Nike Company: Pestle And Swot Analysis

Abstract

Nike is a leading manufacturer of shoes and sportswear, and has achieved tremendous success around the world. In this report, Nike’s business environment was analyzed using Pestle analysis and Porter’s five forces. The company’s internal environment was analyzed by using SWOT analysis, value chain analysis, core competencies, and competitive advantage. It was concluded that Nike is a leader in its business, operates in a competitive business environment and uses a business strategy that ensures its short- and long-term success. It can be recommended that Nike should take advantage of the opportunities available to it and reduce threats.

Company Overview

Nike, the world-renowned brand of athletes, is also the largest and best brand of footwear and sportswear in the world. While Nike designs products for sports use primarily, its popularity as a clothing for leisure continues to grow worldwide. The company continued to focus on two important things – product innovation and product quality. Founded in 1967, Nike has gained world-class reputation for its excellent product quality and marketing strategy (Anon., n.d.).

Business environment analysis

PESTLE Analysis

Political factors

Economic factors

Social factors

People actively participate in fitness clubs and sports competitions. Nike can take advantage of this dynamic social dynamic by offering its high quality sports products. The important social culture factors are increasing wealth opportunities for individuals. Product safety is another important area to consider when it comes to social and economic factors. Improve attitudes towards the positive side and enhance leisure time.

Technological factors

Nike is very interested in marketing and technology techniques. It primarily includes marketing information systems (MIS) to innovate their business operations. The technology used to produce products must be monitored, delivered to customers, and all these activities are promoted through the latest technologies to compete with competitors. The technological externalities affecting Nike are investment in R & D among companies that pose a threat as well.

Environmental factors

Legal factors

Porter’s Five Forces

Supplier bargaining power (low):

Bargaining power customers (high):

Threat of substitute products (moderate):

There are a large number of brands that operate domestically and internationally in the global market that sells sports shoes and apparel. The overall threat of alternative products is moderate due to Nike’s brand image as well as trust and customer loyalty.

Threat of new entrants (low):

As brands enter a smaller and local level, it is very difficult to build a market-leading brand of small investment. There is a very big investment in building a large brand like Nike which requires investment in infrastructure and technology as well as human resources and marketing. There are also legal barriers that prevent new brands from practicing the market.

Competitive rival (high):

Nike’s Internal Analysis

Value Chain Analysis Nike

Primary activities

Operations: Nike is headquartered in Oregon, North America. It is also Nike’s largest office with the largest number of Nike employees. Nike also has offices in Europe, the Middle East, Africa, Greater China, Asia Pacific and Latin America. The brand is located worldwide, and each of its offices serves wide geographical areas in many countries.

Sales and marketing: Regardless of its great quality, Nike is internationally renowned for its excellent marketing strategy starting with the Swoosh logo and can be found in all Nike products. However, Nike also invests heavily in marketing and athletes such as football celebrities are used to market their products and brand and promote them. The video marketing strategy is highly appreciated by Nike fans. Nike’s main sales channels are both physical and online. Their own stores, including retail stores, factory and online sales sites and mobile phone sales channels are sold directly to customers. It also uses a mix of independent distributors, licensees and sales representatives worldwide for sales (Ahmed, 2016).

Support activities

Core competencies of the Nike

• Brand Name: Nike is a world famous brand of sports shoes, apparel and equipment.

• Modern Technology & Innovation: Nike has always focused on modern technologies, product innovation and growth by investing in a better customer experience.

Nike’s Competitive Advantage

• Global Presence – The global presence of the brand is also a major source of advantage.

• Brand image / property rights – The brand enjoys a very high level of trust between its customers and the market as a whole.

Nike’s SWOT Analysis

Strengths

• Brand portfolio diversified. Although the Nike brand itself is incredibly strong, the company has a variety of brands beyond that. This suggests that Nike has its foundations well spread throughout the shoe industry, allowing it to overcome the painless changes in preference.

• Low cost product. Because many Nike products are manufactured in developing Southeast Asian countries such as Indonesia and Thailand, Nike has very low labor costs. What’s more, Nike also uses relatively inexpensive materials for many of its shoes. Together, these factors – cost of labor and cost of materials – allow Nike to manufacture its shoes at very low prices.

Weaknesses

Opportunities

• Developing markets. Since countries around the world are richer and richer, citizens in developing countries have more disposable incomes. In regions such as Southeast Asia, growing disposable income represents an opportunity for new markets to sell products. If Nike can market itself in these emerging markets, it can increase its reach and reduce dependence on the US market.

• Responsible manufacturer. In many Western countries, there is an increasing trend to know where the products came from and how the environment and workers were treated. This is another chance for Nike. If they are able to brand themselves as a manufacturer responsible for sporting goods, they may be able to increase their penetration into the market among the most environmentally conscious consumers.

Threats

Conclusion

Nike is the world’s largest brand of footwear and sportswear which has focused on product innovation and marketing to achieve growth. Its excellent marketing capabilities have helped its superiority among a range of brands. Competitive pressures against the brand continued to grow. To maintain its growth rate, the brand must retain a focus on product innovation and marketing. They can also try back integration because they rely heavily on independent manufacturers in their own supply chain. Nike is a well-known brand that attracts consumers in the market. Continuous product innovation and effective distribution network make sure that the sporting goods of the company are accessible to consumers. However, the company must reduce excessive dependence on the US market. Acquisitions and expansion in emerging markets can help the company maintain its position at the top of the sporting goods industry. If the company fully embraces digitization, its sales may grow exponentially. The company faces some threats, but continues to progress with confidence. Overall, Nike’s outlook is bright and positive.

References

1. Ahmed, R. R., 2016. Strategic Marketing Plan of Nike. [Online] Available at: https://www.researchgate.net/publication/299889166_Strategic_Marketing_Plan_of_Nike [Accessed 27 June 2019].

6. PANDEY, B. C., 2017. Nike Inc- Complete Analysis: SWOT, PESTLE and Marketing strategy. s.l.:BookRix.

7. Porter, M. E., 1980. Competitive Strategy: Techniques for Analyzing Industries and Competitors. First ed. s.l.:Free Press. UKEssays, 2018. Core Competencies Are Capabilities Marketing. [Online] Available at: https://www.ukessays.com/essays/marketing/core-competencies-are-capabilities-marketing-essay.php [Accessed 28 June 2019].