Commitment and Governance 85 out of 100 2. Also, rapid technological innovation could further increase competitive pressure if Nike does not innovate as rapidly. These beliefs have guided Nike from its inception until today. In the mid-2000s, Nike launched a program to boost supply-chain productivity and quality by introducing lean manufacturing principles to its apparel suppliers in the developing world. It has a social media-like feed, customized content around fitness and Nike-sponsored athletes, a feature for booking appointments at Nike stores and events, and, most importantly, it has a mobile shopping section that gives users tailored recommendations and alerts for new items that are dropping. "Â, Nike famously killed its wearable segment and strategy in 2014, but it hasn't stopped investing in digital growth. It is the world’s largest supplier of athletic shoes and apparel. Weaknesses could disrupt Nike’s growth trajectory in the sports shoes, apparel and equipment market. The company has gone through several controversies including the child labor Nike (NYSE:NKE) had a rough 2016. Utilization of the two biggest online networking platforms, including Facebook and Instagram, helps Nike to speak with its differing group of onlookers. See you at the top! “They can lead on how to do this,” Temin said. On a recent morning in Beaverton, Ore., not long after a thick fog has rolled off Nike's 177-acre campus, Hannah Jones is recounting a favorite example of where corporate responsibility can be put to work in an $18.6 billion company: reducing waste. In fact, Nike has gone on record to say sustainability is one of the key components of success and no forward-thinking company can survive without sustainability efforts. Nike excels on Facebook. A survey is news. Nike chose to release their factory data, which led others to follow suit, now allowing competing companies to work together to improve conditions. Nike Inc.’s leadership in the global sports shoes, equipment and apparel market shows the significance of its strengths in competing against other giants like Adidas. Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Also, even though Nike Inc. has expanded its product mix through the years, the resulting product lines are still limited in capturing a larger share of the sports shoes, equipment and apparel market. Leigh, D., & Pershing, A. J. Nike learned this the hard way in the mid-1980s when it lost out on the lucrative aerobics market to Reebok. The company sees enough opportunity in … 1997: Efforts at promotion become occasions for public outrage. Nike has recently been ranked by Fortune as the Top 24 of the Most Admired Companies and Top 1 in the apparel industry. In 2012, Nike introduced the Manufacturing Index (MI) to score factories on sustainability – including labour practices. Nike’s organizational structure is worthy of study due to the fact that it has been a successful organization since its inception. Its tweets are short, punchy and compelling, and nearly always included the hashtag #justdoit or other community-building hashtags like #nikewomen. Nike also has released IP data for many of their products, particularly ecologically-related successes, in hopes that someone else can use that work to improve the world for everyone. But there's always room for improvement, so how else can Nike improve as a company? That means today it takes about half the energy and generates around half the emissions to make Nike shoes as it did eight years ago. The company’s extensive global production and distribution network is a strength that enables the business to support global market dominance. For GDPR compliance, we do not use personally identifiable information to serve ads in the EU and the EEA. Whether they will, or not, is something we’ll all watch.” Parker also needs to show progress to stop an exodus of employees. Nike's sales in China jumped 17% year over year in the quarter when adjusted for currency fluctuations, and the company believes that's just getting started. A Natural Experiment at Nike. This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. In 2006, Nike developed the ‘Nike+iPod’, an activity tracker that records the distance and pace of its user’s workout through a … “They can do it. Nike already gets more than half of its sales from outside the country, but it could still grow further internationally. Online sales have multiple benefits, including the ability to meet more customers who might not be in a Nike store or third-party retailer, and Nike also gets to keep all of that valuable information about the customer. 3. For net income to grow so much faster than sales shows just how successful Nike has been in its push to improve profit margin, which now sits at 11.25% over the trailing 12 month period. "The Greater China marketplace continues to be fueled by higher sports participation, with 38,000 runners taking part in the Shanghai marathon, while nearly four times that many consumers tried to sign up," said Nike Brand President Trevor Edwards in the most recent earnings call.Â, Western Europe, which is Nike's biggest international segment, has been another outstanding region lately. The following strengths are the most notable in the case of Nike Inc.: Nike’s strong brand image evolves based on product quality. However, the results of this SWOT Analysis point out some possible new strategic directions to further enhance Nike’s global performance and leadership. The first of that concept -- the massive new Soho New York location -- integrates mobile check-in and shopping features, as well as touchscreens on the walls to allow consumers to order and ship gear home if they prefer.