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Abstract

Nike’s mission is to bring inspiration and innovation to every athlete in the world. The

company’s number one goal has always been to bring out the best in athletes. Similarly, Nike

relentlessly strategizes to provide their clients with carefully designed products to cater to their

every need. Nike’s dedication to R&D and incorporation of cutting-edge technologies into its

goods may potentially provide fresh growth prospects. All things considered, we believe Nike

has more advantages than disadvantages and possibilities than threats.

Keywords

Figure 1

Keywords
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TABLE OF CONTENTS
Abstract.................................................................................................................................................2
Keywords.................................................................................................................................................2
Table of Figures......................................................................................................................................4
Introduction...........................................................................................................................................5
Mission and Vision.................................................................................................................................6
Innovation at Nike..................................................................................................................................7
Nike Business Model Canvas..................................................................................................................9
1. Customer Segmentation at Nike....................................................................................................10
2. Value Proposition at Nike..............................................................................................................10
3. Channels at Nike............................................................................................................................10
4. Customer Relationships at Nike.....................................................................................................11
5. Revenue Streams for Nike.............................................................................................................11
6. Key Resources for Nike..................................................................................................................11
7. Key Activities at Nike.....................................................................................................................12
8. Key Partners for Nike.....................................................................................................................12
9. Cost Structure at Nike....................................................................................................................13
Challenges faced by Nike’s business Model..........................................................................................14
Competition...........................................................................................................................................14
Trends....................................................................................................................................................15
Risks.......................................................................................................................................................15
Nike’s SWOT Analysis...........................................................................................................................16
Strengths...............................................................................................................................................16
Weaknesses...........................................................................................................................................17
Opportunities........................................................................................................................................18
Threats...................................................................................................................................................18
Recommendations...............................................................................................................................19
Findings & Conclusion..........................................................................................................................20
References...........................................................................................................................................21
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Table of Figures

Figure 1: Keywords.....................................................................................................................................2
Figure 2: Introduction to Nike....................................................................................................................6
Figure 3: Nike’s Mission and Vision............................................................................................................8
Figure 4: Innovation Process at Nike..........................................................................................................9
Figure 5: Nike’s Business Model Canvas...................................................................................................10
Figure 6: Nike’s Cost Structure.................................................................................................................14
Figure 7: Competitor Analysis of Nike......................................................................................................15
Figure 8: Nike’s SWOT Analysis................................................................................................................17
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Introduction

Nike Inc. is one of the world’s leading sportswear manufacturing companies with its

headquarters located in the USA. It has been designing and developing athletic wear including

shoes, clothing, sports accessories, and services since 1964 by Bill Bowerman and Phil Knight.

Nike boasts of being the world’s leading sports business brand employing over 76000+ people

worldwide. The Company extends its operations in 115 countries worldwide It sells its products

through the Nike brand as well as Jordan Brand and Converse division.

"To deliver inspiration and innovation to every athlete in the globe," (McGlone and

Martin 2006) Nike Corporation's mission statement reads. Nike has established a comprehensive

and efficient organizational structure that enables continuous innovation and growth as a result

of its diverse business operations. Nike has been sponsoring world-renowned athletes across the

world for years along with their trademark motto we all are familiar with by now “Just do it”.

("ABOUT US", 2022)

Figure 2

Introduction to Nike
Both consumers and business experts view

Nike to be a high-value brand. It is to be noted that in today’s competitive terms that Nike’s

well-known brand campaigning is not only confined to its consumer items targeted for use also

but it also plays a key role in all of the company's divisions. Nike's corporate reputation has

always been on the cutting edge of brand image. Ever since the company's original motto and

tagline "just do it," Nike has cultivated several common criteria associated with the Olympics

and sports outdoing one's successes, drive, and competitiveness.

