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 government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, wage bills are increasing, technology disruption, increasing commodity prices, increasing energy prices,
central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
Effective Research and Development (R&D)
– Wacc Study.introduces has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Nike, Inc.: Cost of Capital (v. 1.8) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
Operational resilience
– The operational resilience strategy in the Nike, Inc.: Cost of Capital (v. 1.8) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
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.
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.
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.
Organizational Resilience of Wacc Study.introduces
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wacc Study.introduces does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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 -
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 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.
Increasing silos among functional specialists
– The organizational structure of Wacc Study.introduces is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Wacc Study.introduces needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Wacc Study.introduces to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nike, Inc.: Cost of Capital (v. 1.8), it seems that the employees of Wacc Study.introduces don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Wacc Study.introduces supply chain. Even after few cautionary changes mentioned in the HBR case study - Nike, Inc.: Cost of Capital (v. 1.8), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Wacc Study.introduces vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Nike, Inc.: Cost of Capital (v. 1.8) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Nike, Inc.: Cost of Capital (v. 1.8) can leverage the sales team experience to cultivate customer relationships as Wacc Study.introduces is planning to shift buying processes online.
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.
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.
Products dominated business model
– Even though Wacc Study.introduces has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Nike, Inc.: Cost of Capital (v. 1.8) should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Wacc Study.introduces has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Wacc Study.introduces has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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 -
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wacc Study.introduces can use these opportunities to build new business models that can help the communities that Wacc Study.introduces operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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.
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.
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.
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.
Using analytics as competitive advantage
– Wacc Study.introduces has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Nike, Inc.: Cost of Capital (v. 1.8) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wacc Study.introduces to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Wacc Study.introduces to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
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.
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.
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 -
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.
Stagnating economy with rate increase
– Wacc Study.introduces can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Wacc Study.introduces will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
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.
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.
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.
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.
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.
High dependence on third party suppliers
– Wacc Study.introduces high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Wacc Study.introduces can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.