Nike – Recent Enviromental Changes Essay Example

not only impacted Americans but also had repercussions on the global economy and various business sectors, including Nike Inc. The value of the American dollar dropped quickly after the attacks but is gradually recovering.

Due to a large amount of unsold inventory, Nike plans to reduce production which will result in layoffs for many employees. Lower sales and profits for Nike can be attributed to reduced consumer travel and spending on non-essential items as consumers closely monitor events like U.S attacks in Afghanistan. Military campaigns like this lead to caution when placing retail orders.

As a consequence of these events since September 11th, Nike's stock has declined by 12%. The September 11th attacks have caused a disruption in Nike's long-term plans resulting in a slight decrease in projected quarterly earnings.Analysts predict that consumer spending slowdown will impact sales in the fourth quarter. Nike's stock experienced a decline after September 11th but gradually recovered. The company plans to reduce advertising and production in the upcoming year. As a global corporation, Nike is focused on aiding relief efforts and following President Bush's directive for quick business recovery. Immediate financial support is identified as the most critical need by both local and national Red Cross bureaus. Consequently, the Nike Foundation has been collecting contributions from individual employees and factory partners worldwide. Through matching funds, Nike is donating $1 million to the American Red Cross and local relief organizations, while Asian partner mills Feng Tay and Pou Chen each donated $100,000 to the American Red Cross. In addition, Nike is collaborating with relief agencies in New York, Washington D.C., and Pennsylvania to provide donations of Nike products for victims affected by

these tragic circumstances as well as those involved in rescue and recovery efforts. Nike and Niketown New York have donated various items including jerseys, socks, work boots, towels, shoes, tune-ups jackets sweatshirts,and gym bags for rescue workers in New York City.Nike has made significant contributions following the events of September 11th. In addition to these donations, Nike will continue working with relief and government agencies to provide more requested products for fire and rescue personnel. So far over $300k worth of Nike products have either been delivered or are on their way to NY relief agencies. Not only did Nike donate physical items but also participated in other initiatives. For instance, Nike US employees took part in a Red Cross blood drive at their headquarters in Beaverton on September 24-25 and at their Memphis distribution center on October 1st-5th. Moreover, Nike funded two 30-second advertisements for the Red Cross that were aired during the World Cup match between Team USA and Jamaica on ABC on October 7th. They also purchased advertising space on the West4th wall in Manhattan.

In summary, Nike Inc. made several donations totaling $1 million to various organizations in New York City. These included a $250,000 donation to the American Red Cross, with $106k contributed by Nike employees worldwide. The PBA Widows & Children's Police Relief Fund and UFA Widows & Children's Fund each received $175k, while the Federal Employee Education & Assistance Fund received $100k and the International Association of Fire Fighters received $50k. The WTC Fund of the New York State Fraternal Order of Police provided an additional $50,000 for burial costs and household expensesCatholic Charities USA donated $50,000 to assist

households affected by the catastrophes in NY. The United Methodist Committee on Relief and Mercy Corps also contributed $50,000 to provide immediate guidance and household services for those impacted. Mercy Corps specifically focused on their "Comfort for Kids" project aimed at aiding children and families in NY and Washington DC. In addition, a contingency fund donated $75,000 towards programs promoting racial and spiritual healing as well as community building.

Considering the changing world and technological advancements, these global market shifts also affect Nike Inc., being a global business. While machines influenced the economy during the industrial revolution, today's advancements primarily stem from computer technology. Approximately 50 years ago, the US invented the first computer which was initially large-sized and had its own power plants. These computers were costly to build, costing a million dollars but were limited to simple calculations. However, ongoing development has made computers smaller, more affordable, productive, and capable over time. In the 1980s there was significant progress in microprocessors leading to technological advancements in the following decade.

Today, computers are prevalent in many households worldwide with almost every developed country having at least one. The price range for top personal computers is now between $2500 and $3500 compared to larger models from previous centuries.
The Internet has globally transformed our world into a global village. It was originally designed by the US Department of Defense in 1969 for potential nuclear attacks but later became available for email and online chats during the 1980s. However, it was the HTML improvements in the 1990s that gave rise to a new form of communication and business known as the World Wide Web. Currently, there are approximately 120

million internet users worldwide, with numbers continuously increasing. The fast internet speed and dynamic nature have attracted people to engage in more online activities.

One significant advancement brought forth by the internet is e-business, which allows people to purchase goods and services online. Furthermore, advertising has become another common use of the internet. Nike, a company known for exploring new markets and consumers, has utilized online platforms like niketown.com to expand its reach. The Internet serves as an invaluable tool for connecting with customers worldwide and providing access to information on various subjects.

Nike's website not only entertains and informs but also serves as a platform for selling products through their online store. This aligns with the increasing trend of internet shopping and helps improve the company's future business prospects. Maintaining a good reputation for providing quality services online is crucial for NikeIn 1994, the European Union (EU) imposed quotas on certain types of footwear from China. However, Nike does not believe that these quotas significantly affect their business. The following year, the EU committee introduced two anti-dumping laws targeting footwear imported from China, Indonesia, and Thailand. Over time, specific anti-dumping duties were imposed on certain types of footwear made from man-made fabric and leather originating from these countries.

