Nike is a multinational company formed in 1994 by Phil Knight and Bill Bowerman with its headquarters at Beaverton, Oregon. The company specializes in sportswear, athletic wear, apparel, footwear, and accessories. The company was created to provide athletes with exceptional products that would enhance their performance (Wong et al., 2021). The company has approximately 75,000 employees in all its outlets and a presence in over 170 countries. The company recorded net revenues of $37.4 billion in 2020 and a net profit of $2.5 billion. The company, like many others, has been affected by the effect of Covid-19 and intense competition (Balis, 2020). As a result, it is essential to carry out a PESTLE and SWOT analysis to decide whether launching a new product outside of the United States will be a viable strategy to improve the sales numbers. Conducting the two analyses is crucial for Nike to avoid uncertainty market dominance when every business is struggling to survive amid a drastically reduced number of physical buyers and increased competition.
SWOT Analysis
A SWOT analysis is a framework that evaluates a firm's capabilities or the strengths, weaknesses, opportunities, and threats to determine whether its products will continue doing well or not. Below is the SWOT analysis for Nike Inc.
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Strengths
Nike has strong brand awareness in the United States and globally. It is one of the most recognizable brands globally, with an impossible logo to mistake or forget at all (Wong et al., 2021). Moreover, it is the most dominant sportswear and footwear for sports and leisure globally, competing against strong opponents like Adidas. The company has an extensive customer base with millions of customers loyal to Nike throughout its existence. The company has managed to pull in adoring African American customers by being a part of the black lives matter movement, which stands against racism. The company's extensive customer base has pushed its profits higher than any of its competitors.
The company has a powerful branding technique that uses prominent athletes to market its products. For instance, Serena Williams, who plays tennis for the US women, plays in a complete Nike outfit while Christiano Ronaldo's boots are Nike. Also, Nike used Michael Jordan to market its Jordan shoe brand to basketball lovers.
The company uses a low production cost and high-quality policy to ensure that its customers get high quality at a low price, specifically intended to earn economies of scale (Pandey, 2017). Further, the company uses highly innovative and research-guided techniques to develop high-quality products that rival every competitor. 3D technology is being used to create unique products.
Weaknesses
Nike is over-dependent on the footwear venture, which is the backbone of the company. Depending on one market segment, the risk of relying on one market segment is that uncertainty in market shifts could pose problems to the company (Pandey, 2017). The company has created a lousy labor reputation in overseas countries. The working conditions have not been perfect, and the company has had numerous lawsuits on discrimination and sexual harassment. This is a bad image for a company that intends to expand outside of the United States. The company also has outstanding loans, which threaten its financial position.
Opportunities
Nike has opportunities for growth in developing countries. Nike outlets in Asia and Brazil are performing well, which means that there are more opportunities to expand. The company has been diversifying its products into the accessories field, and there is a unique opportunity to exploit the gap.
Threats
The company faces the threats of increasing competition from companies such as Adidas and Reebok. Also, the hostility caused by labor tensions in foreign countries threatens the company's stability (Pandey, 2017). Furthermore, there is a unique threat of imitation or counterfeiting of Nike brands which threatens the credibility of its products.
PESTLE Analysis
Political
The United States has an excellent political environment that encourages businesses to thrive (Wong et al., 2021). The taxation policies are favorable, and the interest rates are low. However, the political climate in developing countries is relatively unstable.
Economic
The economic environment is promising with the rapid expansion of business in developing countries. The dollar's stability is a positive sign for Nike to continue operations (Balis, 2020). However, a recession caused by factors such as coronavirus pandemic has caused the profits to dip considerably.
Social
The increasing demand for body fitness means that more Americans are getting into the practice of being fit, which will increase the demand for Nike products.
Technological
Since its inception in the United States, the company has been using 3D technology, resulting in high-quality products (Pandey, 2017). The market is experiencing an influx of accessories such as health watches and smartwatches. This is both an opportunity and a threat.
Environmental
The company has been at the forefront of reducing its carbon footprint through zero-emissions efforts. The company has been involved in green practices to promote sustainability.
Legal
The company has to address the legal problems caused by labor conflicts in its overseas branches. Moreover, it has to expand consumer regulations in overseas ventures.
Recommendations
The overall conclusion is that Nike has to develop a new product such as a new footwear model that appeals to athletes and the general public. This means designing a product that serves everyone. to achieve this; the company has to exploit its reputation for quality and innovation to drive the launch of its new products. Nike customers are loyal to the brand, and this will enable the latest footwear to launch successfully. Also, it is highly recommended that the company should fix its employees' policies abroad. If employees are not treated well, there are fewer chances of a product being successful overseas. The company has to take the initiative of ensuring safe working conditions and employee welfare.
Furthermore, the company has to exploit the advantage of operating overseas at total capacity, a move that companies are reluctant to attempt. This will give the new product enough time to adapt to the market before competition becomes stiff. Also, Nike has to take advantage of the relative growth in developing countries as an opportunity to launch the new footwear. The US market is already saturated, and external markets are the future of Nike. Furthermore, Nike has to take advantage of the advancing technology to improve its product designs.
References
Balis, J. (2020). Brand marketing through the coronavirus crisis. Harvard Business Review .
PANDEY, B. C. (2017). Nike Inc-Complete Analysis: SWOT, PESTLE, and Marketing strategy . BookRix.
Wong, D., Abu-Khater, H., Woschnik, E. S., Huda, C., & Mora, B. (2021). Factors in post-COVID-19 global supply chain management. Journal of Supply Chain Management, Logistics, and Procurement , 3 (3), 239-259.
