ECN 220 University College London Economic Analysis of Nike Inc Research Paper

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ureela

Business Finance

ECN 220

University College London

ECN

Description

do not chose Apple, Huawei, Samsung company.

Requirements:

Prepare a report undertaking an economic analysis of an organisation of your choice, its markets and the wider macroeconomic context using

evidence drawn from company reports, market reports, market data and academic journal articles, etc.

The report should include:

i) a description of the organisation’s basic characteristics;

Describe the firm’s main product(s) / lines of business and the internal organisational structure of the firm (e.g. U-form, M-form etc.).

Outline and explore the production and cost concepts affecting managerial decisions: economies of scale, relation between fixed and variable costs; the state of technology in the

sector in which the firm operates and the degree of technological uncertainty involved.

ii) an analysis of the markets and economic environment in which it operates;

Analyse the markets within which the firm operates (market structure as implied by number of competitors, market concentration, entry barriers and extent of product

differentiation; degree of innovation; availability of substitutes and nature of complementary products and markets). Use information on relevant elasticities and / or demonstrate

how such information, if available, could be used to inform managerial decisions.

Assess the economic environment in which your chosen firm operates (domestic / international / global; macroeconomic conditions; international trade conditions, exchange rate

volatility; institutional and regulatory environment, (effect of) government policies).

iii) an assessment of the firm’srecent and likely future performance;

Relative to a key competitor in the firm’s main sector, assess the firm’s performance over the previous 5+ years, including in relation to profitability; market share; and innovation

(introduction of new products / processes and creation of new markets).

Outline the firm’s recent strategy and, based on all the data above and your preceding analysis, assess its likely performance prospects over the next 5 years.

Note that your mark will depend primarily on the extent to which your report demonstrates knowledge and understanding of the economic concepts

developed in the module and your ability to apply these in analysing your chosen organisation; the selection and use of data is also important.

Assessment Criteria:

Please note that the descriptors below are guidelines and should not be taken to correlate to precise percentages; they are indicative of a level of

performance across the key criteria upon which the coursework is assessed.

