SWOT 

Analysis of Nike

Nike’s Strengths – Internal Strategic Factors

1. Strong Brand Awareness and Brand Value– Nike is one of the most recognizable
brands in the world as its name alone is memorable, easy to pronounce, and very unique. Its
swoosh symbol is easily recognized by everyone. According to Interbrand, Nike has a brand
value of $42.5 Billion.  
2. Huge Customer base – Nike has millions of customer from around the world who loyally
follow Nike’s trends, participate in Nike events, and even provide customer feedback. Due to
its huge popularity, Nike’s market cap has grown to $232 billion as of Jan 2022.
3. Aimed For Sustainability – Nike’s CEO Mark Parker has addressed that they will continue
to acknowledge the environmental issues in the communities. The CEO ensures that Nike
will help to contribute in finding a solution against these environmental issues.
4. Iconic Relationships – Nike’s long-term partnership with Michael Jordan has proved to be
beneficial in terms of sales for the company. Their collaboration resulted in “Air Jordan 1
Shoes”. Additionally, Nike teamed up with the famous basketball player to help design the
“Air Jordan 1 Shoes”.
5. Side Brands – Nike’s ability to maintain and enhance its side brands such
as converse and Hurley have enabled it to enjoy unparalleled success for decades.
6. Low Manufacturing Cost – Most of Nike’s footwear is manufactured in foreign countries.
In the fiscal year 2021, Vietnam produced 51%, China produced 24%, and Indonesia
produced 21% of total Nike’s footwear. Other operations are in Argentina, Brazil, India,
Italy, and Mexico.
7. In-house Professionals – Nike has a team of professionals that design its shoes and other
athletic accessories. Nike believes that their business has flourished due to the thorough
research that is conducted for each product.
8. Superior Marketing Capabilities – Nike has excellent marketing campaigns. The brand
heavily relies on demand creation expense, which includes advertisement, promotion,
endorsement contracts, media print and complimentary products. In the fiscal year 2019,
2020 and 2021, Nike spent $3.7 billion, $3.6 billion and $3.1 billion  respectively. The brand
has successfully utilized social media and marketing campaigns to target more customers.
9. Black Community Support – The brand has excellent marketing campaigns and recently
released “Don’t Do It” ad campaign in support of Black communities against racism.
10. High Market Share – Nike is a market leader in footwear industry. Nike has captured
approximately 39% of the global athletic footwear market and 13% of global athletic
apparel market.
Nike’s Weaknesses – Internal Strategic Factors
1. Poor Labor Conditions in Foreign Countries – In the last 20 years, Nike has been
consistently targeted regarding their poor labor conditions. These issues include forced labor,
child labor, low wages, and horrific working conditions that were deemed “unsafe”.
2. Retailers Have a Stronger Hold – Nike’s retail sector makes Nike weak due to its
sensitivity against pricing. 65% of Nike products are sold directly to wholesalers or retailers.
With retailers serving as their core customers, Nike does not put up a fight against
their pricing structures whatsoever.
3. Pending Debts – Although Nike’s income statements prove to be prosperous, a quick glance
at their balance sheet could paint a different picture. Nike is still facing financial threats. As
of FY21,

Nike’s total long term debt was $9.4 billion

4. Dependency on US Market – Even after having established itself globally, Nike still relies
on the U.S Market in terms of sales and revenue. In the fiscal year 2021, about 39% of
Nike’s sales came from the North America, while the rest of 61% came globally. Despite
its fame, Nike depends on the U.S for substantial sales and growth.
5. Lawsuits: 
o Recently, a former employee accused Nike of discrimination based on his Croatian
origin.
o Four former female Nike employees filed a class-action lawsuit against the company
in August 2018. According to these women, Nike has a toxic company culture for
women. The women filed their case against the sportswear company claiming that the
company violated the Equal Pay Act. The women said the company engaged in
systematic gender pay bias where men were paid more than women for the same
amount of work.
6. Lack of Diversification: Nike’s over-dependence on sporting apparel or lack of
diversification is a major weakness. The pandemic has discouraged physical interaction and
gathering with sporting events canceled or postponed. Several sporting teams are on the brink
of collapse. If the crisis discourages sporting events for longer, Nike’s losses can be
catastrophic.

7. Contradicting Strategies: Nike pledged to shift all its facilities to 100% renewable energy
with net-zero carbon emissions under the “Move to Zero” scheme. While the strategy is
great and welcomed, it contradicts Nike’s strategy that favors innovation over sustainability.
This creates the perception that Nike is not committed to addressing climate change and its
pledge is just a marketing stunt.

8. Sexual Harassment: Former female employees also pointed out that sexual harassment and
misconduct was very common in the company. The New York Times
conducted interviews with 50 former and present Nike employees to investigate the company
culture. Through the interviews, it was established that Nike did have a toxic working
environment, where sexual misconduct was rampant.
Multiple female employees reported that they had complained to the HR but saw no action being
taken from their part. The women were left devastated and felt unsafe while working at Nike. Some
even left their jobs. The entire controversy has significantly affected the company’s image.

