Nike, Inc. is a sportswear and equipment supplier based in the United States. It was founded in January
1964 and it’s headquarters are located near Beaverton, Oregon. Nike is the world's leading supplier
of athletic shoes and apparel and a major manufacturer of sports equipment (Wikipedia)
Founded as Blue Ribbon Sports in the year 1964, it was officially named as Nike, Inc on 30th May, 1970.
This company takes its name from the Greek goddess of victory named Nike (About.nike.com, 2016).
Nike’s brand value as reported by Forbes in 2017 is $15.9Billion.
The brand, its Swoosh (also referred as Nike tick) logo and universal slogan ‘Just do it!’ are highly recognized throughout the world. Moreover, the Nike swoosh is the most reputable athletic sponsors in the world. Know here the detail about what kind of company nike is through nike case study.
Apparels, Accessories, Footwear
Washington Country, Oregon, USA
US $82.45 Billion (last recorded on 24th August, 2018)
Phil Knight, Chairman
Mark Parker, President and CEO
Athletic footwear, apparel, sport equipment and other recreational products with
separate lining for men, women and kids
Number of Employees
70,700 (2016 data)
[Source: 2016 Annual Results Nike Inc]
SWOT & PESTLE ANALYSIS OF NIKE
What is the SWOT analysis for Nike?
This study is conducted to assess Nike, Inc. reviewing the four major aspects of concern. Nike, Inc. is listed on NYSE with offices located all over the world. A Nike SWOT analysis helps review its strategy and its performance against all the external and internal factors. Swot analysis of Nike includes Strengths, Weaknesses, Opportunities and Threats. They are known as the basis of its short-term and long-term strategic direction of Nike business strategy. By Nike Strategic analysis, It has been shown here Nike strengths and weaknesses.
What are Nike's strengths and weaknesses?
• Product Innovation
In the competitive world, innovation is a crucial determinant of sustainability. Nike, Inc. has always
been successful and is regarded as one of the pioneers to introduce various enthralling products.
With the constantly evolving and innovative product range, it has solidified its position as one
of the leading brands in the apparel and footwear industry.
Since the 1990s, due to the complicated supply chain management, Nike, Inc. started focusing on creating
such products which would be better for the athletes, business and also the planet (News.nike.com,
2016). The below chart provides how Nike, Inc. took various initiatives which reciprocate their strategy
of product innovation.
Launched Nike Vapor Untouchable
Made a revolution by introducing Nike FlyEase
Launched “Space Jam” Air Jordan 11 that marked the most successful shoe
launch in Nike’s history
Nike introduced its innovative Tech Pack collection
• Strong Global Brand
Nike, Inc. is regarded as one of the strongest global brands which have its prominent presence all over
the world. The brand is promoted by the leading celebrities and sports professionals which creates
significant brand equity in terms of recognition and image (Businesstoday.in, 2016). It is also the
brand ambassador of various sporting events and teams (at domestic and national level). Some of the
legendary sportsperson (or teams) who promoted or still promote Nike, Inc. are Michael Jordon, Cristiano
Ronaldo, Rory Mcllory and Rafael Nadal. These influential endorsements along with the captivating
slogan ‘Just do it’ is recognizable and inspire all its potential consumers.
• Low Cost Manufacturing with Strong Cash Flow
Nike, Inc. has always followed an effective marketing strategy which helps it to reduce the cost of manufacturing.
Most of their factories and production units are located in Asian countries which are emerging economies
as well as involve low production cost. Their plants are located in China, Vietnam, South Korea and
Thailand. Apart from these units, it also has manufacturing firms located in South American countries
and in USA (Seattlepi.com, 2016).
Shareholders of Nike, Inc. always earn a healthy dividend which keeps their reputation high. It also
enjoys high valuation in NYSE and trust among all investors. Nike, Inc. also maintains a steady cash
flow which is used for
aggressive marketing strategy and to allocate sufficient amount for Research and Development
budget. The capital expenditures of Nike, Inc. increased rapidly in the last five years, from $432
million in the year 2011 to $963 million in the year 2015 (Marketwatch.com, 2016).