Unformatted Attachment Preview

ECN220 Project – Updated 22/02/2022 The submission deadline for all components of the Applied Portfolio is Monday 23 May by 12.00 noon. All submissions must be uploaded to the L2 Applied Portfolio Blackboard organisation The module does not have dedicated workshops or lectures for the project, but there will be signposts throughout the semester to support the task. The project should demonstrate applications of concepts and techniques learned in the class; you should also be able to provide a good interpretation of the results that you produce. The behaviour of interest rates during recessions. The aim of the project is to study the behaviour of various interest rates across recessions and financial crises. You will organize, graph and interpret the data. You will also use various econometric tools to understand the behaviour of interest rates during recessionary periods. Section 1 (Data cleaning and basic analysis) Log on to the Federal Reserve Economic Data website (FRED) (you may have to register) https://research.stlouisfed.org/fred2/categories Go to the sub-field "Interest Rates". Download the following interest rates (feel free to download more interest rates of your choice). When possible use monthly frequency from the starting observation of the series to the last observation of 2019: a. Moody's Seasoned Aaa Corporate Bond Yield (AAA) b. Moody's Seasoned Baa Corporate Bond Yield (BAA) c. 30-Year Conventional Mortgage Rate (MORTGAGE)1 d. Bank Prime Loan Rate (PRIME) e. 3-Month Treasury Bill: Secondary Market Rate (TBILL3) f. 1 Effective Federal Funds Rate (FFR) 30-Year Fixed Rate Mortgage Average in the United States, Percent, Monthly, Not Seasonally Adjusted (MORTGAGE30US) 1. Load all the data in a single Excel file (or Stata file) and graph the series. Make sure that the x- and y- axes are correctly labelled. Provide a table with some basic descriptive statistics: Min, Max, St. Dev., Mean. Show the matrix of correlation coefficients.. Please report this. 2. Looking at the graph in #1 provide a brief (about 250 words) comment on the dynamics of the various interest rates. (Hint: use the economic theories studied in the module) 3. Standard intermediate macro models, such as IS-LM, postulate the presence of a single interest rate. Does that hypothesis hold in the data? Why or why not? (Max 1000 words). Section 2 (Empirical section) This section looks at the behaviour of alternative interest rates across past recessions. 1. Use the data collected in section 1 to generate the following interest rate spread: a. SPt= BAA-AAA 2. Generate a recession dummy variable (i.e. a variable that takes the value of 1 during recession periods and 0 otherwise). Data from the recessions can be downloaded here http://www.nber.org/cycles/cyclesmain.html (Recessions go from peak, the first date, to trough, the second date). a. Estimate the following regression for the period 1919M1-2019M12: 𝑌𝑡 = 𝑎0 + 𝑏0 𝐷𝑢𝑚𝑚𝑦𝑡 + 𝜀𝑡 (1) Where 𝑌𝑡 is the spread (BAA-AAA) that you have created before, 𝐷𝑢𝑚𝑚𝑦𝑡 is the dummy capturing the recessions and 𝜀𝑡 is the error term. Please report coefficient estimates, standard errors, and R2. Present your results in a table and, using the theory studied throughout the semester, comment on your estimated coefficient. (Max 250 words, table(s) excluded). 3. Generate three new variables to capture the financial crises: a. A dummy variable, 𝐷_1929, which takes the value of 1 during the 1929 crisis, 0 otherwise (approximate the dates using the 1929-33 recession dates used above). b. A dummy variable, 𝐷_2007, which takes the value of 1 during the 2007 crisis, 0 otherwise (approximate the dates using the 2007-09 recession dates used above) c. A dummy variable, 𝐷_𝑛𝑜_𝑐𝑟𝑖𝑠𝑖𝑠, which takes the value of 1 during recessions (but excluding the 1929-33 and the 2007-09 episodes), 0 otherwise. d. Estimate the following regression: 𝑌𝑡 = 𝑎0 + 𝑏0 𝐷_𝑛𝑜_𝑐𝑟𝑖𝑠𝑖𝑠 + 𝑏1 𝐷_1929 + 𝑏2 𝐷_2007 + 𝜀𝑡 Where 𝑌𝑡 is the spread (BAA-AAA) that (2) you have created before,𝐷_𝑛𝑜_𝑐𝑟𝑖𝑠𝑖𝑠, 𝐷_1929 and 𝐷_2007 are the dummy variables described above. 𝜀𝑡 is the error term. Please report coefficient estimates, standard errors, and R2. e. Comment on the results obtained (about 500 words). i. What is the economic significance? ii. Are the results econometrically sound? 4. From the Federal Reserve Economic Data website (FRED) download the civilian unemployment rate (series ID UNRATE). The unemployment rate should be at a monthly frequency, seasonally adjusted and for the period 1954:01-2019:12 a. Plot the unemployment rate and the spread (BAA-AAA) Compute the correlation coefficient between the two series over the entire sample. Please report this. b. Run the following regression: 𝑌𝑡 = 𝑎0 + 𝑏0 𝑢𝑟𝑡 + 𝜀𝑡 (3) c. Where 𝑌𝑡 is the spread (BAA-AAA) that you have created before, 𝑢𝑟𝑡 is the unemployment rate, and 𝜀𝑡 is the error term. Please report coefficient estimates, standard errors, and R2. Comment on the results obtained (max 250 words). d. Equation 3 above suggests you that high interest rate spreads are a consequence, rather than a cause of high unemployment. Is this interpretation plausible? What are the limitations of testing this hypothesis using Equation 3? (max 250 words).
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Outline
Title Page ...................................................................................................................................... 1
Table of Contents.......................................................................................................................... 2
I.

Nike ................................................................................................................................ 3

Organisational Structure ............................................................................................................... 3
Production ..................................................................................................................................... 3
Costs ............................................................................................................................................. 4
Financial Statements ..................................................................................................................... 4
Innovations and Use of New Technologies .................................................................................. 7
II.

Markets and Economic Environment ............................................................................ 7

Markets ......................................................................................................................................... 7
Economic Environment ................................................................................................................ 8
III.

Financial Performance and Global Market Share .......................................................... 8

Financial Performance .................................................................................................................. 8
Global Market Share ................................................................................................................... 12
IV.

Conclusions ................................................................................................................. 14

References ..................................................................................................................................... 15


Nike 1

An economic analysis on Nike, Inc.
By

Code + Course Name
Professor’s Name
University Name
City, State
Date

Total word count (excluding Title Page, Contents and References) is 2,471 words.

Nike 2
Table of Contents
I.

Nike ................................................................................................................................ 3

Organisational Structure ............................................................................................................... 3
Production ..................................................................................................................................... 3
Costs ............................................................................................................................................. 4
Financial Statements ..................................................................................................................... 4
Innovations and Use of New Technologies .................................................................................. 7
II.

Markets and Economic Environment ............................................................................ 7

Markets ......................................................................................................................................... 7
Economic Environment ................................................................................................................ 8
III.

Financial Performance and Global Market Share .......................................................... 8

Financial Performance .................................................................................................................. 8
Global Market Share ................................................................................................................... 12
IV.

Conclusions ................................................................................................................. 14

V.

References ................................................................................................................... 15

Nike 3
I. Nike
Nike, Inc., was founded in 1964 by Philip Knight and Bill Bowerman. It was first called
Blue Ribbon Sports but ...


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