Nike SWOT Analysis - FourWeekMBA

Nike is an American multinational corporation founded by Bill Bowerman and Phil Knight in 1964.

The core focus of the company is supplying athletes with wearable products that increase sports performance.

This includes footwear, apparel, equipment, accessories, and other athletic wear. In recent times, the company has moved into athletic leisurewear.

Let’s now take a look at the Nike SWOT analysis.

Strengths

Brand image

Nike is a brand that enjoys global recognition.

The famous Nike “swoosh” is instantly recognizable and the Nike brand alone was recently valued at approximately $30 billion.

Research and development

Allowing Nike to continually deliver innovative products and significantly lower manufacturing costs per unit.

Market leader in sport’s shoes and apparel

With a focus on quality, innovation, sustainability, and customer experience, Nike has maintained leader status in what is a very competitive market.

The company has secured 31% of the global athletic footwear market alone.

Marketing capability

In the past two years, Nike has spent a combined total of $7.2 billion on marketing.

The company is also skilled at delivering successful marketing campaigns on a range of platforms to increase market share.

Weaknesses

Labor controversy

Every Nike manufacturing facility is outside of the United States, with China, Vietnam, Thailand, and Indonesia accounting for all production.

The company has been criticized for poor working conditions with issues centered on forced labor, child labor, and low wages.

A lack of diversification

42% of revenue comes from the US market, arguably leaving Nike dependent on this major source of income.

Culture

Nike has had well-documented problems with organizational culture in the past.

The company has faced various legal challenges over employee discrimination, with one former employee claiming he was treated unfairly as a result of his Croatian heritage.

Nike was also taken to court over its toxic culture for women and violation of the Equal Pay Act.

Opportunities

Emerging markets

Nike has an opportunity to strengthen its global presence in emerging economies such as India, China, and Brazil.

Product development

Although the company prides itself on innovative athletic products, many consumers wear Nike products as a fashion statement.

This presents an opportunity for growth, provided that a broader focus does not dilute brand image.

Supply chain integration

To some extent, Nike relies on a host of independent manufacturers.

Acquiring these manufacturers could lead to process efficiencies, streamlined distribution, and economies of scale.

Threats

Counterfeit products

Given that Nike is such a globally dominant brand, imitation in the form of counterfeiting is a constant threat.

Low-quality counterfeit products have the potential to affect revenue generation and brand image.

Patent disputes

In such a competitive market, it is almost inevitable that there will be conflict over certain patented products.

One such example is the public battle between Nike and Adidas over patents concerning the design of a line of shoes.

Trade tension

Escalating tensions between the United States and China pose a serious threat to Nike.

The Chinese consumer market has shown renewed interest in Nike products and the company is also reliant on China for 36% of its manufacturing operations.

Related to Nike

Who Owns Nike

The Knight family owns Nike. Indeed, the top individual shareholder is Travis A. Knight, son of Philip Knight, co-founder of Nike, with a 7% stake in Class A stocks and a 2.7% stake in Class B stocks. On the other hand, the Knight family also controls the company tightly through their Trusts and an LLC called Swoosh (the Nike logo’s shape is a “swoosh”). Through individual shares, Swoosh LLC, and Travis Knight’s irrevocable trust, the Knight family controls over 97.1% of Class A and 21.4% of Class B stocks.

Nike Business Model

Nike follows a wholesale strategy combined with a very strong direct distribution. The company makes money primarily from footwear. As of 2022, over 62% of revenues came from footwear and 29% from apparel. The most successful Nike brand is the Jordan Brand, which in 2022 generated $5.2 billion in revenue. Nike is the master of demand creation and generation through its influencer campaigns, where athletes become an inspiration for everyday people.

Nike Strategy

Nike leverages both a wholesale and direct distribution strategy. Indeed, while still in 2022, most sales come from wholesale distribution, in reality, since 2020, Nike has been ramping up its direct distribution through its NIKE stores and e-commerce platform (SNKRS).

Nike Revenue

Nike generated most of its revenue from footwear. Indeed, in 2022, Nike generated over $29 billion in revenue from footwear, over $13.5 billion in apparel, $2.35 billion in equipment, and over $1.6 billion from the Converse brand.

Nike Financials

Nike generated over $47.7 billion in revenue and over $6 billion in net profits in 2022, compared to over $44.5 billion in revenue and almost $5.8 billion in 2021.

Nike Mission Statement

Nike’s vision is “To bring inspiration and innovation to every athlete in the world.” At the same time, its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities where we live and work.”

Nike SWOT Analysis

Nike Competitors

Jordan Business Model

Jordan follows a demand generation business model, where its iconic brand works as a propeller for the sale of its footwear and apparel, that in 2022 generated more than $5 billion in revenue for Nike or more than 10% of its total revenue.

Converse Business Model

Converse is an independent brand part of Nike’s family of brands. Indeed, Converse generated $2.35 billion in revenue in 2022. And like Nike, it follows an heave Wholesale distribution strategy, where most of its sales are made, through footwear. However, Converse follows also a direct distribution approach where it sells directly via its monobrand stores.

