Nike is one of the most popular American sports footwear, apparel and equipment brand, which operates in a global scale. Over the years the company has managed to expand its business in various international markets and is currently valued at USD 32 billion. Nike also holds the leadership in terms of market share in the global apparel market. In order find out how the company functions in the contemporary business environment and to identify the key factors behind its success, an in-depth SWOT analysis has been performed.
The SWOT analysis helps in determining the internal and external factors that influences the business performance of Nike. The internal factor includes its strengths and weaknesses, whereas the external factors cover the opportunity and threats. This article aims at providing an in-depth, yet concise SWOT analysis of Nike to provide help with essays on strategic management.It can also help you gain sufficient information on Nike’s business environment, allowing to design your own proposed marketing strategy.
The key strength of the company lies in its financial prowess, which is reflected in its revenue generation. As of 2019, the company was able to earn USD 39 billion. The strong financial status of the company allows it to strengthen its position in the market through aggressive marketing strategies and innovating product development. The strength of the company also comes from its brand image. Nike is one of the most popular sports footwear and apparel brand in the world, with a brand valuation of USD 32 billion (as of 2019). The strong brand image allows Nike to attract its customers and investors, thereby further securing its financial position.
The geographic diversification of Nike into the various international markets, has helped the firm to cater to a large customer base, leading to higher revenue generation. Moreover, the product line of Nike is constantly updated for the customers, in order to offer them with new product variants. This plays an important role in maintaining a strong competitive advantage in the market. The frequent update of product designs allows the customers to always have something new to find in the product portfolio.
The organizational structure of Nike follows a matrix structure, which has enabled the company to take faster decisions for individual markets and better centralized control. Moreover, it also helped the firm to adopt a combination of standardized and localized approach in its marketing and product development strategy, which is attributed for its success in international markets.
Even though the company has diversified into multiple international markets, its business growth is largely dependent on the revenue earned from the home country. The performance of Nike in the developing markets is quite restricted. This as a result makes it difficult for the company to compete with the local brands in the host markets.
Nike operates with a limited range of product categories. At present, there are three key product categories in which the company caters to, which are footwear, apparel and equipment. The limitation in product mix of the company restricts its potential for revenue growth. Moreover, it also increases its operating risks. Sudden fluctuations in even one of the key product lines can have a major impact on the financial performance of the company.
Over the years, Nike has faced some critical controversies relating to its operational activities. The labor controversy surrounding the poor treatment of workers in the developing countries has led to poor corporate image for the company. This as a result can repel some customers and investors.
Nike has potential opportunity for its business growth in the near future. The global apparel and footwear market have expanded steadily over the past years and is forecasted to grow further in the future as well. In 2019, the market to USD 1.9 trillion from USD 1.8 trillion in the previous year. The market growth can prove to be extremely beneficial for the sales and revenue generation of Nike. It also indicates that the customers are exhibiting higher demand for the footwear and apparel products, which the primary sources of cashflow for the company.
The home country, US has good bilateral trade relationships with various host nations. This as a result allows companies like Nike to expand its business to other neighboring countries seamlessly. It also enables the firm to create a robust global supply chain to source raw materials and services from multiple suppliers in the industry. Studies have shown that the apparel market in Asia is likely to grow significantly in the coming years. This as a result, presents potential opportunity for Nike to strengthen its presence in the Asian market.
The governmental bodies of several developing countries, such as India are welcoming well-established foreign companies to expand their businesses there. This can also be a significant opportunity for Nike to penetrate deeper into the developing markets by leveraging the support from the local governments.
Nike faces a significant threat from the presence of steep competition in the global apparel and footwear market. Some of the dominant market players are Adidas, Under Armour and Puma. Each of them has a strong presence in the industry and offers almost identical value proposition to the target customers. It should be noted that even though Nike holds the leadership position in the global market, in terms of market share, these rival brands can pose serious threats for the company. Each of these companies adopt aggressive marketing strategies to attract the customers and offer them compelling value propositions.
The business operations of Nike are largely dependent on its suppliers, which as a result gives the suppliers higher bargaining power. It can affect the cost of the operations of the company and may eventually be reflected in its financial performance.
Since, Nike operates with a global supply chain, any disruption in any of the host nations can have a significant effect on the business operations of the firm. Political turmoil and any sudden changes in the rules and regulations in the host country can also have a prominent impact on Nike and its business operations.
The SWOT analysis of Nike, as presented above should give you a clear example of how to use this strategic framework in your own college paper. You can refer to this article, whenever you are preparing a SWOT analysis or need some detailed information on Nike and its business environment. In case of Nike, its key strengths rely on its financial status and its brand image. However, it also has certain weaknesses in terms of ethical controversies and limited product mix. The company has significant potential in future expansion owing to steady market growths in the global markets. Alongside of the growth opportunities, the company faces threat from steep competition from the likes of Adidas, Puma, etc.
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