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Nike's Analysis: Student Name Institutional Affiliation Course Name Instructor Name Date
Nike's Analysis: Student Name Institutional Affiliation Course Name Instructor Name Date
Nike's Analysis: Student Name Institutional Affiliation Course Name Instructor Name Date
Student Name
Institutional Affiliation
Course Name
Instructor Name
Date
Table of Contents
Executive Summary:........................................................................................................................3
Introduction:....................................................................................................................................4
Recommendations:........................................................................................................................16
Conclusion:....................................................................................................................................17
Executive Summary:
Nike is a company that mainly works in the footwear market. Sports clothing, accessories,
equipment, and component items are planned, manufactured, and commercialized. CEO Philip
Knight is overseeing Nike, Inc. President. Mr. Knight was co-founded in 1962, and in 1978 Nike
The company's financial records, press releases, division details, company history, and current
ventures were compiled for a strategic audit of Nike Inc. and its wholly-owned subsidiaries.
Following the compilation of data, an analysis of the capabilities, limitations, opportunities, and
risks Nike has as an organization was done and a SWOT analysis was conducted for Nike. In
Porter's Five Powers model, the footwear industry was studied. Based on the results, Nike Inc. is
successfully using the money by extending promotions in the entertainment field; growing the
marketing initiative in casual footwear lines; continuing to be at the cutting edge in designing
and producing athletic footwear; maximizing the quality of Nike Inc.’s products
"To ensure the inter-generational quality of life, preserving the atmosphere, and increasing
respect to our customers, shareholders and business partners, by embracing business strategies,
Nike has set a mission statement" (1). According to Acaria.com, the mission is to increase
income for shareholders through goods and services that enrich the lives of our clients.
Introduction:
Nike from Oregon (NKE) is one of the world's biggest labels. The organization is still strong
since it was founded in 1964 as Blue Ribbon Sports. Nike is the leading retailer of sports clothes
and boots. Recognized for his famous motto —"Just Do It" It also creates makes and
commercializes its own sports equipment range. Nike's corporate names include Air Jordan, Nike
Golf, and Nike Pro, as well as several franchises including Converse and Hurley International.
Nike Inc. (NKE) is a multinational business designing, producing, promoting, and distributing
sporting equipment, clothes, accessories, and services. Though mainly for sporting use, many of
their products are used for recreational or recreational uses. Manufactured by private contractor
firms, the bulk of Nike products are either distributed directly to the customer by Nike retail
stores and on digital platforms or through local manufacturers, licensees, and sales members.
The company's headquarters in Oregon include Adidas AG (ADDYY), ASICS Corp. (7936),
Lulu lemon Athletica Inc. (LULU), Puma SE (PUMSY), and Under Armore Inc. (UAA) Nike is
the largest growth organization in terms of mindset and purpose. I am sure the owners will be
happy if Nike works by the slogan and pursues the momentum. By February 2020, the firm had
$143.6 billion in market capitalization. Based on its stable stock output and income growth,
sales, and income per share, good balance sheet, and management strategy, Nike is a solid stock.
Yet no risk-free stock remains – not even Nike. In China, a recession, currency fluctuations and
intensified competition are issues often that can form the growth figures in the sector. Although
the positive should prevail over the negative ones, the stock might seem to be costly especially
when it is about 52 weeks old. The business can clarify this level, but it is prudent to encourage it
Nike, Inc.'s primary business is "designing, developing and marketing of high-quality shoes,
clothing, equipment, and accessories worldwide". In the USA and about 110 countries around
the world, Nike sells its goods to about 20,000 retail accounts. Almost all Nike products are
manufactured by independent contractors. The bulk of footwear items are made outside the US.
Revenues of $8.8 billion were compared to a record of $9.6 billion for the fiscal year ended on
Nike footwear has been specially designed for athletic use. High-quality construction and
creative nature are of great significance. But a significant proportion of the items are used for
recreational or informal purposes. Nike offers and sells a wide range of items such as track
shoes, soccer, cross fitness, women, and youth. These are all now its top-selling types of items.
