Photo AI
Evaluate these two options and recommend which one is most suitable for Nike to maintain its global competitiveness - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Question 2
Evaluate these two options and recommend which one is most suitable for Nike to maintain its global competitiveness. Extract F ASEAN opportunity The Association o... show full transcript
Worked Solution & Example Answer:Evaluate these two options and recommend which one is most suitable for Nike to maintain its global competitiveness - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Step 1
Focus on cost competitiveness
Answer
By locating in countries such as Indonesia, Nike can reduce its operating costs, such as rent and labor. These cost benefits can be passed on to customers in the form of lower prices, which may help Nike to improve its profit margins. Given that Nike is a market leader, with $22.3 billion of sales globally in 2018, it has the ability to reduce prices without risking its market position against competitors like Adidas and Asics. Additionally, the lower disposable incomes in emerging economies, such as Indonesia, mean that customers may be more price-sensitive. This approach can lead to higher profits and provide a funding source for future shareholder investment.
Step 2
Focus on differentiation
Answer
Nike Flex offers an opportunity to differentiate Nike's brand through customized products and faster delivery times. By enhancing the ability to tailor shoes and improve efficiency in production, Nike can strengthen its brand loyalty among customers who value personalization. This differentiation can capitalize on the growing demand for unique products. However, competitors like Adidas may also adopt similar strategies, making it crucial for Nike to innovate continually through partnerships such as that with Flex.
Step 3
Recommendation
Answer
In conclusion, while cost competitiveness can offer significant short-term benefits, focusing on differentiation through innovative products and quick delivery may provide a more sustainable long-term strategy for Nike. The unique propositions offered through partnerships like Flex can help Nike maintain its leadership in an increasingly competitive global market, especially in regions with high growth potential such as ASEAN.