ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 1: Business and Business Environment

Submission date 21/10/2020 Date Received 1st submission

Re-submission Date Date Received 2nd submission

Student Name Vu Ngoc Linh Student ID GBH200283

Class GBH0908 Assessor name Trang Thu Do

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I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand that
making a false declaration is a form of malpractice.

Student’s signature Linh

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Table of Contents
1. Introduction: ............................................................................................................................................................. 4
2. Micro and Macro Environment................................................................................................................................. 4
2.1. Competitive environment: ................................................................................................................................. 4
2.1.1. Potential competitors: ................................................................................................................................ 5
2.1.2. Current Competitor: ................................................................................................................................... 6
2.1.3: Substitution competitor: ............................................................................................................................ 9
2.1.4: Power of suppliers: ................................................................................................................................... 10
2.1.5: Power of buyers: ....................................................................................................................................... 11
2.2. PESTLE Analysis: ............................................................................................................................................... 12
2.2.1: Economic factor: ....................................................................................................................................... 12
2.2.3. Social factors: ............................................................................................................................................ 14
3. Internal Analysis:..................................................................................................................................................... 20
3.1. Mission, Vision and Core Value: ...................................................................................................................... 20
3.1.1. Mission: .................................................................................................................................................... 20
3.1.2. Vision: ....................................................................................................................................................... 20
3.1.3. Core Value:................................................................................................................................................ 21
3.2. Organizational Structure:................................................................................................................................. 22
3.3. Human resources: ........................................................................................................................................ 23
3.4. Brand name and Equity:............................................................................................................................... 25
3.5. Market Resources: ....................................................................................................................................... 28
4. Business Decision: ................................................................................................................................................... 29
4.4. SWOT Model: ................................................................................................................................................... 34
Conclusion:.................................................................................................................................................................. 38
References .................................................................................................................................................................. 39

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1. Introduction:
This report given by a business analyst from an American multinational financial service which is the fourth
largest bank in the world by market capitalization and, by total assets, the fourth largest bank in the US. It
will demonstrate specifically about Nike company, especially the internal and external environment of this
company. Shortly, Nike, Inc., formerly (1964-78) Blue Ribbon Sports, the Beaverton, Oregon-based
American sportswear corporation. It was founded in 1964 by Bill Bowerman, a University of Oregon track-
and - field coach, and his former student, Phil Knight, as Blue-Ribbon Sports. Nike had retail outlets and
distributors in more than 170 countries by the beginning of the 21st century, and its logo, a curved check
mark called the" swoosh, "was recognized throughout the world. The internal and external factors of Nike
Inc, which include micro and macro environment in the market of America where can make a considerable
impact on the whole organization. Five aspects in the competitive environment which are potential
competitors, current competitors, substitute products, power of suppliers and power of buyers and also
PESTLE framework will be clarified thoroughly. On the flip side, this document will clearly figure out that
both pros and cons of internal analysis affects the company. The last issue which is revealing about SWOT
model of Nike Inc, commitment will also be mentioned.

2. Micro and Macro Environment

2.1. Competitive environment:
The chart below will provide a detail view of the competitive environment around Nike Inc,.

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2.1.1. Potential competitors:
Skecher is definitely the potential competitor of Nike. Shortly, Skechers is a lifestyle and performance shoe
brand created in 1992 by Robert Greenberg in California, United States, where its main offices are located.
It is listed in the New York Stock Exchange and ranks sixth in the shoe sales ranking. With net revenues of
$ 4.64 billion and 170 million pairs of footwear delivered in 2018, it is one of the fastest growing
companies. Skecher is a monopolistic competition and it is formed to market its product. Skechers Men's
Classic Fit-Delson-Camden Sneaker is the popular product of Skecher which is used to be compared to
Nike Running and Adidas Ultraboost but there are some identical points of this product of Skecher which
differentiate it from those two products of Nike and Adidas mentioned above. Instant sporty style and
lightweight comfort delivers in the SKECHERS Delson - Camben shoe. Lightweight knit mesh fabric and
synthetic upper in a slip on laced-front sporty casual comfort sneaker oxford with stitching and overlay
accents. Air-Cooled Memory Foam insole, flexible comfort midsole which make this product different from
Nike and Adidas.

2.1.1.1: Barrier to entry:

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New Clothing entrants - Fashion Footwear & Accessories introduces creativity, new ways of doing stuff
and put pressure on Skechers U.S.A., Inc. by lower price policy, cost savings, and consumers' supply of new
value proposals. Both these challenges must be handled by Skechers U.S.A., Inc. and successful obstacles
must be designed to preserve the competitive advantage. There are 2 specific barriers to entry which will
be analyzed below: First, Government Barriers to Entry: Industries heavily regulated by the government
are usually the most difficult to penetrate. Commercial carriers, military contractors and cable providers
are examples. For different causes, the government establishes daunting obstacles to entry. Regulations
are not only robust in the case of commercial carriers, but the government prohibits potential entrants to
regulate air traffic and ease control. Cable providers are highly supervised and constrained since
substantial public land usage is required for their facilities. Sometimes the government imposes barriers
to entry not by necessity but because of lobbying pressure from existing firms. For example, a handful of
states require government licensing to become a florist or an interior decorator. Critics assert that
regulations on such industries are needless, accomplishing nothing but limiting competition and stifling
entrepreneurship. And last but not least is Natural Barriers to Entry: Barriers to entry can also form
naturally as the dynamics of an industry take shape. Brand identity and customer loyalty serve as barriers
to entry for potential entrants. High consumer switching costs are barriers to entry as new entrants face
difficulty enticing prospective customers to pay the additional money required to make a switch (Hayes,
2020).

2.1.1.2: Barrier to exist:

Investment in specialist equipment - Investments in specialized equipment that cannot readily be used in
other industries tends to be an impediment to leaving the industry. Specialized skills - Highly specialized
skills by industry participants that cannot be utilized in other industries tend to be an impediment to
leaving the industry. High fixed costs - High levels of dedicated fixed costs tend to be an impediment to
leaving an industry (Kenton, 2019).

2.1.2. Current Competitor:

Adidas is a footwear and sportswear brand created by Adolf Dassler in Germany in 1949, which managed
to become a global company that today employs 57,000 people and produces 900 million units worldwide,
where 50% is apparel, 45% are sneakers and the rest is equipment. The group owns other brands such as

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Reebok, TaylorMade and the technology platform for training planning, Runtastic. In addition, it has a
participation in the German football club Bayern Munich. In 2018, it achieved sales for $ 14.6 billion,
ranking second behind Nike in sports shoes sales. Among its strengths, there is an important investment
in research and development and a great concern for sustainability: it works with organic cotton and does
not use plastic in its products. Like its main rival, Adidas has had an aggressive marketing strategy, reaching
in 2018 a marketing expenditure of $ 3.5 billion, which represented 14% of its total revenues (Adidas,
2019).

