Unit 32: Assignment on Business Strategy

ASSIGNMENT 3 FRONT SHEET
Qualification BTEC Level 5 HND Diploma in Business
Unit number and title Unit 32: Business Strategy (574)
Submission date 6 September 2021 Date received (1st submission)
Re-submission date Date received (2nd submission)
Student name Le Hoang Long Student ID GBD18372
Class GBS0815B.1 Assessor name Huynh Ai V
Student declaration
I certify that the assignment submission is entirely my own work and I fully understand the conseque
understand that making a false declaration is a form of malpractice.
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Long
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Business strategy
Full name: Le Hoang Long
Class: GBS0815B.1
Teacher: Huynh Ai Van
Word count: 4358 words

Contents
I. Strategic position (SWOT) ...................................................................................................................................... 1
II. Strategies choices .......................................................................................................................................... 4
1. Strategic direction ......................................................................................................................................... 4
Vertical integration ........................................................................................................................................ 4
Product development .................................................................................................................................... 4
2. Business strategy ........................................................................................................................................... 6
Cost leadership .............................................................................................................................................. 6
Differentiation ............................................................................................................................................... 6
3. Strategic methods .......................................................................................................................................... 7
Organic Development .................................................................................................................................... 7
Strategy 1 ............................................................................................................................................................... 8
Strategy 2 ............................................................................................................................................................... 9
III. Evaluation .................................................................................................................................................... 10
SAFe evaluation criteria ....................................................................................................................................... 10
Strategy 1 ............................................................................................................................................................ 10
2. Strengths and Weaknesses .................................................................................................................. 12
Strategy 2 ............................................................................................................................................................. 13
2. Strengths and weaknesses .................................................................................................................. 14
IV. Strategy in VN .............................................................................................................................................. 15
Conclusion .................................................................................................................................................................. 15
References ................................................................................................................................................................. 16

List of figures
Figure 1 : Corporate strategy directions (Johnson et al., 2017: 245) ..................................................... 5
List of tables
Table 1 : Nike's SWOT analysis ............................................................................................................... 3

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Introduction
Proposing appropriate strategies for an organization by leaders or managers needs to base on
external and internal factors of that organization. In assignment 1, using PESTEL tool and stakeholder
mapping to analyze external factors of Nike Company showed which opportunities that Nike could take
advantage and threats that Nike Company is facing. In assignment 2, however, to identify the weaknesses
and strengths that exist inside the company, value chain method and Benchmarking were applied to
analyze internal factors. When external and internal factors are identified, suggesting the strategies to
help enhance Nike’s business performance will be easier for top managers and leaders of Nike Company
in assignment 3. Besides, evaluating the strategies after proposed in order to how effective they are and
which weaknesses of the strategies are needed to improve by using SAFe criteria, Quantitative Strategic
Planning Matrix – QSPM.
I. Strategic position (SWOT)
Strengths Weaknesses
(1) Strong Brand Awareness – Nike is one of the
most popular brands in the world, as the logo itself
is memorable, easy to say, and exclusive. Its
swoosh mark is quickly understood by anyone.
(2) Low Manufacturing Cost – Most of Nike's
footwear are manufactured in foreign countries. In
fiscal year 2020, Vietnam produced 50 per cent,
China produced 22 per cent and Indonesia
produced 24 per cent of Nike's total footwear.
Other operations include Argentina, Brazil, India,
Italy and Mexico.
(3) Nike possess many different technologies that
the company is using to create various innovative
(1) Poor labor conditions in foreign countries –
Nike has consistently focused on poor working
conditions in the last 20 years. These include
forced labor, child labor, low wages, and appalling
working conditions that were considered unsafe."
(2) Weak managing in supply chain - Nike has
collaborated with many independent
manufacturers around the world. There are some
problems that Nike is facing in supply chain are
Nike cannot control comprehensively cost of
materials that their suppliers buy and quality of
product will be not ensured by some suppliers.