• Global Presence and Influence
In a recent data, the number of retail stores of Nike located worldwide is more than 1182 through which
it reaches its consumers located globally.
Total number of retail stores
It is currently the most valuable brand among all sports businesses. According to the Annual Report (2016),
its annual revenue in this financial year was US $32.4 billion with operating income at US $5.163.
This further pumped up to US $82.45 Billion in 2018 (source: NYSE). Their products are immensely
popular among the teenagers and youth.
• Proficient Leadership
The success of any company depends on their leadership and executives who manage the company in good
and bad times. As it explains Nike, Inc. has one of the brightest team of leaders who not only devise
the meticulous marketing strategies but they also inspire others to do the best work (About.nike.com,
2016). Nike’s leadership team comprises of:
- Philip H Knight, Chairman
- Mark Parker, President and CEO
- Trevor Edwards, President of Nike Brand
- Andrew Campion, CFO
- Elliott Hill, President of consumer and marketplace
- Hilary Krane, EVP, CAO and general counsel
- Jeanne P Jackson, President of product and merchandising
- Monique Matheson, EVP, Global human resources
- John Slusher, EVP, Global sports marketing
- Michael Spillane, President of categories and products
- Eric Sprunk,COO
Lastly, it won’t be inappropriate to mention one comment by Philip Knight, the founder of Nike, ‘Business
is war without bullets!’ Nike, Inc. works on this principle.
• Excessive Dependence on Footwear
Nike, Inc. has a diversified range of products which includes apparels, equipment and footwear. But the
marketing trends exhibit that the sustainability of Nike, Inc. is dependent on the sales of its footwear
(Statista.com, 2016). If in any circumstances, the footwear segment experience an erosion then the
whole organization would be affected adversely. In North America itself, more than half of the revenue
gets generated from the footwear every year.
Revenue (in Million US dollars) for
Revenue (in Million US dollars) for
Revenue (in Million US dollars) for
The above figure clearly explains how important for Nike, Inc. it is to diversify its products and provide
more importance to other fields apart from its footwear.
• High Prices of its Products
As Nike, Inc. enjoys huge reputation throughout the world, almost all the products are premium ranged.
Through it supports their strategy of higher margins of profitability but it significantly reduces
the number of prospective customers especially in the emerging economies of Asia and South America.
The high prices of their products also encourage the competitors of Nike, Inc. to keep their charges
low giving them an opportunity to increase their market share. As the company is expected to continue
with their price hiking strategy (Marketrealist.com, 2016), it will probably result in the loss of
key market share in Japan and Brazil. But it will continue to reign in other global segments.
• High Advertising Spending
Nike, Inc. spends highly to advertising and brand endorsements. Though regarded as a successful marketing
strategy, the annual cost rise manifolds and create a substantial impact on the profit margins. According
to the Nike, Inc.’s Annual Report (2013), the total advertising and promotion spending accounted
for about 11% of the total sales or around $2.7 billion. As the competition increases with every
fiscal, the allocation for advertising costs also increases exponentially. The company itself argues
its stance by claiming it as a ‘demand creation’ process but the percentage increase does not reflect
in the productivity advances as expected.
Advertisement Spending in billion USD
The above chart explains how in USA itself the advertising spending has increased in the last few years
for Nike, Inc.
• Nike Sweatshop Problem
Nike, Inc. has always been very protective about its brand image. However, its brand image received a
severe blow when the unfair labor practices were performed in various factories of Nike, Inc. especially
in the Asian countries. Referred to as a sweatshop issue, it tarnished the company’s image and hurt
sales. Poor working conditions, low wage rates and using children as laborers were the main complaints
against the company (Theguardian.com, 2005). Issues started from the 1990s when Nike, Inc. started
to shift their companies to Vietnam and Thailand from South Korea and China to tackle the rising
demands by the laborers. Various allegations from Vietnam, Indonesia and Thailand had compelled them
to devise a new commitment to maintain the standards at the factories. Named as SHAPE (Safety, Health,
Attitude, People and Environment), it defines the code of conduct to be followed in every company.
