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 - – challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing transportation and logistics costs, technology disruption, central banks are concerned over increasing inflation, increasing commodity prices, increasing energy prices,
competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
Diverse revenue streams
– Wacc Study.introduces is present in almost all the verticals within the industry. This has provided firm in Nike, Inc.: Cost of Capital (v. 1.8) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Wacc Study.introduces in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Wacc Study.introduces in the sector have low bargaining power. Nike, Inc.: Cost of Capital (v. 1.8) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Wacc Study.introduces to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
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.
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.
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.
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 -
High bargaining power of channel partners
– Because of the regulatory requirements, Robert F. Bruner, Jessica Chan suggests that, Wacc Study.introduces is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Lack of clear differentiation of Wacc Study.introduces products
– To increase the profitability and margins on the products, Wacc Study.introduces needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wacc Study.introduces can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wacc Study.introduces is facing challenges because of the dominance of functional experts in the organization. Nike, Inc.: Cost of Capital (v. 1.8) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
Leveraging digital technologies
– Wacc Study.introduces can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Wacc Study.introduces can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Nike, Inc.: Cost of Capital (v. 1.8) .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Nike, Inc.: Cost of Capital (v. 1.8), Wacc Study.introduces may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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.
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.