Â, Nike also launched a Nike+ smartphone app last summer. Nike's sales in China jumped 17% year over year in the quarter when adjusted for currency fluctuations, and the company believes that's just getting started. Nike's focus now is on increasing its digital sales strategy to drive sales through Nike.com. Its dominance in sports retail is undeniable. Learn more about our average carbon footprint “To me, the most hopeful idea in sustainability is the belief that we get to decide how the story is going to end. 1996: Nike establishes a department tasked with working to improve the lives of factory laborers. Nike Inc.’s SWOT Analysis emphasizes the importance of product development to maintain a competitive edge. This component of the SWOT Analysis addresses the internal strategic factors that prevent or reduce business performance. But also, by removing this summary, Nike may be asserting its design credentials – “we don’t need your reviews”. Improve labor/employment practices 2. "Do not be fooled by its commonplace appearance. This report captured the areas where companies needed to take actions to eradicate forced labour from their supply chains. The company has also made advancements in connecting its digital strategy to its new concept physical locations. Nike’s strengths are the primary drivers of the company’s growth and global leadership in the sports shoes, apparel and equipment market. Most of the successful businesses worldwide have improved their growth rates only by adopting innovative supply chain management practices. Nike is an American multinational company producing equipment, footwear, clothes, and accessories. Market data powered by FactSet and Web Financial Group. The external strategic factors that facilitate business growth are covered in this component of the SWOT Analysis. This part of the SWOT Analysis shows that, for Nike to maintain its leadership in the global sports shoes market, product innovation and legal protection must be included in its major strategies. This part of the SWOT Analysis shows that Nike Inc. has capabilities to retain its global market leadership. A Nike spokesperson told The New York Times that Parker had read the letter, ... That can create at least some incentive to improve things. Things have started to turn around for Nike in 2017, already one of the best-performing large-cap stocks of the year, and it could get much better from here. The report stated: Nike scored the following in the report's themed scores: 1. Nike's drop in 2016 was certainly a shock, but it could also have provided a great opportunity. This part of the SWOT Analysis indicates that Nike Inc. must reform some of its policies and strategies to ensure its continued leadership in the global athletic footwear, apparel and equipment market. Nike Inc. has opportunities to enhance its performance in the athletic footwear market. Moreover, the company suffers from limited presence in developing markets, partly because of issues with pricing, imitation and patent protection. To assess the level of sustainability, Nike created a Sourcing & Manufacturing Sustainability Index (SMSI). The external strategic factors that facilitate business growth are covered in this component of the SWOT Analysis. Proactive strategies for this concern can lead to an improved brand image. We use cookies for website functionality and to combat advertising fraud. This weakness limits Nike’s global growth. Nike.com sales nearly doubled year over year in the most recent quarter.Â, Nike announced that in fiscal 2016, Nike.com went live in 20 additional countries, doubling from a year ago, which should help that international expansion as more of those localized online stores go live in 2017. Its stock fell 18% throughout the year, as Wall Street worried about its future growth prospects amid a changing consumer market and stiff competition from Under Armour (NYSE:UAA)(NYSE:UA) and a resurgent Adidas (OTC:ADDYY). Things have started to turn around for Nike in 2017, already one of the best-performing large-cap stocks of the year, and it could get much better from here. I can see why Nike would remove this – to remove distraction. Simultaneously, it is also focusing on its pricing, retail, and marketing strategy to bring the best products for its customers. Nike also raised the minimum wage it paid workers, improved oversight of labor practices, and made sure factories had clean air. As mentioned by Han in 1991, fashion is a reason for Impulse Buying, “fashion orientated Impulse Buying” (Han … Competitors, such as Under Armour Inc., have recently opened major offices in Portland, which is a few miles from Nike’s headquarters. In addition, imitation remains a threat, especially in developing countries with poor legal protection for patents. The SMSI has become an important tool in factory selection, encouraging performance improvement, eradicating underperformance in factories, and driving business to the … There are many things Nike - Get Report can do to boost sales but it has not done them, said CLSA analysts. Like most worldwide brands, Nike has separate Facebook pages for … Since then, it has worked hard to ensure that never happens again. SWOT analysis. Let's conquer your financial goals together...faster. Nike hasn't given a lot of insight into the specifics of its Man Rev, but investors can probably expect to learn more in the earnings calls to come.Â. Even though Nike is one of the major players in the sports shoes, equipment and apparel market, some threats could limit or reduce the company’s performance. Nike is putting technology and its innovative flagship stores to work to build a big lead in retail instead of relying on department stores. The company’s effective marketing campaigns also contribute to this strength. Traceability and Risk … This is just one more way the company is looking to meet its customers where they are and grow its online sales strategy further. Copyright by Panmore Institute - All rights reserved. In addition, it has the benefit of higher gross margin by allowing Nike to create customized gear and other higher-priced items, as well as keep the full sale rather than letting a percentage go to a third-party retailer. Nike delivers innovative products, experiences and services to inspire athletes. Nike Inc. 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