Strategic Management - NU SKIN Enterprise

STRATEGIC
MANAGEMENT
by Student Name / ID Number
MBA - Strategic management
Table of Contents
1.0 Introduction 3
1.1 Objectives of study 3
1.2 Background info – NU SKIN Enterprise (NUS) 3
1.3 NU SKIN Enterprise‘s current strategic challenge 4
1.4 The mission, vision & objectives statements of NUS 5
1.5 Focus, Clear & motivate analysis for vision and mission statements 5
1.6 SMART analysis of the goals and objectives 6
2.0 Macro environmental analysis – PESTLE 7
3.0 Micro environmental analysis – Porter‘s 5 forces 12
4.0 Capability analysis 14
4.1 Value chain 14
4.2 VRIO 16
4.3 Resource audit 16
4.4 KPIs benchmarking 17
5.0 Proposed strategy 18
5.1 SWOT 18
5.2 TOWS 21
5.3 Ansoff‘s matrix 22
6.0 Strategy evaluation 24
6.1 Suitability of proposed strategies 24
6.2 Acceptability of proposed strategies 25
6.3 Feasibility of proposed strategies 27
List of references 28
Appendices 29
2
1.0 Introduction
Strategic management is the ongoing planning, monitoring, analysis and

assessment of all necessities an organization needs to meet its goals and
objectives. Changes in business environments will require organizations to
constantly assess their strategies for success. The strategic management process
helps organizations take stock of their present situation, chalk out strategies,
deploy them and analyze the effectiveness of the implemented management
strategies.
1.1 Objectives of study
This report is a strategic plan study for NU SKIN Enterprise, United

States of America and its subsidiaries around the globe. The mission,
vision and objectives statements of the organization will be analyzed
using the three criteria of focus, clear and motivation. Macro
environmental analysis will be conducted using the PESTEL model while
micro industry analysis will be conducted using Porter‘s 5 forces model.
Internal capability of NU SKIN will be analyzed with aid of Value Chain
model. Solutions to current issues facing by NU SKIN will be proposed
using the TOWS and Ansoff matrix. Evaluation of the proposed strategies
will be analyzed using the Suitability Acceptability and Feasibility model.
Industry Key Performance Indicators analysis will be examined by
benchmarking NU SKIN Enterprise versus AMWAY – a close
competitor.
1.2 Background info – NU SKIN Enterprise
NU SKIN Enterprises is an American multilevel marketing company that

develops and sells personal care products and dietary supplements under
its Nu Skin and Pharmanex brands. Nu Skin was founded in 1984 in
Provo, Utah. The company originated in the United States and began its
first foreign operation in Canada in 1990
In addition, Nu Skin (Malaysia) Sdn Bhd was founded in 1996. The

Company's line of business includes the wholesale distribution of
prescription drugs, proprietary drugs, and toiletries. The administrative
office is located at Lot 2.5.1, Level2, PNB Perdana (Commercial Center),
No.10 Jalan Binjai, 50450 Kuala Lumpur.
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1.3 NU SKIN’s current strategic challenge
Disclaimer: All information gathered here is based on NU SKIN

Enterprise Annual Report released for public reference.
Figure 1: Total Global Revenue by Product Category

Source: NU SKIN Annual Report 2020
Figure 2: Southeast Asia Revenue by Product Category

Source: NU SKIN Annual Report 2020
As shown in Figure 1 and Figure 2, NU SKIN witnessed significant lower

revenue in 2019 compared to 2018. For a Southeast Asia region, the
revenue recorded was USD301.6 millions or USD15.3 millions lower
compared to 2018 revenue. The Mainland China is the main NU SKIN
market among the others.
4
1.4 The mission, vision and objectives statements of NU SKIN.
NU SKIN mission is to be a force for good throughout the world by

empowering people to improve lives with rewarding business
opportunities, innovative products, and an enriching, uplifting culture.
NU SKIN vision is to become the world‘s leading business opportunity

platform.
1.5 Focus, Clear and motivate analysis for vision and mission statements
At NU SKIN, they believe the brands, like people have its own
personalities. As a person, NU SKIN embodies three major qualities:
empowering, curiosity, and optimistic. NU SKIN praise ‗we‘ as a
business-people strategic concept as below.
We’re empowering: We‘re here to inspire and empower you to live your
best life.
We’re curious: Do you like sticking with the status quo? We don‘t. We
like pushing boundaries, asking questions, and adapting to our ever-
changing world.
We’re optimistic: Let‘s face it—life is better when your glass is half full
rather than half empty. We keep a positive mindset and look toward the
future with optimism.
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1.6 SMART analysis of the goals and objectives
NU SKIN mission is to be a force for good throughout the world by

empowering people to improve lives with rewarding business
opportunities, innovative products, and an enriching, uplifting culture.
NU SKIN vision is to become the world‘s leading business opportunity

platform.
• The mission and vision appears

specific as it describes the desire to be
Specific
a force for good throughout the world
by empowering people.
• The mission and vision is measurable