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products such as Nike Fit, a foot-scanning solution
designed to find every person’s best fit and other
technologies Nike Air, Lunar, Zoom, Free, Flywire,
Dri-Fit, Flyknit, Flyweave, ZoomX, React, Adaptive
(3) Retailers Have a Stronger Hold – Nike's retail
sector is weak due to its price sensitivity. 65
percent of Nike products are sold directly to
retailers or retailers. With retailers serving as their
core customers, Nike does not fight their pricing
structures at all.
(34 Catching new trends is weak - Nike is not able
to adapt new trends as fast as Adidas is. this is one
of reasons that Nike’s sales was less than Adidas’s
sales in emerging market such as up 14%,
Russia/CIS, up 3%, and North America, up 10%, and
in Greater China, up 11% compares with Nike.
Opportunities
(1) Government support: The United State is
willing to support the organizations and has good
policy for industrial development. The government
provides low-interest capital and well-arranged
international tax agreements. Besides, tax and
manufacturing laws are facilitated well for
company growth.
(2) Emerging markets: While Nike already has a
presence in several international countries, there
are still plenty of opportunities for Nike. This is
because emerging markets like India, China and
Brazil are increasingly booming.
(3) Acquired Artificial Intelligence Start-up –
Through its enormous financial capital, Nike may
Threats
(1) Counterfeit Products: Counterfeit products will
have a huge effect on Nike's profits and credibility.
The business works internationally and the risk of
counterfeit goods has risen. Many merchants and
sellers sell imitation Nike items at cheaper prices.
The low-priced items are made of low-quality
materials but also have the Nike logo. This will
tarnish the reputation of the brand, as consumers
might believe as if Nike has begun making low-
quality items.
(2) Increased competitive pressure: While Nike is
dominant in the athletic industry, rivalry and new
emerging brands are still potential challenges to
the business. With a higher competition level, Nike

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buy small to medium-sized businesses or start-ups.
It has recently acquired a predictive analytics tool –
Celect to extend its online sales capability and
forecast consumer-buying behavior.
(4) Efficient Integration: The supply and
distribution of Nike's products relies on
independent suppliers. The brand may either
acquire a few of these or make some of its own for
a more effective and seamless supply chain.
has to expend more money on promotions and
advertisement. To overpower rivalry, Nike's best
bet is to develop creative goods targeted to the
needs of athletes.
(3) Economic Uncertainty: No matter the industry,
both businesses are vulnerable to the detrimental
consequences of a global recession. Nike has
already reported a 38% decrease in revenue in
Quarter 2 2020 and will continue to decline in the
future if the recession is as serious as expected by
analysts (Kohan, 2020).
(4) Trade Tensions: Nike relies on various markets
around the world, as shown by the recent rise in its
stocks, along with an increase in revenue in China.
With China and the US as their main customers, a
substantial portion of Nike's revenues will be
affected if trade disputes between the two giants
intensify.
Table 1: Nike's SWOT analysis

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II. Strategies choices
1. Strategic direction
Strategic direction is the product, service, business and market that should be undertaken by an
organization. Organizations may decide to enter several new sectors of the product and market. One way
to expand the scope of the portfolio of an organization is vertical integration. Vertical Integration
describes the operations involving the supplier or customer of the organization itself. Backward
integration and forward integration are two directions of vertical integration (Johnson et al., 2017).
Vertical integration
Backward integration converts input processes relevant to the organization's actual activities. Forward
integration converts output processes relevant to the organization's actual activities. Therefore, vertical
integration through the company's reach is the same as diversification. The distinction is that it combines
activities up and down the same value network, while diversification generally requires more or fewer
distinct value networks. Besides, as understanding synergies require bringing together diverse value
networks, diversification is also represented as horizontal integration (Johnson et al., 2017).
Product development
Product development is where organizations deliver to existing markets modified or new products (or
services). This can require varying degrees of horizontal diversification (Johnson et al., 2017). A main
corporate strategy decision is about which areas a business can develop in. The product/market growth
matrix of Ansoff is a conventional corporate strategy paradigm for generating four fundamental
directions for organizational growth (Johnson et al., 2017).

