LCBB5003 Management Economics: An Analysis of Nike's Market Structure

This report provides a comprehensive analysis of Nike's market structure within the framework of management economics. It begins by describing Nike as a multinational corporation involved in the design, development, manufacturing, and marketing of athletic footwear, apparel, and accessories. The report then analyses the market in which Nike operates, considering different market structures such as perfect competition, monopoly, monopolistic competition, and oligopoly. It discusses Nike's historical market structure, particularly its early operations in a perfect competition market characterized by many buyers and sellers, homogenous products, and free entry and exit. The report further explores how Nike has evolved and adapted to changing market conditions and competition over time. Desklib offers a wide range of solved assignments and past papers for students.

MANAGEMENT
ECONOMICS
(Assessment-2)

TABLE OF CONTENT
INTRODUCTION...............................................................................................................................3
MAIN BODY.......................................................................................................................................3
Describe the company.......................................................................................................................3
Analyse the market............................................................................................................................3
Different market structure..................................................................................................................5
Did the company operate in a different market structure?.................................................................8
CONCLUSION..................................................................................................................................10
REFERENCES..................................................................................................................................11

INTRODUCTION
Economics is the study of that branch which considered the main aspect of the market
by which they ensue the higher profits and revenue in the market. Demand and supply are the
two wheels of the market which operates the whole market and ensure production,
consumption, investment and transfer of wealth (Guerrieri and et. al., 2020). This also helps
the economy to boast the overall growth of the nation by fulfilling the needs and wants of the
market. Nike is the chosen organisation for this report, it is the American multinational
company which is dealing in design, development, manufacturing, and worldwide marketing
and the sales of the footwear, apparel, equipment, accessories and services. The headquarter
of the company near Beaverton, Oregon in the Portland Metropolitan area. This report will
cover the analysis of the market and also analyse that company is operating in which market
structure and since its inception, company were operating in which market structure. Lastly,
It will suggest that either company remain in the same market structure or have to change
their market structure and government interventions would be more or less for the society.
MAIN BODY
Describe the company
Nike is the American multinational company which is operating their business across
the globe. The company is founded in January 25, 1964. The company takes its name from
the Greek Gooses victory. They are advertising their all the products under their own brand
so that they can be the market leader in the different locations. The company is dealing in
Athletic footwear and apparel recreational products. It is the leading company which is
engage in manufacturing sports and fashion shoes so that they can meet the integrated
demand of the market and generate higher profits.
Shoes is the chosen product for this report as the brand is known for their best shoes
so it will help in understanding the demand and supply in the market and also measuring the
elasticity of demand for the shoes so that they can do further production accordingly in the
near future. This also helps in brand recognition in the market so that company can do the
required modification.
Analyse the market
Market is the place where large number of buyer and seller meet with the sole aim of
selling and purchasing goods and services so that they can generate higher profits and
revenue. It is the main consideration of the market by which they can able to have the higher

profits and revenue. A place where buyer and seller meet with the common aim of sustaining
in the market for long period of time so that they can be the market leader. Nike is the leading
shoes manufacturing company in the world, although with sports shoes and apparel, the
market would be broad and most part Nike basically target the consumer between the age
group of 15-40 and they are catering to both men and women in the market so that they can
establish good brand image in the market. They are targeting the people composed of men,
women and young adults who are interested in sports and fashion. The gender divide is lea s
they are having the 28.4 % of female in the UK and rate Nike as their favourite shoes brand
in the world. They are contributing the good brand image.
 Perfect competition market: Perfect competition occurs when all companies sell
identical products, market share does not influence price, companies are able to enter
or exit without barrier, buyers have “perfect” or full information, and companies
cannot determine prices. In this products are homogenous and there are many buyers
and sellers. Due to large number of buyer and seller, there is no barrier for the entry
and the exit of the firm as new business can come in the market and reach to the
higher level of profits so that they can be the market leader. The buyer and seller is
having compete knowledge of the market as they are the one who give their best in
attaining the higher profits to the company and seller is well aware about the current
trends of the market by which they can fulfil the needs and wants of the customers in
the target market and establish god brand image in the market. There is no barriers for
the factor of production as employees can move to any organisation where they are
getting good salary or compensations. With the consideration of the buyer, they are
getting more smart as they are having good knowledge of the market about the
upcoming product and brand so that they can be the market leader cross the globe.
 Monopoly market: it is a type of market framework that include a single seller who
is selling a Unique product in the market. As the product sold does not face any
competition in the market so the sole seller has the power to set the price of his goods
with no objection as no other substitute is available to his product in the
market. There are some factors that restrict the entry of other sellers and support to
maintain the monopoly of the goods in the market. These factors include : Ownership
of resources, government license, copyright and patent and high starting cost that
overall make it possible to remain as a single seller of the goods. However, Monopoly
is not supported in the Free market nation. As it seems to encourage unfair pricing and