Mission and Vision

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Nike’s mission and vision statement read “to bring inspiration and innovation to every

athlete in the world” which exactly depicts what the company has been promoting and has been

renowned for since the day of its establishment. The company’s number one goal has always

been to bring out the best in athletes and it is evident that they are fulfilling their goal since

almost all of the world’s best athletes use Nike during their performances. Their commitment

and persistence to strive toward their goal of leading the world’s sports apparel business are

really outstanding. They also aspire to build a connection and relationship with everyone it

interacts with planning to design more authentic yet inclusive products in the future. (Statements,

2022)

Figure 3

Nike's Mission and Vision

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Innovation at Nike

Nike believes innovation is not just new and different but it has to be new and better. It

has to have an element of surprise and improvement from the last one. With that being said,

nobody in the business industry does it better than Nike. It is evident that Nike has always been

very forward at innovation by the way it has been able to satisfy its customers. They do so by

taking their opinions and feedback into consideration, researching and studying their needs to

enhance their athletic performance and experience.

It’s this relationship and bond they keep with their athletes and customers that helps Nike

come up with groundbreaking innovations in this industry. Some of the latest Innovations Nike

has come up with like the Nike Flywire Support System, Trainer 1 shoes, Lunarlite foam

cushioning, etc. continue to create a new benchmark in the industry.

The Nike Sport Research Lab is where a lot of this efficiency knowledge is developed. It

is the world's leading research and development center for aerodynamics, kinesiology,

technology, systems engineering, and other related subjects. Sportsmen, instructors, coaches,

event coordinators, orthopedists, podiatrists, and other specialists serve on scientific committees

and advisory boards that consult with us and analyze ideas, resources, and strategies for product

enhancement.
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Customer's needs and preferences have developed alongside Nike. So, they collaborate

and communicate with customers all around the world. Old, traditional formats tend to blur the

boundaries between items and brands as retail adapts to fulfill these new requirements - from

athletic specializes to department shops. Hence, Nike strives to answer the following questions.

What are the options available to a customer? What kinds of experiences do customers respond

to the most? This is an opportunity for Nike and our retail partners, in our opinion. ("Connection

- Nike Inc. A Growth Company", 2022)

Figure 4

Innovation Process at Nike

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Nike Business Model Canvas

Nike’s business model is entirely based on the manufacturing and selling of athletic wear like

shoes, sports uniforms, gear, equipment, etc. Below, is the visual representation of Nike’s

Business Model Canvas. (Shastri, 2022)

Figure 5

Nike's Business Model Canvas

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1. Customer Segmentation at Nike

Nike targets its products to anyone looking for sportswear and apparel with no boundaries

and restrictions. Its market is categorized into the following geographical areas:

1. North America

2. EMEA (Europe, Middle East, and Africa)

3. Greater China

4. APLA (the Asia Pacific and Latin America)

2. Value Proposition at Nike

Nike strongly believes in inclusiveness and fulfilling people’s athletic dreams. They are

very attentive and committed to the quality of products, being innovative, and their brand

reputation. These are the core values of the brand and these are also the exact reasons why Nike

is so beloved among customers. They also provide a wide variety of products to a wide variety of

customers for a wide range of sports activities. So, they are also renowned for being inclusive.

Nike heavily invests in research in order to ensure the development of good quality products

while also acquiring and utilizing the best raw materials and technology. This has for sure made

Nike a leader in the sports world. The brand is infamous for being loved by athletes like Chris

Paul, Michael Jordan, Tiger Woods, Rafael Nadal, LeBron James, etc.

3. Channels at Nike

Nike uses various mediums through which they market and channel their products,

mostly through brick-and-mortar stores that are exclusively branded by Nike. Nike owns and
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operated around 1152 physical stores (2019) around the globe. Along with that, it sells its

products and services through its various digital and online platforms in more than 45 countries.

Besides all these, Nike also does other media campaigns like TV advertisements and social

media campaigns along with sponsoring athletes and other influencers who promote their brand.

To estimate all these costs, we can assume that Nike spends around $3.5 billion dollars every

year on their marketing campaigns.

4. Customer Relationships at Nike

Nike has always put its customer’s needs and preferences at the top of its priority list.

The customers can use any of Nike’s available online or offline stores to purchase their products.

