Option 1. Taking advantage of Foreign Exchange
Many global companies hold global meetings for their executives. While working at Tetra Pak, one session I attended made it to the Guinness world of records (see here) by being the largest ice village.
Your company organizes an annual event for 100 executives. The budget is 1 million dollars for three days. This includes all traveling expenses, hotels, meals, and entertainment. It works out to $10,000 per executive.
The executives are coming from
30% North America
30% Europe & Middle East
30% Asia
10% Oceania & Pacific
Some executives mentioned that we should take advantage of the currency’s depreciation in Europe, Japan, Turkey, Argentina, and other countries and hold the meeting there instead of in New York.
Prepare a recommendation showing how we could save on the cost by hosting the convention in a location other than New York. Focus on the depreciation of other currencies compared to the dollar for the last three years.
Option 2
Explaining Sales growth
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Instructions
- Prepare a table to explain sales growth versus a prior period. You can use any period you like.
- Identify the four most relevant growth drivers for the two periods you are comparing. Use that if your company provides the impact due to volume, pricing, foreign exchange, etc. It’s the preferred option.
- If they don’t, use what they provide (don’t make up the numbers). Examples include:
Regions (e.g., China, India, Europe, or North America),
Business units (e.g., skincare, cosmetics).
Pick four drivers, not 2, 3, 6, or 7. You can then use the template provided and save a lot of time.
Tips
- Get the data the way that the company shows. If they show it by region, use regions. If they show it by categories, use categories.
- Pick a period for which more data is available (the annual report has the most data). Don’t compare periods impacted by exceptional events such as the pandemic, and skip all comparisons to 2020 (don’t compare 2020 vs. 2019, 2021 vs. 2019 is better). Don’t mix drivers: if you grab from the annual report the drivers by region, don’t mix it with drivers by product. Pick one or the other.
See a short video about this session here
There are 4 reasons why Sales declined. Reason 1 for Sales decline: Competition IBM is facing many strong competitors, such as
Amazon, Microsoft and Google. Reason 2 for Sales decline High investments and low returns in AI. In 2015, IBM spent more than $15 billion developing Watson. Compared to the large investment made, IBM has not had an impressive return since. IBM is seeking a competitive advantage with its AI technologies, especially in the Americas. Even if these technologies have seen an increase in sales in the Americas during the pandemic, revenue declined across IBM’s business segments. Cloud and Cognitive Software, IBM’s biggest unit, saw revenue decrease from 2019 to 2020. Reason 3 for Sales decline: Global Pandemic Revenue for IBM in Q2 2020 is down from the $19.2 billion figure recorded in the same quarter last year, as is net income, down from $2.5 billion to $1.4 billion, as the company continues its recovery from Covid-19. Even if AI and cloud computing saw a slight rise in revenues during the pandemic, this was not enough for IBM to end its 2020 on a positive note Reason 4 for Sales decline: Market Demand Shift IBM has faced struggles adjusting to changes in the marketplace in the Americas. Recently the company has focused on “strategic imperatives”: getting rid of low-margin businesses and investing in high-margin businesses; at the end of 2018, for example, IBM sold IBM WebSphere Commerce to HCL Technologies for 1.8 billion U.S. dollars. It is imperative to focus on the changing
demands of digital transformation in the Americas. The largest source of IBM’s revenue of 2020 now comes from its AI technology services and cloud platforms business segment, which specializes in helping organizations integrate their
traditional infrastructure into a multi-cloud environment, especially in the Americas.
To explain sales growth, I decided to choose Disney as the company selected. In their category (DPEP), I included five drivers 1. Merchandise licensing and retail, 2. Theme parks admissions, 3. Parks & experiences merchandise and beverages, 4. Resorts and Vacations, 5. Park Licensing and Others. Looking at the drivers and the comparison between 2020 and 2021, I saw an overall decrease in Net Sales for DPEP of -$0.4B/-2.9%. Comparing 2020 to 2021 for each driver, Merchandising increased by 0.5 Billion, whereas Theme Parks and Admissions decreased by 0.2B, Parks and Experiences decreased by 0.1B, and Resorts and Vacations decreased by 0.7B.
The analysis for Disney was surprising, as I thought Disney DPEP would have increased in 2021 as in 2020, they got hit by the pandemic. Looking at the results, 2020 was a better year for this category.
There are different factors why there was a decrease.
1- Parks attendance decreased in 2021 due that customers were scared of crowded spaces due to the spikes of COVID cases.
2- In 2021, Some resorts had to close down again due to the Covid situation; Shanghai hotel, Disney Fan resort,, and some were at a limited capacity.
3- Lower Hotels occupancy rate which decreased the net sales
Merchandising increased due to customer high demand for products and the addition of new products like Mickey and Minnie, Frozen 2, star wars, the mandolorian and Spiderman.
There seems to be a better future for Disney DPEP in 2022. Disney increased their overall prices of tickets, annual passes and in parks food and beverages since the initial of the calendar year 2022 and all parks at a full capacity. As the pandemic is fading and customers are willing to get into the parks plus the increase in price and opening of resorts, this should result in an overall increase of their net sales in this category.
The company I picked is Disney. As we all know, Disney has two main segments, one is Disney Media and Entertainment Distribution (DMED), and the other is Disney Parks, Experience, and Products (DPEP).
Under the DPEP segment, there are several branches:
1. Theme park admissions
2. Parks & Experience
3. Merchandise, food & beverage
4. Resorts and vacations
5. Merchandise licensing and retail
6. Park licensing and other
According to Disney’s 2021 annual report, the total revenue of the DPEP segment drop 3% from 2020 to 2021 and the main cause is Resorts and vacations. Due to the pandemic, Disney parks and resorts were all got influenced and the number of daily visitors was decreasing. However, Merchandise licensing and retail increased by 11%, which kind of helped to balance the loss.
Different from the DPEP segment, the growth of the DMED segment is significant. From 2020 to 2021, the total revenue of the DMED segment increased by 5%. Furthermore, Disney + has reached 95 million subscribers worldwide and the number keeps growing. Therefore, the revenue of the DEMD segment cancels out the DPEP segment, allowing Disney’s total revenues to slightly increased compared with 2020.
The company I pick is Nike, and the truth is that the sales did grow at the year of 2021 compared to previous years. Obviously after-pandemic effect is one of the major reasons for the sales growth of Nike at the last year, since retailing shop opened back, supply chain started to work efficiently and international shipment also came back to the same speed level as the time before Covid pandemic. However, to further analyze the sales growth of Nike, there are several other reasons that can be mentioned here to further explain the growth.
The first and the most important reason is the digital market growth of Nike. Even before the pandemic, Nike already started to encourage its customers to use the online shopping APP introduced by Nike but at that time the offline retailing shop was still the major force of Nike’s selling. Due to the effect of the Covid pandemic, Nike’s online shopping app got a chance to develop itself significantly because that was the perfect time for Nike to push the customers into its online shopping app and Nike did success in that.
The second reason is about the impact of product launches. Throughout that year, Nike continuously utilized the marketing strategy of Co-branding to introduce new products that can attract customers from both brands. The co-branding of Nike and the famous fashion brand OFF-WHITE is a perfect example for that which generate a considerable sales growth for Nike. Now Nike is still actively using the strategy, such as the Nike x Louis Vuitton co-branding which was just introduced recently.
In order to explain sales growth, I would pick L’Oréal. This company is organized into four complementary divisions, with each one developing a specific vision of beauty for its respective market: Professional Products Division, Consumer Products Division, L’Oréal Luxe, and the Active Cosmetics Division. According to L’Oréal’s 2021 annual report, this was a historic year with a strong increase in profits. The company had a +16.1% growth,
which is twice the beauty market growth.
* The sales growth compared to 2019 was recorded to be +11.3% like-for-like.
* There was a record operating profit of 6.16 billion euros and 19.1% of sales.
* In 2021, e-commerce grew by +25.7%, accounting for 28.9% of sales.
Successful product launches by division:
1. PROFESSIONAL PRODUCTS: growth: +24.8% like-for-like and +22.2% based on reported figures.
* Kérastase: Curl Manifesto
* Hair Colour: EQ by Redken and Dialight by L’Oréal Professionnel.
* L’Oréal Professionnel: Metal Detox and Redken – Acidic Bonding Concentrate line.
2. CONSUMER PRODUCTS: grew by +5.6% like-for-like and +4.5% reported, with +6.5% like-for-like growth in the fourth quarter.
* Sky High mascara by Maybelline
* Dream Lengths Wonder Water by Elsève
* Garnier’s Vitamin C Serum
* NYX Professional Makeup – Money Heist Collection
3. L’ORÉAL LUXE: growth at +20.9% like-for-like and +21.3% reported.
* Lancôme: Absolue and Helena Rubinstein
* Kiehl’s: Retinol Skin-Renewing Daily Micro-Dose Serum
* YSL: Libre
* Mugler: Alien Goddess
* Prada: Luna Rossa Ocean
4. ACTIVE COSMETICS: exceptional growth at +31.8% like-for-like and +30.3% reported.
* La Roche-Posay: Effaclar serum and Lipikar EczemaMED
* SkinCeuticals: Silymarin CF
L’Oréal’s exceptional growth was driven by generating high-rank innovations, as well as diligent cost control. This has enabled them to invest extensively in their brand, delivering record operating profit and an operating margin.
The company I am choosing to analyze is Ulta Beauty [ULTA]. Ulta has seen a rise in sales growth over the last year as reported in their annual report. The company pulled in $6.1B in net sales in 2021’s report and $8.6B for 2022’s. This can be attributed to a variety of reasons.
One main reason is the lifting of covid restrictions. 2021’s annual report showed a 17% decrease in sales given the fact that that year was spent mostly in quarantine. The 35+% increase into 2022 shows a return to regular life. Cosmetics and fragrances and bath contributed to these increases. “The net sales increase was primarily due to the favorable impact from stronger consumer confidence, government stimulus payments, and the easing of COVID-19 restrictions, and an increase of $15.1 million in other revenue. The total comparable sales increase of 37.9% in fiscal 2021, compared to a decrease of 17.9% in fiscal 2020, was driven by a 30.0% increase in transactions and a 6.0% increase in average ticket.”
Netflix is well known as a worldwide video streaming service. The company receives revenue from monthly subscription fees for streaming content, which offers various subscription plans for membership. The price varies by region and country, ranging from $2 to $27 per month.
The streaming revenue (sales) of Netflix is divided into regions including:
United States and Canada (UCAN)
Europe, Middle East, and Africa (EMEA)
Latin America (LATAM)
Asia-Pacific (APAC)
According to Netflix’s 2021 Annual Report, the revenue of Netflix has increased in all 4 regions. The highest revenue growth is 38% in APAC, followed by 25% in EMEA, and 13% in UCAN and LATAM. The total streaming revenue growth is 19%, which increase from $24 billion in 2020 to $29 billion in 2021.
The reasons for revenue growth are mainly due to the increases in the overall subscription price, increases in the number of subscribers.
1. Netflix shows an increase in average monthly revenue per paying membership in all regions: a 9% increase in UCAN, 8% increase in EMEA, 5% increase in APAC, and lastly 4% increase in LATAM.