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Figure 1: Corporate strategy directions (Johnson et al., 2017: 245)
Usually, in zone A, an organization begins. It may choose to penetrate deeper into zone A (sometimes
referred to as 'consolidation'), or to increase its diversity along the two axes of increasing business
novelty or increasing product novelty. The 'diversification' is defined as this phase of growing the variety
of goods and/or markets. Diversification means increasing the variety of goods or markets that an
organization represents. Related diversification means extending the current organization into goods or
services with relationships. Accordingly, the company has two associated diversification strategies
available on the Ansoff axis. Moving to Zone B, creating new products for its established markets.
Moving to Zone C by taking its existing products to new markets. The farther along the two axes, the
more the strategy is diversified in each situation. Alternatively, following a conglomerate diversification
approach of completely new markets and new goods, the organization will step in both directions at
once (D zone). Therefore, conglomerate (unrelated) diversification requires diversification into goods or
services that are not linked to established enterprises. For brainstormingstrategic solutions, Ansoff's
axes may be used, verifying that all four zones have been correctly considered (Johnson et al., 2017).

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2. Business strategy
Cost leadership
The strategy of cost-leadership includes being the lowest-cost organization in an area of activity. As
follows, four key cost drivers can help deliver a cost leadership strategy. First, Input costs, such as labor
or raw materials, are also very important. In countries with low labor costs, many businesses seek a
competitive advantage by positioning their labor-intensive activities. Second, Scale economies refer to
how growing scale generally decreases the average operating costs over a given period, perhaps a month
or a year. Wherever high fixed costs exist, economies of scale are significant. Fixed costs are those costs
that are required for a production level. Third, Experience can be a key cost savings source. The
experience curve means that for each unit of production, the accumulated experience acquired by a
company contributes to reductions in unit costs. Fourth, Product/process design also affects cost. In the
beginning, productivity can be 'built-in'. It is necessary to consider whole-life costs in the design of a
product or service: in other words, the cost to the consumer not only of purchase but also of subsequent
use and maintenance (Johnson et al., 2017).
Differentiation
Differentiation is the principal alternative to cost leadership. The strategy of differentiation requires
uniqueness along certain dimensions that are sufficiently respected by clients to allow a price premium.
Related differentiation points vary between markets. Companies can distinguish between different
dimensions within each market as well (Johnson et al., 2017). In short, in following a differentiation
strategy, there are numerous factors to consider, and below are three key drivers of differentiation to
consider:
Attributes of product and service. Some product features can have better or unique characteristics for
the consumer than similar goods or services. However, the possibilities of product differentiation are
practically limitless and restricted only by an organization's imagination. Differences in color, design,
pace, style, taste, etc. can be included. It is necessary to clearly define the consumer on whose needs the
distinction is central to create a foundation for differentiation. It can be a valuable source of distinction

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to find a distinctive way of prioritizing clients. It is also necessary to recognize the offers of rivals while
defining a basis for differentiation and the strategy canvas provides one way of mapping various types of
differentiation (Johnson et al., 2017).
Relationships with customers. Differentiation may depend on the relationship between the company
offering the product and the consumer, in addition to more concrete differences in product and service
characteristics. This also relates to how the consumer perceives the object. Via consumer services and
responsiveness, the perceived value will increase. This can include, among other items, delivery services,
payment services, or after-sales services. Another basis for distinction may be marketing and reputation,
including emotional and psychological elements, that an organization projects. For products that are
otherwise difficult to discern, building on a brand image is prevalent (Johnson et al., 2017).
Complements. Complements Differentiation may also be based on links to other goods or services.
When consumed along with other goods or service supplements, the relative value of such products may
be substantially improved compared to consuming the product alone. Therefore, another potential way
to distinguish is to understand how consumers profit from purchasing two goods or services in tandem
(Johnson et al., 2017).
3. Strategic methods
Organic Development
The default approach for implementing a plan is to focus on internal resources to do it yourself. Organic
growth is thus where a plan is followed by building on the capabilities of an organization and expanding
those (Johnson et al., 2017). Relying on organic production has five major advantages:
Learning and Knowledge. Using the current strengths of the company to pursue a new approach will
improve organizational awareness and learning. The development and internalization of deeper
expertise than a hands-off strategic partnership is likely to be facilitated by active participation in a new
market or technology (Johnson et al., 2017).

