Paper Example on Critical Analysis of Nike

The financial data for Nike, Inc. is presented in the 13th edition of Financial Statement Analysis by Gibson, C. in 2013. Nike, named after the Greek goddess of victory, began as the company Blue Ribbon Sports in 1964 (Frisch, 2008). Nike and Adidas are the two global competitors in the sports equipment, apparel, and footwear business. Although those two companies have dominated the global market for quite some time, Under Armour is a new relatively new competitor in the industry and is a force to be recognized by both companies. Nike, Inc. is headquartered in Beaverton, Oregon, operates with approximately 2.7 million in volume every year, and boasts a $92 billion market cap (Ranjan, 2016). The company also has earnings per share of $3.50 and is considered a Bull in the stock market.

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Nike is continuously striving to improve their product line and dominate the global market, which is evident by their frequent applications for new patents on various parts of the shoe (Cin, 2015). The evidence provided will support the thesis that Nike will remain the global market leader for a very long time. Nike, Inc. sells high-quality products worldwide and is the largest seller of athletic footwear and apparel in the world (Frisch, 2008). The company's 2011 financial results indicated that they not only met but exceeded their financial goals by increasing revenues by 10%. While the earnings per share have dropped over the past four years, from $4.39 to $3.50, they are still considered the world's leader in their industry (Ranjan, 2016).

Future orders of Nike products have continued to increase every year, mainly due to the which is evident by their frequent applications for new patents on various parts of the shoe (Cin, 2015). The evidence provided will support the thesis that Nike will remain the global market leader for a very long time. Nike, Inc. sells high-quality products worldwide and is the largest seller of athletic footwear and apparel in the world (Frisch, 2008). The company's 2011 financial results indicated that they not only met but exceeded their financial goals by increasing revenues by 10%. While the earnings per share have dropped over the past four years, from $4.39 to $3.50, they are still considered the world's leader in their industry (Spence, 2008).

Future orders of Nike products have continued to increase every year, primarily due to the relatively small price increase of products and the increase in sales volume (Frisch, 2008). Common-size analysis, both vertical and horizontal, indicates that income and taxes increased over two years between 2010 and 2011 (Frisch, 2008). Liquidity of Nike, Inc. appears to be good as well, with accounts receivables turnover days and inventory turnover days decreasing, avoiding expenses for carrying surplus. Long-term debt-paying ability was good as the debt/equity ratio was good every year, while it dropped in 2010, it rebounded in 2011. While the financial ratios for Nike, Inc. were relatively good from 2009 through 2011, there was a lot of fluctuation, and the valuation of the company was deemed as favorable by investors.

The analysts believe that the year-end market price was attributed to the diluted earnings per share and an optimistic outlook on the profitability of the company (Frisch, 2008). Frisch presents a comparative analysis with Sketchers U.S.A. however, since the two companies operate on a much different scale, the information was only interesting and not relevant to use in a comparative analysis. While Adidas' financial statements would have been in a different format, since they are a German company, the data would have been more relevant to use in a comparative analysis, although that type of analysis may have required more in-depth analysis and dissection (Mahdi, Abbas, Mazar & George, 2015).

In 1971 came up with the name Nike along with the Swoosh trademark for his products. The winged goddess of victory from Greek mythology-inspired both the name Nike and the Swoosh symbol. In the late 1970s, Blue Ribbon Sports officially became Nike and increased its sales from $10,000,000 to $270,000,000. During the 1980s and 1990s, the company and sales continued to grow (Spence, 2008). In 1996, Nike was named Marketer of the Year, with sales at $6. 74 billion. Sales and profits have continued to grow over the years, but at what cost to those who work in Nike's factories worldwide?

As far back as 1998, Nike was being criticized for the way their footwear was being produced. Remember that Phil Knight wanted to provide high-quality footwear at a low cost. Michael Moore's film "The Big One" brought to light Nike's overseas labor practices and raised many questions about Mr. Knight and his company. In his film, Michael Moore questioned the number of hours Nike factory workers were working, the amount they were being paid, and the age of some of the factory workers (Dobrusin, 2002). As a result of the film, Nike felt compelled to raise the minimum age of their factory workers in factories.

