Occurrence of Price Competition in the Retail Sector - Essay Example

Once the company initiates its international expansion, it will become an even greater threat. In cases when Under Armour, albeit a smaller company, becomes more prominent among the customer population, Nike will no longer remain the most desired company for sports garments and this hinders the main objective of Nike which is to improve as well as protect the position of Nike as the number one brand in the US.

 Furthermore, Nike not only faces huge threats and competition from major sports brands but also faces threats from fake Nike goods.  According to an article by BBC, almost 135,000 fake Nike running shoes have been seized by the U.S., making it clear that this is a huge problem. Nike has been selling goods in countries other than the US. Certain labor-related accidents, in countries like Bangladesh where Nike goods are sold, have led to protests regarding the safety rights and health of the employees. If Nike is forced to invest in the uplifting of health for these employees, it would act as a risk since it would enhance the costs of the company and a contraction in margins. This risk will continue to increase with time as Nike is raising their prices of sports goods.

 Another risk factor for Nike is the fact that since it generates sales outside the US, it is inevitable for the company to face currency fluctuations. Since the dollar has been strengthening and will continue to strengthen, it will pose a risk for Nike. The company is exposed to the international nature of trade. Since it sells and buys in different currencies, it faces instability in terms of margins and costs over time duration. This means that Nike Inc. might be selling at a loss. With these fluctuations, the income of the company will become varied and the cost of its manufactured goods in other countries will also be altered. This tends to obstruct the objective of Nike to manage and direct the international business of the company as it is developing.  Also, if such incidents continue to occur along with protests against the company, it could threaten the brand image of Nike.

Adding further, there is a greater occurrence of price competition in the retail sector. This means that the customers aim at buying those products that are concerned with looking for a better deal. As a result, if one store is charging more, the customers will move towards buying that item from the store along the street after comparing the prices from other sports goods stores. And ultimately will buy the cheaper product. Thus, such an extreme sensitivity to price tends to be a potential threat for the company Nike