The value chain was first introduced by michael porter during the 1980s in his bestselling book, competitive advantage. A company like nike target segments like athletes and sports so that they can create the greatest customer value for its customers and also create profit and sustain the value and profit for a long period of time. The purpose of this value chain analysis was to explore the dynamics of in terms of looking at the intricate foundation value chain the company has created to serve its millions of satisfied customers. Mar 27, 2008 nike has admitted its chinese supply chain is suffering from a lack of transparency, problems with wages and the use of underage workers. Value chain analysis value chain analysis vca is a process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation. Generally, amazon does not have longterm contracts or arrangements with its vendors to guarantee the availability of merchandise, particular payment terms, or the extension of credit limits. Value chain analysisvalue chain analysis is a systematic way of examining all the value ystematic organizations functional activities and how well. Nike sues adidas over soccer player zhengs contract. By dividing book value by the total number of shares outstanding, you can find book value. As a result of the shift in the sales mix to highermargin geographies and nike direct business, nike saw great margins. Nike has a global procurement team to manage the procurement part of its supply chain management. Read this business case study and over 89,000 other research documents.
Nike manufacturing and supply chain strategies market realist. Value chain analysis is a useful tool for working out how you can create the greatest possible value for your customers. The value chain and competitive forces model 781 words. During the past years, the highest 3year average book value per share growth rate of nike was 165. We said that based on our footprint across our entire supply chain we saw a number of key focus areas for nike. Because of nikes marketing research, the company has decided to revamp its apparel division to be more fashion savvy. Find the latest book value per share for nike, inc. Value chain analysis nikes value chain contains seven primary activities. Book value reveals how much the company is worth if it were liquidated and all assets were sold for cash. H ere is a fivestep method for discovering a customers particular strategic needs based on a unique application of value chain analysis.
In the later works introduction when explaining the value chain perspective, burns observes that it analyzes the entire sequence from raw materials input market to final customer output market. These activities are technology development, product design, component manufacturing, assembly, marketing, distribution and retail sales. You can apply the same method to get the book value growth rate using book value per share data. Mgmt65000 strategic management spring 2011 test 1 by. Another important decision may be transportation planning. Nike has admitted its chinese supply chain is suffering from a lack of transparency, problems with wages and the use of underage workers.
For a company that moves over 900 million units per year, these savings amount to a serious competitive edge. Evaluate nike using the competitive forces and value chain models. The primary activities within michael porters value chain are used to provide a company with a competitive advantage in any one of the five activities so it has an advantage in the industry in. Craddock kaplan university january 6, 2012 value chain analysis the purpose of this value chain analysis was to explore the dynamics of in terms of looking at the intricate foundation value chain the company has created to serve its millions of satisfied customers. Strengths strong management team and good corporate strategy in both north american and overseas markets first movers advantage in ecommerce. Sep 12, 2016 the value chain was introduced by michael s. In addition to examining value chains from a firm level, it is also possible to examine them at an activities level. Value chain michael porter was the first person who introduced the term value chain in his book competitive advantage. Supply chain strategic management for nike marketing essay. Nike s value chain and competitive forces in 1984, nike owned just 16% of the athleticshoe market, and for much of the 1980s it was running neckandneck with reebok wilson 1. It provides insights to support the various decision makers in the company and stresses that every member of the company contribute to this branding effort. Nike manufacturing and supply chain strategies market.
Ycharts book value of equity is the equivalent of total assets less total liabilities and preferred equity. Pdf using valuechain analysis to discover customers. Value chain and competitive forces models 1795 words bartleby. Porter suggested that activities within an organisation add value to the service and products that the organisation produces, and all these activities should be run at optimum level if the organisation is to gain any real competitive. Michael porter defines value chain as a representation of a firms valueadding activities, based on its pricing strategy and cost structure. Dec 16, 2007 value chain analysis unit 4 individual project assignment gb570.
Each step in the manufacture of a product or the delivery of a service can be thought of as a link in a chain that adds value to the product or service. Brand value chain brand value chain is a structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value. Swot analysis is similar as pest analysis to understanding the corporation but swot analysis is to understanding between own corporation and competitors, to getting the information which part nike should improve to become better than other competitors. In his book competitive advantage 1985, michael porter explains value chain analysis. In this article well examine examples of how you can perform a firm level value chain analysis. However, the value chain analysis pioneered and illustrated by michael porter in his groundbreaking book, competitive advantage, remains an indispensable. Around 450 million clothing items are produced by zara on yearly basis. The term value chain reflects the fact that, as each step of this path is completed, the product becomes more valuable than it was at the previous step table 4. Ikea valuechain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the global furniture retailer.
