I provided you a template for Part B, to make your assignment easier to complete. You must cite your references in the content of the paper. Important: Information in tables can be single-spaced. The

16

Nike, Inc.: Environmental Analysis and SWOTT Analysis

MKT 574

University of Phoenix

September 30, 2024

Prof. Ismael Hau

Nike, Inc. Description

Nike, Inc. is the world's leading producer of sportswear, athletic shoes, and sports equipment based in Beaverton, Oregon. Nike began in 1964 as Blue Ribbon Sports, as a partnership of two men, Phil Knight and Bill Bowerman, and it became Nike in 1971 after the Greek goddess of victory. The Company has a unique image, identified through the Swoosh logo and the "Just Do It" philosophy, which underlines performance, innovation, research, and development of effective products in the sporting industry.

Environmental Analysis

Competitive Forces

Nike competes with Adidas Group, Puma, and Under Armour. According to the BCG matrix, Nike can be placed at the top position because of the relatively high market share and extremely high growth rate in the global sportswear market. The main competitor of Nike is Adidas, where Addidas is strategically working on environmental sustainability to produce environmentally friendly shoes. Furthermore, Addidas is collaborating with Parley to enhance its technology towards sustainable shoe development (Abushoke et al., 2020). Puma, on the other hand, and Under Armor are also using celebrity endorsements and technology-focused products to increase their market share.

Nike has captured about 25% of the global market for sportswear, although its key competitors are Adidas and Puma, which are strategically working on product development. The Company enjoys its competitive advantage because of its well-established brand image, product differentiation, and wide supply chain. Nike employs famous athletes, including LeBron James and Serena Williams, in its advertisements, which is a great strategy for making its products more recognizable to the market. Nick also stands out from its competitors by developing sustainable programs, such as its Move to Zero program, making its customers distinguish it from its competitors.

Economic Forces

Nike faces competition from other world players, making it vulnerable to global economic factors such as inflation, changes in consumption levels, and changes in exchange rates. Volatility in sales has been identified in some of the markets in which it operates, such as North America and Europe. Economic forces are likely to affect Nike significantly as it deals with expensive products, and it may face a significant amount of losses if the product development is not sold (Waymer et al., 2021). To address this, Nike has spread its services across various regions around the Globe, minimizing the impact of economic problems encountered in one region.

Other factors likely to affect Nike's profits include Supplier costs, Labor costs, and raw materials. Furthermore, the rise in production costs in manufacturing countries like China and Vietnam is likely to make production costs expensive, affecting the Company's revenue. To address this, Nike has improved its supply chain, making it easier for products to be manufactured in low-cost production countries and shipped to where the products can be sold at higher prices, increasing its competitiveness in the market. Lastly, Nick enjoys economies of scale, which makes it secure lower prices for its raw materials from local suppliers.

Political Forces

Some of the common political factors that Nike encounters include trade policies, tariffs, and diplomatic relations, which affect Nike's operations. This can be justified by the tensions rising between the United States and China, where trade tariffs were increased, resulting in higher importation taxes and cost of production. Economic policies and instabilities in manufacturing countries like China will likely hinder the supply chain, leading to revenue loss.

With the United States having different tax laws, trade agreements, and labor regulations, Nike's financial position is likely to be affected. To address these political challenges, Nike is required to adopt new laws in specific countries that primarily affect both labor and the environment (Li, 2023). Furthermore, socio-political conditions change in emerging markets such as China, which may either be an opportunity for Nike's expansion or impose new challenges on its expansion strategies.

Legal, Regulation, and Ethical Consideration

Despite Nike capturing 25% of the market share, it must comply with the policies of all the countries it operates in. Labor laws, especially in manufacturing countries that focus on issues affecting health, have identified Nike as a company of focus as Nike once faced scrutiny on the way its manufacturing companies operate. This made Nike develop new ways of developing its products, which required it to observe ethical labor practices and specific codes of conduct.

Many countries across the Globe are passing laws to ban plastic consumption or reduce carbon emissions. One threat is Nike's adherence to sustainability, which resonates with these trends, but these regulations may increase compliance costs. New sporting regulations may also pose new challenges to Nike's advertisement campaigns, like the limited number of billboards that can be put up because of the data privacy regulations associated with internet marketing.

Technological Forces

Nike is continuously influenced by technological advancements, particularly in digital marketing, product innovation, and operational efficiency. The rise of e-commerce platforms has allowed Nike to expand its direct-to-consumer sales, which has become an essential stream of revenue. Innovations in 3D printing and sustainable materials also drive Nike's competitive edge in product design and manufacturing.

