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SWOT Analysis (Reebok International LTD)


The difference and similarity between Reebok and Nike on the strength
  • Similarity
    1. New technology development of athletic shoes with inflatable sides and collars for extra support.
    2. Both are top two firms in the industry, which utilize research and development and try to research consumer preferences.
  • Differences
    1. Reebok utilize acquisition of other firms to diversify its shoe lines, but Nike enters to different markets by its company.
    2. Reebok was very successful to diversification its production, Nike was not.
    3. Nike was very strong at apparel, but Reebok was not.
    4. Reebok were facing many competitors in its different footwear markets including Nike, Nike was not.
    5. Reebok owned its own distribution network, but Nike did not.
    6. Reebok was emphasizing international expansion and acquisition to gain more market share, Nike work on their product development on its current market.
    7. Reebok use high price and upscale product image, but Nike uses shoe design and price to compete with Reebok.



SWOT Analysis
  1. Strength
    • The firm can predict the shoe market and come up with products that will create markets.
    • Diversity its products into the competitive market.
    • Strong positive results from its good operation performance.
    • New technology makes the firm to be able to make better shoes.
    • The top firm in the shoe industry.
    • Utilize market research and development and try to find out consumer's preferences.
    • Can make shoe in both in stylish and comfortable
    • Able to enter into different markets and to gain market share from it.
    • Strong management team and good corporate strategy on domestic and oversea market.
    • Ability to built its own distribution network.
    • The new products are able to gain consumers' attention.
    • Strong positive financial statues with minimal long-term debt.
    • Good acquisition to make the company to be more profitable.
    • Good decision-making. For example, Reebok let Avia stand alone, and it helps the company generate more market share from the shoe industry.
    • Company revenue and net income kept increasing from 1983-1991.
    • Specialty footwear focus for the Company's non-Reebok brands and to pursue more aggressively markets out-side Reebok's primary focus.
  2. Weakness
    • Reebok's current position in the apparel industry is not strong.
    • Go for too many segments, so company can't handle all of them well, and it may cause company to loss its market in the long run.
    • Position on the product on high end may lead to loss market share in the long-run (Price elasticity)
    • Put the company operation oversea may get company potential risks.
    • The company's non-Reebok brand footwear may be potential competitor for itself.
  3. Opportunity
    • The market is big, and the increasing demand is expected.
    • Produce oversea will help company to cut down its cost on labor, and generate more margins on its products.
    • Fads are unknown. Yet, if the firm can react quickly enough to the fads, it can generate lots of profit from the new trends.
    • Newer Technology development or innovations can help company to get more profit and market share on its future products.
    • Extend its distribution network via its own subsidiaries or individual distributors will increase Reebok 's future sales.
  4. Threats
    • The industry is controlled by fads and the fads are nearly not predictable.
    • Product must be unique and competitive distinction.
    • Reebok facing strong competitors in the casual market, and competitor's products are trendy, fashionable, and fleshy.
    • Competition is very strong in each of the sports and fitness footwear market segments, with new entrants and established companies providing challenges in every category.
    • Competition in each of the markets for the Company's products is manifested in a variety of ways, including price, quality, brand image and ability to meet delivery commitments to retailers.
    • Rapid changes in technology and consumer preference that can occur in the footwear and apparel markets constitute significant risk factors in the Company's operations.
    • The Company's other product lines also continue to confront strong competition
    • As with its international sales operations, the Company's footwear and apparel production operations are subject to the usual risks of doing business abroad, such as import duties, quotas and other threats to free trade, foreign currency fluctuations and restrictions, labor unrest and political instability.



Major problem facing Reebok on 1989 to 1990

Reebok's share of the athletic shoe market fell to 28% in 1988, and Nike made serious inroads into Reebok's market share and threatened to regain the market leader position. By the year-end 1989, Nike had regained the position. Nike used new technology to design for its new products and the new casual shoe would be introduced in the spring of 1990. Therefore, this would be a strong competitor for the company. Not only did the Nike go back to the No 1 position, but also in 1988, Converse was making efforts to become competitive in the area of high-tech and women's athletic footwear. Thus, it gave Reebok lots of pressure on its products development and market share in the coming years. The problem was not only from outside competitors, the problem was also within the internal operation. Since the management styles conflicting was with the those of Fireman, President and Chief operating officer, Joseph Labonte and Chief Marketing officer, Mark Goldston both resigned from Reebok in 1989. After their resignation, Fireman reorganized the company, and this movement may lead to delay the reaction to competitor's movement. Of operation result side, From 1989 to1990, the net revenue increases, but the net income slowdown.



Recommendation

Since in the footwear market, most of the male consumers are more concern on the new technology and the product construction, the company needs to put more attention on its product technology development and construction. Of the other segment, the company needs to be aware of the new fads and the product's style and image. The footwear and apparel industry is intensely competitive, Therefore, if company can react the rapid changes in the consumer preferences and the technological innovations, the company can generate more profit on that. Since the footwear market still has the space to increase its market, but sales growth may need to dependent in part on the company increasing its market share at the expense of its competitors, the high-end product may compel consumers to switch their preference to competitors. Therefore, company needs to consider producing more competitive price products toward the regular consumers and markets.

Of the oversea operation, it involves the potential risk. Since it can help company to cut down the cost significantly, the company needs to be aware of the economic and political situation of those foreign countries. Diversify the products are good procedure to help company to avoid the company too dependent on certain product lines. However, too many product lines may get company into financial crisis. Therefore, Quality vs. Quantity is better procedure to go for. Finally, Create more channels of distribution in private network or individual and well develop of retail relationship can help company to gain more sales and profit.