Assessing and Managing Risk

Company: NikeThe purpose of this assignment is to assess how potential value-enhancing strategies may pose risk to a firm.Review your instructor’s feedback on the Strategic Alternatives Assessment and the Financial Analysis assignments. Use that feedback to guide your analysis of the strategies that you believe will provide the most significant opportunities for your firm to manage risk and add value.Keep in mind that increasing value for the firm does not necessarily mean expanding the business. Acquiring other firms, conducting research and development, or introducing new products and services might fall under the umbrella of value enhancement, while in other cases it may mean downsizing, rightsizing, or even refining the products and services the firm offers.In a paper of approximately 1,500 words, revisit the strategic alternatives and financial analysis recommendations that offer the greatest opportunities to add value to your firm and assess the risks of each. Use the information you have learned about your company’s business model, industry, competition, and target market in conjunction with the feedback you received on your work in the previous two topics to assist you in addressing the following.In the Strategic Alternatives Assessment, you evaluated potential growth opportunities and strategies for your firm, using a SWOT analysis to assess the advantages and disadvantages of each. Recapitulate your findings here in conjunction with any instructor feedback received, identifying how you determined your proposed strategic alternative(s) and calculated potential inhibitors to each. Expand upon your initial proposed alternatives to include financial considerations.Throughout the course, you have developed and submitted reports for your firm based on information that you and your CLC group have acquired and assessed. However, it is equally important to consider what other information, had you been able to locate it, would have been of value in formulating recommendations. What information are you lacking that might assist you and your team in developing and suggesting value-enhancing strategic alternatives? What information are you lacking that would assist you and your team in better assessing and managing possible risks of the proposed alternatives?When it comes to making strategic recommendations to management, financial considerations weigh significantly on the feasibility and viability of the available options. Revisit the Financial Analysis assignment and, with the incorporation of any instructor feedback received, reiterate your findings on the financial condition and performance of the firm respective to the risks and benefits of forming a strategic alliance, profitability ratios, and possible value-enhancing strategies.Given your instructor’s feedback and considering how the financial markets have changed since you submitted your Financial Analysis assignment, how would you refine or update your assessment of the organization’s current performance and financial strategies?How would you use a decision matrix to determine the risks of your suggested strategic alternative and the potential financial implications for your company of pursuing this alternative? Is the decision matrix an effective tool for predicting risk? Why or why not? How does the application of the decision matrix alter what you previously chose as the most advantageous strategy?Utilizing a risk matrix, identify a minimum of 10 unique risks associated with the strategic alternative you believe will provide the most significant opportunity for your firm to add value. Choose two or three of the most critical risks and discuss their potential impacts on your selected alternative.Submit your risk matrix with your written response.Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.Course Code
BUS-485
Class Code
BUS-485-EMWF320A
Criteria
% Scaling
Percentage
100.0%
Strategic Alternatives Assessment Recap
15.0%
Strategic Alternatives and Associated Risks
Information Gaps
10.0%
Financial Analysis Recap
10.0%
Financial Assessment Update
10.0%
Decision Matrix Applicability
10.0%
Risk Matrix
10.0%
Critical Risk Impacts
10.0%
Thesis Development and Purpose
5.0%
Argument Logic and Construction
5.0%
Mechanics of Writing (includes spelling,
punctuation, grammar, language use)
5.0%
Paper Format (use of appropriate style for the
major and assignment)
5.0%
Documentation of Sources (citations, footnotes,
references, bibliography, etc., as appropriate to
assignment and style)
5.0%
Total Weightage
100%
Assignment Title
Assessing and Managing Risk
1: Unsatisfactory (0.00%)
Recap of the Strategic Alternatives Assessment is not
included.
Information gaps in formulating strategic alternatives and
assessing possible risks are not included.
Recap of the Financial Analysis is not included.
An updated assessment of the firm performance and
associated financial strategies is not included.
