Nike SWOT (Toni)

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.// <![CDATA[//
  • 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.// <![CDATA[//

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.
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Filed under Secondary Research, Toni, Trends Research

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