Essay Example on Small Businesses to Multinationals: Achieving Competitive Advantage

Introduction

In our contemporary societies, small businesses have grown to become multinational corporations. The business world is filled with many competing firms. For a firm to succeed in an industry with stiff competition, the firm must have a competitive advantage. The firm needs to find out what areas of the business are doing well and which are not. Also, the organization should identify where it is currently and where it wants to go. Factors that may deter the organization from achieving its own goal are also considered. SWOT-analysis helps a firm explore these issues (Sarsby, 2016). The SWOT analysis on Nike and propose ways to gain or maintain a competitive advantage over other firms to ensure profitability in the future.

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Nike Inc. was founded by Phil Knight and Bill Bowerman in 1964. The firm has its headquarters in Beaverton, Oregon, in the United States. Nike deals in athletic wear, including footwear, athletic equipment, and accessories. Also, the primary goal of the firm is to provide athletes with comfortable and highly efficient products to help them have the best performance (Knight, 2016). However, the organization produces leisurewear due to the success of athlete wear. In 2019, Nike Inc. had an annual net income of about $4.02B, an increase from 2018 (Macrotrends, 2019). The value was almost double that of Adidas, its primary competitor.

Today, the firm has distribution channels in over 100 countries in the world. Also, the company has employed over Forty thousand employees. However, the company was not always successful. The company completed its first IPO in 1980 with a price of $ 0.18 per share. Also, the company became the leader in the industry in 1998 (Knight, 2016).

SWOT Analysis

Strengths

Nike has a strong brand image, which ensures the company make many sales and hence make profits. The name of the company is easy to remember, making Nike a recognizable brand in the world. Also, the swoosh symbol is easily identified by anyone in all parts of the world. The company carries out brand awareness campaigns and celebrity endorsements to ensure the popularity of the brand (Nike Inc, 2019). A sharp brand image ensures the company continues to rake in billions from all over the world.

Moreover, Nike has low production costs for its products. Most of the products are manufactured in South East Asia countries such as Vietnam and China, where there is cheap labor. Also, the materials used for manufacturing shoes by Nike are relatively less expensive compared to those used by the competitors (Nike Inc, 2019). Low costs enable the firm to sell its products at low prices hence increasing sales.

Weakness

Nike Inc. has been criticized recently over poor working conditions for the laborers. The firm has been targeted for employing children and providing low wages, especially in foreign nations. Also, the workers perform their duties in poor working conditions that are unsafe for any human being. The allegations may impact the brand image negatively, leading to a decrease in sales (Nike Inc, 2019).

Although the institution has established itself globally, it heavily relies on the US market for sales and revenue. In 2018, about 42% of its sales came from the United States and 58% from the rest of the world (Nike Inc, 2019). The firm depends on the US market, although most products are manufactured outside the country. A change in tax policies or regulations in the United States regarding the sale of footwear could drastically reduce Nike's sales.

Opportunities

Nike Inc. can explore emerging markets in developing countries. Although Nike has established itself in most countries all over the world, there are still opportunities for growth. People in developing countries keep getting more disposable income that can be used to purchase Nike shoes (CSImarket, 2019). Proper marketing in these countries will see the growth of the firm and reduce dependence on the home market.

Besides, the company could produce innovative products. The firm has used modern technology with fitness to create products designed to monitor physical activities (CSImarket, 2019). However, there is still room for combining advanced technology with athletic wear since the area has not been much explored.

Threat

One of the significant threats facing the firm is counterfeiting. Since people know that Nike has a sharp brand image, they manufacture cheap products and label them Nike. Counterfeit Nike products are being sold everywhere to unsuspecting customers. These products often have low-quality products; hence, the customers are unsatisfied (Nike Inc, 2019). The counterfeit goods can damage the image of the brand since Nike customers feel that the company has started producing low-quality products. Also, counterfeit products are usually sold at lower prices, discouraging customers from buying the original items.

Also, Nike is facing stiff competition from companies such as Adidas. There are also threat from emerging new brands, and the company has to be aggressive on new opportunities (CSImarket, 2019). Also, the firm has to spend more money on increasing competition through marketing and advertisement. The company can, however, reduce competition by being innovative.

Ways to Create a Competitive advantage

The primary source of competitive advantage for Nike Inc. is customer loyalty. Having the right brand image has enabled the customer-oriented brand to have strong customer loyalty. The firm invests significantly in research and development to produce new designs for customers. Also, its marketing strategy ensures the company receives the best product hence creating loyalty (Nike Inc, 2018). Therefore, for the firm to maintain its excellent performance, it has to ensure customer loyalty.

Innovation can be a source of competitive advantage for Nike. The firm can focus more on research and development to ensure there is product innovation. Research and development show what kind of products are needed by the customers. Customers have diverse tastes, and others have fast-changing demands (Nike Inc, 2018). Through product innovation, Nike can produce items to meet the varying tastes and preferences, leading to an increase in sales.

References

CSImarket. (2019). Nike sales versus its competitors: Q3 2019. Retrieved Nov. 30, 2019, from CSImarket: http://csimarket.com/stocks/compet_glance.php?code=NKE

Knight, P. (2016). Shoe dog: A memoir by the creator of Nike. New York, NY: Simon & Schuster.

Macrotrends. (2019). NIKE net income 2006-2019 | NKE. Retrieved from https://www.macrotrends.net/stocks/charts/NKE/nike/net-income

Nike Inc. (2019). NIKE, Inc. reports fiscal 2019 fourth quarter and full year results. Retrieved from https://investors.nike.com/investors/news-events-and-reports/investor-news/investor-news-details/2019/NIKE-Inc-Reports-Fiscal-2019-Fourth-Quarter-and-Full-Year-Results/default.aspx

Nike Inc. (2018). Nike Inc.2018 annual report. Beaverton, OR. Retrieved from: https://s1.q4cdn.com/806093406/files/doc_financials/2018/ar/docs/nike-2018-form-10K.pdf

Sarsby, A. (2016). SWOT Analysis (1st ed.). Morrisville, NC: Lulu.com.