Analysis, Pages 3 (596 words)
In order to better understand the industry and the environment, every organization has to introspect on its inner business functions and strategies and Nike has proved to have identified to its best the internal environment which is the Strengths and the Weaknesses as well as the external organization comprising of opportunities and the threats. Strengths: Nike is known world wide to be the leading manufacturer and the marketer of athletic shoes, apparels in sports and sports equipments. In 2007 its revenue grew by million.
Their biggest supports are the employees which are having a base of 30,000 employees worldwide. The competitiveness of Nike makes the company work towards striving for excellence to maintain a competitive edge. Phil Knight being the CEO and founder of Nike has created this empire as he himself as been a track athletic. The biggest advantage Nike international has is because it doesn’t block its cash in buildings and manufacturing workers as it doesn’t have their own factories which have been outsourced.
As a result if prices rise, Nike will move its production base else where wherever cheap products are made. Their theme has been to product high quality innovative product ranges with minimum price and is a brand which has world wide existence and presence felt. Weaknesses: Nike doesn’t have a wide variety or diversified range of sports products and as such the major chunk of the business income is generated from the footwear section of the brand. It’s highly sensitive to price in the retail sector although it has its own retailer Nike Town.
However their income comes from selling to the retailers despite not being exclusive as they offer their consumers almost the same kind of experience. Thus there are chances of margins getting squeezed as they would pass the low price competition onto Nike. Opportunities: Development of the product offers Nike huge market opportunities. The owners of Nike argue that Nike is not known as a sport wear but it is more used by the youth as a fashion brand which has been the culture of the consumers which identifies a place on its own for various opportunities.
Hence consumers would tend to replace shoes as they no longer may remain a fad or fashionable for the consumers. Opportunities are huge in sunglasses, sports wear and jewelry as well which could be associated with the brand to fetch higher profits. Nike international getting globally recognized as a brand is a huge challenge in the global and the international market. Emerging markets such as India and China have huge amount of disposable income that is coming towards sports goods which will form a richer generation of consumers for the company.
World cup (soccer0 and Olympics are the events which Nike globally supports in the sponsorships there by helping in supporting the brand. Threats: Nike’s costs and margins are not stable as it is known in the international trade for the buying and selling transactions happening in different currencies and hence there is fluctuation in the market over longer periods of time. Which would indicate that Nike could run into loses.
Sports shoes and garment industry is very competitive and hence the company needs to catch and counter attack every move of its competitors. Generating a sustainable competitive advantage poses a threat for Nike as competitors are waiting to snatch its market share. As retailing is price competitive in this industry, consumers could shop else where to get a better and cheaper deal. Internationally Nike is known to be a language of sports recognized for its passion and competition.