Nike: Strategic Analysis, Synthesis & Recommendations

1. Strategic Analysis, Synthesis &
Recommendations Document
Company Details
Company: Nike, Inc.
Current Industry:
Sportswear and athletic footwear are Nike's current industries. Nike is a market leader in the
development, production, and distribution of sports footwear, clothing, gear, and accessories. Over
170 nations and territories across the world sell Nike merchandise.
Chosen Industry: Wearable Fitness Technology
The market for wearable fitness technologies is expanding quickly. The market for fitness-related
wearable technology is anticipated to increase from USD 45 billion in 2021 to USD 124.32 billion in
2028. Numerous causes, such as rising consumer demand for fitness and health tracking, technical
improvements, and government backing for fitness and health initiatives, are contributing to this
growth.
The wearable fitness technology market is fragmented, with several well-established and up-and-
coming firms. Apple, Fitbit, Garmin, Huawei, and Samsung are a few of the leading companies in the
sector.
Industry Attractiveness Analysis:
Wearable fitness technology is a rapidly growing industry with high potential for Nike to leverage its
core competencies and address unmet needs.
a. Industry Life Cycle:
The wearable fitness technology market is now going through a period of expansion. This stage is
distinguished by:
• High Consumer Interest: Consumers are very interested in tracking their health and fitness.
• Technological Advancements: Innovation is being driven by technological advancements in
wearable technologies.
• Increasing Competition: Competition is getting more intense as new features and designs
are constantly being introduced by market players.
• Profit Potential: Because of its expansion, the sector has a significant profit potential.
Given this stage of development, this is a good time for Nike to enter the industry and use its
knowledge of athletics and brand recognition to forge a significant presence. Since the industry has
not yet entered a period of maturity or decline, there will likely be more room for expansion soon.

2. b. Porter’s Five Forces:
In assessing the competitive intensity and profit potential of the wearable fitness technology
industry, we utilize Porter's Five Forces framework:
• Threat of new entrants: High due to low entry barriers, such as easily accessible technology
and low regulatory obstacles.
• Buyer bargaining power is high due to a wide range of options and the possibility to switch to
other means of fitness tracking, such as smartphone apps.
• Supplier bargaining power: Moderate due to many component and service providers,
although select significant suppliers may wield more power.
• Substitutes pose a moderate threat due to the availability of substitutes such as smartphone
apps and smartwatches, although wearable fitness devices offer unique advantages.
• Intensity of competitive rivalry: High due to the existence of both established and emerging
players such as Apple, Fitbit, Garmin, Huawei, and Samsung.
Implications for Nike:
• Differentiation: Nike can differentiate its wearable fitness devices by focusing on innovation,
design, and branding, such as developing stylish and fashion-forward devices.
• Integration: Nike can integrate its wearable fitness devices with its existing products and
services, such as NikePlus and Nike Training Club.
• Focus: Nike can focus on specific niches within the wearable fitness technology market, such
as developing devices for athletes and fitness enthusiasts.
c. Growth Rate
The wearable fitness technology industry is a rapidly growing industry. The global wearable fitness
technology market is expected to grow from USD 45 billion in 2021 to USD 124.32 billion by 2028, at
a compound annual growth rate (CAGR) of 17.6%.
The rapid growth of the wearable fitness technology industry presents an opportunity for Nike to
expand its business and generate new revenue streams. However, Nike needs to develop a strong
strategy for entering the market in order to compete effectively with established and emerging
players.
Company's Core Competencies:
An examination of Nike, Inc.'s venture into wearable fitness technology is critical for understanding
its competitive edge in this new market.
a. Resource-based View (VRIO Framework):
In evaluating Nike, Inc.'s potential entry into wearable fitness technology, it is crucial to assess its
resources using the VRIO framework:
• Valuable: Nike possesses a globally recognized brand, extensive consumer engagement, and
strong R&D capabilities, all valuable for innovation in wearables.
• Rare: The combination of Nike's sportswear expertise, iconic brand, and customer loyalty is
relatively rare in the industry.

3. • Inimitable: Nike's brand and customer engagement are difficult to replicate, and its
organizational efficiency supports market leadership.
• Organized: Nike has a history of efficiently organizing resources, which can be applied
effectively in the wearable fitness technology sector.
These factors align Nike's strengths with the industry's requirements, positioning the company for
success in this market.
b. Synergies with Existing Business:
Nike, Inc.'s entry into the wearable fitness technology business complements the company's current
strengths:
• Nike can share its supply chain and distribution networks, lowering expenses.
• Capabilities that complement one other: Nike's experience in athletic wear design
complements wearable technologies.
• Nike's dedicated client base can be used to cross-promote products.
• Integration with existing fitness applications, footwear, and gear delivers a comprehensive
fitness solution that improves the user experience.
Nike's strategic position for entry into the wearable fitness technology business is strengthened as a
result of these synergies.
External Influencing Factors:
Examining the broader external factors that could influence Nike, Inc.'s entry into the wearable
fitness technology industry.
a. PESTEL Analysis:
When considering Nike, Inc.'s introduction into the wearable fitness technology business, it is critical
to consider the following external factors:
• Government restrictions, trade policies, and incentives may all have an impact on Nike's
market entry.
• Economic conditions and consumer purchasing trends in health and fitness-related
technology are crucial factors to examine.
• Social: Growing health consciousness in society, consumer preferences, and cultural
influences all have a role.
• Technological advancements in wearable technology and the possibility for innovation are
important drivers.
• Environmental: Concerns about sustainability in product production should be considered.
• Legal considerations, such as health data privacy and safety norms, must be made.
This analysis aids in identifying external opportunities and constraints, guiding Nike's decision-
making process regarding entry into the wearable fitness technology market.

