Management - Nike Strategic Analysis

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NIKE STRATEGIC ANALYSIS
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Contents
Introduction................................................................................................................................2
Analysis of internal and external environment of Nike.............................................................2
Nike company SWOT analysis..............................................................................................2
Strategies used by Nike company..............................................................................................5
Recommendation in future strategies.........................................................................................6
Bibliography...............................................................................................................................8

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Introduction
Nike is one of the revered brands of America that is into manufacturing high quality
innovative footwear, equipment, apparel, services, and accessories. It is the company that is
headquartered in Beaverton Oregon. The company is considered one of the largest suppliers
of designer shoes globally. The company has done great in various aspects of its businesses,
it has achieved great heights in the field of manufacturing best designer shoes and apparels.
Recently, in 2018 the company was ranked at 89th position in terms of revenue among various
countries in the globe. The company came into exitance in 1964 with the name as Blue-
Ribbon sports by great personalities named Phil Knight and Bowerman (Bengtsson, 2016).
The original name of the company is Blue Ribbon sports, the name of Nike related to sports
was given because of its great association with the athlete Phil Knight. In past the company
has organized various CSR initiative that were helpful in raising great CSR financial funds
(Mackey & Bassendowski, 2017). These financial funds were helpful in achieving the
American government CSR objectives and goals. One of the important products of the Nike
company are its sports equipment as it was helpful in raising good amount of revenue for
various great personalities. Moreover, the company was into producing those apparels that
are highly designer in nature so that they are adorned by the target market. In achieving such
a strong positioning in the market, it had come up with various innovative strategies and
policies so that its visons and missions can be accomplished (Paro, 2017). The company
operates with the vision of bringing innovation and inspiration to every athlete in the world
while its mission statement is to do everything possible in expanding the potential of human
being. These mission statements of the company what keeps it on its toes to get the things
done. The following report will be discussing about various strategies and policies of the
Nike and its internal and external environment through SWOT analysis and five forces
model.
Analysis of internal and external environment of Nike
Nike company SWOT analysis
The Nike company is into manufacturing good designer footwear, apparels, Accessories, and
equipment’s. The company was able to achieve the good positioning in the global market
due to the combination of various strengths available to achieve its visions and missions. In

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order to analyze the company’s strengths and weakness. It is important to conduct its Swot
analysis so that the right analysis can be done (Setiawan, 2016).
Some of the strengths of the Nike company are-
Strong Brand image-
Nike company is known for its strong brand image globally. The stores of Nike can be found
in every country. The important thing that is responsible for ensuring the good and powerful
brand image of the brand is its consumer-friendly attitude as it provides the trendy, good
quality and attractive shoes and apparels to the target market (Payne, 2019). The other
reasons include for its good and powerful market positioning of brands are stylish products
and good marketing strategies. the products manufactured by Nike company are supremely
stylish and always follows the latest trends. These trendier products are highly attractive to
the eyes of the consumers. The company is also into good marketing strategies that include its
attractive or alluring brand logo that is swoosh style. Besides the swoosh style logo, in past, it
had organized various marketing programs thus leading to its robust brand positioning
globally (Mello, 2015).
Good marketing capabilities-
Marketing is one of the most important part of any business. it is quite helpful in making the
target consumers aware about the products and the services offered by the brand. except
Nike, various other competitors have invested in the marketing. The other companies have
invested huge some of money in its brand recognition activities. In 2016 and 2017, Nike has
spent the major portion of its revenue in marketing its product and equipment’s. The sum
invested by it was $3.2 and $3.3 Billion. The major portion of it was utilized by the company
in promoting its products on social and digital media (Mojibi, 2015)a.
Robust financial position -
Nike is into the business of offering the high quality and trendy apparels and equipment’s to
the target market from the past 55 years. From the past 55 years, the company had been into
producing these products and services that had affected its financial position. The company
has earned a great deal of revenue in the past years thus making its position stro9nger
financially (R & S, 2013). The revenue earned by the business in the past years were
responsible for investing in other business. The good financial investment had attracted great
association with the company thus making it easier for it to rise high.

