Nike SWOT Analysis 2024 : An Ultimate Report With Advice

How Nike began its journey is heavily debated, but its success is something no one ever questions. Nike is an American multinational company that specializes in apparel, accessories, and sports gear. As of January 2024, Nike holds the position of the 76th biggest company by market cap, which is calculated to be $157.84 Billion. So, let’s take a closer look at Nike’s success by reading the Nike SWOT analysis.

Nike: Company Overview

Nike’s most accepted origin is that it started as Blue Ribbon Sports in 1964, and it functioned as a distributor for Japanese shoemaker Onitsuka Tiger. The company changed its name to the Nike Inc. we knew today in 1971. However, 1960 Summer Olympics gold medalist Otis Davis claimed Bowerman, a co-founder of Nike, made the first ever Nike shoes for him. Regardless of origin, the true Nike Inc. was born when Carolyn Davidson designed the famous swoosh mark in 1971.

The company is now led by Chairman Mark Parker and CEO John Donahoe. It’s headquartered in Beaverton, Oregon, and it currently employs 79,100 people. In 2023, the company was awarded the world’s most valuable apparel brand by Brand Finance for the 8th year in a row. Nike managed to increase their brand value by 9% to $33.2 billion.

Product & Services of Nike
Bags | Socks | Sport Balls | Eyewear | Timepieces | Digital Devices | Bats | Gloves

Nike Competitors
Adidas | Puma | Reebok | Under Armour | Anta | Fila | ASICS | New Balance

Did You Know?

Nike’s famous “swoosh” logo was designed by Carolyn Davidson in 1971, who was an art student at the time. She was paid $35 for working 17.5 hours on the project and later given 500 shares of stock of Nike Inc. for creating one of the most recognizable logos globally.

Strengths – Nike SWOT Analysis

Highest Sports Brand Visibility: Nike has slowly become synonymous with sports over the years. Through marketing, undermining the competition, managing the store design, and collaborations, Nike has become a name for reliable, high-quality sports gear. If you want to be a professional athlete, you get Nike. Just Nike’s footwear generated over $4.54 billion in Asia Pacific and Latin America in 2023.

Sports Focused: Nike heavily emphasizes producing high-quality gear that’s meant to be used for sport. Most of Nike’s collection is actual sports gear made to be moisture-wicking, durable, and breathable, with other additions to aid athletes. This is why professional athletes such as LeBron James, Kobe Bryant, Serena Williams, Cristiano Ronaldo, and Roger Federer have worn Nike gear while playing.

Star Athlete Collaborations: Nike grabs the attention of millions of sports fans by collaborating with or signing marketing deals with star athletes. These deals are powerful marketing tools that promote the brand to any signed professional athlete fans. Nike has managed to get sign Cristiano Ronaldo, LeBron James, Serena Williams, Kevin Durant, Rafael Nadal, and more, and their fans have flocked to Nike to buy its products.

Impactful Designs: Nike’s design isn’t only targeted towards aesthetic value. It also focuses on producing performance-enhancing gear. Designs like Nike Air Flightposite challenged the idea of a shoe while focusing on biomechanics to create shoes that protected and padded your feet. Nike’s Air technology packs air into flexible and durable bags and forms a structure within the soles of shoes to reduce weight, absorb impact, and retain shape.

Aiming For Sustainability: Unlike many businesses, Nike has made an effort to ensure sustainability for its older, current, and future products. Nike provides instructions on how to extend its older shoes’ lifetime, repair shoes, and offers to take used shoes in and refurbish them. It has started working with biodegradable plastic and launched Nike Forward, a collection that has reduced its carbon footprint by 75%. This decision is a long-term investment that has endeared Nike to many consumers and reduced its manufacturing costs.

Weaknesses – Nike SWOT Analysis

Low Number Of Suppliers: Compared to its sales numbers, Nike has a low number of suppliers. For footwear, Nike relies on 122 factories in 12 countries. In 2020, the factories in Vietnam supplied 50%, Indonesia 24%, and China supplied 22%. For apparel, it only relies on 329 manufacturers, with China supplying 28% of the products. Any international issue or production issue can easily cause its supply to be halted.

Unethical Labor Practices: Nike has a long-running issue with unethical labor practices in its supply chain. In February 2020, the Washington Post revealed that Qingdao Taekwang Shoes Co. has been forcing Uighurs from the Xinjiang region to produce Nike shoes. Tailored Wages UK reported in 2019 that Nike was not likely to pay proper living wages.