However, Michael Moore's film did not bring an end to Nike's problems related to child labor. In an article entitled "Nike Admits to Mistakes Over Child Labor" by Steve Boggan, published on October 20, 2001, it says, "Philip Knight, the company chairman, clearly stung by reports of children as young as 10 making shoes, clothing and footballs in Pakistan and Cambodia, attempted to convince Nike's critics that it had only ever employed children accidentally. 'Of all the issues facing Nike in workplace standards, child labor is the most vexing,' he said in the report. Our age standards are the highest in the world: 18 for footwear manufacturing, 16 for apparel and equipment, or local whenever they are more senior (Dobrusin, 2002). But in some countries (Bangladesh and Pakistan, for example) those standards are next to impossible to verify when records of birth do not exist or can be easily forged

The article goes on to discuss a situation in 1995 when Nike thought it was producing football in a responsible factory with the right conditions, only to discover that the work was being subcontracted to small villages and children were making the footballs.

It is clear that historically there have been problems with working conditions in Nike's sweatshop factories as well as the use of child labor. Nike has taken steps to improve the conditions in its 1,000 factories overseas. However, there are many more recent problems that still exist today. As recently as 2011, Nike was again facing allegations of abuse and mistreatment of factory workers in Indonesia (Kahle, Boush & Phelps, 2000). The problems seemed to be occurring in the Pou Chen Group factory in Sukabumi, which is located about 100 kilometers from Jakarta. This factory started making Converse shoes in 2007, which was four years after Nike bought Converse.

It has been reported that "workers making Nike's Converse brand sneakers in Indonesia said supervisors regularly physically assaulted and verbally abused them. Nike admits that abuses occurred but insists there was little it could do to stop it

The Pou Chen factory is located in a place where the minimum wage is far below the national average. It has 10,000 workers who make Converse sneakers. Most of the workers are women, and they earn only 50 cents an hour (Kahle, et al., 2000). The amount that they collect is not even enough to cover their food and deplorable housing.

In this factory, the women are both physically and verbally abused. Nike's investigations have proved these complaints to be true. The company made a statement saying that immediate actions would be taken to deal with the situation. It is interesting to note that "an internal Nike report, released to the Associated Press after it inquired about the abuse, showed that nearly two-thirds of 168 factories making Converse products worldwide failed to meet Nike's standards for contract manufacturers. Twelve access to Nike inspectors.

References

Dobrusin, M. (2002). Crass Commercialism: Is It Public Debate or Sheer Profit-The Controversy of Kasky v. Nike. Whittier L. Rev., 24, 1139. Retrieved from: HYPERLINK "https://heinonline.org/HOL/LandingPage?handle=hein.journals/whitlr24&div=52&id=&page=" https://heinonline.org/HOL/LandingPage?handle=hein.journals/whitlr24&div=52&id=&page=e

Frisch, A. (2008). The story of Nike. The Creative Company. Retrieved from: https://books.google.co.ke/books?hl=en&lr=&id=rt7FtdlT7AwC&oi=fnd&pg=PP7&dq=Swoosh+trademark+nike&ots=sQoeDI4vGk&sig=mPCv9aYAMfv0T-AzdCcH2kG9s1s&redir_esc=y#v=onepage&q=Swoosh%20trademark%20nike&f=false

Kahle, L. R., Boush, D. M., & Phelps, M. (2000). Good morning, Vietnam: An ethical analysis of Nike activities in Southeast Asia. Sport Marketing Quarterly, 9(1), 43-52. Retrieved from: https://s3.amazonaws.com/academia.edu.documents/44822225/Good_Morning_Vietnam_An_Ethical_Analysis20160417-26500-1xlcfio.pdf?response-content-disposition=inline%3B%20filename%3DGood_morning_Vietnam_an_ethical_analysis.pdf&X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=AKIAIWOWYYGZ2Y53UL3A%2F20191217%2Fus-east-1%2Fs3%2Faws4_request&X-Amz-Date=20191217T150226Z&X-Amz-Expires=3600&X-Amz-SignedHeaders=host&X-Amz-Signature=99c5c78a2adf648d2edda4481b31219ff8abfeb9eebb55497fd4c377ad999c90

Mahdi, H. A. A., Abbas, M., Mazar, T. I., & George, S. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 6(3), 167-177. Retrieved from: https://pdfs.semanticscholar.org/b0a7/2e2fb2b7d23121895f1582289a221229c91c.pdf

Ranjan, W. (2016). The Financial Performance Analysis of Nike Inc: with Special Reference Year 2015 Annual Report. Retrieved from: http://repository.kln.ac.lk/handle/123456789/18704

Spence, K. (2008). Nike: by the Numbers. Gatton Student Research Publication, 1(1), 7-14. Retrieved from: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.615.6219&rep=rep1&type=pdf