Global Business Industry Analysis: The Global Apparel Manufacturing Industry

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Global Apparel Manufacturing Industry Analysis
The Global Apparel Manufacturing industry contains men’s, women’s, and children’s apparel. This industry includes manufacturers that purchase fabrics and make fabrics themselves with certain facilities. The key economic drivers of this industry are GDP of BRIC nations, Global per capita income, GDP, World price of cotton, and Global population. The industries that supply Global Apparel Manufacturing are Global Agriculture, Hunting, Forestry, and Fishing. The Demand Industries that feed off of Global Apparel Manufacturing are Global Wholesale and Retail Trade, Global Department Stores, and General Merchandise Stores. The main activities of the Global Apparel Manufacturing industry are winter clothes …show more content…

Nike is a household brand name not only in the United States but also throughout the world, although roughly half of sales are sourced in the United States (Brick). This dominance in North America, an area which represents $108.7 billion of the $282.3 billion worldwide, is key in the overall evaluation of the Nike assets (Euromonitor 1). Nike’s position of industry power is supported through their innovation in design as well as notable sponsorships and collaborations with professional athletes and tech companies like Apple. Their event and team sponsorships also elevate Nike to an elite level (4). However, competitors in this industry are quickly gaining momentum. For example, Under Armour has experienced notable growth in the past five years, and adidas continues to grow their presence in the United States. This has detracted some of the Nike dominance in the U.S. market …show more content…

As adidas is denominated in the Euro, we used historical and present values in the Euro to ensure more accurate figures, but converted the final intrinsic value into dollar terms. Following similar steps to the Nike DCF previously mentioned, we were able to use net revenues from the recent past in order to find historical growth rates using the year over year method. Again, rather than use the YOY method for the projected growth rates, we chose to use a three-year average to find the future rates using the most recent three years. We felt that this reflected a more accurate number, especially as adidas has experienced recent growth as compared to their negative growth rate seen in 2013. With firms gaining quick momentum, it is easy to be influenced by the new success. However, the historical data should be taken into consideration for more accurate projections. We found the free cash flows for the next five years and then found their present value using an 8% discount rate. The ultimate intrinsic value per share for adidas was USD98.09 (after using the present conversion rate of 1.17:1 EUR:USD), which is USD9.35 less than its current price of USD107.44. The margin for error in this calculation is similar to that of Nike. Also, the unprecedented mentioned previously that adidas has experienced could continue, which could increase the growth rate

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