Case Study on Nike - 1252 Words

Case Study Nike Introduction Good morning ladies and gentlemen and thank for taking the time to meet with us. Nike was founded on January 25, 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight. The company officially became Nike, Inc. on May 30, 1978. Nike has various products which include footwear as well as other apparel that compliment the former. This accounts for 92 percent of the company’s revenue. The other 8 percent comes from equipment and non Nike brand products, such as Cole Haan. When we were considering on whether it was more appropriate to use multiple cost of capitals for each segment we believe that they all mostly share similar risk factors. We therefore decided to calculate two different costs of capitals,†¦show more content†¦We took this data and ran regressions for each. We found that weekly gave us the most accurate beta under these conditions to use for CAPM. The beta that the regression gave us is .74 EXHIBIT 3. After choosing the beta, we wanted to use both a pproaches of CAPM to calculate the cost of equity and compare. When using the arithmetic approach, we found that the cost of equity is: 10.97%. When using the geometric approach we found that the cost of equity is: 9.78% EXHIBIT 8 PART 2. We also wanted to include in our analysis finding the cost of equity using the dividend growth model as well as the earnings of capitalization method. When using the dividend growth model we found that the cost of equity is: 6.64% EXHIBIT 9. The earnings of capitalization method gave us 5.51% EXHIBIT 10. Both of these methods DGM and ECM are irrelevant to our analysis of Nike for the reason that given the recent history of Nike we aren’t dealing with a stable better yet mature company, therefore the choosing of those methods would be inaccurate. Our Recommendation Given that we used an analytical approach to determine if Nike is undervalued or overvalued we wanted to assure our investors that we took diligent steps in determining this. As we mentioned earlier in the report we used two different methods to calculate the WACC. The geometric and the Arithmetic both were higher than Joanna’s but they still prove that the stock isShow MoreRelatedNike Case Study1004 Words   |  5 PagesRSS Case Study: E-recruitment gets Nike on track Posted by HR Zone in Strategies on Thu, 09/12/2004 - 16:54 0 inShare The Nike employer brand is extremely powerful in attracting potential talent to the business making the process of handling applications and supporting the resourcing process effectively and efficiently critical to business success; implementing e-recruitment was identified as the way to solve this businesses hiring problems. The issue Nike currently receives aroundRead MoreNike Case Study1112 Words   |  5 PagesCase Study- Nike 1. 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However, very soon Nike learnt that in order to be a global brand they needed to appeal to different market segments, not just athletes. Hence, they then decided to tap moreRead MoreNike Case Study899 Words   |  4 PagesCorporation Case Study: Nike What is it? NIKE, Inc. is the world’s leading innovator in athletic footwear, apparel, equipment and accessories. Before there was the Swoosh, before there was Nike, there were two visionary men who pioneered a revolution in athletic footwear that redefined the industry. Nike Employees Nike Employee Networks are designed to help Nike move toward greater diversity. In the U.S., six employee networks focus attention on important communities within Nike. The intendedRead MoreNike Case Study5183 Words   |  21 PagesNike Case Study The US-based Nike Corporation announced that it had generated profits of $97.4 million, around $48 million below its earlier forecast for the third quarter ended February 28, 2001. The company said that the failure in the supply chain software installation by i2 Technologies3 was the cause of this revenue shortfall. This admission of failure also affected the companys reputation as an innovative user of technology. The supply chain software implementation was the first part ofRead MoreNike Case Study1542 Words   |  7 Pagesin the stocks of Nike for the fund that she manages. †¢ Ford should base her decision on data on the company which were disclosed in the 2001 fiscal reports. While Nike management addressed several issues that are causing the decrease in market sales and prices of stocks, management presented its plans to improve and perform better. †¢ Third party sources also gave their opinions on whether the stock was a sound investment. WACC CALCULATION: Cost of Capital Calculations: Nike Inc Cohen calculatedRead MoreNike Case Study1219 Words   |  5 PagesCase Discussion Questions 1. Should Nike be held responsible for working conditions in foreign factories that it does not own, but where subcontractors make products for Nike? Some people probably think that designing and marketing its products is what Nike is responsible for. But outsourcing its manufacturing divisions into foreign countries doesn ´t release Nike from the responsibility. During a developing process manufacturing is one of the most important intermediate steps and because of