Microeconomics Of Nike

The article that I chose to review was titled “Nike’s Earnings Face a Tougher Bracket.” Nike is not a standalone player in the world of sports products when dealing with Jerseys, Shoes, and other products that have made this company dominate the sports world. This article made it clear that because of fierce competition with other brand names such as Adidas AG its stocks have been on the worst losing streak since the financial crises. Nike makes 45% of its revenue in the United States, but because of companies such as Adidas investing money in the U.S to gain a foothold in the North American market, Nike has been losing money due to the competition. Because of the competition, Nike has failed to meet investors’ expectations in terms of revenue due to the slow growth rate which has been the lowest in the past five years. Adidas has not only been investing money in the U.S, but has also been reestablishing its Reebok brand placing greater disadvantages for Nike to sustain its dominance in the market. According to the article, Adidas has a plan to increase its sales in the U.S by 50 % before the year 2020. The article makes it clear that competition has made Nike not the number one choice in the U.S market.
In terms to how this article relates to microeconomics,

This image has given it dominance in the industry, but the competition is always going to pay for its brand to be worn by new images such as Tim Duncan, Derrick Rose, or even James Harden to implant their brand on the next generation of potential sports stars. This investment in image can cause what the text book describes as the substitution effect. Adidas shoes which are most likely to be a cheaper alternative making the consumer switch from Nike to Adidas without feeling like a loser because of the stars as listed above still wear the