During this process, the customer may have direct contact with the salesperson. Along with all

this, Nike has also made provisions for a lot of customer support, FAQs, live chats, etc.

Customers can also subscribe to Nike ID which is designed to bring more personalized and

catered products to them.

5. Revenue Streams for Nike

It is safe to say that the major factor responsible for Nike’s billions of dollars in revenue

generation every year is the sales of its products like footwear, clothing line, equipment, etc.

Nike generates money from selling shoes through wholesale clients that spread Nike's brands all

over the world.

Nike’s revenue for 2021 reached around 37.4 billion USD.

6. Key Resources for Nike

Nike’s key resources can be divided into the following divisions:

 Physical structures: Memphis has five Nike distribution hubs, with more in California.
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 Human Resources: Nike Explore Tea Sports Research Lab, which has more than 40

researchers working on new ideas;

 Intellectual property: The United States' third-largest design patent portfolio.

7. Key Activities at Nike

Without a doubt, the most eventful activities happening at Nike are the innovation,

designing, and manufacturing of products. Along with that, there are various other activities that

take place in the organization for its smooth and efficient operation like research, marketing,

advertising, sales and etc.

8. Key Partners for Nike

Given that Nike relies on independent contractors to make its products, those same

companies are unquestionably perhaps the most significant essential partners for Nike. There are

about 145 shoe manufacturers and over 400 clothing manufacturers, the majority of which are

located outside of the United States. Prominent collaborators for sporting and scientific research

include several universities and organizations in North America, Europe, and Asia.

9. Cost Structure at Nike

Figure 6

Nike's Cost Structure

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If we look into Nike’s cost structure and expenses, it is clearly notable that it spends a

large sum of money on inventory and warehousing that accounting for over $21 billion every

year. Similarly, the budget Nike spends on marketing every year is around $3 billion which is

inclusive of advertisement and promotion costs, sponsorships, endorsements, as well as events,

and brand presentations. Likewise, all of the other extensive and managerial costs account for

$500 million every year.

If we clearly look into Nike’s business Model above thoroughly, it is very clear that Nike

has organized and structured its business model strategy very suitably. This can also be backed

up by the success Nike has gained in today’s competitive world and the demand for Nike

products in the market.

The reason why Nike’s business model is so successful is thanks to its innovation,

improvements over time, and also its marketing strategies. All of this has helped Nike gain ever-

increasing revenues of billions of dollars every year.

Challenges faced by Nike’s business Model

Figure 7

Competitor Analysis of Nike

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Competition

Getting a spot for yourself in the sports industry, especially in the athletic wear

and equipment industry is relatively very tough. This could be due to lack of enough

suppliers who supply top quality raw materials required to produce athletic wears. Lack

of suppliers and high demand in the market makes it very tough. Therefore, there is a lot

of investment that needs to be made in order to stand out amongst the tough competition.

Trends

Customers have ever-changing wants, needs, and preferences. It’s hard to keep up with

these trends, especially in unpredictable times like today. SO, there is always a risk of new

substitute products that might pop up in the market gaining even wider popularity. Therefore,

it might prove to be quite expensive to keep Nike at top of the charts with new technologies

and trends.

Risks

There are always chances of unprecedented situations occurring globally be it pandemics

or economic crises, privacy breaches, or government policies that might take place that may

have a negative impact on the business.

These are all the possible problems Nike’s business Model may encounter.
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Nike’s SWOT Analysis

Figure 8

Nike's SWOT Analysis

Strengths

Global Awareness

Nike has global brand awareness in the sports industry like no other. People

instantly recognize the brand just with its logo. Nike has been endorsed by world

renowned athletes and celebrities for decades now.SO, the reputation and awareness Nike

and its products have in the market are truly remarkable and unmatched.

Cheap Manufacturing

Nike manufactures most of its products through third-party vendors throughout

multiple factories spread across the world outside of the USA; which is one of its large

markets. Some of these factories are located in different countries like China, India,
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Vietnam, Indonesia, etc. The cost of production in these companies is cheaper resulting in

leaving Nike with a larger profit margin.