This is due to the increase in price in most subscription plans in many countries. The higher average price is one of the reason that the revenue increases
2. Netflix shows an increase in average paying membership in all regions: 31% increase in APAC, 15% increase in EMEA, 9% increase in LATAM, and 4% increase in UCAN.
The reason for increases in this market growth is because Netflix has been offering low price plans in some countries in order to attract new customers as their international market penetration plan. It has worked very well, especially in India and Asia where Netflix has been gaining more market share.
The rising number of subscribers is also due to Netflix focusing more on new original movies content (new products) that is more customized to local people in each region.
Netflix has also included constant currency change in each region, which considered the foreign currency exchange rates to remain constant from each of the corresponding months of the previous year. This is to exclude the effect of foreign currency rate fluctuation on the monthly revenue.
Although the revenue has been growing, Netflix is facing a problem with saturating market of streaming services. It’s harder to gain more subscribers when there are more competitors. The revenue growth is lower than the previous years and investors aren’t happy about it. So, Netflix has been increasing the price to increase revenue and profit, while also trying to gain market shares in the region that still has low competition.
Company- L’Oreal
How would you explain the sales growth of your favorite company to others? Despite the unprecedented challenges caused by the global pandemic, L’Oreal was able to demonstrate remarkable growth surpassing pre pandemic figures and expectations.
Market Growth- In 2021 L’Oreal experienced exceptional market growth with sales growth up 16%. The company’s e-commerce channel grew by 25.7%.
Market Share Gains- There were market share gains in all zones, divisions, and categories (meaning all geographic zones showed gains despite the public health issues). All divisions of the business were up 6.5% in the fourth quarter.
Pricing- Despite being one of the company’s priciest sectors, L’Oreal Luxe became their largest division in 2021, specifically gathering attention in their fragrances, subsidiaries like YSL, Margiela, and Prada typically price their perfumes around $150USD.
Impact of Product Launches- Product launches have only helped L’Oreal in terms of growth. Due to their loyal consumers and brands desirability, they can profit and experience success with most new products their brands put out.
“2021 was a historic year for L’Oréal. Thanks to the expertise, passion and commitment of our 85,400 L’Oréalians around the world, the Group achieved record growth of +16.1%1, twice that of the worldwide beauty market. L’Oréal gained market share in all Zones, Divisions and categories. Over two years, the Group achieved growth of +11.3% like-for-like, spectacularly outperforming a market that had returned almost to 2019 levels.”
Quote from https://www.globalcosmeticsnews.com/loreal-reports-historic-year-in-2021-with-sales-growth-driven-by-infinite-appetite-for-beauty/
Coca-Cola remains the world’s most valuable soft drink brand till date. I am comparing Coca Cola’s sales growth for the years 2011 and 2012. In 2012, Coca Cola made the most of its sales since the past 5 years. In 2011 the company saw a global volume growth and continued the momentum to 2012. In 2011 the total revenue was 46.54 US Billion Dollars followed by 48.02 US Billion Dollars in 2012. Here are a few drivers that led to the highest sales in these years –
1. Macroeconomic volatility – a major systematic factor was put in place by Coca Cola during these years in a large cross section of countries across the world. A few reasons that helped them manage this were the economic outputs, unemployment rates, and inflation in other countries that they gained an advantage from.
2. Bottling partners – Muhtar Kent, CEO of the Coca-Cola Company, faced a critical decision in 2011 after closing a $12 billion deal to buy its troubled North America bottling operations from its biggest bottler, Coca-Cola Enterprises. The decision was prompted by several changes in the U.S. market, including the bottler’s inability to make crucial investments, the growth of alternative, non-sparkling drinks, and the growing power of national accounts, such as Wal-Mart. Now that Coke owned most of its North American bottling network, Kent had to decide whether keeping the labor and capital-intensive side of the bottling business was in Coke’s long-term strategic interest. In December 2011, it purchased half of one of the biggest beverage companies in the United Arab Emirates, Aujan Industries. Three months later, it opened its 42nd bottling plant in China which showed tremendous growth results.
3. Expanding globally – Coca Cola started focusing on other regions when the US become a market that was producing organic revenue. North America, Japan and Germany with double-digit growth in key emerging markets, including India and China in the year 2011-12 by focusing on globally scaled marketing campaigns
4. Treating all products as their hero products – In these years, their major revenue was from sparkling water – Worldwide sparkling beverage volume grew 2 percent in the quarter, with international sparkling beverage volume up 3 percent. Still beverage volume worldwide grew 8 percent for the full year and 6 percent in the quarter, led by growth across The Coca-Cola Co.’s portfolio, including ready-to-drink teas, juices and juice drinks, energy drinks and water brands. International still beverage volume grew 10 percent for the full year and 7 percent in the quarter, and North America still beverage volume grew 4 percent for the full year and 3 percent in the quarter. Global brand Minute Maid Pulpy continues to expand globally, with 20 percent volume growth in 2011. Energy drinks volume grew 19 percent in the quarter with broad distribution of the company’s Burn energy brand, which now is available in nearly 80 countries. The company’s water volume grew 7 percent in the quarter as the company continues to focus on innovative and sustainable immediate consumption packaging such as the PlantBottle in North America, which is driving new customer listings, and the I LOHAS/Ecoflex lightweight crushable bottle for water brands in Asia and Latin America.
Coca-Cola Co.’s four-year productivity program was also in the works during these two years which was successfully completed with annualized savings of more than $500 million, exceeding its original target between $400 and $500 million. The company also launched a new “Productivity and Reinvestment” program with aimed incremental annualized savings of $550 to $650 million by the end of 2015 as a natural outgrowth of the company’s 2020 vision to design and implement the most effective and efficient business system.
Disney provides a variety of products and services under two main segments: Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP).
While the DMED segment consists of movies and Disney’s streaming service (Disney+, Hulu, ESPN+), the DPEP segment covers theme park experiences, merchandise, resorts, and even the food and beverages offered within the parks.
Total revenues from 2020 compared to 2021 had dropped by 3% in the DPEP segment due to the pandemic. As for DMED, there was a 5% increase in revenue. It is obvious that the pandemic impacted the DPEP segment because less people were taking the chance to go to theme parks and staying at the resorts. Since there were less people in the parks, food and beverage sales also declined.
Meanwhile in DMED, an increase in total revenue consisted of subscription fees, advertising, and TV/SVOD distribution. The increase in advertising was from higher impressions on Hulu and pay-per-view fees on ESPN+ along with exclusive Disney+ releases, like Black Widow and Cruella, was a part of the increase in TV/SVOD distribution.
The increases in DMED covered the decrease in revenue in the DPEP segment and overall leaving a slight growth in revenue from Disney’s 2020 revenues.
The company I picked is 3M. 3M has four main business branches: health care, transportation & electronics, safety & industrial, and consumer.
1. Safety & Industrial will drop by 3% in 2022. In this business branch, the sales growth is primarily led by the closure and masking systems additional with abrasives, industrial adhesives, and types. Safety & Industrial has fallen by 1.3% according to the fourth quarter of 2021. The strong demand for COVID-related products has declined since the end of 2021. The COVID-related products will reduce their production, whereas the other products related to regular industrial production are increasing on the opposites; these are all a result of the lesser impact of COVID. Therefore, in the combination of growth and reduced demand, it is predicted that 2022 will still be a relatively declining sales by 3%.
2. Transportation & Electronics will drop by 5%. Affected by the war in Ukraine and soaring oil prices, transportation is facing a serious dilemma. As the essential factor of the transportation system, the soaring prices of oil limit the expansion. The sales growth will drop unless the energy price can be stable and affordable.
3. Health Care branch will drop by 4%. Oral care is the main industry production in this business branch, together with food safety and medical solution. The serious bad effect of inflation reduced the demand of consuming the oral care service. People are declining their consumption of the unnecessary.
4. Consumer branch will increase by 6%. The sales growth of the consumer branch has increased by 4.9% in the fourth quarter of 2021. After COVID, people back to the office and school, which brings back the demand for stationary. This is considered to be rigid demand and the sales in 2022 is promising.
The company I choose to talk about is Nike. Nike’s sales revenue was increased in year 2021 compared to its previous year. One of the major reasons for its growth is that after the pandemic, Nike started to re-open their retail stores and improved their supply-chain in order to meet the demand of their customers. Another reasons is Nike’s digital sales growth. While Nike’s in-store sales haven’t yet reached pre-pandemic levels, the retailer’s digital sales continue to grow. Globally, the retailer drove a 25% currency-neutral growth in its digital channel’s sales and digital is now 21% of Nike’s total revenue, up from 19% of total revenue the year prior. Indeed, Nike has been investing in digital shopping long before the pandemic, often as a first-mover in new technology. Nike invested in a sneaker launch app called SNKRS in 2015 and adopted curbside pickup and online-offline product-availability-integrated app in 2018. In addition, Nike’s loyalty membership is also playing a role in their sales growth, Nike reported 70% growth in repeat buying members. And Nike continue to manage their marketing strategy and digital growth.
How would you explain the sales growth of your favorite company to others? Try mentioning market growth, market share gains, pricing, and the impact of product launches
The company that I choose to work on is Coca-Cola who pulled off a 12.93% sales growth in 2021 compared to 2020. The biggest driver would be the increase market size in Latin America. As a matter of fact, Latin America accounts for 48% of Coca-Cola’s reported operating income. The major growth in Latin America was led by Mexico, Brazil and Argentina, driven by solid performance of Trademark Coca-Cola and the hydration category. Another contributor is recovery from the pandemic. Supply chains are going back to normal, people are more often going out, international shipping is increasing in size etc. These all leads to growth to the overall economy, thus to Coca-Cola as well.
Because of the inflation, price for Coca-Cola has gone up, especially in North America, which compensates the cost of production process.
There are stereotypes about Coca-Cola company that they are only doing business of cola, or soft drink in general. However, they actually have a very broad product line that can support their sales growths and contribute to the net income from different angles. For example, Nutrition, juice, dairy and plant-based beverages grew 12% last year which is double the rate of the soft drink category. Hydration, sports, coffee and tea also grew for 6%.
I’m using 3M’s as the company to explain Sales Growth. There are four business groups under 3M: Safety & Industrial, Transportation & Electronics, Health Care, and Consumer.
According to 3M’s 2021 Financial Report, the company has increased their sales by +9.9% year-on-year. Their 2021 Net Sales for 2021 were recorded at $35.4B, compared to 2020 Net Sales which came in at $32.2B. There were several factors that influenced the sales growth of 3M, I will be expanding on raw materials and organic growth.
Raw materials: As mentioned on their 2021 annual report, due to the “higher raw materials, logistics, and outsourced manufacturing costs” and other variables related to the global supply chain challenges of 2021, and “winter storm Uri in the U.S.” influenced the price increase of multiple products.
Organic growth: Some of the factors that directly impacted the organic sales growth of 3M were:
– $91M pre-tax “from a favorable Brazilian Supreme Court decision that concluded on the impact of state value-added tax when determining Brazil’s federal sales-based social tax-essentially lowering the social tax that 3M should have pain in prior periods.”
