Question

The global athletic footwear market is expected to experience only very slow growth over the next several years. Nike is the market leader. According to Boston Consulting Group portfolio analysis, how should Nike treat its athletic shoe business?a. Nike will probably have to invest heavily in the athletic shoe business, including extensive promotions and new production facilities.b. Nike should consider exiting the athletic shoe market.c. Nike's athletic shoe business still requires some investment but is likely to produce excess resources that can be invested in other divisions of the company.d. Nike should stop investing in athletic shoe business; it has already reaped all the benifits it is likely to receive.

Answer 1

Answer:

The answer is: A) Nike will probably have to invest heavily in the athletic shoe business, including extensive promotions and new production facilities.

Explanation:

Athletic shoe business is Nike´s cash cow, it can not afford the risk of not investing in it. Even if the market´s growth rate slows down there will always be serious competitors willing to replace them as No. 1 (Adidas). It is a very competitive industry all around the world. So the moment Nike lowers its guard, Adidas will attack them furiously.  

As the market leader Nike needs to constantly invest in new promotions and new technology. It has to fight to keep their share of the market growing, because once it reaches its zenith, then the only way to go is down. If Nike´s shoe business goes down, the whole company´s sales will go down since other business units are complementary to it.