Nike’s Opportunities – External Strategic Factors

1. Emerging Markets – Although Nike already has a presence in many foreign countries, there
is still plenty of opportunities for Nike. This is because emerging markets like India, China,
and Brazil are gradually flourishing.  
2. Innovative Products – Although Nike has produced many products, there is still a lot to
innovate. Nike has extended its reach in technology in association with fitness and health.
Products like wearable technology that monitors physical activities, is the first step in
building innovative technology products. Combining technology with athletic wear can prove
to be beneficial as it is an aspect of the fashion industry that still hasn’t been
explored much.
3. Efficient Integration – The supply and production of Nike’s products depend on
independent manufacturers. The brand can either acquire a few of these or make some of its
own for a more efficient and streamlined supply chain.
4. Cutting ties with big retailers: Nike has decided to cut ties with some of the biggest multi-
brand retailers and wholesale partners. According to the report, Nike will no longer work
with wholesale retailers such as Zapoo’s, Dillard’s, Fred Meyer, Bob’s Stores, etc. The
step is taken for better product positioning and greater customer experience.
5. Acquired Artificial Intelligence Start-up – With its vast financial resources, Nike can
acquire small or medium companies or startups. It recently acquired predictive analytics
platform – Celect to expand its online sales capabilities and predict
customer’s shopping behavior.
6. Merges with the Metaverse –  Recently, Nike acquired RTFKT, a digital shoe-making
company. Yes, you heard that right, the company designs shoes, but for the virtual
stratosphere only. However, RTFKT also claimed that it partnered with FEWOCiOUS (a
young artist) to sell real shoes along with their digital versions. Nike is banking on the
opportunity to market their digital shoes on the Metaverse, where players can use their
Metamask wallets to purchase different types of in-game merchandize.
7. Exiting From Wholesale Distribution –  Recently, Nike announced it’s going to be exiting
the wholesale distribution market in the U.S. The company plans to only market its products
at Nike stores, app, and websites. According to Nike, the move away from distributors is
going to help them double their profit margins. Moreover, Nike will also have the
opportunity to spearhead the customer shopping experience as well as control prices.
8. Consumer Direct Strategy –  Nike has accelerated the consumer-direct strategy, which
means shifting its focus to digital business and subsequently closing physical stores. In fiscal
year 2021, 38.7% of its Nike brand revenue comes from online sales. Clearly, the pandemic
is shaping up how Nike interacts with its customers. 

Nike’s Threats – External Strategic Factors

1. Counterfeit Products – Counterfeit products can significantly affect the revenue and
reputation of Nike. The company deals globally and the risk of counterfeit products has
 become higher. A number of merchandisers and retailers offer counterfeit Nike products at
lower prices. The low-priced products are made from low-quality materials but still have the
Nike label. This can tarnish the image of the brand as the customers might feel that Nike
has started producing low quality products.
2. Increased competitive pressure – Although, Nike is a dominating the athletic industry,
competition, and new emerging brands are still potential threats to the company. With higher
competition ratio, Nike has to spend more money on marketing and advertising. Nike
spent $3.5 Billion specifically on marketing and demand generation in fiscal year 2020.
To overpower competition, Nike’s safest bet is to design innovative products that are tailored
according to the needs of athletes.
3. Marketing Budget Pressure – Companies like Under Armour , Adidas and Lululemon are
spending more on marketing and advertising campaigns, increasing the pressure on Nike.
4. Currency Foreign Exchange Risks – Since the brand operates globally, it is affected by
fluctuating foreign exchange rates. Nike reports its financial earnings in U.S dollars. This
affects its revenue as the U.S dollar is exposed to volatility against other financial currencies.
5. Patent Disputes – Regardless of whether a company is wrong or right, patent disputes are
hotly and fiercely contested in the public domain and expose some dirty secrets about sides in
the dispute. Nike and Adidas have been engaged in a fierce patent disputes over Primeknit
and Flyknit shoes in U.S. and German courts.
6. Economic Uncertainty – Regardless of the industry, all companies are susceptible to the
negative effects of a global recession. Already, Nike has registered a 38% decline in sales in
Q2 of 2020 and can drop further in the future if the recession strikes as hard as predicted by
experts.
7. Trade Tensions – Nike depends on different markets across the world evidenced by the
recent increase in its stocks rallied by an increase in sales in China. With China and the US as
its biggest markets, a large chunk of Nike’s sales will be threatened if the trade tensions
between the two giants escalate.
8. Patent Conflict towards Adidas Primeknit Shoes –  In an appeal to a U.S. agency,
Nike filed a complaint that Adidas has been infringing on the company’s Flyknit shoe
technology patent. The company also stated that the German shoe manufacturer had
used Nike’s Flyknit tech in 49 shoe designs (which uses Primeknit tech). However,
according to an Adidas representative, the company will fight these claims and stated that
Adidas has started using their Primeknit technology after numerous years of research and
development. 
9. Risk to Kangaroo Population –  Nike has been accused of putting the Australian kangaroo
population at risk of extinction. The leading athletic brand uses kangaroo skin to
manufacture leather football shoes. Animal rights activists and advocates have urged Nike
to rethink its strategies and to use plant-based alternatives. So far, Nike hasn’t responded to
these allegations.