Nike is one of the largest sport networks in the world today. Over the last few decades, Nike has become the symbol of the healthy lifestyle. According to analysts, the share of Nike accounts for almost 95 % of the market of basketball shoes in the USA. In 2015 the company employed more than 56,000 people worldwide. The company is estimated at $ 13.7 billion and is defined to be the most valuable brand in the sport industry. Nike refers to organic type of organization. Since the company is dealing with a complex and dynamic environment, ever-changing external environment, it needs decentralization of power for quick decision-making to more proactive employees that contributes to the rapid adaptability of manufacturing to the environment. At the same time new challenges presented by business environment such as increased competition require identification of the main strengths and weaknesses analyzing financial indicators of Nike for the last three years.
The main strengths of Nike are: huge market share and size of the company, significant brand recognition, positive brand image, innovations, successful financial performance, effective management system, and increased customers' loyalty. Nike successfully implements new strategies in order to remain competitive globally as well as on the national markets. The founder and CEO of Nike, Phil Night, has proclaimed the basic statement of the company: “Business is war without gunfire.” Nike always enters into healthy confrontation with its competitors. For example, at the Olympic Games 1996 in Atlanta, one of the main competitors of Nike, Reebok, sponsored the event, while Nike has sponsored leading athletes, which also gave impressive results.
Nike has no factories and permanent production base, making the organization system flexible and efficient. Nike applies strategies of lean production in order to minimize costs presuming high-quality of products. The company allocates resources in most appropriate way studying the manufacturing possibilities of different countries. As the result, high quality allows Nike to implement innovative ideas and to quickly expand its production capacity developing new products. Moreover, Nike is global brand and all the marketing campaigns are aimed at increasing brand awareness. The company focuses on its transnational strategy that allows adjusting to rapidly changing environments of particular markets.
Nevertheless the company has some weaknesses such as lack of balance in performance of its particular sectors (the vast part of incomes is received from sport shoes), the scandals associated with mistreatment of workers in China split the corporate image. Nike produces a wide range of goods, from soccer balls to clothing for snowboarding, but most of the profits Nike receives from sales of sport shoes. That makes Nike very dependent on this market. Retailing sector is very price sensitive. The choice of pricing policy is key component of overall success of the company. Moreover Nike was accused of violating working conditions in Vietnam and China, the exploitation of cheap labor and polluting production for several times. In context of sustainable business vision, mistreatment of labor force negatively influence the corporate image partially decreasing loyalty of customers. Nike sells its products all over the world, so costs and margins can be unstable in the long run taking into currency rates. In other words, Nike can produce or sell goods at a loss without deep analysis. Almost all international brands face with such a problem. On the sporting goods market competition is very strong. Many competitors of Nike launch alternative brands to take away market share.
Conclusions
On the basis of this research it is clear that Nike actively promotes its products, and at the moment it is one of the most recognizable brands in the world. All these factors give great freedom of action and opportunities of entering new segments and markets for the organization. However, most of the company's revenues are concentrated in athletic shoes, making the company vulnerable to risk if the market starts to lose customers. Although production policy of the company is efficient in reduction of risks making production process able to respond to the slightest changes in the industry, numerous complaints by global organizations on working conditions and environmentally unfriendly production in Nike Company partially decreased the loyalty of customers. The analyzed financial indicators of Nike show positive trends of its performance. Such tendency increases the compatibility of the company allowing limiting impact of internal weaknesses.
References
Annual Financial Statements. n.d. 23 July 2016 <http://www.investors.nike.com>.
Lee, Steven. The story of Nike. London: LPP, 2016.
Worldbank official website. n.d. 23 July 2016 <http://data.worldbank.org>.