– “3M also experienced year-over-year increased costs as a result of the regular review of its respirator mask liabilities and certain follow-on accelerated depreciation following some of the restructuring in 2019 and 2020.”
As we have seen on other companies, COVID-19 also played a big role on 3M’s product launches, and pricing. “In 2021, COVID-related respirator sales negatively impacted year-on-year organic sales growth by approximately 0.2% as they grew at a slower rate than the rest of the Company.” However, 3M did see an increase in sale in personal safety, general cleaning, and other industries/products.
Resource:
3M 2021 Annual Report: https://s24.q4cdn.com/834031268/files/doc_financials/2021/ar/3M_2021_Annual_Report_Web-(3).pdf
Apple revenue increased dramatically between in the past decade, from $108 billion to $365 billion. In the past year alone, it has increased its revenues by 33%. Apple generated $365 billion revenue in 2021, 52% came from iPhone sales, and Apple Services was the second largest division, responsible for 18% of revenue. At the end of 2021, Sales of iPhones, Apple’s core product segment, were $71.63 billion (up 9%) in the year-end quarter, after the next generation iPhone 13 family began shipping last fall. That was an all-time high for the smartphone biz. In addition, Apple’s Services revenue for the period rose 24%, to $19.5 billion, also a record, the same growth rate as in the year-earlier period. The segment comprises the App Store, Apple Pay, Apple Music, Apple TV Plus, iCloud, AppleCare and other subscription businesses. In the quarter, Apple recorded all-time high revenue for areas including cloud, music, video, advertising and payment services. In the September 2021 quarter, supply-chain issues including chip shortages added $6 billion in costs, and the impact was expected to be even bigger in the year-end 2021 quarter. However, “Apple’s growth cycle is not reliant on pandemic cycles in the same way that say Netflix has been — benefitting but then finding it hard to keep up that growth,” said Tom Johnson, global chief digital officer at media agency Mindshare. “Apple’s cult following will always buy the latest version of its flagship device. Chip shortages were never going to hold back its growth long term.”
The company I picked is Nike which is a MNC that designs, manufactures and sells sportswear across the world. Sales growth have gradually recovered last year as covid-19 is under control now, and most countries have lifted quarantines that were previously in place. We see a trend of stores reopening and factory productions back on track to support its supply chain and consumer demands. Another reason for Nike’s market growth comes from its e-commerce empire that it put a lot of effort in building during the covid pandemic. In particular, Nike Direct has greatly contributed to the company’s market growth, which focuses on selling directly to its customers rather than through third-party retailers. For example, its SNKRS app allows Nike fans to buy Nike sneakers online and have exclusive first access to new and limited-edition sneakers. There are many advantages towards Nike’s DTC strategy, including changing consumer shopping habits (from offline to online), direct data collection (about consumer spending habits and preferences, allowing better direct to customer advertisement and bettering understanding of its customers), builds up loyal customer base (app provides inside access to new product launches), and also allowing Nike to control its own brand or product content. Besides that, Nike has also increased its impact of product launches through collaboration with well-known brands and celebrities. For example, its new partnership with Louis Vuitton this year, launching LV Air Force 1 which collected great media attention. Other collaborations ranges from sports celebrities to singers such as LeBron James, Serena Williams and Drake. Furthermore, Nike’s innovative products and technologies have allowed it to gain competitive advantage over its competitors over the years. Examples include Nike flyWire support system to maximize support and minimize weight, lunarlite foam cushioning for better energy return for runners, and its hands free sneakers for easy get in and get out.
Apple’s first fiscal quarter runs from October through the end of December and is the company’s biggest of the year, powered by increased holiday spending and a launch schedule that puts new products on the market in the fall.
In result, Apple revenue for the quarter ending June 30, 2022, was $82.959B, a 1.87% increase year-over-year. Apple revenue for the twelve months ending June 30, 2022 was $387.542B, a 11.63% increase year-over-year. Apple annual revenue for 2021 was $365.817B, a 33.26% increase from 2020.Apple’s revenue growth forecast is 7.4%. Apple’s revenue growth forecast is expected to average 5.5% over the next five fiscal years.
iPhone and Apple services are the two main support for apple revenue. Apple Watch and wireless headphone sales hit by slowing demand is the company’s wearables division.However, Morgan Stanley’s Woodring believe Wearables are the most discretionary product in Apple’s portfolio and therefore most prone to the pullback we are seeing in consumer electronics spending.
Apple’s hardware business was particularly grim. While iPhone sales increased 3% to $40.7 billion; Mac revenue dropped 10% to $7.4 billion; sales of wearables — including the Apple Watch, AirPods and HomePods — dropped around 8% to $8.1 billion, and iPad revenue barely declined to $7.2 billion, according to TechCrunch.Apple has managed to convince investors that the growth and profitability of its services business — which includes Apple Music, iCloud storage, App Store revenue, Apple Pay and warranties — matters more than its moribund top line.
Services “will make up for smart phone saturation and provide healthier profits,” noted CNBC. To be sure, Services are more profitable than hardware. After all, Apple’s gross margin from Services of 71.5% in the third quarter was significantly above Apple’s overall gross margin of 43.3%.
However, the growth of Services is falling short of Apple’s aspirations. While Services grew 16% in 2020 and 27% in fiscal 2021, they increased a mere 12% in the fiscal third quarter to $19.6 billion — $100 million below analysts’ expectations, according to Refinitiv.
That was not enough to boost its top line growth — since Services represented only 23.6% of Apple’s revenues for the quarter.
Apple is blaming the economy for slowing Services growth. Apple CEO Tim Cook said, the digital advertising division was “clearly impacted by the macroeconomic environment.”
I picked Pfizer to explain sales growth as this is the company I’ve been working on my assignments this semester. Pfizer is not my favorite company but I do like it. In 2021 performance, Pfizer’s sales growth increased from $41.7 billion to $81.3 billion, which is a 95% increased. It’s mostly from the operational increase of $38.4 billion and the impact of foreign exchange of $1.2 billion. There is strong growth in “Eliquis, Biosimilars, PC1, Vyndaqel/Vyndamax, the Hospital therapeutic area, Inlyta and Xtandi, partially offset by declines in the Prevnar family, Chantix/Champix, Enbrel and Sutent” according to Pfizer’s 2021 10-k report. Pfizer’s market share increased 60% – the total value of Pfizer’s stocks surged from $127 billion to $331 billion by the end of December 30, 2021. Parts of the pricing and reimbursement of Pfizer’s products depended on government regulation in 2021 as government had the most impact on drug pricing and Pfizer had to provide specific prices to the government agencies.
For Pfizer, revenues increased $39.6 billion, or 95%, to $81.3 billion in 2021 from $41.7 billion in 2020, reflecting an operational increase of $38.4 billion, or 92%, as well as a favorable impact of foreign exchange of $1.2 billion, or 3%. Excluding direct sales and alliance revenues of Comirnaty and sales of Paxlovid, revenues increased 6% operationally, reflecting strong growth in Eliquis, Biosimilars, PC1, Vyndaqel/Vyndamax, the Hospital therapeutic area, Inlyta and Xtandi, partially offset by declines in the Prevnar family, Chantix/Champix, Enbrel and Sutent.
To sum up, the sales grow from $41651 million in 2020 to $81288 million in 2021. The key drivers include operational (excl. impact of LOE and Operational impact of Comirnaty and Paxlovid Revenues) for $2947 million, impact of LOE for -$621 million, Operational impact of Comirnaty and Paxlovid Revenues for $36013 million and foreign exchange for $1208 million. And this definitely reflects the focus of Pfizer in 2021.
For L’Oréal , the sales growth in 2021 will be significant. the Group achieved record growth of +16.1%, twice that of the worldwide beauty market. L’Oréal gained market share in all Zones, Divisions and categories. Over two years, the Group achieved growth of +11.3% like-for-like, spectacularly outperforming a market that had returned almost to 2019 levels.In terms of Zones, North America made a strong comeback and joined North Asia as the primary growth contributor. In Europe, boosted by the Zone’s reorganisation, L’Oréal achieved significant market share gains and saw a return to 2019 levels. With an extremely volatile public health situation in SAPMENA-SSA and Latin America, L’Oréal demonstrated agility and delivered solid performance.
From my point of view, the main reason for the growth is that L’Oréal can adapt to the development of e-commerce faster and get rid of the impact of the epidemic faster. As a result, L’Oréal has achieved higher market share while achieving higher sales growth.
My company of choice is Lululemon because I like its sportswear. Lululemon is experiencing good sales growth in both 2021 and 2022. What’s remarkable about this growth is that Lululemon isn’t just thriving in a time of inflation; it’s growing while its closest competitor is having a tough year. Under Amour reported on its second-quarter earnings call that North America was flat for the quarter, “at $909 million compared to the prior year period, with international revenue declined 3%.”
1. For the 12 months that ended July 31, 2022, Lululemon Athletica Inc’s revenues were $7,061 million, an increase of 27.83% from the same period last year.
Lululemon Athletica Inc’s annual revenue for 2022 is $6,257 million, an increase of 42.14% from 2021.
2. Direct-to-consumer e-commerce revenue accounted for 42% of net income, a slight but positive increase from the 41% share in the second quarter of 2021.
Revenue expansion is occurring in North America and internationally, which are now growing at a compound annual growth rate of more than 25% over the past three years. Diluted earnings per share were $2.26, well ahead of the Street’s estimate of $1.87, while operating income reached $401.2 million.
3. The company is planning a conservative price increase starting in the second quarter of 2022 that will initially affect only about 10 percent of the general catalog. Chief Executive Officer Calvin McDonald said more price increases could come in the next few quarters.
4. The yoga-wear maker said it saw a modest impact from the blockade of stores and some suppliers in China, but the overall effects on first-quarter revenue were offset by strength in other regions.
Lululemon launched a women’s footwear product in March. Demand for the new products exceeded supply in the first quarter and “far exceeded” the company’s expectations.
The company I choose is Disney. In general, Disney sales have grown by 3% in 2021 compared to the year before. The factor leading to this growth is mainly growing DTC subscription revenue, while it has been partially offset by a decrease in the Disney Parks, Experiences and Products category due to the impact of COVID-19.
Disney’s business can be broadly divided into two categories, Disney Media and Entertainment Distribution(DMED) and Disney Parks, Experiences and Products(DPEP), revenues in DMED has increased 5% and the latter has decreased 3%. In DMED category, the Linear Networks and Direct-to-Consumer are the two driving factors for sales growth. The increase in affiliate fees and advertising sales, subscription fees and sub-licensing fees have contributed to the growth. Under the negative influence of the pandemic, the business in DPEP category still has not fully recovered to pre-pandemic level. The sale of admissions to theme parks, food and beverage, merchandise at theme parks and resorts, and charges for hotels etc. were all adversely impacted as a result of the closure/generally reduced operating capacity across the theme parks and resorts. While this decrease has also been partially offset since Disney has raised its average price for a certain amount.
The company I picked is L’Oreal. 2021 is a historic year for L’Oreal. They have 16.1% growth increases. And twice the beauty market growth. It is a very strong increase in profits.
The sales growth compared to 2019 increased by 11.3%.
The earnings per share is an increase of 20.9%.