It is important to note that these duties do not apply to STAF footwear or athletic footwear nor to footwear with a CIF above 5.6 EURO’s (World Wide Web.Nike.com). As a result, Nike can still sell most of its products except for children's shoes and low-cost sandals.

To prevent potential negative consequences from stricter EU measures in the future, Nike suggests that its European subsidiaries consider relocating their shoe production

to other countries in order to maintain competitive pricing. Nike closely monitors international restrictions and has implemented a multi-country sourcing strategy along with contingency plans (source: World Wide Web.centrum.sk). The company believes that its major competitors are also facing similar challenges (source: World Wide Web.pravda.sk).

In recent years, Nike has expanded into new markets both internationally (excluding the US) and within the US market (source: www.nikebiz.com).Nike's expansion not only involves geographical growth but also responding to customer demand and trends, reflecting the increasing prevalence of the global village concept. The company has divided its global business into four regions: United States, Europe, Asia Pacific, and Americas. Although all regions experienced increased revenue in 2001, most of the growth came from previously untapped international markets. To adapt to this evolving market landscape, Nike has established several international branch offices and subsidiaries over the past seven years.

Nike has a strong presence in various countries including Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Croatia, Czech Republic, Denmark, Finland , France , Germany , Hong Kong Hungary Indonesia Ireland Italy Japan Korea Malaysia Mexico New Zealand The Netherlands Norway (China) Philippines Poland Portugal Singapore Slovenia South Africa Spain Sweden Switzerland Taiwan Thailand Turkey UK Vietnam.

In Europe and the Asia-Pacific market where Nike operates stores that emphasize presentation and service. In these regions similar to what it experienced in the United States twenty years ago,Nike is seeing a growing emotional connection with customers. In the highly demanding Asia-Pacific market reliable sports placements and technology-driven performance products are crucial for success which Nike fulfills.Nike has the opportunity to expand its success in soccer in Asia through the upcoming 2002 World Cup in

Japan and Korea. Despite facing challenges in certain areas of the United States market, Nike continues to dominate the athletic footwear industry and drive product innovation. After a period of difficulty, apparel sales have rebounded with a 9% increase in revenue for the year. The apparel market is stabilizing during the second half of financial year 2001 due to changing customer demands that align with current trends. Recent research shows that American children now have less free time compared to previous years, leading to a decline in demand for leisure attire, footwear, and sports equipment like Nike. Athletic footwear sales have also declined due to back-to-school promotions during the third quarter. Teenagers, who are a significant portion of the market, are showing less interest in athletic footwear and opting for different styles influenced by entertainment, music, and celebrities. As a result of declining sales in traditional markets such as aerobics, fitness, and cross-training, major corporations within the athletic footwear industry are losing market share (World Wide Web.Nike.com).Despite the growing popularity of non-traditional sports, the introduction of brown shoes surprisingly did not affect the athletic footwear market. Instead, there has been a significant increase in demand for off-trail and fashion footwear. As a result, many athletic footwear companies are expanding their presence in these areas. Currently, the athletic footwear market has reached its peak and is stabilizing at around 300 million pairs (World Wide Web.Nike.com). However, occasional spikes in production occur due to fashion trends that boost industry growth, such as the example of 345 million pairs produced in 1995 (Source: www.nike.com).

To benefit from the annual production level of 300 million pairs, retailers should collaborate with

retail merchants to centralize store locations, manage inventories, and maximize sales. The financial interactions between countries and governments have a direct impact on the profits of large corporations like Nike and the retail prices of their products.

Trade between North American countries mainly takes place in US dollars which simplifies transactions. However, in the European Union where there are 15 different countries, currencies must be exchanged for conducting business with other nations. This often leads to higher retail prices for international goods and services.

On January 1st, 1999, fixed conversion rates were established between the previous currencies of 11 out of the 15 EU member states and the new EURO currency which became common for all member states.During the transition period, both the original currencies and EURO can be used as payment by public and private entities. From January 2002 onwards, EURO will become the official currency of EU, completely phasing out all original currencies by June 30th, 2002. Nike has been studying the challenges and consequences of transitioning to the EURO since January 1998. Adjustments have been made by Nike's team to various technology systems including market direction, invoicing, wage functions, and cash management in order to ensure a smooth transition. Introducing the EURO is expected to reduce disparities in exchange rates between countries according to Nike. However, variations in cost and taxation rates may still impact retail prices. Over the past three years, Nike has actively adjusted their pricing practices in order to effectively utilize the new currency. Approximately 8 million US dollars were spent on adapting their systems mainly associated with changing existing ones. Despite this change in currency, Nike is confident that it

will not affect their financial situation or operational results as they have a strong decision-making ability based on logic, intuition, and experience which leads to significant success in this ever-evolving market landscape.Nike has a history of making successful choices through well-known selections. They have utilized wholly or partially owned subsidiaries worldwide to embrace globalization and mitigate risks, as stated on www.nike.com. Nike's involvement in various sports areas demonstrates their flexibility and smart decision-making, allowing them to dominate many markets by manufacturing high-quality products for numerous sports.

