Nike, Inc. is one of the global publicly traded, footwear and sportswear suppliers established in the US. The headquarters of the company is at Beaverton Oregon in Portland. It is one of the leading suppliers of sportswear and apparel in the world. The company’s brand is valued at approximately $10.7 Billion which has established it as one of the most valuable brands in the sportswear industry (Byun, 2015). The essay seeks to analyze the strengths, weaknesses, threats, opportunities ethical, and the core competencies of Nike.
Strengths
One of the major strength of Nike is that is it is one of the competitive global companies with a slogan approach of “Just Do It” (Byun, 2015). The slogan has created an epitomized brand hence winning customer’s loyalty and attitude. First, it is important to note that Nike was established specifically to produce shoes for all people who can walk or run hence this can be considered as the company’s guiding principle. In addition to the company’s “Swoosh” logo, it is evident that the name Nike is its strength that is has developed and has gained global recognition (Byun, 2015).
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Secondly, Nike has been successful regarding outsourcing all their production aspects and materials to various overseas facilities. Therefore, the company has no manufacturing outlet that can be considered its own. This has played a critical role to Nike Company by enabling them to critically focus on diverse activities considered to be of higher value addition to the company such as design, R&D. This has played a crucial role in the company by helping them save the potentially high cost of labor which majority of the manufacturing sectors incurs.
Another major strength of Nike Company is that it is an international company with its brands recognized globally. The company has therefore been able to create a positive and lasting brand image in the global markets. The company invests heavily in ensuring its brands are of high quality, endurance, and fitness. All these aspects have played a role in ensuring that brands offered by Nike become a brand of choice for all current and potential consumers (Yadav & Raju, 2013).
Additionally, Nike has a strong research and development that enhances their innovativeness and inventiveness. This is highly evidenced by the company’s ranges of innovative brands that the company offers to the market. They take greater consideration in brand quality and innovations to ensure that they retain their market share and market competitiveness (Byun, 2015).
Weaknesses
Nike has for many years been exclusively driven by the production of footwear implying that the footwear market across the globe contributes a greater share of the firm’s revenues. Therefore Nike has become entirely depended on footwear segment for its survival (Yadav & Raju, 2013). During the recession times, it has been established that it is not good for a company to wholly depend on one segment only. It is essential that Nike should invest in horizontal and vertical diversification by including other products such as accessories and apparel.
Nike has further been operating its business through retailers across the globe who stocks other types of brands besides Nikes brands. This implies that these retailers will sell other brands at the expense of Nike’s brands. For instance, assiduously cultivated exclusivity of Nike brands will be sacrificed since Nike Company has not been able to spread their operation to include the exclusive retailer outlets in the global market.
A study by Mullin, Hardy & Sutton (2007), has shown that Nike is considered as being too premium in addition to being a luxury brand by most of its consumers across the globe. However, it is worth noting that this is not a bad thing to the company but based on the current scenario in the global market, studies have pointed out that most consumers have migrated to what is considered as “middle tier of the luxury scale”( Mullin, Hardy & Sutton, 2007), since they are becoming highly price conscious and high quality focused.
Opportunities
Studies have shown that product development and innovation offers the company greater global opportunities. It can be said that Nikes’ brands are strongly defended by the company’s owners who believe Nike and its brands are not a fashion brand and further those customers using Nike brands do not do this always only to participate in sports. Further, it has been argued that among the youths, Nike is considered a fashion brand was hence creating global opportunities for the company (Mullin, Hardy & Sutton, 2007).
Nike has the opportunity to offer other products and brands to its customers including sportswear, jewelry or even sunglasses. This diversification will enable Nike to expand their operation in high-value items. Brand diversification will allow the company to target new customers hence, increasing productivity and profitability of Nike.
Further, studies have pointed out that Nike business has the opportunity to be developed globally through building upon their global brand recognition. This is because Nike has a well established global brand recognition that has enabled them to attract a huge customer base. In the global market, there are various global marketing events and exposures such as world cup that Nike can utilize to create awareness for their brands further.
The other major opportunity available to Nike is the emerging markets such as China and India. These markets are characterized by plus new consumers who would be highly receptive to the brands of Nike. The emerging markets will offer a greater opportunity to Nike since they will be able to expand their target market and customer base. This will, therefore, translate into increased productivity and profitability to Nike.
