Nike, Inc.: Developing an Effective Public Relations Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Nike, Inc.: Developing an Effective Public Relations Strategy

It had been almost a decade since the first article surfaced in the media alleging that factories subcontracted by Nike in China and Indonesia were forcing workers to work long hours for low pay and for physically and verbally abusive managers. The article was the seed of a media campaign that created a public relations nightmare for the company. A financial crisis in Asia and intense competition in the domestic market contributed to a decline in Nike's revenue and market share after three years of record performance. Though no direct correlation could be proven between the consumer's negative perceptions of Nike and the company's decline in market share and stock, it certainly did not help in its efforts to establish itself as the global leader in a hotly competitive industry.

Authors :: Kathleen E. Slaughter, Donna Everatt

Topics :: Organizational Development

Tags :: Public relations, Social responsibility, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Nike, Inc.: Developing an Effective Public Relations Strategy" written by Kathleen E. Slaughter, Donna Everatt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nike Decline facing as an external strategic factors. Some of the topics covered in Nike, Inc.: Developing an Effective Public Relations Strategy case study are - Strategic Management Strategies, Public relations, Social responsibility and Organizational Development.

Some of the macro environment factors that can be used to understand the Nike, Inc.: Developing an Effective Public Relations Strategy casestudy better are - – geopolitical disruptions, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, wage bills are increasing, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, etc

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Introduction to SWOT Analysis of Nike, Inc.: Developing an Effective Public Relations Strategy

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nike, Inc.: Developing an Effective Public Relations Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nike Decline, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nike Decline operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Nike, Inc.: Developing an Effective Public Relations Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Nike, Inc.: Developing an Effective Public Relations Strategy case study
2. Improving business portfolio management of Nike Decline
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nike Decline

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Strengths Nike, Inc.: Developing an Effective Public Relations Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Nike Decline in Nike, Inc.: Developing an Effective Public Relations Strategy Harvard Business Review case study are -

Innovation driven organization

– Nike Decline is one of the most innovative firm in sector. Manager in Nike, Inc.: Developing an Effective Public Relations Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Sustainable margins compare to other players in Organizational Development industry

– Nike, Inc.: Developing an Effective Public Relations Strategy firm has clearly differentiated products in the market place. This has enabled Nike Decline to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Nike Decline to invest into research and development (R&D) and innovation.

High switching costs

– The high switching costs that Nike Decline has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Successful track record of launching new products

– Nike Decline has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nike Decline has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.

Strong track record of project management

– Nike Decline is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Organizational Resilience of Nike Decline

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nike Decline does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Effective Research and Development (R&D)

– Nike Decline has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Nike, Inc.: Developing an Effective Public Relations Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Digital Transformation in Organizational Development segment

- digital transformation varies from industry to industry. For Nike Decline digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nike Decline has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.

Training and development

– Nike Decline has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nike, Inc.: Developing an Effective Public Relations Strategy Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Cross disciplinary teams

– Horizontal connected teams at the Nike Decline are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.

Superior customer experience

– The customer experience strategy of Nike Decline in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Analytics focus

– Nike Decline is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Kathleen E. Slaughter, Donna Everatt can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

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Weaknesses Nike, Inc.: Developing an Effective Public Relations Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Nike, Inc.: Developing an Effective Public Relations Strategy are -

Low market penetration in new markets

– Outside its home market of Nike Decline, firm in the HBR case study Nike, Inc.: Developing an Effective Public Relations Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Skills based hiring

– The stress on hiring functional specialists at Nike Decline has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

Need for greater diversity

– Nike Decline has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Aligning sales with marketing

– It come across in the case study Nike, Inc.: Developing an Effective Public Relations Strategy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Nike, Inc.: Developing an Effective Public Relations Strategy can leverage the sales team experience to cultivate customer relationships as Nike Decline is planning to shift buying processes online.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Nike, Inc.: Developing an Effective Public Relations Strategy, it seems that the employees of Nike Decline don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

High operating costs

– Compare to the competitors, firm in the HBR case study Nike, Inc.: Developing an Effective Public Relations Strategy has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Nike Decline 's lucrative customers.

High dependence on existing supply chain

– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Nike Decline supply chain. Even after few cautionary changes mentioned in the HBR case study - Nike, Inc.: Developing an Effective Public Relations Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nike Decline vulnerable to further global disruptions in South East Asia.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study Nike, Inc.: Developing an Effective Public Relations Strategy, in the dynamic environment Nike Decline has struggled to respond to the nimble upstart competition. Nike Decline has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Slow to strategic competitive environment developments

– As Nike, Inc.: Developing an Effective Public Relations Strategy HBR case study mentions - Nike Decline takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Nike, Inc.: Developing an Effective Public Relations Strategy, is just above the industry average. Nike Decline needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.

Increasing silos among functional specialists

– The organizational structure of Nike Decline is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Nike Decline needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nike Decline to focus more on services rather than just following the product oriented approach.

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Opportunities Nike, Inc.: Developing an Effective Public Relations Strategy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities highlighted in the Harvard Business Review case study Nike, Inc.: Developing an Effective Public Relations Strategy are -

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Nike Decline can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Nike Decline can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.

Learning at scale

– Online learning technologies has now opened space for Nike Decline to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Nike Decline can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Better consumer reach

– The expansion of the 5G network will help Nike Decline to increase its market reach. Nike Decline will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

Developing new processes and practices

– Nike Decline can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Using analytics as competitive advantage

– Nike Decline has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Nike, Inc.: Developing an Effective Public Relations Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nike Decline to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Nike Decline can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Building a culture of innovation

– managers at Nike Decline can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.

Buying journey improvements

– Nike Decline can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nike, Inc.: Developing an Effective Public Relations Strategy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.

Manufacturing automation

– Nike Decline can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Nike Decline can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Creating value in data economy

– The success of analytics program of Nike Decline has opened avenues for new revenue streams for the organization in the industry. This can help Nike Decline to build a more holistic ecosystem as suggested in the Nike, Inc.: Developing an Effective Public Relations Strategy case study. Nike Decline can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

Leveraging digital technologies

– Nike Decline can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

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Threats Nike, Inc.: Developing an Effective Public Relations Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Nike, Inc.: Developing an Effective Public Relations Strategy are -

Regulatory challenges

– Nike Decline needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.

New competition

– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Nike Decline in the Organizational Development sector and impact the bottomline of the organization.

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Nike Decline business can come under increasing regulations regarding data privacy, data security, etc.

Technology acceleration in Forth Industrial Revolution

– Nike Decline has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Nike Decline needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Nike Decline.

Shortening product life cycle

– it is one of the major threat that Nike Decline is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Easy access to finance

– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nike Decline can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

High dependence on third party suppliers

– Nike Decline high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.

Consumer confidence and its impact on Nike Decline demand

– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Nike Decline can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Nike, Inc.: Developing an Effective Public Relations Strategy .

Instability in the European markets

– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Nike Decline will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Nike Decline in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

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Weighted SWOT Analysis of Nike, Inc.: Developing an Effective Public Relations Strategy Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Nike, Inc.: Developing an Effective Public Relations Strategy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants. We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –

First stage for doing weighted SWOT analysis of the case study Nike, Inc.: Developing an Effective Public Relations Strategy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.

Second stage for conducting weighted SWOT analysis of the Harvard case study Nike, Inc.: Developing an Effective Public Relations Strategy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.

Third stage of constructing weighted SWOT analysis of Nike, Inc.: Developing an Effective Public Relations Strategy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Nike Decline needs to make to build a sustainable competitive advantage.

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