Has your professor recently asked you to perform a SWOT analysis of a company? Many students find it difficult to research and write an informative SWOT analysis. Hence, the following points intend to educate you on how one can perform this analysis. These points are related to the world largest athletic footwear and apparel retailer.
What Is SWOT Analysis?
It is important for students first to learn what this term means. A SWOT analysis is an acronym for strengths, weaknesses, opportunities and threats. Analyzing each point gives every company a chance to gain insight on what things they need to introduce and what things they need to cut down. Mapping these four things can take every company to the path of success. Here is a SWOT analysis of Nike, which is a world-famous brand:
When Bill Bowerman and Phil knight first formed Nike in 1964, it was named as Blue ribbon sports. It was not until 1978 that the name changed to Nike. The company is known for athletic apparel, sporting equipment, footwear, accessories, and service all over the world. Its logo is represented by a Swoosh, which sets it apart from the rest of companies in the same field.
A Recognizable Global Brand
Nike is one of the leading brands all over the world. Consumers and other people can easily recognize Nike’s logo anywhere they go because of how popular it is. The company’s famous logo, Swoosh, is also one of the elements that make it easily recognizable. Nike’s popularity is mostly because of the famous athletes who have endorsed the brand. A combination of passion and effective marketing strategies is what sets the company apart from its competitors.
Continuous product innovation
The main strength of Nike is that it is always using different innovative concepts to renew its old products and introduce new ones in the market. Many people connect Nike with competitive athletic apparel and other services that demands brand loyalty. Nike’s product has been large and growing as it was found in the company’s trend in the last few years. Unlike other companies that grew quickly but declined after a few years, Nike, in contrast, has seen no decline yet and it continues to grow because of its strong product innovation.
Efficient Production and Distribution Process
The reason behind Nike’s global dominance is efficient production and effective distribution process. Due to their adequate resources, they can continue producing top-notch products at production costs at a high pricing power. Nike has three main distribution channels: one is that they distribute through wholesalers that are situated in the US, second is direct distribution through their factory outlets and last but not the least, they sell through E-commerce. Nike’s products are spread all over the world from India to China, Brazil, Argentina and many more companies.
Nike has a few external and internal weaknesses that can be overcome if they focus on it. Some of these weaknesses include rising costs, labour issues, low budget for research and development and many more.
Even though Nike is generating more revenue compared to previous years, however, its expenses increased greatly. Whenever a company has fast-rising expenses along with its revenue, then the company should take immediate action. In the past, Nike has cut down its costs by firing employees. It is expected that the company might take such measures again.
Low budget for research and development
Even though one of its strong factors is that it is continuously innovating and bring new products, however, if you view their income statement, you will be shocked to see that the company has spent zero dollars on research and development, which is considered a big weakness.
Furthermore, every company faces labour issues. Nike faced this backlash, too, when it was accused of treating the workers in the wrong way. It was also accused of utilizing child labour in Pakistan. This can affect the different operations of a business significantly. Nike has been trying to clear its name by finding issues to these problems.
Entirely dependent on the US market
Even though Nike is trying to expand itself internationally, it still depends on the US market. 40% of its revenue generates from North America, which means that the changing political, social and economic conditions of America can heavily affect their company. It is about time that Nike should make its presence strong in overseas market as well.
Nike has made some strategic acquisitions over the years that has made the brand presence strong. It has acquired companies like Zodiac, Virgin Mega, Umbro and many others. It recently made a deal with Invertex. The company should not stop doing this. It should acquire more companies that have a bad image due to wrong reasons.
Grow sales through E-commerce
The opportunities that the internet offers are unlimited. It is a growing opportunity for Nike to use this platform to increase their sales. The company should open its physical stores all over the world; however, it should also focus on growing its online presence.
This is a threat that is faced by almost all companies. Nike has extremely strong competition from companies like Adidas, Puma and H&M, which recently entered the sports industry. Nike needs to focus on how to stay ahead of this competition, considering that its sales decreased last year and Adidas sales increased comparatively.
Increasing Selling, General, and Administrative expenses
As mentioned above, that even though with the increasing revenues, the company is other expenses have been increasing too, which could consequently affect the price of its products. As a result, it can difficult to compete.
Ever since the company has been introduced, it has been growing with its new product and innovation of the old ones. It has acquired with many new companies and recently, affiliated with NBD, which made its presence strong all over. However, the company needs to resolve its labour issues, rising expenses, and it needs to spend more on research and development.