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- 1. Key Facts : - US based company Founded by William J . Railey. Mission Statement – To become worlds leading manufacturer of high performance athletic and active life style products operating in a socially responsible manner. Market share is 11.6% in US.
- 2. Nike is the market leader in US, Adidas distant No.2 and New Balance closely follows it at No.3. Very competitive market, with a range of $15 - $200. Market growth is pegged at 5% annually Market can be segmented by age. All companies except NB
- 3. Source – www.newbalance.com
- 4. Place Product Promotion Placement • NB has its • Uses cutting • Has entered • corporate, c own outlets edge into several atwalk, spor and also technology licensee t, student, f supplies to and invests agreements un large heavily in and tie-ups runner, busy retailers research with moms, vega companies. ns. • It has • First shoes introduced company to • spends 7% • Shoes the get shock- on supplied are revolutionar absorbers in advertising of superior y EDI the shoes. quality and • Associates system to mid price with events enhance range ($60- such as distribution. $179) marathons
- 5. Strength Weakness R&D Quality Presence in Overseas Strong Market presence in Market. US Design Distribution system In store Promotion Relationship with retailers Alliance and partnership Brand Positioning. SWOT Opportunity Threat Entry into New Intensive Markets. Competition. Mid Age Market And overseas Segment. competition.
- 6. Designing and manufacturing process to maintain quality & standard of products Designing start with customers preference exceeding the customers need. Distribution & Partnership create good
- 7. Direct to retailer and reach through out the location. Making good partnership by increasing their profit margin-EDI Reached the distributor to major retailer-Foot locker, champs , sport authority Faster replacement
- 8. Taking benefits of distribution and existence brand Get market share in different segment which has created more sales- Franco apparel, eyewear's design , moretz sports Product portfolio management by introducing product life
- 9. Changing preference and demographic profile of customer. Availability of quality products and changed of external environment. People who are targeting psychologically they are young but chronologically old. Trial-Tested- functional
- 10. Product strategy is like a guideline which is useful to know where you are and where you want to be.
- 11. The product level of New Balance is augmented The PLC management system The product mix: 1. product line 2. product width 3.
- 12. The following differentiation of New Balance from other market leaders such as Nike and Adidas are: Superior Quality Perfect Fit( six to eight different widths) Mid price Range Technologically
- 13. Branding is the major issue in product strategy. Developing brand requires a great deal of long term investment. Global branding is behind the success of a company , its all about how to manage a brand successfully and adding
- 14. New balance is the functional brand which meets the need of everyday athletic and believe on total customer satisfaction. Brand positioning: New balance major target market is senior athletes and selective customers who believe in function over fashion. Brand Extension Line Extension Co Brands
- 15. Innovation and Adapted Diversification Marketing Mix Advertising Success in International Market
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Fern Fort University
New balance athletic shoes case study analysis & solution, harvard business case studies solutions - assignment help.
New Balance Athletic Shoes is a Harvard Business (HBR) Case Study on Technology & Operations , Fern Fort University provides HBR case study assignment help for just $11. Our case solution is based on Case Study Method expertise & our global insights.
Technology & Operations Case Study | Authors :: Kim B. Clark
Case study description.
Faced with growth exceeding 100% per year, James Davis, president of New Balance, must decide how to meet the need for additional capacity. Several factors contribute to a climate of extreme uncertainty. Several options are considered, ranging from a second shift to acquiring a plant in Ireland. Sufficient information is provided to allow an analysis of forecasted demand as well as the strategic financial and organizational implications of alternative courses of action.
Forecasting, Growth strategy, IT, Manufacturing, Risk management
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[10 Steps] Case Study Analysis & Solution
Step 1 - reading up harvard business review fundamentals on the technology & operations.
Even before you start reading a business case study just make sure that you have brushed up the Harvard Business Review (HBR) fundamentals on the Technology & Operations. Brushing up HBR fundamentals will provide a strong base for investigative reading. Often readers scan through the business case study without having a clear map in mind. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. Reading up the HBR fundamentals helps in sketching out business case study analysis and solution roadmap even before you start reading the case study. It also provides starting ideas as fundamentals often provide insight into some of the aspects that may not be covered in the business case study itself.
Step 2 - Reading the New Balance Athletic Shoes HBR Case Study
To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. Begin slowly - underline the details and sketch out the business case study description map. In some cases you will able to find the central problem in the beginning itself while in others it may be in the end in form of questions. Business case study paragraph by paragraph mapping will help you in organizing the information correctly and provide a clear guide to go back to the case study if you need further information. My case study strategy involves -
- Marking out the protagonist and key players in the case study from the very start.
