SWOT analysis: Nike Introduction Like most companies, Nike has corporate strengths and weaknesses. However, in the 50 years that Nike has been in business, it has weathered most challenges. From its maverick days as an upstart sports shoe brand being sold out of the back of the trunk of its owners’ cars at track meets, through the 80s and 90s when it lavished multi-million dollar endorsement deals on sports icons. Following is a SWOT (strength, weakness, opportunity and threat) analysis of this great American business enterprise.
Strengths: Marketing expertise Nike is a marketing trailblazer. Its commercials are so unique and iconic that every new advertising campaign is analysed by industry watchers and experts, and reviewed like it is a new novel or bestseller (Howell, 1991). It has produced gems such as “Just Do It”, the “most recognizable tagline in advertising history” (Katz, 1994), and “No games. Just sport” – a no nonsense rallying cry immortalized in the 2000 movie “What Women Want” starring Mel Gibson and Helen Hunt.
Air Jordans – its Air Jordan line has been so successful that more than 10 years after Michael Jordan has retired from professional sports, the line continues to be Nike’s premier brand (Strasser, 1994). Innovative product Its very first hit, the “waffle soles” for running shoes made Nike its first millions. It was inspired by Phil Knight’s wife’s pancake waffle iron (Strasser, 1994). It combined maximum traction, simplicity of design and minimum weight. It has been copied by competitors but never duplicated. Innovative service Nike recognized early on the power of e-commerce.
It established its Nike website to assist its worldwide fan base, allow them to ask questions, design their own shoes, and order shoes directly from the factory (Dworkin, 1999). There was practIcally no e-commerce in 1995, but in 1997 this segment earned businesses $26 billion. By 2002, it explode into a $330 billion industry and $1 trillion by 2005. Nike continued to reach its worldwide audience through its website although the US is home to 50% of the world’s market in sports shoes and apparel (High Tech Writers, 2000). Personalization Through Nike. om, its “Nike Id”, allows buyers to design their own shoes, or have their number or name on it, just like Kobe Bryant, or Michael Jordan or LeBron James. It gives regula customers access to special treatment Nike’s multi-million dollar endorsers and gives fans the perception that they can really be like their sports heroes (PRnewswire, 2000). Adds value to product Nike in 2009 paid LeBron James $90 million to promote his basketball shoes. Michael Jordan reportedly still commands upwards of $20 million a year, and Kobe Bryant, the same amount (Wicked Local, 2008).
While it costs Nike a large amount of cash, the positive brand association that celebrity endorsements can bring can be worth several times more than they cost (Katz, 1994). Weakness Damaged reputation Nike has been rocked by accusations of supporting unfair labor practices in its overseas factories. It is also accused of turning a blind eye on labor abuse in countries that produce Nikes such as, Korea, Taiwan, Malaysia, Thailand, Vietnam, The Philippines, China and other countries (Ferrell, et al. , 1998). Labor and human rights activitists have picketed several Niketown Stores to call attention to these alleged abuses.
An activist group, Vietnam Labour Watch, has accused Nike of violating minimum wage laws and overtime laws in these countries. Nike has denied the accusations . Opportunity Customer assistance through the internet Through its “Ask Nike” website, a partnership it runs with “Ask Jeeves”, its technical advisers answer questions fielded by Nike fans and customers. The website provides customers with a direct and almost-instantaneous connection with Nike. (Dworkin, 1999). Discount Nike sells both popular and discontinued models of shoes and apparel at its discount out let, Niketown (Wicked Local, 2008). Mergers
To further cover or service markets that Nike does not reach, it acquired long-established brands Cole -Haan, Converse, and Huxley shoes, among other brands (The Independent, 2004). New market segments Nike started with track shoes and later on running shoes. In the 90s, as the US hosted the World Cup of soccer, advisers suggested Nike tap the huge worldwide soccer shoe and equipment market (The Independent, 2004). Previously, it has successfully controlled 50% of the $35 billion basketball shoe segment, while the golf market has been penetrated with the help of Tiger Woods, a long-time endorser (Katz, 1994).
Recycling program Nike supports recycling efforts with its Reuse-A-Shoe program. Started in 1993, it collects old shoes, processes them into sports surfaces, basketball courts, playgrounds and running tracks, and donates them to needy communities (Ferrell, et al,. 1998). Sponsorships Its first track endorser is iconic runner Steve Prefontaine, after whom Nike’s corporate headquarters in Oregon is named. Nike has also supported the late Jackie Joyner-Kersee, Carl Lewis, Spike Lee, Jim Courier, Roger Federer, Rafael Nadal, Lindsay Davenport, Maria Sharapova, Serena and Venus Williams (Strasser, 1994).
It has also supported the national soccer teams of Brazil, Portugal, the US, Netherlands, and professional European soccer teams, Manchester United, Juventus, FC Barcelona, Inter Milan, Porto, Shakhtar, Club America, Aston Villa, Dundee United, Celtic, Arsenal, Steaua, and more. Threat Reebok and Skechers USA were able to capitalize on the new ‘toning’ shoe craze. Nike, meanwhile watched the market expand and did not enter it – losing precious ground to the competition (Townsend, 2010). While Reebok’s share more than doubled, to 6. 7 percent, or $90. 3 million, and Skechers tripled to 17 percent, or $225. 7 million, Nike’s slipped 7. percentage points, to 31 percent, or $412 million (Townsend, 2010). Conclusion Nike has its Strengths and Opportunities while keeping its Weaknesses and Threats to a minimum. It continues to increase market share, strives to satisfy customer demand, improve customer care and service, and penetrated new markets. Nike has also addressed perennial irritants such as accusations of supporting unfair labor practices overseas by proactively forming its own staff that make up 75 to 91 personnel that investigate hundreds of suppliers. It now commands $19 billion in assets and hopes to increase it to $27 billion by 2015.
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