- Nike is a very competitive organization. Phil Knight (Founder
and CEO) is often quoted as saying that 'Business is war without
bullets.' Nike has a healthy dislike of is competitors. At the
Atlanta Olympics, Reebok went to the expense of sponsoring the
games. Nike did not. However Nike sponsored the top athletes and
gained valuable coverage.
- Nike has no factories. It does not tie up cash in buildings
and manufacturing workers. This makes a very lean organization.
Nike is strong at research and development, as is evidenced by its
evolving and innovative product range. They then manufacture
wherever they can produce high quality product at the lowest
possible price. If prices rise, and products can be made more
cheaply elsewhere (to the same or better specification), Nike will
-Nike is a global brand. It is the number one sports brand in
the World. Its famous 'Swoosh' is instantly recognisable, and Phil
Knight even has it tattooed on his ankle.
- The organization does have a diversified range of sports
products. However, the income of the business is still heavily
dependent upon its share of the footwear market. This may leave it
vulnerable if for any reason its market share erodes.
- The retail sector is very price sensitive. Nike does have its
own retailer in Nike Town. However, most of its income is derived
from selling into retailers. Retailers tend to offer a very similar
experience to the consumer. Can you tell one sports retailer from
another? So margins tend to get squeezed as retailers try to pass
some of the low price competition pressure onto Nike.
- Product development offers Nike many opportunities. The brand
is fiercely defended by its owners whom truly believe that Nike is
not a fashion brand. However, like it or not, consumers that wear
Nike product do not always buy it to participate in sport. Some
would argue that in youth culture especially, Nike is a fashion
brand. This creates its own opportunities, since product could
become unfashionable before it wears out i.e. consumers need to
- There is also the opportunity to develop products such as
sport wear, sunglasses and jewellery. Such high value items do tend
to have associated with them, high profits.
- The business could also be developed internationally, building
upon its strong global brand recognition. There are many markets
that have the disposable income to spend on high value sports
goods. For example, emerging markets such as China and India have a
new richer generation of consumers. There are also global marketing
events that can be utilised to support the brand such as the World
Cup (soccer) and The Olympics.
- Nike is exposed to the international nature of trade. It buys
and sells in different currencies and so costs and margins are not
stable over long periods of time. Such an exposure could mean that
Nike may be manufacturing and/or selling at a loss. This is an
issue that faces all global brands.
- The market for sports shoes and garments is very competitive.
The model developed by Phil Knight in his Stamford Business School
days (high value branded product manufactured at a low cost) is now
commonly used and to an extent is no longer a basis for sustainable
competitive advantage. Competitors are developing alternative
brands to take away Nike's market share.
- As discussed above in weaknesses, the retail sector is
becoming price competitive. This ultimately means that consumers
are shopping around for a better deal. So if one store charges a
price for a pair of sports shoes, the consumer could go to the
store along the street to compare prices for the exactly the same
item, and buy the cheaper of the two. Such consumer price
sensitivity is a potential external threat to Nike