Nike markets also offshore shoes for outdoor events, for example, tennis, cricket, soccer,
baseball, rugby, bicycle, volley, boxing, boarding, water sports, car racing, and other leisure or
Nike started to market outdoor sports clothing in 1979 and now we are offering clothing and
athletic bags and shoes in both of these categories. Nike clothes and shoes have the same brands
and are marketed through the same promotion and delivery outlets, to add to your sports
footwear products. In "collections" with identical styles or for particular reasons the company
also markets boots, garments, and accessories. The brand offers a range of Nike-based
performance apparel, including athletic balls, timepieces, eyewear, skates, bats, and other sports
equipment. They offer also, through its wholly-owned subsidiary, Cole Haan Holdings, an
assortment of casual footwear and accessories for men, women, and children under the brand
name Cole Haan. The business markets its wholly-owned subsidiary, Nike Team Sports, Inc.,
formerly Sports Specialties Corporation, with its official team logos. They also sell limited
quantities of different plastics through its wholly-owned company, Nike IHM, Inc., to other
manners.
Ice skating, rollerblades, in-line skates, safety clothing, hockey sticks, and hockey jerseys and
accessories are manufactured and sold under the corporate names of Bauer and Nike through
Bauer, the company's wholly-owned subsidiary, Bauer Nike Hockey Inc. Bauer provides a wide
In the world of athletic, recreation, and footwear brands, products and equipment companies, and
major companies, including Reebok, Adidas, and others, Nike is competing with growing
numbers of sporting and leisure shoe companies and globally diverse lines of sports and
equipment.
Growth; The business called itself a "growth enterprise," a clear statement about its mindset and
purpose. I am sure the owners will be happy if Nike works by the slogan and pursues the
momentum. As of February 20, the corporation has had $143.6 billion in market capitalization.
For Nike, things went well. The 2019 fiscal year finished with sales of $39.1 billion. This was 7
percent more than last year and revenues were 36.4 billion dollars. On a balanced monetary
basis, the growth was 11 percent relative to the previous fiscal year.
Hurley and Converse are the main brands of Nike's affiliate. Converse crafts produce and sell
clothes, boots, and accessories for sport. On the other side, Hurley crafts markets and distributes
boots, clothes, and apparel for surfing and kids. Business shifts into the direct sale of the brand
and high US growth have driven Converse's sales to $1.9 billion, up by 3 percent from the
Liabilities
Sold
During Q1 of its 2021 fiscal year (FY), which ended August 31, 2020, Nike reported net profits
of $1.5 billion on $10.6 billion in sales. In Q1 FY 2021, net income rose 11.0 percent relative to
the same quarter a year before. Compared to the year-ago period, sales declined by 0.6 percent.3
Reduced operating and administration costs offset the reduction in gross profit and revenue,
witness decreases in physical retail traffic in its stores. For the quarter, most of the company's
stores were open. The organization has also said that its digital revenues have seen good growth.
May 31, May 31, May 31, May 31, May 31, May 31,
Current ratio: a liquidity ratio based on the current assets over liabilities. The existing ratio of
Nike Inc. decreased between 2018 and 2019 but then changed to a 2018 average between 2019
and 2020.
Quick ratio: liquidity ratio measured as a selective range of Current A. (cash plus short-term
marketable assets plus debts) divided by present liabilities. The quick ratio of Nike Inc. worsened
between 2018 -2019, and then increased between the periods of 2019 -2020, however still could
liabilities. The cash ratio of Nike Inc. declined from 2018 - 2019 but then strengthened over 2018
May 31, May 31, May 31, May 31, May 31, May 31,
coverage
Debt-to-equity ratio: solvency ratio measured as net debt divided by total shareholder equity.
