Nike Case Study:
Nike is an international company. It is involved in manufacturing apparel related to sports. The firm originated in 1964. At that time this company used to work as a distributor for a Japanese sports shoe manufacturer. However, after gaining much profit from its earlier business, it came up with its own store in 1966 which was situated in California. Nike parted its ways with its earlier distributor by 1971 and started producing its own footwear. In 1972, Nike came up with its first set of shoes and “Nike” which means Goddess of victory got established. Nike did not do much advertising of its products in the initial years. Its first advertisement came on television in the year 1982. Apart from low advertising, Nike still achieved great success and growth by 1980. During that time around it had a contribution of around 50% to the US market in sports shoes. In today’s time Nike is considered as one of the fastest growing companies in the world. The paper will put light on the SWOT and PESTLE analysis of NIKE company.
SWOT AND PESTLE ANALYSIS OF NIKE:
SWOT Analysis of Nike:
The strategy chosen by Nike in the corporate market has its own strengths, weaknesses along with several opportunities and threats which may demand Nike to come up with more robust market strategy in the coming times.
- Strengths– The major strength of Nike is that it is a singular, well- recognised and a reputed brand. It insists that its brand should be used whenever a new subsidiary is acquired by it. It has an extensive and an innovative product range. Further, endorsements by multiple celebrities is another important factor that adds to its strength. This factor of celebrity endorsement has added to a greater profit to the sale of Nike products.
- Weaknesses– Surprisingly, the weaknesses of Nike in a way lies in its strengths only, Being a singular brand, which in a way is a great thing for it, also adds weakness to it. If any damage happens to the brand it will affect the entire reputation and success of Nike. Further, its high reliability on retailers due to owing few shops of its own does not create a very ideal situation for Nike in the market.
- Opportunities– Exploitation of technology via e-commerce in a potential manner adds to the opportunities for Nike in the market. There is great scope of growth for Nike as Nike’s strategy is centrally based on innovative products lines. Moreover, Nike can also enter some untapped markets which could not spend money earlier but now due to advancement, they can invest more money into the businesses. These untapped markets can be explored in developing countries where the scope of growth is far greater.
- Threats– Whenever you are in a business or market, you can never escape from potential competitors. Nike is also vulnerable to threats from sports companies viz. Adidas which has a good share in the market. Nike is in a way under critical situation because of being a singular brand. In recent times, a negative news came which put a bad impression on Nike’s reputation. The report stated that the company is not using appropriate suppliers for producing supplies i.e. Children were used for producing supplies so that the company has to pay less money to its workers. Although Nike was able to come out of this crisis by removing those children but it provided a way to its competitors to gain more shares in the market.
PESTLE Analysis of Nike:
PESTLE analysis involves discussing of political, economic, social, technological, legal and environmental factors determining a business strategy and eventually affecting its success and position in the market. PESTLE analysis will give us a more deep insight into the Nike business strategy.
- Political – From political point of view, there may be some issues that Nike might have to face. The ability of Nike to serve the needs of its customers highly rely upon the efficiency of supply chains and how effectively these supply chains are maintained will determine its success. Therefore, any kind of political unrest which creates a disturbance in these supply chains viz. strikes done by people at both national and local level can create a threat for the company.
- Economical – There are a number of challenges for Nike as far as economics is concerned. As Nike is looking forward to expand its business and market in other countries, it is prone to high cost of penetration in the markets. Not just that expanding its markets in Europe can be difficult due to various entry barriers. Whenever there is a drop in confidence of the consumer it leads to decrease in the spending by the consumer in all the sectors. As a result sports brands also suffer a lot due to this condition.
- Social– With a strong market position and high brand consciousness among consumers, Nike has been able to achieve good social reputation among people in the market. As the markets are becoming more female oriented, Nike also noticed the same trend and its product line nowadays strongly reflect the company’s ability to identify the social changes that take place in the market. Keeping in notice the rising brand consciousness among consumers, Nike has always taken care of its policies and strategies and has always aligned itself with the strong corporate social responsibility policies.
- Technological– Nike has showed great advancement in the field of technology as well. Its designs are always in alignment with the recent trends in technology which keeps it in the forefront. Innovation in products designs has been the saviour of Nike even in the critical economic times and along with this these innovations have kept it ahead of its competitors in the market.
- Legal– There have been really tough times for Nike as far as legal issues are concerned. In particular, the under-age workforce has been active in pursuing legal actions against the companies. The whole success of Nike lies in its ability to follow trade agreements signed at international level and relying with them at all costs. If the company go against these agreements it can be highly damaging for the company‘s integrity and reputation. Hence these issues must be monitored with immense care by the respective departments of the company.
- Environmental– Nike’s business strategy is inclined with the issues of climate change and environmental sustainability. The organisation works on the principles which maintain the sustainability and integrity of the nature. The company shows its responsibility in the corporate sector which is visible from its green approach towards nature.
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