SWOT analysis of Nike

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SWOT analysis of Nike

This detailed SWOT analysis of Nike aims to examine the strengths and the weaknesses of Nike. It also aims to examine the opportunities the company should explore and the threats it should keep an eye on. Nike, Inc. is an American multinational corporation headquartered in Oregon, USA. It was founded by Phil Knight and, Bill Bowerman in 1964 and was originally named as Blue Ribbon Sports (BRS).

Strengths of Nike

As of March 2019, Nike operates more than 1100 retail stores worldwide, and its products are sold in more than 160 countries. It designs, manufactures, and sells footwear, apparel, equipment, accessories, and services around the world. In fact, it is the global market leader in athletic footwear and apparel. With one of the most recognized logos in the world (swoosh) and a number of brands in its portfolios e.g. Converse, Hurley Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Dunk, and Air Max, Nike stands out very clearly in a highly segmented market of sportswear.

Many commentators argue that much of Nike’s success can be attributed to its brilliant marketing campaigns. Nike has been using endorsement deals and sponsorship agreements with some of the world’s elite sports celebrities and professional sports teams for a long time. In this regard, some of the greatest sports personalities to mention are as follows; Michael Jordan, Serena Williams, Maria Sharapova, Roger Federer, Rafael Nadal, John McEnroe, Andre Agassi, Pete Sampras, Romario, Eric Cantona, Ronaldo, Ronaldinho, Cristiano Ronaldo, Thierry Henry, Didier Drogba, Wayne Rooney, Neymar, Harry Kane, Eden Hazard, Kylian Mbappé, Tiger Woods, Sebastian Coe, Carl Lewis, Jackie Joyner-Kersee, and Michael Johnson.

Nike has received a number of awards and accolades over the years. For instance, in 2018 it was ranked #5 in the Top 10 Most Attractive Employers in the US by Universum, and #2 in the list of the Happiest Companies to Work for by Career Bliss. Likewise, it was ranked #9 in the list of Most Admired Employers for Millennials by Morning Consult, and #12 in the list of World’s Most Admired Companies by Fortune in 2017 (Nike, Inc. 2019).  Nike also received a number of prestigious awards in the year 2015 and 2016.

Weaknesses of Nike

Though Nike’s marketing strategies have been really successful, it should be remembered that sponsorship agreements are very expensive. For instance, Nike spent $11.5 billion, nearly a third of its sales, on marketing and endorsement contracts in 2018 (Meyersohn, 2019).

Nike has drawn a number of criticisms over the years. For example, it has been accused of contracting with factories that violate employment laws in countries such as China, Vietnam, Indonesia and Mexico. These factories are widely known as Nike sweatshops and have been accused of failing to provide their workers with satisfactory working conditions. Exploitation of cheap labour, and the use of child labor in Cambodia and Pakistan have also tarnished Nike’s brand image. In fact, in 1996 Nike was heavily embarrassed when a US magazine featured a photograph of a young Pakistani boy sewing together a Nike football (Wazir, 2001).

Opportunities for Nike

Nike can grow further into the US market, as the home market still shows potentials for growth. In fact, Nike’s decision to open a flagship store called ‘House of Innovation 000’ in the heart of New York City shows its determination to continue to dominate the US market. By building upon its strong global brand recognition, Nike should also explore growth opportunities in new cities and towns of some of the emerging markets such as India, China, Brazil, and others.

The demand for fashionable, versatile wear with wider functionality and trendy sportswear is ever growing. Nike can avail of this opportunity by introducing new products. It in fact, has proven its expertise in designing and manufacturing new products many a times before.

Threats to Nike

Threat is the last element to address in the SWOT analysis of Nike. Nike faces a fierce competition from Reebok, Adidas, Puma, and Under Armour. The industry is highly fragmented with many brands competing, putting enormous pressure on Nike. Likewise, the availability of low quality and counterfeit products are also a threat.

Nike’s operations are spread out across the world. While it is a recognition of Nike’s might, it also presents certain challenges. For instance, fluctuations in currency rates, trade barriers, and trade wars between countries (e.g. between the USA and China) may turn out to be very challenging for any company.

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Last update: 30 April 2019

References:

Meyersohn, N. (2019) Nike’s stock falls after Duke star is hurt as his sneaker comes apart, available at: https://edition.cnn.com/2019/02/21/business/nike-zion-williamson-shoe-duke/index.html (accessed 30 April 2019)

Nike, Inc. (2019) About us, available at https://jobs.nike.com/about (accessed 30 March 2019)

Statista (2019) Total number of Nike retail stores worldwide from 2009 to 2018, available at: https://www.statista.com/statistics/250287/total-number-of-nike-retail-stores-worldwide/ (accessed 28 March 2019)

Wazir, B. (2001) Nike accused of tolerating sweetshops, available at: https://www.theguardian.com/world/2001/may/20/burhanwazir.theobserver (accessed 25 March 2001)

Photo credit: Pixabay

Author: Jo David

Jo David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.