UKFF4024 Multinational Finance

VS

Presenters:
1. Chong Xuet Ying 1406057
2. Chow Mei Yeng 1406682
3. Lee Geying 1305474
4. Pan Wen Yan 1406351
5. Ng Tiat Kuang 1501185
 Company
Details
Founder Bill Bowerman Adolf Dassler
Phil Knight
Founded Year January 25, 1964 August 18, 1949

CEO Mark Parker Kasper Rrsted

Headquarter Washington County, Herzogenaurach,

Oregon, United States Germany
Product Line Footwear, apparel, Shoes, Clothing,
equipment, accessories Accessories
and services
Main Brands Nike Adidas
Converse Inc. Reebok
Hurley International
 1. Return on equity
Company/ 2012 2013 2014 2015 2016
Year
Nike 22.0% 23.1% 24.6% 27.8% 30.1%
Adidas 9.9% 14.3% 8.7% 11.2% 15.7%

NIKE has higher return on equity compared to

Adidas.
Reason: NIKE has entered into license
agreements that permit unaffiliated parties to
manufacture and sell NIKE-owned trademarks
products.
2. Current Ratio
Company/ 2012 2013 2014 2015 2016
Year
Nike 3.0 3.5 2.7 2.5 2.8
Adidas 1.5 1.44 1.68 1.39 1.31

Adidas has lower current ratio.

Reason:
Adidas business focuses on athletic footwear
and apparel market.
They have exit golf hardware market by sell
of Adams Golf and Ashworth brands.
 3. Price/Earning Ratio
Company/ 2012 2013 2014 2015 2016
Year
Nike 23.0 22.8 25.9 27.5 25.6
Adidas 17.8 23.1 21.2 27.1 30.1

Adidas has higher P/E ratio compared to Nike.

It indicates that market is optimism regarding
Adidass growth prospect. Hence, investors are
willing to pay more for the share.
 4. Gross Margin
Company/ 2012 2013 2014 2015 2016
Year
Nike 43.5% 43.6% 44.8% 46.0% 46.2%
Adidas 47.7% 49.3% 47.6% 48.3% 48.6%

Adidas has higher gross margin compared to

Nike particularly on 2013.
Reason: Adidas has introduced new products
to the markets which tend to have a higher gross
margin (Adidas Group, 2014)
 Current Account Balance

Source: World Bank (2017)

1. US home country to Nike experienced continuously deficit in current account
balance
Debit (outflow) Credit (inflow), import export

2. Vietnam, China and Indonesia manufactured approximately 44%, 29% and 21%
of total Nike brand footwear respectively (Nike Annual Report,2016).
Credit (inflow) Debit (outflow), export import
SALES
MANUFACTURE
FINANCIAL
 Sales
Germany
Germanys sales (17%) from 4,539 billion to 5.291 billion
2015 2016
GDP (US $) 3.06% $3.364 trillion $3.467trillion
Exchange Rate CNY 6.939/ CNY 7.3657/
Business Strategy Adidas used it own company advantage in
market & the effective management system to
launch out the new products that can satisfy the
changes of the market.

Germany is Eurozone members the interest rate stay low & export to other
Eurozone member is cheaper (competitive advantage)German consumers
have more money to spend locally significant drive the economic growth.
 Sales
China
Chinas sales (28%) from 2.469 billion to 3.010 billion
2015 2016
GDP ( current US $)1.2% $11.064 trillion $11.199 trillion
Business Strategy Sought to reach lower tier cities consumer,
Adidas entered Chinese E-commerce by
launching the online store in tmall.com.

This able for Adidas to meet the strong

demand from growing domestic consumption.
 Production
Germany
Germany Production increase from 3,010,000 units to 3,600,000 units

2015 2016
GDP US$3.364 trillion US$3.467trillion
Inflation Rate 0.23% 0.48%
Business Adidas start piloting an automate shoes production
Strategy which shoes manufactured by robots.
 Production
Vietnam
Vietnam production increase from 123,410,000 units to 151,200,000 units

2015 2016
GDP US$ 193.241 billion US$ 202.616 billion
Inflation Rate 0.63 % 2.67%
Business The cost of production is lower in Vietnam because
Strategy Vietnam have low-cost labour.
Vietnamese have an increase in literacy rate and
increasing personal income.
 Financial
Germany Japan
2015 2016 2015 2016
Lending 5.1% 5.9% 1.1% 1.0%
interest rate
Business Adidas bring the shoes production back to Germany by
Strategy using the robotic to shortening production time.

As MNC, Adidas establish hedging system on a rolling

basis up to 24 months in advance, the purchasing volume
is hedged approximately six months prior to the start of a
season.
Current Account Balance ( BOP, US $)
Year Germany China Vietnam Japan
2014 288,185,899,345.0 236,046,577,873.6 9,359,000,000.0 36,351,469,240.0
2015 288,151,235,865.7 304,164,445,643.0 906,000,000.0 134,134,182,917.3
2016 187,264,824,334.6
289,158,837,956.4 196,380,229,052.9

Positive BOT Positive BOT Positive BOT Positive BOT

Source: World Bank 2017

The Asia and Europe manufactures approximately 79% and 18% of total Adidas
hardware production respectively (Adidas Annual Report, 2016)
Credit (inflow) Debit (outflow), export import
Johnson Shoes vs. Nike and Adidas
Creating the New
Developing a new business to achieve growth

E-commerce
Setting an online store
Easy to purchase

Expansion in global marketplace

Use wholly owned subsidiary strategy to enter the foreign market.
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