International Sourcing in Athletic Footwear: Nike and Reebok SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of International Sourcing in Athletic Footwear: Nike and Reebok
Nike and Reebok, the two largest athletic footwear companies, look to contractors in Asia to manufacture their shoes. Sourcing from Asia offers advantages of low cost and flexibility, but raises questions about human rights and corporate responsibility. How Nike and Reebok have addressed these questions is the focus of this case.
Authors :: Philip M. Rosenzweig
Topics :: Leadership & Managing People
Tags :: Human resource management, International business, Social responsibility, Supply chain, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "International Sourcing in Athletic Footwear: Nike and Reebok" written by Philip M. Rosenzweig includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Reebok Nike facing as an external strategic factors. Some of the topics covered in International Sourcing in Athletic Footwear: Nike and Reebok case study are - Strategic Management Strategies, Human resource management, International business, Social responsibility, Supply chain and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the International Sourcing in Athletic Footwear: Nike and Reebok casestudy better are - – technology disruption, increasing commodity prices, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs,
increasing transportation and logistics costs, geopolitical disruptions, etc
Introduction to SWOT Analysis of International Sourcing in Athletic Footwear: Nike and Reebok
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in International Sourcing in Athletic Footwear: Nike and Reebok case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Reebok Nike, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Reebok Nike 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.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of International Sourcing in Athletic Footwear: Nike and Reebok can be done for the following purposes –
1. Strategic planning using facts provided in International Sourcing in Athletic Footwear: Nike and Reebok case study
2. Improving business portfolio management of Reebok Nike
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Reebok Nike
Strengths International Sourcing in Athletic Footwear: Nike and Reebok | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Reebok Nike in International Sourcing in Athletic Footwear: Nike and Reebok Harvard Business Review case study are -
Innovation driven organization
– Reebok Nike is one of the most innovative firm in sector. Manager in International Sourcing in Athletic Footwear: Nike and Reebok Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Reebok Nike 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.
Superior customer experience
– The customer experience strategy of Reebok Nike in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Reebok Nike has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Reebok Nike to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Reebok Nike digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Reebok Nike 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.
Highly skilled collaborators
– Reebok Nike has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in International Sourcing in Athletic Footwear: Nike and Reebok HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Leadership & Managing People industry
– International Sourcing in Athletic Footwear: Nike and Reebok firm has clearly differentiated products in the market place. This has enabled Reebok Nike to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Reebok Nike to invest into research and development (R&D) and innovation.
Training and development
– Reebok Nike has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in International Sourcing in Athletic Footwear: Nike and Reebok 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.
Analytics focus
– Reebok Nike 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 Philip M. Rosenzweig 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.
Effective Research and Development (R&D)
– Reebok Nike 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 International Sourcing in Athletic Footwear: Nike and Reebok - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Reebok Nike
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Reebok Nike does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Reebok Nike is present in almost all the verticals within the industry. This has provided firm in International Sourcing in Athletic Footwear: Nike and Reebok case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses International Sourcing in Athletic Footwear: Nike and Reebok | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of International Sourcing in Athletic Footwear: Nike and Reebok are -
Increasing silos among functional specialists
– The organizational structure of Reebok Nike is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Reebok Nike needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Reebok Nike to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Reebok Nike, firm in the HBR case study International Sourcing in Athletic Footwear: Nike and Reebok needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Reebok Nike has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Lack of clear differentiation of Reebok Nike products
– To increase the profitability and margins on the products, Reebok Nike needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Reebok Nike is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study International Sourcing in Athletic Footwear: Nike and Reebok can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study International Sourcing in Athletic Footwear: Nike and Reebok, is just above the industry average. Reebok Nike 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.
No frontier risks strategy
– After analyzing the HBR case study International Sourcing in Athletic Footwear: Nike and Reebok, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the International Sourcing in Athletic Footwear: Nike and Reebok HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Reebok Nike has relatively successful track record of launching new products.
Products dominated business model
– Even though Reebok Nike has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - International Sourcing in Athletic Footwear: Nike and Reebok should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study International Sourcing in Athletic Footwear: Nike and Reebok 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 Reebok Nike 's lucrative customers.
Slow to strategic competitive environment developments
– As International Sourcing in Athletic Footwear: Nike and Reebok HBR case study mentions - Reebok Nike 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.
Opportunities International Sourcing in Athletic Footwear: Nike and Reebok | 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 International Sourcing in Athletic Footwear: Nike and Reebok are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Reebok Nike in the consumer business. Now Reebok Nike can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Reebok Nike can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Reebok Nike 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Reebok Nike to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Reebok Nike can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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. Reebok Nike can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Reebok Nike 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 Leadership & Managing People segment.
Better consumer reach
– The expansion of the 5G network will help Reebok Nike to increase its market reach. Reebok Nike 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.
Creating value in data economy
– The success of analytics program of Reebok Nike has opened avenues for new revenue streams for the organization in the industry. This can help Reebok Nike to build a more holistic ecosystem as suggested in the International Sourcing in Athletic Footwear: Nike and Reebok case study. Reebok Nike can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Reebok Nike can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Reebok Nike has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Reebok Nike to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Reebok Nike to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Reebok Nike is facing challenges because of the dominance of functional experts in the organization. International Sourcing in Athletic Footwear: Nike and Reebok case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats International Sourcing in Athletic Footwear: Nike and Reebok External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study International Sourcing in Athletic Footwear: Nike and Reebok are -
Shortening product life cycle
– it is one of the major threat that Reebok Nike is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Reebok Nike
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Reebok Nike.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Reebok Nike in the Leadership & Managing People industry. The Leadership & Managing People 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.
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 Reebok Nike business can come under increasing regulations regarding data privacy, data security, etc.
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 Reebok Nike in the Leadership & Managing People sector and impact the bottomline of the organization.
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. Reebok Nike 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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Reebok Nike needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Reebok Nike can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Reebok Nike.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study International Sourcing in Athletic Footwear: Nike and Reebok, Reebok Nike may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Stagnating economy with rate increase
– Reebok Nike can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of International Sourcing in Athletic Footwear: Nike and Reebok 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 International Sourcing in Athletic Footwear: Nike and Reebok 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 International Sourcing in Athletic Footwear: Nike and Reebok 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 International Sourcing in Athletic Footwear: Nike and Reebok 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 International Sourcing in Athletic Footwear: Nike and Reebok 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 Reebok Nike needs to make to build a sustainable competitive advantage.