L‘Oreal has four divisions, and L’Oréal Luxe became the Group’s largest Division, with remarkable success in fragrances, while the Consumer Products Division, the largest Division by volume, strengthened its position, with noteworthy performance in makeup. The fast-growing Professional Products Division continued its far-reaching transformation and became truly omnichannel. With a portfolio of brands that perfectly matches consumers’ health aspirations, Active Cosmetics also achieved spectacular growth, doubling in four years.
The reason why L’Oreal can achieve such large growth is due to the strict cost control and comprehensive e-commerce support of the L’Oreal Group. Due to the epidemic, offline shopping has decreased sharply, but the new comprehensive e-commerce and marketing support makes L’Oreal Group stand out from the major cosmetics groups.
L’Oréal continues to innovate, update products and acquire new brands to make the group stronger. Four different divisions showed their magical powers to seize different consumer markets, and the profits of the entire group rose steadily.
Despite rising prices, it has not stopped the enthusiasm of consumers. L’Oreal is committed to bringing the latest and best products to those who love beauty.
Sales Growth Analysis of Disney from 2019 to 2021
Overview: Disney’s total sales decreased around $2 billion from 2019 to 2021, to $65 billion in fiscal 2021. The main reason is the decreased of Parks & Experiences services fee and the Parks & Experiences and TV/SVOD distribution revenue. However, Disney content from licensing to being on the DTC streaming service. Therefore, it still have several growth in their digital media business.
– First, DTC subscription revenue increased $0.6 billion from 2019 to 2021. Content from licensing to third parties to being on the DTC streaming service.
– Second, Advertising revenue increased $0.3 billion from 2019 to 2021.
– Third, Merchandise licensing revenue increased $0.2 billion from 2019 to 2021.
The company I picked is Estee Lauder. The sales have grown 9% compared to the year before, driven by the increase from pricing of 7%, due to favorable impacts from changes in mix and strategic pricing actions; incremental net sales attributable to the increase in Estee Lauder ownership of DECIEM in the fiscal 2021 fourth quarter of 2%; and the increase from volume of 1%. Partially offsetting these increases was the unfavorable impact of foreign currency translation of 1%.
Estee Lauder has four main divisions: skincare, makeup, fragrance, and hair care.
Skincare occupied the biggest portion of total net sales, driven by incremental net sales attributable to the increase in our ownership of DECIEM in the fiscal 2021 fourth quarter of 4%.
Makeup net sales increased by 12% in fiscal 2022, led by higher net sales from MAC and Estée Lauder. The continued progression towards recovery in makeup, including increased usage occasions compared to the prior-year period, led to the increase in makeup net sales in The Americas and Europe, the Middle East & Africa.
Fragrance net sales increased by 30% in fiscal 2022, due to more store openings, and successful performances during holidays and key shopping moments.
Hair care net sales increased by 11% in fiscal 2022, primarily due to the continued progress toward salon and retail store recovery in North America. Net sales from Aveda increased, reflecting the continued success of existing product franchises, and new product launches.
To explain the sales growth, I chose Coca-Cola as the company of choice. For the full year 2021, the company reported revenue of $38.66 billion, up 17% year-over-year, beating market expectations of $38.08 billion; operating profit of $10.31 billion, up 15% year-over-year; earnings per share of $2.32, above market expectations of $2.29; and global unit case sales growth of Global unit case sales increased 8% year-over-year.
Market and market share growth: global unit case sales grew 9% year-over-year, and unit case sales in Asia Pacific grew 11% year-over-year, driven by strong growth in China, India, and the Philippines. Meanwhile, a strong increase in China last quarter, especially with the doubling of Coca-Cola Zero Sugar compared to the fourth quarter of 2019, and revenue enhancement management and e-commerce business also contributed to growth in China. Moreover, globally, Coca-Cola grew its value share of the non-alcoholic ready-to-drink (NARTD) beverage market in both the fourth quarter and for the full year 2021, with the share in both the in-home and out-of-home channels up.
Pricing: Due to inflation, the price of Coca-Cola has increased, which compensates for the cost of the production process.
Product Launch: With a long-term goal of becoming a “full-service beverage company,” Coca-Cola continued to strengthen the competitiveness of its classic brands while bringing fresh categories and beverage choices to consumers. For example, during the Chinese New Year of the Tiger, Coca-Cola launched its first limited edition of Chinese New Year cans in China. Incorporating Chinese elements such as traditional Chinese New Year paintings and cut-out art, as well as a series of creative marketing activities such as the Year of the Tiger animated movie and immersive interactive games. To strengthen Coca-Cola’s role as a symbol of joy and reunion, connect deeply with local consumers, enhance emotional resonance with local consumers, and further strengthen the brand’s market. The brand’s market competitiveness was further strengthened.
The company that I chose is Nike. From fiscal 2022 compared to fiscal 2021, Nike’s sales had been increasing by 5% ($42 to $44 Billions USD). There are many reasons that led to the growth of Nike. The first one is the growth of Nike Direct, which are both Nike-owned retail stores and digital platforms. Since the pandemic, consumers have shifted their ways of consumption toward online platforms because most companies have developed a system to make it more and more convenient to serve their customers and it help companies reduce the cost of physical stores and also manage inventory better in return. The second reason is the increase in the product price. Nike increased the price of footwear, which contributed to 66% of total revenue, by 5-10%, for example, one of the most popular models of Nike footwear, Air Force 1, increased the price from $90 to $100 in 2022. Another reason is that Nike has the biggest market share in the sportswear industry at 41%, followed by Adidas which has only 25%. That means competitors of Nike are not strong enough to slow down their sales growth. Nike has a strong consumer base to support and continue purchasing from the brand. The last reason is that there are many new products laugh during the fiscal year 2022 after the pandemic. Nike launched lots of new interesting products to attract their customers and potentially increase their sales. Nike partnered with Lil Nas X, a popular American rapper, to create exclusive sneakers called Satan Shoes which was successful among Nike fans and also his fans. Nike also launched other new sneakers called Go FlyEase, which can be put on and removed without using hands. The innovation of this sneakers gained a lots of attention from footwear consumers and helped strengthen the position of Nike that Nike is an innovative brand and always come up with shoes that not only good looking but also functioning, and finally support the growth of Nike as a whole.
The company I choose is Disney
Disney have two main segments:
– Disney Media and Entertainment Distribution (DMED)
– Disney Parks, Experience, and Products (DPEP).
Overall, Disney’s total revenue has slightly increased.
DPEP total sales have decreased 3% from 2020 to2021, and DMED revenues have increased around 5%.
Due to the COVID-19, the Disney Parks, Experiences and Products category get influenced and main reason is the tickets, resorts and vacations.
However, Disney + has reached approximately 95 million subscribers around the world and still growing.
Furthermore, the DTC subscription revenue increase around $0.6 billions.
Therefore, while the deceased of DPEP, the digital media business still have growth for the revenue.
I would explain sales growth on behalf of Disney Company, specifically analyzing the sale change between 2021 and 2019 of Disney Parks, Experiences, and Products (DPEP) segmentation. There are mainly four drivers under DPEP: 1. Theme park admissions 2. Parks & Experience, Merchandise, food & beverage 3. Resorts and vacations 4. Merchandise licensing and retail.
According to the 2021 and 2019 annual reports, the total revenue for DPEP has a 37% decline, from $26.2 billion down to $16.6 billion, decreasing by $9.6 billion. Drivers like Theme park admissions, Parks & Experience, Merchandise, food & beverage, and Resorts and vacations all have a significant decline, whereas Merchandise licensing and retail have increased slightly.
For theme park admissions, the main reason for the decline is park closure and generally reduced capacity in 2021. According to the annual report, Disneyland Resort, Disneyland Paris, and Hong Kong Disneyland Resort all opened less than 52 weeks. Disneyland Resort only operated for 22 weeks and Disneyland Paris for 19 weeks in 2021. Another factor is lower attendance caused by the travel policy during the pandemic. Guests need to reserve their tickets in advance and are required by law to use the “LeaveHomeSafe” app and fulfill the “Vaccine Pass” requirements upon entering the Park and specified premises. China also has flight limitations and quarantine requirements which lower the travel business.
For resorts and vacations, the lower occupied room nights and fewer passenger cruise days lead to the sale decline. The hotel occupancy rate in 2019 was 88% and became 37% in 2021 due to the pandemic. According to Disney Industry News, Disney Cruise Line has announced that it is suspending U.S. departures through June 2021, which includes all sailings on the Disney Dream, Disney Fantasy, and Disney Wonder.
For in-park experiences, merchandise, food and beverage, the decline was caused by lower volume. Although Disney parks are recovering from the pandemic, compared with 2019, the volume of passengers in 2021 still decreased a lot for all the parks. Competitors like Universal also surpassed Disney’s attendance.
Merchandise licensing and retail is the only driver has a sales growth in 2021. Merchandise licensing and retail revenue growth was due to an increase from merchandise licensing driven by higher revenues from merchandise based on Mickey and Minnie, Spider-Man, Star Wars, including The Mandalorian, and Disney Princesses, partially offset by a decrease in revenues from merchandise based on Frozen.
Other factors that cause the decline might be an economic downturn in the U.S. or globally. A decline in economic activity, such as a recession or economic downturn, in the U.S. and other regions of the world in which we do business, can adversely affect demand for any of our businesses.
I picked Disney fiscal 2019 compared to 2021. The total revenue decreased from 69.5 to 67.4 in Billions in the year 2021 (-2.1%). This revenue can divide into 4 major divers. The largest diver is Direct-to consumer which increased by 7% mainly from increasing the pricing rate at Hulu, Disney+, and ESPN+. The following factor is Media Network which increased from 24.8 to 28.1 billion (+3.3%) due to the increase in Cable advertising revenue. However, the studio entertainment factor decreased by 3.8%, and Disney parks, Experience and Product factor also declined from 26.2 to 16.6 billion. These impacted by Covid19 consequently close theme parks in many countries.
My company is Apple so I will explain the sales growth drivers for the same. Apple’s revenue grew by 7.79% from 2021 to 394.328 billion USD (United States Dollars) in 2022. This growth has been majorly by Mac sales growth of 14% compared to 2021 and Apple services that also grew 14% compared to 2021. While the major revenue contribution came from iPhone of 52% there was moderate growth of 7% in the same compared to 2021.
Mac sales growth was fueled due to demand by new customers thus acquiring more market share which led to revenue increase by 5 billion USD than 2021. However due to shortages in supply of chips the growth is expected to be lower in 2023. Apple services which include Apple Music, Apple TV+, Apple Arcade, iCloud+, Apple News+, and Apple Fitness+ was able to deliver innovative apps and entertainment that garnered a lot of fame leading to higher subscription base of 900 million subscribers up by 155 million subscribers then 2021. The revenue also increased by 10 billion USD.
Apple witnessed a decline in sales for iPad by 8% compared to 2021 with revenue of 29 billion USD. This is mainly because no new launches were introduced for iPad and iPad pro except software updates and the supply issues faced due to the chip shortage. This hints that Apple plans to roll out major changes for iPad 2023. Overall, a growth in customer base for both Macs and Apple service combined with a consistent growth in iPhone and Wearables sector has acted as a sales driver for Apple in 2022.