Nike and Adidas are the world’s largest manufacturers for branded sportswear. There has always been a
discussion on which brand is better than the other. However, when it comes to shoes, there has never
been a universally endorsed brand because really, everyone’s choice depends on personal requirements.
Citing differences between the two brands that are all internationally endorsed is not quite that easy. The
endorsement means that they are all good for sports, which can loosely imply that they are all the same.
However, they have to be distinct in a certain way. Each of these manufacturers has in place their own
unique features that make their shoes perfect for different purposes. This is also important to beat the
stiff competition in the sportswear market. The differences between the two are visible when you pay
close attention to style, value, price and even comfort (Clark, 2019).

2.1.2.1: Areas of endorsements:

Adidas is mainly used by those who play soccer and tennis. The shoes dominate these areas because they
are relatively comfortable. This is attributed to how flexible and versatile most of them on the shelves are.
Nike on the other hand is a premier choice to inspire those who love basketball and running. They have an
amazing variety of running shoes that can be used by any type of runner, for example the Nike Air
VaporMax. On their range are also the super light varieties like the Nike Air Zoom being primarily used for
basketball. So if you are a runner or fitness enthusiast, Nike is the brand for you (Clark, 2019).

2.1.2.2: Quality of the shoes:

Nike shoe products are ranked the first globally, with Adidas taking the second position. Being the top two
leading shoe brands, it’s not easy to define which particular one is of more value than the other. They all
tend to bring satisfaction in the field of sports. Many find them all to be of quality compared to other

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sprouting brands which offer comparatively lower prices. This is the reason why it’s normal to find people
with shoe collections comprising of both Nike and Adidas. However, having been in the market for long
with more advanced technology, Adidas shoe brands are believed to be of better quality than Nike. At the
same time, it is also proper to say that each of them produces quality products based on their areas of
expertise. For example, Adidas shoes for soccer could certainly be of quality compared to Nike’s pair for
the same purpose. Similarly, Nike’s running shoes could also be of more quality in comparison to Adidas
(Clark, 2019).

2.1.2.3: Logos of each brand:

This is the most apparent feature that strikes the eye. The logos used by Adidas and Nike are different, not
only on the shoe products but also on the other sportswear like shirts and pants. These are what help you
to identify each product effortlessly. They are carefully chosen to suit your everyday life. Therefore, with
them, you can figure out if a pair of shoes is genuine or not. This is important because these two companies
have costly shoe portfolios and you might be paying a lot of money for something else. A genuine Adidas
shoe product can be easily identified with the company’s logo. This is usually three stripes made of three
parallel bars. These bars usually take different colors, depending on the color of the shoes. This is to make
the stripes easily visible. However, unlike their competitor Nike, Adidas doesn’t have a tagline. The shoes
in their portfolio are not only limited to Adidas but also include other relatively big names like Reebok.
Nike shoe products, just like several other brands, have their own logo which is the Swoosh. This is
normally accompanied by their trendy tagline “Just Do It”. This catchy phrase is what makes it easy to
identify their brands. Nike shoes are made to fit how the body works and moves, and also how the shoes
feel (Clark, 2019).

2.1.2.4: Prices of each brand:

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When at the shoe store, you must have noticed that Nike brands tend to be slightly pricier than Adidas. Of
course, there are some pairs of Adidas shoes that cost a lot more than certain Nike products, like the
Adidas Yeezy shoes. However, a decent pair of Nike shoes will have you digging deeper into your pocket.
We have Nike brands like the Nike Mag 2016 Air that retailed for up to $ 26,000. So yes, the physical appeal
comes at a price too (Clark, 2019).

2.1.2.5: Market share:

Total Segment Market Share Q3 2020 of Nike Inc, achieved revenue growth of 13.91 % in overall company,
and improved market share, to approximate 47.14 %. Nike is the larger business overall and the market
leader in the global sports footwear industry with revenues from footwear of over $24.2 billion in 2018,
compared to Adidas footwear revenue of $15 billion. These figures include not only Nike and Adidas
branded footwear but also Converse (owned by Nike) and Reebok (owned by Adidas). Nike might be the
bigger company but through sponsorship and an improving cool factor, Adidas is closing the gap. Anyway,
Nike's market capitalization is more than double that of Adidas (CSIMarket, 2020).

2.1.3: Substitution competitor:

Converse is definitely the substitute products of Nike. Converse is one of America’s most iconic footwear
companies. Providing people around the world with sneakers for over 100 years, the brand is considered
cool and classic. There are some reasons below that show why Converse is worth being Nike’s alternative
products.

2.1.3.1: Environmental impact:

Converse, owned by Nike, have set some ambitious environmental goals in recent years. Currently, the
Sustainable Apparel Coalition member uses a low proportion of eco-friendly materials including organic
and recycled cotton and polyester. They minimize off-cuts in parts of the manufacturing process and have
a waste reduction strategy for most of their supply chain. Parent company Nike has set an ambitious
Greenhouse Gas (GHG) target, that includes Converse, to procure 100% renewable for their strategic
assets. They predict this will reduce their operational emissions by more than 50% by 2025. Whilst Nike
lead the way with their GHG target, they lag behind on minimizing their water impact despite moderate
improvements in tracing their supply chain to identify whether they operate in water-stressed basins.

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While Converse do comply with a Restricted Substances List guided by the Zero Discharge of Hazardous
Chemicals Group (ZDHC), they have made no commitment to eliminate hazardous chemicals, and their
chemicals policy has attracted criticism from Greenpeace’s Detox Catwalk campaign. Despite being
committed to completely phasing out polyvinyl chloride, Nike was the only brand to completely fail in all
three of the categories assessed by Greenpeace (Wolfe, 2019).

2.1.3.2: Labor conditions:

Converse’s labor rating is based on the 2017 Ethical Fashion Report. This report examines areas such as
transparency, how well the brand knows their suppliers, auditing and worker empowerment. While the
brand may have received an A+ for their Supplier Code of Conduct and trace most of their supply chain,
the good news ends there. They have minimal worker empowerment initiatives (D +) and received the
bottom score (F) in relation to implementing a living wage or improving wages across their supply chain.
While they are an FLA Workplace Code of Conduct certified company, the fine print says members “shall
pay at least minimum wage or the appropriate prevailing wage” to their workers. But minimum wage does
not equal a living wage, especially in high-risk countries where fast fashion brands outsource their
production (Wolfe, 2019).