Discussion about the applicability of a decision matrix to
determine risk is not included.
Ten risks are not included.
Impacts of the most critical risks on the proposed strategic
alternative are not included.
Paper lacks any discernible overall purpose or organizing
claim.
Statement of purpose is not justified by the conclusion. The
conclusion does not support the claim made. Argument is
incoherent and uses noncredible sources.
Surface errors are pervasive enough that they impede
communication of meaning. Inappropriate word choice or
sentence construction is used.
Template is not used appropriately, or documentation format
is rarely followed correctly.
Sources are not documented.
Total Points
110.0
2: Less Than Satisfactory (65.00%)
Recap of the Strategic Alternatives Assessment is incomplete
or insufficiently developed.
Information gaps in formulating strategic alternatives and
assessing possible risks are incomplete or insufficiently
developed.
Recap of the Financial Analysis is incomplete or insufficiently
developed.
An updated assessment of the firm performance and
associated financial strategies is incomplete or insufficiently
developed.
Discussion about the applicability of a decision matrix to
determine risk is incomplete or insufficiently developed.
Fewer than 10 risks are identified in the matrix.
Impacts of the most critical risks on the proposed strategic
alternative are incomplete or insufficiently explained.
Thesis is insufficiently developed or vague. Purpose is not
clear.
Sufficient justification of claims is lacking. Argument lacks
consistent unity. There are obvious flaws in the logic. Some
sources have questionable credibility.
Frequent and repetitive mechanical errors distract the
reader. Inconsistencies in language choice (register) or word
choice are present. Sentence structure is correct but not
varied.
Appropriate template is used, but some elements are missing
or mistaken. A lack of control with formatting is apparent.
Documentation of sources is inconsistent or incorrect, as
appropriate to assignment and style, with numerous
formatting errors.
3: Satisfactory (75.00%)
Recap of the Strategic Alternatives Assessment demonstrates
only superficial relevance to firm strategies and shows scant
incorporation of instructor feedback.
Information gaps in formulating strategic alternatives and
assessing possible risks relate only superficially to valueenhancing strategies for the firm.
Recap of the Financial Analysis demonstrates only superficial
relevance to firm financial strategies and shows scant
incorporation of instructor feedback.
An updated assessment of the firm performance and
associated financial strategies draws only superficial
connections between instructor feedback and current
financial markets.
Discussion about the applicability of a decision matrix to
determine risk demonstrates only a superficial understanding
of risk prediction and how risks influence strategic alternative
selection.
Ten risks are identified in the matrix, but not all are unique to
the selected firm.
Impacts of the most critical risks on the proposed strategic
alternative are only superficially explained or marginally
relevant.
Thesis is apparent and appropriate to purpose.
Argument is orderly but may have a few inconsistencies. The
argument presents minimal justification of claims. Argument
logically, but not thoroughly, supports the purpose. Sources
used are credible. Introduction and conclusion bracket the
thesis.
Some mechanical errors or typos are present, but they are
not overly distracting to the reader. Correct and varied
sentence structure and audience-appropriate language are
employed.
Appropriate template is used. Formatting is correct, although
some minor errors may be present.
Sources are documented, as appropriate to assignment and
style, although some formatting errors may be present.
4: Good (85.00%)
Recap of the Strategic Alternatives Assessment demonstrates
relevance to firm strategies and shows considerable
incorporation of instructor feedback. Submission references
elements from the financial analysis.
Information gaps in formulating strategic alternatives and
assessing possible risks demonstrate some familiarity with
value-enhancing strategies for the firm.
Recap of the Financial Analysis demonstrates relevance to
firm financial strategies and shows considerable
incorporation of instructor feedback.
An updated assessment of the firm performance and
associated financial strategies draws relevant connections
between instructor feedback and current financial markets.
Discussion about the applicability of a decision matrix to
determine risk demonstrates some familiarity with risk
prediction and how risks influence strategic alternative
selection.