I would explain the sales changes of Disney company of 2021 vs. 2019. Disney’s revenue was 67,418 million, decreased by 3.09% compared to revenue from 2019. For Disney Media and Entertainment Distribution segmentation, the sales has increased a lot over the years. The shifting consumer preference in consuming video content, contributed to the revenue growth generated by Direct to consumer streaming service. Disney+ is gaining market share compared to Netflix’s decreased market share. However, compared to 2019, the revenue of Disney Park, Experience and Products declined dramatically, mostly due to the impact of Covid-19. Most of the parks and resorts has been closed, suspended or operated at a limited capacity in 2021. The factors like health concern, travel restriction and unstable economic conditions combined, resulted fewer attendance of customers, which accounts for a major source of revenue in 2019.
For the foreign exchange assignment, I would first recommend my company hold the events in Europe & Middle East or Asia if we would love to host the event out of North America. Because the personnel in both areas is 30%, compared to 10% in Oceania & Pacific. So, in order to reduce the price of transportation and airfare, I would rule out hosting events in this area first. Then we narrowed it down to Europe, Japan, and Turkey.
First, the euro had a sharp rise against the dollar in the near 2019-2020, but continued to decrease after the epidemic. Therefore, Europe can be our candidate, but the price and living standard in Europe is another factor we have to consider.
The second place is Japan, which can also be disregarded because the exchange rate of the yen against the dollar has continued to rise in the past three years, especially in the past year, from 113 to 146. Moreover, the living standard of Japanese prices is also very high.
The third place is Turkey, Turkey can be said to be a very good choice. The lira has continued to fall against the dollar in the last three years, although the magnitude is not large, but the downward trend has not changed, and the lira has maintained a steady decline against the dollar due to the appreciation of the dollar. Moreover, the prices and living standards in Turkey are relatively low.
CocaCola revenue for the twelve months ending September 30, 2022 was $42.343B, a 12.01% increase year-over-year. CocaCola annual revenue for 2021 was $38.655B, a 17.09% increase from 2020. CocaCola annual revenue for 2020 was $33.014B, a 11.41% decline from 2019.
The reasons why increased is due to increased price. Coca-Cola increased prices on its products to account for rising inflation. The prices charged for Coca-Cola’s beverages in away-from-home venues are higher than those that grocery stores charge for beverages that are (presumably) for at-home consumption. Indeed, management highlighted that nearly all of the Q4 revenue growth was the result of higher prices and the channels where the beverages were sold. Consumers are once again going out more often.
The company I chose was Nike.
Nike reports its operations based on internal geographic organization. The Company’s reportable operating segments for the NIKE Brand (include results for the NIKE and Jordan brands) are: North America; Europe, Middle East & Africa (EMEA); Greater China; and Asia Pacific & Latin America (APLA).
Global Brand Divisions revenues include NIKE Brand licensing and other miscellaneous revenues that are not part of a geographic operating segment.
For fiscal 2022, the company reported revenue of 46,792 USD millions for NIKE Brand and Converse. Its sales experienced a 5.17% increase compared to fiscal 2021. (Data from WSJ Markets) Nike’s revenues were driven by higher revenues in EMEA, North America and APLA, partially offset by lower revenues in Greater China. Higher revenues in EMEA and North America each contributed approximately 3 percentage points to NIKE, Inc. Revenues, and APLA contributed approximately 2 percentage points, while lower revenues in Greater China reduced revenues by approximately 2 percentage points. (Data from NIKE 2022 Annual Report)
The main reasons for growth include:
General resurgence of sporting events：As sport continues to return, the entire sportswear industry has seen growth opportunities, with companies of different sizes experiencing growth.
Improved physical retail traffic: With the lifting of the epidemic restrictions, stores open again and traffic in retail outlets has increased, bringing with it improved sales opportunities.
D2C transformation: Nike has industry leading D2C marketing and NIKE Brand Digital business fuels growth. And in 2020 it just launched its newest phase of CDO – Consumer Direct Acceleration, which greatly helped to boost Nike Direct, the business that cuts down operation expenses and lifts average selling price. NIKE Direct revenues represented approximately 42% of total NIKE Brand revenues for fiscal 2022 compared to 39% for fiscal 2021. This strong digital sales growth could be noticed in all segments except Greater China.
Product innovation: Continued to increase depth and breadth of NIKE’s global portfolio.
In Greater China, revenue decline is much more complex. Greater China revenues for fiscal 2022 decreased 13%, reflecting impacts from supply chain constraints, government restrictions due to COVID-19 as well as marketplace dynamics. Impacts include higher inventory obsolescence reserves and elevated freight and logistics costs.
For Apple, the company experienced a positive sales growth by 8% from 365,817 million USD in 2021 to 394,328 million USD in 2022. Higher net sales from iPhone, Services and Mac are the main contributing drivers to the sales growth. The iPhone sales grew by 7% with the robust consumer demand on the premium iPhone models. iPhone provides Apple with the biggest revenue contribution of 52% or 205,489 million USD. The company has decided to increase the prices of its iPhone models to maintain profitability and combat rising manufacturing chip costs. With the in-house chip, Apple’s Mac was able to raise demand and gain more market share, which contributed to revenue growth of 14% from 35,190 million USD in 2021 to 40,177 million USD in 2022. Equalling Mac’s revenue growth is the sales of Apple services such as Apple Music, Apple TV+, Apple Arcade, iCloud+, Apple News+, and Apple Fitness+, which experience a 14% revenue growth from 68,425 million USD in 2021 to 78,129 million USD in 2022. This was resulted from Apple’s ability to produce creative and popular content that wins awards and recognition. Currently Apple has a total of 900 million paid subscribers, a 154 million increase from 2021. However, Apple’s Wearables is growing at a slower pace of 14%, while the iPad experience a decline in sales of 8%. This could be the result of saturation in the education market as many schools and families are well-stocked from providing devices for remote learning during lockdown.
Nike INC.
2022 Fiscal Year revenue was reported to be $46 Billion and has seen a 5% increase from last year’s revenue of $44.8 Billion.
There have been many factors for this increase. For one, fewer covid restrictions worldwide have brought back in-person sports and retail shopping. There was also a lot of development in the online platform during the pandemic that contributed to their online sales. There’s also a higher percentage of full-price sales on a whole equivalent basis, a higher margin in the Nike Direct business, and positive changes in net foreign exchange rates, which contributed to the increase in gross margin. Nike also had different collaborations with brands and public figures (celebrities). As well as launching their metaverse store. In North America, revenues increased by 7%, footwear sales rose by 5%, driven by Nike Direct’s expansion and largely offsetting a dip in the wholesale sector. While footwear revenue grew by about 9%-point, greater ASP (average selling price) per pair offset a 4% decline in unit sales. Revenues from apparel rose 9%, mostly due to growth in the Men’s category. A higher ASP per unit contributed almost 11% points to the gain in apparel revenue while unit sales of clothes fell by 2%. Europe, the Middle East & Africa has seen an increase of 12%, Asia Pacific & Latin America has seen an increase of 16%, meanwhile, Great China has seen a decrease by 13%. A reason due for this decrease in China is because of the Covid-19 related government restrictions which resulted in reduced physical retail traffic.
Total sales for Disney from 2019 to 2021 decreased by approximately $2 billion from 2019 to 2021 .
This factor is primarily due to the impact of COVID-19, a decrease in Disney parks, experiences and product categories.
Growth in DTC subscription revenue, and thus some growth in their digital media business remained.
A general reduction in the ability to close/operate theme parks and resorts under the negative impact of the pandemic, preventing their revenues from reaching pre-epidemic levels Theme park related merchandise also needed to offset the decline in total production by increasing prices.
The company I chose is Coca-Cola. In 2021, Coca-Cola’s net sales were 38.66$ billion. Compared to 2020, which is 33$ billion, the company gained a sales growth of 17%.
Pricing: Global inflation has led to rising prices of raw materials for the production of Coke, so Coca-Cola has carried out price management and increases. For example, using different packaging to give consumers different price choices.
Units: In terms of sales volume, global single box sales increased by 6% year-on-year, higher than in the same period in 2019, mainly driven by developing and emerging markets. The single-case sales in the Asia-Pacific market increased by 3% year-on-year, mainly driven by the Chinese and Indian markets; Coca-Cola and flavored soft drinks led the sales growth in the Asia-Pacific market.
Environmental: The growth was driven by the ongoing, asynchronous recovery in many markets and the company’s ability to better adapt to successive waves of the pandemic.
Market share: For the quarter and the entire year, the company gained value share in total nonalcoholic ready-to-drink (NARTD) beverages, which included share gains in both at-home and away-from-home channels. The company’s value share in total NARTD beverages, and in both at-home and away-from-home channels, remains ahead of 2019.
The impact of product launches: Coca-Cola re-launched a drink in China in September-Lemon-Dou, a Japanese-style lemon sparkling alcoholic drink. Flavored alcoholic beverages occupy a certain proportion of the beer industry. Coca-Cola has won a particular share in flavored alcoholic drinks, becoming an important business and contributing to revenue growth. The Coca-Cola Company and China Mengniu’s joint venture, Keniuliao Dairy Products Co., Ltd., announced the launch of the “Fairlife” brand to enter the Chinese low-temperature milk market, bringing new low-temperature milk products to Chinese consumers and promoting the upgrading of dairy consumption in China. . This is the Coca-Cola Company’s strategy of engaging in the full range of beverage products and varieties.
For over 60 years, since its foundation on the 15th of April 1955, McDonald’s has grown to be the world’s most popular and recognized fast food restaurant. In 2020, McDonald, like other businesses, was shaken by the shocks and aftershocks of covid-19 but confronted its way up to survival through several sales growth drivers. The historical survival Model for McDonald’s is devotion to their high-level capital investment in new business locations introduction of new products such as fried chicken designs and business models. McDonald’s net earnings in 2022 have shown a steady rise from sales in that part of the year. From a recent study on McDonald’s total earnings in its second quarter performance, revenue per market share was $2.55, whereas its total revenue was $ 5.72 billion, even though not as much as expected. The war between Russia and Ukraine resulted in a slight drop in net sales by approximately 3% but experienced a global same-store sales increase of roughly 9%. Solid and productive international relationships stimulated this growth in the current year’s second quarter. McDonald’s total earnings, a recent study on its second quarter performance, shows that its earnings per market share were $ 2.55 while its revenue was $ 5.72 billion. These values on market share earnings and total revenues in 2022 represent a decline in sales growth from a reported 3% decline in global sales due to the closure of McDonald’s fast-food restaurants in the Ukrainian and Russian markets. The decline is also due to a 46% decline in earnings per share to $1.60 due to a $1.2 billion charge from the closure of Russian and Ukrainian outlets. According to the company’s claims, McDonald’s sales growth increased by 3.7% in 2022’s second quarter as inflation dominated its local and external (international) performance. They also affirmed that same-store sales increased by approximately 9.7% globally due to its global sales performances and relationships. The company also claimed that within its six most significant markets, its digital sales accounted for approximately a third of McDonald’s sales. As a giant in the fast-food restaurant industry, McDonald’s sales growth has outperformed many of its competitors due to its reliable marketing and implementation of a competitive digital sales program. The company also said its sales increased partly because of a strategic price increase for its menus to maintain profit margins.
