Business Analysis of Nike Inc.: Agency, Market, and Corporate Strategy

This report provides a comprehensive analysis of Nike Inc., covering three key areas: agency theory, market structure, and business strategy. The report begins with a brief description of Nike Inc., its founding, market capitalization, and focus on sports footwear and other sports products. The analysis then delves into agency theory, clarifying the relationship between Nike and its subsidiary, Converse, including the impact of acquiring Converse. The market structure section employs SET analysis and game theory to examine the retail market in which Nike competes, including market trends, the structure of the market, and the impact of store closings and openings. Finally, the business and corporate strategy section evaluates Nike using Porter’s Five Forces, assessing competitive rivalry, bargaining power of consumers and suppliers, and threats from substitutes and new entrants. The report concludes with a discussion of the products of Nike which are enlisted in the category of Stars and Cash Cows.

Description of Firm:
Nike is a famous company which has world
wide reorganization for making footwares.
Some of the facts regarding this firm are;
•The company had been founded in the year
1964 on January 25, by Phil Knight and Bill
Bowerman.
• Nike's shares traded at over 72 USD per
share, and its market capitalization was valued
at over 114.5 billion USD in October 2018
(Sahu,2016).
• The company has focused on the
development, production, manufacturing and
export of sports shoes, but had later shifter
focus to the other sports products based on

Agency Theory of Nike:
•Clarifies the relationship between the parent
organization and subsidiary.
•In this case the parent organization is Nike
and subsidiary is Converse.
•Chuck Taylor range was the famous product
of Nike.
•The Nike acquire the brand converse and the
label Chuck Taylor

Cont.
•The consequence of acquiring the
Chuck Taylor and the Converse has the
positive effect on the business of Nike.
•The product gained popularity in the
Turkish market.
•The Nike was planning to launch
another version of Chuck Taylor .
•However, the popularity of the product
made the Nike to raise the price of the
product.

Market structure (SET analysis) and Game
theory:
•Outline of the main industry in which the firm
competes
The market in which Nike Inc. has been competing
with their unique products is the retail market.
•The retail industry is a sector of the economy that is
comprised of individuals and companies engaged in
the selling of finished products to user consumers
(Mahdi et al.,2015).
• Retail market generally deals with the process of
selling the consumer goods that are finished in
exchange of money through supply chains
(Burgelman,2017).
• The products that are dealt here are the companies
that deal with the products like grocery, convenient,

Cont.
Structure of the market in which the firm competes:
Two-third of the estimated gross domestic product of the business
market belongs to the retail consumption.
Therefore, store closings and openings are used an indicator of how
well the economy of the world has been doing overall (McPherson &
Alsuwaida, 2015). In 2016, a significant number of store closings and
bankruptcies are an indication of both shifting consumer preferences,
and an unsteady economy.
The entire cost of the retail market worldwide incorporates a total
budget of 24 trillion worth of USD.
The United States of America has been the highest retail market in
the world. Amongst the 10 largest retail organizations in the world, 5
belong from the United States of America, while the other five belong
from Europe.
SET assumptions of the market:
The changing dynamics in the retail industry changes
every year. Based on that, it can be said that the market
sale is supposed to grow by 2 per cent and the market
share is going to decrease by 2 per cent, due to the

Business Strategy and Corporate
Strategy:
•The business strategy specifically defines the
business decisions those are formulated for the
business organization for achieving the goals
and objectives of the firm.
•corporate strategy helps to indentify the
answers of the few business related questions
such as the type of the business organization is
doing, relationship between the parent company
and subsidiaries and the analysis of the
advantage that can help the organization to
compete (Rothaermel,2015).
•In order to evaluate the current market situation
of Nike, the application of the Porter’s Five

Cont.
•Competitive Rivalry for Nike is high.
•Bargaining power of the consumer for Nike is
medium.
•Bargaining Power of the supplier is weak for
Nike.
•Threat from substitute for Nike is medium.
•Threat from new Entrants is weak for Nike.
The products of Nike which are enlisted in the
category of Stars and Cash Cows are definitely
needed to be kept (Jackson et al.,2017). The
product enlisted in the cash cow is performing
well in the low market growth. The products
enlisted in the Stars are performing well and

References
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McPherson, J., & Alsuwaida, A. (2015). Applying Five Forces in the
Competitive Advantage of 3D Printing Technology in the Footwear Industry.
Jackson, E. P., Ciulla, S., Ehlen, F., Ogunlana, A., & Dixon, J. C. (2017).
Performance Sports Group: To Invest or Not to Invest. Case Studies in Sport
Management, 6(1), 76-85.
Mahdi, H. A. A., Abbas, M., Mazar, T. I., & George, S. (2015). A Comparative
Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group
with special reference to Competitive Advantage in the context of a Dynamic
and Competitive Environment. International Journal of Business Management
and Economic Research, 6(3), 167-177.
Burgelman, R. A. (2017). 9. Complex strategic integration at Nike: Strategy
process and strategy-as-practice. Handbook of Middle Management Strategy
Process Research, 197.
Sahu, G. S. (2016). Decathlon sourcing project to identify the logistics
potential in accordance to The needs of Decathlon’s processes. NIFT.