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Spreading investment over time. For the target company, acquisitions usually require an immediate
upfront payment. Organic production allows investment to be distributed over the entire period of the
development of the plan. If conditions change, this reduction in upfront commitment will make it easier
to reverse or modify a strategy (Johnson et al., 2017).
No constraints on availability. The benefit of organic growth is that it is not contingent on the availability
of acceptable acquisition goals or future partnership partners. Organic developers also do not have to
wait for the perfectly matched target of acquisition to reach the market (Johnson et al., 2017).
Strategic independence. The independence given by organic growth means that if an organization
agrees with a partner organization, it does not need to make the same sacrifices as may be required
(Johnson et al., 2017).
Management of culture. Organic growth facilitates the formation of new practices in the current cultural
climate, which decreases the likelihood of conflicts between cultures (Johnson et al., 2017).
Strategy 1
Nike Company is outsourcing independent manufacturing factories in many countries in Asia such as
Vietnam, China, Thailand, and Indonesia to manufacture products for the company so that Nike Company
can save many manufacturing costs. However, the risk the company is facing is the company cannot
manage the quality of inputs (materials, labor workforce, etc.) and products. Moreover, when the
product are done, Nike will send these products to retailers and distribution system to sell to customers.
It can make Nike company unable to control services of those retailers and distribution system.
Therefore, the strategy that improve Nike’s supply chain is the company should conduct vertical
integration strategy comprising backward and forward integration in strategic direction for the company.
In backward integration, Nike should own manufacturing factories where have cheap labor cost. That can
help Nike supervise quality of inputs and products. In forward integration, Nike should have its own
retailers in each country where customers can purchase products of Nike and prevent supplying
counterfeit products for customers that can effect brand image of the company. Doing that can help Nike
guarantee and provide the best service and experience for customers. Nike can implement vertical
integration strategy by organic development (do it yourself method). It is said that Nike has huge

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capitals, so Nike can take advantage of that to conduct investing their own manufacturing factories and
retailers in order to integrate Nike’s supply chain so that Nike can operate its supply chain effectively.
Vertical integration is one of strategies that helps Nike gain competitive advantage in price of products
(cost leadership) with other rivals such as Adidas, Under Amor, etc.
Strategy 2
In threats part of SWOT analysis, there is an issue that Nike is facing is the company is competing with
many huge competitors in sportswear industry such as Adidas, Under Amor, New Balance, Reebok, etc.
Currently, these big companies are selling the same categories of products as Nike. That can influence
revenue of Nike totally. It requires Nike to have to pursue differentiation strategy. The differentiation
strategy will help the company increase competitive advantage among rivals in sportswear industry.
Besides, this differentiation strategy can make price of products higher. To implement differentiation
strategy, Nike Company should develop products in existing market (Ansoff’s product/market growth
matrix) by creating new more products or adding special value in products that can make customers
distinguish products between Nike and other companies. It can be seen that people like products made
from recycling materials that can protect environment or products having innovative technology on
them. These products will help Nike make big gap with other competitors. However, to produce creative
products like these, it requires Nike to have to invest many on R&D. Currently, one of strengths is Nike is
considered as Technology Company due to successful technology that Nike has created such as Nike Plus,
SNKRS, Nike fit, etc. Nike should continuously try to catch new trends in order to create proper
technology for their products in order to increase experience of customers. As mentioned above,
pursuing differentiation strategy requires many resources and too much investment, but this is not
barriers of Nike. Because, Nike is known as the company has huge capital, then the company can invest
them self in creating more innovative technology for the company (organic method).