Since the year 2005, the company continues to perform according to the commitment. Overall the situation
changed and Nike, Inc. has been successful in retrieving its image considerably (BusinessInsider.com,
2013). But the liability towards
corporate social responsibility
What are the opportunities and threats of Nike?
• Explore Emerging Markets
In the 21st century, countries like China, India, Brazil, and South Africa exhibited high economic growth
when European and American economies slowed down. Consumers in these countries had high disposable
income with increasing interest in western brands (Forbes.com, 2016). These countries can turn into
significant markets for Nike, Inc. Exploring these markets can boost up the sales of Nike, Inc. by
manifolds and hence increase the profit margins. Though Nike, Inc. has already stepped into these
countries, still the potentialities have not been exploited completely. The main strategy that Nike,
Inc. undertook to popularize their products in these countries is to endorse the popular sports.
• The Rise of e-Commerce Trade
Till the last decade, Nike, Inc. had to reach the customers through their own retailer stores or their
franchises. But the rise in the e-commerce sector now allows every customer to book their selected
product from their smartphone and get it delivered at their home anytime. The marketing strategists
projects that by 2020, e-commerce sales will be responsible for one-third of overall growth (Internetretailer.com,
2016). They also project that the total sales in the fiscal 2020 will reach $7 billion.
Apart from the rising sales, people who are not engaged with any sports associate the brand of Nike with
fashion and style. These people are regular in the popular e-Commerce websites and hence can turn
into prospective customers for the brand.
Here are the results that Nike Inc. Reported for fiscal 2017 fourth quarter and full year:
- Fourth quarter revenues up 5 percent to $8.7 billion; 7 percent growth on a currency-neutral basis*
- Fourth quarter diluted earnings per share increased 22 percent to $0.60.
- Fiscal 2017 revenues up 6 percent to $34.4 billion; 8 percent growth on a currency-neutral basis*
- Fiscal 2017 diluted earnings per share increased 16 percent to $2.51
- Inventories up 4 percent as of May 31, 2017
• Product Expansion
Nike, Inc. is one of the few brands which spend millions of dollars in research and development. As they
reign in footwear, apparel and sports and health equipment, it gives them considerable opportunity
to increase their range of products. It needs to diversify the product range with special emphasis
on accessories and also partnerships with other branded companies to strengthen its position (Nikevision.com,
2016). As the preferences of the customers tend to change every year, product expansion would help
to maintain their hold on market share.
The innovative research and development branch of Nike, Inc. has always brought enthralling products.
Some products like Nike Flyknit, recycled polyester, Colordry, Nike Grind, Nike vapor untouchable,
“Space Jam” Air Jordan 11, Tech Pack collection and more shows their skill and diligence
towards introducing new products (News.nike.com).
• Initiatives Towards Better Environment
Nike ranks among the top two in a survey of climate-friendly companies standing just behind Canon (Reuters.com,
2016). As with every year, climate change and global warming are becoming more serious, it becomes
crucial to play a constructive role to protect the environment. However, only a few companies play
their role of corporate social responsibility. In this bleak scenario, Nike, Inc. shows promise as
it devises particular strategies to initiate recycling, phasing out usage of chemical components,
proper precautions to safeguard health of laborers working in factories earned them reputation and
praise globally (About.nike.com, 2016). However, these initiatives are not sufficient as the scope
• 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. But it faces stiff completion 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 (Statista.com, 2016). 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.
Revenue in US dollars (as recorded in 2017)
What challenges do Nike face?
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. Nike, Inc. experienced a fall in footwear sales in the USA in 2017, which is a serious threat
to the company.