Measureable by measuring the business opportunities
and number of produced product.
• To be a force for good, NU SKIN set

their archieveable target to become
Achieveablea world's leading business opportunitiy
playform which are opened to
everyone.
• Given the current position of NU SKIN

in global matket the revenue show a
Realistic sign of their realistic capabilities in
becoming world leader in their product
segment.
• The specific period or timebound to

Timebound
achive the objective is not specified.
Table 1: SMART Analysis for NU SKIN Enterprise
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2.0 Macro environmental analysis – PESTLE
Political The nature of the political, regulatory and legal systems in

Mainland China gives regulatory agencies at both the local and
central levels of government broad discretion to interpret and
enforce regulations as they deem appropriate to promote social
stability. NU SKIN face a risk that regulators may change the
way in which they currently interpret and enforce the direct
selling regulations, or that such regulations may be modified. If
NU SKIN business practices are deemed to be in violation of
applicable regulations as they may be interpreted or enforced,
in particular NU SKIN use of the sales productivity of a Sales
Leader and the sales representatives that such Sales Leader
trains, collaborates with, supports and services in setting
his/her salary or service fee on a quarterly basis, then NU
SKIN could be sanctioned and/or required to change their
business model, either of which could significantly harm their
business.
In January 2019, the Mainland China government announced a

100-day campaign to review and inspect the health products
and direct selling industries. This campaign involved a number
of regulatory agencies. Although the 100-day period has
ended, there has continued to be a heightened level of media
and regulatory scrutiny of these industries and of their business
and products. There is also uncertainty whether any changes to
the regulations that apply to these industries will be made
based on the review. If changes are made to any of the
regulations that apply to NU SKIN business model, products or
operations, business could be harmed.
Meanwhile, win for Malaysian opposition part in the 2018

general elections has uttered the political climate in the country
and this has had a significant impact on every market segment.
However, the political instability in Malaysia is a threat to

foreign investor. Political stability index in Malaysia is closer to
weak than strong in 2017 (-2.5 weak; 2.5 strong). The political
climate and uncertainty keep rising up in quarter 1, 2020.
(www.theglobaleconomy.com/Malaysia/wb_political_stability,
2020).
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Economic About 87% of NU SKIN revenue came from outside of the

United States in 2019, with approximately 30% of their
revenue coming from Mainland China, NU SKIN largest
revenue market. Given the size of their international
operations, as reported in U.S. dollars, are often impacted by
foreign-currency fluctuations. In 2019, NU SKIN revenue was
negatively impacted 3% from foreign-currency fluctuations
compared to 2018. In addition, their results can be impacted by
global economic, political, demographic and business trends
and conditions
General Malaysia Economic Growth:

According to the projection by International Monetary Fund
(IMF), Malaysia is number 37 in the ranking of global
GDP. Its GDP in 2018 was $358,579 million. The GDP per
capita of the country in the same year was $11,072, which was
higher than that in 2017 (Country Economy, 2018). Malaysia
has a healthy, robust, and industrialized economy. As of
August 2019, the unemployment rate in the country is
3.3%. Malaysian economy is diversified and very robust with
focus on industrialized and knowledge-based industries. The
economy has benefitted from the adoption of cutting-edge
technology. According to IMF (2018) Malaysia is well on its
way to achieving high-income status (IMF, 2018). However, to
achieve the status finally, it must improve further on the level
of labour productivity and the living standards of its citizens.
Malaysia received RM21.7 billion in Foreign Direct

Investment (FDI) in the first quarter of 2019. This is the
highest FDI inflow in the country‘s history (Jessinta, 2019)
Below figure presents GDP forecast for the period from 2020
to 2024 as estimated by the IMF in its latest edition of World
Economic Outlook (WEO) as of October 2019. As below
figure, countries are ranked by the gross domestic product
measured in purchasing power parities (PPP) at current prices.
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Source : IMF World Economic Outlook (WEO), October 2019
However, with the Covid-19 Pandemic, global economic

conditions continue to be challenging. Difficult economic
conditions could adversely affect NU SKIN business by
causing a decline in demand for their products, particularly if
the economic conditions are prolonged or worsen. In addition,
such economic conditions may adversely impact access to
capital for NU SKIN and their suppliers, may decrease the
ability of their sales force and consumers to obtain or maintain
credit cards, and may otherwise adversely impact NU SKIN
operations and overall financial condition.
Social cultural Malaysia is a multi-ethnic and multi-religious country. The
major religion in the country is Islam. Other religions practiced
in the country are Buddhism, Taoism, Hinduism, Christianity,
and Sikhism. Though divisions exist, communal harmony is a
great feature of the country. The major languages are Malay
(official), English, Chinese dialects, Tamil, Telugu, and
Malayalam (BBC, 2019). As of 2018, the total population of
the country is 32.4 million.
Malaysia is ethnically diverse and has a rich cultural

