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Business Project on Nike

Part 1- Value Line. 3

1. Three reasons why to call the client to sell the stock. 3

2. Earnings per share of Nike in the last 5 years. 3

3. Write up on Bottom half of value line states. 3

4. Rating value line gives. 4

Part 2- Company website. 4

1. Company’s mission statement 4

2. Four ways company has been innovative over the years. 

3. Innovative ideas that will be presented to Board of Directors for increasing sales and customer satisfaction  6

4. Ways to motivate the employees to take Nike to a next level 6

Part 3- 4Ps of Marketing. 7

1. 4Ps relate to services and products of Nike. 7

Part 4- Ethics and Social Responsibility. 8

1. Statement about ethics and social responsibility. 8

2. What should a company be ethical and socially responsible?. 9

3. Why Nike is ethical and socially responsible?. 9

4. Case regarding ethical part of poor management and competition. 9

Part 5- President of US. 10

1. Should US continue to run the federal budget deficits or have the balanced budget?. 10

2. Do you favour the free trade with organisations such as NAFTA or Protectionism?. 11

3. Should the federal income taxes be decreased or increased for helping the economy?. 11

4. How to help the entrepreneurs to open a new business and create jobs or assist in innovation in US  11

References. 13

 

Part 1- Value Line

1. Three reasons why to call the client to sell the stock

On being a stockbroker at Merrill Lynch, the three reasons I might call the client and sell them the stock are as follows:

  1. Every time one buys and sell, I would get a commission since broking companies run because of commission. Once anyone buys, the ........

2. Four ways company has been innovative over the years. 

3. Innovative ideas that will be presented to Board of Directors for increasing sales and customer satisfaction  6

4. Ways to motivate the employees to take Nike to a next level 6

Part 3- 4Ps of Marketing. 7

1. 4Ps relate to services and products of Nike. 7

Part 4- Ethics and Social Responsibility. 8

1. Statement about ethics and social responsibility. 8

2. What should a company be ethical and socially responsible?. 9

3. Why Nike is ethical and socially responsible?. 9

4. Case regarding ethical part of poor management and competition. 9

Part 5- President of US. 10

1. Should US continue to run the federal budget deficits or have the balanced budget?. 10

2. Do you favour the free trade with organisations such as NAFTA or Protectionism?. 11

3. Should the federal income taxes be decreased or increased for helping the economy?. 11

4. How to help the entrepreneurs to open a new business and create jobs or assist in innovation in US  11

References. 13

 

Part 1- Value Line

1. Three reasons why to call the client to sell the stock

On being a stockbroker at Merrill Lynch, the three reasons I might call the client and sell them the stock are as follows:

  1. Every time one buys and sell, I would get a commission since broking companies run because of commission. Once anyone buys, the brokers receive two transactions for their commission. Thus, one always sees a “buying” suggestion from a broker.
  2. Brokers might give the unbiased advice to clients but many broking firms like the Merrill Lynch have investment banking relation and advisory role with companies. Thus, is where one is forced to suggest only to the company’s stocks to clients.
  3. However, all relationship managers have the incentive on the revenue they generate. Thus, the more the brokerage one generates, the more will be the incentives to get.

2. Earnings per share of Nike in the last 5 years

On looking at the Earnings per Share (EPS) of Nike in the last five years, it had showed a slight increase in earnings. In 2013, it was $1.35, which increased to $1.49 in 2014, and along this, the company has showed an increase in their earnings with $1.85 in 2015. In order, in 2016, the EPS was $2.16, which grew gradually by $2.51 in 2017. From 2013-2017, it is showed that there has been an increase every years, and the significant factor of the rise in EPS is because the company has maintained to increase their revenue every quarter by about 3%. However, the strong growth in e-Com and the emerging markets of Nike has helped to raise profits in market such as North America, Asia Pacific and UK (Financials.morningstar.com, 2017). According to analysts, the rise of EPS is increasing every year because the company has exceeded its revenue increase by 5% a year. Thus, this has continued Nike’s trend to beat the analyst forecasts, and the effective growth it has seen in the East Asian markets.

3. Write up on Bottom half of value line states

From the value line report, it is indicated that the first half of the financial year 2017 has showed a strong note. Specifically, Nike has earned around $0.50 per share during the last quarter in 2017. On a neutral base, the revenues have also increased by 8%, and year after year, Nike has significantly gained profit in Greater China, Western Europe and North America. Thus, on the bottom-half on value line, Nike has benefitted from the efficient administrative cost management while a roughly estimate of $900 million in stocks showed the buybacks. This has aided per-share in comparisons (Publishing, 2017). Thus, these actions have helped to mitigate contraction in gross margin that has narrowed by about 140 basis points to 44.2% in last quarter. Moreover, the foreign currency headwinds and the high operating costs were just to blame regarding the gross margin erosion. On looking ahead, Nike has been anticipating high single digit at top lie in FY2017.