SWOT Analysis Case Studies

McDonald’s SWOT Analysis

Nike SWOT Analysis

Samsung SWOT Analysis

Samsung was founded in South Korea in 1938 by Lee Byung-Chul. Originally a trading company, it took Samsung 22 years to become the fully-fledged electronics company that most people recognize today. Indeed, the company is a leader in technological innovation through telecommunications, electronics, and home appliances.

Costco SWOT Analysis

Costco is a large American multinational corporation with a focus on low-cost, membership-only retail warehouse clubs. Costco is the 4th largest retail operator in the world, operating 785 warehouses in 10 different countries. Indeed, it has enjoyed rapid success growing from zero to $3 billion in sales within six years.

Walmart SWOT Analysis

From humble beginnings just over 50 years ago, Walmart has grown to become the world’s largest retail company. A single small discount store in Arkansas has now expanded to over 11,000 stores in 28 countries. Some reports suggest that the company now makes $1.8 million of profit every hour.

Uber SWOT Analysis

Headquartered in San Francisco, California, Uber started as a peer-to-peer ridesharing platform. In more recent times, the company has moved into food delivery, rental cars, and bike-sharing. In one form or another, Uber now has a presence in over 900 cities worldwide.

Disney SWOT Analysis

It would be hard to argue the case for a more recognizable entertainment brand than Disney. Disney is of course synonymous with Walt Disney, but it was Walt and his brother Roy who started the company in 1923 in Burbank, California. Disney content is now broadcast on over 100 channels in 34 different languages across the globe.

Coca-Cola SWOT Analysis

Coca-Cola is the market leader of the soft drink industry. It is also the most widely recognized brand, with a Business Insider study revealing that a staggering 94% of the world population recognizes the red and white logo. However, Coca-Cola faces significant challenges with increasingly health-conscious consumers and less access to water resources.

Ford SWOT Analysis

Founded in 1903 by Henry Ford and is the fifth-largest family-owned company in the world. Ford is a globally recognized brand in the automotive industry for a couple of reasons. First, Henry Ford is well-known as the inventor of the production line and thus the modern automobile industry. Today, Ford has also maintained relevance as the seventh-largest car manufacturer worldwide, selling a range of passenger cars, trucks, and vans.

Tesco SWOT Analysis

Tesco was founded in 1919 by Jack Cohen, as a small group of market stalls. After rapid expansion in the following years, the company became the largest retailer in the UK and is now the second-largest in the world. To put their dominance into perspective, consider that Tesco serves around 66 shoppers per second across 7000 retails stores, delivering approximately $180,000 worth of sales every minute.

Nestlé SWOT Analysis

Nestlé is a large multinational food and beverage manufacturer with more than 2000 brands spread across 197 countries. Some of Nestlé’s well-known brands include Nescafe, Kit-Kat, Purina, Aero, Butterfinger, Maggi, and Haagen-Dazs. Originally a producer of infant food in 1867, it is now considered to be the world’s largest food manufacturer.

Amazon SWOT Analysis

Amazon is among the most diversified business model in the tech industry. The company is well-positioned to dominate e-commerce further. And while its online stores have tight profit margins, Amazon still unlocks cash for growth, while consolidating its dominance in the cloud and grabbing new opportunities like voice.

Facebook SWOT Analysis

Facebook, with its products, with its strong appeal, and consumer brand has a solid business model, threatened in the last years by privacy concerns, which open up the way to potential regulation to break up the company. If that will not happen, Facebook will have the chance to expand to define other markets like VR.

Starbucks SWOT Analysis

Starbucks is a global consumer brand with direct distribution, recognized brands, and products that make it a viable business. Its reliance on the Americas as a primary operating segment makes it a weakness. At the same time, Starbucks faces risks related to coffee beans price volatility. Yet the company still has global expansion opportunities.

Tesla SWOT Analysis

Among the most recognized car manufacturers, Tesla is valued more than the combined market capitalization of GM and Ford. While the company’s direct distribution is a strength, its lack of financial viability is a weakness. Competition is a future threat. However, if Tesla defines a new market for car manufacturing its potential growth will be massive.

Netflix SWOT Analysis

Netflix is among the most popular streaming platforms, with a subscription-based business model. The brand, platform, and content are strengths. The volatility of content licensing and production are weaknesses. The streaming market is a potential blue ocean. Inability to attract and retain premium members, and its fixed long-term costs are threats to its business model.

Apple SWOT Analysis

Apple can leverage a strong consumer brand and set of successful products as a strength. Yet the company is still too reliant on the iPhone as a primary revenue stream. Though Apple is working to open up new markets as an opportunity, it has to make sure to sustain its stores’ sales.

Google SWOT Analysis

Google’s strength is its strong consumer brand. The company is grabbing new opportunities by opening up industries like voice search and consolidating in industries like the cloud. As a weakness, its revenues primarily come from advertising. A primary threat is the quick change of search and potential intervention by regulators.

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