We can potentially improve the value of the budget, allowing for more activities and facilities for the executives, if we could reduce the cost by holding the conference in a place with a favorable exchange rate.
We must take into account how other currencies have declined in value relative to the dollar over the past three years in order to choose suitable sites for holding the event.
Over the past three years, the currencies of the following nations have depreciated significantly against the US dollar:
1. Turkey: Over the past three years, the value of the Turkish Lira (TRY) has declined by almost 70% in relation to the US dollar (USD).
2. Argentina: Over the past three years, the Argentine Peso (ARS) has lost nearly 65% of its value against the US dollar.
3. Brazil: Over the past three years, the Brazilian Real (BRL) has lost more than 30% of its value relative to the US dollar.
4. South Africa: Over the past three years, the South African Rand (ZAR) has lost more than 25% of its value relative to the US dollar.
5. Mexico: Over the past three years, the Mexican Peso (MXN) has lost nearly 20% of its value against the US dollar.
With this knowledge, we might think about holding the event in one of the nations mentioned above. The most desirable possibilities are Argentina and Turkey because of their considerable depreciation. Both Buenos Aires, Argentina, and Istanbul, Turkey, are large cities with first-rate facilities that might host the event.
We may take advantage of the good exchange rate and lower the cost of the event by holding it in Istanbul or Buenos Aires. The local sights and cultural experiences would also greatly enhance the event and give the executives a memorable experience.
Finally, holding the event in Istanbul, Turkey, or Buenos Aires, Argentina, could help us save a significant amount of money while giving the executives a fun and unforgettable experience.
Based on the information provided, it may be possible to save money by holding the conference in a location other than New York due to currency devaluation in certain regions.
By comparing the exchange rate of each currency against the U.S. dollar over the past three years and calculating the percentage change in value. We can focus on the regions that have seen the greatest currency depreciation against the U.S. dollar, as this indicates the greatest potential for cost savings.
At current exchange rates, the euro has depreciated about 17 percent against the dollar over the past three years. Similarly, the Japanese yen has depreciated by about 21%, the Turkish lira by about 70% and the Argentine peso by about 65%.
By comparison, we can see that Turkey is the most suitable place to host a conference. This is followed by Argentina. However, we should also consider the potential impact on our company’s reputation and brand image. Hosting a conference in a location that is not normally associated with our industry or values may send the wrong message to our stakeholders. In making our decision, we should carefully consider the potential reputational impact.
Currently, I believe that either Egypt, Lebanon, or Pakistan is the best place to hold the convention. This is because as of February 2023, they have the highest recentdepreciation rates compared to the USD. The Egyptian Pound had depreciated by 24.86% over the past 3 months, and 93.77% over the past 6 months. The Lebanese Pound depreciated by 58.94% over the last 3 months, and 150.00% over the last 6 months. The Pakistani Rupee depreciated by 20.02% over the last 3 months, and 52.05% over the last 6 months. The Russian Ruble also has a similar deprication rate over the last 3 months to both the Egyptian Pound and Pakistani Rupee, at 20.64%, however there are multiple reasons why this is not an option. Firstly, the political climate would not allow it, as many countries have now boycotted Russia. Additionally, over the last 6 months, it actually appreciated by -5.16%, showing that the depreciation is not a long-term trend.
As per the given scenario, the company is planning to organize a three-day event for 100 executives with a budget of 1 million dollars, which means $10,000 per executive. To save on the cost, the executives suggested taking advantage of the currency’s depreciation in certain countries and hold the meeting there instead of New York.
Upon analyzing the depreciation of various currencies compared to the dollar for the last three years, Japan emerges as a promising location to hold the event. The Japanese yen has experienced significant depreciation against the dollar, with a 14% decrease in value in the past three years. This depreciation can be leveraged to save on costs, as the company can get more value for its money when converting dollars to yen.
Moreover, Japan has a well-developed transportation system, making it easy for executives from different parts of the world to travel to the country. Japan is also a hub for business and technology, making it an ideal location for an executive event.
Additionally, Japan offers a unique cultural experience for the executives. They can explore traditional Japanese cuisine, visit historical landmarks, and immerse themselves in the Japanese culture during their stay. This cultural experience can also help to foster stronger relationships between the executives, which could be beneficial for future business interactions.
In conclusion, hosting the event in Japan could be a cost-effective and culturally enriching option for the company. The depreciation of the yen against the dollar and Japan’s well-developed transportation and technology infrastructure make it an attractive location for the event. Furthermore, the cultural experience that Japan offers can also enhance the relationship between the executives and provide a unique backdrop for the event.
I would recommend that company meetings be held in Asian countries, such as China or Japan. China’s and Japan’s currencies decline by 6% and 13%, respectively, against the U.S. dollar in 2023. Therefore, this can reduce the budgeted expenses to a great extent. Also, transportation costs and consumption levels in China are low compared to Asia as a whole, so costs for living and accommodation can be minimized.
I think organizations could be hosting the convention in Argentina, Hungary, Japan and Turkey to save the cost rather than in New York. According to the data about depreciation of different countries’ currencies compared to the dollar for the last three years. I found that Argentina, Hungary, Japan and Turkey’s currencies have big changes in recent three years. For example, in 2019 Argentina’s yearly average exchange rate is $48.192, but in 2022 is $130.792. In 2019 Japan’s yearly average exchange rate is $109.008, but in 2022 is $131.454. Also, Turkey’s yearly average exchange rate is $5.685 in 2019, but it became to $16.572 in 2022. In 2019, Hungary’s yearly average exchange rate is 290.707; in 2022 is 372.775. We can discover that there is a very big gap between three years in aspect of yearly average exchange rate. However, running a conference or staging a fancy event costs money in many aspects including traveling expenses, hotels, meals, and entertainment. And if company hold this event in New York, the company’s expenses must be huge. By comparing depreciation of different countries’ currencies which I mentioned before, those countries have high rates of yearly average exchange. Therefore, I recommend that company could save on the cost by hosting the convention in Argentina, Hungary, Japan or Turkey.
I recommend starting an event in Turkey. Because more than half of the company’s employees are located in Europe, North America and the Middle East, it is convenient to get there, and participants may be more receptive to Turkey. Secondly, the U.S. dollar has risen by about 200% against the Turkish currency in the past three years. Other currencies have been on an upward trend recently and exchanging them may result in losses.
When considering where to host the event, Japan is an attractive option due to its well-developed infrastructure, the depreciation of the yen against the dollar, and the cultural experience it offers. However, there are other countries with significant currency depreciation that should also be taken into consideration. Over the past three years, the currencies of Turkey, Argentina, Brazil, South Africa, and Mexico have all depreciated significantly against the US dollar, making them viable options for the event. Buenos Aires, Argentina, and Istanbul, Turkey, in particular, offer excellent facilities and could be used to host the event. By taking advantage of these favorable exchange rates, the company could save on costs while still providing a memorable experience for the executives. Japan may be the ideal location, but the company should also consider the other countries with significant currency depreciation to maximize their savings.
Organizing an annual event for 100 executives with a budget of $1 million for three days is a significant task. We need to consider several factors when deciding to hold the meeting in New York or to take the advantage of currency depreciation in Europe, Japan, Turkey, Argentina, or other countries. I think our company should first analyze and compare cost.
1. Cost in New York:
Accommodation, meals, and entertainment for 100 executives: $1,000,000
Travel expenses to New York for 30% of executives: $300,000
Total Cost in New York: $1,300,000
2. Cost in alternative locations:
We need to estimate factors, for example, Exchange rates, Accommodation costs, Meals and entertainment costs, Local transportation expenses, Venue rental fees, Safety and infrastructure. And we also need to check if the depreciation in the local currency provides substantial cost savings.
3. Evaluate the Benefits:
We also need to consider the benefits of hosting the event in each location, such as networking opportunities.
I suggest holding the meeting in Asia, such as China, because the exchange rate between the US dollar and the Chinese yuan has been relatively good and has not fluctuated much in the past year, while the exchange rates in the other three regions have fluctuated greatly. In addition, Asia is moderately close to where candidates from other regions are located, so the time it takes for everyone to fly here won’t be too different.
Based on the analysis of currency depreciation and cost savings, I recommend Argentina as a potential replacement for New York as the convention location.The Argentine Peso has experienced significant depreciation against the US Dollar over the last three years. This depreciation can lead to cost savings when organizing your convention.The exchange rate of Argentine Peso to US Dollar was 0.0167 on January 3,2020. But recently, their exchange rate is 0.0029 on October 29,2023. It means the currencies of Argentina was delined approximately 83% in recent three years. Argentina now provides a more affordable environment for holding events.
Amazon will host a global conference for executives. The conference is three days long as well as has an overall budget of one million dollars. Some employees within the company have proposed that because of currency devaluation in other regions, the conference should be held somewhere other than the United States, which would save the company’s budget. We listed three regions to compare with New York based on the largest cities on each continent: Istanbul, Tokyo, and Sydney.
The Japanese Yan has lost 23.92% of its value over the last five years compared to the US Dollar, the Turkish Lira has lost 80.71% of its value, and the Australian Dollar has lost 12.04% of its value. Istanbul seems to be the most favorable at the moment. In terms of accommodation, the average hotel price in Tokyo is 71.5 USD per day, Sydney is 169 USD per day and Istanbul is 50 USD per night. Compared to New York (206 per night), Istanbul is the most economical. Istanbul also has lower food and entertainment options than other regions and is very localized, which is believed to attract executives’ interest.
Of course, Tokyo, Japan, a place with a very different culture than the West, is also a very good choice, and the price of accommodation (for a single person) is not too different from Istanbul. One of the advantages of choosing Japan is that it has a very developed economy. For a company like Amazon, which focuses on technology and consumer experience, hosting a conference in Japan is not only a way for executives to experience a different culture, but also a great learning experience. Another option could also be China, Hangzhou – one of the most developed areas for e-commerce in China. So I would suggest that Amazon should consider a number of factors to decide where to hold its global conference. New York is a more expensive option that can be disregarded.
I think we should take advantage of recent currency depreciations in planning this annual event, to maximize our budget efficiency. The Turkish lira has depreciated around 60% against the dollar in the past two years. This trend means that USD can buy more TRY than before, potentially leading to cost savings in Turkey for expenses paid in the local currency. Turkey generally has a lower cost of living and lower prices for services compared to New York. This factor, combined with the depreciation of the TRY, could result in substantial cost savings in terms of accommodation, meals, and local transportation. Even though the travel cost for executives from North America will be higher, but this can be offset by the currency depreciation in Turkish Lira. Also, the travel cost for executives from Europe & Middle East will be lower because Turkey is a closer spot than New York.
Prepare a recommendation showing how we could save on the cost by hosting the convention in a location other than New York. Focus on the depreciation of other currencies compared to the dollar for the last three years.
