Swot Analysis of Nike

Strengths.
 Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as
saying that 'Business is war without bullets.' Nike has a healthy dislike of is competitors. At the Atlanta
Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike
sponsored the top athletes and gained valuable coverage.
 Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This
makes a very lean organization. Nike is strong at research and development, as is evidenced by its
evolving and innovative product range. They then manufacture wherever they can produce high
quality product at the lowest possible price. If prices rise, and products can be made more cheaply
elsewhere (to the same or better specification), Nike will move production.
 Nike is a global brand. It is the number one sports brand in the World. Its famous 'Swoosh' is
instantly recognisable, and Phil Knight even has it tattooed on his ankle.
Weaknesses.
 The organization does have a diversified range of sports products. However, the income of
the business is still heavily dependent upon its share of the footwear market. This may leave it
vulnerable if for any reason its market share erodes.
 The retail sector is very price sensitive. Nike does have its own retailer in Nike Town.
However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar
experience to the consumer. Can you tell one sports retailer from another? So margins tend to get
squeezed as retailers try to pass some of the low price competition pressure onto Nike.
Opportunities.
 Product development offers Nike many opportunities. The brand is fiercely defended by its
owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that
wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture
especially, Nike is a fashion brand. This creates its own opportunities, since product could become
unfashionable before it wears out i.e. consumers need to replace shoes.
 There is also the opportunity to develop products such as sport wear, sunglasses and
jewellery. Such high value items do tend to have associated with them, high profits.
 The business could also be developed internationally, building upon its strong global brand
recognition. There are many markets that have the disposable income to spend on high value sports
goods. For example, emerging markets such as China and India have a new richer generation of
consumers. There are also global marketing events that can be utilised to support the brand such as
the World Cup (soccer) and The Olympics.
Threats.
 Nike is exposed to the international nature of trade. It buys and sells in different currencies
and so costs and margins are not stable over long periods of time. Such an exposure could mean that
Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.
 The market for sports shoes and garments is very competitive. The model developed by Phil
Knight in his Stamford Business School days (high value branded product manufactured at a low cost)
is now commonly used and to an extent is no longer a basis for sustainable competitive advantage.
Competitors are developing alternative brands to take away Nike's market share.
 As discussed above in weaknesses, the retail sector is becoming price competitive. This
ultimately means that consumers are shopping around for a better deal. So if one store charges a
price for a pair of sports shoes, the consumer could go to the store along the street to compare prices
for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a
potential external threat to Nike.
'If you have a body, you are an athlete' - Bill Bowerman said this a couple of decades ago. The guy
was right. It defines how he viewed the world, and it defines how Nike pursues its destiny. Ours is a
language of sports, a universally understood lexicon of passion and competition. A lot has happened
at Nike in the 30 years
Strengths
•Nike is a globally recognized for being the number one sportswearbrand in the World.
•Nike being a competitive organization has a healthy aversion towards its competitors i-eduring
Atlanta Olympics, Reebok expensed on sponsoring the games; Nike however sponsored the top
athletes and due to this step, it gained valuable coverage.
•Nike has no factories; rather it uses contract factories to get the work done which makes it quite a
lean organization. It has contracts with above 700 shops globally in about 45 different countries.
•Nike is quite strong regarding its research and development;quite evident regarding its evolving and
innovative product range.
•They manufacture high quality at the lowest possible price,if prices rise due to price hike then the
production process is made cheaper by changing the place of production.
•It belongs to the Fortune 500 companies.
•Nike employs about more than 30.000 people worldwide.