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III. Evaluation
SAFe evaluation criteria
Suitability is concerned with determining which of the suggested solutions resolve key opportunities and
challenges facing the enterprise through an understanding of the strategic role of the organization: it is
also concerned with the general logic of the plan.
Acceptability is concerned with whether the anticipated performance of the planned plan satisfies the
standards of the stakeholders. This can be of three types: risk, return and stakeholder reactions. It is
sensible to use more than one approach to determine the acceptability of a plan.
Feasibility is concerned with whether a plan will operate in practice: in other words, whether a company
has the potential to deliver a strategy. The feasibility evaluation is likely to include two main issues: I are
the tools and skills actually available to successfully execute the strategy. If not, will they be obtained?
These problems can be extended to any resource field that has an impact on the feasibility of the
planned plan. Here, however, the emphasis is on three fields of economics, people (and their skills) and
the importance of resource incorporation.
Strategy 1
1. SAFe evaluation criteria
Suitability
● Exploits the opportunities in the environment and avoids the threats;
● Capitalizes on the organization’s strengths and avoids or remedies the weaknesses
Environment Capability
Direction: Vertical integration US government has good
relationship most of countries in
the world and good policies for
Having own manufacturing
factories that can help Nike
utilize and save manufacturing

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organization, so Nike can invest
on owning manufacturing
factories and retailers in many
countries. It help Nike can
control supply chain effectively.
cost as much as possible.
Moreover, Nike is known as big
tech company, currently the
company is having many big
technologies so Nike can take
advantage that into supply chain.
Having agency in abroad
markets, the company can catch
customer trends effectively.
Method: Organic Nike finds that most of current
manufacturing factories do not
ensure safe and good
environment for labor workforce.
Besides, Nike cannot control
quality of products and limit
counterfeit products completely.
Nike has huge capital and the
company already has their own
manufacturing factories in US, so
it is not difficult for Nike to invest
these factories and retailer in
abroad markets.
Acceptability Risk: Implementing vertical integration in order to pursue cost leadership will need to lots of
investment on manufacturing factories and retailers. Besides, vertical integration can involve quite
different strategic capabilities. It leads many companies fail in recent years. Reaction of stakeholders: The strategy mostly affects to investors. Investorsmay be too sensitive
with this strategy because too much capital will be used on this strategy. They are afraid that
expensive investment can affect profit rate of the company and shareholders are only concerned
about how much profit Nike can bring to them. When it happens, the company cannot retain
investors. Moreover, owning manufacturing factories aim to control environment working for labor
workforce, when employees feel safe and comfortable they tend to work more effectively.

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Feasibility
There are three areas that how the company have capabilities to deliver the strategy: Finance: as mentioned in strengths of Nike’s SWOT analysis, Nike has extremely huge capital that
can help Nike implement investing manufacturing and owning many retailers on abroad markets. People and their skills: In vertical integration, employees in producing factories are the most factor
that Nike is concerned about. Nike has to ensure that working environment is safe and limit unfair
issues related to salaries and promotion that can influence to employees. Furthermore, these
employees should be trained professionally in order to produce quality products that bring value to
customers. It is said labor workforce of Nike are working effectively. This is good signal to conduct
the strategy. Integrating resources: Nike is successful in using huge capital to collaborate with famous basketball
players and big sport even to develop image brand. Therefore, the strategy can be successful.
2. Strengths and Weaknesses
Strengths Able to control quality of products and limit counterfeit products on the market Able to improve customer experience Nike can continuously catch new trends in sportswear industry Working environments will be improved for employees
Weaknesses Shareholders may leave the company Able to impact profit of the company Investment cost will be extremely high

