Recommendations of Nike Inc: Cost Of Capital Case Solution

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Recommendations of Nike Inc: Cost Of Capital Case Study Help

On the basis of above internal and external analysis of the company along with the assessment of various alternatives, the business is advised to think about alternative 3. As alternative 3 would allow the company to broaden in international markets with no decrease in its regional earnings and any wear and tear of its market position. By thinking about Alternative 3, the company could preserve its shop experience and brand originality. It could also consider alternative 2 that might permit the business to access the markets without any possible financial investment. The company might pursue alternative 1 which would enable the business to focus on possible global markets rather than the local markets but as the company is highly dependent on the regional markets with 90% of its stores in the US, there fore pursuing option 1 would result in the considerable decrease in business's income. For that reason, the company is advised to think about alternative 3.

Aletrnative-1: Expanding International Brick and Recommendations of Nike Inc: Cost Of Capital Case Solution Stores

Growth towards international markets through opening brand-new stores in other Europe and Asian nations with closing domestic stores is although a great alternative for increasing the global presence of the business. Nevertheless, the closing of domestic shops might highly impact the profits of the company as above 90% of its shops lie domestically and closing those stores would ultimately decrease the revenues of the firm. Moreover, the company has a long term market position in United States which can not be created soon in the new markets. The option would assist the company to broaden in international markets in addition to the removal of problems raised in its regional markets related to its diversity. The pros and Cons for Option 1 are noted below;

Pros:

• Expedition of new worldwide markets.
• Boost in profits from global markets.
• Removal of problems connected to variety.
• Profits diversification.
• Action towards being a strong global brand.

Cons:

• Loss of substantial revenues from the local markets.
• Boost in competition.
• Differences in cultures could led to a failure of the brand name particularly in Asian countries.
• Low revenues at preliminary levels.
• Increase in marketing expenditures to get market share.

Alternative-2: Introduction of Click and Recommendations of Nike Inc: Cost Of Capital Case Analysis Stores

With the increased patterns towards online shopping, the online shops like Amazon, Alibaba etc. might posture a serious hazard to the market share of business. In this circumstance the company could think about presenting Click and Recommendations of Nike Inc: Cost Of Capital Case Analysis stores. These shops with a low requirement of funds to settle would make it possible for the company to reach global markets, without ending its domestic stores.

Pros:

• Low investment
• Decreasing competitors hazard
• Access to the world markets
• Increasing the size of customer base
• Easy to manage
• Big Incomes
• Low Operating Costs
• Easy brand-new market entryway

Cons:

• Risk to the market position
• Elimination of brand name Individuality
• Elimination of the fantastic store experience.
• Threat of decline in elite sales.

Alternative-3: Expansion towards International Markets Without closing Domestic Stores

Another choice that the business could consider, is to broaden towards the global markets without closing its domestic shops that contributes to the major part of incomes of the company. The pros and cons connected to Alternative 3 are offered below;

Pros:

• Reducing competitors risk
• Access to the world markets
• Increasing the size of consumer base
• Big Earnings
• Exploration of new global markets.
• Increase in income from worldwide markets.
• Earnings diversity.
• Action towards being a strong worldwide brand.

Cons:

• Continuation of problems related to diversity.
• Differences in cultures could resulted in a failure of the brand name specifically in Asian countries.
• Low earnings at preliminary levels.
• Boost in marketing expenses to acquire market share.



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