Risk Management Nike

Table of content

Introduction        

1.1 Risk identification of competitive advantage due to intense competition and changes in consumer preference        

1.2 Risk management strategy assessment        

2.1Risk identification (risk of uncertain global economic market specifically the outsourcing of business operation)        

2.2 Risk management strategy assessment        

2.3 Recommendation        

3.1Risk identification (Failure to obtain high quality endorsers of the Nike products)        

3.2 Risk management strategy assessment        

3.3 Recommendation        

4.1Risk identification (Technological)        

4.2 Risk management strategy assessment        

4.3 Recommendation        

APPENDIX.        

Reference        

Introduction

The purpose of this report is to identify the various types of risk factors which are associated with NIKE INC. and how it affects their business model and how it could potentially affect their overall performance if they are not strategically controlled or placed appropriate measures. Within the athletic and leisure footwear, apparel and equipment industry, there is strong competition amongst the competitors with technical innovative products which adds to the competitive nature. Furthermore, in recent years with unpredictable fluctuation of the global economy it can adversely impact Nike as most of their business operations are outsourced.

Moreover, this report will examine and analyse the effectiveness of the approach of the implemented risk management by NIKE INC. and also additional suggestion that would help mitigate and reduce the impact to the risk exposure and overcome them.

The major risks which the company is exposed to that were identified are

• Intense competition and consumer preference
• Global capital and credit market condition.
• Endorsement
• Technical innovation

If these risks are not strategically unmanaged, they possess considerable threat towards the company and must implement appropriate strategies to overcome and mitigate them, if not it will have adverse effect on the revenue stream of the organisation and overall profitability.

1.1 Risk identification of competitive advantage due to intense competition and changes in consumer preference

A major risk that possess as a constant threat for NIKE INC. within the athletic and leisure footwear, apparel and equipment industry is strong competition with associated changes in consumer preferences for products. As NIKE INC. is the leading company within their industry they must not become complacent with their position as intense competition grows. Simultaneously the industry of the global athletic footwear market being valued at $74.7 billion in 2011 and forecasted to grow at 1.8% CAGR during 2011-2018 (New Global Athletic Footwear Market Research Report Published By Transparency Market Research 2013) while the sports apparel market which is worth $135 billion in 2012 and is forecasted to grow 4% CAGR during 2012-2019 and reach value of$178 Billion (Nike Shares Can Find Some Zip On Emerging Market Sales 2013). Furthermore the leading companies Nike, Adidas, Puma and Asics are forecasted at 14.2%, 13.3% 5.8% and 5.0% CAGR respectively (Nike Shares Can Find Some Zip On Emerging Market Sales 2013).   Therefore, it is evident that competitors would fiercely compete in terms of innovative products, strategic marketing to obtain a proportion and gain a financial reward of the growth of the sport wear indusrty.