Nike has continued to establish itself as a leader in the global shoe sports industry. The nature of apparel, the market, and growth of the industry shows the growth of the athletic footwear industry. The analysis of the external environment of Nike can be used to formulate the strategy of the company. The external environment entails an analysis of the opportunities and threats facing a company. After the analysis, Nike should formulate a strategy that focuses on capitalizing on its opportunities and removing some of its threats. The key opportunity that Nike should capitalize on is digital transformation and innovation while the key threat that Nike should be concerned about is the closure of brick-n-mortar retail stores, changing consumer trends, and excessive competition.
Nike Opportunities
Digital Transformation
The advent of the internet, handheld devices, and computers have changed the way people shop and experience different brands. Many consumers are increasingly accessing information online and are opting for ecommerce and mobile ecommerce platforms. The online shopping industry has been largely driven by the digital transformation. Such a transformation involves the integration of social, web, service, mobile, and ecommerce to enhance customer experience. The digital market and ecommerce has created a whole new type of customers that companies should tap into. Nike should capitalize on the ecommerce platform by investing in having products that are appealing to the modern shopper. Nike has already invested in the use of mobile apps that created a personalized shopping experience. The company should continually invest in these technologies to ensure that it reaches the new customers.
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Innovation
The modern consumer has experienced a change in their tastes and currently demand innovative products and services. This has resulted in business transformation where companies that are highly innovative appeal to customers and experience significant growth and sales. Nike is an innovation oriented company and the company can continually tap on the innovation of its products to continually appeal to customers. The modern customer is willing to try new products and products that have been integrated with technology. Nike should thus engage in a continual product development and focus on R&D to ensure that the company is at the forefront of product innovation.
Increasing Value of Health and Exercising
Many people today have become health conscious and have adopted a healthier lifestyle. This means that sport is increasingly becoming a part of everyone’s lifestyle. Many people find it fashionable when they participate in activities in sports. The youth culture has also changed in the past with a significant emphasis on sports and fashion. Nike has established its niche in the sports and lifestyle market and it expects to capitalize on this opportunity. With the increasing concern of people that want to engage in exercising and fitness, there comes a huge market for Nike to capitalize on. Nike should thus advertise itself as a product that encourages health and fitness so as to appeal to the customers.
Increase in Global Markets
There have been rapidly growing economies in the past few years such as China and other emerging economies such as Brazil and India. These new markets have the potential to improve the growth, sales, and revenues of Nike. The number of customers in Nike is expected to increase as the brand continually gains an international brand recognition. The company can establish a global brand recognition and experience excessive growth. The company establish itself in the Chinese customer preferences and tastes. Additionally, it can engage in high growth rates in developed markets for the coming years.
Nike Threats
Close of Brick-n-Mortar Stores
There has been a rapid change in consumer trends and this has created significant pressure for brick-and-mortar stores. Traditional brick-and-mortar retailers have been closing at a significant rate over the past few years. While some of the closures of the stores has been as a result of bankruptcy, most companies have closed due to the poor performing retail stores. The closure of stores has been compared to recession during the financial meltdown. The closure of the stores has also impacted retail stores that sell Nike shoes. Most of the companies that sell Nike products have closed and this has resulted in a decrease in Nike product distributors. The closure of the stores presents a new challenge for Nike as it becomes difficult to access customers.
Changing in Consumer Shopping Habits
Another threat that Nike faces is that there has been a significant change in consumer habits that can be difficult to anticipate. Most consumers are increasingly opting for online shopping and the traditional system of retail is not going to survive. With the presence of online shopping, customers increasingly have information about products regarding the quality of the product through product reviews. This has resulted in companies experiencing significant pressure to improve the quality of its products. Additionally, any negative publicity that a company faces can result in the information being widespread and the overall result is that the company would have a bad public image. Such a negative publicity can have a significant impact on the company’s sales as customers can choose not to buy from the company.
The changes in consumer interests have also been caused by the rapid changes in technology. Technology has been growing at a significant rate over the past few years and companies need to start integrating technology in their products. Companies that do not develop their products that showcase the latest technology are likely to be outperformed by competing companies. Additionally, the changes trends in design occurs at a more accelerated pace and this can affect business results. Companies need to keep up with the latest trends in order to remain relevant.
Competition
The athletic apparel, equipment, and footwear industry is a highly competitive industry throughout the globe and especially in the United States. There are multiple leisure and athletic sport and footwear companies that can produce similar products to niche. Some of the notable competitors in the athletic wear industry include Adidas and Puma. These companies have been able to diversify their line of products and included various items that are sold by Nike such as sports and lifestyle clothing, leisure and athletic footwear, and sporting equipment.
Currency Changes
A part of Nike’s products is usually generated in locations outside the United States and fluctuations in currency can result in negative outcomes for the company. The company can experience unfavorable exchange rates which can result in a reduction in the overall profits. In some instances, Nike could be manufacturing and selling its products at a loss. In order for Nike to prevent such outcomes, the company can opt for having hedges in place to lessen the impact of the exchange rates.
In conclusion, the analysis of the opportunities and threats of Nike shows the strategy that the company should use. The emerging digital platform has created several opportunities that Nike can capitalize on. There is a new online market that Nike can use to reach the modern customer. However, such a shift has also created several threats as brick-and-motor retail stores shut down and there are changes in customer tastes and preferences. In order to overcome these threats and capitalize on the opportunities, Nike should use the strategy of digital transformation so as to realize continual growth and success.