Nike Inc.'s debt-to-equity ratio increased from 2018 to 2019, but only declined drastically from
2019 to 2020.
debt-to-asset ratio: solvency ratio measured as net debt divided by total assets. Nike Inc.'s debt-
to-asset ratio increased from 2018 to 2019, but only declined drastically from 2019 to 2020
Financial debt ratio: solvency ratio measured as net assets divided by total shareholder interest.
The financial leverage ratio of Nike Inc. rose from 2018 to 2019 and from 2019 to 2020.
Interest coverage ratio: solvency ratio measured as EBIT broke down by interest payments. The
interest coverage ratio of Nike Inc. increased from 2018 to 2019, but then declined substantially
Fixed coverage ratio Solvency ratio measured as earnings before fixed charges and tax split by
fixed charges. The fixed charge coverage ratio of Nike Inc. increased from 2018 to 2019 but then
margin
Net profit margin 6.79% 10.30% 5.31% 12.34% 11.61% 10.70%
Return on Investment
(ROE)
Return on assets 8.10% 16.99% 8.58% 18.23% 17.57% 15.15%
(ROA)
Gross profit margin: Gross profit margin reflects the amount of income required for operating
and other expenses. The gross profit margin ratio of Nike Inc. increased from 2018 to 2019 but
then declined dramatically from 2019 to 2020 (Van Horne, & Wachowicz, 2005).
Operating profit margin: profitability ratio measured as operating profits divided by income. The
gross profit margin ratio of Nike Inc. fell from 2018 to 2019 and from 2019 to 2020.
Net profit margin: Measure of performance, measured as net profits divided by income. The net
profit margin ratio of Nike Inc. increased from 2018 to 2019, but then fell marginally from 2019
to 2020 to 2018.
ROE: The profitability ratio is measured as the net profits divided by the equity of the lenders.
The ROE of Nike Inc. improved from 2018 to 2019 but then fell significantly from 2019 to 2020
to 2018.
ROA: The rate of profitability measured as net profits divided by total assets. The ROA of Nike
Inc. changed from 2018 to 2019 but then declined dramatically from 2019 to 2020.
The dividend yield is a simple way to calculate the present interest rate received on the
invested dollar because it is a relative measure of common stock dividends. The dividend yield is
measured as follows: annual dividends earned per share / current stock market price. The
dividend yield for Nike Inc. is 1.16. It is commonly one of the ratios that are tested by skilled
traders to watch rates and it provides a clear understanding of how the business operates. It is
useful to look at the dividend payout ratio to put the dividend yield in perspective. The part of
earnings per share that is paid out as dividends is determined by this ratio. Dividends per
stock/earnings per stock are calculated as follows. The payout ratio for Nike Inc. is 22.22
percent. This is a fairly decent ratio, and while stockholders like to collect dividends, they do not
like to see the payout ratio of the company above 60-70%. It is hard to sustain payout rates that
The latest stock price of Nike Inc. was priced at $41.38, and with each share kept, their last
annual dividends were valued at $0.48. It is fair to assume that its dividend distribution per year
is reasonably effective.
Considering Nike Inc. is a leading high-quality footwear manufacturer, producer, and marketer,
one would expect their business profile to be very good. The previous financial review indicates
that even though their ratios might not always be above market expectations, Nike runs a stable
sector in the industry. Keeping the shareholders happy is always really critical, and Nike has
done this by constantly bringing value to the brand. Nike deserves praise for being an industry
leader and for still being on the lookout for new markets to lead, amid some low ratios.
The outlook of Nike looks highly optimistic as the company expects new markets to begin to
enter, boost revenue, and mitigate product costs. It is therefore possible to expect the company to
will advocate investing in the stock of Nike Inc. as this study shows that it will be a smart
Nike is an affluent portfolio, focused on constant stock success and earnings growth per share,
profits, and net revenue. Yet no risk-free stock remains — not even Nike. A recession in China,
the movement of currency, and rising competition are often issues that could diminish the
development of the business. While the positive can outweigh the negatives, the stock will seem
costly, especially if it is about 52 weeks tall. The business can justify these prices, but you should
Many firms fight for revenue. The market is very fierce. Most money is spent on advertisement
and promotion on multiple platforms so that the young age community of customers can connect
with them, investing most money on their goods. In the athletic footwear industry, development
has also slowed, but with fast growth rates, new markets are developing. The action sports and
corporate products markets are examples of these markets. The seasonal portion of commodity
casual wear are rising unconventionally, competition and marketing are fierce in moving
consumers around. Consumer prices are still very competitive for swapping. Alternatives are
conveniently available, attractively priced, and equal to quality, with just a few characteristics.
