SWOT Analysis OF NIKE

Partial fulfillment by the award of the post graduate diploma in business Management. From Fortune School of Technology and Management in Singapore.

Nike Inc. was founded in 1962 by Bill Bower man and Philip H. Knight as a partnership under the name, Blue Ribbon Sports. Since Germany conquered the domestic market in America, Nike came with low-cost and high quality products for the American people. Today, Nike manufactures and distributes athletic shoes in the global market and 40% of its sales come from athletic apparel, sports equipment,and subsidiary ventures and they have traditional as well as nontraditional distribution channels in more than 100countries globally. Nike has attained a premier position in the market but in 1998, the company has to face the issue of exploiting overseas workers and the altering consumer needs negatively pretentious the sales of Nike. In this report, I have discussed the case history of Nike that majorly covers the child labor problem and the problem of change in consumer’s preferences after which I have done the SWOT analysis and have come up with strategic objectives, market driven strategy Objectives. Furthermore, the marketing strategy is discussed that covers the segmentation strategy, targeting, positioning and channel distribution of Nike and the product, price and promotional strategy it must approve. In the end, I have given some recommendations to Nike’s management to force it towards success.

Contents

INTRODUCTION:

The company Nike has establish its brand with lot of efforts today almost all knows about Nike it is a world famous brand with a good reputation. Knight called his first shoe Tiger and began allocation at path meet. Blue Ribbon in 1971 earned its Swoosh and knight introduces the most important Nike brand line. In 1978 the Blue Ribbon becomes Nike and both years their earnings grow steadily. Due to Nike attention in informal shoes in the 1980, they missed the leaning to aerobic shoe and cut down after allowing Reebok to manage the marketplace.

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MISSION AND VISION:

Nike states in its mission declaration that it entail responsibility commerce in a guilty way, most important to sustainable monetary increase. With the advance in knowledge, Human resource practices, the healthy knowledgeable and skilled employment power, here is extremely small deficient to distinguish organization’. Living being seen to go added than the lowest amount necessary on community issue can draw and keep patrons. This bottle sea green modification attracts concentration to the association; they are view as thoughtful and public liable (Mullins, L. 2005).

A speech, on the construction put into practice of Nike during its make obtainable sequence accuse the association of individual concerned in limited operational circumstances, defiance of hard work civil rights, low salary and pestering of its labor force. Nike takes this information seriously. On the basis of the learning answer the business has make stronger the check of its dealer (Hummels, H and Timmer, D.2004)

OBJECTIVE OF THE STUDY:

Provide an environment which develops people to maximize their contribution to NIKE. Identify focused consumer segment opportunities. Provide quality and innovative services and products internally and externally Establish and nurture relevant emotional ties with consumer segments. Maximize profits.

SWOT ANALYSIS:

Strengths

Nike is a very competitive organization. Phil Knight (Founder and CEO) is frequently quoted as saying that ‘Business is war without bullets.’ Nike has a healthy aversion of is competitors. At the Atlanta Olympics, Reebok went to the outlay of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable reporting.

Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is tough 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. (ynkamat, 2009)

Nike is a global brand. It is the number one sports brand in the World. Its famous ‘Swoosh’ is instantly familiar, and Phil Knight even has it tattooed on his ankle Nike is quite strong regarding its research and development; quite marked regarding its evolving and innovative product choice.

They manufacture high quality at the lowest potential price, if prices rise due to price hike then the production process is made cheaper by changing the place of production. It belongs to the Fortune 500 companies. Nike employs about more than 30.000 people worldwide.