2.1.3.3: Animal welfare:

While Converse use leather without specifying sources, they have banned fur, and do not use wool,
angora, down or any exotic animal hair or skin. At Good On You, we care about our furred, feathered and
scaled friends and take their treatment into consideration when rating a brand (Wolfe, 2019).

2.1.4: Power of suppliers:

Suppliers affect Nike’s business through the availability of raw materials. This element of the Five Forces
Analysis tackles suppliers’ influence on firms and the industry environment. In Nike’s case, the following
external factors create the weak bargaining power of suppliers: High overall supply (weak force), Large
population of suppliers (weak force), Moderate size of individual suppliers (moderate force). The high
supply minimizes the effects of individual suppliers’ actions on Nike’s business. Similarly, the large
population of suppliers reduces the impact of individual suppliers’ demands on large companies like Nike
Inc. The moderate size of individual suppliers supports a moderate degree of suppliers’ influence.

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Nonetheless, this element of the Five Forces Analysis shows that Nike experiences only a weak force
representing the bargaining power of suppliers. As such, suppliers are among the least significant concerns
determining Nike’s strategies in the sports shoes, equipment and apparel industry environment. While no
single supplier holds significant bargaining power, footwear production is concentrated in Vietnam, China
and Indonesia. Nike’s footwear and apparel products are manufactured by third-party contract
manufacturers outside the U.S. in various countries, including Vietnam, China, Indonesia, Argentina, Brazil,
India and Mexico. Nike’s footwear production is largely conducted in Vietnam, China and Indonesia as
contract factories in these countries in fiscal 2013 comprised around 42%, 30%, and 26% of total Nike
brand footwear production, respectively. Hence, both sovereign issues and currency effects could be a
cause for concern for Nike. No single footwear factory or apparel factory accounted for more than 6% of
total Nike brand footwear production and Nike brand apparel production respectively in fiscal 2013;
hence, due to a large base of suppliers, we believe their bargaining power is limited. The switching costs
in changing suppliers is significant, but suppliers generally share the inflationary pressure (related to raw
material costs and labor expenses) with Nike through manufacturing service pricing. Overall, the level of
dependence on suppliers may be a NO for Nike Inc,. (Suppliers of Nike in America for example: Delta Galil
Industries)

2.1.5: Power of buyers:

Nike caters to its customers through both the wholesale and direct-to-consumer channels, which
accounted for 80.6% and 18.9% of total Nike brand’s sales respectively, in fiscal 2019. Direct-to-consumer
sales rose by 23% in fiscal 2019, as compared to 6% growth in the wholesale channel; hence Nike is looking
to strengthen its direct channel. Certain big wholesale customers hold bargaining power as they could
widen their partnership with Nike’s competitors or provide their own private label offerings to earn higher
profitability. Bargaining power of end-customers is low as Nike has a very strong brand image and holds
an innovative product portfolio. However, customers could also choose other brands owing to factors such
as price, advertising, product sponsorship, and changing styles (Nike, 2019).

Actually, Nike customers is the most powerful tool that bring back huge profit for Nike, which makes Nike
becomes more competitive to Adidas in the market. Nike thoroughly understands this thing, so that it
always takes care its customers and keep doing study on its customer. Despite continuing to see growth

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in sales to wholesale customers, Nike has been ramping up its efforts to sell directly to consumers and cut
out the middleman in a bid to reach its target of $50 billion in revenue by 2020. This change showed in
their 2017 results. Nike reported an increase of 18% on sales made via their DTC channels. Much of this
came from an increase in sales made via the internet. Digital commerce sales were up 30% on the previous
year. Not only has Nike seen impressive revenue from its online store, but it has also started to sell via
leading digital retailer Amazon, putting its products in front of 300 million shoppers in the United States
alone. According to Business Insider, Nike was already the most popular clothing brand on Amazon.
However, selling direct to Amazon customers will allow Nike to take revenue away from third-party sellers
(CSIMarket, 2020). Obviously, the power of buyers make Nike becomes more and more potential and
stronger in the market. Competing with other giants like Adidas, Reebok, Nike always keep sustainable
and powerful as the loyalty of its customers – Nike fans- and always be attractive to other new clients with
different and outstanding design as customers of Nike is powerful and definitely is the one that bring back
huge profit for Nike

2.2. PESTLE Analysis:

2.2.1: Economic factor:
These charts are captured from https://countryeconomy.com/gdp/usa which show clearly why it put an
impact on the economic issues of Nike Inc,.

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Annual GDP of America expects a growth throughout the year. It rose from 1.7% in 2016 to 2.3% in 2017.
In 2018, the proportion of total GDP in the US reached at 3.0% and then slightly decreased to 2.2%. But
the percentage of GDP per capita in this country saw an impressive increase. From 2.0% in 2016 to 4.1%
in 2019. Inflation rate of 2019 in the United States was 1.81% and then may decrease to 0.62% in 2020
(expected data) and it is expected that in 2021 may increase to 2.24%. Anyway, these data given above
depict clearly about the impact of economic background to Nike Inc,. Recession is the greatest economical
issue in several companies. Nike reduced costs and about two thousand posts or five percent of its labor
force during recession. Recession caused Nike to reduce its marketing budget in order to make less
expenses. Nike terminated some deals with some athletes, many employees lost their jobs and the
company spent less in advertising during recession. Currency rate has a strong impact on international
corporations. When the dollar gets strong, the price of goods brought into a country from overseas will
diminish and the sales will be stimulated by the low price. Due to a strong US dollar, the price of goods
sent to a foreign country for sales will go up. The export may be reduced by the higher overseas price. Nike
will obtain currency interests from the upcoming orders when the dollar gets strong, because the company

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has the large scale of the upcoming orders operating with the foreign currency to exchange with foreign
suppliers (Kevin, 2020).

2.2.3. Social factors:

a, Demographic of the country:

Millennials are the largest adult generation in the United States, but they are starting to share the spotlight
with Generation Z. This year, Millennials, those ages 23 to 38, will outnumber Baby Boomers (ages 55 to
73), according to Census Bureau projections. Although the nation’s 73 million Millennials are the largest
living adult generation, the next one – Generation Z – is entering adulthood. Also known as the post-
Millennials, Gen Zers (those born after 1996 – ages 7 to 22 for this analysis) are on track to be the best
educated and most diverse generation yet. Nearly half of Gen Zers (48%) are racial or ethnic minorities.
Socially and politically, their liberal-leaning opinions on key issues are similar to those of Millennials. The
immigrant share of the U.S. population is approaching a record high but remains below that of many other
countries. The 44 million foreign-born people living in the U.S. in 2017 accounted for 13.6% of the
population, according to a Pew Research Center analysis of the American Community Survey. That is the
highest share since 1910, when immigrants were 14.7% of the total population. The record share was in
1890, when immigrants were 14.8% of the total. According to United Nations data, 25 nations and
territories have higher shares of immigrants than the U.S. They include some Persian Gulf nations with
high shares of temporary labor migrants, as well as Australia (29%), New Zealand (23%) and Canada (21%).
These data obviously affect to Nike in America as the ranging age of people using Nike products has been
loosen, children or even the elder tend to use those, including people from other countries who purchase
Nike products in America (Expatnetwork, 2020).