decline state of quality due to unavailability of any alternative choice to consumers.
Basically, a Monopoly refers to the Single company that has control over an industry.
It can be emerged naturally or may be imposed by government for particular reasons.
However there could be other ways in which a company can maintain a monopoly by
adopting some unfair practices that will restrict competitons and not allow consumers
to be provided by any choice.
 Monopolistic market: It is a type of market in which the company is operating their
business and having large number of buyer and seller that are offering differentiated
products so that they can establish good brand image in the market. These products
are differentiated from one another as they are having higher profits so that they can
be the market leader. This is no barrier for the entry and the exit for the new start-up
company as they can effectively launch the new product in the market by which they
can establish good brand image in the market. They are having huge competition and
it is a mixture of perfect competition and monopoly as they are offering unique
products at higher prices due to superior quality of products and There small number
of large firms which are offering differentiated product and having good brand image
in the market. Nike is operating their business in this market structure as there are
large number of buyer offering differentiated products.
 Oligopoly market: It is the type of market which is being dominated by a small
number of suppliers. There is less competition in the market as there are few big seller
in the market which are offering premium goods. There is barrier in the entry and the
exit of the firm while entry in the oligopoly market and also having huge
interdependence on the other firms. These firms often promote their brand by using
limited medium of marketing as they already having good brand image in the market.
Different market structure
In the initial stage, he company was founded on January 25, 1964 as Blue Ribbon
Sports, by Bill Bowerman and Phil Knight. They become Nike, Inc in 1971. The company
has taken their name from the Greek Goddess of victory. The company use to market their
product under their own brand. They have also owned Bauer Hockey from 1995 to 2008 and
in addition to manufacturing of shoes and equipment, the company operates retain store under
the Niketown name. With the course of time the company is facing huge competition as there
are big firms who were offering premium products or master piece by which they have
grabbed the attention of the market. They have used the advance and innovation techniques

by which they were sustaining in the market for long period of time. Top leading brand in the
market makes difficult for the new firms in their entry and exit of the firms as they also
maintained good brand image in the target market. Due to huge competition, Nike were
operating their business in perfect competition market since its inceptions and their
characteristics are given below:
 Many buyers & sellers at the marketplace – This is containing as the most
prominent characteristics of perfect competition market structure. Structure is very
flexible and there is a involvement of large number of buyers and sellers at the
whole marketplace. At the initial level Nike used this market structure and again
more profitability. The prime motive of this market structure is to focus on buyers
requirement so that company can effectively improve their wine and selling
activities and fulfil the expectations of their target buyers. In this structure, the
participation of buyer and seller is more which can improve the effectiveness of the
organisation & this is fracture is also considered as the convenient structure which
company can adopt to gain more profit advantages. Nike also utilise to this
structure in the beginning and improved their buying and selling process
appropriately & gained high level of market growth rate globally.
 Every organisation makes same goods - in this market structure, companies make
similar products & sale in the market which can improve the competition level. At
the beginning, Nike consider this market structure and focused on their products &
also prepared growth strategy so that Nike and take more competitive advantages as
compared to their competitors.
 Buyers & sellers can access of perfect details about the price – This
characteristics determined that every wire and sellers who are engage with the
company can contain specific and perfect information and detail about the cost of
the product. In this market structure, Nike demonstrated full transparency with their
prices so that their wire and sellers fully aware about the products details and it’s
price.
 No transaction costs - In perfect competition market structure, there is no
transition cost exist and this market maintain full transparency in their buying and
selling activities so that companies can satisfy their customers. Nike also charge no
transitional cost so that company and achieve the trust level of their customers
which help do to improve their sustainability rate at the entire marketplace.