I chose holding the convention in Seoul, South Korea. I believe Seoul is the best option because it is the most city-like location in comparison to the other parts of East Asia, which I think makes up the fact that other places in East Asia would be cheaper. 1 USD is 1357.34 South Korean Won and looking at the past 5 years, the currency compared to the dollar is very consistent which means we can buy all the hotels and plane tickets in advance without worrying that the USD would get stronger/weaker. In addition, it was found that the average Seoul (major city in South Korea) hotel was 45 USD a night which is cheap especially comparing to 175 USD in New York (almost 4 times the amount!).
The average meal at an inexpensive restaurant in South Korea was $6.66 USD and a meal for two at a mid-range restaurant (3 courses) was 39.98 USD. This is substantially cheaper than NYC’s price in food! In NYC, the price of an inexpensive meal was 25.50 USD while a meal for a mid-range restaurant was 120 USD. The difference is large (almost 3 to 4 times).
For transportation compared to NYC, Seoul is around half the price for everything (a one way ticket was .98 USD while in NYC it was 2.90 USD)!
Finally, for entertainment, in New York, a cinema ticket was 19.50 while in Seoul, the price was 10.35 USD. Overall, Seoul is around 3-4 times cheaper in every single aspect!
Finally the main reason I chose South Korea is because a good amount of the representatives are from Asia (30%) so it justifies having the location to be there.
New York is an great city with lots to do but Seoul has just as many amenities! Seoul has numerous theaters, spas, amusement parks and even a K-POP center that teaches dance lessons! These are the reasons why I believe Seoul is a great city to choose to hold the convention. I feel that although other cities in other parts of Asia may be cheaper (Hanoi in Vietnam), Seoul has the most to do and has the most similar city feel to New York while being decently affordable.
Sources
https://www.google.com/finance/quote/KRW-USD?sa=X&ved=2ahUKEwivlLq96aGCAxXFE1kFHYEQAFUQmY0JegQIChAr
https://www.budgetyourtrip.com/hotels/south-korea/seoul-1835848
https://www.budgetyourtrip.com/hotels/united-states-of-america/new-york-city-5128581#:~:text=The%20price%20of%20accommodation%20can,New%20York%20City%20is%20%24524.
https://www.numbeo.com/cost-of-living/in/New-York
https://www.numbeo.com/cost-of-living/country_result.jsp?country=South+Korea&displayCurrency=USD
https://english.visitseoul.net/entertainment
Compared to 2021, Apple’s net revenue increased by 8%.
Driver1: Sales growth by product
1.iPhone: Net iPhone sales increased by 7% due to the company’s release of new iPhone models in 2022.
2. Mac: Mac net sales increased by 14% due to increased laptop demand.
3.iPad: Compared with 2021, iPad net sales declined by 8% in 2022 because the iPad Pro is still in its 2-3 use period and people will not buy new iPads so quickly.
4. Wearables, Home, and Accessories: Net sales of them increased by 7% due to increased demand for Apple Watch and Air Pods.
5. Serve: Services net sales increased by 14% due to higher income in advertising, cloud services, and the App Store.
Driver2: Sales growth by region
1. Americas: Americas net sales increased by 11% during 2022 due to higher demand for iPhone, Services, and Mac.
2. Europe: Europe’s net sales increased by 7% due to higher demand for iPhones and Services. The weakness in foreign currencies relative to the U.S. dollar had a net unfavorable year-over-year impact on Europe’s net sales during 2022.
3. Greater China: Greater China’s net sales increased by 9% due primarily to higher net sales of iPhones and Services. The strength of the renminbi relative to the U.S. dollar had a favorable year-over-year impact on Greater China’s net sales during 2022.
4. Japan: Japan’s net sales decreased by 9% during 2022 compared to 2021 due to the weakness of the yen relative to the U.S. dollar.
5. Rest of Asia Pacific Rest of Asia Pacific: Net sales increased by 11% during 2022 compared to 2021 due primarily to higher net sales of iPhone, Mac, and Services. The weakness in foreign currencies relative to the U.S. dollar had an unfavorable year-over-year impact on the Rest of Asia Pacific net sales during 2022.
Apple’s net revenue increased by 8% compared from 2021.
Driver1: Region growth
1. Greater China: Greater China’s net sales increased by 9% due to the currency change and other factors like new products.
2. Americas: Americas net sales increased by 11% during 2022 .
3. Europe: Europe’s net sales increased by 7% due to the weakness in foreign currencies relative to the U.S. dollar had a net unfavorable year-over-year impact on Europe’s net sales during 2022.
4. Japan: Japan’s net sales decreased by 9% during 2022 compared to 2021 due to the weakness of the yen relative to the U.S. dollar.
Driver2: Product growth
1.iPhone: Net iPhone sales increased by 7% due to the company’s release of new iPhone models in 2022.
2. Mac: Mac net sales increased by 14% due to increased laptop demand.
3.iPad: Compared with 2021, iPad net sales declined by 8% in 2022 because the iPad Pro is still in its 2-3 use period and people will not buy new iPads so quickly.
5. Services: Services net sales increased by 14% due to higher income in advertising, cloud services, and the App Store.
The company I chose is Disney. Disney’s two main segments are Disney Parks, Experiences, and Products (DPEP) and Disney Media and Entertainment Distribution (DMED). From 2020 to 2022, Disney’s total revenue will range from $65.3 billion to $82.7 billion, an increase of almost 20 million (22.7%).
Here are some of the main drivers:
First of all, with the end of the covid 19 epidemic and the advent of the holidays, more people choose to go out, and the number of people visiting Disneyland has increased significantly. During this period, Disney’s ticket prices have increased, but the number of people entering the park is still very high.
Secondly, as the number of tourists increases, so does the sales of goods and food. The impact of DPEP has turned from negative to beneficial.
Third, Disney media has been on an upward trend in recent years, even during the pandemic. Because of the adoption of streaming media, especially Disney+, which has 146.7 million subscribers worldwide, is still a growing trend. The increase in Disney+’s market share is very beneficial to Disney.
Fourth, DMED’s growth has not been affected by the end of the epidemic because Disney has continued to export good movies to ensure the stability of customers.
Disney’s DPEP and DMED will show an increasing trend year by year in 2022. The Disney Company has also determined that Disney streaming media will have a price increase in 2023, which will give Disney more revenue and increase overall sales.
In 2022, Spotify experienced significant sales growth, ending the year with a robust subscriber base of 205 million users. The company’s annual revenue reached an impressive 11.7 billion euros, reflecting a notable 21% increase from the previous year. This substantial growth underscores Spotify’s strong position in the competitive digital music streaming industry. Despite the challenges and changes in the landscape, Spotify managed to adapt and thrive, emphasizing the company’s ability to navigate evolving market dynamics while maintaining substantial sales growth.
Comparing the currency fluctuations of the Euro, Japanese Yen, Turkish Lira, and Argentine Peso, the recommendation is to hold the convention in Argentina as the US dollar holds the highest value due to the recent drastic depreciation of the Argentine Peso. The USD to ARS conversion has grown by 680% over the past 2 years and over 2000% in the past 5 years. The ARS significantly depreciated in mid-December 2023 and has continued to depreciate further into 2024. The current going rate as of March 2, 2024, is 1 USD = 843 ARS.
The budget of USD$10,000 (AR$8,432,770) per executive will be more than enough and should have plenty of room for company savings. As an example, a 4 days, 3 nights stay (breakfast included) at a 5-star hotel in Buenos Aires costs roughly around AR$500,000 or only USD$592. This 5-star hotel rate simply does not exist in New York.
1. First, we need to determine the region and specific city for the conference. Since only ten percent of the executives are from New York, we will only consider hosting the conference in North America, Europe and the Middle East, and Asia. Moreover, we have selected New York, Istanbul, and Tokyo as our preferred cities because these cities are not only major urban centers but also very suitable for tourism.
2. Next, we will estimate the costs based on the depreciation of local currencies in different regions over the past five years: the Japanese Yen has depreciated by 25.24% against the US dollar, while the Turkish Lira (TRY) has depreciated by 71.93% against the US dollar over the same period. However, we still cannot determine which location is more suitable for holding the conference at this point.
3. Finally, we need to look at how much the cost of living in these cities translates into US dollars:
– Travel Costs: New York $500, Istanbul $400, Tokyo $700
– Hotel Costs: New York $300, Istanbul $100, Tokyo $200
– Dining Costs: New York $150, Istanbul $50, Tokyo $100
– Entertainment Costs: New York $100, Istanbul $50, Tokyo $150
– Total Costs for Three Days: New York $2,150, Istanbul $1,000, Tokyo $2,050
Overall, Istanbul appears to be the most suitable place to hold the company conference, not only because of its largest currency depreciation but also because the US dollar’s purchasing power has increased there, allowing for more products and services to be bought than before.
Apple’s sales growth in the past 2 years can be broken down to (1) product category performance, particularly pivoting into Services and (2) regional sales dynamics.
One of Apple’s most prominent growth has been its diversified performance across its product categories. While traditional hardware lines like the iPhone, Mac, and iPad have long been Apple’s revenue backbone, a notable shift towards Services has emerged. In 2023, Services, which include offerings like Apple Music, iCloud, and Apple TV+, marked a significant growth area with a 9% increase in net sales, translating to $7.1 billion more than the previous year. This shift signifies Apple’s strategic pivot towards building recurring revenue streams, to help mitigate the drop in demand for hardware products, particularly the Mac and iPad as well as volatility in the sales cycles.
Additionally, Apple’s global footprint means regional dynamics, including economic conditions, currency fluctuations, and consumer preferences influence its sales. The past two years have seen varying performances across different geographies. In the Americas, a 4% decrease in net sales was reported, mainly due to lower iPhone and Mac sales. Europe and Greater China similarly experienced decreases in net sales by 1% and 2%, respectively, with currency weaknesses playing a significant role in these regions. Japan saw a larger decrease in net sales of 7%, while the Rest of Asia Pacific experienced a small increase of 1%, highlighting the diverse impacts of regional market dynamics and currency fluctuations on Apple’s sales.
OPTION 1
Meta’s Global Executive Meeting
After taking a closer look at moving our global executive meeting from New York to Japan, it seems like a smart move with a lot of financial upside. The Japanese Yen has dropped by about 20% against the US dollar over the past three years, which gives us a great opportunity to cut costs by taking advantage of the better exchange rate.
Currently, the estimated cost per executive in New York is around $10,000. However, by moving the meeting to Japan, we could reduce the cost to approximately $7,500 per person, saving us 25%. In total, we’d save around $250,000. The majority of the savings would come from lower hotel and meal costs. Tokyo hotels are about 30% cheaper than New York, and meals are about 40% less expensive. Furthermore, transportation and venue rentals in Japan are approximately 25% cheaper
While flights from North America to Japan might be a bit pricier, this would be offset by cheaper flights for execs coming from Asia and the Middle East, where flying to Japan costs less than flying to New York. Plus, with Meta’s growing presence in Asia, Japan is strategically located and closer to key markets.
Aside from saving money, Japan provides a diverse range of cultural and logistical benefits that will make the event more enjoyable overall. The country’s excellent technological infrastructure and unique cultural experiences would greatly enhance the meeting.
With all of this in mind, I recommend that we consider Japan for Meta’s global executive meeting. The cost savings, combined with the additional strategic benefits, make it an excellent decision for us.