life. People lead a much more affluent lifestyle compared to
their counterparts in many upper-middle income countries. The
major factors contributing to this affluent lifestyle are low
national income tax, almost free health care system, social
welfare system, and a low cost of local food, fuel, and
household products. However, alcohol abuse among teenagers
is an issue of grave concern. It is also worth noting that the
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government limits freedom of speech by directly and indirectly

controlling almost all the media (Faoite, 2016).
Today‘s social media and social media influencer bring more

competition among cosmetic and other product use. The
incoming trend of direct selling will force NU SKIN to be
more competitive and technology goer.
Technology Malaysia is one of most digitally connected societies in the
world (Kumar 2019). Approximately, 80% of its residents have
access to the Internet, mostly through mobile
networks. Malaysia has been a great place for international
tech companies due to its strategic location, tech savvy work
force, and IT infrastructure. Many companies such as IBM,
HP, Intel, Google, Amazon, and Cisco are well established in
the country. The leading social media in use in the country are
Facebook, Twitter, Pinterest, Instagram, and YouTube.
It is worth noting that Malaysia aims to become the preferred

destination for high-tech investment by 2025. The government
has taken a number of initiatives to achieve that goal as
well. However, many employers in Malaysia are concerned
with the shortage of locally skilled talents to work and face the
demands and challenges of the booming transformation of
digital technology (Shah, 2019).
Legal Malaysia is mostly a common law country, with a separate
Islamic law (mostly civil laws) system. The Employment Act
(1955) is the main legislation on labour matters in the country.
NU SKIN and Pharmanex products and related promotional

and marketing activities are subject to extensive government
regulation by numerous federal, state and local government
agencies and authorities, including the United States Food and
Drug Administration (the ―FDA‖), the FTC, the Consumer
Product Safety Commission, the Department of Agriculture,
United States and State Attorneys General and other state
regulatory agencies in the United States, as well as the State
Administration for Market Regulation in Mainland China, the
FDA in Taiwan, the Ministry of FDA in South Korea, the
Ministry of Health, Labour and Welfare in Japan and similar
government agencies in all other markets in which we operate.
In the United States, the FDA, in particular, regulates the
formulation, manufacture and labeling of over-the-counter
drugs, cosmetics, dietary supplements and medical devices.
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Environment Malaysia is a beautiful holiday destination. Approximately

25.83 million tourists arrived in the country in 2018. However,
this figure fell short of the target of 26.4 million. Dynamic
cities, delicious food, stunning beaches, weather, and friendly
people are some of the factors that attract tourists to the
country. However, it is worth noting that deforestation, climate
related natural disasters, air pollution, excessive waste
production and river pollution, and escalating carbon dioxide
emissions are some of the environmental challenges facing the
country today.
Table 2: PESTLE analysis for NU SKIN Enterprise
3.0 Micro environmental analysis – Porter’s 5 forces
The cosmetic has a high bargaining power of

customers. This is due to the increase competition
and availability of cosmetic products from a variety
of manufacturers. Since these products have high
Bargaining power of substitutes, then it is possible for consumers to
subscribers force manufacturers to reduce their product prices
through purchasing those of their competitors. This
is a challenge which manufacturers face across the
world including NU SKIN.
Suppliers who have a high bargaining power are
able to influence price changes through using
techniques such as market manipulation through
hoarding and restraining supply. Although some of
these strategies are illegal in Malaysia, suppliers
usually apply them when they want to effect price
changes (Diller et. al., 2006: 33-36). The cosmetic
industry has a low bargaining power of suppliers.
Bargaining power of
suppliers This is due to the high number of market players
and large supply of diverse products to the market.
There are many cosmetic products which are
developed by both large and small scale
manufacturers. Due to the huge supply, consumers
have the power to influence the market prices as
opposed to the suppliers.
The treat of new entrant is very high in cosmetic
industries in Malaysia. More new re-badge
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Threat of new entrant cosmetic level enters the market without proper
control and enforcement by local authorities.
The threat of substitutes arises when there are
similar products developed by NU SKIN
competitors which satisfy the market needs. When
consumers have access to substitute products
which can satisfy their market needs, then
manufacturers and suppliers lose their bargaining
power. Consumers are able to purchase NU SKIN
competitor‘s products if they are not satisfied with
Threat of substitute
product price or quality. In order for suppliers to
product
tackle the challenge of threat of substitutes, NU
SKIN have to innovate products which meet the
needs of their target market segments (Keller,
2003: 595-600).
It is therefore essential for NU SKIN to be

innovative if they are to tackle the challenge of the
threat of AMWAY.
The degree of competition among NU SKIN rivals
in the industry is high. NU SKIN compete with
other direct selling organizations such as
AMWAY, some of which product have a longer
operating history, and greater visibility, name
recognition and financial resources than NU SKIN.
Leading global direct selling companies include
Amway, Avon Products, Herbalife and Mary Kay.
Competitive rivalry
We also compete with local direct selling
companies. For example, the leading direct selling
companies in Mainland China are Infinitus, Perfect
and Joymain. NU SKIN compete with these
companies to attract and retain their sales force and
consumers based on the strength of product
offerings, sales compensation, multiple business
opportunities, management and international
operations.
Table 3: PORTER‘s 5 Force for NU SKIN Enterprise
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4.0 Capability analysis
4.1 Value chain