•It has a strong sense of marketing campaign by sponsoring top athletes.
•It uses lunarlite foam and flywire materials in order to make the manufactured shoes lighter and more
controllable.
Weaknesses
•Even though the organization has a diversified range for sportswear, the income of the business,
however, is still heavily dependent upon its share of the footwear market which leaves it at a quite
vulnerable spot if for any reason its market share erodes.
•The retail sector is price sensitive;retailers usually tend to offer a very similar experience to the
consumers with another cheaper product, which in return tends to get squeezed as retailers try to
pass some of the low price competition pressure onto Nike.
•Nike was for quite some time unwilling to disclose any type of information concerning its partnering
companies.
•It was charged with the violation of overtime and minimum wage rates in Vietnam, 1996, that was
seen as having poor working conditions, and that it was also charged for exploiting cheap workforce
overseas.
•Nike was also reported to have applied child labor in Pakistan and Cambodia to produce soccer
balls.
•It was positioned as a subject of criticism by anti-globalization groups due to its unruly and exploited
manner that was quite a disaster for its reputation.
Opportunities
•The brand is sternly defended by its owners who believe that Nike is not a fashion brand, however, a
large number of consumers wear Nike product because they derive a fashion trend rather than to
participate in a sport. It is mostly argued that in youth culture, Nike is a fashion brand which also
creates opportunities for Nike since its products would become outdated before even the product
wears out i.e. consumers will feel the need to replace the product with a newer trend.
•There are many international regions that still need tapping and there is need forsportswear and with
Nike’s strong global brand recognition, it can initiate in many markets that have the disposable income
to spend on high value sports goods.
•Nike gives a lot of effort on its corporate marketing mainly through the promotion of corporate brand
and sponsorship agreements.
Threats
• Nike is exposed to the international nature of trade so it sells its product in different currencies which
destabilizes the costs and margins for profits over long periods of time. This type of exposure may
make Nike to be manufacturing and/or selling at a loss, although that is not the case for a giant as
itself.
•The market for sports shoes and sportswear is quite competitive; the competitors are constantly
developing alternative brands and techniques to take away Nike’s market share.
•Consumers are constantly shopping around for a better deal that conveys a good quality and if one
store charges a higher price for the products, the consumer would try to seek a better deal of the
same product in the premises that delivers the same value but cheaper of the two,this type
of price sensitivity among the consumers is a potential threat to Nike.
•The textile industry unpleasantly upsets the atmosphere, and therefore the organization is constantly
struggling to retain its eco-friendly reputation.
•A recession may lead to job shortages in most of Nike’s worldwide branches.
•The organization has experienced many adverse publicity feedbacks due to its widespread
advertising.
Comparison between Nike and Adidas
Nike Adidas
Headquarters Beaverton, OR USA Herzogenaurach,
Germany
Major Markets Basketball, Cross- Soccer, Tennis, Athletics
training, Running,
Women and Children’s
shoes
Key Sponsorships Michael Jordan; Mia New York Yankees;
Hamm; Tiger Woods; University of Tennessee;
Brazil Soccer Kobe Bryant
Strategies � Domestic market focus � European market focus
� Shifted focus to soccer � Adidas dominates the

in order to gain world market, specifically
international recognition the soccer market which
is considered the "world’s
� Started athlete sport."
sponsorship frenzy
� Sponsors professional
� Has created new look athletes and athletic teams
shoes to excite "bored in response to Nike’s
customers" marketing technique
� Nike Team Sports � Tries to cut production

time and cost in order to
� Changes shoe designs be more efficient
frequently to stay ahead
of competitors � Uses low wage labor
to cut production costs
� Customized products
(Nike ID) � Has enhanced
marketing and advertising
� Uses overseas budget
manufacturing factories to
cut production costs. � Has recently tried to
expand its market to
� Perfected its internet sports equipment and
site with custom footwear apparel
options
� Has lead the industry

in advertising and
marketing strategies
Outsourcing � Nike is not a production � Adidas outsourced its

company; almost all shoes production but the design and
are outsourced; the home development process is based
office in Beaverton designs, in Germany.
develops and markets the
goods � In 1993, Adidas moved its
production overseas to Asia
� Subcontractors in Taiwan in order stay competitive in
and Korea contract to other the industry.
Asian countries for
production
� Assembly factories in
Taiwan, Korea, China,
Indonesia and Vietnam
produce the shoes.
� Nike’s trading company is

the Nissho Iwai Corporation

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Strengths.

•Nike employs about more than 30.000 people worldwide.

� Shifted focus to soccer � Adidas dominates the

� Nike Team Sports � Tries to cut production

� Has lead the industry

Outsourcing � Nike is not a production � Adidas outsourced its

� Nike’s trading company is

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