[in-depth] life is like adidas and nike, ‘nothing is impossible’ so ‘just do it’

“Life is like Adidas and Nike, ‘nothing is impossible’ so ‘just do it’” ― Unknown

GENERAL PROGRESS REPORT  

Following the rough plan devised in the previous weeks, I have made great strides in the pursuit of better understanding the finance industry and how stocks and the market function. After an open and honest discussion about our goals for this year’s in-depth and our concerns on the progress of the project, our mentor, David, and I established a flexible project-based and feedback-based learning system. We also began planning and preparing our final project. 

In the past two weeks, my peer, David, and I conducted a comparison project on the stock value and growth potential of Nike and Adidas, two well-recognized sportswear and equipment brands, and tried to predict the performance of their stocks and their future development. For this project, we focused on autonomously developing research and analysis skills and learning about financial materials and what they mean. 

The Nike and Adidas comparison project, the first of many David and I will take on, introduced me to a variety of financial data, such as profit margin, debts, and stock price, and reports, such as market share analysis and the two company’s quarterly financial statements. We analyzed the two brands’ potential and drew the conclusion that Nike, who heavily invests in e-commerce and brand desirability, has a higher potential, especially during and after the pandemic, and its value will continue to expand. This conclusion was further supported by Nike’s surging market share and its stock growth, which was three times Adidas’.

Comparison Chart Of Nike And Adidas:

Nike Adidas
Age 1971 (50) 1949 (72)
Brand Net Worth 34,388M 12,070M
Revenue  11,243,000 – Aug 31, 2020 – Nov 30, 2020 5,964,000  – June 30, 2020 – Sept 30, 2020
Net Income  4,847,000 – Aug 31, 2020 – Nov 30, 2020 2,983,000  – June 30, 2020 – Sept 30, 2020
Stock Value  137.06 – Feb 1, 2020  166.53 – Feb 1, 2020 
Shares Outstanding 1.27B 390.07M
Market Cap 176.27B 55.19B
P/E Ratio  79.02 119.54
Stock Growth (past five years) 
Stock Growth (during pandemic) 
Strategies 
  • Investing in technology and growing their own e-commerce channel
  • Managing supply chains and outsourcing
  • Focusing on building and marketing a positive brand presence 
  • Marketing strategies and product innovation
  • Best cost provider 
  • Investing in e-commerce and brand desirability 
  • Open-source innovations and collaborations
  • Focuses on developing consumer relationships (by delivering multichannel experiences)
  • Spending less on the quantity of marketing and focusing on the quality 
  • Product innovation 
  • Targeting the right consumers and acting on those demographics 
Strength 
  • Strong brand awareness
  • Established (large) consumer base
  • Sustainability goals 
  • Superior marketing capabilities
  • Low production costs? 
  • Strong focus on e-commence 
  • Diverse portfolio 
  • iconic brand (awareness)
  • Established (large) consumer base
  • Global and loyal customer base
  • Strong and diversified distribution network
  • Sustainability goals 
  • Branding through high-profile sponsorships
Weakness
  • Controversy: from poor labour conditions to sexual harassment lawsuits
  • Dependency on the US market
  • Around 10 billion debt
  • Supply Chain Shortage from dependency on 3rd party manufacturer 
  • Limited product line
  • Loss of trademark
Opportunities
  • Emerging markets in foreign countries
  • Growing sportswear industry
  • The rise of e-commence
  • Market’s need for innovative technology-related sport products 
  • Emerging markets in foreign countries
  • Growing sportswear industry
  • The rise of e-commence
  • Market’s need for innovative technology-related sport products 
Threats 
  • Increased competitive pressure 
  • Controversy and lawsuit 
  • Economic uncertainty as the result of Covid-19 
  • Increased competitive pressure 
  • Competition’s rapid expansion and adoption of e-commerce
  • Economic uncertainty as the result of Covid-19

Though Nike and Adidas are both “over analyzed” and transparent companies and this project was relatively easier than expected, I still struggled with understanding and analyzing the data and information I gathered. When I messaged my mentor, asking for help, he immediately replied and suggested a few approaches I can take like comparing their revenue growth in relation to their debt growth, and multiple resources on basic trading terminology and valuing techniques. I really appreciated how I was able to experience and tackle hardship on my own and seek out external help when necessary.