It has also been established that Nike Company for many years has been offering value for money to its customers. The company, therefore, can maximize on this unique advantage in the future. The firm can, therefore, make its way to new consumers segment who wishes to have a high-quality brand at an affordable price.
Threats
It is clear that Nike Company is highly exposed to the nature of the global trading where they transact using different currencies (Kearsley et al., 2006). This, therefore, implies that the costs and the margins are highly varying over periods of time. Therefore, it might point out that Nike could be trading at a loss hence affecting the company’s profitability.
Further, research has shown that the sports shoe market is highly competitive hence posing a threat to Nike. This is where there are very many competitors in the market offers an alternative and cheap brand hence taking away a huge portion of Nike’s market share (Kearsley et al., 2006).
Nike has the global chain of retailers operating in various parts of the world implying that they are subject to potential risks of international trade such as labor strikes and currency fluctuations. This will affect the profitability of the company since productivity will be impacted negatively.
Imitation has also been reported to be one of the major threats that Nike is facing in the global market. This is where there are many competitors in the market who specializes in brand imitation hence offering low-quality brands at a cheaper cost to customers, and this ends up damaging the strong image of Nike (Kearsley et al., 2006).
Ethical Issues for Nike
Labor law violations are one of the ethical issues that affected Nike. For instance, the subcontractors of Nike were reported to have violated labor regulation of Vietnam regarding covering employee’s overtime wages, Sunday and night shift wages (LeBaron, 2013). This was characterized by high level of wage cheating. Some employees received below minimum wage especially during the three months of their employment.
Wage inequality was also practiced by Nike where about 90 percent of staffs in Vietnam working for Nike were women between ages 15 to 28 and were paid below a livable wage. The third ethical issue is a poor working condition that violates human dignity. For instance, it was a rule for workers not to visit the bathroom more than once every 8-hour shift and not to drink water more than twice per every shift. Violation of these rules led to the serious warning and after three warning you get dismissed. Further, it was reported that Nike’s managers in Vietnam used verbal abuse and sexual harassment against the employees in addition to corporal punishment. Foreign supervisors were reported to have sexually harassed women employees in Vietnam (Kahle, Boush & Phelps, 2000). It can thus be argued that abuse of employees by Nike is a clear reflection of the company’s inability to enforce the code of conduct. Further reports showed that most of the health and safety regulations in Vietnam were highly ignored by Nike. For instance, by the year 1997, Nike had not implemented any health and safety recommendation developed by the Ho Chi Minh City Health Department.
Core Competencies for Nike
Core competency is considered the company’s fundamental enterprise development. Further, they are company’s capabilities which tend to function as a major area of competitive advantage over the rivals. Nike core competencies emerged over time upon learning how to position their scarce resources and capabilities to give the company competitive advantage. First, the core competency for Nike arises from the firm’s effective marketing strategies. Using this core competency, Nike has been able to strategize their marketing approaches to the international market where it has enabled them to compete favorably with the rest of its global competitors in the sports shoes industry. Using effective marketing strategies, Nike has been able to position themselves strategically in this industry, create brand awareness and build up a huge customer base. The marketing strategy is thus a vital component of Nike’s success. The firm is thus located as one of the premium brands in the global market dealing with designed brands. The company has been for years luring its customers with its strategic marketing approaches focusing on its brand image, slogan “Just Do It” and its distinctive logo “Swoosh” (Saner, Yiu & Søndergaard, 2000).
Secondly, Nike prides itself on its other core competency of innovative brand design. Using this competency the company has been able to diversify their production, produce innovative brands that meet the market demand and create fashion for certain market segment such as the youth culture. This core competency offers a high value and benefits to the company’s consumers. Nike’s innovative and creative brands have set the company apart from its rivals in the market. Using its innovativeness, Nike was able to pioneer shoe cushioning systems which have the ability to reduce shock (Saner, Yiu & Søndergaard, 2000). Among the company’s technological developments are Nike Air Zoom, Nike Air, and Nike Shox. The company uses its innovativeness to enhance its customer’s comfort.