It has a strong sense of marketing promotion by sponsoring top athletes. It uses linarite foam and flies wire materials in order to make the manufactured shoes lighter and more convenient. (Adam, 2009)

Its standing for high quality and innovative footwear .Nike is also known for its innovative marketing .Nike ads are part of the pop culture an impressive achievement. Famous campaigns feature bo Jackson, Michael Jordon, and Tiger Woods the Nikes “swoosh “is highly recognizable world wide .Nikes recent comeback has been greatly helped by increased sales of Nikes apparel. (Robert N. Lussier, 2009)

Political Analysis According to PEST analysis the political enviourment can be taken as strength

The government must create economic policies that will foster the growth of businesses. Nike, fortunately, has been helped by the US policies which enable it to advance its products. The support accorded to Nike by the US government, particularly in the general macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system, form the foundation critical to Nike’s growth. (Cuizon, 2009)

Society Analysis According to PEST analysis the social enviourment can be taken as strength

People are more health conscious currently. Diet and health are getting more prominence. Consequently, more and more people are joining fitness clubs. There is an accompanying demand for fitness products particularly exercise apparel, shoes and equipment. Nike is at the front position of this surge in demand as people are looking for sports shoes, apparel and equipment. (Cuizon, 2009)

Technology Analysis Political Analysis According to PEST analysis the technological enviourment can be taken as strength

Nike uses IT in its marketing information systems very effectively. Nike applies marketing information systems to the economics of improvement, segmentation and differentiation for nearly all of its businesses.

Nike’s leadership status owes in large part to the use of extremely valuable Information Technology, and applying it to every aspect of the product from development to distribution.

Nike, being the world leader in the athletic footwear industry, is able to effectively harness its environment to boost its marketing efforts. This strategy has translated into robust sales of Nike’s products. (Cuizon, 2009)

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.

Nike was for quite some time unwilling to disclose any type of information concerning its partnering companies. It was charged with the violation of overtime and minimum wage rates in Vietnam, 1996, that was seen as having poor working conditions, and that it was also charged for exploiting cheap workforce overseas. (ynkamat, 2009)

Nike was also reported to have applied child labor in Pakistan and Cambodia to produce soccer balls. It was positioned as a subject of criticism by anti-globalization groups due to its unruly and exploited manner that was quite a disaster for its reputation. (Adam, 2009)

In late 2005 founder phil knight resigned from the CEO position at Nike. Since that time Nike has had two CEO s. Nike brand co president mark parker is the companies new president and chief executive officer following the resignation of William D. Perez will Nike ever be able to replace the larger than life founder Phil knight? Another question on the area concerning is that global sales, such as Europe and Asia ,have instead at a much faster pace than domestic sales in the United States. (Robert N. Lussier, 2009)

Economic Analysis According to PEST analysis the economic enviourment can be taken as weakness

In economy, the biggest threat for Nike would be economic recession. During recession, Nike’s growth will be adversely affected. The US economy is experiencing a downturn right now. Consumer purchases are slowing down. Currently, Nike’s feeling the pinch of the economic recession. The Asian economic crisis also affects Nike since its goods are manufactured in Asia. The labor costs and material prices are going up.

Nike’s growth is not just affected by the local economy but also in the international economy. A weak Euro and an Asian recession could mean weak sales for Nike. The overall results in the sales generated by Nike in athletic footwear, however, remained stable. The global market makes up for the variances in sales particularly between peak and lean seasons. (Cuizon, 2009)

Society Analysis According to PEST analysis the social enviourment can be taken as weakness

Nike, however, failed to foresee problems brought about by a sweatshop expose pertaining to labor and factory conditions at production locations in Asia. This caused bad publicity and declining sales as society and consumers

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 utilized to support the brand such as the World Cup (soccer) and The Olympics. (ynkamat, 2009)

The brand is sternly defended by its owners who believe that Nike is not a fashion brand, however, a large number of consumers wear Nike product because they derive a fashion trend rather than to participate in a sport. It is mostly argued that in youth culture, Nike is a fashion brand which also creates opportunities for Nike since its products would become outdated before even the product wears out i.e. consumers will feel the need to replace the product with a newer trend.

There are many international regions that still need tapping and there is need for sportswear and with Nike’s strong global brand recognition, it can initiate in many markets that have the disposable income to spend on high value sports goods.

