Implementation of SWOT Analysis for Nike Company - Essay Example

?Implementation of SWOT Analysis: Nike Company A SWOT analysis is a method of business planning that involves the evaluation of the strengths, weaknesses, opportunities and threat to the business (Hill & Westbrook, 1997). When conducting a SWOT analysis of a business or product, the internal and external factors that favor or disfavor the business are analysed against a backdrop of the business objectives. While the strengths of the business are the characteristics that assign it advantages over other businesses in its field, the weaknesses are those characteristics of the business that place it at a disadvantage relative to its competitors. On the other hand, the business opportunities are the elements that the business can exploit to its advantage. The threats are the elements that could lead the business to trouble. It is important to conduct a SWOT analysis as it may later inform the business planning steps that are directed to the realization of business objectives (Armstrong, 1996). Every serious business should conduct and implement a SWOT analysis every so often to evaluate its position in the market. This paper will involve a SWOT analysis of Nike Company and will go further to analyse what businesses need to do to gain a stronger market position. About Nike Company Nike Incorporated is a multinational business that designs, develops and markets apparel, footwear, accessories and equipment. The American company has its headquarters in the Portland metropolitan area of Oregon. Nike as the company is popularly referred to is among the fortune 500 companies and boasts of being a leading producer of apparel, sports equipment and athletic shoes in the world (Nike Inc., 2013). Established in 1964 under the name of Blue Ribbon Sports, the corporation has several brands to its name, the main ones being Nike, Nike Skateboarding, Nike Golf, and Nike Pro. The organization has a number of subsidiaries including Converse and Hurley International, operates a number of retail stores, and sponsors several high profile sports teams and athletes from different nations across the globe. Nike SWOT Analysis Strengths Nike Inc. enjoys several strengths to its advantage. The company has been in existence since 1964 which may translate to a lot of experience in its field. The Nike brand has become a global brand over the years and enjoys strong brand equity. Given that the brand is linked with many famous athletes and favorite sports teams, it enjoys a huge amount of endorsements from its beneficiaries and by extension, the support of the masses spread across the world (Marketing Teacher, 2013). It is a fact that the establishment of manufacturing plants, buildings and other immovable assets cost huge capital investments and ties an organization’s finances. While many organizations have their capital tied to such assets as buildings and factories, this is not the case with Nike Inc. The corporation also does not have its capital tied to workers engaged in the production of its products. This being the case, the business thrives on a lean workforce and therefore operates on a lean budget. Furthermore, relying on the facilities of other organizations to manufacture its products gives Nike the opportunity to produce its products at the lowest possible costs without compromising on quality (Marketing Teacher, 2013). This arrangement affords Nike huge profit margins especially considering that it thrives on a lean workforce and budget. The organization has a robust research and development team that work toward coming up with high quality innovative products. The organization is one that produces branded clothing - a field in which there is little to innovate about (Tech Analysis Blogger, 2013). While this is the case, the company has managed to come up with innovative products that meet the needs of various demographics. The company also has a high score with regard to its environmental record. The Clean Air-Cool Planet, the company among the top companies that are climate friendly. Weaknesses One of the weaknesses that Nike has to bear with is its association with sweat shops, which makes it have a wobbly reputation (Marketing Teacher, 2013). The organization has previously been criticized for having its brands made in sweatshops in China, Mexico, Vietnam and Indonesia. The company has also been criticized for exploiting cheap labour outside the U.S., the use of child labour in Pakistan during the 90s, and for offering poor working conditions to workers. Yet another weakness that the company has is that its brand is generally thought to be expensive. Owing to the strong brand, the organization may be perceived to be greedy and exploitative. This perception tends to make potential customers shy away from the brand. Furthermore, the organization relies heavily on its share of the footwear market given that it has not diversified greatly its range of sports products. Opportunities Currently, the corporation has not diversified its range of products in spite of its attractive performance in the market. In this respect, it has an opportunity to diversify its products further and develop more innovative products such as accessories and sports wear which are high value and, therefore, associated with high profits (Marketing Teacher, 2013). The company has the opportunity to organize marketing events in various parts of the world to further create brand awareness and to attract sales. For example, by participating in international events such as world cup and the Olympics, the company’s brand is bound to grow stronger as more people will become aware of it around the globe. The organization also has the opportunity to build its strong brand by developing internationally. By venturing into new and growing markets like China, the organization can tap into the disposable incomes from these markets. Nike has a range of products with almost similar features or characteristics. Some of these include the Freerun 3.0, FlyKnit Lunar1 +ID, and Freerun+ 2ID. The differences between some of these products may be hard to understand without a more elaborate explanation. The company can make it easier for customers to understand the different products by streamlining how it names its products (Tech Analysis Blogger, 2013). By taking this measure, customers will be in a better position to appreciate the products on offer and their unique features. Nike can capitalise on technology to earn more revenue in the long run. In collaboration with Apple, Nike created the Nike+, a feature that can be incorporated in smart phones and used to track calories burnt and running distance (Tech Analysis Blogger, 2013). By investing in and making similar wearable products, the company can earn licensing revenue and broaden its reach to customers as noted by Tech Analysis Blogger (2013). Threats As an organization, Nike engages in international trade. By virtue of the fact that the company trades using different currencies, its costs and profit margins vary a lot over long durations (Tech Analysis Blogger, 2013). This in itself can expose the company to massive losses. Nike also faces stiff competition from old and new players in the sports shoes and apparel industry. Some of the competitors produce products/brands that are high in value and yet low in cost. These brands eat upon the market share that Nike enjoys to the extent of exposing the company to low profits or massive losses. In a market that is price sensitive, Nike may lose greatly to its competitors for maintaining high product prices. With Nike relying on other companies to manufacture its brands, it may be grossly affected if any one of these companies is faced with poor publicity or engaged in unethical practices. This may see potential customers abandon the company for alternative brands. Factors that Nike Should Consider to Achieve a Stronger Position In the Market Nike can achieve a stronger position in the market. However, for it to do so, it needs to consider a variety of factors. First, it should work on changing the perception people have about its products (especially in terms of high price) as recommended by Wise Geek (2013). Also, it should consider creating brand loyalty among its customers. Also, it needs to come up with new strategic plans that will propel it toward gaining a bigger market share and earning more profits than it currently does. References Armstrong, M. (1996). Management Processes and Functions. London: CIPD Hill, T. & Westbrook R. (1997). "SWOT Analysis: It’s Time for a Product Recall". Long Range Planning 30 (1): 46–52. Marketing Teacher (2013). SWOT Analysis Nike, Inc. Retrieved from http://www.marketingteacher.com/swot/nike-swot.html Nike Inc. (2013). About Nike Inc. Retrieved from http://nikeinc.com/pages/about-nike-inc Techanalysis Blogger (2013). Nike SWOT Analysis. Retrieved from http://techanalysisblogger.wordpress.com/2013/09/19/nike-swot-analysis/ Wise Geek (2013).What Factors Affect Market Positioning? Retrieved from http://www.wisegeek.org/what-factors-affect-market-positioning.htm Read More