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
The strengths of the book come from its’ accessibility. The book is easy to follow and provides readers with a great deal of information about the production of mass-manufactured clothing. As well as brings awareness to its’ many issues which we inadvertently take part in when we purchase such products. The book is well written and thoroughly researched but does have its’ share of weaknesses.
Executive Summary Introduction Kimi Ford, a portfolio manager at NorthPoint Group, a mutual-fund management firm, was considering buying shares in the fund she manages, the NorthPoint Large-Cap Fund, with an emphasis on value investing. Ford held an analysts’ meeting to disclose its fiscal-year 2001 results and, most importantly, to communicate a strategy for revitalizing the company. Nike has maintained revenue of about $9 billion since 1997. However, its net income had fallen from almost $800 million to $580 million. Moreover, Nike’s market share in U.S. athletic shoes has fallen from 48% in 1997 to 42% in 2000.
The corporation should invest more money in research and innovation since this is what has helped them to make a product that rivals their competitors. At the same time, it is imperative for them to improve their machinery for cheap labor costs which will help the company increase its production allowing it to meet the demand in the market. By improving production leading to lower costs of making shoes, apparel, and equipment, Nike will achieve higher demand assuming a quality product is maintained in that process. They will stand a better chance of competing in the industry (Hill, 2009). The organization is already in a better position for meeting the demand, customer taste, and needs. The company should improve quality by focusing on developing lightweight products that are more durable compared to those offered by the competitors. Also, Nike can keep up their success by continuing to reinvent and improve their items and continue to meet the current demand by using new technology. It can also use the Internet to communicate with consumers (Hill, 2009). By developing new technology, Nike will allow the customers to suggest and design their shoes online. To achieve this goal, it is fundamental to enhance areas such as their website to make it more user-friendly. Finally, the company should pay attention to small startup organizations that enter the
The financial standing of the company Nike, Inc. has steadily increased from the year 2014 to the year 2015. This is evident through looking at the financial ratios. Each of the ratios use values that are taken from a company’s financial statements: income statement, balance sheet, and the statement of cash flows. The ratios quantify different aspects of the business and are crucial when looking at the financial state of the company.
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
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
Economically who benefits when retailers in Europe and the United States source textiles from low-wage countries such as Bangladesh? Who might lose? Do the gains outweigh the losses?
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
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
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.
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.