Customer satisfaction and overall product quality are always a priority for Nike's management, who recognize societal expectations placed upon them. They believe that the value of quality justifies the extra cost of producing top-notch products in the market, according to www.msn.com.

Nike's management has made crucial decisions that have yielded significant returns over time through strategic advertising investments. They strategically use famous athletes as brand ambassadors and engage in social activities to contribute to their well-known image.

Additionally, Nike's company proprietors envisioned goals for the business and hired the right individuals to work towards achieving them. By providing motivation through higher rewards, they involve employees in initiating and executing changes beyond just managerial expertise.

Overall, Nike's success can be attributed to various strategies employed by its management team (source: www.nike.com).Nike prioritizes empowering employees, which has proven successful in boosting confidence, encouraging creativity, and involving them in decision-making processes. They also focus on research and development efforts, specifically in technical innovation for creating products that enhance athletic performance, minimize injuries, and maximize comfort. In addition to this, they prioritize product design based on current trends. To achieve these goals, Nike recruits individuals with expertise

in fields such as biomechanics, exercise physiology, technology, industrial design,and more. Specialized commissions comprised of top-level athletes, managers,trainer,equipment directors , orthopedics,podiatrists,and other experts contribute their knowledge to improve Nike's products by providing insights on designs ,materials ,and structures.This collaboration aids in developing new products and enhancing existing ones.Additionally,Nike involves their hired or sponsored athletes in testing and verifying their products during development.These facts are highly valued within the company and included in reports.As a consumer products company,Nike heavily relies on popular sports activities and changing trends for product demand.Therefore,it is crucial for them to quickly respond and adapt to these changes.Nike needs to adjust existing products develop new ones,and create styles that align with current trends.Despite their position as the world's leading sports equipment manufacturer, Nike has faced challenges in adapting to changing market conditions. Their strategy of focusing on safe and profitable markets has proven unwise as they failed to respond quickly enough to emerging trends such as the growing demand for aerobic exercises and fitness training. This slow response highlights the unstable nature of their environment and the potential negative impact on sales and profits.

In contrast, Reebok took advantage of this opportunity by developing a popular line of aerobic and fitness equipment, establishing themselves as leaders in this market. Nike must recognize the importance of adapting strategies over time, as organizations tend to become set in their ways despite evolving conditions.

Nike's quick response to their lack of success in certain countries, particularly in association football where Adidas dominates, ultimately proved unsuccessful. Despite experiencing above-average growth in 2001, Nike's overall growth has stagnated in recent years.

Before 1997, Nike was a strong company with increasing

market share and revenues. However, since then they have struggled to sustain growth. Initially appearing promising, Nike faced challenges due to staff shortages resulting from rapid expansion by the end of the financial year 1997.

This information is sourced from www.nike.com and www.sgma.com.As a global company, Nike recognized the need to hire more employees to maintain enthusiasm and focus on excelling in every aspect of their business (World Wide Web.sgma.com)(World Wide Web.Nike.com). However, their growth came to a standstill as they neglected the basics while focusing on new areas of business(World Wide Web.sgma.com). Despite implementing a three-year supply chain overhaul and dealing with challenges during the Asian economy's challenging period, Nike's industry remained stagnant(World Wide Web.Nike.com). While anticipating a recession in the U.S. market due to rapid growth, Nike planned ahead for a three-year supply chain overhaul (World Wide Web.Nike.com). Yet, this strategy did not yield immediate results and was further impacted by the negative effect of the Asian economic system(World Wide Web.Nike.com). Despite these setbacks, successful companies can handle such events and continue to grow. One major reason for Nike's stagnation was managers' lack of attention to these factors. Although there is growth in certain markets like Europe, Asia, Latin America, association football, and golf; overall progress for Nike has been stagnant.Nike's decline in 2001, evidenced by their struggles in the mid- and low-cost footwear market in the U.S., led to production and order matching issues. Now facing a decision, Nike must either accept these problems and gradually decline or excel in some areas while maintaining average performance in others to retain their current position. However, it would be most beneficial for Nike to find

solutions and resume growth despite operating within an unstable environment that exposes them to unforeseen risks (www.sgma.com) (www.msn.com). Throughout this period, Nike has shown adaptability through creativity and flexibility with few exceptions. The company takes steps to anticipate and manage risks associated with these changes. Nevertheless, Nike's growth is not as significant as anticipated due to internal weaknesses and external factors. Nonetheless, Nike remains the leading company in the global footwear market (Company Profiles For Students, 1999, p.944-949).