Nikes footwear products dominates its market share and footwears are designed for aquatic activities, baseball, cheerleading, football, golf, lacrosse, outdoor. Now, with somewhere between 4347% of that market, nike is the undisputed leader. Value chain analysis is the process of looking at the activities that go into changing the inputs for a product or service into an output that is valued by the customer. Indeed, companies such as nike and the gap do very little of their own. May 26, 2019 the primary activities within michael porters value chain are used to provide a company with a competitive advantage in any one of the five activities so it has an advantage in the industry in. Zara case study creating value chain with supply chain. Largest seller of athletic apparel and footwear worldwide international performance for 2008.
Nike inc study of value chain functions and how they contribute to the success of nike. Divya mishra school of management purdue university calumet submitted to. Leveraging the value chain amazon case study medium. Introduction value chain analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Strategic analysis nike was swot analysis and value chain.
Its headquarter is located in washington country oregon united states. The concept comes from business management and was first described and popularized by michael porter in competitive advantage. Value chain analysis is mentioned extensively in the first half of the book competitive advantage in 1985 by michael porter. Value chain analysis of airasia the value chain analysis is used to evaluate the value of each particular functional activity that is added to the organisations products or services as seen in diagram 1 pic a logistics this involves all areas of receiving, storing of inputs when producing outputs. Value chain and competitive forces models value chain analysis internal activities of an. Price to book value is a valuation ratio that is measured by stock price book value per share. Nov 24, 2019 ikea valuechain analysis is an analytical framework that assists in identifying business activities that can create value and competitive advantage to the global furniture retailer. Nke book value per share explanation usually a companys book value and tangible book per share may not reflect its true value. The value chain also known as porters value chain analysis is a business management concept that was developed by michael porter.
Nikes value chain and competitive forces in 1984, nike owned just 16% of the athleticshoe market, and for much of the 1980s it was running neckandneck with reebok wilson 1. Using valuechain analysis to discover customers strategic needs article pdf available in strategy and leadership 364 july 2008 with 7,453 reads how we measure reads. What are the primary activities of michael porters value chain. Since nikes manufacturing strategy is based on outsourcing and contract manufacturing, growing protectionist actions could hit its supplychain process. Value chains place a great amount of focus on things such as product testing. Apr 25, 20 value chain analysis is a strategy tool used to analyze internal firm activities.
An rationale for the ps ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as eps or book value. Porters value chain analysis by michael porter toolshero. Swot analysis is similar as pest analysis to understanding the corporation but swot analysis is to understanding between own corporation and competitors, to getting the information which part nike should improve to. Oct 17, 2019 since nikes manufacturing strategy is based on outsourcing and contract manufacturing, growing protectionist actions could hit its supplychain process.
Value chain analysis for assessing competitive advantage. Conditions in the sports equipment industry and available resources term paper business economics operations research publish your bachelors or masters thesis, dissertation, term paper or essay. The book value is essentially the tangible accounting value of a firm compared to the market value that is shown. Indepth view of key statistics and finances for nike, inc. Sales are also more stable than earnings and never negative.
The term value chain refers to the process in which businesses receive raw. Its goal is to recognize, which activities are the most valuable i. The book value of equity represents the equity of shareholders from a balance sheet perspective less the preferred stock. The aim of this strategy is to reduce costs throughout the value chain and. Nke, including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Value chain and competitive forces models value chain analysis internal activities of. Using valuechain analysis to discover customers strategic needs. Nikes management analyzes its internal environment and makes decisions based on that analysis.
In amazons core business of hardgoods retail, they own the entire value chain, and the business logic of profitable sales created the flywheel effect allowing them to. Estimated total useful life over longer time periods, this ratio is a useful measure of companys depreciation policy and can be used for comparisons with competitors. Nike is a celebrity brand of sports shoes, apparel and equipment. A comparative analysis of strategies and business models of nike. As stated in its annual report, nike is primarily a design and marketing company. The key to nikes efficiency is its low overhead manufacturing costs. Value chain and competitive forces models value chain analysis internal activities of an organization add value to the service and products that the organization produces and should be run at optimum level if the organization is to gain any real competitive advantage. Apr 02, 2020 figure 1 amazon value chain analysis amazon primary activities.
Value chain is used to analyze the flow of valueadding activities from the raw material. Creating and sustaining superior performance porter 1985. The purpose of this paper is to analyze amazons value chain. The assets may be carried on the balance sheets at the original cost minus depreciation. Feb, 2018 value chain analysis is the process of looking at the activities that go into changing the inputs for a product or service into an output that is valued by the customer. This may underestimate the true economic values of the assets. Book value per share is a widely used stock evaluation measure. Value chain and competitive forces models 1795 words. Diversification and vertically integrated models enable the company to design, manufacture, distribute and retails the stores within only two weeks from the days it appears on catwalks. Everything you need to know about value chain analysis. The value chain as a strategicanalysis tool emerged when nike set a precedent in the. Porters value chain 1998 outlines the most important activities for a firm to identify its competitive. The companys gross profit margin grew by 150 basis points to 45. Influential work by michael porter suggested that the activities of a business could be grouped under two headings.