Business Problem

Business Problem

Student’s Name

Institution’s Name

Date

Business Problem

Description of the Selected Company

The selected company is Nike Incorporation which is an American based sportswear company that was established in 1964 by Bill Bowerman as Blue Ribbon Sports. The company is involved in selling, designing, marketing, and developing athletic services, footwear accessories, apparel and equipment. The company’s first retail outlet was established in 1966, and incorporated in 1969 September. In 1972, the Nike shoe brand was launched and in 1978, the company’s name was changed to Nike, Inc, and two years later the company went global. Nike by early 21st century contained distributors and retailer outlets in over 170 nations. Its current company logo referred to as swoosh, which is curved check mark also gained popularity during the early 21st century. The company segments of operation include Japan, North America, Greater China, Western Europe, Eastern and Central Europe and Emerging Markets (Britannica.com, 2016).

The brands portfolio of the company includes the Converse, NIKE Brand, Jordan Brand, and Hurley. The firm sells its creations to retail accounts, via its internet websites and retail stores, and via a mix of independent licensees and distributors across the globe. The products of the company are produced by independent contractors. The company sells a variety of products that include NIKE brand products which include nine categories containing running, golf, Nike basketball, sportswear, the Jordan brand, action sports, football, women training and men training. It also sells a number of performance accessories and equipment under Nike brand name that include golf club, bags, protective equipment, socks, gloves, sport balls, bats, eyewear, digital devices, timepieces as well as other equipment structured for sports activities. The company major competitors include the Under Armour, Adidas, Puma, ASICS, V.F. Corporation, Li Ning, and Lululemon Athletica (Reuters.com, 2017).

Description of NIKE Problem

NIKE has been the leading sportswear company for quite a long time. Thus it attracted a large number of investors who always looked forward for increase in their annual dividend and increase in the share value. This went hand in hand with increase in the volume of sales, and thus resulting to increase in total revenues and the company’s profitability. However, the company has recently been demonstrating some challenges in its financial reports and market shares. Although the company has nine brands divisions, more than 61% of its 2016 quarter revenue originated from footwear, showing that the company is highly depending on one product to generate the greatest part of its income. The company is also experiencing the competition challenge mostly in its apparel business. While the footwear is growing exponentially, the apparel section is glowing slowly, slower than the same section of the competitors, despite being the largest section of the company (Henage, 2015).

The high rate of competitors’ growth reduces the company’s growth rate as part of its market share is taken progressively by its competitors. The slowing down of the company’s sales is threatening investors. The company is experiencing high inventory issue in the apparel section causing its gross margin to decline. The company’s basketball shoes are going down adding concern on the slowing growth in the company to the investors. This is resulting to a decline in the company’s market shares value in the market after the Wall Street Analyst degraded it following exponential growth in its competitors; Adidas and Under Armour in North America, the region where NIKE products have been dominating for a while. This puts the company into a challenging situation in the market, with a lot needing to be done to regain the investors trust and to reclaim the company’s position in the market (Schlossberg, 2016).

Research Variables

The research variable in this case include the level of inventory in all the NIKE categories especially Apparel, the change in the market share of each category in all the company’s operational markets, the company’s stock market trend, and the contribution of each category to the total revenue of the country. This will give a clear picture of what is happening to the company and be able to evaluate the level to which the identified problem would affect the company profitability and existence in the future.

Methods Used to Collect Data

To gather the most suitable data for this analysis the researcher will need to collect data from previous sales and future sales. The main aim in this case is monitoring the trend of sales and inventory in all the nine segments of the company. Thus one of the methods to collect the data will be records reviews to determine the previous trends. This is a quantitative form of data collection where one retrieve data from previous records created for other purposes. The researcher will also need to collect data from observation. This will involves close monitoring of the company’s sales, inventories, market share change, and the stock market valuation trend. This data should be recorded for a while to obtain the actual changes taking place.

Analyzing that the Efficiency of the Data Collection Methods

The validity refers to the accuracy of the data collection method based on the instrument used and the extent to which the accuracy last. In this case, the data will be gathered by reviewing previous records of the company’s sales and extracting current data regarding the measured variables for the identified purposes. The data will be retrieved from legible sources which are defined by the company and other databases interested in monitoring the financial performance of the company. The legibility of these sites or companies guarantees the validity of the data. Reliability measures the data consistency. To ensure that the collected data is reliable, the instrument used must demonstrate a high level of consistency while collecting the data. There are various sites that display the kind of information needed in this case. The consistency of the selected data collection method can be measured based on the consistency of the stored data from these sites. A high level of reliability will be demonstrated by high level of consistency. The validity and reliability of the anticipated data can be assured due to the fact that the data would be recorded for serious purposes which include demonstrating the company’s performance to its investors. Invalid data can therefore be highly unlikely and when displayed, they can be contested by the company since thy can ruin the company’s image or by the competitors since they can create unhealthy competition in the market. Thus, the data retrieved from legible sources including the company’s annual reports are highly probable to be reliable and valid, since in most cases thorough audit is done before that information is displayed to the public.

References

Britannica.com. (2016). Nike, Inc. Retrieved from < https://www.britannica.com/topic/Nike-Inc >

Henage, M. (2015). 3 reasons Nike may have run too far too fast. Retrieved from < https://seekingalpha.com/article/3343855-3-reasons-nike-may-have-run-too-far-too-fast >

Reuters.com. (2017). Nike Inc (NKE.N). Retrieved from < http://www.reuters.com/finance/stocks/companyProfile?symbol=NKE.N>

Schlossberg, M. (2016). Nike is facing unprecedented headwinds. Retrieved from < http://www.businessinsider.com/nike-is-facing-problems-2016-6?IR=T >