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
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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
Only a week earlier, on June 28, 2001, Nike had held an analysts' meeting to disclose its fiscal-year 2001 results.1 The meeting, however, had another purpose: Nike management wanted to communicate a strategy for revitalizing the company. Since 1997, its revenues had plateaued at around $9 billion, while net income had fallen from almost $800 million to $580 million (see Exhibit 1). Nike's market share in U.S. athletic shoes had fallen from 48%, in 1997, to 42% in 2000.2 In addition, recent supply-chain issues and the adverse effect of a strong dollar had negatively affected revenue.
When looking at the market share globally, Nike owns more than other large companies such as Adidas, there closet competitor. An example of this comes from the chart on the next page (Bain, 2015). Nike controls 20.8% of the market share in an area that is one of the main revenue sources, sports footwear. Secondly, even though the Nike is close to fellow competitor Adidas, it is an area that is continuously growing for Nike. Moreover, Nike owing the market share is even more evident when looking at the market shares for the United
Nike’s goal is to remain unique and different from others in terms of the items offered on the market. Arguably, Nike belongs to a monopolistically competitive market as there only a few organizations with the ability to regulate the amount charged for their product which means they cannot make their prices high as this is likely to make customers move on to other available choices (Nike, Inc., 2012). However, Nike can find a balance between the prices to charge for their products and remaining competitive with other companies in the industry. Nike has formed a distinction between the appearance and performance of their footwear and that of their competitors. Although products are differentiated from other companies, they still influence each other because they are items of the same
Many global companies like Nike, Inc. are seen as role models both in the market place as well as in society in large. That is why they are expected to act responsibly in their dealings with humanity and the natural world. Nike benefits from the global sourcing opportunities, therefore areas such as production and logistics have been outsourced to partner companies in low-wage countries like China, Vietnam, Indonesia and Thailand. As a result the company is limited nowadays to its core competencies of Design and Marketing.
Specifically, a Competitive Profile Matrix (CPM), Internal Factor Evaluation (IFE), and External Factor Evaluation (EFE) Matrix are provided in Appendix A, B, and C respectively (David & David, 2015). Designed to identify our strengths and weakness and quantifying their importance to industry success, UA’s rating in critical success factors such as advertising, product quality, price competitiveness, management, financial position, customer loyalty, global expansion, and market share, remains lower compared to their main competitor and market share leader Nike (David & David, 2015). Specifically, management effectiveness, financial position, and market share remain factors in which we can direct additional resources and improve our strategies in a highly competitive global market place. As depicted in Appendix A, although price competitiveness and customer loyalty are the lowest ranks factors, both apparel and footwear industry analysis dictates a high degree of buyer independence and low-cost switching, which remains a significant hurdle for the entire industry (MarketLine, 2015a; MarketLine, 2015b). Both factors indicate that brand loyalty is not an important factor and that there is a high tendency to switch between brands (MarketLine, 2015a; MarketLine, 2015b). Therefore, it will be in UA’s best interest to improve our management effectiveness and financial position to improve their market
Nike’s Asian operations had previously continued to soar generating US$300 million in 1994 in revenues to a whopping US$1.2 billion in 1997. However based on the Asian economic crisis, this had adversely affected revenues, while regional layoffs were inevitable. Nike also performed well in the European market generating about US$2 billion in sales and a good growth momentum was expected, however, some parts of Europe were only slowly recovering from an economic downturn. In the Americas (Canada and the U.S.A.), Nike experienced a growth rate for several quarters. The U.S. alone generated approximately US$5 billion in sales. The Latin American market at this point was exposed to economic volatility; however Nike still saw them as a market with “great potential for the future”.
