Strategic analysis using S.W.O.T for Nike Consultant M.A.Abushanab

Advisor Mohammed Abushanab

advisormohammedabushanab.jimdo.com

NIKE – SWOT ANALYSIS S U M M A R Y

Our function is to provide knowledge and insights. We are the global repository for the science of human performance and potential.” — Matthew Nurse, Senior Director of the Nike Explore Team Sport Research Lab

Even though the market is variable and other threats such as possible currency fluctuations and

other global economic issues do exist, Nike remains strong — maybe even stronger than

ever.

On the one hand, it has strengths which have a big impact on its opportunities. But on the other

hand, as you can see from the picture above, the ratio between the different types of strategies

is more or less balanced. Definitely, Nike is on a role, but even now some analysts suggest that

correction in its valuation is forthcoming.

It is definitely worth watching how things will work out for Parker’s company. Eventually, it

doesn’t matter how fast you are going in the middle of the run — it only matters who is the first

on the finish line.

The research lab was started in Nike’s infancy, in 1980 in Exeter, N.H. It was formed in response to the running boom of the late ‘70s (the name was coined by recent hire Mark Parker, current NIKE, Inc. President and CEO). The primary goal was to understand runners’ needs in order to make the best

products for athletes. It has been quite a journey since 1980 — both for the technology in general

and the American sportswear company in particular. Just a year before, in 1980, Nike advertising

executive Dan Wieden had coined its new marketing slogan: “Just Do It”. Today this slogan

is one of the most recognized trademarks in the world, Nike is worth more than ever and holds

more than 60% of the American footwear market.

Nike is obviously on a role, but will it last forever? What kind of strategy should Nike employ in

the immediate future? Let’s take a look at the SWOT analysis we have prepared.

Advisor Mohammed Abushanab

advisormohammedabushanab.jimdo.com

S T R E N G T H S

The strengths of Nike are pretty straightforward. First and the most important one (see the

picture below) is a significant amount of brand diversity. Nike, with its famous Swoosh slogan

and the previously mentioned slogan “Just Do It!” is one of the most recognized brands in the

world and occupies first place in the Top 50 ranking of brands appreciated by millennials,

ahead of corporations such as Apple, Microsoft or Coca-Cola. Jeep ,GMC ,Ford The company

has contracts with the most famous world athletes such as Cristiano Ronaldo, LeBron

James and Tiger Woods which only strengthens its image as one that is professional,

innovative and top quality.

Nike – SWOT analysis – Strengths

The brand, of course, has a strong impact on the valuation of the company and its current growth.

Nike currently employs more than 60,000 people around the globe and its stock is now

reaching the highest levels in its history. The Market Cap of the Oregon-based corporation is

Advisor Mohammed Abushanab

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now equal to approx. $112 billion, which makes it a tasty morsel for investors and gives the

company vast amounts of money to invest further in innovation and new markets development.

O P P O R T U N I T E S

Why is Nike so powerful right now? The foremost reason is that it can perfectly capable of

making use of the opportunities which are ahead of it. From our analysis, we can clearly see that

the most important opportunity for Nike right now is the China market.

Interestingly, Nike is one of the few brands which are actually succeeding in this Asian

market. The analysts explain this growth by Nike’s attitude towards Chinese customers. Brian

Buchwald, chief executive of the consumer intelligence company Bomoda says that “Nike is

perhaps the pre-eminent foreign company in building direct relationships with the Chinese

consumer outside of Apple”. This strategy can result in even bigger profits in the near future,

especially keeping in mind the fact that the Chinese premium sportswear market is still far from

its saturation point.

Nike – SWOT analysis – Just run

Advisor Mohammed Abushanab

advisormohammedabushanab.jimdo.com

But the growth in China is only part of a

bigger picture. Consumers around the

globe are more and more focused on

being healthy and fit. Marathons across

the world attract more and more

participants. Due to a number of

reasons, including the pressure of

better health, achieving goals and

even being trendy, running as a

lifestyle has become more popular

than ever. This has forced Nike to

constantly evolve its strategy and

invest in new solutions such as

wearable devices or applications

connected with modern smart

watches. With Nike’s capital this is

more achievable than ever.

W E A K N E S S E S

But Nike is not only about strengths and opportunities. As you can see in the picture below, the

relationship between the weaknesses of the American company and its opportunities is also quite

strong. It means that some of the weaknesses that Nike has can actually limit the use of its

opportunities.

Nike – SWOT analysis – Weaknesses

Interestingly, the most prominent among these weaknesses is something connected to Nike’s

biggest asset — its brand. Even though the footwear company dominates the American market,

the competition such as Under Armour is growing fast. This means that each problem with

Nike’s brand can cause its competitors to grow, especially in the fickle millennial market.

Nike has learned that being in the spotlight can cause a lot of problems. During the Berlin

Marathon, Eliud Kipchoge failed to set the world record because his shoes which were made by

Nike disintegrated before the entire world. In March 2015, Nike signed a new sponsorship deal

with the American sprinter Justin Gatlin and caused a lot controversy because Gatlin

cannot be easily seen as a positive archetype of the modern athlete — he has previously had

two doping bans and was suspended for four years between 2006-2010.

But it is not only about technical issues and controversial sponsorships. Nike still has to

struggle with the image of being a greedy American corporation which exploits poor people

in emerging markets, one which darkened the bright image of the company in the late 90’s. A

series of scandals regarding poor labor conditions in Nike factories in Asia almost caused the

American giant to collapse. The workers in countries such as Vietnam were earning as low

as $47 a month, working overtime, having restricted access to toilets and water during their

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workday and were the object of physically

and verbally abusive treatment. This caused a

lot of protests around the globe and propagated

a new modified version of Nike’s slogan: “Just

DON’T do it.”

Apparently, a lot has changed since then and

Nike has become more transparent and

socially responsible, but the memory of its

uncomfortable past only shows that the trust for

the brand is not a given, and Nike must focus on

carefully nurturing it.

T H R E A T S

The reason that Nike must be careful is that it operates in a very variable market. In retail,

everything changes quickly, and young consumers follow the trends and move from one brand to

another. Even though, as Mark Parker, the Nike CEO says, that people still prefer premium

brands, it is possible that the market will change and Nike will have to find a new niche for

its customers.

The competition, however, is still solid, and, therefore, one of the threats for Nike is that it can

find itself in a massive price war where similar but cheaper brands can expand their share

of the global market. It may be too soon for Nike to be worried, but a warning sign for them can

be the case of Adidas, although it still holds the no. 1 in the world sports apparel market

share, it has fallen dramatically in the footwear market in the United States, giving way to

newer brands such as Under Armour or New Balance.