Index

Nike (general description).......................……..................................................... 2

History …………………….......................……....................................................... 2

Business strategy………....................…….......................................................... 3

Organizational Structure……………………........................................................ 4

Board of directors……………………................................................................... 4

Managers of the Company (Officers) ……………………................................... 5

Description of Market or Industry ……………………........................................ 5

SWOT Analysis……………………....................................................................... 6

Tables of Historic Information …………………….............................................. 8

Tables of Financial Analysis Interpretation……............................................... 11

Conclusions ........................................................................................................ 12

Bibliography......................................................................................................... 14

Nike (general description)

Nike is a shoe company engaged in the design, development, marketing and selling of

athletic footwear, apparel, equipment, accessories and services. Nike sells his shoes

worldwide, in North America, Western Europe, Central and Eastern Europe, Greater

China, and Japan. The Company's brands include NIKE, Jordan Brand, Hurley and

Converse.

History

Nike was born on January 25, 1964, by the name of “Blue Ribbon Sports” by Bill

Bowerman and Phil Knight. The name of “Nike” comes from the Greek goddess of

victory and it became the official company’s name on May 30, 1971. The company

started as a distributor for a Japanese shoe maker Onitsuka Tiger, selling at track

meets out of Knight's automobile. Years later their relationship was nearing an end, so

they launch their own shoes, starting with “The Swoosh” logo.

Business strategy

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Nike uses a combination of many strategies which leads to them being as successful as

they have been. According to the Porter model Nike uses a combination of cost

leadership strategy and differentiation strategy as their generic strategy, meaning they

always try to cut costs to maximize their profits, this also leads to lower prices for

consumers. The differentiation strategy on the other hand meaning Nike tries to be

different from their competitors by always being innovative with new technology for

example. Another strategy of Nikes is market penetration, they always try to expand to

new markets and gain a larger market share, this is done by for example selling their

products both in store and online, also selling through local retailers is another factor

here as well as product affordability which Nike focuses heavily on.

Organizational Structure

According to Jay R. Galbraith this is Nike’s organizational structure:

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 Board of directors

Philip H. Knight Alan B. Graf Jr

Mark G. Parker Peter B. Henry

Cathleen Benko Travis A. Knight

Elizabeth J. Comstock John C. Lechleiter

John G. Connors Michelle A. Peluso

Timothy D. Cook John R. Thompson

John J. Donahoe Ii

Managers of the Company (Officers)

Mark Parker Hilary Krane

Andy Campion John Slusher

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 Eric Sprunk

Description of Market or Industry

Nike is engaged in the design, development, marketing and selling of athletic footwear,

apparel, equipment, accessories and services. The Company's operating segments

include North America, Western Europe, Central & Eastern Europe, Greater China,

Japan and Emerging Markets. The Company's portfolio brands include the NIKE Brand,

Jordan Brand, Hurley and Converse. The Company sells its products to retail accounts,

through its retail stores and Internet Websites, and through a mix of independent

distributors and licensees across the world. The Company's products are manufactured

by independent contractors.

SWOT Analysis

Strengths Weakness

R&D activities dependance on independent contract

manufacturers all over the world
brand portfolio

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 Opportunities Threats

Footwear Market growth in counterfeit product

Online Retail Channels intense competition

SWOT analysis consists of four different aspects, strength, weakness, opportunity and

threat, beginning with strengths Nike has a lot of them, they are currently in a very

dominant market position with a strong brand portfolio, Nikes focus on R&D activities is

another strength giving them an edge over opponents in the market. Lastly Nike has a

multi channel approach, meaning they sell their merchandise in many different ways,

from their own stores to local retailers and online. Now moving on to the weakness of

Nike, one major flaw with Nike is that they depend on independent contract

manufacturers all over the world, this is a weakness because it gives Nike limited

control of the quality of the products they provide. Opportunities, for Nike are currently

the growing market that is footwear which Nike is apart of, there has been big increases

in this markets total revenue during the last couple of years. Another opportunity of

Nikes is the growing number of people buying through online retail channels throughout

both Europe and the United States, since Nike has a big presence online with their

online stores, which is why this is an opportunity for them. Lastly threats, some threats

of this major corporation that is Nike are, the growth in counterfeit products, this

meaning there are a lot of shoes and other Nike products being sold that are counterfeit,

and this number is only growing making it a threat to Nike. Other threats Nike must

consider are the very intense competition for example, in this market there are many big

names such as Adidas, Puma, UA and so on meaning that Nike has to put in a lot of

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work to maintain their position as market leaders, otherwise there are many other

brands ready to step in and take that position.

