Nike Inc. SWOT Analysis & Recommendations

Nike Inc SWOT analysis, strengths, weaknesses, opportunities, threats, internal external factors, recommendations, sports shoes case study
A pair of Nike Air Max IV (Air Classic BW). Nike Inc.’s SWOT analysis highlights capability to maintain leadership in the sport shoes, apparel and equipment market. (Photo: Public Domain)

Nike Inc.’s leadership in the global sports shoes, equipment and apparel market shows the significance of its strengths in competing against other giants like Adidas. A SWOT Analysis of Nike outlines how these strengths relate with the company’s weaknesses, opportunities and threats. Established in 1964 as Blue Ribbon Sports, Nike Inc. is now one of the world’s biggest players in the athletic footwear market. An understanding of the company’s strengths and weaknesses (internal strategic factors), and weaknesses and threats (external strategic factors) yields insights on how a manufacturing and retail business can achieve global success despite tough competition.

Nike Inc.’s SWOT Analysis emphasizes the importance of product development to maintain a competitive edge. However, the results of this SWOT Analysis points out some possible new strategic directions to further enhance Nike’s global performance and leadership.

Nike’s Strengths (Internal Strategic Factors)

Nike’s strengths are the primary drivers of the company’s growth and global leadership in the sports shoes, apparel and equipment market. This component of the SWOT Analysis deals with the internal strategic factors that support business development and competitiveness. The following strengths are the most notable in the case of Nike Inc.:

  1. Strong brand image
  2. Rapid innovation processes
  3. Extensive global production and distribution network

Nike’s strong brand image evolves based on product quality. The company’s effective marketing campaigns also contribute to this strength. Also, rapid innovation processes are a core factor in Nike’s ability to create cutting edge designs for its athletic footwear, equipment and apparel. The company’s extensive global production and distribution network is a strength that enables the business to support global market dominance. This part of the SWOT Analysis shows that Nike Inc. has capabilities to retain its global market leadership.

Nike’s Weaknesses (Internal Strategic Factors)

Weaknesses could disrupt Nike’s growth trajectory in the sports shoes, apparel and equipment market. This component of the SWOT Analysis addresses the internal strategic factors that prevent or reduce business performance. In the case of Nike Inc., the following weaknesses are the most significant:

  1. Labor controversies
  2. Limitations in the product mix
  3. Limited presence in developing markets

Labor controversies continue to plague Nike’s business, especially in considering production facilities in developing countries. This weakness negatively impacts the company’s brand image. Also, even though Nike Inc. has expanded its product mix through the years, the resulting product lines are still limited in capturing a larger share of the sports shoes, equipment and apparel market. Moreover, the company suffers from limited presence in developing markets, partly because of issues with pricing, imitation and patent protection. This weakness limits Nike’s global growth. Based on this part of the SWOT Analysis, Nike Inc. must improve its policies and strategies in the areas of labor and employment, product mix development, and penetration in developing markets.

Opportunities for Nike Inc. (External Strategic Factors)

Nike Inc. has opportunities to enhance its performance in the athletic footwear market. The external strategic factors that facilitate business growth are covered in this component of the SWOT Analysis. The following are the major opportunities in the case of Nike Inc.:

  1. Improve labor/employment practices
  2. Improve the product mix
  3. Increase market presence in developing countries

Nike has the opportunity to improve its labor practices to address controversies in this area of the business. Proactive strategies for this concern can lead to an improved brand image. Another opportunity is for Nike to improve its product mix to attract more customers, especially non-athletes. The company also has the opportunity to improve its presence in developing markets to benefit from these markets’ high growth potential. This part of the SWOT Analysis indicates that Nike Inc. must reform some of its policies and strategies to ensure its continued leadership in the global athletic footwear, apparel and equipment market.

Threats Facing Nike Inc. (External Strategic Factors)

Even though Nike is one of the major players in the sports shoes, equipment and apparel market, some threats could limit or reduce the company’s performance. This component of the SWOT Analysis deals with the external strategic factors that negatively impact business performance. The following threats are most notable in Nike’s case:

  1. Tough competition
  2. Rapid technological innovation
  3. Imitation

Nike faces tough competition, considering other major players like Adidas. Also, rapid technological innovation could further increase competitive pressure if Nike does not innovate as rapidly. In addition, imitation remains a threat, especially in developing countries with poor legal protection for patents. This part of the SWOT Analysis shows that, for Nike to maintain its leadership in the global sports shoes market, product innovation and legal protection must be included in its major strategies.

Nike’s SWOT Analysis – Recommendations

This SWOT Analysis of Nike Inc. shows that the company has the strengths needed to support its global leadership in the sports footwear, equipment and apparel market. However, the company must address concerns regarding competition, labor practices, imitation and patent protection. Thus, it is recommended that Nike Inc. must reform its strategies in these areas. The company must also collaborate with government units to address patent protection issues.

References
  • Bernroider, E. (2002). Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. European management journal20(5), 562-573.
  • Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of management29(6), 801-830.
  • Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.
  • Nike, Inc. Form 10-K, 2015.
  • U.S. Department of Commerce. The Retail Services Industry in the United States.
  • Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of Marketing theory and Practice, 54-69.
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