Nike Business Essay Example
Nike Business Essay Example

Nike Business Essay Example

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  • Pages: 4 (950 words)
  • Published: October 8, 2017
  • Type: Essay
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NIKE Inc. specializes in creating top-notch footwear, apparel, equipment, and accessory goods and markets them globally. They distribute their products through their owned retail outlets and online, as well as through a blend of independent distributors and licensees internationally. The majority of their products are manufactured overseas by independent contractors. While gear-related items are primarily made in the US, all apparel and footwear are made outside of the country. NIKE does not own any factories, which means they do not invest funds into buildings or manufacturing personnel.

Nike's focus on research and development leads to an efficient organization that produces a creative and progressive range of products. They manufacture their goods in locations that maintain high-quality standards while keeping costs low, but if production becomes more affordable elsewhere with equal or better specifications, Nike will relocate. While the company des

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igns athletic footwear primarily for specific activities, a significant portion of its products are also used for casual or leisure purposes.

NIKE currently sells a variety of footwear, including running, training, basketball, soccer, sports-inspired urban shoes, and children's shoes. These categories are expected to remain popular in the future alongside other shoe categories. In addition to their footwear products, NIKE offers a "collection" of sports apparel and accessories that feature licensed collegiate and professional team logos. Furthermore, NIKE sells branded sports equipment and has licensing agreements for other companies to produce and sell branded products.

Although Nike operates its own retailer, Nike Town, the majority of its revenue comes from sales to other retailers. As retailers face pricing pressure from competitors, Nike's profit margins may be reduced. The company combats this by investing $500 million annually in advertising t

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maintain the strength of its brand.

The company has several wholly owned subsidiaries, each with a specific focus. NIKE IHM Inc. sells small plastic products to other manufacturers, while Cole Haan designs and distributes dress and casual footwear, apparel, and accessories for both men and women under the brand names of Cole Haan and Bragano. Converse Inc. is also a subsidiary of the company.

NIKE acquired several wholly owned subsidiaries that design, distribute, and license athletic and casual footwear, apparel and accessories. Converse, Chuck Taylor, All Star, One Star, John Varvatos, and Jack Purcell are sold under one subsidiary. Another subsidiary, Hurley International LLC, designs and distributes sports apparel and accessories under the Hurley brand. Umbro is a subsidiary that designs, distributes and licenses primarily soccer-related athletic and casual footwear, apparel and equipment. NIKE bought all of their capital stock on March 3, 2008. The industry can be found at the following website: http://www.fairolympics.

From page 5 of org/background/Company_Profiles.pdf, it is acknowledged that NIKE regards PUMA and ADIDAS as primary contestants. Additionally, two risks have been identified: 1) intense competition faced by the products and 2)...

Inability to predict consumer preferences and develop innovative products could hinder net revenues and profits. Technical innovation and superior product quality are essential for competing in the market. Failure to recruit top-class product endorsers could adversely affect business.

Noncompliance by contractors with their code of conduct, local regulations, and other standards may have adverse effects on their business (6). Seasonal factors affecting their operations could cause fluctuations in both their stock price and operating results (7). The accuracy of future revenues cannot be guaranteed based on their "Futures" orders (8). Their "Futures" ordering

scheme does not mitigate excess inventories or inventory shortages, which could impair operating margins and harm the business (9).

The financial health of their retailers could have negative consequences for them (10). If retailers consolidate or if market share becomes concentrated amongst a few, this may increase their credit risk and hinder their sales (10). Failing to properly protect their intellectual property rights could have an adverse impact on their business (11). From time to time, they may be subject to litigation and regulatory proceedings that require unexpected expenditure of time and resources (12). Their international operations come with inherent risks that could be harmful to their business (13) .

Potential increases in costs and decreases in margins may result from currency exchange rate changes 15, while risks related to overseas sourcing, manufacturing, and financing impact their products 16. Availability and effectiveness of global distribution facilities play a crucial role in their success 17, and their supply chain heavily relies on information technology systems. Any deficiency, interruption or security threat associated with this technology could negatively impact their business operations 18.

Possible financial losses may result from failed investments in business and operations, which could negatively impact their financial results (19). The business is dependent on key personnel, and the departure of these individuals could cause harm to their business (20). If the chairman sells a significant amount of shares, the market value of their common stock may decrease (21). anti-takeover measures could negatively impact a potential acquisition of the company or decrease the value of the common stock (22).

Nike's stock may face a decrease if it does not meet analyst expectations. On February 15, 2007, they

had a two for one split, as their stock had increased over 70% in the past five years. This was to appeal to small investors and align with similar companies in the industry. They purchased sports apparel supplier, UMBRO, known for their association with the England national football team's kits for $660M in early 2008. This added to Nike's football business and increased Goodwill from $131M to $449M. Revenues are recognized differently for wholesalers and retail stores, with inventory valuation at lower of cost or market and straight-line depreciation utilized for all items.There are various timeframes for leases and agreements related to buildings, ranging from 2 to 40 years. Similarly, machinery and equipment typically come with leases or agreements of 2 to 15 years. For computer software, the timeframe generally falls between 3 and 10 years.

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