The infographic below shows an overview of those different stages or tiers of our value chain, the main processes within those tiers, and the relative carbon and water impacts of the tiers. The value chain as a strategicanalysis tool emerged when nike s. This began a period of transition, where several of nike s early pioneers decided to move on to other pursuits. Strengths firstly, nike inc was leader of sports equipment industry, which also top suppliers of sports equipment around the world. Porter suggested that activities within an organisation add value to the service and products that the organisation produces, and all these activities should be run at optimum level if the organisation is to gain any real competitive. Nike has a mass market business model, with no significant differentiation between customers. Nike, inc cost of capital on july 5, 2001, kimi ford, a portfolio manager at northpoint group, a mutualfund management. His book competitive advantage introduced the basic concept of value chain analysis, outlining how businesses can identify primary and supporting activities and create value for their customers. The term value chain analysis was first coined in 1985 by michael porter, a harvard business school professor. Nike is a celebrity brand of sports shoes, apparel and equipment. Placed in a wider context, this acquisition makes a lot of sense. The straightforward guide to value chain analysis hubspot blog. Value chain analysis is a strategy tool used to analyze internal firm activities.
Nike entered the 1980s on a roll, thanks to the successful launch of nike air technology in the tailwind running shoe in 1979. May 12, 2020 analysis of nigeria bottling company value chain. Please note, not all equities are covered by this module due to inconsistencies in global equity. We also sell athletic apparel carrying the same trademarks and brand names as. Dec 16, 2007 home essays nike s value chain nike s value chain topics. In his 1985 book competitive advantage, porter explains that a value chain is a collection of processes that a company performs to create value for its consumers. To find book value, add up everything the company owns in terms of assets, then subtract everything the company owes, such as debts and other liabilities. Aug 19, 2019 outbound logistics are a very critical part of nike s value chain. One of his bestknown concepts is the value chain, which is used to deliver a product or service to the market and has three key objectives. It was professor michael e porter of harvard business school who introduced the concept of value chain analysis. Porters value chain is important for discussing the internal business environment of nike inc. For a company that moves over 900 million units per year, these savings amount to a serious competitive edge. Value chain analysis is mentioned extensively in the first half of the book competitive advantage in 1985 by michael porter.
Price book value is a widely used stock evaluation measure. Aug 16, 2016 studies that use the gvc framework typically follow a research approach that involves two main steps. The value chain as a strategic analysis tool emerged when nike set a. Largest seller of athletic apparel and footwear worldwide international performance for 2008. A business needs to look at every angle for their value chain to work and to make sure their expansion is successful. Nike nutrition and global sustainability nikes policy of corporate social. Value chain analysis is mentioned extensively in the first half of the book. Mar 30, 2021 to find book value, add up everything the company owns in terms of assets, then subtract everything the company owes, such as debts and other liabilities. An analysis of the mission, vision, values, and goals.
This began a period of transition, where several of nike s early. Nov 08, 2009 nike s new supply chain project introduction. What is porters value chain model and why it matters in. Optimizing these steps helps create better results and increase productivity. Value chain analysis of nike value chain of nike is the best known example of business management concept. By the end of 1980, nike completed its ipo and became a publicly traded company. Porters value chain model is highly popular in the business world.
Porter has dedicated much of his career to studying competitive advantage. Book making global value chains work for development. The average book value share of the companies is 8. It has formulated definite strategies to introduce new technology which will not only release less carbon dioxide and carbon monoxide but it will also decrease the need of basic raw materials, 2016. So, despite its fabled swoosh, nike was regarded as an amateur when it decided in 1995 to branch out from shoes. These products are shipped to the nike distribution centers and then to retail stores for sales. We said that based on our footprint across our entire supply chain we saw a number of key focus areas for nike. Nike can control following drivers to add value, set. Adding value in nike s production line technology and. The key to nike s efficiency is its low overhead manufacturing costs. Nikes value chain and competitive forces in 1984, nike owned just 16% of the athleticshoe market, and for much 1,194 words 5 pages nike inc study of value chain functions and how they contribute to the success of nike. Value chain analysis nikes value chain contains seven primary activities. As is stated in the book, an increasing worry for organizations in indust. The following table provides additional summary stats.
We dominate sales in the athletic footwear industry with a 33% global market share. As is stated in the book, an increasing worry for organizations in industries. If the real value is higher than the market price, nike inc is considered to be undervalued, and we provide a buy recommendation. The fact that nike is working in numerous regions of the world requires for a critical analysis of the value chain in the global context. The company targets its offerings at any consumer who is interested in athletic footwear and apparel. Over 1,360 companies were considered in this analysis, and 1,236 had meaningful values. These activities are technology development, product design, component manufacturing, assembly, marketing, distribution and retail sales. Electronic commerce, online shopping, website pages. Please refer to the stock price adjustment guide for more information on our historical prices. Value chain analysis in order to assess nikes strategic capabilities, value chain analysis will allow us to identify the key capabilities that the company currently possess, whilst also allowing us to pinpoint those that must be leveraged in order for us to gain a competitive advantage.
The value that has created and captured by a firm is the profit margin. Identify and provide an example of the use of lateral collaboration and vertical collaboration within the organization, and prepare an. One of the critical ingredients of nike success is its ability to create demand for its products. Its headquarter is located in washington country oregon united states. In 2019 nike took a win as company of the year for its revolutionary approach to. How organization creates values it is always a significant business consideration. Primary value chain activities inbound activities the inbound logistics aims of nike inc.
