Nike Inc. is one of the largest manufacturers of apparel and design products, primarily focusing on athletic footwear and related products. The company is involved in international trade relations around the world, designing, developing, and manufacturing its original products. This essay will attempt a SWOT analysis to identify the strengths and weaknesses of the company, as well as its potential opportunities and risks. Thus, a full-fledged understanding of the principles of operation on which this brand is based will be created.
In a generalized environment, Nike’s loss of demographics due to rising age and declining association with sports is a major concern. Nike strives to show its advantage over other brands in an equal environment, as evidenced, for example, by the brand’s long-term coexistence with such titans as Adidas and Reebok. Nike’s competitiveness is not in question and is considered to be their strongest force if applied to The Five Forces Analysis. However, their monopoly in the market is complicated by the presence of large rival brands and young companies aiming to take a segment of the market from Nike.
At the same time, it should be borne in mind that in the modern world, the competition between rival companies is becoming more and more aggressive. Accordingly, opposing companies may use methods that are outside the ethical sphere of Nike. At the same time, companies are additionally threatened by constantly emerging young companies that are more energetic and position themselves as “killers” of big brands. This term means that young companies provide an alternative to a popular brand that is of lower quality in production but significantly more affordable. Thus, the company is deprived of a large segment of the market, which requires additional financial influence to replenish, which is also unprofitable for the company.
Speaking about the strengths of the Nike brand, the first thing that draws attention to itself is its grandiose scale. Nike’s signature checkmark and its iconic “Just Do It” slogan has proven to be extremely effective in influencing a mass audience. The already established popularity of the brand, provided by outstanding design and marketing solutions, is perhaps its main strength. The established reputation of the brand and its widespread popularity allow Nike, as a company focused on sportswear, to enter into collaborations with famous athletes. Thus, the star power of the brand is only further enhanced by the mutually beneficial contract concluded with the sports star. A large amount of the company’s budget is spent on creative advertising and marketing, which ensures its popularity.
Nike is distributed all over the world, but its production principle consists of the refusal to localize production. The company’s activities can be described as mobile because the company is in constant search of financially profitable production options. The logistics industry of the company operates according to the philosophy of globalization, in which the most successful business is supported by the presence of transnational ties. However, at the moment, such principles of production are more of a difficulty for the company than an advantage.
The situation of border closure and sanitary restrictions on production conditions cannot but impose a great additional burden on the company’s activities. Thus, production slowed down in the era of a pandemic represents an impressive weakness for the company. It should be noted, however, that Nike was able to capitalize on its reputation in the era of the pandemic by donating over 30,000 pairs of specifically designed shoes to frontline medical workers (Johnson, 2020). However, the company still requires some restructuring in the production and localization aspects to be prepared for similar emergencies on a global scale in the future.
Perhaps at this stage of the company’s existence, Nike, with such brand appeal and power of influence, could expand its production space. This implies that the brand could go beyond sportswear design. A feasible opportunity for Nike is product diversification, which is also offering a fresh design perspective that characterizes the company. The company is the largest in its industry, but at the same time, its principle of market dominance is conditioned by the defined by healthy competition, which has its threats.
Thus, a possible strategy is a thoughtful and advertised entry into other manufacturing industries, for example, covering the entire market of sports accessories. Nike could also develop a more profitable and more affordable line of budget footwear that would expand the brand’s reach without putting additional pressure on production. The process of diversification, bringing variety to its range of products, could easily take Nike to other markets.
At the same time, the strength of the brand will be impressive enough for Nike to be effectively protected from financial failure. An alternative strategy to building competence would be to cross alliances with other companies that pose a threat to Nike. By teaming up with cheaper manufacturing forces, the company could develop more affordable footwear, and expand its sphere of influence, while neutralizing competitive young firms.
Thus, in the last part of the work, it is required to give a balanced assessment of the implementation of the above strategies. First of all, the company needs to expand its workforce to include designers and manufacturers of other accessories, such as glasses or sporting goods. Then it is required to determine the place of production, but at the same time to avoid criticism for harmful manufacturing and air pollution. In parallel with the production of new series of products, Nike needs to develop a special advertising campaign. Perhaps given the already committed contracts with sports stars, Nike should involve celebrities in advertising to ensure public attention. Thus, taking into account all the strengths, weaknesses, and external threats, Nike will have the opportunity to bypass its competitors and seize new markets.
Johnson, L. M. (2020). Nike will donate 30,000 shoes to frontline workers fighting Covid-19. CNN Business. Web.