American Multinational Corporation: Nike’s Problem

Nike’s Problem
Student’s Name
Institutional Affiliation
Nike’s Problem
Background History
Nike is an American multinational corporation, which is involved in designing, developing, manufacturing, distributing and selling footwear, equipment, apparel, accessories and services across the world. The company was formerly known as Blue Ribbon Sports until 1971 when it officially assumed the name Nike Inc. It was founded by Phil Knight and Bill Bowerman of the University of Oregon. It has its headquarters in Washington County, Oregon, United States of America. In order for the company to grow, it engaged in various expansion activities such as expanding its product portfolio and regions across the world. It also acquired various companies. Throughout history, the company has acquired a number of apparel and footwear companies some of which have been sold. In 1988, Nike acquired its first company, Cole Haan which was followed by the acquisition of Bauer Hockey in 1994. In 2002, it bought Hurley International, an apparel company, from its founder Bob Hurley. In 2003, Converse which manufacturers the Chuck Taylor All-Stars sneakers, became a subsidiary of Nike after being bought atUS$390 million. In 2004, Nike acquired Starter and Umbro. However, besides these successful acquisitions, Nike began to divest some of its subsidiaries. Starter and Bauer Hockey were the first ones to be sold in 2007 and 2008 respectfully with Umbro and Cole Haan being sold in 2012 and 2013 respectfully. Nike Inc. produces a wide range of sports equipment such as jerseys, shoes, shorts, among others for wide range of sports activities such a basketball, hockey, football, tennis among others. It sells its products under its brand and Air Force 1, Nike Pro, Air Max, Air Jordan, Nike Skateboarding, Nike Golf, Nike Drunk, Nike Blazers, Air Jordan, Foamposite.
Problem
Nike Inc. has been the market leader in the athletic-apparel industry and it was strange for one to ask whether the company will lose its position. However, due to the recent activities and market trends, this question is undeniable because Nike tends to be losing some of its magic. The recent earnings report demonstrate that the company is losing its North American sales, which is an important market region. Its sales have reduced by 3 percent as compared to earlier results (Townsend, 2017). Consequently, its overall gross margin has declined as well but this is attributed to the increase in off-price sales. These decline of sales in the North American region were not surprising at all. In August, some of its important retailing partners such a Finish Line Inc., Foot Locker Inc., and Dick’s Sporting Goods Inc. saw a drop of 18 percent of stock in one day after they reported bad quarterly results. Partly, Nike might be suffering from indirect forces such as a declining mall traffic and stiff competition from online stores like Amazon.com Inc (Halzack, 2017). However, this is simple issue because all the affected retailers depend on Nike for a significant share of the sale of its products.
Nike is the cornerstone for the retailers because it accounts for a significant share of their cost of goods sold. From the company reports, some brands such as Nike Jordan are...