Oct 21, 2017 looking at the company s peg ratio, a metric favored by peter lynch, nike s current peg ratio is 1. However, nike must not take it as a rigid, standalone framework by assigning the equal importance to all activities. Trade policy in a world of global value chains case solution, nike. You can also select from a set of available indicators by clicking on the link to the right. Pdf using valuechain analysis to discover customers strategic. Golf ranks as one of the most brutal and demanding markets in the sports business. Identify and provide an example of the use of lateral collaboration and vertical collaboration within the organization, and prepare an action plan to use lateral and vertical collaboration. Essay type analysis nigeria bottling company produce, sell and distribute a range of nonalcoholic beverages including four of the worlds best selling brands. Case study analysis international mraketing of nike inc. It is a model consisting of value chain activities and support activities enables a company to understand the parts of its operations that create value in addition, it enables a firm to its cost position the value chain includes all the activities starting from the procurement of raw materials to sales and after sales service optimizing these steps helps create better results and increase productivity this is an analysis of the value chain of nike value chain analysis.
What is porters value chain model and why it matters in business. Michael porter, introduced a simple value chain model in his book. Value chain analysis example what is value chain analysis. Nike has a distinguishment then other its competitors.
Feb 16, 2021 the proactive approach towards analysis of assets feasibility, significant return on investment, supply chain management, import and export status, consumption volume, and enduse offers more value to the overall statistics on the women sportswear market. Most of nike s fundamental indicators, such as book value per share, are part of a valuation analysis module that helps investors searching for stocks that are currently trading at higher or lower prices than their real value. The value chain as a strategic analysis tool emerged when nike set a precedent in the. A value chain is used to describe all the business activities it takes to. Solved porter value chain analysis of nike f1 hbr case study.
This book examines and evaluates various private initiatives to enforce fair labor. Nike jobs, benefits, business model, founding story. The effective value chain analysis requires nike to realise that all activities or functions do not require same scrutiny level. Assessing the primary activities in the value chain. Analysis would suggest that these companies are becoming larger rivals to nike. They outsource to companies that can make their clothing at lower cost without nike having to own any factories. The current price to book ratio for nike as of march 31, 2021 is 17. Aug 10, 2020 analyzing the events that add value and those that are not important, because the company can achieve high returns, if the value created is more than the costs incurred for the specified value. Capital is an approximation of the economic book value of all cash invested in goingconcern business activities. Nike inc market multiple valuation nke usa footwear. Apr 01, 2021 investors use this metric to determine how a company s stock price stacks up to its intrinsic value. It is a model consisting of value chain activities and support activities enables a company to understand the parts of its operations that create value in addition, it enables a firm to its cost position the value chain includes all the activities starting from the procurement of raw materials to sales and after sales service optimizing these steps helps create. Nike makes money by primarily selling footwear via wholesale customers that distribute the nike brands across the globe.
The remaining comprised equipment and the converse brand. Strategic directions and strategic objectives 10 3. Norcio 2192007 when bill bowerman, a former trackandfield coach at university of oregon and cofounder of nike inc, once said if you have a body, you are an athlete, his words marked the foundation for a. Nike is building a massive digital advantage the motley fool. As of 2017, over 60% of revenues came from footwear and over 28% in apparel. Around the world, it can be easily recognized by its swoosh logo. If product differentiation is the aim of nike, value chain analysis will help the company in maximising the efficiency and enhancing the product quality by improving processes.
Indepth view of key statistics and finances for nike, inc. Enterprise value is total company value the market value of common equity, debt, and preferred equity minus the value of cash and shortterm investments. Commodity chain analysis of nike shoes essay 1621 words. Under swot analysis categories into four part that are strengths, weaknesses, opportunities, and threats. As a result, he asserts that value chain analysis is directly linked to competitive advantage. The value chain approach suggests that a company can consider these activities as.
Historical price to book ratio values for nike nke over the last 10 years. Nike cannot trade all activities in the external market. Nike inc study of value chain functions and how they. How nike uses predictive analytics by clark boyd the. According to kimi fords quick sensitive analysis, nike was undervalued at discount rate below 11. Pdf global women sportswear market 2021 pandemic impact on. This is above a fair value figure of 1, suggesting that the company is indeed overvalued. Book value per share bvps is a method to calculate the pershare book value of a company based on common shareholders equity in the company. The current price to book ratio for nike as of march 30, 2021 is 17. It is important for managers to know how each stage in the value chain adds value to the entire production process. The strategic analysis that i choose for nike inc which are swot analysis and value chain.
Nike inc study of value chain functions and how they contribute to the success of nike. A value chain analysis example for nike is that it can use the analysis as a tool to negotiate the best prices and maximise the inbound and outbound transportation processes. Nike company has quite an edge over its competitors. Porters value chain model is a strategic management tool developed by harvard business school professor michael porter. Norcio 2192007 when bill bowerman, a former trackandfield coach at university of oregon and cofounder of nike inc, once said if you have a body, you are an athlete, his words marked the foundation for a future business venture. In his 1985 book competitive advantage, porter explains that a value chain is a. As stated in its annual report, nike is primarily a design and marketing company. Nke, including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Sep 09, 2019 nike s recent acquisition of predictive analytics company celect made headlines. Nike becomes a technology company page 1057 answer the questions.
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