Unit 1 – Exploring Business
AIM C – EXAMINE THE ENVIRONMENT IN WHICH BUSINESSES OPERATE
AIM D – EXAMINE BUSINESS MARKETS
C.P4 – Discuss the internal, external and competitive
environment on a given organization
SWOT ANALYSIS OF NIKE INC
A swot analysis is a tool used to recognize the strengths, weaknesses, opportunities and threats to a team or
project. It helps businesses to understand both the internal and external factors that contribute to the
success of the business or project.
Strengths
Nike’s USP is the brand itself. There is only one Nike. Also, because Nike was founded by a track team to
make shoes for real runners and genuine sports people. Some people see Nike brand ambassadors as sports
people.
1. Strong brand image – Nike is one of – if not, the most - popular brands in the sports
industry.
2. Diverse brand portfolio – Within Nike there are many subcategories that offer an even
wider range of products to people. These subcategories include: Converse, Nike Shox, Nike Blazers
and Nike Tempo. They sell shoes for a variety of sports such as baseball, golf, cheerleading,
volleyball, tennis and football.
3. Extensive global production and distribution network – Nike sells its products throughout
the US and in more than 180 countries worldwide. Meaning that they have a very wide audience and
brand image
Weakness
1. Footwear focused – Although Nike has a diverse selection of products, they predominately
sell footwear and have not diversified itself much across other industries. Therefore, limiting their
audience reach
2. Dependent on US Market - Each year most of Nike’s revenue comes from the US Market. If
American tax policies were to change in any way it would affect Nike’s ability to sell on the US
Market, thus affecting their profits.
3. Manufacturing – Although, Nike’s outsourced manufacturing aspects is a strength. This
manufacturing has gotten negative publicity because of unfriendly labor conditions in its overseas
outlets. The term ‘sweatshops’ is used to mock the conditions of the manufacturing facilities
overseas, ultimately denting the brand’s image.
Opportunities
1. Product Development – The owners of Nike truly believe that Nike is not a fashion brand however,
they are aware that consumers that wear Nike do not always buy it to participate in sport. In addition to
this, they can develop products such as sport wear, sunglasses and jewelry. In youth culture, Nike is a
fashion brand, thus creating its own opportunities.
2. Increase brand recognition – Nike could participate in global marketing events that can be utilized to
support the brand such as the World Cup and the Olympics.
3. Responsible Manufacturers – In recent years, there has been a growing trend of knowing where
products come from and what the working environment is like. If Nike can brand themselves as a good
manufacturer of sportswear goods, they may be able to increase their market share and attract more
ethically and environmentally conscious consumers.
Threats
1. Tax – Like other big companies, Nike has optimized tax strategies, allowing them to have avoid
paying large amounts of tax even on billion-dollar profits. If tax laws where to change, Nike will lose their
freedom to pay low amounts of tax, affording Nike significantly smaller net profits.
2. Competition – Nike is in competition with other big companies such as Adidas, PUMA, Reebok and
many more. With so many competitors in the same industry, Nike needs to be careful and make sure
that they are not replaced or lose potential revenue.
, 3. Counterfeiting – Like other brands, Nike apparel and shoes is subject to high amounts of
counterfeiting. These counterfeit goods are available everywhere on the internet. Therefore, Nike needs
to develop a strategy in order to counter this. One option is to take legal action against counterfeiters or
create a clever marketing campaign that encourages people to buy goods from the core business.
STEEPLE ANALYSIS OF NIKE INC
Social
1. Consumers becoming more brand conscious – Many customers associate Nike with high quality
products. Aside from this, the Swoosh logo and trendy slogan ‘just do it ‘is recognized on a global scale.
This brand awareness is what helped Nike become and remain one of the most popular retailers in the
world.
2. Increase in female customers – To grow their business Nike has decided to begin targeting more
female customers. Some strategies include partnerships with more female creatives, unisex sizing of
Nike’s classic shoes collections and a retail concept aimed directly at women
3. Working conditions at factories - Customers always want their company to be socially
responsible. Nike has often been accused of hazardous working conditions, to counter this, during the
1990’s Nike instilled new regulations to improve security, safety and wages.
Technological
1. Innovation – Nike has always been on top of and adapted to the latest technology. This innovation
has helped them stay ahead of their competitors and refine their production process.
2. Marketing techniques – Instead of traditional marketing channels, Nike often uses online media and
app to reach a wider audience of customers, because of this strategy, Nike does not have to depend on
their stores to sell footwear and apparel. Nike is the first company to reach the 1-billion-dollar mark
through internet sales.
Economic
1. Rise in production cost and labor issues – One of the main reasons for Nike Inc setting up their base
in Asian countries is the low labor cost. Labor issues are very common in these factories and have even
led to strikes from employees. Thus, having a significant effect on the production as well as
the revenue of the company
2. The threat of recession and competition - Being a market leader, Nike can be affected
significantly as a company. During the last recession, customers replaced Nike with other brands that
had similar products for cheaper prices, causing Nike to lose a significant amount of revenue.
3. Fluctuating profit margin – Nike is an international company; this means that it is important
that currency exchange and international interest rates are stable to allow consistent growth of the
businesses profit margin. High inflation rates along with fluctuating currency rates always has drastic
effect on Nike’s annual profit margin
4. Acquisitions and subsidiaries – Over the years Nike has acquired various companies that operate in
the retail, but more specifically the footwear industry. Some of the companies that Nike has purchased
are Converse, Jordan Hurley and SPARQ
Environmental
1. Global warming and environmental concern – It is very important for global companies to reduce
waste that are harmful to the environment. Nike have put some new strategies into place, such as using
knit and woven materials in their collection
2. Pollution concern in china – Most of Nike’s factories are in china. In the last few years, the Chinese
government has taken steps to check the pollution level, which increased the production costs
dramatically.
3. Decrease greenhouse emission – Nike is also working to reduce their contribution towards green
house has emission. They have put new strategies in place that involves using new technology that will
release less carbon monoxide, carbon dioxide whilst decreasing the need of raw materials.
Political
1. Favorable US Government Policies – The US government has always initiated growth
– oriented policies which have helped the company to grow and expand internationally. Also,
considering that Nike have their environmental- friendly business strategies, it receives considerable tax
benefits in this regard