• Fluctuating International Markets
Since the last decade, 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 (Nike, Inc.
Annual Report, 2009). This is an issue faced by all global brands and exposure to these fluctuations
for a longer period of time can be detrimental for the company. Along with the oscillating currencies,
the product cost inflation and labor inflation also affects Nike, Inc. and hampers its productivity.
• The Rising Counterfeit Cases
The World Custom Organization (WCO)’s second Illicit Trade Report 2013 stated that Nike, Inc. is the
most counterfeited brand worldwide while Apple. Inc became a distant second. The research states
that this illicit business of fake products is very popular in the Asian markets which directly disturb
the annual revenue of Nike, Inc. In the Chinese markets, the performance of Nike, Inc. is quite dismal
when compared to other emerging economies. The total revenue collection by Nike, Inc. at 2013 in
China slipped by 3% and the experts explicitly points out the challenge it faces from the huge counterfeit
market. As the market of apparel and footwear is extremely volatile and substitutive, these rising
fake Nike products pose enormous threat to the sustenance of the company. These fake products not
only affect the revenue but it also maligns the reputation and brand image that Nike, Inc. holds
globally (Worldtrademarkreview.com, 2016). Accordingly, these unethical business practices will force
potential customers to migrate to other brands. Hence, it is important for Nike, Inc. to take social
responsibility for serious and maintain its brand image.
• Perilous Supply Chain Management
For a global company like Nike, Inc., it is very crucial to reach the customers and make the delivery
of the products with precision. Nike, Inc. owns no factories for manufacturing footwear and apparel
though it makes up to 90% of its revenues. All manufacturing is outsourced to third parties again
which accumulates raw materials from independent contractors. It helps in improving profit margins
and reduces inventories but it also adds risk into the whole supply chain management system. This
perplexed supply chain failed in February 2001 and Nike, Inc. incurred a loss of over 100 million
US dollars. The stock price of the company also fell by 20% at that time (Scdigest.com, 2016). Since
then, they tried to improve their network of supply chain which comprises of workers, communities,
suppliers, buyers and obviously consumers by identifying the key issues which lead to the failure.
It is a collaborative action which requires better management and constant monitoring to create an
effective and efficient management system (Nikebiz.com, 2016).
Nike, Inc. is known for its massive advertising spending, endorsements and sponsorships. But in the last
decade (2007-08), 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 by 4% (NYTimes.com, 2009).
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. The global economic conditions
and the financial stability of the potential consumers are necessary for the growth of this company.
If the above figure is minutely noticed, then it can be seen how the annual revenue of Nike, Inc. suffered
in two years successively (2009 and 2010) which was also the recession years. The growth rate was
negative as it earned less globally especially witnessing drastic fall in sales in North America
and European markets. Hence, every global recession pose a serious threat for this company Nike,
Nike PESTLE Analysis
Nike PESTLE analysis refers to all the macro-environmental factors that are necessary for strategic management. Nike PEST analysis in Australia is an acronym which when expanded includes six factors when Nike is contemplating to launch or upgrade a service or a product as per Nike Business model.
The factors are:
The importance of all these factors is different for different companies or industries but comprehensively
they play a crucial role in deciding the future action of every organization.
PESTLE Analysis for Nike, Inc.
• Favorable US Government Policies
The government policies always have a profound impact on the businesses especially which are engaged
globally. The US government has always initiated growth-oriented policies which have helped the company
to grow and expand internationally. The trade regulations, stable government and international competitive
tax arrangements by the Federal Reserve fosters its growth (Whitehead, 2012). As Nike, Inc. is known
for its environmental-friendly business strategies, it receives considerable tax benefits in this
• Political Unrest in Some Asian countries
Most of the factories of Nike, Inc. are located in the emerging Asian countries like Thailand, Vietnam
and Indonesia. The political unrest in Thailand in the last few years was a major concern for the
management of Nike, Inc. where more than 35 factories are located. The situation was equally gloomy
in Vietnam, Indonesia and parts of China in stages as any form of protest, political instability
or social unrest can disturb the supply chain of Nike, Inc.