Ten risks are identified in the matrix and most are unique to
the selected firm.
Impacts of the most critical risks on the proposed strategic
alternative demonstrate familiarity with firm weaknesses and
are sufficiently explained.
Thesis is clear and forecasts the development of the paper.
Thesis is descriptive and reflective of the arguments and
appropriate to the purpose.
Argument shows logical progression. Techniques of
argumentation are evident. There is a smooth progression of
claims from introduction to conclusion. Most sources are
authoritative.
Prose is largely free of mechanical errors, although a few may
be present. The writer uses a variety of effective sentence
structures and figures of speech.
Appropriate template is fully used. There are virtually no
errors in formatting style.
Sources are documented, as appropriate to assignment and
style, and format is mostly correct.
5: Excellent (100.00%)
Recap of the Strategic Alternatives Assessment demonstrates
thoughtful comprehension of firm strengths and weaknesses
and shows clear and appropriate incorporation of instructor
feedback. Submission includes the addition of elements from
the financial analysis.
Information gaps in formulating strategic alternatives and
assessing possible risks demonstrate a critical analysis of how
value-enhancing strategies will affect the firm and the how
the effects of threats and weaknesses might be mitigated.
Recap of the Financial Analysis demonstrates thoughtful
comprehension of firm performance and financial condition
and shows clear and appropriate incorporation of instructor
feedback.
An updated assessment of the firm performance and
associated financial strategies demonstrates direct
connections to instructor feedback and shows timely
research of currently financial markets.
Discussion about the applicability of a decision matrix to
determine risk demonstrates appropriate insight into risk
prediction and thoughtful consideration of how risks
influence strategic alternative selection.
Ten unique risks are thoughtfully identified in the matrix
specific to the selected firm.
Comments
Impacts of the most critical risks on the proposed strategic
alternative demonstrate thoughtful consideration of firm
strengths and weaknesses and are discussed in depth.
Thesis is comprehensive and contains the essence of the
paper. Thesis statement makes the purpose of the paper
clear.
Clear and convincing argument presents a persuasive claim in
a distinctive and compelling manner. All sources are
authoritative.
Writer is clearly in command of standard, written, academic
English.
All format elements are correct.
Sources are completely and correctly documented, as
appropriate to assignment and style, and format is free of
error.
Points Earned
Running head: Strategic Alternatives Assessment
Strategic Alternatives Assessment: Nike
Student Tianxiang Li
Grand Canyon University: BUS-485-EMWF320A
3.8.2020
1
Strategic Alternatives Assessment
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Nike
Nike is a multinational corporation founded in 1964 where headquarters located in
Beaverton, Oregon. Nike is one of the largest footwear company now in a leading position of the
industry which focuses on the design, development, manufacturing of footwear, apparel,
equipment, and accessories. Nike’s mission is what drives Nike to do everything possible to
expand human potentials. Nike tries to accomplish that by creating sport innovation, by building
such a creative global team, by making their product more sustainable, and by making positive
impact and feedback to the society and communities that we lived in (Nike Inc.).
SWOT Analysis
Strengths
Nike’s major strength is its strong and unforgeable brand awareness and influence, Nike
is one of the most recognizable brands in the world. Its swoosh symbol can be easily recognized
by everyone that’s not even into the sports culture. Nike has captured approx. 31% market share
of the global sports footwear market. Also, its huge customer base, low manufacturing cost and
Iconic subsidiaries such as Air Jordan brand gives a strong back for Nike to stay and maintain
their position as the leading footwear brand. In 2020, Nike’s market cap reached 139.19 billion
dollars and has a 15.9 billion dollars brand value (White, Sharma, Benjamin, Divva, & Oasis,
2020).