 No barriers of entry & exit – in this market structure there is no barrier of entry
and exist and this market structure is containing free entry & exit system so that
lots of buyers & sellers can easily take their purchasing decisions. Company should
be maintain free to entry & leave the firms . If there is a chance for the revenue and
profit the company will enter the business & if there is a probability of the loss then
company have a choice to exit the business. Nike utilise this structure and proceed
their business activities without any barrier.
 Homogeneity of the Product – In contacts of this market structure, each and every
companies should produce and also sale a homogeneous good so that no buyers
contain any kind of preference for the goods of any individual seller over another.
If product will be homogeneous then the cost will also uniform everywhere. Nike
also considered this characteristic & maintained the requirement of homogeneity
products so that company in order to improve their business operations.
 Consider perfect knowledge about the market - with the help of these
characteristics, compete effectively obtain and consider the perfect knowledge
about the whole market place. This market structure provides specific applicability
so that buyers and sellers contain perfect knowledge about the market and take their
purchase decision. The main purpose to utilised this market structure is to obtained
specific and perfect information about the market so that Nike managed all their
business operational activities. This market structure perfectly maintain appropriate
market situations whether it is stable or unstable & determined the effectiveness of
the market.
 Perfect mobility of specific factors of production & products - This market
structure contain the perfect mobility of the appropriate factors related to the
production and also products. Perfect competition structure is totally dedicated
towards the buying and selling process and also provides open market to the buyers
& sellers. This market structure should maintain perfect mobility related to the
goods & appropriate factors which lie between the industries. Product should be
free to move in those places where all the products can fetch the highest cost. Nike
also maintained all the considerations of this characteristics and contained specific
perfect mobility in their factors related to the production and also their goods.
 Absence of Price Control - This characteristic demonstrate the absence of price
control at the entire marketplace. In context of this market structure, company I
have no control on their price & there is a absence of rice control. At the initial

level, Nike also contained no control on their price. In this structure is there should
be a fully and complete openness in context of buying and selling of the products.
Prices of the products are liable to modify freely in the responses to maintained the
demand & supply conditions.
Did the company operate in a different market structure?
In the current time, the company is operating their business in monopolistic market
structure due to small number of large firms are sustaining in the market. Nike is having
leading recognition across the world and they are the market leader in shoes manufacturing
and designing. There are having large group f customer which is contributing to the growth of
the business venture in the world. so as per the suggestion, if the company wants to enter in
the perfect competition market, they need to compete with the small firms and they tend to
lower down the overall market value due to large number of buyer available in the market.
They need to offer some unique product which can meet the demand of the large market only
then the company can sustain in the market for long period of time. If the company wants to
enter in the monopoly market, then they need to conduct effective market research so that
they can effectively sustain in the market. So it is suggested to the company to stay in the
monopolistic market as they are having leading brand image in the market by which they are
ensuring the good results which contribute in higher profit and growth in the market.
Government interventions are the rules and laws which is being imposed by the
government so that all the industries can operate their business in lawful manner. This also
helps in eliminating the inequalities from the workplace and influence to give equal
employment opportunities at he given job. This also helps in making the good brand image in
the market so that they can be the market leader. But the government intervention is up to
that extent so that companies do not charge huge amount of price for their goods and services
due to high tax rate on their goods and services. This also helps the society to have better
product with affordable prices with all the fair means policy by the government.
When taking the consideration of the society, there must be less interventions of the
government as it helps in having less taxation on goods and services. It is the main
consideration of the market to have low government interventions so that they can effectively
sell their product in the large market.

CONCLUSION
It is concluded from the above report that demand and supply are the two wheels of
the market which ensure the higher profits by meeting the needs and wants of the market.
This also helps the nation to have better GDP in the market. There is different type of market
structure which is being used by the various industries such as perfect completion, monopoly
market, monopolistic market and oligopoly market so that they can run their business in an
appropriate manner. The company is operating their business in monopolistic market as they
are offering differentiated products and having premium quality of products. In the history,
the company is operating their business in perfect competition market as there are large
number of buyer and seller. Lastly, It is suggested to the company to stay in the same market
structure in which they are operating and there must be less interventions of the government
so companies do not charge huge amount for their goods and services.

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