The athletic footwear industry is dissuasive as a result of the research and development of the
athletic footwear market. Casual shoes are however not as pricey. Technological knowledge in
sports footwear is not readily available (ex. Nike Air, Nike Shox, Reebok DMX, etc.). Buyers
are still very involved in brand loyalty and choice. To do so, brand awareness, advertisements,
Another problem facing potential entrants is the limited investment in manufacturing resources.
Restricted access to retail space is however one of the most significant entrance deterrents. No
regulatory policies, tariffs, or import barriers are currently being enforced to prohibit entry.
Suppliers have little control or control to manipulate pricing or availability. Raw materials and
processing capability are also not missing. Quality and efficiency in the processing and
production of raw materials is not a consideration because it's an expensive process. Quality and
efficiency depend on the type and manufacture of the shoe, not on the raw materials concerned.
Control and leverage tradable by commodity purchasers, The fact that switching costs are low
gives buyers some control. However, there is a very big number of prospective clients who buy
themselves and not as a group. Thus, volume or exclusive party discounts are not negotiated.
Buyers may not attempt to reverse their inclusion in the sellers' market. However, consumers
may determine whether to procure a specific brand of a product in a broad variety of ways.
Recent Developments, Analyst Opinions, and opportunities:
Nike is a major developer of revolutionary new goods. It began with Nike Air's air product
range. The new update, the Nike Shox line, has now passed away. The new shoe would increase
the potential of a competitor to leap, fly, and make the game more challenging. For 16 years, the
research team at Nike spent dreaming about the ability to attach the springs to the foot of an
athlete, studying, designing, and testing them. The dream is brought to life by Nike Shox, the
most famous technical creation. This is another example of how Nike is making its sneakers with
performance and technology. They also retain simplistic templates, which for Nike is chic. Nike
is well known for its advertisements as well as its sneakers and has excellent mass-
In the course of the Customer Direct Acceleration program (CDA), Nike announced some senior
leadership changes at the end of July. To build long-term growth and stability, the CDA
initiative, first revealed in June, intends to accelerate the digital transformation. The company
expects improvements to management to lead to the Company's net employee cuts, leading to
Nike has precious tangible properties, too. The shoes are sold around the world and they market
shoes in more than 100 countries. Nike also partners with Hewlett-Packard to provide the Nike
supply chain (NSC) initiative with hardware, applications, and consultancy services. The
that will deliver sustainable strategic advantages and strengthen Nike's global brand leadership.
The project aims to increase Nike's capacity to adapt to changing markets, and the investment
cost and inventory, strengthen customer/consume experience, improve procedures, educate and
consistency of the product and provide a local implementation of an effective global supply
chain.
Nike also has important human properties, as their workers are inspired by an athletic
background that makes them an attractive, successful organization. Nike has valuable corporate
strengths, a healthy balance sheet, and a stable financial standing from the point of view of loyal
customers.
Their intangible properties, including brand value or corporate ethos, are one of Nike's most
significant sustainable strategic advantages. Everybody understands that Nike is one with
competitiveness, athletics, and a fair-track mentality from his previous ads, commercial
approvals, and activities. Another power is the R&D organization of the firm, which will
maintain the pipeline full of creative new goods. They still have manufacturing contracts with
producers in countries with fewer labor conditions and other countries with more expense. The
produce is often carried out when labor is inexpensive, as the operation is intensive in function.
