Introduction
For organizations to survive during their inception or throughout their life, it is vital to carry out an examination of their internal strengths and weaknesses as well as the external opportunities, threats, and trends. This is the epitome of SWOT analysis, and it enables businesses to determine their current position in the market they operate in and the trajectory to take the company in the future (Rauch et al., 2015). The knowledge of internal and external environments is vital in gauging whether a corporation will thrive or succumb to the competition by rival companies. This paper seeks to undertake a SWOT analysis to show the inherent strengths and weaknesses along with the external growth opportunities, threats, and trends that could influence the future of Nike.
Environmental Analysis
For Nike to realize its goals and mission, both internal and external environments will play a key role hence the need for their analysis. In the study of intrinsic components of the business environment, Nike will have to examine its innate strengths and weaknesses. A key strength that Nike possesses is the existence of a well-established competitive strategy (Jason, 2015). This is enhanced by the intensive marketing campaign that has steadily scaled up brand familiarity for years.
Another key strength that works for Nike’s success is the well-established company structures with offices in forty-five different countries worldwide. This has significantly impacted on the availability of the products Nike offers globally, which is another strength possessed by the giant corporation. Nike also prides itself with more than thirty thousand employees globally who ensure Nike’s efficiency in its ventures.
Regarding processes and systems, Nike’s strength is exhibited in the exclusive ability to supply lightweight shoes with the inclusion of linarite foam material. This is a technological advantage as well and has had immense contribution to the good reception rates of Nike’s product worldwide. Nike has also built a culture that encompasses professionalism, and this action has seen the firm maintain its competitiveness in the marketplace.
With resources such as the chain of retail stores in Nike town, the company has the strength of distributing its products. This makes the firm capable of carrying out a forward integration strategy. Another strength, which is inherent with Nike, is the ability to relocate to more cost efficient locations given that the corporation owns no physical factories (Jason, 2015). This has enabled the company to employ cost strategies effectively whenever necessary. Finally, Nike’s goal to indulge into numerous rebranding opportunities that have been of great success has been a major building block for the organization.
In spite of the various strengths that Nike has, there still exist some inherent weaknesses which if not well handled could adversely affect the company’s operations. Economic and regulatory forces such as varying currency exchange rates have impacted negatively on the firm’s global marketing. This will, however, be countered by Nike’s strategy to expand its operations to more countries worldwide, a move that will reduce the export transactions of their products.
Nike has experienced setbacks emanating from the historical violation of wage regulations in Vietnam. However, the firm has put in place structures that have sustainably supported the large number of employees it currently has with full compliance to the labor regulations. Nike has also strived to ensure employee welfare to offset the accusations that have loomed over overseas worker exploitation. Another weakness that Nike has had is structural in nature given that for years profits had been largely reliant on the footwear products. Nike is, however, keen on expanding and diversifying its products with the venturing into sunglasses and jewelry product lines.
The firm also needs to examine its external environment for it to identify the best opportunities that are available to trigger its growth. Similarly, the outside environment also poses some threats to the firm, hence the need to scrutinize it and identify the trends that could be prevalent.
There are several opportunities that Nike can make use of and prompt its growth. Regarding social and environmental concerns, using big time innovations Nike has seen the need to produce sportswear by use of waste from conventional manufacturing. Besides, Nike has been a leader in innovation with the introduction of the Nike HyperAdapt 1.0 shoe, which features the self- lacing technology. The firm also can expand its international markets, which will be a big stride towards the expansion of brand recognition. Given Nike’s past accusations, controversies pertaining its trading, and production practices, the firm has the opportunity of rebuilding its image (Wakefield, 2010). This is by complying with economic trade regulations as well as labor laws. The worldwide economy and the emerging trend of advocacy for corporations to go green have set the stage for Nike to venture into projects boosting the economy as well as encouraging recycling.
The external environment has also created threats for Nike especially with the volatility of the financial conditions in the economy. Currency fluctuations have also hardly hit on the firm since it has operations internationally. Nike has also had seasonal competitors such as Adidas, who have aggressively vied for a bigger share of the market. With these competitors producing quality products Nike’s profits margins are at the threat of decreasing. Emerging trends such as being eco-friendly so as to maintain the corporation’s reputation is also threat facing Nike. Consumers have also turned out to be sensitive to prices a behavior that leads them to acquire the most cost effective products. Nike, therefore, has to readjust its price strategy to maintain such consumers given the wide range of products from its competitors.
A SHOTT Table
Given the above examination of Nike’s strengths, weaknesses, opportunities, threats and trends, Nike is capable of expanding to the sports sunglasses and jewelry product lines. This is mainly due to its strength of having been a market leader in a segment that will also double up as the market for the new product. Besides, Nike’s significant presence worldwide coupled with the well-established consumer loyalty will lead to a desirable reception of the two new products by its loyal customers. With the high innovative culture within the corporation, Nike will easily establish a supply chain that will make use of its resources such as the retail stores in Nike town. The structures of the company also favor smooth adoption of the new product line’s supply chain given that it has offices in over forty countries worldwide.
Nike has also proven to be a flexible firm through the ability to move freely to locations that allow the company to gain cost effectiveness. The firm will, however, face several issues in its bid to adapt to the new operations. This includes the need to comply with economic and labor regulations whereby the firm has not fared well in the recent past (Ali et al., 2015). Emerging trends such conducting eco-friendly operations are also opportunities the firm will have to weigh into.
The following are hypotheses that can be drawn surrounding these issues that Nike is posed to face.
There is a major relationship between Nike’s new product exports and those of the existing products.
There is a significant relationship between the new product line’s/ jewelry’s profits and that of the existing products/ footwear.
Is there any significance difference between Nike’s new product and the existing ones?
Is there any significant difference between the new product lines and the existing footwear
Conclusion
Survival of modern companies will greatly depend on both their internal environmental factors as well as the external factors. Thus, it is imperative to scrutinize these aspects carefully using the SWOT analysis. Nike, for instance, will need to deal with the growing dependence on profits from footwear and venture into the opportunities of growth available in their external business environment. Venturing into a jewelry and sports glasses product line will be a viable option given that they have for years had a significant market share in the sporting arena. SWOT analysis, therefore, proves to be an essential tool in assisting them to make this decision.
References
Ali, H. A., Abbas, M., Mazar, T. I., & George, S. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management & Economic Research, 6(3), 167-177.
Jason, D. (2015). Nike: Analysis of strengths, weaknesses, opportunities, threats. Retrieved July 16, 2016, from http://www.gurufocus.com/news/325905/nike-analysis-of-strengths-weaknesses-opportunities-threats
Rauch, P., Wolfsmayr, U. J., Borz, S. A., Triplat, M., Krajnc, N., Kolck, M., & Mühlberg, C. (2015). SWOT analysis and strategy development for forest fuel supply chains in South East Europe. Forest Policy and Economics, 61, 87-94.
Wakefield, C. S. (2010). Nike's Shanghai advertising dialectic: a case study. China Media Research, (1), 68.