In addition, David and I solidified our plans for our final product. We are going to use Wall Street Survivors, a stock market simulation game, and start trading in real time. With Nike and Adidas, we are running a practice simulation to familiarize ourselves with the platform and expand our market-related knowledge. We purchased approximately $40000 of Nike stocks and shorted $40000 worth of Adidas stocks running, meaning we will profit if Nike stocks grow and/or Adidas stocks fall. Now, we are just waiting to see how Nike and Adidas performs. 

NEXT STEPS

In the next few weeks, David and I plan to research two specific areas of the financial industry: mobile payment and blockchain technology. We are also going to examine the company Tesla and try to predict how the company will develop and their stock growth. Since we decided on a definitive final project, we will further explore Wall Street Survivors and examine stock market details in action. 

HOW TO HAVE A BEAUTIFUL MIND: HOW TO BE INTERESTING AND HOW TO RESPOND

In the fourth and fifth chapters of How to Have a Beautiful Mind, Edward de Bono focuses on building relationships by creating interest and how to respond to stimulate discussions. Both of these concepts seem easy to execute, but they were actually more difficult than I imagined, especially how to develop interest and becoming interesting for both myself and others.

Bono stresses that “being interesting is much more important than winning an argument” and “being interesting is much more important than showing how clever you are.” By being interesting, people will be naturally drawn to you and “enjoy talking to you”, which is the foundation of most relationships. Bono introduces a few strategies one can utilize to invoke interest, like “what if” statements, forming speculations, and linking connections. During my meeting with my mentor and David, I asked questions such as “what if Adidas invests in online retail at the same time as Nike?” to open up new possibilities and further clarify the role of online retail in today’s market. In addition, while my mentor, David, and I discussed how to interpret revealing and informative financial data, I explored possible connections between financial data and non-financial information (SWOT analysis, expansion projects, etc.) and how both are valued. David also supported this connection by later relating Nike and Adidas’ stock growth to their expansion plan. David and I’s efforts interested our mentor and he further elaborated on our ideas, stating that growth potential is best seen from non-financial information as they are more about the future. By being interesting, my conversation with my mentor and David became more thought-provoking and in-depth. 

Moreover, in my last blog post, I examined the importance of agreeing, disagreeing, and differing. In the fifth chapter, Bono, adding on to the previously mentioned aspects, introduces a variety of other ways to respond in order to continue a conversation meaningfully, such as asking for clarifications, supporting others’ ideas, and modifying an idea that’s been put forward. For example, as my mentor often speaks Chinese to David and me and, let’s face it, I don’t know Chinese financial terms at all, I need to ask for clarifications to ensure that I understand exactly what my mentor is saying. More specifically, in our last meeting, we talked about 增量市场 (increment market) and 存量市场 (inventory market). I had to ask my mentor what do those terms mean in English and express that I had no idea what he was saying. He then explained the two terms in English and started checking in with us periodically to make sure we understood everything. In another instance, I supported David’s idea with extra facts and statistics when we presented our findings to each other. To support someone “goes beyond agreement,” I had to “put forward some opinion that actually makes the proposition of another person stronger.” Though I had the same conclusion as David, instead of simply saying “I agree,” I provided specific data, like Nike and Adidas’ past stock growth and profit growth during the pandemic, to build upon the idea that Nike has a higher growth potential. Furthermore, I also practiced modifying established ideas. Our mentor suggested that we research the entire composition of the financial industry for our next meeting, but I thought that one week is not enough to fully analyze an entire industry and modified the “assignment” to focus on two specific areas.

With these two chapters of Bono’s book and the past two weeks, I was able to further connect with my mentor and respond in a way that cultivates conversation and I’m beginning to get inside glances into the finance field. It has been very informative and exciting and I hope that the future weeks will be the same! Again, I’m super grateful to have an experienced mentor and a supportive peer.

see y’all later,

joanna

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