According to Nike’s annual report, write an analysis of five portals, and the definitions of five portals are included in the article|My homework helper
Posted: February 4th, 2023
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According to Nike’s annual report, write an analysis of five portals, and the definitions of five portals are included in the article.
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According to Nike’s annual report, write an analysis of five portals, and the definitions of five portals are included in the article|My homework helper
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1. Competitive Rivalry.
2. Supplier Power.
3. Buyer Power.
4. Threat of Substitution.
5. Threat of New Entry.
4-5 pages
Morningstar Equity Analyst Report | Report as of 2 Feb 2023 22:18, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NEW YORK STOCK EXCHANGE, INC. Page 1 of 22
ß ®
Nike Inc Class B NKE QQQ 1 Feb 2023 22:24, UTC
Last Price Fair Value Estimate Price/FVE Market Cap Economic MoatTM Moat TrendTM Uncertainty Capital Allocation ESG Risk Rating Assessment1
129.06 USD 2 Feb 2023
134.00 USD 22 Dec 2022 01:15, UTC
0.96 200.80 USD Bil 2 Feb 2023
Wide Stable Medium Exemplary ;;;;; 1 Feb 2023 06:00, UTC
Price vs. Fair Value
0
50
100
150
200
Fair Value: 134.00 22 Dec 2022 01:15, UTC
Last Close: 129.06 Over Valued Under Valued
2018 2019 2020 2021 2022 YTD
0.99 0.96 1.32 1.30 0.87 0.96 Price/Fair Value
19.84 37.87 40.64 18.61 -29.04 10.30 Total Return %
Morningstar Rating
Total Return % as of 2 Feb 2023. Last Close as of 2 Feb 2023. Fair Value as of 22 Dec 2022 01:15, UTC.
Contents
Business Description
Business Strategy & Outlook (22 Dec 2022)
Bulls Say / Bears Say (22 Dec 2022)
Economic Moat (21 Dec 2022)
Fair Value and Profit Drivers (21 Dec 2022)
Risk and Uncertainty (21 Dec 2022)
Capital Allocation (21 Dec 2022)
Analyst Notes Archive
Financials
Appendix
Research Methodology for Valuing Companies
Important Disclosure
The conduct of Morningstar’s analysts is governed by Code of Ethics/Code of
Conduct Policy, Personal Security Trading Policy (or an equivalent of), and
Investment Research Policy. For information regarding conflicts of interest, please
visit: http://global.morningstar.com/equitydisclosures.
The primary analyst covering this company does not own its stock.
1The ESG Risk Rating Assessment is a representation of Sustainalytics’ ESG Risk
Rating.
Wide-Moat Nike’s Powerful Brand and Digital Strategy
Allowing It to Overcome Market Turmoil
Business Strategy & Outlook David Swartz, Senior Equity Analyst, 22 Dec 2022
We view Nike as the leader of the athletic apparel market and believe it will overcome current
challenges despite near-term inventory and economic issues. Our wide moat rating on the company is
based on its intangible brand asset, as we believe it will maintain premium pricing and generate
economic profits for at least 20 years. Nike, the largest athletic footwear brand in all major categories
and in all major markets, dominates categories like running and basketball with popular shoe styles.
While it does face significant competition, we believe it has proven over a long period that it can
maintain share and pricing.
We think Nike’s strategies allow it to maintain its leadership position. Over the last few years, Nike has
invested in its direct-to-consumer network while cutting many wholesale accounts. In North America
and elsewhere, the firm has reduced its exposure to undifferentiated retailers while increasing its
connections with a small number of retailers that bring the Nike brand closer to consumers, carry a full
range of products, and allow it to control the brand message. Nike’s consumer plan is led by its Triple
Double strategy to double innovation, speed, and direct connections to consumers. Triple Double
includes cutting product creation times in half, increasing membership in Nike’s mobile apps, and
improving the selection of key franchises while reducing its styles by 25%. We think these strategies
will allow Nike to hold share and pricing. © Morningstar 2023. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 2 Feb 2023 22:18, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NEW YORK STOCK EXCHANGE, INC. Page 2 of 22
ß ®
Nike Inc Class B NKE QQQ 1 Feb 2023 22:24, UTC
Last Price Fair Value Estimate Price/FVE Market Cap Economic MoatTM Moat TrendTM Uncertainty Capital Allocation ESG Risk Rating Assessment1
129.06 USD 2 Feb 2023
134.00 USD 22 Dec 2022 01:15, UTC
0.96 200.80 USD Bil 2 Feb 2023
Wide Stable Medium Exemplary ;;;;; 1 Feb 2023 06:00, UTC
Although its recent results in China have been inconsistent due to supply issues, virus-related
restrictions, and a political controversy, we still believe Nike has a great opportunity for growth there
and in other emerging markets. The firm experienced double-digit annual sales growth in six of the past
eight years in greater China and, fueled by high government investment in athletics, we think it will do
so again after the current difficulties have passed. Moreover, with worldwide distribution and huge e-
commerce platform that exceeded $10 billion in fiscal 2022, Nike should benefit as more people in
China, Latin America, and other developing regions move into the middle class and gain broadband
Porter’s Five Forces – The Framework
Explained
A Guide to Analyzing Competitiveness Using Michael
Porter’s Strategic Model
By the Mind Tools Content Team
Porter’s Five Forces is a simple but powerful tool that you can use to identify the main sources of
competition in your industry or sector.
