Nike: Corporate Financial Objectives and Strategies

FINANCIAL MANAGEMENT

Nike
Nike has reigned over the world of sports for more than a generation but its firmness on the
crown has started to decrease. Firstly, it has failed to make the topmost selling sneaker in the
country in more than a decade as Adidas claimed such spot. The company filled out the rest
of the top 10 but it was a small consolation for an organization like Nike accustomed to
winning. Secondly, ridding of excess inventory has also degraded the sales growth of Nike.
In addition, sales of basketball shoes have also decreased by one percent resulting in a major
challenge for the company (Nike, 2016).
Nike intends to enhance its revenues on a level that can allow it to transform such revenues
from a higher single digit to a lower double figure. This signifies a target of seven to thirteen
percent enhancement in the company’s revenues (Peirson et. al, 2015). Secondly, the
company intends to manage and direct its international business as and when it continues to
develop. In simple words, Nike purposes to accomplish mid-teens growth in its earnings per
share. However, this is not feasible according to various economic analysts (Parrino et. al,
2012). Thirdly, the company purposes to achieve profitable, sustainable, and long-term
growth through efficient management of its widespread portfolio of business. This corporate
financial objective based on the company’s perspective can be attained through effective
management of inventories and fewer but better products that can address the requirements of
a huge customer base (Ferguson, 2017). The next corporate financial objective of Nike is to
obtain a free flow of cash that must progress faster than its net income as a whole. In other
words, the company intends to possess smooth flow of resources so that it can easily monitor
its overall working capital requirements, even if its net income remains lower in comparison
to previous years. The last corporate financial objective of the company is to attain high-
twenties to the lower-thirties percentage rate of return on the capital that is invested by it
(Gowthrope, 2011). The reason can be attributed to the fact that it can allow it intensify the
overall efforts for the purpose of developing such products required by all segments of
customers.
For the purpose of attaining higher diversification of resources in order to create a huge base
of customers, the company has undertaken a location strategy so that it can optimize costs
and effectiveness through proximity to suppliers, employees, and the target market. Nike’s
operations managers implement a corporate approach to decide locations of productions
facility based on nearness and costs to most relevant markets (Nike, 2016). Another possible
impact for the purpose of attaining a higher return on invested capital, a maintenance strategy
has been undertaken by the company that allows it consider the adequacy of resources.
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