The company sees enough opportunity in … Nike delivers innovative products, experiences and services to inspire athletes. The report stated: Nike scored the following in the report's themed scores: 1. Nike has recently been ranked by Fortune as the Top 24 of the Most Admired Companies and Top 1 in the apparel industry. Nike is the biggest sneaker maker in the U.S., putting it ahead of rivals Adidas and Under Armour. Nike’s financial performance also looks set to improve due to its investment in creating a more efficient business. We use cookies for website functionality and to combat advertising fraud. The company’s effective marketing campaigns also contribute to this strength. Nike's drop in 2016 was certainly a shock, but it could also have provided a great opportunity. The company also has the opportunity to improve its presence in developing markets to benefit from these markets’ high growth potential. It is the world’s largest supplier of athletic shoes and apparel. "The Greater China marketplace continues to be fueled by higher sports participation, with 38,000 runners taking part in the Shanghai marathon, while nearly four times that many consumers tried to sign up," said Nike Brand President Trevor Edwards in the most recent earnings call.Â, Western Europe, which is Nike's biggest international segment, has been another outstanding region lately. Of course, Adidas is a powerhouse in Europe, particularly in soccer. That might seem odd, given the region's own relatively slow growth, but sales in Western Europe grew 12% year over year, the 13th consecutive quarter of double-digit sales growth there. Nike’s strengths are the primary drivers of the company’s growth and global leadership in the sports shoes, apparel and equipment market. SWOT analysis. "The Greater China marketplace continues to be fueled by higher sports participation, with 38,000 runners taking part in the Shanghai marathon, while nearly fo… The company recently launched the first true product of that center, a line of women's wear called UA Arris Project. This is just one more way the company is looking to meet its customers where they are and grow its online sales strategy further. Its dominance in sports retail is undeniable. (2006). In addition, imitation remains a threat, especially in developing countries with poor legal protection for patents. Leigh, D., & Pershing, A. J. The first of that concept -- the massive new Soho New York location -- integrates mobile check-in and shopping features, as well as touchscreens on the walls to allow consumers to order and ship gear home if they prefer.Â, Nike also launched a Nike+ smartphone app last summer. This weakness limits Nike’s global growth. Under Armour launched a manufacturing innovation center in Baltimore in 2016 called Lighthouse, which features 3D printers, body scanners, and other technology. Copyright by Panmore Institute - All rights reserved. “They can lead on how to do this,” Temin said. "Â, Nike famously killed its wearable segment and strategy in 2014, but it hasn't stopped investing in digital growth. The external strategic factors that facilitate business growth are covered in this component of the SWOT Analysis. Improve labor/employment practices 2. Even though Nike is one of the major players in the sports shoes, equipment and apparel market, some threats could limit or reduce the company’s performance. Stock Advisor launched in February of 2002. Nike's focus now is on increasing its digital sales strategy to drive sales through Nike.com. However, the company must address concerns regarding competition, labor practices, imitation and patent protection. But when it comes to training, that’s not a bad thing: These are fast-digesting carbs, which means they’re readily available to use for energy during exercise, says Amadeo Salvador, a PhD candidate at the University of Illinois at Urbana-Champaign. Nike already gets more than half of its sales from outside the country, but it could still grow further internationally. Also, even though Nike Inc. has expanded its product mix through the years, the resulting product lines are still limited in capturing a larger share of the sports shoes, equipment and apparel market. 1996: Nike establishes a department tasked with working to improve the lives of factory laborers. Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. This report captured the areas where companies needed to take actions to eradicate forced labour from their supply chains. Nike already gets more than half of its sales from outside the country, but it could still grow further internationally. A Nike spokesperson told The New York Times that Parker had read the letter, ... That can create at least some incentive to improve things. When you look back through history, Adidas was the only brand in sports that had a very strong connection to culture. The following are the major opportunities in the case of Nike Inc.: Nike has the opportunity to improve its labor practices to address controversies in this area of the business. Potatoes pack a lot of starchy carbs — a large one contains about 65 grams. Nike is the largest sports brand in the world, worth close to $16 billion. Like so many things, it is not what is outside, but what is inside that counts." Nike chose to release their factory data, which led others to follow suit, now allowing competing companies to work together to improve conditions. Market data powered by FactSet and Web Financial Group. Its tweets are short, punchy and compelling, and nearly always included the hashtag #justdoit or other community-building hashtags like #nikewomen. Nike learned this the hard way in the mid-1980s when it lost out on the lucrative aerobics market to Reebok. The external strategic factors that facilitate business growth are covered in this component of the SWOT Analysis. But also, by removing this summary, Nike may be asserting its design credentials – “we don’t need your reviews”. Nike’s women’s business grew by nearly 12% to $5 billion in 2013, outpacing the company’s overall 9% top line growth. Nike excels on Facebook. The company has many growth opportunities ahead of it, but these three look like some of the most interesting now. Based on this part of the SWOT Analysis, Nike Inc. must improve its policies and strategies in the areas of labor and employment, product mix development, and penetration in developing markets. Thus, it is recommended that Nike Inc. must reform its strategies in these areas. As mentioned by Han in 1991, fashion is a reason for Impulse Buying, “fashion orientated Impulse Buying” (Han … However, the results of this SWOT Analysis point out some possible new strategic directions to further enhance Nike’s global performance and leadership. Nike hasn't given a lot of insight into the specifics of its Man Rev, but investors can probably expect to learn more in the earnings calls to come.