When you understand the forces affecting your industry, you can adjust your strategy, boost your
profitability, and stay ahead of the competition. You can take fair advantage of a strong position
or improve a weak one, and avoid taking wrong steps in the future.
In this article and video, we explore each of Porter’s Five Forces and show you how to use them.
This will help you to analyze your organization’s strengths and weaknesses, and to identify
critical factors that may affect your profitability.
Contents
• Introduction to Porter’s Model
• Porter’s Five Forces FAQs
• Who Created the Five Forces Model?
• What Are Porter’s Five Forces?
1. Competitive Rivalry
2. Supplier Power
3. Buyer Power
4. Threat of Substitution
5. Threat of New Entry
• How to Use Porter’s Five Forces Model
• Porter’s Five Forces Example
• Criticism of Porter’s Five Forces Model
Porter’s Five Forces FAQs
What is the purpose of Porter’s Five Forces?
Porter’s Five Forces model can help you to analyze the attractiveness of a particular industry,
evaluate investment options, and assess the competitive environment in your market.
How do you use Porter’s Five Forces?
Think about each force in turn, and how it applies to your industry. Gather data on each force,
and use it to help inform your future strategic decision making. Read more in the section How to
Use Porter’s Five Forces Model.
What are the benefits of using Porter’s Five Forces?
Porter’s Five Forces allows you to gain valuable insights into your current market, or one that
you’re considering moving into. This can help you to develop a strategy to succeed.
Who Created the Five Forces Model?
The tool was created by Harvard Business School professor Michael Porter
Since its publication in 1979, it has become one of the most popular and highly regarded
business strategy tools.
Porter recognized that organizations like to keep a close watch on their rivals, but, in his Harvard
Business Review article, ‘How Competitive Forces Shape Strategy,’ he encouraged business
leaders to look beyond the actions of their competitors and examine the forces at work in their
wider business environment. [1]
What Are Porter’s Five Forces?
According to Porter, there are five forces that represent the key sources of competitive pressure
within an industry They are:
1. Competitive Rivalry.
2. Supplier Power.
3. Buyer Power.
4. Threat of Substitution.
5. Threat of New Entry.
He described them further in his later article, “The Five Competitive Forces That Shape
Strategy.” [2]
Porter stressed that it’s important not to confuse these five forces with more fleeting factors, such
as industry growth rates and government interventions. According to Porter, those are examples
of temporary factors, while the Five Forces are permanent parts of an industry’s structure.
Let’s take a look at Porter’s Five Forces in more detail.
1. Competitive Rivalry
The first of Porter’s Five Forces looks at the number and strength of your competitors. Consider
how many rivals you have, who they are, and how the quality of their product compares with
yours.
In an industry where rivalry is intense, companies attract customers by cutting prices
aggressively and launching high-impact marketing campaigns. This can make it easy for
suppliers and buyers to go elsewhere if they feel that they’re not getting a good deal from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing what you do,
then you’ll likely have tremendous competitor power, as well as healthy profits.
Example
If you were setting up a haulage business, you’d likely be entering a crowded market. You’d have
to consider many potential rivals, how much they charged, and whether they were able to
discount deeply. You’d also need to think about their resources: you might be setting up to
compete with international logistics companies, as well as local competitors
Remember that at this point the analysis should focus on your potential rivals. Only start thinking
about your own offer when you’ve got your data together on the competition.
Note that Michael Porter developed his Four Corners Model
all about competitor behavior. You can find out more about that in our article.
SOLUTION
Valuing a company can be done using various research methodologies, including:
- Discounted Cash Flow (DCF) Analysis: It calculates the present value of future cash flows, discounting them at a rate that represents the cost of capital.
- Comparable Companies Analysis: It involves comparing the subject company with similar companies in terms of size, growth rate, profitability, etc.
- Price-to-Earnings (P/E) Ratio: It compares a company’s current stock price to its earnings per share, providing an indication of its relative value.
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: It compares a company’s enterprise value (market capitalization + debt – cash) to its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).
- Dividend Discount Model (DDM): It is a method of valuing a company’s stock price based on the present value of its expected future dividends.
These methods can be used singularly or in combination, and the choice of methodology depends on the type of company and its financial characteristics.
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