Owing to the success of Nike in the last ten years, it is in a favorable business position. Their
market share leadership, wider product range, and greater awareness will also add to this.
Nike broke into three groups of financial measures: NIKE Brand; Converse; and Corporate.
Also, the NIKE brand is split into several regional areas: North America, Europe, the Middle
East, and Africa, Greater China, Asia Pacific, and Latin America and Worldwide Brand
Branches. The division of the NIKE brand constitutes 94.6% of overall sales of the company and
For its primary product categories and distribution platforms, Nike still divides sales but does not
income from multinational brands and converse company licensing companies and the foreign
exchange hedge profits and losses paid for in the corporate division, are responsible for a
marginal amount. In Q1 FY 2021, only Footwear produced higher sales than in the first quarter
of 2021. The details listed in the above and below pie charts exclude divisions which have either
negative income or negative income. Nike records both sales and EBIT, its prime metric for the
Europe, Middle East, Africa: 9.8 billion dollars or 26% of global revenues.
Latin America: USD 5.2 billion or 14% of overall sales the Asia Pacific
Nike has new prospects and sectors to enter and exploit to remain a global leader and maintain
profits and growth. The highest is the product line "All Conditions Gear" (ACG), which focuses
on the Y generation and the extreme sports they love. More products and accessories are also
important to further broaden into a mainstream sport, such as golf, basketball, basketball,
volleyball, football, and rugby. Nike would now build on existing global markets and enter new
markets. They need to continue to evolve innovations and fads like Nike Shox. Another potential
is to extend promotion into non-sport and leisure venues as the line between entertainment and
sport has blurred. Nike could also attempt to reach into the field of corporate commodities since
We also established the following suggestions after evaluating extensively Nike's organization,
marketing policies, and role in the industry. As the consistency and brand value of the ACG
product line is decreasing, we recommend they invest more capital, energy, and advertising to try
and increase it. You can also do this by enhancing product architecture, components, and
processes. The corporation should spend its capital more efficiently. This may be achieved by
broadening its promotion to cover leisure and other non-sport services so the line between sports
is fluctuating. At present, Nike concentrates much of its marketing activities on athletic apparel.
They should also extend their casual footwear to boost sales (Besanko, Dranove, Shanley, &
Schaefer, 2009).
As Nike's approach is to distinguish, they must stay at the forefront of athletic apparel. This will
allow them to develop new sneakers and other items, which will give them a diverse selection of
products. The use of the Internet to communicate with consumers is one of the most important
aspects of Nike's business (Chandr, 2011). They develop a new technology that enables them to
design their shoes online. To do so you must upgrade your website so that it becomes easy to
access. The download on the website takes way too long and there is no word on the simple
functionality of the products. We also advise Nike to expand its international efforts to maximize
its product sales. Our last recommendation is that Nike remains the leader in athletic shoe
technology and performance. They must maintain their strong competitive edge to avoid losing
Investors should be mindful of the financial and stock effects of Nike including currency
However, analysts believe that Nike is positioned for continuous progress, which could influence
the share price of the firm. This is because it relies constantly on creativity in product and
marketing. It will continue to upgrade its digital presence across its Nike Direct enterprise by
marketing and releasing new goods online and also enhancing its supply chain.
Nike's emphasis on market awareness and development through investment can continue to pay
off along with R&D investments and demand generation. Also, demand for its goods could
continue to rise both for the rising middle class in developing markets and for China in greater
numbers. However, there might be some hiccups. In October 2019, the company revealed it was
turning over the reins to John Donohoe to its CEO Mark Parker, who has lead Nike since 2006.
Donohoe served as Chairman and CEO of the cloud computing firm ServiceNow and was on the
China is another main investor aspect that needs to be kept in mind. Since it is one of the major
growth markets of the business, any adverse news from outside the nation can have a huge effect
on stock prices. For example, the inventory hit after the company revealed that, because of the
coronavirus epidemic, it had to close down half its stores in February 2020.
References
Education.
Education.