The primary value chain activities of Nu Skin Enterprises are directly
involved in producing and selling the product to targeted customers.
Analysis of primary value chain activities can improve the performance
of Nu Skin Enterprises as explained below.
Inbound logistics It is important to develop strong relationships with

suppliers as their support is necessary to receive, store and
distribute the product. Without analysing the in-bound
logistics, Nu Skin Enterprises can face various challenges
in product development phases. Analysis of in-bound
logistics requires a company to focus on every aspect of
transformation from raw material to finished product.
Some examples of inbound logistics are retrieving raw
material, storing the inputs and internally distributing the
raw material and components to start production.
Operations The importance of analysing operational activities raises
when raw material arrives, and Nu Skin Enterprises is
ready to process the raw material into the end product and
launch it in the market. Some examples of operational
activities are machining, packing, assembling and testing.
Equipment repair and maintenance also falls into this
category.
It includes both- manufacturing and service operations.
Analysis of operational activities is important for
improving productivity, maximising the efficiency and
ensuring the competitive success of Nu Skin Enterprises.
The increased productivity can help Nu Skin Enterprises to
achieve consistent economic growth, increase profitability
and set a powerful basis for competitive advantage.
Outbound logistics Outbound logistics include the activities that deliver the
product to the customer by passing through different
intermediaries. Some outbound logistics activities are
material handling, warehousing, scheduling, order
processing, transporting and delivering to the destination.
Nu Skin Enterprises can analyse and optimise the
outbound logistics to explore competitive advantage
sources and achieve its business growth objectives.
Because, when outbound activities are timely managed
with optimal costs and product delivery processes put a
minimum negative effect on the quality, it maximises the
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customer satisfaction and increases growth opportunities

for the firm. Nu Skin Enterprises should pay specific
importance to its outbound value chain activities when its
offered products are perishable and require quick delivery
to the end customer.
Sales and Due to the person-to-person nature of direct selling, NU
marketing SKIN‘s results of operations could be harmed if the fear of
a communicable and rapidly spreading disease or other
crises such as natural disasters result in travel restrictions
or cause people to avoid group meetings or gatherings or
interaction with other people. It is difficult to predict the
impact on their business, if any, of the emergence of new
epidemics or other crises. NU SKIN is currently anticipate
that the outbreak of the Covid19, meeting restrictions and
many people's hesitance to go to public places in response
to this outbreak, and travel restrictions and quarantines that
the Mainland China government and other Governments
are instituting, will have a significant negative impact on
NU SKIN business in that market and possibly other
markets. In addition, most of NU SKIN nutritional
supplement revenue is generated from products that are
encapsulated in bovine- and/or porcine sourced gel
capsules. If NU SKIN experience production difficulties,
quality control problems or shortages in supply in
connection with bovine or porcine related health concerns,
this could result in additional risk of product shortages or
write-downs of inventory. NU SKIN may be unable to
introduce their products in some markets if they are unable
to obtain the necessary regulatory approvals or if any
product ingredients are prohibited, which could harm their
business. (NU SKIN Annual Report, 2020)
Service The pre-sale and post-sale services offered by the Nu Skin
Enterprises will play an important role in developing
customer loyalty. The modern customers consider post-
sale services as important as marketing and promotional
activities. The power of negative e-WOM due to poor
support service cannot be undermined in the current
technologically advanced era. The company must analyse
its support activities to avoid damaging brand reputation,
and instead use it as a tool to spread positive word of
mouth due to quick, timely and efficient support services.
Table 4: Value Chain, NU SKIN Enterprise
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4.2 VRIO. Table 5: VRIO, NU SKIN Enterprise
Org. Competitive
Valuable Rarity Inimitability
Set-up implication
Competitive
Inbound
YES YES YES YES advantage is
logistics
sustainable
Operations YES NO NO YES Competitive parity
Outbound
YES NO NO YES Competitive parity
logistics
Temporary
Sales and
YES YES NO YES competitive
marketing
advantage
Service YES NO YES YES Competitive parity
4.3 Resource audit. Table 6: Resource Audit, NU SKIN Enterprise
Resources Capability
Market Capitalization $3.33 Billion Track Record of Delivering
Shareholder Value
55.61M Shares Outstanding
24% average annual return
$2.68 billion in sales (2018) since 2008 and attractive
dividend – 2.3% yield
Sales presence in ~50 markets
18 Years of consecutive
Threshold Approximately 4,700 employees dividend increase
worldwide
Visible Growth from Recent
Named one of the best places to work Projects
for 2018 by Direct Selling News
Strong Financial Position
Traded on NYSE since 1996 – symbol
NUS Capacity to fund growth
projects and increase
dividends.
Two research centers with Nu Skin operates in nearly 50
approximately 75 in-house scientists. markets across Asia, the
Distinctive Americas, Europe, Africa and
More than 80 scientific posters, 30 the Pacific.
patents and 25 published articles.
Source: (Investor Fact Sheet, Q4 2018: NU SKIN Fact Sheet, 2019)
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4.4 KPIs Benchmarking
Figure 3: Financial Highlight NU SKIN Enterprise, 2018