4. b. Market Gaps and Opportunities:
Nike should evaluate the following factors before considering a foray into the wearable fitness
technology industry:
• Unmet Needs: Nike, for example, can detect the need for more precise health tracking
capabilities that go beyond simple step counting, catering to consumers seeking full fitness
data.
• Nike may identify a dearth of fashionable and performance-oriented wearables for athletes
and may provide customized goods suited to this area.
• Market Gaps: Nike can seek to offer cost-effective yet high-quality solutions that appeal to
budget-conscious consumers by identifying gaps in the affordability of existing wearables.
• Staying on the cutting edge of sensor technology and data analytics can allow Nike to create
novel features that set its wearables apart from competitors.
• Global Expansion: Evaluating markets with a burgeoning interest in health and fitness, like
emerging economies in Asia, presents opportunities for international growth.
By addressing these market dynamics and leveraging its brand strength, Nike can strategically
position itself to seize opportunities in the wearable fitness technology sector effectively.
c. Regulatory Environment:
When considering Nike's entry into the wearable fitness technology industry, it is vital to:
• Data Privacy: Ensure compliance with health data privacy regulations, safeguarding user
information in wearables.
• Product Standards: Meet safety and quality standards specific to wearable technology to
gain consumer trust.
• Intellectual Property: Protect innovations through patents and designs, guarding against
potential legal disputes.
• Incentives: Explore government incentives promoting research and development, which can
reduce production costs.
• Global Considerations: Understand variations in international regulations, choosing markets
with favourable regulatory environments.
This analysis allows Nike to navigate regulatory challenges and capitalize on incentives for successful
market entry.
Stakeholder Interests:
a. Shareholders
Major shareholders, including institutional investors, play a significant role in shaping Nike's strategic
decisions. Assessing their expectations, risk tolerance, and historical voting patterns is crucial. Nike
should ensure that entering the wearable fitness technology industry aligns with shareholder
interests and demonstrates a commitment to long-term value creation.

5. b. Management Vision and Beliefs
The personal views, visions, and backgrounds of Nike, Inc.'s top decision-makers, including founders
and executives, can have a substantial impact on the company's strategic orientation. It is critical to
determine whether they have a strong relationship to fitness or technology, whether they view Nike
as a holistic health and fitness brand, and whether there is an innovation culture. This report
assesses Nike's leadership and the company's possible entry into the wearable fitness technology
business.
Analysis Synthesis and Identification of 3 Key Reasons
The top three compelling reasons for Nike, Inc. to think about entering the market for wearable
fitness technology must be determined using the results of the thorough investigation that was
undertaken. These are:
• Core Competencies Leveraging: Nike is well-positioned to succeed in the wearable fitness
technology market thanks to its long history of athletic expertise, well-known brand, and
history of product innovation. The business can take advantage of its advantages to develop
cutting-edge fitness wearables and apps that appeal to its devoted consumer base.
• Industry Attractiveness: Thanks to rising health consciousness among consumers and
technical improvements, the wearable fitness technology sector has a promising future. By
joining this market, Nike can take advantage of a growing industry and further its goal of
promoting active living.
• External Influencing Factors: When determining its strategic path, Nike should take
regulatory changes, stakeholder interests, and management vision into account. Accepting
wearable fitness technology complements Nike's dedication to holistic health and wellness
solutions and is in line with changing consumer expectations.
Nike can make a strong case for its strategic entry into the wearable fitness technology market and
further establish its position as a market leader in the process by condensing these findings into
three important factors.
Conclusion
In conclusion, Nike, Inc. is ideally suited to enter the market for wearable fitness technologies. With
advantages including market leadership, varied revenue sources, enhanced customer engagement,
and a positive impact on global health, this strategic shift is in line with Nike's mission and vision.
Nike's foray into this market strengthens its commitment to all-encompassing health and wellness
products and prepares the company for long-term success.

6. Recommendations
Nike's successful foray into the wearable fitness technology market will be steered by these
suggestions.
• Prioritize innovative fitness wearables and apps that are consistent with the Nike brand.
• To improve product development and market reach, seek partnerships with IT companies
and health influencers.
• Market segmentation will help you better meet the needs of your target markets.
• Regulatory Compliance: Ensure that safety and privacy requirements are followed.
• Plan a gradual introduction into promising locations for global expansion.
• Engage Customers: Create excellent customer involvement and support.
• Continue to adapt: Be adaptable and receptive to market developments.