Tables of Historic Information

a. Balance Sheet

6
b. Income Statement

7
c. Cash Flow Statement

8
 Tables of Financial Analysis

a. Liquidity Analysis

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b. Operating Analysis

c. Profitability Analysis

d. Solvency Analysis

Interpretation

a. Current Ratio

The current ratio of Nike for this past year was 251% meaning 2,51 this would be

considered good since a company usually wants the current ratio to be above

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 two so they can pay back debt fast if ever needed. It was higher last year but that

does not mean it was necessarily better, having around 3 instead of 2 could be

considered cash just sitting and not being invested.

b. Acid Test

For this past year Nike had 163% as acid test, or 1,63 this would be considered

good because acid test or quick ratio as it is also referred to as, should be above

1 atleast so that if faced with a setback the company can still survive and pay off

the debt. Acid test also had a higher number last year being around 2 but as

mentioned before you need over 1 here and 2 could in some people's eyes be

considered as cash not being invested.

c. Accounts Receivable Turnover and Collection period

How many times a year a company collects the accounts receivable or the

money they are owed, it takes Nike almost 81 days to collect the cash, usually

this would be considered to be a little slow, since that is almost 3 months until

they finally collect the money, and this number has not changed much the last

couple of years for Nike meaning it is currently not improving much.

d. Inventories Turnover and sales period

Inventory Turnover, or sales period would be the amount of times per year the

company Nike manages to sell its inventory, while sales period would be this

number but in days, meaning how many days on average until Nike sells their

inventory. Comparing the days inventories number between the 3 years for Nike

we can see that Nike has improved each year a little in this aspect meaning it

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 takes shorter time to sell inventories today than two years ago, therefore it is

currently headed in the right direction.

e. Accounts Payable and payment period

Accounts payable turnover and days accounts payable (payment period) are

connected, this years 3,7 accounts payable turnover gives 95 days until Nike

pays their short-term obligations, comparing this to last years 98 shows no big

difference, a slight decline which is bad but not too much, when comparing to two

years ago on the other hand Nike had a days accounts payable of 118 days

meaning they waited much longer before paying which gives a better value in the

net cash cycle.

f. Return on Net Operating Assets (RNOA)

RNOA decreased in one year from 19% in 2017 to 8% in 2018, all because the

net income, which decreased from 4,240,000 in 2017 to 1,933,000 in 2018,

meaning they are winning less money than last year.

g. Return on Assets (ROA) using the DuPont Model

ROA decreased in one year from 19% in 2017 to 8% in 2018, because net

margin went down from 40% in 2017 to 17% in 2018, meaning they are winning

less money than last year

h. Return on Equity (ROE) using the DuPont Model

ROE is lower this year because Net margin decreased from 40% in 2017 to 17%

in 2018, meaning investors are earning less than last year

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i. Assets Turnover

Assets turnover increased from 47% in 2017 to 50% in 2018 because sales

increased by 31.63%, meaning each asset I have makes more money per year

j. Gross Margin

Gross margin decreased from 40% in 2017 to 17% in 2018, this means net

income decreased by 54%

k. Operating Margin

Gross margin decreased from 40% in 2017 to 17% in 2018, this means net

income decreased by 54%

l. Net Margin

Gross margin decreased from 40% in 2017 to 17% in 2018, this means net

income decreased by 54%

m. Total Debt to Equity

My total debt to equity increased from 31% in 2017 to 39% in 2018, because my

debt increased by 17% and my equity decreased by 21%

n. Long Term Debt to Equity

My long term debt to equity increased from 28% in 2017 to 35% in 2018,

because my long term debt almost didn’t increased and my equity decreased by

21%

o. EBITDA / (Short Term Debt + Interest Expenses)

It decreased from 13.232 in 2017 to 11.37 in 2018 because my debt and interest

expenses was to high

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 Conclusions

Nike it’s a good company, every year they earn more and more, and even though their

debt increases every year too, it's nothing compared to how much they are earning.

One of the reasons that nike is growing every year is because every year they sell more

and more thanks to their marketing, we can see it in the cost of good sold, they spend

more each year because they make more products.

Bibliography

○ Nike, retrieved from: https://en.wikipedia.org/wiki/Nike,_Inc.

○ Company Profile, retrieved from:

https://www.reuters.com/finance/stocks/company-profile/NKE.N

○ 9 Surprising fact you didn’t know about nike swoosh logo, retrieved from:

https://www.designhill.com/design-blog/9-surprising-facts-you-didnt-know-

about-nike-swoosh-logo/

○ Organization design challenges resulting from big data, retrieved from:

https://pdfs.semanticscholar.org/4306/48f1f88319b222b169d19815a9657

0d60ec9.pdf

○ Code of Ethics, retrieved from:

https://investors.nike.com/investors/corporate-governance/?toggle=ethics

○ How Nike became successful and the leader in the sports product market,

retrieved from: https://profitworks.ca/blog/marketing-strategy/545-nike-

strategy-how-nike-became-successful-and-the-leader-in-the-sports-

product-market.html

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○ Nike Inc. Generic Strategy & Intensive Growth Strategies retrieved from:

http://panmore.com/nike-inc-generic-strategy-intensive-growth-strategies

○ Nike Swot Analysis, retrieved from:

http://www.marketingteacher.com/nike-swot-analysis/

○ Swot, retrieved from: https://businessteacher.org.uk/swot/nike.php

○ Accounts Receivable Turnover Ratio, retrieved from:

https://www.accountingtools.com/articles/2017/5/5/accounts-receivable-

turnover-ratio

○ Average collection period, retrieved from:

https://www.investopedia.com/terms/a/average_collection_period.asp

○ Days sales of inventory, retrieved from:

https://www.investopedia.com/terms/d/days-sales-inventory-dsi.asp

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