Nike, Inc.: Cost of Capital (v. 1.8) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Nike, Inc.: Cost of Capital (v. 1.8)
This is a Darden case study.Introduces the weighted average cost of capital (WACC). Provides a WACC calculation, although it has been intentionally designed to mislead students. Thus, their task is to identify and explain the "mistakes" in the analysis, which are intended to highlight conceptual issues regarding WACC and its components. Such issues are often misunderstood by students. Assumes that students have been exposed to the WACC, CAPM, the dividend discount model, and the earnings capitalization model.
Swot Analysis of "Nike, Inc.: Cost of Capital (v. 1.8)" written by Robert F. Bruner, Jessica Chan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wacc Study.introduces facing as an external strategic factors. Some of the topics covered in Nike, Inc.: Cost of Capital (v. 1.8) case study are - Strategic Management Strategies, Financial analysis and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Nike, Inc.: Cost of Capital (v. 1.8) casestudy better are - – increasing energy prices, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, there is backlash against globalization, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices,
increasing household debt because of falling income levels, geopolitical disruptions, etc
Introduction to SWOT Analysis of Nike, Inc.: Cost of Capital (v. 1.8)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nike, Inc.: Cost of Capital (v. 1.8) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wacc Study.introduces, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wacc Study.introduces operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Nike, Inc.: Cost of Capital (v. 1.8) can be done for the following purposes –
1. Strategic planning using facts provided in Nike, Inc.: Cost of Capital (v. 1.8) case study
2. Improving business portfolio management of Wacc Study.introduces
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Wacc Study.introduces
Strengths Nike, Inc.: Cost of Capital (v. 1.8) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wacc Study.introduces in Nike, Inc.: Cost of Capital (v. 1.8) Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Nike, Inc.: Cost of Capital (v. 1.8) firm has clearly differentiated products in the market place. This has enabled Wacc Study.introduces to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Wacc Study.introduces to invest into research and development (R&D) and innovation.
Innovation driven organization
– Wacc Study.introduces is one of the most innovative firm in sector. Manager in Nike, Inc.: Cost of Capital (v. 1.8) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Wacc Study.introduces has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Wacc Study.introduces has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Nike, Inc.: Cost of Capital (v. 1.8) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Wacc Study.introduces has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nike, Inc.: Cost of Capital (v. 1.8) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Analytics focus
– Wacc Study.introduces is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Robert F. Bruner, Jessica Chan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Wacc Study.introduces has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wacc Study.introduces has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Wacc Study.introduces has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wacc Study.introduces to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Wacc Study.introduces is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Wacc Study.introduces is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nike, Inc.: Cost of Capital (v. 1.8) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Wacc Study.introduces is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Wacc Study.introduces digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wacc Study.introduces has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Cross disciplinary teams
– Horizontal connected teams at the Wacc Study.introduces are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Nike, Inc.: Cost of Capital (v. 1.8) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nike, Inc.: Cost of Capital (v. 1.8) are -
Skills based hiring
– The stress on hiring functional specialists at Wacc Study.introduces has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Nike, Inc.: Cost of Capital (v. 1.8) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Wacc Study.introduces 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Wacc Study.introduces, firm in the HBR case study Nike, Inc.: Cost of Capital (v. 1.8) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Nike, Inc.: Cost of Capital (v. 1.8), in the dynamic environment Wacc Study.introduces has struggled to respond to the nimble upstart competition. Wacc Study.introduces has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Nike, Inc.: Cost of Capital (v. 1.8) HBR case study mentions - Wacc Study.introduces takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Nike, Inc.: Cost of Capital (v. 1.8), is just above the industry average. Wacc Study.introduces needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Wacc Study.introduces has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Wacc Study.introduces is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Nike, Inc.: Cost of Capital (v. 1.8) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Nike, Inc.: Cost of Capital (v. 1.8) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Wacc Study.introduces has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Wacc Study.introduces has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Wacc Study.introduces even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– After analyzing the HBR case study Nike, Inc.: Cost of Capital (v. 1.8), it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities Nike, Inc.: Cost of Capital (v. 1.8) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Nike, Inc.: Cost of Capital (v. 1.8) are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Wacc Study.introduces in the consumer business. Now Wacc Study.introduces can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Wacc Study.introduces to increase its market reach. Wacc Study.introduces will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wacc Study.introduces to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Wacc Study.introduces to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wacc Study.introduces can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Nike, Inc.: Cost of Capital (v. 1.8), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Wacc Study.introduces can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Creating value in data economy
– The success of analytics program of Wacc Study.introduces has opened avenues for new revenue streams for the organization in the industry. This can help Wacc Study.introduces to build a more holistic ecosystem as suggested in the Nike, Inc.: Cost of Capital (v. 1.8) case study. Wacc Study.introduces can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Wacc Study.introduces can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Wacc Study.introduces to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Developing new processes and practices
– Wacc Study.introduces can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Wacc Study.introduces has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Wacc Study.introduces can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wacc Study.introduces in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Buying journey improvements
– Wacc Study.introduces can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nike, Inc.: Cost of Capital (v. 1.8) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Nike, Inc.: Cost of Capital (v. 1.8) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nike, Inc.: Cost of Capital (v. 1.8) are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Wacc Study.introduces in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wacc Study.introduces with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Wacc Study.introduces demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Wacc Study.introduces needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Wacc Study.introduces.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Wacc Study.introduces business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wacc Study.introduces in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Wacc Study.introduces has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Wacc Study.introduces needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Environmental challenges
– Wacc Study.introduces needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Wacc Study.introduces can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Shortening product life cycle
– it is one of the major threat that Wacc Study.introduces is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Wacc Study.introduces
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Wacc Study.introduces.
Regulatory challenges
– Wacc Study.introduces needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Weighted SWOT Analysis of Nike, Inc.: Cost of Capital (v. 1.8) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Nike, Inc.: Cost of Capital (v. 1.8) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Nike, Inc.: Cost of Capital (v. 1.8) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Nike, Inc.: Cost of Capital (v. 1.8) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Nike, Inc.: Cost of Capital (v. 1.8) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Wacc Study.introduces needs to make to build a sustainable competitive advantage.