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Globalization has now been one of the vital concerns of the business around the world. Business has developed the module of going global with their business with three major reasons i.e. to allocate new market segment, to find the economic resources, and to diversify risk associated with the business. This module of businesses has imposed additional challenges to the managers all around the world to cope with the global business environment that possess dynamic impact varying upon the latitude and longitude of their existence. To step forward in global business scenario, the managers must prepare themselves according to the anticipated difference between the home and host environment to form an immunization to cope with the sudden changes that may adversely affect the business of the company.
Globalization has forced companies to remain competitive and grow themselves in global market. Nike Inc. without standing out of exception needs to think about the strategies and access the challenges of expanding into global arena. There is no doubt that going international brings lots of opportunities to the door of the company, but it is also equally true that opportunities brings several challenges with it. So, without giving the second thought, financial manager should think of all possible challenges before going international.“The comprehensive understanding of these encounters will empower the company to accept the accurate decision on which market to capitalize in and which markets to sidestep” (Global Marketing Environment, 2007). “Apart from updating the managers’ verdict on which markets is appropriate for venture, understanding the dares in the international market will qualify the company’s management to cultivate the right stratagems for attempting into the different markets and for retorting to the market breaks and difficulties” (Global Marketing Environment, 2007).
Nike Inc, is a multinational company that have their outsourced factory outlet through-out the world. This company is exposed to business challenges imposed by different business environment having their existence in different business environment. The financial manager of Nike has responsibility to raise fund for company through different sources and investors to finance the financial needs of the company. The management of Nike here is to allocate different sources for the reasonable financing for the company from the global business scenario. There can be huge range of sources and different investors with various levels of requirement and expectation. On the other hand, understanding and performing according to the expectation of different investors around the globe is the must. The financial management of Nike has challenge to find the sources for financing that best suits the financing need of company without exposing it to the much of the risk exposure by the global financing environment. Nike being a multinational company, with its stock traded at different stock exchanges around the world with current stock price of $78, a minor fallacy in financing decision at a corner of globe may have impact upon the global stock price of Nike thus, despite being exposed to different challenges imposed by global business environment, managers at Nike should create a consistence performance to investors around the world.
The company must follow the capital budgeting procedure to formulate business plan for every individual business opportunities in the market. The company must be sensitive to Internal Rate of Return and Net Present Value of all the future cash flows to ensure the pro-forma profitability of firm in different business scenario. This helps business in selecting the business area and investment platform that helps to find a profitable segment for the business.
The company must access different financial ratios of similar business in particular locations. This helps them to allocate a proper business environment and challenges imposed by different environments. The anticipation here is the similar business risk to be imposed to the business in terms of liquidity, performance indicators, profitability indicators, and risk associated measures.
The company must have access to information related to different sources of funding at different region. Since Nike has global investors to invest upon their business, they need to allocate the debt source of financing available at different places to maintain the risk exposure of business according to their global standard. Apart, the company can also raise fund from the local investors if they are available at cheaper rate than their existing one.
The other selection criterion for business should be the government policy at the places. The company must have eye on the repatriation policy and hostility of government in terms of their view to international business and policies to nationalize them.
Apart from that, exchange rates situation should be accesses as it can have significant effect in its operation. Understanding of exchange rates and situation of different currencies in the market will allow company to take a right step in deciding which market to invest. Competition factor should never be undermined and it is the one of the important factor to be considered. Dissimilar marketplaces are categorized by diverse competitive atmospheres. It would be judicious for Nike Inc.’s financial managers to comprehend the worldwide competitive situation in order to create the utmost appropriate market to advance in. Additional economic aspects that can touch the business performance of the company include; labor ailment, interest and inflation rates. On the other hand, natural occurrence such as drought, earth quakes, Tsunami and hurricanes can have hostile economic and financial influences on a company. It is therefore significant for Nike’s financial managers to comprehend destinations that are prone to such catastrophes in order to make judicious investment choices ("Importance of Understanding Challenges in the Global Market", n.d.)
Thus, these are the major challenges and the selection criterion for Financial Manager of Nike to select appropriate business at different global environment.
References
Anonymous (2007). Understanding the Global Marketing Environment. February 27, 2012. Retrieved from http://www.oup.com/uk/orc/bin/9780199239429/leecarter2e_ch01.pdf
Importance of Understanding Challenges in the Global Market. (n.d.). Retrieved from http://customwritingtips.com/component/k2/item/10762-importance-of-understanding-challenges-in-the-global-market.html?tmpl=component&print=1
CNN Money. (2013, November 21). CNN Money. Retrieved November 22, 2013, from www.money.cnn.com: http://money.cnn.com/quote/quote.html?symb=NKE
Daniels, J.D., Radebaugh, L.H., Sullivan, D.P., and Salwan, P. (2010). International Business: Environments and Oprations. Droling Kindersley (India) Pvt. Ltd.