Source: (NU SKIN fact sheet, 2019)
Figure 4: Business objective NU SKIN Enterprise, 2019

Source: (NU SKIN fact sheet, 2019)
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5.0 Proposed strategy
5.1 SWOT
SWOT analysis is a strategic planning tool that can be used by NU SKIN

Enterprises to do a situational analysis of the organization . It is an
important technique to analyze the present Strengths (S), Weakness (W),
Opportunities (O) & Threats (T) Nu Skin Enterprises is facing in its
current business environment.
Source :http://fernfortuniversity.com/term-papers/swot/1433/907-nu-skin-
enterprises.php
STRENGTH WEAKNESS
 Good Returns on Capital  The profitability ratio and Net

Expenditure – Nu Skin Enterprises is Contribution % of Nu Skin Enterprises
relatively successful at execution of are below the industry average.
new projects and generated good 
returns on capital expenditure by  High attrition rate in work force –
building new revenue streams. compare to other organizations in the
 industry Nu Skin Enterprises has a
 Strong distribution network – Over higher attrition rate and have to spend
the years Nu Skin Enterprises has built a lot more compare to its competitors
a reliable distribution network that can on training and development of its
reach majority of its potential market. employees.
 
 Highly skilled workforce through  Organization structure is only
successful training and learning compatible with present business
programs. Nu Skin Enterprises is model thus limiting expansion in
investing huge resources in training adjacent product segments.
and development of its employees 
resulting in a workforce that is not  Not very good at product demand
only highly skilled but also motivated forecasting leading to higher rate of
to achieve more. missed opportunities compare to its
 competitors. One of the reason why
 Reliable suppliers – It has a strong the days inventory is high compare to
base of reliable supplier of raw its competitors is that Nu Skin
material thus enabling the company to Enterprises is not very good at demand
overcome any supply chain forecasting thus end up keeping higher
bottlenecks. inventory both in-house and in
 channel.
 Strong Brand Portfolio – Over the 
years Nu Skin Enterprises has invested Financial planning is not done
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in building a strong brand portfolio. properly and efficiently. The current

The SWOT analysis of Nu Skin asset ratio and liquid asset ratios
Enterprises just underlines this fact. suggest that the company can use the
This brand portfolio can be extremely cash more efficiently than what it is
useful if the organization wants to doing at present.
expand into new product categories. 
  Limited success outside core
 Successful track record of integrating business – Even though Nu Skin
complimentary firms through mergers Enterprises is one of the leading
& acquisition. It has successfully organizations in its industry it has
integrated number of technology faced challenges in moving to other
companies in the past few years to product segments with its present
streamline its operations and to build a culture.
reliable supply chain. 
  The marketing of the products left a lot
 Automation of activities brought to be desired. Even though the product
consistency of quality to Nu Skin is a success in terms of sale but its
Enterprises products and has enabled positioning and unique selling
the company to scale up and scale proposition is not clearly defined
down based on the demand conditions which can lead to the attacks in this
in the market. segment from the competitors.

 Highly successful at Go To Market
strategies for its products.
OPPORTUNITIES THREATS
 Government green drive also opens  Shortage of skilled workforce in

an opportunity for procurement of Nu certain global market represents a
Skin Enterprises products by the state threat to steady growth of profits for
as well as federal government Nu Skin Enterprises in those markets.
contractors. 
  New environment regulations under
 New customers from online channel Paris agreement (2016) could be a
– Over the past few years the company threat to certain existing product
has invested vast sum of money into categories .
the online platform. This investment 
has opened new sales channel for Nu  Growing strengths of local distributors
Skin Enterprises. In the next few years also presents a threat in some markets
the company can leverage this as the competition is paying higher
opportunity by knowing its customer margins to the local distributors.
better and serving their needs using big
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data analytics.  New technologies developed by the

 competitor or market disruptor could
 The market development will lead to be a serious threat to the industry in
dilution of competitor‘s advantage and medium to long term future.
enable Nu Skin Enterprises to increase
its competitiveness compare to the  Imitation of the counterfeit and low
other competitors. quality product is also a threat to Nu
 Skin Enterprises‘s product especially
 Lower inflation rate – The low in the emerging markets and low
inflation rate bring more stability in income markets.
the market, enable credit at lower 
interest rate to the customers of Nu  Increasing trend toward
Skin Enterprises. isolationism in the American economy
 can lead to similar reaction from other
 Organization‘s core competencies can government thus negatively impacting
be a success in similar other products the international sales.
field. A comparative example could be
- GE healthcare research helped it in  The demand of the highly profitable
developing better Oil drilling products is seasonal in nature and any
machines. unlikely event during the peak season
 may impact the profitability of the
 New environmental policies – The company in short to medium term.
new opportunities will create a level 
playing field for all the players in the  Intense competition – Stable
industry. It represent a great profitability has increased the number
opportunity for Nu Skin Enterprises to of players in the industry over last two
drive home its advantage in new years which has put downward
technology and gain market share in pressure on not only profitability but
the new product category. also on overall sales.