Emerging technologies like big data analytics enable Nike to personalize customer experiences, from recommending products based on past purchases to optimizing its supply chain. Currently, Nike is developing apps, such as Nike Run Club and SNKRS, which are expected to offer digital experiences that engage customers. These technological trends will allow Nike to stay ahead of competitors and adapt to evolving consumer behaviors.

Social Forces

Shifting social trends, such as development on health, fitness, and sustainability, are key drivers of Nike's success. As more consumers adopt active lifestyles, Nike is profiting from this trend by offering performance-enhancing products catering to athletes and everyday individuals (Abushoke et al., 2020). Additionally, as different nations pass laws associated with environmental sustainability to their citizens, Nike is likely to enhance its ways of using sustainable products to develop their products.

Nike's brand is closely tied to social causes, with its advertising campaigns addressing critical social issues like equality and diversity. The Company has partnered with athletes and other influencers who stand for these values that resonate with socially conscious consumers. As consumers become more interested in aligning their purchases with ethical brands, Nike's social activism and sustainability efforts will likely strengthen its brand loyalty.

Current Marketing Tactics

Nike uses a wide range of marketing techniques to cover both the traditional and the modern market. Consumers learn about Nike products through advertising messages that include broad and easily memorable slogans like 'Just Do It'. Nike also relies greatly on advertisements, particularly the use of influential athletes such as LeBron James, Serena Williams, and Cristiano Ronaldo, among others, which attract people's attention through sports and social media. These endorsements and partnerships are likely to increase Nike's brand as they are associated with consistency that enhances Nike's brand and reputation in the market.

Nike is extremely active in digital media with its consumer engagement strategies, including Instagram, YouTube, TikTok, and Facebook, which target youthful customers who are actively engaged in technology. Nike often engages consumers through group calls on social media and influencer marketing, where they also participate in challenges to increase their brand loyalty. Furthermore, Nike offers detailed information about its products in its apps and website, which allows its users to be aware of its products in the market.

Nike has a large marketing budget, meaning it can cover all the marketing costs across the Globe. According to recent statistics, Nike spent more than $3.85 billion on advertising and promotions in 2022, covering both offline and online posts. Some of the common methods that Nike uses to create awareness include paid advertisements, sponsored posts, and organic content, which increase Nike's brand visibility and maintain strong engagement with its consumers in the market.

SWOTT Analysis

Strengths

One of the main strengths of this Company is its brand recognition and leadership in the market. According to an article, by 2023, Nike will be among the most recognized fashion brands globally, allowing it to have a strong customer base. For the Company to achieve brand recognition, it thrives on collaborating with high-profile athletes such as Serena Williams and also creating a wide range of innovative products, thus increasing its customers (Li, 2023). This strategy has not only enhanced the organization's brand recognition; it has also increased its revenue to more than $46 billion, making it a global leader.

The second core strength of this Company is its commitment to sustainability and innovation. This can be justified by how Nike has developed and sponsored several initiatives, such as Nike's Flyknit shoe and Nike's Green Concept, which integrates high-end technology and environmentally responsible practices that align with its vision in the market.

Weaknesses

Despite Nike being successful in the market, it faces several internal challenges, including the use of advanced technologies in product development, which increases production expenses. Furthermore, Nike is strongly tied to markets such as the North American markets, and Nike is likely to be vulnerable to fluctuations that may occur. Although Nike has grown by reaching out to new markets such as China, the firm still depends on established markets, exposing it to risks.

Customers on a budget may find themselves discouraged by Nike's expensive prices. Their pricing strategy may block customers emerging from low-income populations, especially in developing areas. Furthermore, Nike's supply chain is vulnerable to interruptions such as the COVID-19 pandemic, which destroyed both production and logistics, making it hard for its customers to access products from the Company.

Opportunities

The increasing number of customers who use products for fitness and wellness creates a major chance for Nike. As people increase their value for physical fitness and health, Nike can leverage this trend by improving its product range to meet the needs of diverse customer groups in emerging markets such as China and India. Secondly, as environmentally sustainable products gain popularity in the market, the Company can enhance its efforts to create green sportswear.

Nike can increase its revenue by evaluating the current digital innovations and transformations in the market, allowing it to improve its digital presence with the aim of boosting personalized products to meet the needs of their users (Chen, 2024). Furthermore, Nike can broaden its online loyalty program with the aim of strengthening customer relations and increasing its sales.

Threats

Despite Nike's success in several markets, it faces competition in the sports industry. Brands like Puma, Under Armour, and Adidas keep advancing technology and promoting their products to capture specific demographic groups. If economic fluctuations are encountered around the Globe, Nike is likely to generate low revenue, forcing it to formulate aggressive marketing strategies. This can be justified in economic incidents where customers are forced to tighten their budgets, making luxury gear to become less of a priority.