4. Rating value line gives

From the value line Projections, the sustained appreciation shows that the value over the last few years has limited the capital gains in potential. However, the projected price over the next 3-5 years is viewed in upper left of the value line report. This contains the value line projection on price that shows an absolute number, as the total percent change with the annual total return. However, the annualised total return calculation includes the dividends, if it is paid. Hence, on moving to the rank box directly, equity is ranked as three for Timeliness (Publishing, 2015). This shows an average rank, which suggests stock’s performance to mirror the averages across the space of Value Line Investment Survey over the next 6-12 months. No, value line rating is not agreed anyhow, as the market neutral rank indicates that company does not stands out on the momentum accounts for short-term play.

Part 2- Company website

1. Company’s mission statement

Nike’s mission statement is to carry innovation and inspiration to each athlete globally. From the mission statement, it represents Nike’s strategic goals for reaching out to the global apparel, Sports shoe and the equipment market (Smithson, 2017). However, Nike’s mission underlines innovation that is functional by the company’s plan to have continuous growth of products through the new technologies. Thus, the mission statement also pushes Nike to target every customer globally.

2. Four ways company has been innovative over the years

Each year, Nike comes with new technologies, resources and construction methods in name for making athletes performance better. The major ways where Nike has remained innovative over the years are:

Nike introduced the Flyknit Shoes that are manufactured by using a new method for making shoes. Nike Flyknit was manufactured by using the digital knitting technology, which leverages art of knitting and specifically defined with fabric variations (Rctom.hbs.org, 2016). However, this technique decreased the waste by 60% when compared to the sports footwear.

Nike has also come with the Pro Rival Bra, which is used in workout for women. This aims to make certain that is the Bra could increase the workout performance of an athlete very well. However, the bra is a nexus of sports innovation, which has the modulus to stretch, compress and wear it without any discomfort.

Nike has also introduced its SNKRS AR Camera that ignites customer energy by expanding functionality and community of SNKRS with new modes of engaging (Nike News, 2014). The camera uses the reality technology that can unlock the potential to buy limited edition sneakers where the sneakers could be seen and unlocked by viewing image by the camera function on SNKRS.

Nike has been also innovative with its N+TC APP that connects to the digital community to about 65 million women in the world. This has been an influential network for the athletes, which can commit to tap their full potential (Nike News, 2014). However, Nike+ Training Club App also helps to stick to the mission for delivering multi-week programs, sufficient motivation and customizable workouts from elite athletes, authority trainers and active celebrities.

3. Innovative ideas that will be presented to Board of Directors for increasing sales and customer satisfaction

As a CEO of Nike, I would try to define a Rebranding Nike Program that will phase out the line of high accomplishment on athletic shoes. Besides, the reposition in active footwear market and casual footwear with this rebranding program will gradually increase within subsequent years by launching Flyknit Racers (Miles Media, 2016). This will also help to make large advancement among women, and thus the old products will help to increase sales and attract customers on a wide base.

Being the CEO, I would also come up with an idea by bringing aesthetic athletic footwear (in wide colour variation) that will define customer preferences by changing evolving lifestyles. This will help manufacturers to keep a close tab on the needs of customers. Besides, the Sneakers have gained a huge reputation as the street style shoes with the conventional use of the athletic footwear (Apparel Magazine, 2016). However, the sneakers are no longer just used for workout or playing basketball, but they are being paired with casual clothing. Thus, this innovative strategy will boost huge sales for Nike.

As a role defined for CEO, I will come up with Pollution Eating Bikes for Nike, which will be presented to Board of Directors. This bike will be designed to enrich sports person physically to increase their fitness in sports, and even the bike has the capability to soak the polluted particles from environment so that individuals can feel free. Thus, this is a completely new innovative idea, which can have success in the coming years.

4. Ways to motivate the employees to take Nike to a next level

On being the CEO of Nike, I would devise few possibilities that can take employees of Nike to a new level.

