It is important to note that Nike, Inc. is a large multinational corporation. Its key products range from footwear to accessories, equipment, and apparel. The factors that influence the company’s demand include consumer income, consumer preferences, and the price of substitutes. However, the core components that affect Nike’s supply involve the cost of production, government regulations, and the number of suppliers. Figure 1 below showcases Nike demand with demand graph shifters, whereas Figure 2 below visualizes the supply with its shifters as well.
Demand Side Analysis
Firstly, consumer income determines the demand for Nike’s products because it sells non-essential goods. In other words, these items are not a priority for buyers, which is why they will not purchase them if the price is too high for their income. Secondly, if the prices of similar products from competitors, such as Adidas, consumers might switch to Nike products, but if competitor prices fall, the demand for Nike products will decrease (Nike, Inc., 2022). Thirdly, trends, endorsements, and effective marketing can influence consumer preferences. If Nike launches a successful marketing campaign or signs a popular athlete, this can increase demand. Conversely, if these factors are negative, they can reduce demand.
Supply Side Analysis
Firstly, in terms of the cost of production, the latter consists of the cost of labor, the cost of materials, and other forms of manufacturing expenses. If these costs rise, Nike will likely reduce its supply, which will shift the supply curve to the left. Secondly, government regulations can affect the supply through taxes, where stricter taxation will lead to supply reduction (Nike, Inc., 2022). Lastly, the greater the number of factories and suppliers for Nike, the higher the overall supply. However, if many of these suppliers shut down or decrease in number, then Nike will have a lower supply.
Reference
Nike, Inc. (2022). Form 10-K [PDF document]. Web.