Swot Analysis of Nike

SWOT Analysis

SWOT analysis is an examination of an organization’s internal strengths and weaknesses, its opportunities for growth and improvement, and the threats the external environment presents to its survival (Harrison, 2010). The key objective of conducting SWOT analysis is to determine how to position the company within the industry by taking the advantage from the strengths and opportunities, as well as minimising the internal weaknesses and external threats (Ireland, Hoskisson, & Hitt, 2013). The result from SWOT analysis will give the case analysts an insight about the company’s performance about help the management in choosing the strategies that suitable for the company. For Nike's Global Women's Fitness Business, we can use SWOT analysis to help the Nike’s top management in the selection of strategies.

Strengths

• Increment in Sales due to Global Well-known Brand

Nike for the Greek goddess of victory, is one of the world’s most well-known brands and a dominant competitor in the global athletic footwear, apparel, and equipment market. Its success at branding has been second to none, with its trademark “swoosh” one of the most instantly-recognizable corporate symbols in history (SWOT of Nike, 2015). By 2006, Nike had approximately 26,000 employees worldwide and operations in 120 countries. For example, Nike's fiscal year 2006 sales reached $15 billion (up 9% percent from FY 2005), with net income of $1.4 billion (compared to $1.2 billion the previous year). In 2014, the company's dominant market position is built on its portfolio of strong brands like NIKE, Jordan, Converse, and Hurley (Company Profile: Nike, Inc., 2014).

• Intense Focus on Products and Product Innovation

Nike focus on R&D activities has been its key driver to maintain leadership position in the athletic footwear and apparel market (Company Profile: Nike, Inc., 2014). Nike’s corporate mission was “to bring inspiration and innovation to every athlete in the world”. In this written statement, there was an asterisk after the word “athlete” with a note that clarified, “If you have a body, you are an athlete”. Nike’s products were designed to inspire the individuals to get out and realise their physical potential. Innovation is the main element of the company’s value and innovative products were at the centre of its competitive advantage.

By emphasizing on technical innovation in the design and manufacturing process of footwear, apparel, and athletic equipment, Nike focuses on producing products that help reduce injury, enhance athletic performance and maximize comfort. Nike has own staff of specialists in the areas of biomechanics, chemistry, exercise physiology, engineering, industrial design, sustainability, and related fields who help in developing innovative products (Company Profile: Nike, Inc., 2014).

Nike had organised its business around a product orientation, which emphasis on designing and manufacturing the products. Nike has three primary business units focused on footwear, apparel, and equipment. In fiscal 2006, footwear accounted for roughly 66% of the business, apparel 28% and equipment 6%. In the global branded footwear market, Nike accounted 38% of the market shares.

• Great Celebrity Spokespersons

Nike establish relationships with professional athletes, sports teams, and leagues to develop, evaluate and promote our products, as well as establish product authenticity with consumers (Nike, Inc. Annual Report on Form 10-K, 2014). When Nike created a women’s team within its product marketing group, the management signed endorsement contracts with the female athletes such as Sheryl Swoopes, Lisa Leslie, Gabrielle Reece and Mia Hamm to better address the products in the women’s market in the early to mid-1990s.

• Multi-Channel Approach

Nike sells its merchandise through retail stores and other channels. The company offers its products to retail accounts, through its owned retail stores and internet websites (www.nike.com) and through a mix of independent distributors and licensees, in virtually all countries around the world (Company Profile: Nike, Inc., 2014). Through the broad network, Nike has been able to increase its scope immensely and reach out to consumers across the world. Therefore, the multi-channel approach increases the company's reach and enables it to cater to a wide customer base. This, in turn, helps Nike to enhance its market presence.

Weaknesses

• Lack of Collaboration among the Product Creation Engines

Nike consists of three different dimensions of the matrix organisation structure. The lead dimension will be the business units along with a handful of global functions. The second dimension is represent by four geographic region that Nike operate in the world. The last aspect of the matrix will be the Nike’s nine sports categories such as tennis, basketball and so on. Integration between the business units was inconsistent and they would work together due to the special event such as World Cup, Olympics or others. After they done in support of particular projects, they will go back to their silos.

The main cause of this weakness arose from the different timelines each business units for bringing the products into the market. For example, footwear runs on 18 month product creation cycle while other business units such as apparel and equipment have their own product creation cycle. Therefore, three business units are difficult to work together. The integration between the different dimensions of the matrix and different timelines resulted Nike developed products for four seasons a year, which meant that each business units was managing multiple seasons at any given time. It is waste of costs and resources if coordination among the business units are not done.

• The Priority Setting and Decision Making among Dimensions of the Matrix

Within the matrix organisation structure of Nike, the decision making and priority setting were dominated by the business units. The global functions within the business units did not always share the same priorities with the regional teams. This meant that global programs were not always executed as planned, if the regions elected to adapt plan based on local issues, opportunities and needs. Therefore, it will run away from planned results and cannot achieved the common goals.

• Afraid to Make Changes

Nike decide to establish women’s fitness division to its matrix organisational structure as a fourth dimension. However, senior management was afraid if the women’s division added to the structure, it will add on the complexity to the complicated organisational structure. Some of the senior management also afraid that if the women’s division was successful, it would erode the men-business and loss the male customers’ loyalty since Nike is dominated by the male culture. After debate among the senior management, Nike created its women’s fitness division in 2001. This project was not given top priority by the management and was considered as their second job since they need to manage different tasks at the same time.