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b, Life style, culture, social class:

Different regions of America have been influenced to different degrees by the different ethnicities and
cultures giving each a unique balance. They are drawn together by a belief in the ‘American Dream’, the
idea that with hard work and talent anyone can achieve great success and wealth. Success is praised and
admired rather than envied, and this is one of the things that makes a major impression on newcomers
from other countries. Americans have a reputation for being outgoing and direct talking and this can take
a little getting used to for those from countries where people are more reserved. They are often very
sociable and will readily welcome people into their homes. In many places special groups are set up to
welcome newcomers into the neighborhood. Americans have divides themselves into five social classes:
upper, upper-middle, middle, working and lower. These five class labels are representative of the general
approach used in popular language and by researchers. The last analysis showed that 3% of Americans

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identified themselves as upper class, 15% as upper-middle class, 43% as middle class, 30% as working class
and 8% as lower class -- with noted changes in these self-categorizations over time (Robert Bird, Frank
Newport, 2017).

c, Customer behavior toward trends and changes, preference:

The American is quite adaptable to changes and trends. They even create new trend and shifts that make
an impressive movement to the whole people all around the world. Especially, the online market has to
be mentioned in this part. Physical distancing and stay-at-home orders have forced whole consumer
segments to shop differently. A few months into COVID-19, consumer shopping online has increased
significantly across many categories. Consumer intent to shop online continues to increase, especially in
essentials and home-entertainment categories. More interestingly, these habits seem like they’re going to
stick as US consumers report an intent to shop online even after the COVID-19 crisis. Categories where
expected growth in online shoppers exceeds 35 percent include essentials such as over-the-counter (OTC)
medicine, groceries, household supplies, and personal-care products. Even discretionary categories such
as skin care and makeup, apparel, and jewelry and accessories show expected customer growth of more
than 15 percent. The chart below will prove it (Tamara Charm, Becca Coggins, Kelsey Robinson, Jamie
Wilkie, 2020).

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After that, switching or shifting between brands has to be mentioned also. Consumers are switching
brands at unprecedented rates. The crisis has prompted a surge of new activities, with an astonishing 75
percent of US consumers trying a new shopping behavior in response to economic pressures, store
closings, and changing priorities. This general change in behavior has also been reflected in a shattering of
brand loyalties, with 36 percent of consumers trying a new product brand and 25 percent incorporating a
new private-label brand. Of consumers who have tried different brands, 73 percent intend to continue to
incorporate the new brands into their routine. Gen Z and high earners are most prone to switching brands.
The beneficiaries of this shift include big, trusted brands, which are seeing 50 percent growth during the

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crisis, and private labels, which have outpaced the retail market. Some 80 percent of customers who
started using a private brand during the pandemic indicate they intend to continue using it once the
COVID-19 crisis subsides. Here is the chart which clarified this problem clearly (Tamara Charm, Becca
Coggins, Kelsey Robinson, Jamie Wilkie, 2020).

From these above, Nike can make itself become more potential in America market as it has a wide range
of products with eye-catching style, trendy appearance and high-quality of every product. Customers from
other brands many want to switch to Nike to try and they might be attracted by those outstanding
products. But it would be a challenge for Nike’s marketers as they have to find a way to maintain
customer’s loyalty and become aware of when shoppers are migrating brands or retailers and then to
manage the logistics to ensure product and service availability.

CONCLUSION ABOUT THREATS AND OPPORTUNITIES:

1. Competitive environment:

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Potential competitor, which is Skecher, will not be a threat to Nike as Nike enjoys a great degree of brand
recognition and loyalty, and it will be a difficult for a new player to match its level and requirement for
high capital and research investments could limit the entry of new players; however, there is a threat from
new e-commerce players like Skecher, takes so long in a run way with Nike; but its opportunity is that it
can be a fresh factor in this market which can attract young people (age 12-25) which is one of the highest
population in America. Current competitor, which is Adidas, its threats will be that obviously, Adidas is also
a huge competitor of Nike in this market with high market share and high-valued brand with huge source
of labor around the world but its opportunity would be create when head to head with Nike, create new
and creative product which can attract Nike’s fans. When it comes to substitute products, which is
Converse, its threats might be that this brand is not high-quality as Nike, their chain of style and material
is not vary as Nike and the fundamental of this brand doesn’t target to same level of its in Nike, but its
opportunity would be that the usage of its product is versatile, from the young to the elder can wear it
without worrying its appearance may affect customers’ experience. Mentioning about the power of
suppliers, its threat definitely is that supplier can be in positive position which can overtake Nike’s control
about the production of its product, lack of materials or something like that can directly affect to Nike, but
its opportunity is that it can make profit from such profitable enterprise like Nike. Last but not least, power
of customers must be the most important factor as its threat is that, customers is the only one who bring
back huge profit for the enterprise, and the successful of the enterprise comes from the satisfaction of the
customers if the customers aren’t treated well, they will leave for other brands like Adidas – a huge
competitor of Nike, and also the opportunity that customers bring back is way more than the enterprise
can expect, the loyalty of brand that Nike create and also its high-quality and creative marketing strategies
will trigger its customers to curiosity and maintain the sustainable profit of Nike.

2. Macro environment:

Social factor can cause threat to Nike as social does not always remain unchanged, some of social activities
may badly affect to Nike and could put an impact on Nike’s business, while its opportunity is that it may
give Nike a chance to get close to the social with new strategies and activities, which will help to spread
the fresh and ethic image of Nike, which can create good vibes and aspects of this brand to people all over
the world and easily inspired them. Technology factor can create threat to Nike as social media now is

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sophisticated, some news and magazine will cause bad effect to this brand, this technology era offers
people to approach the internet more than ever before so they will update news about everything just by
a click of mouse, if Nike doesn’t plan to control so their reputation will be badly damaged, whilst its
opportunities would be more than its threats as technology gives Nike chance to get closer to customers
all over the world and digital marketing is truly effective.

