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Nike Inc.s Strategic Opportunities and Limitations
International expansion is the goal of many firms because selling goods worldwide and locating productions in multiple countries simultaneously is vital for competitive advantage in most markets. Companies that adjust their strategies need to evaluate their current conditions, place at the market niche, strengths, weaknesses, opportunities, and threats they might face. Various approaches to creating blueprints and managing growth through entering other countries markets are implemented and exercised by Fortune 500 businesses (Fortune, 2021). This paper aims to use Nike as a successful companys example to study the international expansion strategy, explore it through SWOT analysis, and identify improvement opportunities.
International expansion strategy development and implementation require the executive team to analyze and evaluate opportunities and outcomes from several aspects. Indeed, they need to explore basic benefits to consider and understand if the corporate-level plan should be multi-domestic, global, or transnational (Hitt, Duane Ireland, & Hoskisson, 2017). Moreover, appropriate entry models should be selected from exporting, licensing, strategic alliances, acquisitions, or opening new subsidiaries (Hitt et al., 2017). Lastly, competitive outcomes such as improved performance or enhanced innovation are necessary to be determined for further risks evaluation and management (Hitt et al., 2017). Market analysis is also critical for clarifying the perspectives for a companys expansion. Understanding how the logistics, production, selling operations and consumers expectations work at a given segment provides a basis for adjusting the existing strategies.
Nike is the apparel and sports footwear company that started its operations in the United States in the 1960s, expanded worldwide, and is now one of the most famous and trustworthy brands. Successful strategic decisions helped Nike enter different niches, develop efficient supply chains, create sustainable production, and implement online selling (Fortune, 2021). Furthermore, international expansion performed by the company addressed the growing demand for sports teams apparel and equipment, including sponsorship and participation at global events (Kim, 2020). Consequently, Nike became a well-known brand associated with high product quality, events, experiences, and a strong mission for promoting sports.
Nike is a global brand, and it keeps expanding its production and distribution to new countries by entering their markets. The approaches the company with a significant competitive advantage, such as the brands authority uses, are the manufacturing facilities establishment, acquisitions, and subsidiary opening (Hitt et al., 2017). Besides, the pandemic led Nike to enforce its online selling and shipping strategies, making the firm a nearly 50% increase in digital sales for one fiscal year with $5,5 billion in revenue (Fortune, 2021). SWOT analysis is the appropriate analysis tool for exploring how the companys international expansion is performed.
Figure 1.Nike SWOT Analysis
Nikes strength is the continuously developing technologies for footwear production, which allow the company to create and distribute outstanding goods for sports and lifestyles. Then, it has authority and a loyal audience that supports the brand worldwide (Kim, 2020). Lastly, apparel and footwear have hundreds of variations and technologies for various occasions so that the companys range of products maintains high revenues from year to year. Nikes weaknesses related to the international expanse are the difficulties a company can experience with labor conditions regulation which might depend on the government and disrupt proper manufacturing and distribution (Standaert, 2021). Moreover, retailing communications might severely influence the pricing policies, yet Nike distributes the products indirectly and needs to achieve balance in the value-setting strategy. It is also crucial to consider that Nike still depends mainly on the footwear market, and the changes in consumers attitudes or perceptions about this type of product might disrupt the company.
Nikes opportunity is the transnational nature of product distribution that allowed the brand to successfully implement e-commerce practices and build optimized worldwide shipping strategies. Nike also associates with a healthy lifestyle, sports, and good appearance the trends of modern society which will support the demand for the company. Expanding to new countries is an opportunity to improve logistics and production. The current worldwide situation with the COVID-19 pandemic and political instability threatens Nikes performance, distribution, and manufacturing (Standaert, 2021). Besides, the global footwear market has strong competitors like Adidas, Reebok, and Puma that also develop and integrate their innovations (Jiang, 2019). Lastly, the financial crises and unstable exchange rates put Nike at risk of becoming less affordable for millions of customers.
Based on the SWOT analysis of Nikes expansion strategies, several suggestions can be made to exploit its strong points and mitigate the weak ones. For instance, strategic alliances might be established with retailer chains owners or responsible institutions in the new countries to decrease the risk of pricing-related difficulties (Hitt et al., 2017). Besides, licensing an innovative technology for footwear production can become a valuable step for enforcing Nikes competitive advantage (Jiang, 2019). Lastly, the company can continue expanding its participation at events, collaborating with famous teams, and producing non-physical services to broaden the audience and increase its loyalty.
International expansion is a risky strategy, yet its outcomes can make a company a worldwide known and respected brand. Moreover, the current conditions of product distribution and e-commerce are the profound foundation for exploring other countries markets. Nike is an example of a successful international expansion, and its SWOT analysis revealed that although weaknesses and threats exist, the company still has options to enforce its positions.
References
Fortune. (2021). Nike.
Hitt, M. A., Duane Ireland, R., & Hoskisson, R. E. (2017). Strategic management: Competitiveness & globalization: Concepts and cases (12th ed.). Cengage.
Jiang, W. (2019). Sustainable development of supply chain in the footwear industrytake Nike as the case. Asian Business Research, 4(3), 86.
Kim, M. (2020). How Phil Knight made Nike a leader in the sports industry: examining the success factors. Sport in Society, 23(9), 1512-1523.
Standaert, W. (2021). Product digitalization at Nike: The future is now. Journal of Information Technology Teaching Cases, 2043886920963286.
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