 New trends in the consumer behavior
can open up new market for the Nu
Skin Enterprises . It provides a great
opportunity for the organization to
build new revenue streams and
diversify into new product categories
too.
Table 7: SWOT analysis for NU SKIN Enterprise
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5.2 TOWS
This analysis helps to link internal factors to external factors with the aim
of identifying relevant strategic options for organization (Wheelen and
Hunger, 2017). The strengths, weaknesses, opportunities and threats in
Table 8 we summarized from Table 7 above.
Strength Weaknesses
Opportunities SO Strategic options WO strategic options
maxi-maxi mini-maxi
1. Good Returns on
Capital Expenditure.
2. Strong distribution Not applicable
network.
3. Highly skilled
workforce.
4. Reliable suppliers.
5. Successful track
record and Strong
Brand Portfolio.
Threats ST Strategic options WT strategic options

maxi-maxi mini-maxi
Not applicable Not applicable
Table 8: TOWS analysis for NU SKIN Enterprise
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5.3 Ansoff’s matrix
Based on the analysis in TOWS matrix above, it can be deducted that

both business ans corporate level strategies are required for NU SKIN to
move its business forward. As such, ANsoff matrix will be used to show
key potential strategy directions. These are preferred options because they
will enable NU SKIN to regain its market share by using its strengths to
overcome weaknesses and using its opportunities to limits threats.
Current markets New markets

Current products Market penetration Market development
New products Product development Diversification
Table 9: Ansoff matrix for NU SKIN Enterprise
Market Penetration
NU SKIN should use its existing products to increase the market share
of its current market. This can be achieved by organizing advertising
campaigns and the use of promotional voucher for its online store
(Wheelen and Hunger, 2017). The campaign should aim at increasing
brand awareness, aggrandizing sales and increasing the awareness
of NU SKIN's online store, this should be done with the use of digital
communications tools like social media, email, websites, biogs and
search engines, in order to meet the target audience and ensure market
and advertising efforts are maximized, it is significant for NU SKIN
to select its campaign channels carefully based on where its target
customers spend most of their time (Franz, et al, 2009). For the
promotional voucher, NU SKIN should make use of its economies of
scale to produce more cosmetic and consumer products at cheaper rates
and with the help of its numerous expert, it should increase the
quality of its products, then offer 10% to 15% discount to every
online purchase above $100, this vouchers should be available to the
target customers during the advertising campaign.
Additionally, NU SKIN should develop a mobile app for its online

store which will be easier for customers to download, register and use
at their convenience, this app should include an artificial recognition
that will be identified as "NU SKIN Virtual Artist" which will enable
customers to scan their faces, try out different lipsticks, eye shadows
and lashes in store and purchase anyone of their choice (Carman,
2017).
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This feature is ideal for busy customers that might not be able to walk-in
and it also create an avenue for NU SKIN's customers to learn more about
its products.
Market Development
This strategy will permit NU SKIN to sell its existing products to
new markets, it could be new geographical markets, new distribution
channels, new product packaging or new market segments (Wheelen
and Hunger, 2017). Hence, for NU SKIN to increase its market share
in Asia where it has been discovered that Japan beauty products are
preferred over U.S. products, NU SKIN has to re-package its products to
suit local users in a way that it will appeal to their culture and beliefs
(U.S. Commercial Service 2016). NU SKIN should use the pictures
of Asian celebrities on the packaging instead of that of an American;
this will assure them that the product is suitable for Asian skin tone.
Similarly, with NU SKIN's strong brand recognition, NU SKIN

should secure dominance of grown markets by introducing its walk-in
outlets because according to Kowitt (2012) to ensure high revenue in
cosmetic and consumer business, firms should be willing to create an
attractive walk-in store with great ambience and scenery which
give immediate gratification and convenience to customers. Thus, NU
SKIN should start its walk-in store in the U.S by renting space in high-
profile shopping malls or partner with departmental and drug stores
like Walmart and Macy's to display its numerous products so that
its products can be readily available for customers that prefer walk-in.
Inculcating this will boost NU SKIN's revenue as research by Terry,
(2012) states that 70% of users tend to purchase new products when they
try it on to see how it enhances their life as opposed to when they view it
on magazines or online.
23
6.0 Strategy evaluation
6.1 Suitability of proposed strategies
The two proposed strategies exploit opportunities in the environment;