Given the depreciation of several currencies against the U.S. dollar, hosting the convention outside of New York would allow us to reduce costs significantly. After evaluating several markets, Tokyo seems like the most strategic choice.
1. Japan: The yen has depreciated by 30% over the last 3 years. Tokyo’s hotels, meals, and entertainment are 25-40% cheaper than in New York. This would bring the per-person cost down from $10,000 to $7,500, saving $250,000 overall.
2. Turkey: With the lira down 60%, Istanbul offers even greater savings, with costs dropping to $5,500 per person, saving $450,000 overall. However, travel logistics could complicate attendance.
3. Argentina: The Argentine peso has rapidly depreciated, offering opportunities for savings. However, longer travel times for executives from APAC and North America make it less convenient.
Final Recommendation: Tokyo is the best option, balancing savings, accessibility, and aligning with Lululemon’s growing presence in Asia. The total estimated cost would now be $750,000, allowing us to use the saved $250,000 for other initiatives.
For the Meta annual executive event, I’d suggest that it be held in either Turkey. In general, a depreciated currency relative to the USD makes the costs become more affordable for companies that are U.S dollar based. Based on date from XE, the Turkish Lyra has depreciated in comparison to the USD by over 83% over the past 5 years. Similarly, the Argentine Peso has depreciated in comparison to the USD by over 64%. Japan and Euro had significant depreciation in relation to the USD in comparison to the USD, but no where near Argentina and Turkey.
In terms of flights and transportation, Turkey is an extremely large travel hub, meaning there will be convenient flights for all members of the executive coming from various corners of the world making flights per person (round trip) between $1000-$1400. Once the executives arrive in Turkey, the depreciation rate is to their advantage as the executives can leverage a strong USD to provide entertainment, housing and meals to the guests. By choosing a location with a favorable currency rate, Meta could reinvest savings into enhancing the executive experience or even trimming the event budget while maintaining high standards. Therefore, my suggestion would be to host this retreat in the location with the highest depreciation rate, Turkey.
To identify the best cost-saving opportunities, analyzed the currency depreciation against the USD over the last three years for the following region/ countries.
Europe (Euro) The Europe has depreciated approximately 10-15% against the USD, which bring the estimate cost for 100 executive to $850,000 – $900,000
Japan (Yen) The Yen has depreciated around 15-20% against the USD, which bring the estimate cost for 100 executive to $800,000 – $850,000
Turkey (Lira) The Lira has depreciated around 40-50% against the USD, which bring the estimate cost for 100 executive to $500,000 – $600,000
Argentina (Peso) The Peso has depreciated by approximately 60-70% against the dollar, which bring the estimate cost for 100 executive to $300,000- $400,000
Based on the analysis, Argentina is the most cost-effective option for hosting the executive event, by taking advantage of the depreciation of currencies, it offering potential savings of up to $700,000 compared to hosting in New York. This would not only improve the budgetary efficiency of the event but also allow for a more valuable and richer experience for the executive compare to hosting in New York.
1. Europe (France or Italy): Aligns with LVMH’s luxury branding. With the euro depreciating, costs could reduce by 10-12%. Holding the event in a European fashion capital could also reinforce brand prestige.
2. Japan: A top luxury market, important for LVMH. Hosting here provides a 15% cost benefit and aligns with market presence goals.
3. Turkey or Argentina: While these options offer the highest savings, they might not align with LVMH’s luxury image. Turkey still holds solid connection to high-end tourism.
For LVMH’s annual executive event, hosting in Paris offers significant financial advantages with the 10% depreciation of the euro against the US dollar. With major event costs (accommodation, meals, and entertainment) charged in euros, the budget benefits from favorable exchange rates, resulting to an estimated 10% overall savings. This decrease could reduce $100,000 from the initial $1,000,000 budget if the event were held in New York. By choosing Paris, LVMH decreases its exposure to foreign exchange concerns since payments are aligned with the company’s euro-denominated activities, resulting in more predictable expenditures.
Paris not only offers financial efficiency but also lowers travel costs for European and Middle Eastern executives, who accounts for 60% of attendees, thus lowering overall expenses. LVMH’s strong presence and history in the city may bring additional discounts on venues and services, increasing cost-effectiveness. This strategy ensures that the event remains aligned with the brand’s luxury image while maintaining cost-effective through currency optimization and localized spending advantages.
OPTION 2
Meta’s sales growth between 2022-2023
Based on the official press release of Meta addressing the full year 2023 financial highlight
(https://investor.fb.com/investor-news/press-release-details/2024/Meta-Reports-Fourth-Quarter-and-Full-Year-2023-Results-Initiates-Quarterly-Dividend/default.aspx)
Between 2022 to 2023 the revenue increased from $113.6 billion to $131.9 billion, this $18.3 billion sales growth can be divided into three main drivers.
1. Advertising: Being the most profitable and primary revenue stream of Meta, Advertising contribute $18.3 billion sales growth, which took up 100% of the total sales growth. This solid growth rate is driven by higher ad demand and improved ad products.
2. Other revenue: Other revenue increased marginally, from $808 million in 2022 to $1.058 billion in 2023. This segment represents a smaller portion of Meta’s total revenue, contributing only a slight growth of 0.3 billion.
3. Reality lab: Reality Labs, responsible for Meta’s investments in VR/AR and metaverse technologies, saw a slight decline in revenue from $2.159 billion in 2022 to $1.896 billion in 2023. The decline reflects challenges in the metaverse segment or shifts in strategic focus, though the overall impact on Meta’s total revenue remains limited given the segment’s smaller contribution.
Lululemon’s overall growth of 18.5% between 2022 and 2023 is due to several drivers. The major ones, in my opinion, are:
Product innovation: Lululemon has consistently launched new and innovative products, including an accessory line. For example, the “Wundermost” line for women, the golf and tennis lines for both genders, and the “Steady State” and “Soft Jersey” lines for men, as well as new versions of the Blissfeel and Chargefeel sneakers.
Opening of new stores: This is also a major factor that drove a significant increase in sales. We opened stores in a variety of formats, including different sizes of company-operated stores, outlets, pop-ups, and stores operated by third parties under supply and license agreements in the Middle East and Israel. In 2023, we opened 28 new stores in Mainland China, bringing the total to 127 stores in the country. The expansion of our operations helps build our brand awareness, resulting in growth in net revenue.
Development of a multichannel strategy: We are investing not only in opening more physical stores but also in our e-commerce and digital channels to reach customers in different markets. We have secured a strong online presence in our e-commerce channel, serving our guests via our country-specific websites, our mobile app, and through third-party regional marketplaces such as Zalando, Lazada, and SSG.
Investment in marketing and advertising: We are increasing brand awareness through new campaigns and global brand activations. For example, the Dupe Swap event in Los Angeles was very successful in bringing many new customers to our brand. We believe investing in brand awareness is crucial to driving our international expansion and growth.
Community engagement: We invest in community-building through events such as World Mental Health Awareness Day, held by Lululemon in six cities in China, which gathered more than 9,000 people. Community is one of our core values, and we believe it is also very powerful in helping to increase brand awareness, strengthen brand loyalty, and acquire new customers, thereby increasing our market share.
The decline in Estée Lauder’s sales from 2022 to 2023 is attributed to several factors. The slow recovery of the travel retail market in the Asia Pacific region, particularly in Mainland China and South Korea, significantly impacted performance. Additionally, pandemic-related restrictions and rising COVID-19 cases in Mainland China negatively affected sales in the first half of fiscal 2023. Other regions were also impacted by unfavorable foreign currency translations, especially the strong U.S. dollar. Furthermore, a shift in product mix, with a decrease in high-margin skincare sales, led to a lower overall gross margin。
According to Tesla’s 2022-2023 annual report, there are four main growth drivers that impacted its revenues. Automotive Sales Volume, Automotive Regulatory Credits, Services and Other Revenue and Energy Generation and Storage. Firstly, the increase in automotive sales revenue was primarily driven by higher deliveries of the Model 3 and Model Y vehicles, specifically due to the global production ramp-up of the Model Y. However, This volume increase was partially offset by reductions in the average selling price and adverse effects from currency fluctuations. Secondly, Revenue from regulatory credits increased slightly by $14 million in 2023 compared to 2022. Tesla sells these credits to other manufacturers to help them meet emissions standards. This revenue source is connected directly to Tesla’s production and regulatory compliance requirements. In addition, revenue from services and other increased significantly, influenced by the growing fleet size, which led to more sales of used vehicles, maintenance services, parts, and paid Supercharging. This growth reflects increased volume and usage among Tesla’s customer base. Lastly, Revenue from Tesla’s energy generation and storage segment rose by $2.13 billion, primarily due to increased deployments of its large-scale Megapack energy storage solutions.
For Nvidia, foreign exchange and strong demand in key segments contributed notably to its sales growth. In 2023, Nvidia experienced robust revenue growth driven by significant demand for its Data Center products, with an increased focus on AI and machine learning applications across enterprise and cloud services. However, foreign exchange fluctuations, particularly a stronger U.S. dollar, presented headwinds that slightly impacted overall sales in international markets.
Despite these challenges, Nvidia’s ability to cater to the expanding AI market allowed it to offset foreign exchange pressures, leading to continued revenue growth. The Gaming and Automotive segments also saw steady demand, with innovations like the GeForce RTX 40 Series and partnerships in autonomous vehicle technology supporting Nvidia’s position as a leader in cutting-edge tech solutions across global markets.
Holding the executive convention outside New York could significantly reduce costs, especially considering recent currency fluctuations. Tesla’s global operations highlight the advantages of strategic location choices to optimize manufacturing and distribution costs; similarly, leveraging favorable exchange rates can create significant cost benefits for this event.
Lisbon, Portugal is the recommended location for the executive convention. The substantial cost savings compared to New York ($250,000) would justify the costs involved in moving the event, particularly if the exchange rate differential remains favorable.
Reasons for Choosing Lisbon:
Significant Currency Depreciation: The Euro has experienced periods of depreciation against the dollar over the last three years, making travel and expenses in the Eurozone potentially cheaper than in the US.
Lower Cost of Living: Portugal, in general, offers a lower cost of living compared to New York, translating into potentially lower costs for hotels, meals, and entertainment.
Attractive Destination: Lisbon is a vibrant and attractive city, offering a rich cultural experience and various tourist attractions to engage executives during their free time.
Accessibility: Lisbon has an international airport with good connectivity to various global cities, ensuring convenient travel for the executives.
Potential for Negotiation: By choosing a location outside of a major global hub, there is potentially more negotiating power in terms of hotel and other event-related costs.
Integrated Energy Solutions: Tesla aims to provide integrated energy solutions, combining vehicle charging with home solar power and battery storage. This integrated approach can be appealing to environmentally conscious customers, potentially boosting sales in both sectors. This synergistic effect could enhance sales growth.
Increased Accessibility to Financing: Favorable automotive credit regulations that make financing easier and more affordable for consumers could increase Tesla’s sales, particularly for buyers who rely on loans to purchase vehicles. This could lead to increased sales volume.
Positive Spillover Effects: A thriving automotive market can create a more positive perception of the industry as a whole. This positive perception could benefit Tesla, increasing consumer interest and willingness to consider electric vehicles, thus increasing overall sale growth.