SWOT analysis for Nike Essay Example

Although Nike has launched Nike Stadiums and Nike Town retail stores, the majority of its revenue comes from retailers.

Retailers sell Nike products at similar prices to those found at Nike stores, with retailers offering slight discounts during sales to clear out inventory. Nike has the potential to dominate the global sports wear industry through extensive advertising and endorsements. There are numerous markets worldwide with disposable income to spend on high-quality athletic footwear and accessories.

Nike can expand into developing markets where younger consumers are eager to buy its products. Partnering with European sports teams can help Nike dominate the global market. Having European athletes endorse Nike will also enhance the company's marketing efforts. Major international sports events, such as the Olympics, present ideal opportunities for Nike to heavily advertise and promote its products.

Nike invests in sponsoring college athletic wear, such as NCAA jerseys, to target and connect with young consumers. Along with its aggressive advertising, Nike's research and development division is a strength that offers a wide range of technologies to enhance performance for both professional athletes and consumers. While not purely a fashion brand, Nike products are purchased and worn by individuals who may not necessarily engage in sports but are influenced by the brand's association with athletes. As a result, Nike has become a popular fashion choice among youth, who look up to athletes that wear Nike. The brand benefits from the opportunity to continually release new shoe styles as older models become outdated.

Apart from footwear, Nike creates and designs various other products including sports apparel, bags, sunglasses, sports equipment, and even jewelry. Though not as profitable as the footwear

line, these products help in promoting the Nike brand while generating profits. However, Nike faces competition from various brands that offer similar products and threaten to erode their market share. The athletic footwear market is highly competitive and maintaining a sustainable competitive advantage is challenging due to these threats. Additionally, international trade inconsistencies such as currency fluctuations and tax impositions make Nike's marginal cost unstable on an annual basis.

Considering this perspective, Nike may engage in both production and commerce when faced with potential losses, a common challenge for major international brands operating within the highly competitive retail industry. Consumers display a consistent preference for better deals and lower prices, frequently comparing prices between products.

One persistent challenge for Nike as a global brand is the sensitivity of consumers to prices. This vulnerability is highlighted as one of Nike's weaknesses, as the brand's recognizable and distinctive features make it susceptible to imitation. The prevalence of piracy poses a threat to Nike, as the black market offers an abundance of raw materials that enable imitations to closely resemble the authentic product. This can lead consumers to believe that Nike prioritizes appearance over footwear technology and performance.

The financial analysis graph depicts Nike's revenue from 1991 to 2002, separated by American and European revenues. The graph displays a constant rise in the company's revenue during the early and mid-'90s, followed by a dip, and then a surge in 2000. However, U.S. revenue witnessed an increase in 1998 and subsequently experienced a gradual decline due to the total revenue percentage.

According to Porter et al. (2002), while revenues from Europe have grown, the overall percentage has remained constant with

a recent slight upward trend. The graph displays Nike's holistic operating revenue, divided between America and Europe, and indicates a growth in operating income since 1995. This increase is primarily due to growth in the U.S. market.

Although Nike's operating income remained consistent, there was a slight decline in the European sector according to Porter et al (2002). The company's Research and Development Strategy Chart is available as a reference in Nike's History and Overview (2008).

The website http://www.nikebiz.com was accessed on March 22, 2008.