Nike SWOT Analysis

Nike Inc. is an international company incorporated in the U.S. Nike’s corporate headquarters is located in Beaverton, Oregon, USA. Bill Bowerman and Phil Knight in 1964 founded Nike.

The company manufactures world-class sportswear, athletic equipment, footwear, apparel, and accessories. Besides producing sporting goods, it is the largest manufacturer of athletic shoes and apparel.

For Nike, the most important thing is to provide players with high-quality products and wearables that help them improve their performance in sports.

The company has retail locations in more than 170 countries and offers online shopping. Nike’s Swoosh is one of the world’s most recognizable logos.

Nevertheless, Nike has expanded its apparel line to include athleisure gear due to its popularity. Nike CEO Mark Parker currently leads the brand.

Nike’s net profit in 2018 was slightly under two billion dollars, making them one of the most profitable companies in the industry.

Nike SWOT Analysis

CompanyNike Inc.
Year foundedJanuary 25, 1964
IndustriesSports Apparel and Footwear
CEOJohn Donahoe
FounderPhil Knight, Bill Bowerman
HeadquarterBeaverton, OR
Areas servedWorldwide
Market Cap$277.19 Billion (November 2021)
Revenue$17.36 Billion (November 2021)

Nike has become a household name worldwide due to its motto, “Just Do It.” A SWOT analysis of Nike is what we’ll be doing in this post, where we take a look at the company’s strengths, weaknesses, opportunities, and threats.

Let us see Nike’s prospects, and we will be able to grasp their current and future business actions better.

Nike SWOT analysis

Nike’s SWOT analysis stresses the importance of product development to stay competitive.

However, this SWOT Analysis results reveal several possible new strategic directions for Nike’s global leadership and performance.

A Nike SWOT Analysis can be used to compare Nike’s performance with competitors and the industry.

Strength of Nike

Nike has been a world leader in sports footwear, apparel, and equipment since its founding in 1964.

Attracting and retaining top talent is important to every company’s growth and success. Among Nike Inc.’s strengths are the following:

1. Strong Brand Presence

Nike is probably one of the most well-known sportswear brands, if not the most powerful. Nike’s business model made it one of the world’s most famous companies, thanks to its distinctive, easily pronounced name.

When people think of fashionable, sporting footwear, Nike is the first name that springs to mind.

It is so well-known that everyone recognizes the swoosh logo. Nike dominates the sports footwear market with a 31% share. Nike’s distinctive brand generates billions of dollars in additional revenue every year.

2. Strong Customer Base

Nike’s merchandise is popular among customers at Nike stores. Many people prefer this brand for everyday use, but others see it as a fashion statement that must be kept in top condition and replaced if necessary. 

Nike has a winning combination of quality and style on every level. Nike has millions of fans worldwide, many of whom participate in Nike events and even send company comments.

Nike occupied nearly two-thirds of the world’s athletic footwear market. Nike’s market capitalization reached $224 billion in February 2021 due to the company’s enormous client base.

3. Diverse Brand Portfolio

Nike is probably the most well-known brand within the corporation, but many other brands are available. Some of the many Nike-centric sub-brands in this brand portfolio include Converse, Nike Shox, Nike Blazers, and Nike Tiempo.

The Nike brand has well-established foundations in the footwear industry, allowing it to cope without pain with sudden changes in consumer preferences.

4. Low Manufacturing Cost

Nike has figured out how to produce quality products at a minimal cost. A large percentage of Nike’s footwear is manufactured outside of the United States. 

Nike’s footwear was made in Vietnam at 50 percent, China at 22 percent, and Indonesia at 24 percent in 2020.

It also helps build a trade and distribution empire that guarantees that every merchant is well-stocked to meet growing demand. Nike generated a gross profit of $16.2 billion in 2020.

5. Celebrity Partnerships

Nike and “Michael Jordan” have been in a long-term partnership for many years. Nike has significantly benefited from this alliance. Because of their cooperation, a new shoe known as the “Air Jordans 1” was born.

The shoe-collecting world was in an uproar over this. This model was profitable for both companies.

The model was among the top 10 most sought-after sneakers of all time. The event led to an increase in Nike’s popularity.

6. Financial position

Nike has a solid financial foundation. There was a profit of US$1.933 billion for the 2018 fiscal year, an increase of 6.0 percent over last year.

Nike shares in October 2018 were valued at over $72 per share, with a market capitalization of over US$114.5 billion. It has steadily increased its market share over the past 57 years.

