Agency Relationship Issue between Nike Inc. and Converse
Added on 2023-06-04
5 Pages1193 Words479 Views
Running head: AGENCY THEORY
Topic 2: Agency Theory
Name of the Student
Name of the University
Author Note
Topic 2: Agency Theory
Name of the Student
Name of the University
Author Note
1AGENCY THEORY
Agency Relationship Issue between Nike Inc. and Converse
The agency relationship is a phenomenon when a company agrees to provide the legal
authority to another company to use their brand name in selling their products. In this
relationship, the former organization is termed as the principal and the latter is termed an agent.
Similarly, the principal company in this regard is the organization of Nike Inc., and the agent
here is the organization of Converse Inc. Both the organizations belong to the same retail
industry that deals with manufacturing and selling shoes.
The converse is an organization that started with the manufacturing and selling of rubber
shoes initially from Malden, Massachusetts in the United States of America. Then with time,
they began selling shoes of different kinds and now have mastered the retail industry with their
sneaker products, such that the sneaker range with their unique design is regarded as ‘converse'
shoes all over the world (Mitnick, 2015). It is one of the famous shoe brands and primarily
targets the younger generation with their comparatively low price. Converse had an ongoing
product of Converse Chuck Taylor All Stars shoes that they made famous within a price range of
281 Turkish liras. This was one of the most affordable ranges of the converses, however; the
organization decided to make their product sell through the brand Nike Inc. and establish a
business relationship.
Converse Inc. used to sell the Chuck Taylor range by itself. However, they agreed to
allow Nike Inc. to resale the product with revamped prices. This made Converse the agent and
Nike the principal, thus forming an agency relationship. The situation was such that the
organization of Nike Inc. reintroduced the Chuck series in the market with the refurbished
product name Chuck 2 series and relaunched it with a new price. The problem started with the
organization of Converse since the previous Chucks consignment was lower in, but the principal
Agency Relationship Issue between Nike Inc. and Converse
The agency relationship is a phenomenon when a company agrees to provide the legal
authority to another company to use their brand name in selling their products. In this
relationship, the former organization is termed as the principal and the latter is termed an agent.
Similarly, the principal company in this regard is the organization of Nike Inc., and the agent
here is the organization of Converse Inc. Both the organizations belong to the same retail
industry that deals with manufacturing and selling shoes.
The converse is an organization that started with the manufacturing and selling of rubber
shoes initially from Malden, Massachusetts in the United States of America. Then with time,
they began selling shoes of different kinds and now have mastered the retail industry with their
sneaker products, such that the sneaker range with their unique design is regarded as ‘converse'
shoes all over the world (Mitnick, 2015). It is one of the famous shoe brands and primarily
targets the younger generation with their comparatively low price. Converse had an ongoing
product of Converse Chuck Taylor All Stars shoes that they made famous within a price range of
281 Turkish liras. This was one of the most affordable ranges of the converses, however; the
organization decided to make their product sell through the brand Nike Inc. and establish a
business relationship.
Converse Inc. used to sell the Chuck Taylor range by itself. However, they agreed to
allow Nike Inc. to resale the product with revamped prices. This made Converse the agent and
Nike the principal, thus forming an agency relationship. The situation was such that the
organization of Nike Inc. reintroduced the Chuck series in the market with the refurbished
product name Chuck 2 series and relaunched it with a new price. The problem started with the
organization of Converse since the previous Chucks consignment was lower in, but the principal
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