Nike, Incorporated, has been a remarkably successful company, emerging rapidly at the top of a highly-competitive industry on the strength of its shoe designs and endorsement contracts with high-profile athletes. Because it has been around for over 40 years, there is a great deal of information regarding its growth and performance, which provides ample opportunity for preparation of a “Strengths-Weaknesses-Opportunities-Threats” (SWOT) analysis. While SWOT analyses are frequently presented in a four-box grid format, this answer will be provided in four sections that can subsequently be reformatted.
Listing Nike’s strengths is the easiest component of a SWOT analysis. Nike is one of the most widely-known companies in the world, yet was formed as recently as 1971. Its success at branding has been second to none, with its trademark “swoosh” one of the most instantly-recognizable corporate symbols in history. It has succeeded in keeping its overhead minimal by outsourcing its production to low-cost factories in Asia, specifically, China, Vietnam and Indonesia and, as noted, set the industry standard for establishing mutually-lucrative endorsement contracts with superstar athletes.
Nike’s weaknesses are fewer in number than its strengths, but they are significant. Nike’s biggest weakness is its reputation for exploiting inexpensive, and child, labor in the Asian factories where its products are manufactured. Media coverage of conditions inside those factories created a public relations problem for the company, although one it has apparently overcome. Another weakness is its limited product lines. While it did emerge as the industry leader in athletic shoes, and while its sports apparel lines have been successful, its range of products is limited. Another image-related problem is the violent crimes that have been committed as American youth in low-income communities have beaten and even killed each over Nike’s over-priced but well-marketed shoes and jackets.
Opportunities for Nike certainly exist. It has highly successful research and development and marketing divisions that help it keep its products at the “cutting-edge” and its image in the public eye. As more less-developed countries build their economies and create greater purchasing power for their publics, the markets for Nike’s goods will expand. As sports are one of the most important unifying activities or themes in virtually every region of the world, Nike should be able to exploit those opportunities to expand its product lines into newly-emerging markets.
Threats to Nike’s future are tied directly to the state of the global economy at any given time and to the level of competition against which it must compete. Economic downturns invariably affect consumer goods industries, especially expensive nonessential items like Nike shoes. The more of a population that is suffering financially from macroeconomic developments, the smaller the market for Nike’s goods. In addition, the level of competition in the sports apparel industry has grown since Nike’s “Air Jordans” revolutionized the athletic shoe world during the mid-1980s. Old companies like Adidas and Reebok have remained competitive, while new companies like Under-Armour have entered the arena and have secured market share previously the provenance of Nike.