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Internationals presence-
Nike has good international presence where it has increased its stores to various countries. It
is considered one of the international brands that had expanded to various countries at the fast
pace. The great expansion of the Nike company to other countries have opened doorways for
various exciting opportunities. The total number of stores of Nike are 642 thus resulting in
better understanding of the things presented. The increase in the international presence of the
stores made it the best among various stores (R & S, 2013).
Besides its strengths the company also has its own set of weakness that include-
High dependence of Nike on US market-
The company Nike is highly dependent on the sales and revenue from the US market. In
2017, the company generated around 47 percentage of the revenue from its sales of products.
The high dependence on USA is quite dangerous for the company as there are various other
competitors coming up in the market that can take up the position of the company (S.Deacon,
2012).
Increase in the operating expenses-
As the company had got into various markets that had increased its costs and expenses. The
rising costs and expenses have affected the profits of the company thus leading to the losses
in various sectors. The high degree of loss affected its positioning in the long run. It had also
impacted it negatively in the long run leading to increased cost and other expenditure of the
company (SHELLY & MILLER, 2006).
Opportunities
Product innovation and digitization-
The company has the great opportunity in the area of product innovation as it can achieve the
better sales and revenues by innovating good quality and trendy equipment. The high degree
of innovation is good in achieving the great results so that the right segment can be attracted
to. In today’s society various changes are being taken place, one of the major issues that is
going recently is the issue of sustainability. The issue of sustainability if taken in the serious
manner can help the company to innovate its products in as more sustainable manner
(Spencer & Johnson, 2017).

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The company has an opportunity for ensuring the highly sustainable products by
incorporating various innovative practices in it. The other important trend is digitization
where the products can be made available digitally or the consumer awareness can be
achieved by ensuring high degree of digitalization of its products (Tang, 2016).
Acquisition-
Acquisition is another important method through which Nike can expand its production. It
can acquire highly related business of its category thus leading to larger consumer base. The
larger consumer base can lead to better growth of the company in infrastructure and financial
terms where all these can be achieved in the best possible (Teravainen, 2018).
International expansion-
Although Nike has achieved the faster international growth in various countries, it had made
various products available in the various countries. The company can take in account the
expansion in the lesser known countries thus leading to better consumer awareness of the
products and high rate of profitability.
Threats
Increased competitive pressure-
The other important threat of the company is high level of competition from other companies
in the market. Many companies have come up in the market that had affected the competitive
strategy of the company in many ways. The companies have taken up some of the market
share thus leading to high degree of conflicts among the companies. Some of the companies
have been responsible for taking up the market share of the company.
Increased legal pressure-
There has been the great pressure of various laws on the company. The company has served
into various international markets that affected it in the effective manner. In some of the
countries where it has operated, it had to face various litigations related to production of the
products and services. These litigations have affected the growth of the company making
company responsible for ensuring to comply with the rules and regulations of the company.
External environment factors-
Political –

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Nike is the Company that is headquartered in USA. In recent times, due to the new litigations
brought down by US political parties, the environment for doing business was highly volatile
in USA. The companies had to face lower consumer participation in buying goods and other
services in USA. It was helpful in analyzing the right way of communicating things in the
best possible manner (Arditi, 2017).
Economic-
Due to the high degree of political instability, the economy of the USA got affected badly
where the businesses went into losses. The high economic disparities were responsible for
increased loss in the long run.
Social-
Social trends of the country were also changing as many immigrants were coming in the
country. The immigrants that were coming were various cultural backgrounds and their
choices differed greatly. Moreover, various competitors have come up that offered better
quality of shoes and other materials (Bengtsson, 2016).
Technological-
There have been great technological changes in USA that has influenced many of the
companies operating there. The companies operating in USA have taken on their
technological changes and affected their workings in the positivity in a productive manner
(Elsbach, 2018).
Legal-
The legal environment of every country differs as every country has a different political
party. The company has to adhere with the legal changes of different countries. Due to the
different legal environment of the country, Nike has faced various objections in the process.
(Luo & Milne, 2013 )
Five forces analysis of Nike company
Suppliers bargaining power-
The suppliers of Nike have the low bargaining power as they are small in size. The small size
of the suppliers of the Nike products makes them less competent to bargain about the prices.
Moreover, the raw materials used by the company are unique as it affects them achieving the

