NIKE CASE STUDY 1. Why is it important to estimate a firm’s cost of capital? What does it represent? Is the WACC set by investors or by managers? Weighted average cost of capital or WACC represents the overall cost of capital in the company. It takes into considerations cost of debt and cost of equity. As company’s value can grow by increasing its assets that could be financed either be debt or equity and cost of capital shows how much it costs to do that. Cost of capital is a very important component
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| NIKE‚ INC.: COST OF CAPITAL | | | | | | Introduction Our report aims to help Kimi Ford make a decision on her investment of Nike. We choose WACC as our method to estimate the cost of capital‚ which can be used as a discount rate to verify whether Nike is correctly valued in current market. We have mainly four steps to calculate WACC: I. Identify the type of cost of capital; II. Figure out the weights of debt and equity; III. Calculate the cost of debt and equity respectively;
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Marketing Management Nike What are the pros‚ cons and risks associated with the Nike’s core marketing strategy? Nike’s core marketing strategy is tag lined as “Pyramid of Influence”. This marketing strategy helps Nike gain competitive advantage over the competitors. Nike’s core marketing strategy is tag lined as “Pyramid of Influence” Nike heavily depends on the successful athletes for marketing and selling its products. Professional athletes such as Tiger wood‚ Michael Jordan‚ Lance Armstrong
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calculation? Why or why not? 2. If you do not agree with Cohen’s analysis‚ calculate your own WACC for Nike and justify your assumptions. 3. Calculate the costs of equity using CAPM‚ the dividend discount model‚ and the earnings capitalization ratio. What are the advantages and disadvantages of each method? 4. What should Kimi Ford recommend regarding an investment in Nike? 2 Case Overview Nike‚ Inc. NorthPoint Group Investment Decision Current share price of USD 42.09 Declining market share
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provide suggestions to boost revenue. The targets provided by management included long-term revenue growth of 8-10% and earnings growth above 15%. Kimi Ford‚ a portfolio manager at NorthPoint Group has been tasked with analyzing Nike and coming up with a valuation for Nike so that her company can decide whether it is a good investment or not. She found that at a discount rate of 12% the company is overvalued‚ while with a slight decrease in the discount rate‚ to 11.7% the company is undervalued. In
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NIKE - Organisational Changes NIKE‚ Inc. (NYSE: NKE) announced today that Charlie Denson‚ NIKE Brand President since 2006 and a 34-year veteran of the brand‚ will retire in January 2014. In conjunction with Denson’s decision to retire‚ the Company also announced strategic changes in its executive management team as part of the Company’s long-term organizational strategy to align the business to continue to drive growth. The changes reflect the Company’s focus on the consumer by accelerating innovation
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The company of Nike started in 1962 as Blue Ribbon Sports. It focus on athletic running shoes and was popular in the U.S. Guarding famous athlete as a spokesperson made Nike achieve great success. In 1985‚ the Air- Jordan basketball shoes create over $100 million profit and $20 million are using in the ads of “Just do it” which became the campaign ad in 1988. As Nike began to expand overseas market in Europe‚ the new sponsor Brazilian team which is the World Cup campaign had changed the Nike’s image
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Sweatshops Throughout the years‚ United States businesses have had to face protests from government officials‚ labor leaders‚ and student organizations due to employing sweatshop labor. If you are unaware of what sweatshops are‚ they are generally characterized as a place of employment that have very low pay‚ very long hours of work‚ and terribly poor working conditions. After hearing this‚ most people would assume that is awful and they should be illegal and banned immediately from all countries
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Quick facts on sweatshops; > Girls between the ages of 15 and 25 make 85% of the workforce in sweatshops >Up to 75% of a sweatshop worker’s income is spent on necessities such as food‚ clothes‚ etc. >on average workers have a 60-80 hour workweek in a sweatshop > in china‚ 2009‚ about 1‚000‚000 workers were injured on the job and 20‚000 got sick from their work in hazardous conditions >Workers are forced to handle dangerous chemicals and glues in sweatshops with little or no protection > A child working
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strategies that Nike has created in tandem with the Football World Cup. The report examines the performance of Nike in relation with the Football World Cup and also tried to find out whether there were any alternatives to get an even better result. In this report I also compared Nike with its closest competitor‚ Adidas and evaluated the critical differences between these two organizations based on the marketing strategies that they have adopted to become successful. 1. Introduction Nike is the leading
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