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Strategy 2
1. SAFe evaluation criteria
Suitability
Environment Capability
Direction: Product Development Currently, Nike is competing with Currently, Nike has many big
(Diversification) many rivals in sportswear technology that applied in their
industry, it leads market shoes. This contributes big
Saturated. Besides, needs of impact in Nike’s revenue such as
customers is increasing. It Nike Fit, a foot-scanning solution
requires Nike to have new more designed to find every person’s
products and these products that best fit and other technologies
make Nike’s rivals find difficult to Nike Air, Lunar, Zoom, Free,
imitate. It help Nike increase gap Flywire, Dri-Fit, Flyknit, Flyweave,
with their rivals. ZoomX, React, Adaptive.
Therefore, Nike can continuously
invest on R&D to create more
products.
Method: Organic Due to competitive pressure, As mentioned in SWOT analysis,
collaborating with other tech one of strengths of Nike is big
companies will make price of capitals and it also has R&D
products higher. Therefore, make center, so Nike does not need to
its own technology will make corporate with other tech
Nike different from other companies in order to create
competitors. products.

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Acceptability Risk: This strategy has also a same character with vertical integration that the strategy requires lots
of investment on research and development. It will take much time to create products continuously. Reaction of stakeholders: Two stakeholders are most concerned with this strategy, shareholders and
employees. Creating new and special products needs to have much investment, but this will help
Nike attract more customers, due to creative products will innovative technologies. Therefore,
shareholders will support strongly this strategy. Talented people should make creative products,
currently; Nike has too many attractive policies for employees who have ideas for creating products.
This promotes many creative products will be made.
Feasibility Finance: Nike is possessing huge flow capital; Nike can focus on exploiting new needs of customers
to create proper products that meet needs of customers. People and their skill: Nike has their own R&D center where gathers talented employees. These
people have already made big technologies that applied Nike’s Shoes. Therefore, Nike isable to
make products that are more creative in the future. Integrating resources: Base available such as technologies and big finance, Nike can be innovative in
making more products.
2. Strengths and weaknesses
Strengths Make differentiation with other competitors Increase recognition for Nike with special products Knowledge and learning to understand will be enhanced

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Weaknesses High cost will make price of products high and bring low profit to the company Technology can be imitated
IV. Strategy in VN
It can be seen that Nike’s categories of products are already seen in Vietnamese market. However, as
mentioned in Nike does Porter value chain model. Vietnam is one of contract factories with Nike.
Vietnam is considered as a place, which has, low labor cost. Nike can utilize manufacturing cost as low as
possible. While Nike does not have many retail stores in Vietnam, customers here have to order from
digital platform such as commerce or Nike website when Nike store is not located at the place where
customers live. Therefore, Nike should expand more retail stores in every city at Vietnam in order to
increase brand image. One of Nike’s strengths is strong brand image. People in Vietnam also strongly like
Nike’s products. However, high of products are still high on the market. Nike should decrease price of
product to attract more customers. Meanwhile, counterfeit products are still on the market. Nike should
apply vertical backward strategy in vertical integration that Nike should invest their own manufacturing
factories instead of collaborating with independent factories in Vietnam as now. When Nike invest
factories in Vietnam that can influence relationship between Vietnam and US. Tax on each products
of Nike will be lower than now. Therefore, Nike should consider this strategy in the future.
Conclusion
After analyzing external factors in assignment 1 and internal factors in assignment 2, this is fundamental
factors to form proper strategies for Nike to gain competitive advantage. There are two strategies that
already proposed in assignment 3, cost leadership and differentiation strategy. Besides, evaluating two
strategies also mentioned above that can show strengths and weaknesses of strategies that Nike should
pursue or not. Besides, strategy was proposed for Nike in Vietnam market.

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References
Johnson, G., Whittington, R., Scholes, K., Angwin, D. and Regnér, P., 2017. Exploring Strategy. 11th ed.
Harlow: Pearson Education Limited. p. 206, 243, 253, 244, 245, 211, 212, 215, 216, 330, 331.
Kohan, S., 2020. NIKE Sales Drop 38% But Leadership Is Not Concerned. [online] Forbes. Available at:
<https://www.forbes.com/sites/shelleykohan/2020/06/25/nike-sales-drop-38-but-leadership-is-not-
concerned/?sh=7bc1da9e2a37> [Accessed 29 November 2020].