Nike SWOT Analysis & Recommendations

Nike SWOT analysis, strengths, weaknesses, opportunities, threats, internal analysis, external analysis, sports shoes business case study
A pair of Nike Air Max IV (Air Classic BW). This SWOT analysis of Nike Inc. highlights business competitive advantages for leadership in the sports shoes, apparel, and equipment market. (Photo: Public Domain)

Nike Inc. maintains strategic effectiveness that accounts for the internal and external factors examined in this SWOT analysis of the multinational sports shoes, equipment, and apparel business. This effectiveness reflects the company’s strengths and opportunities in addressing its weaknesses and the threats to its business, including competitors, like Adidas, Puma, ASICS, Under Armour, and New Balance. This SWOT Analysis of Nike outlines the connections among business strengths, weaknesses, opportunities, and threats (the SWOT factors). Established in 1964 as Blue Ribbon Sports, the company is now one of the world’s biggest players in the athletic footwear market. This success depicts the appropriateness of strategies and goals in relation to Nike’s corporate mission statement and corporate vision statement. This SWOT analysis of the sporting goods corporation examines relevant business strengths and weaknesses (internal analysis), and opportunities and threats (external analysis). The results yield insights on how Nike’s manufacturing and retail business achieves global success despite tough competition.

This SWOT analysis emphasizes the importance of product development in maintaining Nike’s competitive edge. This business analysis case also hints on possible new strategic directions to enhance the sporting goods company. Nike’s operations management and productivity strategies affect business competitive advantages and the success of strategic changes in the organization and its subsidiary, Converse.

Strengths (Internal Strategic Factors)

Nike’s strengths are the internal factors that reinforce or empower the business. These strengths are considered positive indicators of athletic goods business potential and success in this internal analysis component of the SWOT analysis model. Nike uses the following strengths for business growth and development:

  1. World’s strongest sporting goods brand
  2. Effective product innovation for competitive designs
  3. Strong control on a global product distribution network

Nike has the strongest and most valuable sporting goods brand in the international market. In the SWOT analysis model, this internal factor functions as a strength that the company can use to improve its industry position against other athletic and leisure goods businesses. Nike also has the strength of product innovation, which is a factor that makes its footwear products competitive. Product innovation contributes to product quality and attractiveness, and influences business profitability despite aggressive competition in the sporting goods market. The organizational culture of Nike Inc. affects human resource support for such a strength noted in this SWOT analysis. On the other hand, strong control on product distribution is an internal factor that strengthens the athletic shoes company by optimizing its ability to reach customers. This strength in the SWOT analysis of Nike Inc. points to the importance of retailers and sales channels in the growth of the business. For example, the company’s basketball and tennis shoes are sold through various retailers and platforms, such as Amazon, Costco, eBay, and Walmart. In addition, company-owned NikeTown stores contribute to this business strength by supporting internal control on product distribution and sales.

Nike’s Weaknesses (Internal Strategic Factors)

Business weaknesses are barriers that prevent Nike from maximizing its performance. In this internal analysis component of the SWOT analysis, such factors limit the growth of the sports shoes, equipment, and clothing business. The following weaknesses are relevant to this case of Nike Inc.:

  1. Limited network of company-owned retail locations
  2. Limited diversification of production locations
  3. Corporate image issues linked to labor practices

The limited network of company-owned retail locations makes Nike highly dependent on other retailers. The selling prices of the company’s sporting goods are subject to the influence of large retailers, such as Walmart. In this SWOT analysis, such an internal factor weakens Nike’s control on its product distribution and sales. In addition, the limited diversification of production locations is considered a weakness in this SWOT analysis of the footwear and equipment business. This internal factor refers to the company’s reliance on a small number of large shoes, apparel, and equipment production facilities that are mainly located in Asia. Such a business condition subjects the company to economic and sociopolitical trends in the region, in addition to the trends enumerated in the PESTEL/PESTLE analysis of Nike Inc. On the other hand, the corporate image issues linked to labor practices in footwear, equipment, and apparel factories contracted by the company are a weakness relevant to this SWOT analysis. This internal factor affects brand image, consumer perception, and investor confidence, but Nike’s corporate social responsibility strategies and stakeholder management efforts partially address such a weakness.

Opportunities (External Strategic Factors)

Opportunities pave the way for Nike Inc.’s further growth and development in the global market. In the external analysis component of the SWOT analysis model, such opportunities can help improve the sporting goods business. Nike has opportunities for the following:

  1. Stronger market presence through additional company-owned retail locations
  2. Higher competitiveness of products through advanced technology
  3. Healthier customer perception of the business through policies for labor and employment practices

The opportunity for a stronger market presence involves establishing additional company-owned retail locations, such as NikeTown stores, to attract more athletes and non-athletes as customers. This SWOT analysis calls for brick-and-mortar locations to support the company’s distribution and sales of athletic and leisure footwear, equipment, and apparel. Company-owned stores can also function as a high-visibility branding strategy that reinforces Nike’s marketing mix or 4Ps. In addition, this SWOT analysis includes the opportunity for higher competitiveness of the company’s products, such as sneakers. This external factor depends on Nike’s success in integrating advanced technologies in its business processes, including product design and development. For example, cutting-edge technologies can make production processes more efficient, and increase the durability of the company’s running shoes and golf equipment and accessories. In dealing with this part of the SWOT analysis, increasing product competitiveness may require changes in Nike’s organizational structure or corporate structure, in support of new personnel or resources for new technologies. Moreover, the company can improve customer perception and stakeholder relations through enhanced policies and requirements for contract manufacturers’ labor practices.

Threats against Nike Inc. (External Strategic Factors)

Threats to the business can decrease Nike’s industry position. These threats are external factors that harm corporate image and lower the competitiveness of the company’s shoes, equipment, and apparel. The following threats are relevant to this external analysis component of the SWOT analysis of Nike Inc.:

  1. Tough competition
  2. Imitation of sporting goods
  3. Rapid technological innovation among industry players

Competitors, such as Adidas and New Balance, are the biggest threat to the company, imposing a strong force against the business, as shown in the Porter’s Five Forces analysis of Nike Inc. In the SWOT analysis model, tough competition is an external strategic factor that threatens the company’s market share for sporting goods. Another threat to Nike is the imitation or counterfeiting of its products. Small and large competing firms can develop similar footwear and clothing designs, and sell their products in markets that do not have adequate legal protection for patents and other intellectual property. This external factor is considered in the SWOT analysis as a negative influence on Nike’s revenues. For example, low-cost counterfeit shoes and accessories can shift customers away from the company’s authentic products. On the other hand, rapid technological innovation is another threat relevant to this SWOT analysis of Nike Inc. This external factor refers to the potential obsolescence of the athletic shoes company’s technological assets. Such obsolescence presents opportunities for sporting goods competitors to increase their market shares through their own technological advancement. The threats in this SWOT analysis point to the importance of Nike’s generic strategy for competitive advantage, and intensive growth strategies for supporting competitiveness despite competition, imitation, and rapid technological change.

Insights and Recommendations – SWOT Analysis of Nike Inc.

This SWOT Analysis of Nike shows that the business organization has the strengths to support its global market leadership. However, the company must address its weakness of limited diversification of production locations, and the threats of competition and imitation of sporting goods. Based on the internal and external factors in this SWOT analysis, a recommendation is for Nike’s diversification of production locations as a way to reduce regional risks. In addition, the company can establish new marketing agreements with firms like Facebook, Google, and Home Depot, in order to counteract the negative effects of competitors and counterfeit sporting goods. Such agreements are a strategic approach for addressing some of the business challenges stated in this SWOT analysis of Nike Inc.