NIKE - Financial statement ratio analysis

Running head: ANALYSIS 1

ANALYSIS 2

Analysis

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Nike Analysis

Currently, Nike is a public limited company, and it was established in 1964 as Blue Ribbon and later changed into Nike in 1978. The external environmental factors affecting Nike include political factors which bear a significant backend of the organization. Some of the factors affecting Nike include the company favored by low-interest rates and well-structured international tax agreements in the United States, making it easy for them to conquer large markets. However, as an organization that manufactures and sells physical goods, it will remain subject to tax fluctuation in the forex market and political conflicts making associated custom procedures challenging or hinder exports and imports. The second external factor affecting Nike is economics, where Nike Revenues are dependent on low labor costs, especially in the eastern countries. However, changes to such a good deal will mean high prices for Nike products across the globe. Another economic aspect is that Nike has enough finances to chase after small markets, offering the company a competitive advantage.

Nike is also influenced by social factors such as increment of health consciousness will mean that more and more individuals are shifting to better lifestyles; thus, they will buy more sports apparel which would boost Nike's sales volume. The fourth external factor is technological factors, where social media allows things to blow up faster than ever. The company is using social media as a way of building its brand. Also, technology enables Nike to get an opportunity to use valuable information founded on metrics; thus, they can optimize production and targeting to maximize revenue (Pandey, 2017). The fifth factor is the legal aspect which demands Nike to occasionally meet their legal repercussions for exercising shady market practices such as false discounts, thus making customers unhappy.

Additionally, Nike has a habit of dodging taxes which ends up damaging their reputation. The last external factor is environmental aspects, where Nike's large production is undoubtedly contributing to environmental pollution by releasing a lot of aerial pollutants and water bodies. However, the company is promising to adjust its current practices to become eco-friendlier.

Recommendations

Since Nike is a large-scale company, it can manage its future production by intensifying its customer base's range of products. The company commands a broad base of the footwear market, and the competitors' decisions do not influence its prices. Additionally, the company adopts a monopolistic market structure that provides an opportunity for the company to intensify its revenue margins as indicated by predictions and historical data. With the wide range of suppliers across various nations, Nike will have an opportunity to diversify to offer additional product lines that it can concentrate on, including apparel, footwear, and other services. With the arrival of modern manufacturing techniques, the innovation process has decreased its Cost of Goods Sold overall. Therefore the firm has enough time and room to accommodate more product production to boost their sales. Additionally, Nike should take advantage of the monopolistic market structure to expand their product line for steady sustainability in the future. They are less likely to be affected by the ongoing market conditions, and they will have the upper hand to control market prices for their markets.

Additionally, the rapidly evolving technology will also provide Nike with an opportunity to purchase patents that the company can use to promote its growth and sustain the overall market share. Further, developing strategic marketing plans, including forming partnerships with athletic event organizers, brand athletes, and sponsor football teams, will provide a broad opportunity to propel the company to achieve its success (Wang, & Shen, 2017). although the company has been forming partnerships with athletes in the past, the recommendation is that they should carry on with this tactic into the future because the sports industry is expected to grow at a rate of 5%, which means that the demand for Nike products will increase. Additionally, with changing lifestyles, the forecasts show that many people will be ordering more sports apparel in the future. Therefore the company should focus on meeting the demand in the future. They can achieve this by providing customers with after-sales services or extra accompaniments available at every Nike store.

Conclusion

As a concluding remark, it is clear that Nike is affected by external environmental factors, which play a great role in determining their decisions as they have to comply with the environment to remain competitive in the long run. The paper recommends that Nike should improvise its product expansion strategy thus will be in a position to remain sustainable in the highly competitive sports and fashion industry.

References

Pandey, B. C. (2017). Nike Inc-Complete Analysis: SWOT, PESTLE and Marketing strategy. BookRix.

Wang, L., & Shen, B. (2017). A product line analysis for eco-designed fashion products: Evidence from an outdoor sportswear brand. Sustainability, 9(7), 1136.