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right goals of the organization. In Asia, various aspects are used in achieving the goals of the
organization.
Customers bargaining power-
Due to the arrival of various stylish and innovative brands in the country, the competition
among the competitors have risen. The other important aspect of the increased power of
customer bargaining led to high availability of digital media leading to better awareness of
the various other exciting products in the country. Many of the competitors have started
offering exciting and alluring products making it easier to get the things done in an effective
manner. (Luo & Milne, 2013 ) (deWit & Williams, 2013)
Substitute threat-
The products that are offered by Nike company to its target market are apparels, shoes and
other equipment’s. there has been the surge in the companies manufacturing these products.
The increase in the surge of various companies led to the high availability of substitute of
various products thus leading to increased competition in the sector.
New entrants’ threats-
The threats of the new entrants in the industry is very low as Nike is a large scaled and
revered companies on the globe. The new entrants have reduced in the industry sector thus
leading to greater monopoly of Nike and other revered shoes brands in the shoe and other
apparel industry.
Competitive rivalry among the existing brands
The industry has various brands or companies leading to high level of competition in the
industry. The high degree of competition between of brands leading to rivalry between the
players. That rivalry leads to great misunderstanding among the brands thus leading to never
ending brand wars thus affecting their financial position in the long run (Kulczyk, 2016).
Value chain analysis of Nike company
Primary activities:
Inbound Logistics
Nike has a well-equipped procurement team where it secures it supply for its products to
deliver the finalized products to the target audience. The Nike ensures that the suppliers that

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it is dealing with are providing the right quality of goods to produce the good quality of
products. Recently, Nike is switched to ensuring the sustainability in its operations so it now
deals with the smaller number of suppliers who are committed to Nike standard (Banfield &
Kay, 2012).
Operations:
Outbound logistics
One of the most important part of Nike value chain is Outbound logistics. The reason that
makes it one of the essential parts is that Nike has around 500 factories and the items of
which that are to be shipped to various distribution centers and then from there to various
retail stores. It is important for the Nike to manage the efficient system of distribution so that
the products are readily available to the customers in less time (Bengtsson, 2016).
Marketing and sales
Nike spends high expenditure on marketing and advertising of its products in the creative
manner. It has always used good combination of marketing communication to attract the
consumers towards its various brands so that large number of customers can be attracted
towards it. It has also used print media, and digital media to creatively showcase the products.
The digital media had been used extensively for the promotion of products thus by helping
them achieve the right sales of its products (Elsbach, 2015).
Support activities:
Technology-
Nike is USA company that is into using the latest technology thus resulting better
management of the affairs and things. Nike has an organizational culture where annually it
has to revamps its technology thus leading to easier management of the affairs and other
important operations. It has brought in the innovation in the areas of distribution, human
resource activities, and manufacturing of products (Kulczyk, 2016).
HRM-
Nike manages the human resource management in the best manner with help of the best
expertise in the world. Its focus goes on motivating the workforce of the organization thus
leading to better management of the human resources. The organizational culture of the Nike
company is very supportive of the personal goals of the employees (Heuvel, et al., 2010).

