Nike Research Paper

Florida Agricultural & Mechanical University

Team NIKE Incorporation

GEB 1440

Professor L. White

 

Genesis Lopez

Rayvon Casamayor

Kardel Hamilton

Alfred Henderson

Demetrius Bradwell

 

 

 

 

    Philip H. Knight, a Stanford University student, founded Nike in 1972. In ancient Greek mythology, “Nike” referred to the winged goddess of victory, symbolizing ‘honored conquest’ on the battlefield. Their main purpose of creating such mythical products was to help world’s greatest athletes find new levels of achievement, and to also create a new realm of athleticism for average individuals. Nike assures that each customer’s wish, needs, cravings, demands, and desires are taken care of. This guarantees that the customer’s wants are communicated by their willingness to buy their products. Nike’s marketing strategy is one of the main sources of their success. Their idea behind this incredible strategy is to get the best athletes in the world to endorse their product. People all around the world want Michael Jordan’s shoes, the want shoes worn by Tiger Woods, Lebron James, etc… Their store layout, segmentation, and mythical ideas promise customer purchases. The design of the Nike Store exploits usual in-store techniques to increase the chance of customer purchases. Each sport is given its own section, which is organized by product-type and color. It is made to show that there are tiny stores in one larger store. This is also accomplished by the wall and floor color schemes, which also changed depending on the sport shown. Segmentation serves 3 main purposes such as: belief of having different clothing for each sport, creating space that appeals to the imagination, and to create a maze-like atmosphere. These strategies are all intertwined with microeconomics, and the way Nike’s products affect each individual customer’s choices. Nike appears as a customer’s number one choice, which enables them to choose Nike over any other brand.

            A microeconomic law states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa. This is the Law of Demand. Every company has to go through some sort of inverse relationship just as this. The equilibrium price and quantity at Nike Inc is very important to their sales. The equilibrium price is at 10 whereas the quantity is at 15. There are also chances where the prices are constant and the other variable of the prices vary. When their supply increases with the increase in price, the supply curve shifts to the right. Then prices will be enforced to decrease due to pressure that is on the quantity supplied without a fair increase in demand. Then again, if the demanded quantity increases without a decrease in price, then the prices will be forced to rise.

             Another microeconomic law states that all other factors being equal, as the price of a good or service increases, the quantity of goods or services offered by supplier’s increases and vice versa. This is the Law of Supply, and it means that when the prices increase, the willingness of the supplier to supply increases also. For example, Nike definitely uses the law of supply and demand in marketing their Air Jordan’s. Resellers boost the sale, which in turn boosts the demand, which in turn boosts the supply. Michael Jordon only produces a certain amount of Air Jordan’s a year, and this amount is very scarce. Which means that the prices for them increase.

            The change in demand and or supply becomes microeconomic relationship market demand, which is the level of individual demands in the market for a product: the level of desire for all people in the market for the product. Demands from the United States, which have improved over a course in time, were of products such as apparel and running gear. United States is the largest country that holds the largest percentage in purchasing Nike apparel. Some products that can be expected by demand are Nike apparel for both men and women, and Pro Combat football gear. Because Nike has had exposure at Olympics and such sports regionally it has opened opportunities for everyone in regional and global markets. Since Nike has been shown and advertised, it has made an increase in market demands for fashionable athletic footwear and apparel. To make it possible the market has to formulate a plan that will increase their profits by taking risks and going off the market demands.

            Nike can be implied with microeconomics market equilibrium because this is the period where the market is at a balance when supply equals demands, at an agreeable price upon buyers and sellers. Because Nike is such a high priced brand, it is most likely to undergo a supply demand. Nike as encountered a problem whereas their supplies where demanded by such stores Footlocker, whom awaits deliveries of new released shoes, gear and apparel. Though Nike has been at a market equilibrium that counts for them providing supplies to the market and the demands needs have been met.