3. Internal Analysis:
3.1. Mission, Vision and Core Value:
3.1.1. Mission:
Nike mission statement is “to bring inspiration and innovation to every athlete in the world.” This
statement reflects on the impact of Nike in the sports industry. It especially reflects this company's ability
to inspire and shape athletes into their best versions. It also suggests, in reality, that this is what athletes
who want to be clutch should look for (Nike Inc, 2020).

Some of the elements that are connected with this mission statement include:

Bringing inspiration: For example, Nike was on the front row to fulfill this aspect when it comes to inspiring
its consumers when it knows best, supplying them with stylish footwear and clothes. In addition, the
organization knows the significance of looking at the component, and this stimulates their ability to
succeed. The broad variety of sportswear, for example, provides an idea of what precisely this is all about.
After that, creativity is: in this game, the justification Nike has stayed at the top narrows down to its
constant clamor for the most flexible, aesthetically pleasing and most durable goods. It achieves this by
including the most imaginative minds in its team of specialists while introducing some items on the market
to advance its revolutionary agenda. In reality, the innovation house shows a lot of objects and information
that illustrate the company's attention to sports business technologies. With global reach: Nike reveals in
this way that it is a business that needs its presence felt everywhere. The need to satisfy this aspect
explains the company's diversification tactics to incorporate numerous goods targeting athletes across the
globe. For example, Nike has introduced hallmark programs to develop sports talent across the globe (Nike
Inc, 2020).

3.1.2. Vision:
The vision statement of Nike is to "do everything necessary to broaden human capacity." We see a world
where everybody is an athlete — united in the joy of movement. Driven by our passion for sport and our
instinct for innovation, we aim to bring inspiration to every athlete in the world and to make sport a daily
habit. This statement, while specifically designed, indicates that the organization does not restrict itself to
such tactics to guarantee that it offers its consumers the finest in the sporting world. The image portrayed
by this declaration of vision is that Instead, the business goes after the most dynamic, simple, and

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extremely effective prototypes with worthwhile effects on consumers. For example: Nike does not settle
after standard. The following attributes contribute to this vision argument, in line with this finding. Here
are three primary visions: changing lives, exceeding goals and expanding human capacity. Nike’s vision
statement is “do everything possible to expand human potential.” Although precisely crafted, this
statement shows that the company does not limit itself to certain strategies in ensuring it gives its
customers the best there is in the world of sports. The picture portrayed by this vision statement is that
Nike does not settle for normal, instead, the company goes for the most dynamic, simple, yet incredibly
efficient designs with worthwhile impacts on the users. In accordance with this observation, the following
characteristics relate to this vision statement: Improvement of lives. Nike Corporation is a people-oriented
company whose operations targets leaving a positive impact on the people it comes in contact with. The
company does this by incorporating objectives that improve societies to run parallel to its primary goals –
and these form its corporate social responsibility. For instance, Nike is accredited for leading
environmental conservation strategies across the globe, and this is not all. The company is vocal in other
social targets as part of its overall mission of bringing the best out of the people it serves. Exceeding
expectations. If there are companies that have gone out of their way in what they do, Nike would definitely
top the list. In all its operations, Nike has proven beyond doubt that it does not simply give what the
customer expects. The ever-growing reputation of this company is directly linked to the incredible efforts
it puts in manufacturing products whose quality goes over and above the expectations of the market and
Nike competitors as well. For years, there has been no comparison to what Nike does, their products are
simply extraordinary. Expanding human potential. The desire to give its primary customers, the athletes
the best footwear, apparel, and other equipment remains the major priority of Nike. It is something that
the company has stayed true to for years ever since it was founded. In fact, the company understands the
diverse needs of different sportspersons, and in this way, stimulates creativity to produce products
tailored to the needs of each category. (Nike Inc, 2020).

3.1.3. Core Value:

Nike’s core values include “inspiration, innovation, every athlete in the world, authentic, connected, and
distinctive.” These values define what Nike holds dear in its quest to become the best there is (Nike Inc,
2020).

For example: Nike emphasizes the need to retain top inspiration within its workforce and ensure that they
create and manufacture goods that are not only real, but also ones that satisfy the desires of all athletes,
regardless of where they are in the world, powered by ingenuity. The business follows the criteria of its
first through fourth principles in this manner. The organization also emphasizes building relationships with
everyone with whom it interacts, something that makes everything unique about the organization (Nike
Inc, 2020).

Discussing about the pros and cons of this core values. The strengths of this core value will be analyzed.
As “inspiration, innovation, every athlete in the world, authentic, connected and distinctive” will

21
encourage everybody to become a hyper-active people, exactly the thing that Nike directs to. Nike wants
to inspire people, make them develop themselves by athlete activities and more than that is that they
direct to the authentic products with connect people to the brand and no more space between people
and brand. Nike understands its customers and its products. Nike knows how to link between the product
and customer, so that it can bring the message through its product that may inspire consumers and raise
its revenue from exactly what they want. Besides, the drawbacks might be that the customer segmentation
might be narrow because of the above message. Some people will misunderstand what Nike wants to
mention, especially people who are not very hyper-active, they tend to be introvert and might understand
the core values into any other else. Other products like Charles n’ Keith or Pedro or something intense will
attract them. That should be taken into account.

3.2. Organizational Structure:

Nike is a global company. When it opened an office in Taiwan in 1975, Nike first became a multinational
corporation, which now has branch offices all over the world. In Asia and Latin America, nearly all Nike
sneakers are manufactured outside of the US. Nike does not produce the sneakers directly, they contract
out manufacturing to other businesses (Thompson, 2019). Nike is a global corporation and it is a corporate
organization. That, in at least one nation other than its home country, manages or regulates the output of
products or services. The graph demonstrates an hierarchical framework that determines the allocation of
duties and the formation of line authorities inside an organization. The corporate framework of Nike is a
framework with a matrix. Organizational systems are heavily utilized by organizations of all types and sizes.
Within an organization, they describe a particular hierarchy. A strong organizational structure determines
the role of each staff and how it works into the overall scheme. Simply placed, the corporate framework
maps out who does what so that the corporation can accomplish its targets. This arrangement offers a
corporation a visual image of how it is formed and how it will better step ahead in achieving its objectives.
Organizational systems are typically represented as a pyramid in some type of graph or schematic, where
the organization's most important representatives sit at the peak, whereas others with the least influence
are at the bottom. For example, Nike have CEO on top and below, it divided into 4 main links with Chief
Executive Office, President Innovation, Nike President and Product & Merchandising (Kenton, 2019).