People have hailed it as a household name. The company’s market value and brand identity have soared due to its strong financial position. This indicates the company is financially stable.

Weaknesses Of Nike

Nike’s growth trajectory in the sports footwear, apparel, and equipment sector could be disrupted by weaknesses.

Nike’s SWOT Analysis aims to identify the internal elements that can be either helpful or detrimental. Nike Inc.’s most critical flaws include the following:

1. Production outsourcing

There are drawbacks to outsourcing production despite the lower costs involved. To manufacture a product abroad, you must establish a manufacturing operation in your chosen country or outsource your labor to an established manufacturer.

Nike’s products are not always of the highest quality because of this.

2. Foreign workers face poor working conditions.

Nike’s biggest flaw is that they are heavily reliant on the work of others. However, this isn’t their most important problem. Many of these countries are, as a result, in a precarious financial position.

The labor conditions at Nike’s overseas factories have frequently come under question. Its low operating costs are partly due to its reliance on low-cost labor, but its record of treating its employees fairly worldwide remains spotty.

As a result, their labor rules are pretty lenient. Often, this leads to needing to perform a small amount of labor in many dangerous locations. This is why vegans and humanitarians advise people to avoid Nike products.

There have been numerous allegations claiming that these workers are underpaid. It is yet another blow to Nike’s reputation.

3. US Market Dependence

Nike’s revenue in the United States accounted for more than 40% of the company’s total in 2018. Nike’s business strategy relies heavily on the American market, as you might imagine.

Nike generated 41% of its revenues in 2020 in the United States and 59% in other regions. Despite its worldwide popularity, Nike relies heavily on the United States for sales and growth.

Nike’s profits would take a hit in the US market if American tax or legal rules were to alter in any manner that affected their ability to sell there.

4. Lawsuits Worldwide

Almost every business has faced litigation over a company’s errors or concerns about employee treatment.

Public relations nightmares can result from these problems, and the damage to the brand’s image can take years to repair. Nike was the target of a class-action lawsuit alleging wage discrimination based on gender.

5. There is no Diversification.

The excessive reliance on athletic apparel or lack of diversification of Nike is a significant weakness.

The pandemic has discouraged physical interaction and gathered people together, with many sporting events being canceled or postponed.

There are several professional sports teams on the verge of collapse. Nike’s losses could be catastrophic if the crisis continues to discourage sporting events.

6. Focus on Footwear

Nike has diversified significantly within footwear but not significantly across other industries. Nike may wish to expand its horizons despite the likelihood that the footwear industry will endure.

7. Branding strategy

Globalization is accelerating at breakneck speed. Nike should change its approach to dealing with it in light of this. The company’s established branding and communication strategies need to be revolutionized. These must include both the messages and the media.

Social branding is critical in this instance. Nike will pay a high price in the future if they insist on maintaining these customs.

Opportunities For Nike

Nike Inc. has the potential to strengthen its position in the athletic footwear market. Nike may be an industry leader but faces extremely stiff competition in the retail sector, particularly sports apparel.

Opportunities are external factors that a business can leverage for profit and benefit. Many highly-rated brands are vying for the top spot. Nike must seek out opportunities to expand its business.

This section of the SWOT Analysis discusses the external strategic factors contributing to business growth. The Nike SWOT analysis will assist executives in considering them before making their next significant move.

1. Developing Markets

There are a large number of companies expanding into new markets to increase revenue. Nike would do well to take advantage of the increasing international demand for its products. In some ways, more nations show an increasing appetite for American brands.

It has not always been common to wear athleisure daily. An athlete could only understand it; however, the times have changed dramatically, and people now value comfort much more than they did in the past, resulting in new markets worldwide.

The brand was thus better positioned to expand. New markets are emerging due to the government’s decision to encourage economic development.

Nike will be able to expand its business horizons. Nike has a great opportunity to up its game in its business’s marketing and promotion sector, specifically during this Olympic cycle.

2. Diversification of product lines

Nike still has an opportunity to set the standard in other areas, despite its dominant position in footwear.

Nike’s product designs and ideas are heavily influenced by first-world cultures, making it more challenging for people from other nations to connect with Nike’s ideologies.

Nike has a wealth of products to sell, but there are numerous new products it can introduce. Its presence has become known to the public.

Nike’s diversification has been further hampered by the lack of sporting events and physical interaction among people due to the pandemic, which would have allowed it to increase revenues in other countries.

