NIKE
MSCM3 – 23rd November 2019
• Hoàng Lê Ngân
• Nguyễn Thị Thu Hoài
• Trần Đình Quí
• Huỳnh Tấn Khoa
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SWOT by Hoang Le Ngan
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SWOT Analysis
Strengths Weaknesses
Strong Brand Awareness
Huge Customer base
Aimed For Sustainability
Iconic Relationships
Low Manufacturing Cost
S WPoor Labor Conditions in Foreign Countries
Retailers have a strong hold
Pending Debts
Dependence on US Market
Threats
O T
Superior Marketing Capabilities
Opportunities Increased competition
Counterfeit Products
Emerging Markets Foreign Exchange Risks
Innovative Products
Efficient Integration
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Strengths
• Strong Brand Awareness: Nike is one of the most recognizable brands in the
world.
• Huge Customer base : Nike has millions of customer from around the world
who loyally follow Nike’s trends, participate in Nike events, and even provide
customer feedback.
• Aimed For Sustainability: Nike’s CEO Mark Parker has addressed that they will
continue to acknowledge the environmental issues in the communities.
• Low Manufacturing Cost: Most of Nike’s footwear is manufactured in foreign
countries.
• Superior Marketing Capabilities: Nike has excellent marketing campaigns.
Weaknesses
• Poor Labor Conditions in Foreign Countries: In the last 20 years, Nike has been
consistently targeted regarding their poor labor conditions.
• Retailers Have a Stronger Hold: Nike’s retail sector makes Nike weak due to its
sensitivity against pricing.
• Pending Debts: Although Nike’s income statements prove to be prosperous, a
quick glance at their balance sheet could paint a different picture.
• Dependence on US Market: Even after having established itself globally, Nike still
relies on US Market in terms of sales and revenue.
Opportunities
• Emerging Markets: Although Nike already has a presence in many foreign
countries, there is still plenty of opportunities for Nike.
• Innovative Products: Although Nike has produced many products, there is still a
lot to innovate.
• Efficient Integration: The supply and production of Nike’s products depend on
independent manufacturers. The brand can either acquire a few of these or make
some of its own for a more efficient and streamlined supply chain.
Threats
• Increased completion: Although, Nike is a dominating the athletic industry,
competition, and new emerging brands are still potential threats to the
company. With higher competition ratio, Nike has to spend more money on
marketing and advertising.
• Counterfeit Products: affect the revenue and reputation of Nike.
• Currency Foreign Exchange Risks: Since the brand operates globally, it is
affected by fluctuating foreign exchange rates.
Finance Analysis by Nguyen Thi Thu Hoai
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NIKE REVENUE GROWTH
Revenue Growth: Nike vs Adidas vs Skechers
Unit: Million USD
$80,000
$70,000
$60,000
$50,000 $36,397
$34,350
$40,000 $32,376
$27,799 $30,601
$23,331 $25,313
$30,000 $20,117
$19,014
$20,000
$23,983 $25,882
$18,782 $21,347
$18,586 $19,141 $19,250 $19,320
$10,000
$15,923
$2,007 $1,606 $1,560 $1,846 $2,378 $3,147 $3,563 $4,164 $4,642
$0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Skechers Adidas Nike
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Fiscal Year 2018 – Financial Comparison Unit: Million USD
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
Market capitalization Sales Operating profit
Nike Adidas Skechers 11
CASH CONVERSION CYCLE COMPARISO
Nike CCC from 2016- 2018 Nike vs Adidas vs Skechers in 2018
106 106
23 23
Year 2018 Nike
94 94
35 35
114 121
22 38
Year 2017 Adidas
97 119
39 40
113 113
25 53
Year 2016 Skechers
101 130
37 39
0 20 40 60 80 100 120 0 20 40 60 80 100 120 140
CCC Days of Payables Outstanding CCC Days of Payables Outstanding
Days of Inventory Outstanding Days of Sales outstanding Days of Inventory Outstanding Days of Sales outstanding
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Supply Chain by Tran Dinh Qui
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Facilities
• Nike has not invested heavily
into facilities. Manufacturing and
distribution are outsourced.
• Since few years, Nike wants to
make more responsiveness then
they have built Nike live store in
order to get closer with local
consumers (new launching in
long beach and Tokyo).
Nike live launches in Long Beach
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Information and Technology
• Nike focus on using e-commerce
to drive up sales number
significantly and they could get
the local member’s exact needs.
• New warehouse management
systems to optimize logistics and
speed up distribution time.
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Transportation
• Mainly outsourced to third party
logistics providers. Using ocean
container ship instead of by air and
reduce carbon emissions 30% by
2020.
• China Logistics Center.
• North American Logistics Campus.
• European Logistics Campus.
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Pricing
• Premium pricing, based on new
product development and innovation.
Nike is competing through a strategy
of differentiation, so we could expect
a very responsive supply chain (a lot
of new products with short lead
times).
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Sourcing and Inventory
• Most raw material in Nike’s SC are sourced
in the manufacturing host country by
independent contractors because of the
cost advantage of doing so.
• Nike has not built huge warehouse. Most
inventories in the pipeline (factories, third
party logistics providers, distribution
system). They have huge 3 DC China,
Europe, US.
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NIKE in VUCA world by Huynh Tan Khoa
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NIKE in VUCA World ?
Volatility: Trade war impact directly to Uncertainty: Because fashion always
Nike’s SC, tariff change, Forecast change so the new collection, new
change, cost of material change, design may not well received by
demand change, fuel change…. consumers.
Complexity: New brand, new Ambiguity: There are always hidden
competitors appearance constantly. It uncontrollable risks, which can result
results complicated market and demand from a faulty marketing campaign or
of consumers always change. accidents during the production or use
of products that affect reputation
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Recommendations
• Nike must improve responsiveness to meet
customers expectation on premium products.
Bring products closer to customers by reallocating
distribution networks near main market.
• More prevention measurement to avoid
disruption due to outsourcing in different
countries: focus on risk management and supplier
relationship management.
• Continue to invest in Information: more accurate
information for planning, inventory control and
feedback from customers to adjust strategy
accordingly.
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Thank you for attention
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