Nike gives a lot of effort on its corporate marketing mainly through the promotion of corporate brand and sponsorship agreements. (Adam, 2009)

Nike has an opportunity to capitalize on its own Nike Technology. This is a sensor placed in Nike footwear that interacts with Apples iPod to record the distance a runner has completed and the calories that have been burned. Another opportunity will be to capitalize on an endorsement deal with LeBorn James after his NBA playoffs and championship series appearances. Additionally, Tiger woods’ yearly attempt to win all four major Golf Tourments automatically allows Nike to build product campaigns around the Tournaments. (Robert N. Lussier, 2009)

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.

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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. (ynkamat, 2009)

Consumers are constantly shopping around for a better deal that conveys a good quality and if one store charges a higher price for the products, the consumer would try to seek a better deal of the same product in the premises that delivers the same value but cheaper of the two, this type of price sensitivity among the consumers is a potential threat to Nike.

The textile industry unpleasantly upsets the atmosphere, and therefore the organization is constantly struggling to retain its eco-friendly reputation. A recession may lead to job shortages in most of Nike’s worldwide branches. The organization has experienced many adverse publicity feedbacks due to its widespread advertising

‘If you have a body, you are an athlete’ – Bill Bower man said this couple of decades ago. The guy was right. It defines how he viewed the world, and it defines how Nike pursues its destiny. Ours is a language of sports, a universally understood lexicon of passion and competition. A lot has happened at Nike in the 30 years (Adam, 2009)

Specific threat is the contracts that Reebok (now part of Adidas) signed with the NBA and NFL for its apparel businesses. Another threat is the ongoing public relationship s problem pertaining to working environments in the factories producing Nike sneakers. Nike has striven to overcome images of sweatshop conditions, but the problem has been difficult to solve. (Robert N. Lussier, 2009)

Porters five forces

Source:(http://www.google.co.in/images?hl=en&q=porters+5+diagram&um=1&ie=UTF8&source=univ&ei=8UhZTfaOCoXJrQfarcnuBw&sa=X&oi=image_result_group&ct=title&resnum=1&ved=0CCIQsAQwAA&biw=1366&bih=643)

Potential Entrants

Low

Bargaining power of buyers

High

Bargaining power of suppliers

Low

Threats of substitutes

Low

Industries rivalry

High

Refer to appendix 1

CONCLUSION:

SWOT analysis should always be measured by all companies as it helps show companies all their weaknesses and threats. At the same time it also shows what the companies’ strengths and opportunities.

Using this analysis companies can spotlight on their good part of the business and focus more on the bad part to make it good. Also a company can see what factors are external or internal which helps the business in a long run to be more capable

REFERENCES

Adam, 2009. Nike SWOT Analysis. [Online] Available at: HYPERLINK “http://www.mba-tutorials.com/marketing/240-nike-swot-analysis.html” http://www.mba-tutorials.com/marketing/240-nike-swot-analysis.html [Accessed February 2011].

angeletti3, 2005. Nike versus Adidas Case Study and Competitive Analysis. [Online] Available at: HYPERLINK “http://www.echeat.com/essay.php?t=27606” http://www.echeat.com/essay.php?t=27606 [Accessed February 2011].

Cuizon, G., 2009. Marketing Audit of Nike’s Strategies. [Online] Available at: HYPERLINK “http://www.suite101.com/content/marketing-audit-of-nikes-strategies-a94402” http://www.suite101.com/content/marketing-audit-of-nikes-strategies-a94402 [Accessed February 2011].

E, P.M., 1998. In Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.

Gerry Johnson, K.S.W., 2008. In P. Education, ed. Exploring Corporate Strategy. 7th ed.

Phil Knight, 2011. Company History. [Online] Available at: HYPERLINK “http://www.nike.com/nikeihm/about/history.shtml” http://www.nike.com/nikeihm/about/history.shtml .

Robert N. Lussier, D.K., 2009. Applied Sport Management Skills. Human Kinetics.

ynkamat, 2009. SWOT of Nike. [Online] Available at: HYPERLINK “http://www.scribd.com/doc/13163456/swot-of-nike” http://www.scribd.com/doc/13163456/swot-of-nike [Accessed February 2011].