strategy of market penetration will enable N U S K I N to exploit
opportunities in its online store by using advertising campaign
to increase the awareness of its online store and giving
promotional vouchers to new and existing users, doing this will help
N U S K I N to gain more market share thereby limiting the threat
of its competitors. Likewise, the strategy of market development
will allow N U S K I N to exploit the opportunities in new market
segments by producing makeup and consumer product suitable for
new makeup and consumer users who are between age 15 to
24 years and producing skincare products targeting male customers.
Market development will also enable N U S K I N create a new

distribution channels by building its walk-in stores and enable it to
re-package its products in Asia markets, to make it more appealing
to Asian customers. Implementing these will increase N U
S K I N 's revenue, increase its market share in Asia and subdue the
threats of competitive rivalry and that of AMWAY products in Asia
market.
In terms of capitalizing on strengths and avoiding weaknesses, the

two strategies will enable N U S K I N to use its strong brand
recognition to increase sales on it online store, use its Strategic
Sourcing Initiative to source for more reliable suppliers of raw
materials, use economies of scale to produce more cosmetic and
consumer products at cheaper rates and with the help of its
numerous expert, it will increase the quality of its products,
thereby, remedying the issues with continuous decline of revenue
and profit.
Thus, the proposed strategies of market penetration and market
development are suitable for NU SKIN to implement.
24
6.2 Acceptability of proposed strategies
This is to check whether the expected performance outcomes of the

proposed strategies meet the expectations of stakeholders, this will be
achieved using the 3R‘s as follows (Johnson, 2013)
RISK: The proposed market penetration and market development

strategies are prone to lesser risk as they deal with existing products
and modification of existing products respectively.
RETURN: Both market penetration and market development strategies

are financially effective, as they are prone to lesser risk, they will as
well give return to shareholders within a short period of time. Market
penetration which will give N U S K I N the opportunities to source
for more customers and revive existing ones combined with market
development which will help NU SKIN to enlarge its market
segment, will inevitably increase shareholders return.
REACTION OF STAKE HOLDERS: The likely reactions of NU

SKIN's stakeholders to the proposed strategies are analyzed on of
below, using stakeholder mapping which identifies stakeholder
interest and power.
Based on the analysis Table 10 below, it can be concluded that the

proposed strategies will be acceptable by all shareholders.
25
HIGH Keep satisfy Manage closely

Government Employees
Government has Employees are the greatest asset NU
high power and can SKIN has, as they help provide value
influence the for customer, thus they have high
proposed strategies power and high interest in NU SKIN‘s
but since NU success. They will react to the
SKIN‘s plant abides proposed strategies by making sure the
by FDA policies, new and existing products are quality
government will and ensure all cosmetic product meets
have ni negative the standard of FDA (Westervelt, 2014:
reactions towards FDA 2016)
the proposed
strategies Shareholders and Financial
(Westervelt, 2014: Institutes
FDA 2016) They both have high power and high
interest in NU SKIN and they can
influence the proposes strategies, but
when they consider the possible return,
they will support the implementation of
the proposed strategies.
Competitors
NU SKIN‘s competitor such AMWAY
have high power and high interest
when they discover the success of the
proposed strategies, they might want to
implement similar strategies.
Monitor Keep informed

(Minimum Effort)
Communities Suppliers
These stakeholders NU SKIN‘s new and existing suppliers
have low power and have high interest but low power, so
low interest in NU they have to be kept informed about the
SKIN‘s success; proposed strategies so as to give their
hence they would support by supplying quality raw
not have any materials.
negative reaction.
LOW HIGH
Table 10: 3R‘s analysis for NU SKIN Enterprise
26
6.3 Feasibility of proposed strategies
The resources and competences required to implement market

penetration strategy is readily available to NU SKIN, as 36 years old
company, NU SKIN has carried out several advertising campaigns and
its managers surely know how to implement the campaign and
promotional vouchers effectively to achieve expected results (NU SKIN,
2019). Market development on the other hand, will require NU SKIN to
liaise with local producers in Asia market to re-package its product to
the taste of Asia markets and it will also require NU SKIN to ditch
out a huge amount to build its walk-in stores. These resources are not
available but they can be obtained. Contrarily, NU SKIN has the
competence its new market segments require. Hence, it can be concluded
that the proposed strategies of market penetration and market
development are quite feasible for NU SKIN to implement.
27
List of references
https://www.bloomberg.com/profile/company/6937765Z:MK (July, 2020)
https://www.nuskin.com/content/brand-identity/nu-skin-in-a-nutshell/brand-
personality.html (July, 2020)
https://www.nst.com.my/business/2019/05/492306/malaysia-remains-worlds-
22nd-most-competitive-economy (July, 2020)
https://www.essay48.com/value-chain-analysis/13514-Nu-Skin-Enterprises-
Value-Chain-Analysis (July, 2020)
http://fernfortuniversity.com/term-papers/swot/1433/907-nu-skin-
enterprises.php (July, 2020)
https://www.comparably.com/competitors/amway-corporation-vs-nu-skin-
enterprises (July, 2020)
https://www.essay48.com/marketing-strategy/2984-Nu-Skin-Enterprises-Inc-
Marketing-Strategy (July, 2020)
NU SKIN annual report, 2018
NU SKIN annual report, 2019
NU SKIN Fact Sheet, 2018-2019
AMWAY annual report, 2018
M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
O. E. Williamson, Markets and Hierarchies (New York: Free Press, 1975)
L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business