While the outlook appears rosy for NIKE, Inc. in women segment, there are some thorns, too, that could challenge the company’s ability to achieve its financial and operational targets. Some of these factors are discussed
and Reebok International have been leading the way in design development, worldwide marketing, and sales of footwear, apparel, and athletic equipment for nearly half a century. The companies have grown to a magnitude that is disproportionate amongst most of the industries competitors. There are many factors that have contributed to Nike’s and Reebok’s success but none more than the effective management practices of recognizing issues and implementing valuable business research techniques. Both companies can attribute their leverage and knack of staying ahead of the curve because of their ability to develop strategic research designs and productively following through with the process. Nike and Reebok management appear to have a superior ability for understanding the purpose of their research studies which is the most critical stage of the research
In reviewing the case of New Balance Athletic Shoe, Inc. it is clear that there are a few major problems that the company is facing. First of all, New Balance falls behind its other major competitors, Nike, Adidas and Reebok, in the area of marketing. Unlike its competitors, New Balance does not undertake celebrity endorsements. This puts them at a disadvantage when it comes to brand building. This also causes the company to lose out somewhat on gaining awareness on a global scale as it lacks endorsements in major sporting events. Most global brand names generate strong brand recognition through celebrity endorsements in sporting events that would give them the needed momentum to carry their brand name further into the global market.
The report is intended to analyze the Textile Sector in the Pakistan and its potential of productivity and investment and more specifically the capacity to generate revenue for the
There are as many brands as there is ants in the world, but the two brands that pop out are adidas and nike. Those two brands have been going head to head for ages to see who is the better brand. It’s been tested, compared, and debated which brand is better. Whether it’s the quality of the materials or the cost of it, the debate is ongoing. Both brands have been fighting for the top ever since they were both created and I don’t blame them it’d be fantastic to be the best brand in the world. When Nike and adidas are contrasted, it becomes clear that the Adidas brand are better for the overall consumer and enhances sport performance than Nike.
India is a labour abundant country and the textiles and clothing sector is a labour intensive and traditional sector of the Indian economy. This particular industry alone accounts for about 14% of the industrial production, making 4% of GDP; and also estimates for about 11% share in the country’s total exports basket. It provides employment to 45 million people, not only does it generates jobs for its own industry but also increases scope for other complementary sectors (Ministry of Textiles, 2013). As we recall in the history Indian T&C sector has been an important part of the Indian economy, playing a prominent and promising role in our industrial development. At present also the Indian T&C sector holds
Nike is the number one innovator in the world in athletic footwear, apparel, equipment, and accessories. This worldwide company operates in an extremely different organizational structure than other companies, such as Reebok and Adidas. Nike operates tremendous marketing strategies and develops inventive designs to inspire athletes around the world. This company is one of the largest suppliers in the world in athletic footwear and apparel, main producer of sports equipment, and making Nike the most valuable brand among sports companies. The task for Nike is to join diversity and inclusion to encourage ideas and innovation. Around the world, this company is a popular brand.
Adidas chooses to use natural fibers like cotton, synthetics, wool, recycled rubber, recycled polyester, and leather in their footwear production. By communicating and partnering with the local suppliers where the products are originally from, Adidas is able to gain connections in order to be in a better position to compete for the resources they need so its competitors (Nike, Under Armour) will have a harder time obtaining resources. Countries in Asia and other countries such as India, Pakistan, and Indonesia are where most of the factories dealing with the raw materials are located. One reason countries like these are chosen is because they are developing countries. Since these countries are less industrialized in comparison to developed countries, the cost of labour is relatively low for planting, fertilizing, and collecting raw materials. Second reason is that some of these factories are located in the tropics, so the weather is ideal for growing plants such as cotton. So instead of planting cotton in Germany where the company is based, they can save a lot of money by outsourcing to other countries. With more supplies to keep up with the demand of the products, eventually the prices will fall and become more appealing to customers. Third reason is that these countries are also close to other countries where other resources can be found. Since they are so
According to global industry analyst, the world sports clothing industry is anticipated to exceed $126 billion by 2015, Because of more active lifestyle, with older demographics and woman becoming more energetic, this drives the market. The entire sports clothing industry is highly filled with so many brands like Nike, Adidas, Umbro and Reebook all over the world competing, even the high leading brands have to work twice has hard in other to keep their share in the market because most of this small firm have quality products and also a very fine marketing style which has increased competing style in the industry. All over the world people demand more versatile wear, which indicates that’s retailers continue to produce new style of sports clothing for both men and women.