Order from us for quality, customized work in due time of your choice.
Nike Corporation: Case Study for 2022
Nike corporation has become the absolute leader in sporting goods since the brands creation. However, the number of Nike products users is limited by the number of citizens living on Earth, their demand, and their budget. Due to these factors, the company has both positive and negative prospects for 2022. The most influential challenges for this year will be the political issues with the Chinese government, supply chain disruptions, and the significant fall of market demand.
On the one hand, three major benefits would bring significant short- and long-term success in Nikes traditional markets. Firstly, Nike corporation committed to womens sports development and became an official representative of the woman national basketball association (WNBA) (Nike Corporation, 2022b). The association has significant potential in terms of sponsorship products sales due to the direct connection with mens NBA. Secondly, the corporation implemented new supply chain techniques, such as regional diversity, automation increase, and decreased sustainability pressure on their packaging (Nike Corporation, 2022). As a result, the company reduced the average price of product deliveries even though the average waiting time still significantly deviates from the normal one. Finally, the company gradually shifted many product lines to the luxury segment (Felsted, 2022). As a result, the company will be able to increase its average gross margin and hold net profit at the same level.
On the other hand, four of Nikes current problems might significantly worsen Nikes financial results. Firstly, as the largest market for the company, China begins to push Nike out of the market using propaganda about the support of responsible brands at the national level (Hong et al., 2022). Over the last year, sales of cross-country and sportswear in China have fallen by 24 percent and 33 percent, respectively. Despite the coronavirus restrictions, the market leader cannot just lose such a significant market share (Rowsell, 2022). At the same time, Nike has been actively promoting sports in China, especially basketball and baseball, where the company has the most influence in the market. However, in recent years, the Chinese people are still trying to abstract away from imported goods, which leads to significant import substitution of goods by fast-growing sportswear manufacturers such as Anta or Li-Ning. Thirdly, one of the main Nike distributors, Foot Locker, experienced the largest financial plunge in the distributors history (Larkin & Bhasin, 2022). The main factor in the revenue drop was a significant drop in sales from Nike, which cannot help but worry investors about the future growth in sales over the next few years. The competition in the different sports markets is getting stronger every year, and in this case, Nike is only making things worse by focusing on certain product lines. For example, Lululemon recently released cut-edge shoes for women, a major setback for Nike, traditionally positioning itself as a company with equal gender priorities (Bhasin, 2022). Last but not least, recent closures of strategically important trading ports in England and China due to coronavirus proliferation could call into question the companys ability to diversify distribution without the presence of major distribution points from manufacturing to the sale points (Bloomberg News, 2022) (Gallagher, 2022). This could trigger a serious drop in the companys operating revenue, which is too important a part of the companys net income.
To conclude, Nike is facing a very difficult year in terms of market demand, but the corporation will still be able to survive the hurdles thanks to the brand strength and the continuous development of the product lines. Moreover, the succession of sporting events and the gradual lifting of coronavirus restrictions will also be a positive factor in the companys short-term development in 2022. Despite the crisis in the political situation, Nike will be able to generate constant cash flows in the most developed and populated countries of the world.
References
Bhasin, K. (2022). Lululemon debuts first sneakers as it takes on Nike, Adidas. Web.
Bloomberg News. (2022). Shenzhen lockdown eases as Xi seeks to soften covid impact. Web.
Felsted, A. (2022). Nike should be the next luxury fashion house. Web.
Gallagher, J. (2022). Nikes supply-chain snags bring pain to sneakerhead shops. Web.
Hong, J., Saito, Y., & Leung, A. (2022). How nationalism in China has dethroned Nike, Adidas. Web.
Larkin, C., & Bhasin, K. (2022). Foot Locker plunges most in over 40 years as Nike pulls back. Web.
Nike Corporation. (2022). How Nike is transforming its supply chain to best serve consumers. Web.
Nike Corporation. (2022b). The Nike athlete think tank invests in the future of womens sport. Web.
Rowsell, J. (2022). How Nike transformed supply chains to survive Covid. Web.
Order from us for quality, customized work in due time of your choice.