Unethical Clauses In Athlete Deals: Nike has also been found forcing contracted athletes into complying with inhumane clauses. Alysia Montaño, a 7-time champion runner, stated in 2019 that Nike threatened to pause her contract and stop paying her if she had a baby during her career. Mary Cain, a former track star sued Nike and her coach in 2021 for emotional abuse, stating that her coach had objectified and sexualized her. She accused that she had been placed on a diet that forced her to practically starve.

Gender Discrimination: Nike has been blamed extensively for fostering a toxic workplace that allows discrimination against women. Nike was sued in 2018 by 4 of its then-active employees for lower pay, smaller increments, fewer benefits, and sexual harassment. Kelly Cahill was Nike.com’s marketing director for 4 years, and she stated she was paid $20,000 less than her male coworkers per year. Nike claims that it has made many positive changes since, but the lead lawyer Laura Salerno Owens has stated that she is still receiving complaints.

Opportunities – Nike SWOT Analysis

Accessing Asian Markets: Nike made $4,111 million from selling footwear in Asia Pacific and Latin America in 2022. However, Nike is yet to access and market in many counties directly. For example, Nike sells its shoes in Bangladesh, Thailand, and Indonesia, but it does not market its products in these markets in any way. Proper marketing efforts can cause Nike’s customer base in these countries to increase exponentially.

Becoming More Environment Friendly: Nike can rethink its packaging, materials, and logistics and design its physical stores to become more environmentally friendly. Reducing carbon footprint is an easily exploitable marketing opportunity that generates positive press and WOM spread at a lower cost.

Exploiting Indirect Marketing: Since 2014, Nike has been spending over $3,000 million on marketing per year. This has aided Nike greatly in holding on to its market leadership for 8 years. But high marketing costs can cut deeply into a company’s profit margin. Nike can apply indirect marketing tactics such as SEO and PPC for lower costs with high impact.

Threats – Nike SWOT Analysis

Powerful Opposition: Nike has held on to market leadership for a long time, but it has been relentlessly pursued by other large brands for its market share. Companies such as Under Armour, Adidas, Steve Morten, Crocs, Deckers Brands, PUMA, and Sketchers have been spreading into Nike’s target demographic. PUMA and Adidas have constantly challenged Nike’s designs and athlete collaborations while the other brands offer quality products at lower costs.

Luxury Brands: Nike experienced exponential growth during the pandemic. However, luxury brands have begun to shift their philosophy to sustainable, high-quality products that retain value. Now, many consumers are buying luxury clothing as investments, and over 50% of such buyers are millennials. Nike’s products are meant to be used after the purchase, and this conflicts with current market trends.

Current Political Climate: Nike is an American multination corporation that relies on suppliers such as China, Indonesia, and other Asian countries for its production. The current political climate has made many Asian countries, especially China, become somewhat hostile toward the USA. If the situation gets worse, Nike could potentially lose access to all of its manufacturers or be forced to find new ones.

[Bonus Infographic] SWOT Analysis of Nike Inc.

Recommendations for Nike Inc.

Nike has been dominating the apparel market for nearly a decade, but it is not without its faults. The company needs to reinvent its workplace, marketing, sponsorships, and employee management to stay in 1st place. It can consider the following suggestions for these changes.

• Nike should look into its hiring practices and eradicate biases against hiring women. It should focus on providing fair initial wages and equal benefits.
• The company should use independent investigator and monitoring systems to find any cases of sexual harassment and discrimination.
• Nike should ensure that its increment and benefits assessment is fair and equally rewarding to all.
• The human resource department should be trained and equipped to deal with complaints of sexual harassment. Both women and men should have safe, secure methods of registering complaints without repercussions.
• Nike should make changes in its approach to contracting athletes. They should thoroughly examine the athlete’s personal and career goals and provide clear clauses before the contract is signed.
• The company should consider sponsoring Twitch and YouTube personalities to garner the attention of Millennials and newer generations.

Frequently Asked Questions (FAQs)

Final Words on Nike SWOT Analysis

Nike is a market leader that provides good value for its brand to consumers, but it’s seeped into controversy. As a long-standing company, it has stuck to old business practices and moral standpoints that have become outdated and unacceptable. While it’s pushing for innovation in its products, Nike needs to innovate its philosophy. Otherwise, it may collapse from negative press and an onslaught of lawsuits.

References

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