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 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 Revenue :$34.4 billion - FY ending March 2017
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
1. Healthy balance sheet with strong financials: Nike has a strong financial growth every year. In FY 15 they recorded total revenue of $ 30201 Million; the increase in revenue for FY 16 is 7.2%.
2. International presence: Nike has established itself as a sports brand in across 180 countries. It’s a globally recognized brand and retail stores at multiple geographical locations.
3. Make to stock model: Nike creates a fast track continuous supply chain of products to its retailer through this model avoiding any lag in delivery or opportunity cost. It delivers as per the customer need from its stocks.
4. Highly innovative product and research oriented base: Nike is known for its innovative products. In 2006 it created the first prototype of HyperAdapt 1.0, also called as a self lacing technology that automatically adapts to the shoe owner foot size and adapts to it. It is set to release on November 28th, 2016. Such kind of innovation and futuristic product has helped Nike in creating its own brand Following.
5. Low cost High Quality: Nike follows a strategy of venturing into new markets and evaluating the cost of production locally and off shore depending on the cost analysis and decides based on the low cost and high quality model
6. Recognized as top employer to work for: Nike provides with a very innovative environment to work for. The ad campaigns are clear evidence of their passion in the business and openness of the organization culture.
7. Branding products through top athletes: Nike is being endorsed by top athletes e.g. Rafael Nadal, Christiano Ronaldo, Michael Jordan worn across competitions as headband, Shoes, T-shirts, Wrist bands etc branding the accessories as top athletes choice
1. High Reliability on Footwear: Nike in the fiscal year 2015-16 made around $9299 million out of foot wear which amounts to approx 29% of the total revenue. This creates a vulnerable touch point for Nike any damage to the footwear industry shall hugely impact Nike’s revenue.
2. Price sensitivity of the retail market: The market in retail is highly price sensitive. Nike follows a low cost and high quality model so in order to keep the product at its lowest price Nike needs to lower the retailer’s margin which does not make it a lucrative sale for the retailers. Secondly Nike also does not own its own outlets for selling off its product.
The unpublished sections of the entire SWOT analysis is available in the 'Complete Report' on purchase.Nike SWOT analysis has been conducted by Supreet Panigrahy and reviewed by senior analysts from Barakaat Consulting.
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TABLE OF CONTENTS
DELIVERY AND FORMAT
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• 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.
• 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
• 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
• 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.
• The PESTLE analysis of the Sports Apparel and Accessories Industry helps to distinguish the factors that compel and restrain the retail market.
• 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
• Abstract information on Nike's business diversification, deriving its key business segments and highlighting its major competitors
• A concise widow 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
• 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
• 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.
• 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.