Â. So, how does one of the world’s most recognisable brands cut through the clutter on social? NIKE, Inc. (NYSE:NKE) today released its FY12-13 Sustainable Business Performance Summary, providing an update on performance against current business, … The following threats are most notable in Nike’s case: Nike faces tough competition, considering other major players like Adidas. Innovation in terms of the materials used, and also the speed with which new products can get from concept to market -- an initiative the company is calling Express Lane -- could help on both fronts. Nike is putting technology and its innovative flagship stores to work to build a big lead in retail instead of relying on department stores. For long-term bulls who believe all these initiatives and other big growth opportunities can move the stock back to where it was in late 2015 and higher, Nike continues to look like a great long-term play. Developed by Japanese automakers after World War II, the lean production method focuses on eliminating waste, emphasizing flexibility, and enabling skilled workers. That means today it takes about half the energy and generates around half the emissions to make Nike shoes as it did eight years ago. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Nike Inc. has opportunities to enhance its performance in the athletic footwear market. In the case of Nike Inc., the following weaknesses are the most significant: Labor controversies continue to plague Nike’s business, especially in considering production facilities in developing countries. Can you talk a little bit about your strategy there? Weaknesses could disrupt Nike’s growth trajectory in the sports shoes, apparel and equipment market. Nike is Using Less Energy and Reducing Emissions Since 2008, the company’s contract footwear manufacturers have cut energy use per unit by around 50%. Learn more about our average carbon footprint “To me, the most hopeful idea in sustainability is the belief that we get to decide how the story is going to end. Most of the successful businesses worldwide have improved their growth rates only by adopting innovative supply chain management practices. business can grow and become successful. This component of the SWOT Analysis addresses the internal strategic factors that prevent or reduce business performance. Nike Inc. Organizational Culture Characteristics: An Analysis, Nike Inc. Five Forces Analysis (Porter’s Model), Nike Inc. Generic Strategy & Intensive Growth Strategies, Nike Inc. PESTEL/PESTLE Analysis & Recommendations, Nike Inc. Operations Management: 10 Decisions, Productivity, Nike Inc. 3. Nike is an American multinational company producing equipment, footwear, clothes, and accessories. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Traceability and Risk … Part of the reason Nike had such a rough 2016 was that its gross margin continued to fall throughout the year because of higher-priced input goods and inventory challenges that led to reduced prices to get product cleared out. The Retail Services Industry in the United States, Extensive global production and distribution network, Increase market presence in developing countries. In addition, it has the benefit of higher gross margin by allowing Nike to create customized gear and other higher-priced items, as well as keep the full sale rather than letting a percentage go to a third-party retailer. This weakness negatively impacts the company’s brand image. The SMSI has become an important tool in factory selection, encouraging performance improvement, eradicating underperformance in factories, and driving business to the … See our Privacy Policy page to find out more about cookies or to switch them off. Moreover, the company suffers from limited presence in developing markets, partly because of issues with pricing, imitation and patent protection. In 2012, Nike introduced the Manufacturing Index (MI) to score factories on sustainability – including labour practices. Â, Many companies are looking at manufacturing and supply chain and how investments in those areas could drive new growth in the years ahead. From the earnings call and elsewhere in the company's releases, we know that this is a focus on innovative materials, assembly procedures, and advancements with interesting technology such as 3D printing that the company believes will overhaul the ways its products are made in the years to come.Â, There are a few reasons this could be a huge opportunity for the company and its future earnings. Another opportunity is for Nike to improve its product mix to attract more customers, especially non-athletes. Like most worldwide brands, Nike has separate Facebook pages for … Commitment and Governance 85 out of 100 2. There are many things Nike - Get Report can do to boost sales but it has not done them, said CLSA analysts. Simultaneously, it is also focusing on its pricing, retail, and marketing strategy to bring the best products for its customers. Nike Inc.’s SWOT Analysis emphasizes the importance of product development to maintain a competitive edge. The company has many growth opportunities ahead of it, but these three look like some of the most interesting now.  Â, Nike management has started to hype up what it refers to in the most recent earnings call as "Man Rev," which is short for "manufacturing revolution." I can see why Nike would remove this – to remove distraction. But what comes with being the … Nike can possibly enter new markets such as high-end fashion. Nike.com sales nearly doubled year over year in the most recent quarter.