School, 1970)
R. E. White, Generic Business Strategies, Organizational Context and

Performance: An Empirical Investigation, Strategic Management Journal7
(1986)
28
Appendices
Figure 1: Total Global Revenue by Product Category

Figure 2: Southeast Asia Revenue by Product Category
Figure 3: Financial Highlight NU SKIN Enterprise, 2018
Figure 4: Business objective NU SKIN Enterprise, 2019
Table 1: SMART Analysis for NU SKIN Enterprise

Table 2: PESTLE analysis for NU SKIN
Table 3: PORTER‘s 5 Force for NU SKIN Enterprise
Table 4: Value Chain, NU SKIN Enterprise
Table 5: VRIO, NU SKIN Enterprise
Table 6: Resource Audit, NU SKIN Enterprise
Table 7: SWOT analysis for NU SKIN Enterprise
Table 8: TOWS analysis for NU SKIN Enterprise
Table 9: Ansoff matrix for NU SKIN Enterprise
Table 10: 3R‘s analysis for NU SKIN Enterprise
29

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Strategic Management - NU SKIN Enterprise

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STRATEGIC

Strategic management is the ongoing planning, monitoring, analysis and

1.1 Objectives of study

This report is a strategic plan study for NU SKIN Enterprise, United

1.2 Background info – NU SKIN Enterprise

NU SKIN Enterprises is an American multilevel marketing company that

In addition, Nu Skin (Malaysia) Sdn Bhd was founded in 1996. The

1.3 NU SKIN’s current strategic challenge

Disclaimer: All information gathered here is based on NU SKIN

Figure 1: Total Global Revenue by Product Category

Figure 2: Southeast Asia Revenue by Product Category

As shown in Figure 1 and Figure 2, NU SKIN witnessed significant lower

1.4 The mission, vision and objectives statements of NU SKIN.

NU SKIN mission is to be a force for good throughout the world by

NU SKIN vision is to become the world‘s leading business opportunity

1.6 SMART analysis of the goals and objectives

NU SKIN mission is to be a force for good throughout the world by

NU SKIN vision is to become the world‘s leading business opportunity

• The mission and vision appears

• The mission and vision is measurable

• To be a force for good, NU SKIN set

• Given the current position of NU SKIN

• The specific period or timebound to

Table 1: SMART Analysis for NU SKIN Enterprise

2.0 Macro environmental analysis – PESTLE

Political The nature of the political, regulatory and legal systems in

In January 2019, the Mainland China government announced a

Meanwhile, win for Malaysian opposition part in the 2018

However, the political instability in Malaysia is a threat to

Economic About 87% of NU SKIN revenue came from outside of the

General Malaysia Economic Growth:

Malaysia received RM21.7 billion in Foreign Direct

Source : IMF World Economic Outlook (WEO), October 2019

However, with the Covid-19 Pandemic, global economic

Malaysia is ethnically diverse and has a rich cultural

government limits freedom of speech by directly and indirectly

Today‘s social media and social media influencer bring more

It is worth noting that Malaysia aims to become the preferred

NU SKIN and Pharmanex products and related promotional

Environment Malaysia is a beautiful holiday destination. Approximately

Table 2: PESTLE analysis for NU SKIN Enterprise

3.0 Micro environmental analysis – Porter’s 5 forces

The cosmetic has a high bargaining power of

It is therefore essential for NU SKIN to be

Table 3: PORTER‘s 5 Force for NU SKIN Enterprise

4.0 Capability analysis

4.1 Value chain

Inbound logistics It is important to develop strong relationships with

customer satisfaction and increases growth opportunities

4.2 VRIO. Table 5: VRIO, NU SKIN Enterprise

4.3 Resource audit. Table 6: Resource Audit, NU SKIN Enterprise

Source: (Investor Fact Sheet, Q4 2018: NU SKIN Fact Sheet, 2019)

4.4 KPIs Benchmarking

Figure 3: Financial Highlight NU SKIN Enterprise, 2018

Figure 4: Business objective NU SKIN Enterprise, 2019

5.0 Proposed strategy

SWOT analysis is a strategic planning tool that can be used by NU SKIN

 Good Returns on Capital  The profitability ratio and Net

in building a strong brand portfolio. properly and efficiently. The current

 Government green drive also opens  Shortage of skilled workforce in

data analytics.  New technologies developed by the

Table 7: SWOT analysis for NU SKIN Enterprise

Threats ST Strategic options WT strategic options

Not applicable Not applicable