.” The Company strives “To bring inspiration and innovation to every athlete in the world.”
Nike's unique selling proposition or USP lies in being the world's largest manufacturer and seller of athletic shoes and apparels. It is also one of the most renowned and valuable companies with its brand valued approximately 32.4 billion U.S. dollars in 2019. NIKE, Inc. includes the Nike, Converse, Hurley, and Jordan brands.
Nike Revenue :
$39,117 million - FY ending 31st May 2019 (y-o-y growth of 7%)
$36,397 million- FY ending 31st May 2018
Competitive Analysis of Nike
World's No.1 and largest shoemaker, innovative and diversified product portfolio, strong core and side brands, loyal and large customer base, global presence, strong R&D and technical innovations, low manufacturing cost, influencing marketing strategies, etc., are just a handful of the several strengths of Nike.
These factors also serve as core competencies to Nike and lend it a competitive advantage. Despite all the quintessential strengths of Nike, the company faces trouble from some of its inherent weakness. Nike has always been targeted for labor issues like child labor, low wages, in-equal pay on a gender basis, toxic work environment, sexual harassment, etc. These internal weaknesses have damaged the brand reputation. Though Nike's merchandises are mainly designed for an athletic use a considerable percentage of the products are worn for informal or leisure purposes. This grants the company a great opportunity to target audiences who utilize Nike's products not only for sports purpose but also as a fashion trend. The athletic footwear, apparel, and equipment industry, as a whole, is extremely competitive on a worldwide basis; therefore, Nike faces stringent competition threat from its top rivals like Adidas, Under Armour, Puma, etc. Another major threat Nike encounters from the counterfeit products that extensively affect the revenue and reliability of the brand.
The SWOT analysis for Nike is presented below in a nutshell followed by the detailed analysis:
| 1. Healthy balance sheet with strong financials 2. International presence 3. Follows a “Make to stock” model focusing on fast track availability of product for customers from available stocks 4. Highly innovative products and strong research and development base 5. Follows a “ Low cost high quality” 6. Recognized three times as “top 100 companies to work for” 7. Branding product through top athletes of the world. | 1. High reliability on shoe manufacturing for maximum revenue , makes the company vulnerable to market share erosion of shoe products 2. Price sensitivity of the retail model with upcoming competitors like Reebok and Adidas and no self owned retailers the profit margin might get reduced |
| 1. Scope of development in projecting Nike as a fashion brand 2. Expansion of branding focus through sunglasses , sportswear , equipment and accessories 3. Enhancing branding through sports academy | 1. Upcoming competitor brands 2. Common Business model like “ Low price High quality” followed by other competitors 3. Revenue subjective to currency variations due to Global presence increases cost of product |
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Detailed SWOT Analysis of Nike
Strength
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Weakness
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Opportunity
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Threat
1. Highly dependent on sports: The sporting goods industry is highly dependent on sports. If one sport becomes popular and the Company sells equipment for it, the revenues will automatically rise. However if the Company produces shoes and equipment for a sport that loses popularity, then it will incur heavy losses. Nike has to constantly monitor the market for popularity of sports and big events like the Olympics, to ensure higher sales.
2. Intense Competition: Nike faces intense competition from the top players in the sporting goods segment such as Adidas, Under Armour, Puma and Fila. The business is based on innovation and new technology, which is often copied by other rivals. Often the rivals can create similar technology at the same as Nike or earlier, which will impact the Company’s profits.
3. Foreign exchange and market risk: Nike operates in different countries, and as such deals in different currencies. Any fluctuations in currency, economic downturn or deteriorating consumer sentiment can have an impact on Nike. The Brexit has also caused the UK Pound sterling to slump against the USD. Further many Asian currencies such as the Turkish Lira and the Indian Rupee are at lows against the USD. These developments may significantly impact Nike’s bottom-line.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
1. The SWOT and PESTEL analysis report of Nike Inc. presents the complex internal and external factors affecting Nike's brand, its operations, business model, market strategy and growth trajectory.
2. The SWOT analysis evaluates the strengths and opportunities that Nike holds and how it strategizes itself to succeed its weaknesses and threats in its operating external environment
3. The report confers intelligence on the external analysis, comprising the opportunities - low hanging fruits which can be harvested to achieve further growth and expansion and some pertinent threats that threaten to hinder the growth of the company
4. The Report covers compelling initiatives that were taken by Nike, to stay ahead of its competitors and adversaries and attain a competitive edge in the industry.
5. The PESTLE analysis of the Sports Apparel and Accessories Industry helps to distinguish the factors that compel and restrain the retail market.
6. The PESTLE/ PESTEL/ STEEPL Analysis for in-depth analysis of all external factors specifically, political, economic, social, technological, legal and environmental, highlighting their consequence on Nike's business model, marketing and growth strategy
7. Abstract information on Nike's business diversification, deriving its key business segments and highlighting its major competitors
8. A concise window into of Nike’s headquarters, turnover, revenue, and subsidiaries. This is followed by a comprehensive company analysis to obtain perspicacity into company information, company profile, business model, business plans and marketing strategy
9. Analysis of Nike's market position, mergers and acquisitions, strategic partnerships and alliances, that the company endorsed, and the business aims or synergies that were achieved with them
10. Interpretation of Nikes USP or unique selling proposition, mission statement, and vision statement. With a peek into Nike's key success factors, performance indicators, core values, value propositions, and core competencies.
11. Discussion on Nike's business model, extending to the analysis of key business segments and business case study
References used in Nike Analysis Report
1. Annual report 2018-https://s1.q4cdn.com/806093406/files/doc_financials/2018/ar/index.html
2. Revenue 2018- https://news.nike.com/news/nike-inc-reports-fiscal-2018-fourth-quarter-and-full-year-results
3. Nike Website- https://www.nike.com/
4. Nike Adidas trying opposite strategies to take over US market- https://www.businessinsider.in/Nike-and-Adidas-are-trying-opposite-strategies-to-take-over-the-US-market/articleshow/61665620.cms
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Nike SWOT and PESTLE analysis has been conducted by Supreet Panigrahy and reviewed by senior analysts from Barakaat Consulting.
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