Â, Nike announced that in fiscal 2016, Nike.com went live in 20 additional countries, doubling from a year ago, which should help that international expansion as more of those localized online stores go live in 2017. These beliefs have guided Nike from its inception until today. In the mid-2000s, Nike launched a program to boost supply-chain productivity and quality by introducing lean manufacturing principles to its apparel suppliers in the developing world. The company must also collaborate with government units to address patent protection issues. The company has also made advancements in connecting its digital strategy to its new concept physical locations. Social media is powerful for brands such as Nike because it creates two-way interactions between fans and brands. Nike also raised the minimum wage it paid workers, improved oversight of labor practices, and made sure factories had clean air. Nike Inc.’s leadership in the global sports shoes, equipment and apparel market shows the significance of its strengths in competing against other giants like Adidas. The company has gone through several controversies including the child labor Nike Inc. has opportunities to enhance its performance in the athletic footwear market. Returns as of 12/21/2020. For net income to grow so much faster than sales shows just how successful Nike has been in its push to improve profit margin, which now sits at 11.25% over the trailing 12 month period. Nike’s organizational structure is worthy of study due to the fact that it has been a successful organization since its inception. Besides wearing top quality Nike gear they are shown working hard, sweating, or reflecting on events from the past. This component of the SWOT Analysis deals with the external strategic factors that negatively impact business performance. The company expands its … Let's conquer your financial goals together...faster. A Natural Experiment at Nike. Things have started to turn around for Nike in 2017, already one of the best-performing large-cap stocks of the year, and it could get much better from here. The company’s extensive global production and distribution network is a strength that enables the business to support global market dominance. Valentin, E. K. (2001). The importance of innovative supply chain management has been highlighted by scholars and researchers for the successful management of businesses in the 21 st century. In 2006, Nike developed the ‘Nike+iPod’, an activity tracker that records the distance and pace of its user’s workout through a … We look at the tactics that have netted Nike tens of millions of followers on Facebook, and made it … This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. It has a social media-like feed, customized content around fitness and Nike-sponsored athletes, a feature for booking appointments at Nike stores and events, and, most importantly, it has a mobile shopping section that gives users tailored recommendations and alerts for new items that are dropping. Nike Supply Chain Management: Ethics, Sustainability and Efficiency. But there's always room for improvement, so how else can Nike improve as a company? An understanding of the company’s strengths and weaknesses (internal strategic factors), and weaknesses and threats (external strategic factors) yields insights on how a manufacturing and retail business can achieve global success despite tough competition. Recent research on team and organizational diversity: SWOT analysis and implications. Nike uses social media to create a lifestyle and sense of community among fans. Also, rapid technological innovation could further increase competitive pressure if Nike does not innovate as rapidly. Also, rapid innovation processes are a core factor in Nike’s ability to create cutting edge designs for its athletic footwear, equipment and apparel. Competitors, such as Under Armour Inc., have recently opened major offices in Portland, which is a few miles from Nike’s headquarters. On a recent morning in Beaverton, Ore., not long after a thick fog has rolled off Nike's 177-acre campus, Hannah Jones is recounting a favorite example of where corporate responsibility can be put to work in an $18.6 billion company: reducing waste. SWOT analysis from a resource-based view. Nike focuses on research and innovation to bring new designs and styles that increase the popularity of its products. Bernroider, E. (2002). Established in 1964 as Blue Ribbon Sports, Nike Inc. is now one of the world’s biggest players in the athletic footwear market. In February 2019 Ethical Consumer read KnowtheChain’s 2018 report which assessed 43 of the largest publicly traded clothing and shoe companies in the world. In fact, Nike has gone on record to say sustainability is one of the key components of success and no forward-thinking company can survive without sustainability efforts. If somebody wants to find a review, they will. -- Aladdin. A SWOT Analysis of Nike outlines how these strengths relate with the company’s weaknesses, opportunities and threats. At Nike, material innovations—such as recycled polyester, Flyknit, Flyleather, and Nike Air—are changing the world of sustainable performance and reducing the average product carbon footprint of our products. Nike is facing that situation head-on, and as Edwards said during the call, "With the start of our new relationship with Chelsea Football Club next season, our brand is Europe is only getting stronger. As a result, the target audience connects the brand with the effort and determination needed to succeed and therefore is motivated to improve their own “game”, whether everyday running or basketball. Proactive strategies for this concern can lead to an improved brand image. 1997: Efforts at promotion become occasions for public outrage. Online sales have multiple benefits, including the ability to meet more customers who might not be in a Nike store or third-party retailer, and Nike also gets to keep all of that valuable information about the customer. Utilization of the two biggest online networking platforms, including Facebook and Instagram, helps Nike to speak with its differing group of onlookers. Organizational Structure Characteristics (Analysis), Nike Inc.’s Mission Statement & Vision Statement (An Analysis), Nike Inc.’s Marketing Mix (4Ps/Product, Place, Promotion, Price) - An Analysis, Nike’s Promotional Mix (Marketing Communications Mix), Puma’s Organizational Culture & Its Characteristics (An Analysis), Puma’s Generic Strategy, Intensive Growth Strategies & Competitive Advantage, Puma’s Mission Statement and Vision Statement (An Analysis), Burger King SWOT Analysis & Recommendations, Whole Foods Market SWOT Analysis & Recommendations, U.S. Department of Commerce. Nike’s Generic Strategy Product development and differentiation: In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. “They can do it. The following are the major opportunities in the case of Nike Inc.: 1. Maintain a competitive edge organizations like Nike that believe without sustainability Efforts no it worked... 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