NIKE COMPANY ANALYSIS
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Table of Contents
INTRODUCTION/ COMPANY BACKGROUND
This report examines NIKE Inc. one of the leading sports brand in the world. It uses business analysis techniques such as SWOT, PESTEL, Porter’s five forces, and Ratio analysis to analyse the business environment and performance of this company. NIKE Inc. is one of the world’s biggest sporting brand based in Oregon USA. Founded in 1968, NIKE is the world’s biggest designer marketer and seller of athletic footwear, sports equipment, apparel, accessories and services, by sales revenue of $21.5 billion in 2012 (NIKE, 2013). With 48000 employees, NIKE’s operation cuts across different regions in the world including Canada, Asia, Latin America, Europe, and Africa. They posted revenue of $25313 million in the 2013 financial year ending May 2013, the company has enjoy growth in its revenue since 2010, and this trend is expected to continue as they leverage on top sporting events to boost their brand image (Tefris 2013). PESTEL ANALYSIS
PESTEL (Political, Economic, Social, Technological Environment, and Legal) analysis is a business analysis technique that is used to analyse the growth potential of a company. It helps firms identify the environment in which they operate, and can firms predict future circumstances and situations by using information and data it provides (Yüksel, 2012). This report provides a PESTEL analysis of NIKE in the following paragraphs. Political
Political environment have a huge implication on the micro and macro environment of a business, and they can significantly influence a range of business decisions (Leslie and Phillip, 2012). Political environment includes political system, government policies and other trade related regulations. Some of the political factors that can affect NIKE includes the relationship between USA (Nike’s country of origin) and other host countries where NIKE operates (for example China). For example increased tension between US and China can lead to certain aggressive policies that can affect the company’s operations in China. Furthermore recent pressure on US firms to keep jobs in the US can affect plans for future factory locations of NIKE. Economical
The economic environment of the countries NIKE operate in is very vital to the overall strategy and decisions of the company. These factors include the state of the global economy, economic incentives from the countries where NIKE factories are cited, the general economic condition of these countries, inflation rates and changing oil prices. All of these factors can affect the revenue of the company, increased economic growth in emerging markets such as Brazil and China presented a huge revenue opportunity for the company, however recent decline in the growth of the Chinese economy will also have some negative impact of revenue projections of NIKE. Social
Social factors can influence the business decisions of NIKE one way or the other. These factors includes tradition, customs, beliefs, level of education, corruption, customer’s consciousness, changing lifestyle, and income distribution (Singla, 2007). For example increased consciousness to maintain healthy living will lead to more demand for fitness centres and gyms that in turn could lead to more sales revenues for NIKE. Furthermore clamour for increased better welfare for workers in clothing factories in countries like China, Indonesia, and Bangladesh, and pressure from the civil society groups like Worker’s Right Consortium on companies like NIKE to ensure their suppliers follow health and safety standards are among some of the social situations and issues the company have to contend with. Technological
The commercial success of NIKE’s product is based on technical innovation and quality control in the design and manufacturing process of footwear, athletic equipment, and apparel (Nike, 2014). For this reason changes in technological...
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NIKE Inc. (2013) Annual Report and Notice of Annual Meeting. [Online] available from: http://investors.nikeinc.com/files/nike2013form10K.pdf [Accessed on 18th June 2014].
Porter, M. E. (2008) The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Tefris. (2013) Here’s What Matters For Nike’s $56 Valuation. [Online] available from: http://www.trefis.com/stock/nke/articles/167536/heres-what-matters-for-nikes-56-valuation/2013-02-12 [Accessed on 18th June 2014].
Trefis (2011) Nike 's Opportunity in Emerging Markets Outweighs Higher Costs [Online] available from: http://www.nasdaq.com/article/nikes-opportunity-in-emerging-markets-outweighs-higher-costs-cm68544 [Accessed on 17th June 2014]
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