Nike’s Threats

Hello teachers, I’m Huyen. Now, I continue to the last T in SWOT. That is Threat

Threats to the business can decrease Nike’s industry position. These threats are external
factors that harm corporate image and lower the competitiveness of the company’s.

There are 5 threats including: intense competition, the Rising Counterfeit Cases, Market
Budget, Fluctuating International Markets, Recession
Let’s begin to the first threat

1. Intense Competition

Nike, Inc. functions in such an industry that is highly competitive. Nike, Inc. enjoys a better
position in terms of market share when compared with competitors. However,

 It it faces the potential threats from Adidas, Puma and other reputed brands. All these brands
produce the similar athletic footwear, apparel and other equipment which makes the
competition much more intense. While the industry is highly competitive, the customers
always have the option to substitute a product with a similar one of other company if they
are not satisfied with the quality or service.

The above chart depicts the fierce rivalry between the first three brands of the industry. In the
footwear section, Nike is the leader of the industry but it receives consistent challenge from
Adidas and Puma.

 In 2019, Decathlon - a French sports brand officially opened the first sports store in Vietnam
with a large scale, designing products to suit the needs of Vietnamese users. When realizing
the potential of Vietnam's sportswear market is growing. Large store offering a wide range
of products, apparel, training and competition equipment for a variety of sports.

The second threat is

2. The Rising Counterfeit Cases

 The World Custom Organization (WCO) stated that Nike, Inc. is the most counterfeited
brand worldwide. Counterfeit products can significantly affect the revenue and reputation of
Nike. 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.

 Nike is under intense competition pressure from Chinese knockoffs and counterfeits.
Currently, China is the world's largest producer of sports goods, accounting for 70%. Instead
 of spending a lot of money to buy branded goods, many people spend a cheaper amount to
"buy" fake products. This causes big headaches in the fashion and luxury products industry

3. Market Budget

Although, Nike is a dominating the athletic industry, brands like Under Armour , Adidas and
Puma are still the top competitors, and they push their products into the market with a lot of
marketing and promotional campaigns. With higher competition ratio, Nike has to spend more
money on marketing and advertising. Nike is very active in sponsoring major sports tournaments
to increase brand awareness.

4. Fluctuating International Markets

The international market is fluctuating creating a major impact on the standard currency. Most of
the products manufactured by Nike, Inc. are developed in the factories located outside the USA.
Accordingly, they conduct transactions in various currencies. It increases their vulnerability
towards fluctuations in foreign currency exchange rates. It also increases the cost, affects the
operations and disrupt business with independent manufacturers of Nike, Inc. Along with the
oscillating currencies, the product cost inflation and labor inflation also affects Nike, Inc. and
hampers its productivity.
5. Recession
Nike, Inc. is known for its massive advertising spending. When the world was looming in
recession, Nike was compelled to cut its costs by reducing the advertising budget and also by
decreasing the total workforce. The recession not only affected the company internally but the
economic conditions of the customers also worsened as they went to buy footwear and apparel
from the brands with low prices. Hence, being a premium product company, Nike, Inc. was
affected from multiple sources.  Hence, every global recession poses a serious threat for this
company Nike, Inc. The global economic conditions and the financial stability of the potential
consumers are necessary for the growth of this company.

That’s all nike’s threats. We move on next section that was presented by Tuyen