It can develop new products to fill new segments, or t can capitalize on its reputation for quality in other product lines. Nike’s product line grew to include a range of sports and geographical regions during the 1980s.

3. Leaning into sustainable practices

Nike uses some sustainable business practices, but other corporate mandates have led to inconsistent execution.

To remain successful and environmentally friendly, it must fully utilize the wide body of knowledge and research in earth-friendly manufacturing and development practices to remain successful and environmentally friendly.

There has been some difficulty in maintaining a green image for Nike.

4. An ethical manufacturer

Many Western countries are becoming more conscious of the origins of their products and how they are treated. The company can take advantage of this situation.

They might expand their market penetration among ethical and environmentally conscious consumers to establish a reputation as a responsible manufacturer.

5. Improve the working conditions

The brand’s damage will have to be reversed if the concerns and accusations related to its labor force can be addressed.

It will take time to determine if continued low-wage employees and hazardous (and potentially unsafe) working conditions will deter a majority of consumers, which, in turn, may reduce revenue and growth potential in the long run.

Nike’s global employment increased by 119% between 2009 and 2020.

Threats For Nike

Nike is considered a leader in sport’s shoes, equipment, and apparel, but certain threats may limit or diminish the company’s performance. In a highly competitive market like sports retail, there are several threats a company could face.

The organization’s external strategic factors in this section of the SWOT Analysis negatively impact its performance.

Nike’s SWOT analysis allows it to implement several countermeasures once it recognizes them. Nike is especially vulnerable to the following threats:

1. Copycats and counterfeits remain a threat

The counterfeit goods market targets many well-known brands. The value of counterfeit goods in world trade is $461 billion.

Counterfeit products can severely damage Nike’s reputation and revenue. Globalization increases the risk of counterfeit products in the company.

The purpose of counterfeiting is to make buyers believe the product is an authentic version of a well-known brand when it is not. 

The purpose of counterfeiting is to fool buyers into believing they are buying authentic products when they are not.

Nike knockoffs are widely available at discount stores and merchandisers. The Nike label is still present on low-cost items, despite the inferior materials used. 

Customers may think Nike has begun producing low-quality products, which can damage the brand’s reputation. Nike is no exception, and combating counterfeiters is an ongoing battle.

2. An increase in competition

Nike is undoubtedly the leader in athletic footwear; however, competition and new emerging brands pose threats. This market has seen several new businesses emerge in recent years. The result is an increase in competition.

Nike faces a slew of formidable competitors in the consumer sector, including Adidas, Rebook, Anta, and lululemon. Due to the increased competition, Nike must spend more money on marketing and advertising.

It must remain vigilant against its rivals even though it is currently the most dominant brand. Nike spent $3.5 billion in the fiscal year 2020 on marketing and demand generation.

Nike has a marketing budget of 3.5 billion dollars. Their best bet is to develop novel products. Nike’s best bet for dominating the competition is to create innovative products tailored to athletes’ needs.

3. Government Regulation

Government regulations and rules can pose a significant threat to Nike, particularly if they don’t stick to its profit-oriented goals. Nike has been the subject of legal action and complaints from various sources.

Thus, Nike must ensure its relationship with the government remains positive. An inconvenient regulation can have serious consequences.

4. Consumer sensitivity to price

The weakness identified in a SWOT analysis can also become a threat, as in Nike’s case.

The relatively high prices increase average consumption significantly, but this isn’t a threat that concerns the brand since consumers with higher revenue cover the difference.

5. The volatility of the currency

There is no doubt that the brand occupies a sizable portion of the world, and its revenue varies greatly from country to country or continent to continent.

This may be one of the reasons for the long-term changes in import and export or trade policies, which will undoubtedly impact the brand’s economy in no time.

Conclusion of Nike SWOT Analysis

Nike has a lot of room for improvement. However, it is overlooked because the brand has stood the test of time.

Nike Inc.’s SWOT analysis demonstrates the necessary strengths to sustain its global leadership in the sports footwear, equipment, and apparel markets.

The brand’s competition has been increasing at a breakneck pace, and Nike has done an excellent job of living up to the hype and maintaining its high-profile reputation.

In addition, the company needs to address concerns about competitors, labor practices, counterfeiting, and intellectual property. Nike Inc. should therefore reform its strategies in these areas.

We know the brand well, and the team behind it has a long history. While numerous flaws and threats exist, the brand will not overlook them at any cost.