According to Saner, Yiu & Søndergaard, (2000), Nike has successfully developed an online website which has been argued to be highly ideal for customization. Therefore, NIKE ID website has been established in such a way that it offers a greater fun to its customers. Further, it provides the easiest way for its users to customize and make their purchases of footwear. Further, it has been shown that the website has played an important role in transforming their potential customers into designers. Customers can, therefore, apply their choices on ranges of designs and colors. The company, therefore, has managed to revolutionize how the world views sneakers and how they purchase them. Through focusing on this competency, Nike has been successful in remaining ahead of its rivals in sports shoe industry.
How These Competencies Are not Easily Duplicable by the Competition
Nike’s core competencies serve as the major sources of competitive advantage over its competitors. These core competencies are believed to be highly unique and thus tend to distinguish the company from its rivals within this industry, and this is through portraying the company’s personality. Nike invests heavily in R&D, in the development of marketing strategies; therefore, it often becomes difficult for other companies with limited capital to duplicate these competencies of Nike. Further, these competencies are often developed by Nike over a period through the accumulation and learning process hence might not be easy to be copied. These core competencies result to innovation and invention that is believed to enhance Nike’s efficiency and results to a sustained competitive advantage that cannot be imitated by rivals.
How these core competencies dovetail with Nike’s new offering
To ensure that these core competencies dovetail with brands offered by Nike, the company accesses its market and potential consumers then provide brands that will meet the needs of the market. The brand position focuses specifically on the company’s closely-defines clients. By assessing its market, Nike can understand its segment and effective way to satisfy their needs. It is evident that the Company’s core competencies are found in their strategic marking strategies and innovative brand design to target a specific need in the market. As a result of ensuring that these competencies dovetail with the brands offered, the company can provide value and benefits to its loyal customers. Further, these competencies are not easy to imitate and further, they can be leveraged widely to all the brands offered in the market (Saner, Yiu & Søndergaard, 2000).
Strategic implications of core competency on the new offering
The core strategies of Nike Company play a vital role towards the company’s competitiveness. By identifying its core competency, Nike can sustain its long-term competitive advantage when focusing on new offerings. It is clear that the world is changing, and consumers demand, taste, and preferences are changing rapidly hence the need for the company to offer new brands that will meet the emerging needs. By investing in R&D, Nike can provide the new offering to its consumers (Saner, Yiu & Søndergaard, 2000). Further, the company’s strategic marketing approaches will help create brand awareness to the potential consumers. The company should thus recognize the needs and demands of its customers in the new and future markets and then develop a core competency essential to meet the emerging needs hence ensuring that the company gains competitive advantage and gains as the wide customer base. The core competencies should further be focused on product design process to offer new brands that will address the future needs of consumers.
Conclusion
As a result of increased level of competition in the global sportswear Nike has been able to make use of its strengths and opportunities to gain competitive advantage. Further, the company has been able to identify its areas of weakness and threats and transform them into its areas of strengths. Additionally, Nike has established core competencies that have enabled them to gain the competitive advantage in the global market. However, the essay has focused on several ethical issues associated with Nike in Vietnam and these have had a greater negative impact on the business operation and image.
References
Byun, J. W. (2015). Successful Global Brand of the Adidas: Porter’s 5 Forces and SWOT Analyses. 15 (4), 141-167.
Kahle, L. R., Boush, D. M., & Phelps, M. (2000). Good morning, Vietnam: an ethical analysis of Nike activities in Southeast Asia. Sport Marketing Quarterly , 9 (1), 43-52.
Kearsley, L., Mezias, L., Ternay, R., Young, C., & Young, R. (2006). Nike: “just do it”. Marketing Management. New York: Willey.
LeBaron, G. (2013). Subcontracting Is Not Illegal, but Is It Unethical: Business Ethics, Force Labor, and Economic Success. Brown J. World Aff. , 20 , 237.
Mullin, B., Hardy, S. and Sutton, W. (2007). Sport Marketing - 3rd Edition 3rd Edition. New York: Human Kinetics.
Saner, R., Yiu, L., & Søndergaard, M. (2000). Business diplomacy management: A core competency for global companies. The Academy of Management Executive , 14 (1), 80-92.
Yadav, S., & Raju, K. H. H. (2013). SWOT Analysis towards Foreign Direct Investments in Retail Industry in India. International Journal of Entrepreneurship & Business Environment Perspectives , 2 (3), 590.