In places lacking strict enforcement of intellectual property laws, counterfeit items are likely to threaten Nike's brand integrity. Counterfeit products are likely to affect Nike by leading to revenue losses and other losses to Nike's brand image, where the Company is likely to lose its potential customers in the future.

Trends

The evolving trends offer Nick several opportunities in the market. One of the trends in the market is digital transformation, where the Globe is experiencing increasing dependence on e-commerce sites to purchase sports products, and Nick has a chance of increasing its online visibility. By Nike implementing effective online plans and an extensive social media network, it is likely to attract new customers and increase revenue with personalized online marketing.

Nike is also likely to leverage sustainability and eco-consciousness, as consumers are primarily shifting to products that are environmentally eco-friendly. Nike's sustainability trend is likely to align with these customer needs as it has a "Move to Zero" campaign where it has developed concepts such as the Nike Green concept. (Puterisari, 2022) This concept is not only likely to attract new eco-conscious customers; it is also likely to conserve the environment.

Converting Strengths to Opportunities

Since Nike has already established brand awareness and dominated the market, it creates a chance for it to venture into new markets and segments. Furthermore, Nike has established its network of operations all over the world, making it possible for it to easily expand into other growing markets like India and Africa, where the sportswear industry is experiencing growth. This allows Nike to tap into these untapped markets and gain more customers and market share, thereby improving its sales.

Secondly, Nike is committed to sustainability, as can be seen in the Nike Flyknit and Green concept. This offers Nike an opportunity to meet the global demands of sustainability products (Chen, 2024). This allows Nike to attract more environmentally friendly customers by investing more in the production of green products and perpetuating its "Move to Zero" program. Besides, the firm is also in a better position to market to more of the digitally environmentally concerned consumers through targeted promotions.

Converting Weaknesses and Threats to Strengths

The main weakness that Nike is facing is dependence on higher technologies, which can be turned into different abilities through product diversification and technological development. Furthermore, Nike doesn't have to rely heavily on mature markets such as North America and can thereby avoid the effects of market saturation. However, Nike can also look for a long-term solution to high costs through effective supply chain management and better technological integration so that it can retain the quality of the products while controlling its expenses. Nick considers competitors and counterfeits to be big threats as they often affect its strengths, and there is a need to improve its product's authenticity.

Marketing Objectives

According to the Company's SWOT analysis, Nike's marketing strategy should focus on increasing its market share among the new generation of environmentally aware consumers. Nike aims to launch new environmentally friendly footwear and apparel by December 2024 and target consumers who prioritize environmentally friendly practices. Nike's primary goal should be increasing the amount of eco-friendly apparel and gear sold to increase Nike's market share in this segment up to 15% by December 2025.

The second aim is to expand the ways of reaching younger audiences through modern methods of digital marketing, such as creating trendy content on TikTok and Instagram. Nike values its online audience and plans a version of an international advertising campaign by May 2025 using pictures and videos from various customers and collaborating with influencers (Puterisari, 2022). By June 2025, the Company will increase its objective success measured through at least 25% growth in social media engagement rates, including followers, and raise direct-to-consumer sales through its mobile applications and websites.

Finally, Nike wants to build customer loyalty through its Nike Plus loyalty program. The Company aims to raise membership registration by 30% and increase the frequency of customers' purchases by 20% by the end of September 2025. The success will be achieved by the rise of customer retention rates and Net Promoter Scores, and the Company plans to increase the Net Promoter Scores by 15% by the end of 2025.

Reference

Abushoke, A., & Aisha, K. (2020). External requirements and internal enablers in the responsive supply chain management: A case study of Nike's responsive supply chain. Unpublished manuscript.

Jaworski, B., & Cheung, V. (2023). Developing an organization's vision. In Creating the organization of the future: Building on Drucker and Confucius foundations (pp. 11-19). Emerald Publishing Limited.

Li, J. (2023). Financial analysis, SWOT analysis and Porter five forces analysis for Nike. Highlights in Business, Economics and Management, 23, 1164-1170.

Waymer, D., & Logan, N. (2021). Corporate social advocacy as engagement: Nike's social justice communication. Public Relations Review, 47(1), 102005. https://doi.org/10.1016/j.pubrev.2020.102005

Zheng, K. (2022). The analysis of Nike's marketing strategy from social media and consumer psychology and behavior. BCP Business & Management, 34, 436-442.

Chen, Y. (2024, May). A relevant analysis of Nike and its marketing strategies. In 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024) (pp. 426-434). Atlantis Press.

Puterisari, D. U. (2022). Strategic management in Industry 4.0: Digital transformation in NIKE Inc. using the dynamic capability approach. International Journal of Business, Humanities, Education and Social Sciences (IJBHES), 4(2), 103-108.