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Firm Infrastructure-
Firm infrastructure of Nike is large which consist of distribution center, retail stores, and
logistics centers thus it makes it easier for the Nike company to manage it global presence
well. It ensures that the employees and clients of the company remain satisfied (Luo & Milne,
2013 ).
Procurement
The Nike ensures that its products are met with good quality. The products and services
should match up with the set standards of the products in the market. It should also make sure
that the right sources should be deployed in achieving the right manner of getting things
done. The Nike develops relation with the trustworthy suppliers that are able to provide them
with the good quality of products to the Nike manufacturers (Elsbach, 2018).
Strategies used by Nike company
Some of the strategies that are used by Nike company to sustain its competitive advantage in
the company are-
Cost leadership strategy-
Nike as the brand of stylish manufacturer of shoes and other apparels leads to high number of
consumers buying that brand. The lesser cost of the products produced by the Nike company
is the main and the foremost reason for high degree of retention of the consumer base. The
company has tried various technologies and framework in achieving the minimum cost of its
products so that the consumer remains the attracted to the brands as they are offered at low
price (Heuvel, et al., 2010). The r cost leadership strategy makes them produces the right
products at an affordable price. Due to its cost leadership strategy that company was
successful of attracting the middle-class buyers towards its products. It was able to establish
itself in the most effective manner even in the developing countries.
Differentiation strategy-
Differentiation strategy is about producing goods for the consumers that have the distinctive
features in it. The high level of distinctiveness in its products makes its available to the

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consumer base in the right manner. the Nike has followed its differentiation strategy since the
beginning of its time. it had always focused on bringing it cutting edge products to the target
segment, its focus on bringing the increased differentiation in its products sustained the
marketing base of the target segment. The sustained marketing base will be helpful in
improving the loyalty base and revenue structure of the organization. in the past also, the
company has received various awards in the field of ensuring high degree of differentiation in
it products that is quite helpful in attracting the consumer base.
The Nike followed these two generic strategies, except the generic strategies, there are other
important intensive growth strategies that include
Product development-
Since the beginning of its operations, the company followed the product development
strategies. The product development strategies are concerned with developing new type of
products according to the needs and requirements of the consumers. The need and
requirements of the consumers keep changing and are highly dynamic in nature where the
high ways of doing things can be achieved in the best possible manner. In past, the Nike has
come up with various products leading to increased sales and revenues of its stated products
and services (Arditi, 2017).
Market penetration-
The second important strategy followed by Nike company is Market penetration strategy
where it aims to penetrate the new markets by lowering down its prices so that the large
portion consumers can buy its products. The Nike always believed in increasing the market
share of its products by offering it at low prices. It always believed in achieving the high
growth rate by increasing its consumer base in the best possible manner that can only be
achieved by lowering down its prices. Nike has intensively tried applying its approach to the
developing and under developed countries so that it can invite the consumer base from those
countries (Banfield & Kay, 2012).
Market development-
Another important strategy followed by the Nike company is market development strategy
where it aims at developing the new markets so that the long-term profitability can ab
achieved in the business combined with good growth rate. In its objective of developing the
new markets, it has targeted the countries like Africa and other countries (Borghuis, 2016).

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The market development strategy was helpful in getting things done in an effective manner.
the other important market development strategy is helpful in getting the things done thus
increasing the revenues and growth of the company.
Diversification strategy-
When Nike was first established, it was into producing the shoes but as time passed it thought
of diversifying its operations to other sector that included apparels and other important
equipment’s. the high degree of diversification of the its products were responsible for
achieving the high rate of profit and growth of the company. The Nike selected this strategy
because of the high rate of profit and growth derived from it. By looking at past financial
reports of Nike, it could be said that higher level of profit and growth was achieved due to the
profit from other sector of Nike products (Elsbach, 2015).
Recommendation in future strategies
Some of the important recommendation for the future of the organization include-
Market analyzation-
The effective market analyzation is important so that the right type of products can be offered
to the target segment. There were various instance in the past when the Nike was failed in
offering greater satisfaction to consumers that are helpful in getting things done in an
effective manner. the right techniques for ensuring the great degree of market analyzation is
helpful in achieving the targeted level of profit and growth (Elsbach, 2018).
Sustainable products –
Due to various environmental issues in the past that include climate change where it was
important for ensuring the higher degree of customer satisfaction. The company must focus
on ensuring the sustainable products to the target consumers.
Lower market penetration –
Although the brand has developed the good deal of presence in various areas, it has become
very important in achieving the targeted goals and objectives. the lower market penetration is
helpful in getting things done in the effective manner. it should try protecting its brand image
so that it is able to protect its image in the best possible manner.

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