The advantage will be discussed specifically. The usage of child labour in facilities contracted to produce
Nike items is expressly and explicitly forbidden by Nike. The Nike Code of Ethics allows staff to be at least
16 years of age or older than the national compulsory schooling legal age and minimum operating age,
whichever is greater. The specifications further state that staff between 16 and 18 years of age must be

22
hired or operate at night in jobs that could be risky, such as dealing around explosives or heavy machinery.
The age criteria of our Code of Ethics outweigh those of the International Labour Organisation (15 years
of age and 14 years of age in some developed countries). The gender would be both me and woman with
high distinctive quality of academic knowledge and well-built skill of worker. That how Nike’s work
structure is very smooth. But moving to the drawbacks, the organizational structure here might be old. In
the near future, moving to the 4.0 technology era, this structure will affect badly to the whole company.
Nike should take advance in changing the structure of the company and find effective solution for the
organizational structure problems.

3.3. Human resources:

NIKE has about 76,700 workers worldwide as of May 31, 2019, including retail and part-time staff.
Management remains dedicated to preserving a culture in which all NIKE personnel have the ability to
achieve their maximum potential. None of the workers, with the exception of those workers in the APLA
zone, are covered by a labor union, where local legislation mandates certain employees to be covered by
a trade union. Local regulations often mandate workforce participation in certain nations outside the
United States through job committees (which might be entitled to facts and input about some business
decisions) or through union-like organizations. NIKE is mandated by municipal legislation in some
European countries to conclude and/or cooperate with industry-wide or national collective bargaining
arrangements. Owing to labor disputes, NIKE has never encountered a material disruption in events
(Thompson, 2019). Age: In the facilities contracted to make Nike products, Nike specifically and directly
prohibits the use of child labor. The Nike Code of Conduct requires employees to be at least 16 years of
age or older than the national compulsory schooling legal age and minimum working age, whichever is
greater. The specifications further state that staff under the ages of 16 and 18 should not be hired or
operate at night in jobs that could be risky, such as dealing around explosives or heavy machinery. The age
criteria of our Code of Ethics outweigh those of the International Labour Organisation (15 years of age and
14 years of age in some developed countries) (Thompson, 2019).

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Gender: The majority of workers involved in the global production of apparel and footwear are women.
Many of those women have unique vulnerabilities relative to their male peers and can therefore be at risk
for exploitation and abuse. Nike has long recognized these risks and has specific standards to protect
women workers. Our requirements for suppliers include equal pay for equal work, safe work in connection
to pregnancy, childbirth and nursing, prohibitions on discriminatory pregnancy testing or forced use of
contraception, and provision of maternity benefits. Qualification: Nike continues to prioritize recruiting
the best and brightest talent – to bring in critical capabilities, support our company’s continued growth,
build our pipeline of talent, and diversify our workforce (Nike Inc, 2019).

When it comes to the pros and cons of the work, the simple human resources show us how powerful this
company's workers are. Nike proves that it has a successful squad of workers by the difficult option of age,
qualification, talent and credential of the workers. From any single HR Team exam, they are deliberated
before Nike 's official workers is the final stage. 'It's a Start' is also Nike 's labor ranking. Even in their latest

24
promotional ads, the company has concentrated on female empowerment and inclusiveness, the people
who work with Nike (whether in their factories or headquarters) are obviously left out of this image. In
2018 , two disgruntled female executives who accused the sneaker company of developing a system of
racial inequality and sexual assault were actually prosecuted by Nike. On a positive note, the enterprise is
accredited by the Equal Labor Association (FLA) Occupational Code of Ethics, and in the Fashion
Transparency Ranking earned a score of 51-60 points. Detailed details regarding its supplier practices,
investigations, and remediation procedures is likely to be released by Nike. A complete list of suppliers in
the final stage of development is also released, as well as some information on the results of supplier
audits. While there is some public knowledge regarding slave labour, gender equity, or freedom of
association, as well as policies to shield manufacturers from the consequences of COVID-19 in their supply
chain, the employees were unfortunately left out of the picture. Perhaps further, across much of the
production chain, there is little proof to guarantee the paying of a fair wage. The Foul Play report by the
Clean Clothes Campaign and Collectif Ethique sur l’Etiquette shows just how far Nike has to go when it
comes to living wages. It highlights the difference between the ever-increasing amount of money paid on
sponsorships to sports stars and other marketing expenses, compared to the reduction of the share of the
final price of your sports gear paid to workers in the supply chain. The report calls on Nike to commit to
paying living wages across its supply chains by a specific date and other supporting action (Nike, 2019).
That’s the reason why the operation of this company is so smooth that it cannot make any small mistake.
From the smallest thing is to choose the human resources to the final step is releasing the products to the
markets. That is the reason why they always represent for one of the most successful brands. The
drawbacks might be that this structure is quite traditional, in the near future, the 4.0 technology era will
affect this traditional structure and old generation of labor might be too old to use, so in the near future,
Nike should consider to change a little bit about the labor structure.

3.4. Brand name and Equity:

a, Brand name:

In Greek mythology, Nike is the Winged Goddess of Victory. The logo is derived from goddess' wing,
‘swoosh’, which symbolizes the sound of speed, movement, power and motivation (Times, 2017). Because

25
of its long tradition of establishing a sustainable reputation in the athletic room, Nike also features in
conversations around branding. Since the Nike logo "swoosh" cost the corporation less than $50 when
they first created it, it has been one of the most recognizable pictures in the world. Today, to recognize a
Nike commodity, individuals no longer require the famous "Nike" tag. The swoosh is enough to say
someone all about the company he / she wants to hear. 15 Nike has expressed both their company's
health, athleticism and flexibility in one single type, rendering the swoosh a truly influential icon in the
business environment (Peate, 2019)

Moving to the pros and cons of the brand name, it can be easy to see that Nike, as well as the swoosh logo
is very easy to be recognized, that the reason why consumers always recognize the brand whenever com
across them in the market. Simple but legal is words to describe this logo. “Swoosh” logo makes it easy for
people to recognize this. Nike advertises and promotes their brand through billboards, commercials,
newsletters, sponsorships and an overall guarantee of quality service. They keep prospects consistently
aware of their brand and the way in which they are the best product for anything active. One advantage
of using allusive logos is that they usually don't resemble other corporate logos. Coffee merchants, for
example, who use coffee cups or coffee beans in their logo designs risk having consumers confuse their
businesses with competitors who have similar logos. Business owners also can build a loyal customer
following if consumers positively identify their company with an allusive logo. Entrepreneur.com notes
that the Nike “swoosh” logo has no meaning in itself, but the company built a customer following by linking
the “swoosh” to its products and an athletic lifestyle. Besides, the brand name and logo still confuse people
in some way. An allusive logo is usually meaningless to consumers until a company invests a significant
amount of time and money to link the logo to its brands. Still, consumers may find some allusive logos
difficult to comprehend because the connection with the business is too broad. Companies also risk having
consumers make an unfavorable connection with logos that allude to something outside the core business
that consumers perceive as negative (Peate, 2019).