Investment in Research

One of the reasons why Nike is so successful is because of its commitment and

investment in research and development. They have experts looking into various fields

like physiology, biochemical, exercise, and so on. This helps assure that all of Nike’s

products are carefully designed and researched.

Weaknesses

Working Condition

Nike has admitted to not being able to provide better working conditions for its

employees in developing countries. Similarly, it is also rumored that the laborers working

in the factory have working conditions that are way below standards. This means that

some employees may not have a safe working environment.

Expensive

Nike being a global brand, is quite expensive in comparison to other products in

the market. Despite Nike’s premium products and exclusivity, its hefty price tag can

make the brand too out of rich for customers who cannot afford it. High price rates may

not make Nike favorable for customers from various economic classes.
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Opportunities

Developing Markets

There is still high growth potential in the market for sportswear products. Rapidly

growing economic powerhouses like China, India, and Mexico have a very high potential for

Nike to grow its brand and earn more revenue. Nike still has a lot of room to grow and expand its

operations and increase its market in these regions in the future.

Innovation

Nike has always been at the forefront of innovation and creativity. Since it invests a lot in

its research and development, its products are very up-to-date, innovative, and practical. . It is

evident that Nike has always been very forward at innovation by the way it has been able to

satisfy its customers. They do so by taking their opinions and feedback into consideration,

researching and studying their needs to enhance their athletic performance and experience.

Threats

Competition

Nike has many different counterparts like Nike, Adidas, Under Armor, Lulu lemon, etc.

selling similar athletic products in the market. There is always a risk of a competition gaining

wider popularity in the market and that risk will remain until there is a substitute product

available in the market. Any significant changes in these patterns might dampen business

outcomes because Nike's goods depend on the increasing popularity of different sports and

fitness activities as well as shifting design trends. Investment opportunities would indeed suffer

if rivals were more successful in luring clients with more stylish sneakers or clothing.
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Fluctuation in Currency

Nike sells its products across the world. This means that the revenue Nike generates in all

these different countries will greatly be influenced by the currency rate and fluctuation in these

countries. The fluctuation in dollars directly affects its business in countries worldwide. (Nike:

Analysis of Strengths, W - GuruFocus.com, 2015)

Recommendations

 Enhancing the company's workers' safety and security.

 Improvement of the populace by a wide margin.

 Encourage your staff to be inventive.

 Attaining the team's objectives will boost morale.

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Findings & Conclusion

Nike remains at the top of global sportswear. The demand and hype around Nike’s

products in the market are high. There is still a high potential for Nike to grow in developing

countries. Nike's dedication to R&D and incorporation of cutting-edge technologies into its

goods may potentially provide fresh growth prospects. All things considered, we believe Nike

has more advantages than disadvantages and possibilities than threats. One of the major reasons

why Nike is so successful today is thanks to its marketing and innovation. This and all of their

other efforts and campaigns combined Nike remains the world’s number one sports brand.
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References

ABOUT US. NIKE COMPANY. (2022). Retrieved 26 June 2022, from

https://nikecompanyblog.wordpress.com/about-us/.

Gurufocus.com. 2015. Nike: Analysis of Strengths, W - GuruFocus.com. [online] Available at:

<https://www.gurufocus.com/news/325905/nike-analysis-of-strengths-

weaknessesopportunitiesthreats?

gclid=Cj0KCQjw2MWVBhCQARIsAIjbwoMe5FudFc4ijuvh9YsGBYDoalFg19Tpd5N

RyBbgI0TSZ9p7ARHS96saAqNREALw_wcB> [Accessed 23 June 2022].

Shastri, A., 2022. Complete Business Model of Nike | IIDE. [online] IIDE. Available at:

<https://iide.co/case-studies/business-model-of-nike/> [Accessed 21 June 2022].

Statements, M., 2022. Nike Mission Statement 2022 | Nike Mission & Vision Analysis. [online]

Mission-statement.com. Available at: <https://mission-statement.com/nike/> [Accessed 3

June 2022]