Number of Factories (2014)
[Source: Wall Street Journal, 2014]
• Changes in International Law
international law in the last one decade has become more stringent with the rising threat of
terrorism. Various countries have imposed new rules and regulations to counter the growing threat
of illegal activities within their territory. The increase in tariffs in some countries while the
strict rules of immigration and visa are one of the important concerns for every global firm and
Nike, Inc. is not an exception. United States, where the headquarters of Nike, Inc. is located is
always under constant threat of terrorist attacks which pose a potential threat for the normal functioning
of Nike, Inc.
Some of the countries also impose various tariffs to protect their indigenous brands for which Nike,
Inc. is a serious threat. This trade protection hinders the growth of Nike, Inc. in those respective
• Rise in Production Cost and Labor Issues
One of the main reasons for Nike, Inc. to set up their base in Asian countries is the low labor cost.
But with the economic boom and rise in living standards, the production cost in these countries has
raised manifolds (Scmp.com, 2014). The labor issues are quite common in the factories of Nike, Inc.
recently. In April 2014, Nike, Inc. experienced the biggest strike as most of the factories in China
stopped production citing low wages. It had a significant effect on the production as well as the
revenue of the company.
Nike saw a comeback of a similar protest in July 2017 where a number of claims were made. Among all the
claims, the most prominent ones are that workers at a Nike contract factory in Hansae, Vietnam, suffered
wage theft and verbal abuse, and labored for hours in temperatures well over the legal limit
of 90 degrees, to the point that they would collapse at their sewing machines. Nike is also accused
of cutting jobs at the Hansae factory and pulling production from a factory in Honduras with a strong
union presence, resulting in hundreds of workers losing vital jobs. Such claims and protests
are quite detrimental for the company’s growth. (Source: /qz.com/)
• The Threat of Recession and Competition
Nike, Inc. needs to devise a plan how it can tackle another global economic recession. Being a market
leader, Nike, Inc. can be affected significantly as it experienced in the last decade (2008-09).
Last time, it was noticed that during the recession that consumers replace Nike with some other brand
which offers the same products at a lower price. So, the threat of recession always has a paired
effect on Nike, Inc.
• Fluctuating Profit Margin
Nike performs all its business on the global spectrum. Hence, the stability of currency exchange and
international interest rates in crucial to consistent growth of its profit margins (Nytimes.com,
2009). However, the higher inflation rate at the domestic level (USA) with the fluctuating currency
rates with respect to the Dollar always has detrimental effects on the annual profit margin. According
to Forbes, gross profit margin for Nike’s apparel division declined by 2.4% in 2011 and the primary
reason being the volatile economic condition around the world (though the input costs also rose during
• Acquisitions and Subsidiaries
Nike, Inc. has acquired various companies which function within its domain of footwear and apparel industry.
It started in the year 1988 when it acquired Cole Haan (New York times). Since then, it has purchased
many companies to strengthen their base in the world. Nike owns Brand Jordan, Converse,
Hurley, and SPARQ. However, some of these acquisitions put a major pressure on their finances without
any significant accomplishments.
• Consumers Becoming More Brand Conscious
Globally most of the consumers have became brand conscious. They associate Nike, Inc. with quality and
stature. This increase in brand awareness has helped the business of Nike, Inc. to grow. They were
the first company that introduced innovation in the footwear and apparel industry. The amalgamation
of style with technology led the foundation of success for Nike, Inc. which continues till today
(Scribd.com, 2016). Apart from the products, the Swoosh logo and their slogan ‘Just do it!’ is highly
popular and recognized around the world.
