Financial Statement Analysis: NIKE (Research Paper Sample)

Financial Statement Analysis: NIKE Analysis
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Abstract
The paper looks at Nike Inc has a formidable company to invest in. The paper conducts an extensive business analysis of the company in order to ascertain its current placement within the stock markets. Moving forward, the paper conducts both combined income and cash flow statement, and trend analysis in order to seal the commitment to invest with the company as a whole.
Keywords: Nike Inc, business analysis, combined income and cash flow statement, and trend analysis
Financial Statement Analysis: NIKE Analysis
Section 1: Business Analysis
Nike Inc was established in 1962 by Bill Bowerman and Phil Knight. The partnership venture at that time was named Blue Ribbon Sports (Nike Inc 2013). The initial objective of the company was to distribute low costs and higher quality athletic shoe ware to the United States market. Nowadays, the company is engaged in both the production and distribution of the athletic shoes to both local and international markets. It is estimated that about 40% of the company's sales is derived from athletic apparel, sports gears and other external ventures (Forbes, 2013). It is important to mention that Nike Inc distributes its products, mostly designed athletic shoe ware, to over 200 markets that are mainly situated within the US, Europe, Asia Pacific and Africa(Nike Inc 2013). Most notably, the company has, over a number of years, been engaged in intense and aggressive marketing strategies where 20,000 retailers, Nike Towns and stores as well as internet based platforms have been adopted as marketing platforms. Currently, the company boost of about 36,000 employees scattered across the globe (Nike Inc 2013).
Product
Nike Inc's primary product focus is on athletic shoe wares that are designed for specific sportswear and leisure uses. The company, in the recent years, has diversified to the sale of athletic apparels that are sourced from similar trademarks and brands. Also, the firm has adopted strategies effective for the sale of a line of performance equipment that include such products as sport balls, eyewear and bats (Nike Inc 2013).
SWOT Analysis
Internal Environment: Strengths
In respect to strength of the company, Nike Board of directors is made up of both management and independent directors. It is ascertained that these two forms of directors are able to influence the operations of the company in two distinctive ways. For instance, while the management directors are tasked with the responsibility of directly conducting the company's business at all times, the independent are able to avail external experiences. These external experiences avail a series of support for the management board since they help them devise newer ways of executing effective decision making processes. Drawing from this reasoning, it is fair to postulate that Nike enjoys an oversight type of board that plays an oversight role in respect to conducting effective strategic formulations (Nike Inc 2013).
Another strength facet that the company enjoys rests with the different business strategies it has been able to adopt over the recent years. For instance, the company's management is competent enough to conduct internal evaluations and thereby make effective decisions that are based on the analysis. The recent improvements in the company's marketing research have facilitated the restoration of the athletic apparel section. This division within the company is set to increase its publicity in terms of fashion sensibility. The company enjoys robust Research & Development process that has facilitated effective product and pricing strategies. For instance, the company continues to avail products for both the high-end and middle level customers in an attempt to increase its existing market share (Nike Inc 2013).
The company also enjoys a series of both grand and competitive strategies within the market. For instance, due to its intense grand strategies the company has been able to remain at par with the innovativeness currently being experienced in the sports market. This has been achieved through formulation of innovative policies that are as a result of intense R&D activities. It should be noted that the higher level of innovation has facilitated and maintained higher quality products, which is has increased the market share extensively. On the other hand, due to competitive strategies, the company has been able to devise effective marketing strategies as well as product offerings through the adoption of product differentiation strategies. For example, the company, over the recent past, has been focusing on generation and distribution of fashionable footwear products. This is reflected with the company's production of such designed footwear as Old Navy and Ambercrombie &Fitch that are meant for individual styles especially amongst the younger customers (Nike Inc 2013).
The company enjoys a stronger corporate culture that is characterized by trustworthy and loyal employees who depict robust levels of team spirit. Subsequently, as a way of depicting oneness, the company's headquarters, in Beaverton-Oregon, is referred to as “campus” instead of an office. Employees are referred to as “players”, the supervisors are “coaches” and company meetings are “huddles”. This simple yet effective strategy has gone a long way to break monotony amongst employees while creating a formidable working relationship (Nike Inc 2013).
The company enjoys a substantial leadership framework that is characterized by effective team management techniques. The top-level management is made up of committed executive personnel that exercises and instills experience and knowledge skills to the employees. It should be understood that this form of leadership strategy continues to promote the flourishing of such attributes as trust and respect amongst employees (Nike Inc 2013).
Weaknesses
The company's mission statement: “to be the world's leading sports and fitness Company” is more of a vision statement. This is a weakness for the company in the sense that it omits to publicize and thus, market the different products being offered by the company. It also fails to mention the company's capacity to distributing products to the customers across all the global markets (Nike Inc 2013).
The motivation levels for Nike employees have continued to fall below the recommended figures hence posing as a weakness to the future operations of the company's activities. It should be noted that the cost-reductions strategies that was conducted that resulted to the reduction of employees triggered elements of low morale amongst the retained employees. Subsequently, their morale fell because of negative media publicities resulting from the substandard working conditions in Asia based factories (Nike Inc 2013).
Nike Inc continues to suffer from extensive violation of labor polices in respect to human capital. While a company's human capital determines its capacity to grow and establish regionally, Nike Inc's oversees factories continue to experience negative publicity due to its flexibility to adopting global labor relation policies (Nike Inc 2013). While the company has continued to invest in policies and strategies that will foster the development of positive publicity, the challenging task arises in the course of implementing the proposed rectification strategies like increasing the minimum age for workers to 18 and increasing education programs throughout the entire market base.
The company's present strategy that involves establishing new facilities across the globe has not been conducted without challenges. These challenges have arisen from the negative publicity it has continued to experience due to the non-conformance to the United States labor laws and company's expansion strategic requirement (Nike Inc 2013). Despite the company's improved participation in awareness programs that are meant to counter the bad publicity, it has suffered poor sales volume hence lower profits over a long period. This poor non-conformance to US laws has led it to suffer great hitches in respect to close competition like Reebok.
External Environment Analysis: Opportunities
The company's athletic footwear and apparel designs are likely going to benefit from the current stabilization of the middle-level economy. This is expected to increase the number of potential willing buyers that will foster higher sales and profits in that matter.
Nowadays, a great number of people have adopted exercising activities and thus, apparel forms part of their respective wardrobes. This trend is set to increase demand for sports footwear products (Nike Inc 2013).
The recent cut in the company's employee structure has facilitated its operations and also profits since the deigned are manufactured at low production costs thus availed to potential customers at affordable prices. This has facilitated increase in sales volume over the years.
The adoption of E-trading through the internet and company's...