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Nike Comprehensive Analysis

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Analyze publicly available information about a Fortune 500 Company (Nike) and develop an assessment of the corporate strategy and its ability to increase competitive advantage.

Obtain and analyze information at the company, industry and market levels using various databases and reports found in the AIU library, in addition to at least eight (8) professional or academic peer-reviewed articles.

Your analysis should include an in-depth review of the Company's most recent SEC Form-10k Annual Report and Form DEF-14A Proxy Statement. These SEC filings can be found at the SEC Edgar Database located at the URL http://www.sec.gov/edgar/searchedgar/companysearch.html . Pay particular attention to the Management Discussion and Analysis (MD&A) sections of the SEC Form 10-K and the DEF-14A Proxy statement. Direct competitors are identified in the "Comparator Group" section of the DEF-14A Proxy Statement. ) These SEC filings also contain information relative to external and industry analysis that will be helpful in your assessment of the Company's strategy and competitive position.

A thorough analysis requires evaluation of various external stakeholders:

Competitors
Industry
Vendors
Customers
Governmental entities
Communities
Internal stakeholders that should be considered in the analysis include:

Shareholders
Board of Directors
Management
Employees

A comprehensive SWOT analysis should be performed relative to the Company's ability to improve its competitive advantage.

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A thorough analysis requires evaluation of various external stakeholders:

The external stakeholders in this particular summary will be discussed in accordance to their importance to the overall health of the company. There are external factors and external stakeholders that must be discussed for the summary, and I will highlight both of these variables. One of the primary external factors that impacts Nike, is the foreign exchange rate and the fluctuation that occurs on the international market in regard to foreign exchange, because the company relies heavily upon foreign sales, the company is heavily susceptible to fluctuations on the international foreign exchange market. I will discuss the measures that the company has taken to mitigate these risks in the this section of the paper, but it is an issue that impacts the company as they can never control the market in regard to this issue, and it threatens its profits.

Other issues that impact the company's bottomline include the volatility associated with foreign governments in which the company operates. Many of the governments where the company has operations are in their infancy in regard to democracy and some such as Vietnam are governments that are still Communist in nature. This also includes China, and therefore, the company must deal with the prospect associated with governments that may raise taxes, impose trade tariffs, and engage in other practices that are unfriendly toward the company in regard to their bottom line. The country can't control these issues and will need to adapt and adjust to these particular occurrences if they did occur accordingly.

The suppliers and subcontractors who are contracted for producing the products that are sold by Nike are also susceptible to engaging in practices that will hurt the company's bottom line. Everyone is familiar with the Nike "Sweatshop" saga, and this was predicated upon companies who allegedly went against Nike's policy and treated employees like literal slaves in regard to pay and the conditions in which these employees worked. This particular saga had an indelible impact on how the company was viewed, and according to its cofounder, Phil Knight, these subcontractors went against the company's ethical guidelines when engaging in these particular practices. Therefore, the company's reputation was damaged tremendously based upon the actions of their subcontractors in different countries in which they had limited oversight and control, and this could happen again.

As I have demonstrated, there are many external factors that play a role in Nike's success, and if these factors change, the company could lose significant market share as a result. The objective of the organization is to ensure that it hedges against any potential losses as a result of these external factors, and the company has taken steps to do just this. I will explain some of the measures that Nike has taken to hedge against potential calamities occurring as a result of rogue nation regime changes or currency fluctuation. Some of the measures that Nike has taken to address these situations include establishing a foreign currency adjustment program, which allows the company to attempt to more effectively manage the foreign currency risks that it faces in some of the countries in which it operates.

To accomplish this feat, the company assumes foreign currency exposures with specific factories that are chosen for the program wherein the company deliberately adjusts the rate fluctuations at these particular companies by using a foreign currency exposure index that enables the company to denominate labor, materials, and overhead costs associated with these particular factories.

In reference to the denominated indices within these particular countries, the company utilizes the local or functional currency wherein it maintains the autonomy to formally designate these currencies under cash flow hedges. Currencies that are selected for these indices, are subsequently embedded with derivative contracts that must be accepted by these subcontractors upon the purchase order from Nike, and these specifically exclude the local and functional currencies as well as excluding the U.S. dollar from being used under these circumstances.

The purchase orders that occur under this particular strategy result in a separation of the embedded derivatives ...

Solution Summary

The solution identifies the internal and external stakeholders of Nike in a thorough analysis.

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