            Having a celebrity or most important to Nike, a well-known athlete to wear their apparel and gear show the industry they mean business. Because they began on a track and field bases, Nike has shifted to basketball, football, golfing, and so many more sports but have done it well. Which brings us to microeconomics relationship Utility. This relationship shows how they protect the Nike brand. It is defined as the amount of satisfaction received from consuming a product or service. If the product has been around since 1972 and with technology advancement, it speaks for itself that they have the customer satisfaction that they need. Track runners who have been using Nike products and shoes are in for new shoes that are to be more lightweight in allowing the runners to feel bare feet, they are called lightweight Lunar Glides. The demands for new and improved products are speaking alone. When an athlete is endorsed or does a commercial advertising the Nike Inc brand, they are portraying the satisfaction they get is from wearing or using that Nike product.

            Essential relationship Scarcity pinpoints the fact that it is limited resources. Which can be look in a way that there is limited resources in the face of unlimited wants. Not saying that Nike has limited resources but customers who want the best quality sometimes can’t afford the price. It is crucial at points in time when there are wants that can’t be met.

            Some factors that might  affect the GDP of Nike are the activities over a time period.Determining the relative value of an amount of money in one year compared to another is more complicated than it seems at first. There is no single “correct” measure, and economic historians use one or more different indicators depending on the context of the question.Most indices are measured as the price of a “bundle” of goods and services that a representative group buys or earns. Over time the bundle changes; for example, carriages are replaced with automobiles, and new goods and services are created such as apparel and sneakers.

            The Gross domestic product  is the gross domestic product of final goods and services  produced with factors of production in a given period within a country’s border. GNPis the market value of final goods and services produced in a given time period  by a country’s citizens. whether  or not the are produced inside the country. Gross domestic product =consumption .

            It is generally believed that micro level organizational performance in general and business level performance in particular is difficult to improve in business in view of the Nike’s macroeconomic performance. While external factors do influence organizational and business performance, it is the cumulative impact of micro-level organizational and business performance that also feeds into the macro level performance. Due to this intertwined relationship, all responsibility for dismal micro level performance cannot be assigned to the macro economy. For, the macro economy too will be as weak or as strong as its micro constituents are. So, while the macro economy does require sound management, the micro constituents too need to be managed according to the modern principles of management that include anticipation and a response to external factors in general and economic factors in particular as an essential component of organizational management.

                                                            Bibliography

 http://www.mightystudents.com/essay/apply.theories.demand.87495

http://expertvoices.nsdl.org/cornell-info204/2008/04/22/nikes-marketing-strategy/

http://www.seniorfitness.com/tutorials/Nike_Air_Jordans_631820_0_article.html

http://lindaweeks.com/brand_marktg/WK%209%20Case%20Study%20Assign.pdf

Holmes, Stanley, and Aaron Bernstein. “The New Nike.” BusinessWeek – Business News, Stock Market & Financial Advice. Web. <http://www.businessweek.com/magazine/content/04_38/b3900001_mz001.htm&gt;.

Cheng, Andria. “Greater Customer Demand Sends Nike to New High – MarketWatch.” MarketWatch – Stock Market Quotes, Business News, Financial News. Web. <http://www.marketwatch.com/story/nike-jumps-after-results-promise-continued-demand-2010-03-18&gt;.

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Homework-questions on pg 2

1) Future Value – $1360

2)Present Value – $53,500

3) To accumulate $20k it will take 10 years. To accumulate $30K it will take 16 years.

1) Present Value – $60, 228

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Present and Future Value Problems