• Consumers Becoming Health and Fashion Conscious
Every year the number of people visiting the nearest gym to maintain their health, body and physique
is increasing exponentially. Indirectly, this rise helped Nike, Inc. to boost up the sales as they
turn to buy footwear and apparel for themselves to look athletic. Some of the consumers also associate
Nike, Inc. with fashion and leisure (About.nike.com, 2016). They too are getting interested to buy
Nike, Inc. products. This awareness among the people would help Nike, Inc. in the long run.
• Increase in Female Consumers
Nike, Inc. has devised the key strategy to grow their business in the next few years by targeting the
increasing number of female customers. Nike has announced a new approach in designing and
selling shoes to the growing number of female sneaker fans out there. It includes expanded, unisex
sizing on some of its classic Jordan styles and hyped designer collaborations, a push for more partnerships
with female creatives, and Nike Unlaced—a retail concept aimed squarely at women.
• Working Conditions at Factories
Nike, Inc. is often accused of its hazardous working conditions in its factories especially in the Asian
countries. It has been alleged that it is using sweatshops to produce footwear and apparel since
the 1970s. Initial denials from the authorities and Nike, Inc. itself made the situation even more
complicated which affected its image globally. During the 1990s, Nike, Inc. installed the code of
conduct for their factories with defined regulations for safety, security, optimum wages and overtime
limits (Businessinsider.com, 2015). Since then, the working environment improved in the factories.
Consumers always want their company to be socially responsible.
Nike, Inc. is often referred as the Apple Inc. of apparel and footwear. It is regarded as the pioneer
to introduce various products which enthralled the whole world. It has always adapted the latest
technology to ameliorate their products. This technological innovation not only helped them to set
ahead from their competitors but also refined and augmented the production process (About.nike.com,
2016). It is also one of the global brands which took a revolutionary step to curb the usage of chemicals
and other raw materials which are detrimental for the environment. The latest popular product introduced
by Nike, Inc. Is Tech Pack Fall 2018 apparel, which received acknowledgment globally
• Marketing Techniques
With the global rise in sales and impact, Nike, Inc. has also altered their marketing strategies to reach
their customers and prospective consumers. The increase in advertising concentrating on the digital
medium more than the traditional channels is one such step. Nike, Inc. uses online media and apps
to reach the customers and popularize their different products. In the last few years, the market
of online shopping has expanded which has given Nike, Inc. the opportunity to increase their base
worldwide. Now, Nike, Inc. does not have to depend on their stores and franchises outlets to sell
their popular footwear and apparel. For the year 2015, Nike, Inc. reported a 55% increase in
sales through web. The figures touched $1.19 billion crossing the billion mark for the first time
through the internet sales. According to the reports, Nike’s revenue in 2017 in Greater China (Nike's
third-largest market after North America and Europe, the Middle East and Africa) continued to be
a bright spot on the company’s earnings report, growing 16% in the quarter and totaling $1.2 billion. Nike's
divisional revenues in Europe, the Middle East & Africa grew by 19% to $2.1 billion.
• Legal Battles with Adidas and Other Companies
The feud between Nike, Inc. and Adidas is not new. In the year 2014, Nike, Inc. filed a $10 million lawsuit
on Adidas accusing the later for taking proprietary secrets,
marketing plans and
product designs when they recruited few former employees of Nike, Inc (Qz.com, 2015). Though
Nike, Inc. enjoys undisputed dominance in North America, still these legal cases against the rival
companies are an important factor which determines the future strategies. It is also engaged in various
other legal battles which include the rights over the iconic ‘Jump man’ logo and footwear designs.
However, Nike recently defeated Jacobus Rentmeester’s appeal in 2018. Rentmeester, had accused
the sportswear company of ripping off his iconic photo of basketball superstar Michael Jordan, and
using it to create its silhouetted "Jumpman" logo.
• Child Labor and Minimum Wage Allegations
Nike, Inc. had been accused of using child labor in its various factories located in Cambodia and Pakistan.