  1. At first, I would like to motivate the employees by providing them a purpose. In order to execute this, they have to understand the vision of the company very well such that they understand the bigger picture of Nike progression towards innovative products.
  2. One-step that I would take is to deliberately give employees to take positive decisions if they are committed to make a good influence for Nike. However, their decision would help to increase pride and loyalty with the sustainable motivational factor.
  3. I would motivate employees towards the new “Rebranding Program” because this will help to them make more sales on the old products of Nike. I would suggest them to give the customers discounts so that more number of sales could be achieved.

Part 3- 4Ps of Marketing

1. 4Ps relate to services and products of Nike

Product

The company offers a wide base of products including its shoes, equipment and apparels. Nike’s marketing mix is heavily focused on the wide variety of goods for the sports enthusiasts. The company is also regarded as the market leader in the industry since it derives huge revenue from sale of the sports shoes. Besides, the company also offers variety of product range that includes the special type of shoes for each sports category (Gregory, 2017). Nike has also adapted with the changing times, which are now selling and designing the smart products that has good ability to connect to iPhone, and can bring about blend of products from Apple. However, NIKE-ID is regarded as an innovative sub-brand that allows customers to customise the features of desired products, which attract larger audience (Shil, 2012). Thus, Nike also offers new services for the personal trainers to major customers for varied kind of sports.

Price

According to Gregory (2017), Nike is regarded as the market leader in sportswear and equipment, and it tends to employ a value-based pricing to facilitate the growth of profits and sales. With this strategy, Nike measures the valued customers that are willing to pay for every product. Thus, this value is used to decide maximum cost of the customer who are willing to pay for Nike’s apparels, shoes and sports equipment. From this strategy, Nike tends to retain their maximum surplus of buyers. Further, the strategy has also benefited Nike to raise profits over the past few years (Shil, 2012). The price factor is also been carried out by targeting customers of premium segment, and from this strategy, the company caters to niche market by maintaining customer loyal base with the value-based products.

Place

Nike also used diverse channels to sell its variety of products to customers mainly through Nike online stores, retailers, Nike offline stores and online sales made through e-com. As argued by Gregory (2017), retailers are considered as the significant place where products are been sold. The consumers can also buy Nike’s shoes, apparels and equipments through the online stores. In countries such as India where population density is higher, Nike thus poses a huge competition to Rebook, Adidas, Puma and the rival brands. Nike also displays its product variety for every product that could reach to millions of users through online (Brohi et al. 2016). However, Nike exclusive stores are so common in every nations and cities, which caters the need of customer requirements towards the specific geography.

Promotion

Nike as a prime brand in sportswear is known for its strength in strong branding and marketing activities. According to Gregory (2017), this is because of the promotional strategy that drives the aggressive, comprehensive and use of media tools. Besides, Nike also carries the exhaustive promotions with the online campaigns over Facebook, Instagram and YouTube by reaching over millions of fans. The company also engages their sports star as the brand ambassador for making a large effect of consumer’s mind through promotional campaigns and with advertisements. Further, Nike also grabs the opportunity for projecting the brand by sponsoring international events like NBA basketball and Marathons (Bustaman, 2015). On the other hand, Nike also spends its quantum of money to make a wide presence on the kits for the football clubs. Moreover, their images and swoosh logo plays a desirable role in advertising. Thus, it employs media coverage through electronic, print and social media to promote the brand by making use of the “Push and Pull” strategy.

Part 4- Ethics and Social Responsibility

1. Statement about ethics and social responsibility

Nike’s Code of ethics for employee defines standards of the conduct that they expect employees to follow the variety of topics such as competition, ethical behaviour, employee activity, product safety, use of resources and legal compliance (Nike News, 2018).

Towards social responsibility, it provides an indicator to succeed and ability to address the risk management, innovation and efficiency, which are crucial in positioning Nike for the long-term growth potential. Nike is also focusing on CSR efforts that will show huge impact in creating value.

2. What should a company be ethical and socially responsible?

According to Brunk (2012), the premise of social responsibility is defined mainly on the system of ethics on which the actions and decisions should be morally validated before processing. If decision or action causes harm to the society, then it will be regarded to be irresponsible socially. Besides, the moral values, which are inherent in a particular society creates distinction between what is wrong and what is right (Anon, 2016). In this way, communal fairness is believed to be correct but more frequently fairness is not present. Every individual has the accountability to act in a certain manner, which may be helpful to the society.

3. Why Nike is ethical and socially responsible?

Nike is ethical because the company has showed minimal worker’s empowerment initiatives across supply chain, and has received bottom score in implementing a living wage or developing wages across supply chain. As Nike has made few positive changes to environmental practices, it is a member of Sustainable Apparel Alliance. Besides, Nike uses the eco-friendly material like recycled and organic cotton, which minimizes off-cuts in part of manufacturing process (Goodonyou.eco, 2015). The company has also remained socially responsible, as it has made public commitment by reducing the carbon emissions by over 50% in 2025. On the other hand, Nike has been committed for eliminating the perilous chemicals from their supply chain, which could be a major difficulty for workers that are exposed to wear the products.