Pg 17

1. Future Value – $2928

2. Future Value- $1405

3. Future Value – $1050

4. Future Value- 25 years  

Pg 21

1. Present Value -$ 6354.4

2. Future Value-

3. Future Value -$18292

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Being apart of Team Nike, our group members came up with several ideas as to what Nike can offer to the world. Such as a personal hygiene item like Nike Deodorant. There are a lot of brands that tell the public “when playing sports it’s best to use XYZ brand.” Now that we have the idea of putting a Nike brand product on the line, we believe that it will sell indefinitely. Not only because it is apart of the Nike brand but because it can be promoted to all athletes by all athletes. Another idea that we came up with was the fact that Nike can have an endorsement with a sports drink or bring out its own. This could also benefit everyone not only athletes. There are people who love to drink gatorade just because of its taste, and then there are those who do drink it because of being an athlete. Our group can definitely see this happening somewhere down 10 years from now with Nike. In the direction of a sports drink we thought of the idea that Nike can advertise a sports Lollipop with Vitamins and Electrolytes. In a different direction we were thinking that maybe Nike can be apart of a workout video, soundtrack of sports themes and music and have a professional trainer videoed.
In Essential Relationship of Accounting #10, it states the cash method of accounting recognizes revenues when cash is received, whereas, the accrual method recognizes revenue when the sale occurs. Nike as our company uses the accrual method in its workforce. We wouldn’t use this method because of the way it records its data. Its data is recorded when the sale occurs within the company. Moreover, they could just complete the record by inputting the information when the transaction is received.
A net income is a company’s total earnings. To calculate the net income you subtract the total amount of revenue from the amount of expenses.
Nike net income in 2009 was $1.88 billion. Since Nike sponsored the Beijing 2008 Olympics and endorsed 21 of the 26 teams, 50% increased in sales during Q1 2009. The net income for the quarter increased 53% to $522 million. In 2010, the net income for the financial year rose 8% to $1.9 billion.
The balance sheet is depiction of the accounting equation at a single point in time. The balance sheet also shows the relationship (Assets = Liability + owners equity ). The Nike balance sheet entails figures grossed in the company for the year of 2008-2010.Nike has its own physical year ,so it’s on a different time line than we are. Some of the key things mentioned in the balance sheet were how much current  cash there was , Money they owed to other vendors and stock holder-equity and how it pertained to the company. The balance sheet is used to show the current positioning of a company .
The depreciation reflects the loss in usefulness of a firms assets over time. The depreciation that occurred in Nike was listed as a form of stock that had dropped ,when it had been compared to the previous years. The depreciation of nike was listed multiple times as the balance depreciation method. The method consisted of  showing the depreciation in stock and product.

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Nike

Nike was founded by Philip H. Knight, a student out of Stanford University. In the United States alone Nike products are sold in about 20,000 retail accounts and in more than 150 countries. Nike sells a variety of items, such as, shoes, socks, clothes under garment, head bands, and all types of sporting equipment Majority of Nike items are manufactured by independent contractors, mainly across seas. The CEO of Nike products is Mark Parker.

Overlooking Nike’s income statement, their annual report as of May 31 from the previous two years, shows how they have increased from $18,627,000 in 2008 to $19,176,100 in 2009 but have decreased in an amount of $162,100 in 2010 total revenue.  In Nike’s Annual income statement, they have increased tremendously since May 31, 2008 in selling general and administrative.  Nike is a company that has been around since 1958 and over the years the company itself has made profits by track runners and basketball players wearing the shoes. Years later Michael Jordan joined the company and the profit quickly increased.  Looking back on the income statement, May 2010, Nike has had an income of $1,906,700, which in 2008 it was lower with a net income of $1,883,400 and in 2009 it was even lower than in 2008.

Nike has been and is still on the rise. Annually their sales increase 7-13 percent, profitting $4.7 billion. The total assets of Nike values at $13.2 billion. Why is Nike so successful? Nike does not just have great marketing strategies. It has over 500 factories spreaded throughtout America, North Asia, andSouth Asia. Each factory averages out to be over 30,000 square feet shopping area. Not to mention 8 other subsidaiary companies to assist in their fortunes. Nike’s equtiy alone is worth $8.69 billion. With gain, eventually, comes loss in some shape, form or fashion. Out of all the money earned, Nike spends $4.52 billion in expenses quarterly.

While analyzing Nike’s balance sheet ,the initial sum increases every year. The balance sheet is used as a tabular statement of both sides of a set of accounts inwhich the debit and credit balances add up as equal. In Nike’s case the credits and debits balance out perfectly.For the year of 2010  the balance sheet balanced out at 9,099,100. The balance sheet is the source of all financial  obligations with in a company.  The balance sheet is the history of all transaction , you can look at a balance sheet and get clarification on the very first sell of the company.

 

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Personality Assessment

This personality assessment seems to be completely accurate.  I am neat, patient, open-minded, and agreeable. I ponder the thought of why this test is so precise and the processes of how it conjures its conclusions. Just with 24 questions this test summed up my whole personality quicker than any other person could have.

With the results of this test my eyes were open to many strength and weakness that I thought I had but was not sure. One thing that the test said was that I am very capable of being neat, organized, and tactful. In the future this will help me excel in the work force because many employers are looking for organization skills along with the college degree.

 

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