SWOT Nike Air Max 2012

¶ … SWOT

Nike Air Max 2012 Women's Running Shoe

Situational and SWOT Analysis

Term

SITUATION ANALYSIS

SWOT ANALYSIS

Nike Corporation is one of the consistently most profitable and innovative providers of athletic apparel, accessories, footwear and ancillary products globally, generating $20.8B in revenues in their latest fiscal year, generating $9.8B in profits. As of the close of fiscal year (FY) 2011, Nike is organized into six divisions including China, Eastern and Central European Operations, North America, Western Europe and the newest division, Emerging Markets. Nike is organized also by product areas with over two dozen business units operating today across a wide spectrum of business, consumer and government markets. The company is well-known for its ability to quickly transition new product concepts from Research and Development (R&D) into production, often distancing their competitors in speed and quality of supply chain planning, marketing execution and product launch (Stonehouse, Minocha, 2008). Renowned for their global brand, Nike is considered one of the top ten best-known globally today (Tsai, 2006) (Nike Investor Relations, 2012). Based on these dominant strengths, many consider it to be the global leader in each market it competes in. In fact, the company grapples with significant weaknesses as well, as the management team seeks to align with opportunities in key markets while alleviating potential threats.

The intent of this analysis is to evaluate their strengths, weaknesses, opportunities and threats, completing a thorough SWOT analysis with specific attention paid to the Nike Air Max 2012 Women's Running Shoe. The structure of this report begins with a situation analysis followed by the thorough review of Nike's strengths, weaknesses, opportunities and threats. Conclusions and recommendations follow the SWOT analysis. Included throughout the SWOT analysis are insights gained from a financial analysis of Nike Corporation. The results of the financial analysis are provided in the Appendix of this document.

II. SITUATION ANALYSIS

A. Historical Background

Originally founded as Blue Ribbon Sports by Phil Knight and Bill Bowerman in 1964, the company that would evolve into Nike began as a distributor of Japanese-produced shoes from Onitsuka Tiger Shoe Company. Blue Ribbon Sports would later incorporate in 1967 as BRS, opening its first retail store in Eugene, Oregon that same year. It wasn't until 1971 that Nike created the world-known Swoosh logo and began branding all products and t-shirts with it. In 1972 the distribution agreement with the Onitsuka Tiger Shoe Company, leading to the development of the BRS brand associated with the swoosh log and primarily a retailing operation in the Pacific Northwest (Nike Investor Relations, 2012). In 1977, the company officially changed its name to Nike. In the late 1970s the founders were also intrigued with the potential for celebrity athletes to make a significant impact on their brand awareness and sales. In 1977 Nike signed its first celebrity endorsement with John McEnroe and also began to design its first air-cushioned shoe with former NASA engineer Frank Rudy leading the effort (Nike Investor Relations, 2012). Nike was the first to announce and ship air-cushioned shoes at a price the general public could afford. In conjunction with this development, Nike continued to pioneer the use of light-weight, ultra resistance fabrics and poly-resins used in the production of shoes, apparel and accessories, generated over 100 patents in the first fifteen years of operations (Nike Investor Relations, 2012). The momentum in terms of innovation and R&D expertise was already beginning to take shape in the early 1980s of the company. Over the next decade new celebrity endorsements would be created including Michael Jordan's Air Jordan campaign, still considered one of the most successful in the company's history (Nike Investor Relations, 2012). In addition to these accomplishments, the company also branched into over a dozen businesses and has successfully created one of the most successful supply chains globally today (Barrett, 2003). Along the way to these stellar accomplishments however Nike has been accused of going too easy on suppliers who violate child labor laws and having questionable ethics (Doorey, 2011). It has also been experiencing high legal costs due to the various approaches the company takes to protecting its brand (Nike Investor Relations, 2012). As the company pursues high growth opportunities in women's apparel including shoes, one of the fastest growing markets it competes in, it is challenged with relatively moderate growth in sales, relatively flat gross contribution margins at 10% and a Return on Assets (ROA) of 14% with little growth over the period of analysis shown in the Appendix. On top of all these factors, the competitive climate of the industry has never been more intense and focused on taking share from the global market leader, who is Nike in many of the most attractive and fastest growing markets (Nike Investor Relations, 2012).

B. Competitive Analysis