b, Equity:

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This graph is focused on selected financial details in the Nike Annual Report 2019 (Nike, 2019)

The new twelve month return on common equity from NIKE is 29.2 percent. For the fiscal years ending
May 2016 through 2020, NIKE's return on common equity averaged 30.9 percent. NIKE's worked from
fiscal years ending May 2016 to 2020 at a median return on common equity of 30,1 percent. Looking back
over the last five years, the return on common equity of NIKE stood over 42.7% in May 2019. The return
on common equity of NIKE met its five-year low of 17.4 per cent in May 2018. In 2018 (17.4 percent, -49.4
percent) and 2020 (29.7 percent, -30.5 percent), NIKE's return on common equity declined and rose in

27
2016 (30.1 percent, +8.3 percent), 2017 (34.4 percent, +14.1 percent) and 2019 (42.7 percent, +145.7
percent) (Nike, 2019).

About the strengths and weakness. What started as a shoe company has morphed into a global
powerhouse, with products that now include apparel, equipment and accessories. And Nike continues to
be the world’s largest athletic footwear and apparel operator. Like Apple, Nike focuses primarily on
marketing, design and product innovation. Other factors – such as manufacturing – are outsourced. With
its strong cash flows, Nike has purchased other brands like Converse, Hurley International and Umbro (a
top firm in the soccer market). Nike makes large investments in this category. As a result, the company is
often an innovator in areas that improve performance and comfort. This requires a staff with deep
expertise in biomechanics, engineering and exercise physiology. For some time, Nike has been making
investments in markets like China, India and Brazil. These countries are undergoing strong increases in
wealth – which should bode well for premium athletic wear (Nike, 2019). But the weakness may be in this
Co-vid19 pandemic, the total revenue of Nike may decrease which affects directly to the company. That is
quite rare when Nike gets into this condition but if there is something like Co-vid19 pandemic happens,
this company will have to suffer more than what people can imagine. According to MacroTrends, an
American popular website of analyzing stock, Nike annual revenue for 2020 was $37.403B, a 4.38% decline
from 2019, and Nike revenue for the quarter ending August 31, 2020 was $10.594B, a 0.62% decline year-
over-year.

3.5. Market Resources:

Nike is a leading manufacturer of athletic equipment and clothing. A large global footprint has been
established by the group. Via many distribution channels, including business-owned shops and online
platforms, it services its clients. In the athletic shoe sector, Nike's strong market dominance is focused on
many forms of competitive advantage. The agency is now famous for its great marketing practices. The
brand is known for its emphasis on consistency and creativity, apart from excellent marketing. It is a
customer-centered brand that has kept a strong emphasis on product creativity and consistency. Both
these indicators have culminated in impressive revenue and earnings. Though consistency is Nike's key
asset, it has succeeded by concentrating on every area of operation, including supply chain management
and management of human capital (Pratap, 2019).

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The strength of market resource of Nike definitely is that it knows how to blow itself by collaborate with
other brand to widen its market. Through distribution network and marketing campaign and special
events, Nike is getting closer and closer to its new customer. The never-out-of-fashion design of every
single footwear, the versatile shirt and outerwear of Nike collection even make Nike becomes more and
more popular. The availability of famous people being endorsement along with smart marketing strategies
has widened the market of Nike more than ever. Moving to the drawbacks, obviously, there must exist
some ineffective marketing activities which leads to the waste of company’s budgets and resources.
Marketers of Nike should aware of these things so as not to waste any of their company. We must know
that the market resources are indispensable to Nike company and even a small mistake could ruin the
whole company.

4. Business Decision:
The most important decision of Nike is given in the nearest period is the collaboration is between Nike and
Virgil Abloh, an American fashion designer, artist and DJ who has been the artistic director of Louis
Vuitton's men's wear collection since 2018. He designed a collection for Nike called “The Ten” in which he
re-designed a variety of the company's best-selling shoes. Highsnobiety readers voted Abloh's Nike Air
Jordan 1 “Chicago” design the best sneaker of 2017. The Off-White™ "The Ten" project included sneakers
from Nike as well as Nike-owned brands Converse and Jordan. From late October to early November in
2017, the first releases were split into two packs of five. The “REVEALING” pack contained the Off-White™
Nike Air Jordan 1, Air Max 90, Air Presto, Air VaporMax, and Blazer Mid. The “GHOSTING” pack included
an Off-White™ Nike Air Max 97, React Hyperdunk, Air Force 1, Zoom Vaporfly, and Converse Chuck Taylor
All Star (Golubeva, 2020).

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Source: https://www.singlegrain.com/marketing-strategy/nikes-39-billion-marketing-strategy-just-do-it-
like-nike-does/

The collaboration was teased months before its release on Instagram, leaving sneakerheads hotly awaiting
the release dates of the deconstructed shoes after they were extensively cosigned by the likes of A$ AP
Rocky, Drake, Kim Jones, and even Naomi Campbell on social media. Nike's revenue grew significantly with
the introduction of the range, and the resale price of the sneakers in that range was often widely sought
for. The Nike Air Jordan 1 pair, for example, retails for only $190. These shoes, however, are reportedly
reselling at $4,300 (Danforth, 2020).

* Strengths: The strength of this strategy is to widen the range of customers and also make the Nike shoes
become more valued in the footwear market, which make this brand of shoes become more conpetitve
against the Adidas. Because Adidas collaborate with Kanye West and Pharrell Williams to create the Yeezy
Boost and Human Race so it is believed that Nike is back on the commercial arena to compete against this
brand. As the return of Virgil Abloh, Nike gains more positions in the world of sneakerheads and the
consumers’ of footwear. (Edward, 2017).

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* Weakness: Because these shoes are made from different materials which are suede, plastics, polyester
and heavy cottons or even rubber which affect the environments badly and the environment is now
deteriorating because of resources wasting. And these products give a hand of causing environmental
problems (Edward, 2017).