Weaknesses
Nike’s biggest and most weakness spot is the poor labor treatment and conditions in the
foreign manufacturing factories with several controversies that has lots of negative impact on its
Strategic Alternatives Assessment
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brand image. “In the last 20 years, Nike has been consistently targeted regarding their poor labor
conditions. These issues include child labor, low wages, and horrific working conditions that
were deemed unsafe” (White, et al., 2020). Also, Nike is highly dependent on the U.S. market,
even after many years of its global expansion, Nike still have about 42% of its sales comes from
the U.S. despite its global awareness, Nike still rely on the U.S. market for substantial sales and
growth.
Opportunities
Nike still have huge amount opportunities in the foreign market even they already has
been a huge brand in many foreign countries, this is due to the economic growth in some external
market such as China, India, and Brazil, also, the adaption of the sneaker and sports culture in
the foreign lands. On the manufacturing side, Nike have the opportunity to effectively integrate,
because “The supply and production of Nike’s products depend on independent manufacturers.
The brand can either acquire a few of these or make some of its own for a more efficient and
streamlined supply chain” (White, et al., 2020).
Threats
Even Nike is a dominating brand in the athletic industry, the competitive pressure that
comes from Adidas, Under Armor, and many other brands. With this high competition in the
industry, Nike must spend lots of money on its marketing and advertising when the competitors
are spending more on the marketing and advertising campaigns, this give them a pressure on its
marketing. Also, the rising counterfeit product has become a huge issue for Nike and its
reputation, the low prices and poor quality for the counterfeit products can really damage the
Nike’s product sales and its brand reputation.
Strategic Alternatives Assessment
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Strategic Alternatives
The strategic alternatives that helping the internal growth of Nike could be the innovation
and revolution on the manufacturing procedures. Nike’s management has high interest on what
most recent earnings called “Man Rev” which stands for manufacturing revolution. This is an
internal strategic alternatives which focuses on the innovative materials, assembly lines, and
advance technologies such as 3D printing that Nike believe it’s the future of Nike production and
will overhaul the way of how its products are made (McNew, 2017). The reasons why this could
be a huge opportunity for Nike and its future production is because part of reason why Nike in
under pressure on its competition and investment budget is due to its gross margin continues to
fall throughout the year by higher priced input goods and inventory challenge which Nike was
force to clear out their product with low price in the factory store. So, innovation in the material
and production line can speed their product outputs to the market with possibly lower
manufacturing cost which can help Nike on both fronts. The drawbacks for the “Man Rev” could
be any unknow risks that happen throw the changing method of manufacturing and the future of
3D printing technology use in the footwear assembly lines still is questionable.
On the external growth, throw many years of globalization and international growth, Nike
already generate more than 50% of its sales from the foreign country. But there is still further
potential to grow internationally. “Nike’s sales in China jumped 17% year over year in the
quarter when adjusted for currency fluctuations, and the company believes that’s just getting
started. “The Greater China marketplace continues to be fuelled by higher sports participation,
with 38,000 runners taking part in the Shanghai marathon, while nearly four times that many
consumers tried to sign up,” said Nike Brand President Trevor Edwards in the most recent
earnings call” (McNew, 2017). Also, when focusing and resources tilt into foreign markets, there
Strategic Alternatives Assessment
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will be resource reduce in the U.S. market which Nike is highly rely on, this can bring potential
risk that other footwear brand can possibly steal customers from Nike in its base camp.
Decision Matrix Application
Decision matrix can allow us to systematically identify, analyse and evaluate the performance of
relationships between information and sets of target values.
Strategic Alternatives Assessment
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The internal and external decision-making matrix can help us identifying the importance of each
key factors and the advantage, or disadvantage relates to it. The internal alternatives that Nike
put its weights on are brand recognition, marketing campaign, and research and development. A
new innovation of production line or revolution of manufacturing can be a profitable alternative
that change Nike’s stands which would increase its gross margin. And the rising demand for
women athletic footwear and international market will be the major outside revenue generator
for Nike to strength its position in the global footwear industry. (Mazumdar, 2012).