They were used to prepare soccer balls. Although Nike, Inc. took extensive measures to stop this
practice, it was rebuked globally and it also faced legal cases worldwide. Accordingly, in Indonesia,
the laborers claimed to receive lower wages than the standards. Nike was sued in California for this
illegal practice. However, the matter ended amicably, it was a considerable bolt to its reputation
(Jennings, 2012). Though Nike, Inc. now follows a definite regulation still violations are not rare.
• Counterfeit Products
Nike, Inc. is one of the most counterfeited brands globally. It affects its annual revenue drastically.
It is also regarded as the violation of intellectual rights and patented products when they are sold
by fake brands claiming to be Nike, Inc. There are also some contract manufacturers which produce
these products and sell them into the markets which directly affects the sales in that country (Philnike.blogspot.in,
2013). In a step to tackle the menace of counterfeit products, Nike, Inc. can monitor and ensure
that their products are not sold widespread as these fake products can ruin the reputation of the
• Paradise Papers
On 5 November 2017, the Paradise Papers, a set of confidential electronic documents relating
to offshore investment, revealed that Nike is among the corporations that used offshore
companies to avoid taxes.
Appleby documents detail how Nike boosted its after-tax profits by, among other maneuvers, transferring
ownership of its Swoosh trademark to a Bermudan subsidiary, Nike International Ltd. This transfer
allowed the subsidiary to charge royalties to its European headquarters in Hilversum, Netherlands,
effectively converting taxable company profits to an account payable in tax-free Bermuda. Although
the subsidiary was effectively run by executives at Nike's main offices in Beaverton, Oregon—to
the point where a duplicate of the Bermudan company's seal was needed—for tax purposes the subsidiary
was treated as Bermuda. Its profits were not declared in Europe and came to light only because of
a mostly unrelated case in US Tax Court, where papers filed by Nike briefly mention royalties in
2010, 2011 and 2012 totaling $3.86 billion. Under an arrangement with Dutch authorities,
the tax break was to expire in 2014, so another reorganization transferred the intellectual property
from the Bermudan company to a Dutch commanditaire vennootschap or limited partnership,
Nike Innovate CV. Dutch law treats income earned by a CV as if it had been earned by the principals,
who owe no tax in the Netherlands if they do not reside there.
• Global Warming and Environmental Concern
With the rising concern about global warming, it has become extremely important for the global companies
to reduce waste which are harmful for the environment. In various countries the new environmental
laws also restrict their production if they do not follow the specific laws. Through the usage of
innovative manufacturing methods like Nike Flyknit technology, it strives to reduce the manufacturing
waste in the supply chain and also reduce carbon emission and elimination of waste (About.nike.com,
2016). Nike, Inc. plays its role; however, still a lot needs to be done.
Nike Sportswear’s latest Tech Pack collection spins body-informed and environmental data into focused
and functional forms. The collection uses knit and woven materials as well as base, mid-
and outer layers engineered to provide athletes with full range of motion.
• Pollution Concern in China
Most of the factories of Nike, Inc. are located in the China. In the last few years, the Chinese government
took extensive steps to check the pollution level in the country which has increased the production
cost for the company drastically. The limited usage of fossil fuel and its regulations adds to their
• Decrease Greenhouse Emission
Nike, Inc. is working to reduce their contribution towards
greenhouse gas emissions throughout the value chain. It has formulated definite strategies to
introduce new technology which will not only release less carbon dioxide and carbon monoxide but
it will also decrease the need of basic raw materials (Reuters.com, 2016).
After assessing all these concerned factors, both internal and external, it will be safe to say that
Nike, Inc. will continue to enjoy their dominant position in the industry. But the organization needs
to work on their weaknesses and threats to strengthen their position. The footwear and apparel industry
is very competitive, but Nike, Inc. has successfully dealt with every challenge through the years.
Their impressive ability to alter their strategy and introducing new products from time to time has
helped its revenue to grow every year. Lastly, Nike, Inc. will continue to rule the apparel and footwear
industry in the years to come.
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