* Macro environment factors: Despite facing challenges at the domestic level along with a rapidly
transforming global landscape, the U.S. economy is still the largest and most important in the world. The
U.S. economy represents about 20% of total global output, and is still larger than that of China. Moreover,
according to the IMF, the U.S. has the sixth highest per capita GDP (PPP). The U.S. economy features a
highly-developed and technologically-advanced services sector, which accounts for about 80% of its
output. The U.S. economy is dominated by services-oriented companies in areas such as technology,
financial services, healthcare and retail. Large U.S. corporations also play a major role on the global stage,
with more than a fifth of companies on the Fortune Global 500 coming from the United States. Even
though the services sector is the main engine of the economy, the U.S. also has an important
manufacturing base, which represents roughly 15% of output. The U.S. is the second largest manufacturer
in the world and a leader in higher-value industries such as automobiles, aerospace, machinery,
telecommunications and chemicals. Meanwhile, agriculture represents less than 2% of output. However,
large amounts of arable land, advanced farming technology and generous government subsidies make the
U.S. a net exporter of food and the largest agricultural exporting country in the world. The U.S. economy
maintains its powerhouse status through a combination of characteristics. The country has access to
abundant natural resources and a sophisticated physical infrastructure. It also has a large, well-educated
and productive workforce. Moreover, the physical and human capital is fully leveraged in a free-market
and business-oriented environment. The government and the people of the United States both contribute
to this unique economic environment. The government provides political stability, a functional legal
system, and a regulatory structure that allow the economy to flourish. The general population, including
a diversity of immigrants, brings a solid work ethic, as well as a sense of entrepreneurship and risk taking
to the mix. Economic growth in the United States is constantly being driven forward by ongoing innovation,
research and development as well as capital investment. The U.S. economy is currently emerging from a
period of considerable turmoil. A mix of factors, including low interest rates, widespread mortgage
lending, excessive risk taking in the financial sector, high consumer indebtedness and lax government

31
regulation, led to a major recession that began in 2008. The housing market and several major banks
collapsed and the U.S. economy proceeded to contract until the third quarter of 2009 in what was the
deepest and longest downturn since the Great Depression. The U.S. government intervened by using USD
700 billion to purchase troubled mortgage-related assets and propping up large floundering corporations
in order to stabilize the financial system. It also introduced a stimulus package worth USD 831 billion to be
spent across the following 10 years to boost the economy (Focuseconomics, 2020)

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33
 Source: https://www.focus-economics.com/countries/united-states

* Competitive Forces (Current Competitor): Adidas is a brand of footwear and sportswear founded in
Germany by Adolf Dassler in 1949, which succeeded in becoming a multinational business that currently
employs 57,000 people and manufactures 900 million units worldwide, 50 percent of which are shoes, 45
percent are sneakers and the remainder are equipment. As mentioned before, the exclusive product of
Adidas which are Yeezy Boost and Human Race that Adidas collaborate with 2 prestigious artists Kanye
West and Pharrell Williams make Adidas becomes a hottest brand of that period. So these products from
‘The Ten” of Nike will be in trouble when compete to this huge competitor. A decade-defining sneaker,
the Yeezy Boost 350 is Kanye West and Adidas most successful silhouette. Why? Because not only do the
sneakers look as fresh with gym gear as they do with date-night attire, they’re also insanely comfortable.
This is down to the use of Adidas’ innovative materials, a primeknit upper upon a Boost sole. It was
released on June 2015 and bring huge benefit and reputation for Adidas. Unveiled in July 2016, the NMD
Human Race - or NMD Hu, for short - was made in collaboration with Pharrell Williams himself.
Embroidered with "HUMAN RACE"; across the upper, the 'Yellow' was the first colorway to release, and to
this day, it is by far one of the most coveted shades, with an average market value of around £1,250. The
success of both products make Adidas become more and more competitive. Nike have to be aware of
Adidas when it want to compete in the same market. (Edward, 2017).

4.4. SWOT Model:

4.4.1. Nike’s Strengths – Internal Strategic Factors:

Strong Brand Awareness – 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. Nike
has captured approx. 31% of the global athletic footwear market. Huge Customer base – Nike has millions
of customers from around the world who loyally follow Nike’s trends, participate in Nike events, and even
provide customer feedback. Due to its huge customer base, Nike’s market cap has grown to $198 billion
as of Oct 2020. 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. Iconic Relationships – Nike’s long-term
partnership with Michael Jordan has proved to be beneficial in terms of sales for the company. Their

34
collaboration resulted in “Air Jordan 1 Shoes”. Additionally, Nike teamed up with the famous basketball
player to help design the “Air Jordan 1 Shoes”. 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. Low
Manufacturing Cost – Most of Nike’s footwear is manufactured in foreign countries. In the fiscal year 2020,
Vietnam produced 50%, China produced 22%, and Indonesia produced 24% of total Nike’s footwear. Other
operations are in Argentina, Brazil, India, Italy, and Mexico. 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. Superior Marketing
Capabilities – Nike has excellent marketing campaigns. The brand heavily relies on demand generation
expense. In the fiscal year 2019 and 2020, Nike spent $3.7 billion and $3.5 billion respectively. The brand
has successfully utilized social media and marketing campaigns to target more customers. 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 (John, 2020).

4.4.2. Nike’s Weaknesses – External Strategic Factors

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”. Retailers Have a Stronger Hold – Nike’s retail sector makes
Nike week 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. 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 Aug 2020, Nike’s total long-term debt was $9.54 billion. 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 2020, about 41% of Nike’s sales came from the U.S, while the rest of 59% came globally. Despite its
fame, Nike depends on the U.S for substantial sales and growth. Lawsuits: Recently, a former employee
accused Nike of discrimination based on his Croatian origin. 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

35
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. 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. 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. 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 (John, 2020).

4.4.3. Nike’s Opportunities – External Strategic Factors

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. 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. 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. 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

36
Meyer, Bob’s Stores, etc. The step is taken for better product positioning and greater customer experience.
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. 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 2020, 35% of its Nike brand revenue comes from online
sales. Clearly, the pandemic is shaping up how Nike interacts with its customers (John, 2020).

4.4.4. Nike’s Threats – External Strategic Factors

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. 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. Marketing Budget Pressure – Companies like Under Armour
and Adidas are spending more on marketing and advertising campaigns, increasing the pressure on Nike.
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. 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. 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. Trade Tensions – Nike depends on different markets across the

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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 (John, 2020).

Conclusion:
After all, this report has just shown all the thing that need to be discussed and clarified thoroughly about
Nike company. It provides a deeper look in to this enterprise, specifically is Nike Inc's internal and external
variables, which involve micro and macro environments in the American industry, will have a major effect
on the whole enterprise. Five factors would be fully explained in the business environment: future rivals,
existing competitors, alternative goods, supplier power and customer power, as well as the PESTLE system.
On the other side, this report would explicitly point out why the business is influenced by both the pros
and cons of internal research. The last problem that is disclosed regarding Nike Inc 's SWOT model,
involvement, will also be listed.

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