Nike Inc. Essay

Nike is one of the largest corporations operating worldwide. The process of globalization contributed to the fast business development of Nike Inc. The company became one of the leaders in the world sports shoes and sportswear industry due to the elimination of fiscal barriers and financial services delivered internationally. In fact, the free movement of capital became one of the major conditions contributing to the successful international market expansion of Nike Inc.
The current managers are maximizing shareholder’s wealth but in the footwear industry, Nike’s performance still falls (). In fact, managers’ pursuit of maximum profits apparently lead to the deterioration of the position of Nike Inc.’s in the international market. In addition, Adidas-Salomon AG announced it has agreed to buy Reebok International Ltd. in a $3.8 billion deal, by combining strengths, the two brands aim to grab market share from Nike (Thoma, 2005). Therefore, the major rivals of Nike Inc. unite their efforts to outpace Nike Inc.
Moreover, the recent economic recession and global financial crisis affected the position of Nike Inc. because the company faced considerable financial problems and many banks could not afford or were unwilling to lend money to Nike Inc. because of the poor financial position. N such a situation, Nike has countered declines in consumer spending mainly by cutting costs, streamlining operations and reducing marketing to slash 5 percent of its global workforce, or some 1,750 jobs (Nike’s Profit Improves After Cutting Costs, 2009). The job cuts and reduction of costs had positive impact on the financial performance of the company.
Nevertheless, the company needs the stabilization of the situation in international financial markets to maintain its steady business development.