Blaw1002: Economic Principles Exercise Assessment Answer

Assignment Task:

Task:

The exercise is worth 30% of the final mark. ?
This is a ‘take-home’ exercise worth 30%, consisting of short-written answers. The ‘economics principles exercise’ (EPE) is based on BLAW1002 lectures/modules E1 (M6), E2 (M7), and E3 (M8). Assessment and marking guidance shall be made available on Blackboard (Bb) from 3:00pm (Perth, AWST), Tuesday 20th April 2021. You will have up to 17 days to complete the exercise on your own. The EPE is to be submitted via Turnitin in an editable Word Document (or PDF) by the due date: Friday 7th May, 11:59pm.

•  The EPE consists of one section with two (2) compulsory short written answers, with various parts to be answered: Question 1 is worth 20 marks; and Question 2 is worth 10 marks.
•  Just include the answers to the questions and the following: your Full Name, Student ID as a title in the Word document when submitting your work to Turnitin (see Assessments tab on Bb). N.B. file size for uploading to Turnitin cannot exceed 20MB.
•  The suggested word count is a maximum. The main thing is that you just answer the question and have sufficient explanations.
•  For more information, see the PDF on Bb, “Marking Guide and FAQs for BLAW1002 S1 2021 Economic Exercise Qs”.

In summary, all two (2) questions have to be answered using well-labelled, hand-drawn diagrams, with accuracy and sufficient explanations. In your answers, refer to key economic concepts taught in E1 to E3 in BLAW1002 S1 2021, where relevant.

Assessment Task

Q1. The Market Power of Nike (E1, E2) [20 marks]
Nike is a profitable company, known for brand strength and product innovation. Indeed, ‘Fast Company’ tags Nike in the top 10 most innovative retail companies of 2021. Read the following articles (listed in reverse chronological order) and then answer the questions below:

1. Ciment, Shoshy (2021) “Nike is transforming from a marketing company into a technology brand”, Business Insider, March 30, available online: https://www.businessinsider.com/inside-nike-restructure-layoffs-dtc-resale- digitalization-2021-3?IR=T

2. Howland, Daphne (2021) “Despite port congestion and revenue declines at home, Nike posts a profit”, Retail Dive, March 19, available online: https://www.retaildive.com/news/despite-port-congestion-and-revenue- declines-at-home-nike-posts-a-profit/597029/
3. Bain, Marc (2021) “Nike and Adidas are locked in a digital arms race”, Quartz, March 11, available online: https://qz.com/1982171/nike-and-adidas-are-in-a-digital-arms-race/
4. Kohan, Shelley E. (2020) “Pandemic-Proof Nike Delivers Another Strong Quarter With 9% Sales Increase”, Forbes, December 19, available online: https://www.forbes.com/sites/shelleykohan/2020/12/19/pandemic- proof-nike-delivers-another-strong-quarter-with-9-sales-increase/?sh=6d2c0a1a1469
5. Bain, Marc (2020) “It’s getting harder to find Nikes—and that’s just how Nike wants it”, Quartz, November 3, available online: https://qz.com/1925836/under-armour-follows-nike-by-cutting-retail partners/
6. Chitrakorn, Kati (2020) “Inside Nike’s latest bet to understand its customers”, Vogue Business, July 29, available online: https://www.voguebusiness.com/consumers/nike-retail-strategy-direct-to-consumer-house-of- innovation
a. Do some additional research and elaborate on Nike’s past (2016 to 2019) investment strategies of direct-to-consumer (DTC) sales and other e-commerce initiatives that placed the firm in a relative strong (profitable) position in 2020. In your answer, elaborate on a process of creative destruction at play in this case.

[suggestion: 400 words or less]
[5 marks for quality of explanation]
b. Explain the effect of such strategies to enhance the loyalty of Nike footwear to its devoted consumers and therefore Nike’s profitability. In your answer, illustrate with a discussion of the price elasticity of demand for Nike footwear.

[suggestion: 400 words or less] [2 marks for diagram + 3 marks for quality of explanation]

c. Illustrate using an appropriate diagram where the firm sets price to maximise profit (such as adapting Figure 7.9d from CORE ESPP) to explain in some detail the profitability of Nike in 2020. In your answer, use hypothetical values based on actual data where possible. HINT: A good answer discusses all the relevant aspects and concepts related to the diagram, and incorporates answers given in (b). [suggestion: 400 words or less]
[4 marks for diagram + 6 marks for quality of explanation]
Refer to key sentences and ideas from various articles where relevant to support your analysis.

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