Environmental Analysis
Political
Factor Description Threat/Opportunity
US Government Policies US Government initiated growth-oriented policies help Nike expands and grow internationally. The policies have maintained low-interest rates, trade regulation, and internationally competitive tax arrangements. Opportunity
Political Instability in Asia Most of Nike’s factories are located in Asian countries like Thailand, Vietnam, and Indonesia. Thailand’s business outlook is the weakest among the Association of Southeast Asian due to political instability (Phoonphongphiphat, 2018). This can disturb the supply chain of Nike as 34 of its factories are located in Thailand (“Nike Manufacturing”, 2018). Threat
Economic
Factor Description Threat/Opportunity
Production and Labor Cost Increase Most of Nike’s factories are located in Asian countries because of low labor costs there. However, the flourishing economy and a rise in living standards, production and labor costs are increasing. Workers in China are striking due to low wages (Lau, 2014). Threat
Possible Recession Nike must prepare for another possible recession. During the last recession, Nike suffered as customers replaced Nike with lower-priced competitors. Threat
Subsidiaries and Acquisitions Nike has acquired companies within its field of footwear and apparel, to strengthen its position in the world. In 1988, it first acquired Cole Haan. Nike now has Converse and Hurley as subsidiaries. Opportunity
Technical
Factor Description Threat/Opportunity
Innovation Nike is a pioneer in the footwear and apparel industries by using the latest technology in its products. Nike also took steps to cut back on chemical and raw material usage to lessen their environmental footprint (“Nike Chemistry, 2018” Opportunity
Socio-Cultural
Factor Description Threat/Opportunity
Female Consumer Nike has increased focus in women’s product segment. Nike envisions the revenue from this segment will be $11 billion by 2020. The formerly untapped segment could be a key revenue driver in the future (Trefis Team, 2015). Opportunity
Factory Conditions Nike has been accused of using sweatshops to produce products since the 1970s. In 2002, Nike began auditing it factories for occupational health and safety issues (“Nike Sweatshops”, 2018). Consumers have been known to hold publically shame the company, tarnishing its image and hurting sales (Nixon, 2013). Threat
Fashion and Health Conscious Consumers Every year, whether it be clean eating or going to the gym, the number of people becoming more mindful of their health increases. Consumers turn to Nike for their athletic apparel and footwear, because they are a leader in the industry. Consumers are also turning to Nike as athleisure makes waves in the fashion industry. Opportunity
Global Strategy
Nike has an overall growth strategy with specific strategies in its Greater China market, North American market and in 12 key cities.
Let China be the example of Nike’s Greater China market. China is shifting from a manufacturing-heavy economy to a more service-oriented one. There is a massive increase to a more affluent and organized consumer landscape. Therefore, Nike has a unique strategy in which they call, category offense. Nike organizes itself by sports and serves customer through each specific sport. They also have teamed up with the Chinese government. Chinese officials aim to grow the sports and fitness industry from 0.7% of GDP in China to 1% (Toh, 2017). Nike’s partnership with China’s Ministry of Education promotes physical activity in schools.

In North America, Nike has resorted to a pull strategy. It has pulled back on merchandise and ramped up innovation. By cutting 25% of styles put to market, Nike can focus on its most popular styles, Jordan, NikeAir, and VaporMax, and speed up production. This allows them to bring new shoes to the market faster to meet changing consumer trends.
Nike has shifted its focus to consumers in 12 key cities, New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan. These cities are expected to represent over 80% of Nike’s revenue growth through 2020 (“Nike, Inc.”, 2017). Supporting their consumer-focused growth, Nike has implemented a “Triple-Double strategy,” which focuses largely on boosting the speed of product creation, manufacturing, and delivery across all areas of the business. At the heart of this strategy is Nike’s focus on direct-to-consumer retail. With this, Nike has cut its retail network from 30,000 to just 40 key partners. Nike’s direct-to-consumer sales will come through its website, app, Nike-branded stores, and 40 key retail partners.

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Works Cited
Lau, Mimi. “Yue Yuen Strikers Vow to Continue until Benefit Contribution Deficit Paid in Full.” South China Morning Post, 17 Apr. 2014, www.scmp.com/news/china/article/1486399/yue-yuen-strikers-vow-continue-until-benefit-contribution-deficit-paid.

“Nike Chemistry Playbook & Restricted Substances List.” Nike Chemistry, Nike, Inc., 2018, about.nike.com/pages/chemistry-restricted-substances-list.

“Nike Manufacturing Map.” Nike Sustainability – Interactive Map, 2018, manufacturingmap.nikeinc.com/.

“Nike Sweatshops.” Wikipedia, Wikimedia Foundation, 13 Oct. 2018, en.wikipedia.org/wiki/Nike_sweatshops.

“NIKE, Inc. Announces New Consumer Direct Offense: A Faster Pipeline to Serve Consumers Personally, At Scale.” Nike News, Nike, Inc., 15 June 2017, news.nike.com/news/nike-consumer-direct-offense.

Nisen, Max. “How Nike Solved Its Sweatshop Problem.” Business Insider, Business Insider, 9 May 2013, www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5.

Phoonphongphiphat, Apornrath. “Thai Business Outlook Weakest in ASEAN Due to Political Instability.” Nikkei Asian Review, Nikkei Asian Review, 20 June 2018, asia.nikkei.com/Economy/Thai-business-outlook-weakest-in-ASEAN-due-to-political-instability.

Toh, Michelle. “How Nike Tries to Stay Ahead of the Game in China.” Fortune, 1 Mar. 2017, fortune.com/2017/03/01/nike-china-marketing-angela-dong/.

Trefis Team. “Here Are The Three Key Growth Drivers For Nike.” Forbes, Forbes Magazine, 24 Nov. 2015, www.forbes.com/sites/greatspeculations/2015/11/24/here-are-the-three-key-growth-drivers-for-nike/#690294777bda.

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