4. Case regarding ethical part of poor management and competition

From the statement, it is considered that the US government could spend billion dollars to bail out company such as Bank of America and GM. This is because the US economy has come long way with the low point of economic crisis of 2008-09. However, this saw that the stock market is within the throw of unemployment by less than 5% while the entire financial system is in the brink of collapse, which is less than a decade ago (Anon, 2016). Hence, the idea for spending billion dollars on the corporate bailouts is enough to get American’s blood boiling. The news is that the bailouts are not bad investments in a long-term.

In prospect, the statement regarding US government spending billions in corporate bailouts for companies is someway not ethical by looking at the long-term position of country’s economy. Despite the competition and poor management, the conflicts of interest and other ethics in case of bailout are tough to solve (Herbst, 2013). In situations, it is argued that avoiding the bailouts might be cost effective from ethics point on economic policy. Besides, “Bigness” might be considered as a decisive factor in the antitrust law whether it will be directly tied to the monopolist pricing or abusing the market power.

Towards Poor management, the bailouts increase the moral hazards on which companies feel to be protected despite poor decision and risk in behaviours. Thus, this leads to lack of prudence with the insolvency and dissolution (Herbst, 2013). Besides, the US taxpayer bears the cost of bailouts that are wreaking havoc on the government budgets. The taxpayers might be doing certain productive things with money while taxpayers do not get to make the decisions rightly. Thus, they are even bailed out when value of home drops suddenly, or when they lose their job.

Part 5- President of US

1. Should US continue to run the federal budget deficits or have the balanced budget?

On being elected as the president of the US, and for getting the economy right and decrease unemployment, the US should have a balance budget rather than a deficit budget. Because a budget includes a debit, it means that US government should borrow money in order to cover gap between its revenue and expenses. In case of a balanced budget, it means that there would be no purpose to borrow the money, and even no need to pay off in future (Anon, 2018). However, the call for the Balanced Budget Amendment to the US constitution will be more effective, and this kind of decision will require the US not spend more than it was expected. With the implementation of a balanced budget, it will force federal government for spending responsibly, and it is essential due to the breakdown of deficit reduction. With this provision, it might constrain the economic growth but the government has to act responsibly when tax revenue is down.

2. Do you favour the free trade with organisations such as NAFTA or Protectionism?

No, the president under his rule would not favour the free trade agreement with organisations such as NAFTA, which are harmful to ordinary people but few arguments are against the particulars of the government, which have directed trade rather against the free trade. For instance, it is been argued that it might be incorrect to subsidize corn from US into Mexico under NAFTA at prices that are below the production cost (The Conversation, 2016). Further, free trade is not been favoured in protectionist policy since it favours unfair benefit to the domestic industry vs. the global competition.  

3. Should the federal income taxes be decreased or increased for helping the economy?

According to the president elected from the case, the federal income taxes have to be increased. This may result in the increased federal budget deficit that is in long-term. It may also decrease the national savings and raise the interest rates. Since the net impact on the growth is not certain but it is been estimated it to be negative or small (Samwick, 2016). With the increase in federal income tax, the base-broadening measures could eliminate the effect of budget deficits or tax rate cuts but significantly, they will decrease impact on savings, labour supply, investment, and decrease the direct impact on expansion. On the other hand, this will also help to relocate the resources across the largest value economic use to result in increased efficiency.

4. How to help the entrepreneurs to open a new business and create jobs or assist in innovation in US

According to the president of US that is been recently elected, it is evident that president should come up with measures to promote entrepreneurs, as they hold the backbone of economy. In order, policies encouraging expansion of small businesses and entrepreneurship in market are regarded to be healthy. For any capitalist economy, there should be high growth, innovation and competition. As said, small businesses have created around 64% of new jobs in the last decade.

Besides, it is effective that US should come up with a measure that will help to invest in services and products. In order, there has been a large opportunity that could offer a service or product not in existence. Since new businesses tend to hire employees, it will help to create the jobs and thus economic benefits uplifts through the increasing quality of life (Sappin, 2015). Further, the US has also devised the new technologies, which will help to develop the economy of the country. Thus, when the new businesses tend to export the services to certain regions, the enterprises will help to contribute directly to earnings and productivity.