Strategic Alternative Inhibitors
Strategic Alternatives Assessment
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The factors that might inhibit the selection of strategic alternatives to become success are things
such as the acquisition from competitors company to smaller companies that might weaken
Nike’s position, and also the decision that opponents going to stay and compete with Nike throw
manufacturing and international market could lead to another pressure situation for Nike, but
Nike could utilize its strong brand image and successful marketing campaign to minor the threats
from competitors and optimal its decision.
Growth Initiatives
Like I said in the previous, if Nike’s main focus is not increasing its size and expand the business
throw the international rising market, then the innovation and revolution on its production and
manufacturing line will be the key elements to grow the firm with possible chances to increasing
its profit margin and lowering its the cost. This can be achieved mainly by innovative materials,
assembly lines, and advance technologies such as 3D printing
Strategic Alternatives Assessment
References
McNew, B. S. (2017, February 15). 3 Biggest Opportunities for Nike Inc. Retrieved from
https://www.fool.com/investing/2017/02/15/3-biggest-opportunities-for-nike-inc.aspx
Mazumdar, A. (2012, March 26). Nike final. Retrieved from

Nike Inc. (n.d.). Read Nike’s Mission Statement and find information about NIKE, Inc.
innovation, sustainability, community impact and more. Retrieved from
https://about.nike.com/
White, D. M., Sharma, G., Benjamin, S., Divya, Sg, & Oasis. (2020, March 2). Nike SWOT
2020: SWOT Analysis of Nike. Retrieved from https://bstrategyhub.com/swot-analysisof-nike-nike-swot-analysis/
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Running Head: Nike Financial Analysis
1
Nike Financial Analysis
Ratios
According to real-time Yahoo Finance report, Nike’s PE ratio (TTM) is 30.72, and Nike’s
EPS(TTM) is 2.71, their Beta is at 0.86. According to the information that’s presented in NYSE,
Nike’s latest 12 months current ratio is 19x, financial leverage last quarter was at 2.9x. In all
these ratio data, the most important one which present the firm’s performance in the most would
be P/E ratio, which helps the investors to determine the current market value of Nike’s stock as
compared to the Nike’ earning, the higher the P/E ratio is, the higher the investors are willing to
invest in its stock and company, because it means the long term growth expectations in the
future, historically speaking, the average mutual company P/E ratio for S&P 500 are around 13
to 15 (NYSE: NIKE, 2020). If we look at their competitors such as Adidas, their P/E ratio stays
at 20.64 compare to Nike is currently at 30.72, which clear shows that Nike is in a positive long
run, it has a huge future growth expectation. The ratio from Nike honestly didn’t give me too
much concern about their strategy, their EPS is 2.71 which means they are creating lots of wealth
for its investors and is great for their shareholders. Their beta is at 0.86 which slightly lower than
1.0 means that their stocks pose less risks with relatively good return.
Alliance’s Effectiveness
There can be many risks that come with forming a strategy alliance, and in some circumstances it
will bring negative effects to the company’s profitability, such as hidden costs, financial
difficulties, loss of competencies, inefficient management or loss of operational control will all
have some sort effects on the profitability of the brand, and those unexpected changes will result
in firm’s profitability ratio decrease. Those are the risk when Nike are considering forming a
Nike Financial Analysis
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strategy alliance with another partner. From long term perspective, forming a strategy alliance
can have impact on Nike’s revenue and profit maximization. The good side of every strategic
alliance is that it doesn’t reflect within a short span of a period. Risks on the profitability ratios
can be that ratios are facing negative effect initially. However, these can be improved over times.
When we look at the short term “The revenues will increase over time however, in the initial
period after a strategic alliance is formed the business operations of the alliance may incur
unplanned costs and would invest considerable time and efforts in recovering those costs and
achieve the desired result for which the alliance was made in the first place. Rise of conflict is
another risk face…
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