- Drawing a motivation chart of the key players and their priorities from the case study description.
- Refine the central problem the protagonist is facing in the case and how it relates to the HBR fundamentals on the topic.
- Evaluate each detail in the case study in light of the HBR case study analysis core ideas.
Step 3 - New Balance Athletic Shoes Case Study Analysis
Once you are comfortable with the details and objective of the business case study proceed forward to put some details into the analysis template. You can do business case study analysis by following Fern Fort University step by step instructions -
- Company history is provided in the first half of the case. You can use this history to draw a growth path and illustrate vision, mission and strategic objectives of the organization. Often history is provided in the case not only to provide a background to the problem but also provide the scope of the solution that you can write for the case study.
- HBR case studies provide anecdotal instances from managers and employees in the organization to give a feel of real situation on the ground. Use these instances and opinions to mark out the organization's culture, its people priorities & inhibitions.
- Make a time line of the events and issues in the case study. Time line can provide the clue for the next step in organization's journey. Time line also provides an insight into the progressive challenges the company is facing in the case study.
Step 4 - SWOT Analysis of New Balance Athletic Shoes
Once you finished the case analysis, time line of the events and other critical details. Focus on the following -
- Zero down on the central problem and two to five related problems in the case study.
- Do the SWOT analysis of the New Balance Athletic Shoes . SWOT analysis is a strategic tool to map out the strengths, weakness, opportunities and threats that a firm is facing.
- SWOT analysis and SWOT Matrix will help you to clearly mark out - Strengths Weakness Opportunities & Threats that the organization or manager is facing in the New Balance Athletic Shoes
- SWOT analysis will also provide a priority list of problem to be solved.
- You can also do a weighted SWOT analysis of New Balance Athletic Shoes HBR case study.
Step 5 - Porter 5 Forces / Strategic Analysis of Industry Analysis New Balance Athletic Shoes
In our live classes we often come across business managers who pinpoint one problem in the case and build a case study analysis and solution around that singular point. Business environments are often complex and require holistic solutions. You should try to understand not only the organization but also the industry which the business operates in. Porter Five Forces is a strategic analysis tool that will help you in understanding the relative powers of the key players in the business case study and what sort of pragmatic and actionable case study solution is viable in the light of given facts.
Step 6 - PESTEL, PEST / STEP Analysis of New Balance Athletic Shoes
Another way of understanding the external environment of the firm in New Balance Athletic Shoes is to do a PESTEL - Political, Economic, Social, Technological, Environmental & Legal analysis of the environment the firm operates in. You should make a list of factors that have significant impact on the organization and factors that drive growth in the industry. You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies.
Step 7 - Organizing & Prioritizing the Analysis into New Balance Athletic Shoes Case Study Solution
Once you have developed multipronged approach and work out various suggestions based on the strategic tools. The next step is organizing the solution based on the requirement of the case. You can use the following strategy to organize the findings and suggestions.
- Build a corporate level strategy - organizing your findings and recommendations in a way to answer the larger strategic objective of the firm. It include using the analysis to answer the company's vision, mission and key objectives , and how your suggestions will take the company to next level in achieving those goals.
- Business Unit Level Solution - The case study may put you in a position of a marketing manager of a small brand. So instead of providing recommendations for overall company you need to specify the marketing objectives of that particular brand. You have to recommend business unit level recommendations. The scope of the recommendations will be limited to the particular unit but you have to take care of the fact that your recommendations are don't directly contradict the company's overall strategy. For example you can recommend a low cost strategy but the company core competency is design differentiation.
- Case study solutions can also provide recommendation for the business manager or leader described in the business case study.
Step 8 -Implementation Framework
The goal of the business case study is not only to identify problems and recommend solutions but also to provide a framework to implement those case study solutions. Implementation framework differentiates good case study solutions from great case study solutions. If you able to provide a detailed implementation framework then you have successfully achieved the following objectives -
- Detailed understanding of the case,
- Clarity of HBR case study fundamentals,
- Analyzed case details based on those fundamentals and
- Developed an ability to prioritize recommendations based on probability of their successful implementation.
Implementation framework helps in weeding out non actionable recommendations, resulting in awesome New Balance Athletic Shoes case study solution.
Step 9 - Take a Break
Once you finished the case study implementation framework. Take a small break, grab a cup of coffee or whatever you like, go for a walk or just shoot some hoops.
Step 10 - Critically Examine New Balance Athletic Shoes case study solution
After refreshing your mind, read your case study solution critically. When we are writing case study solution we often have details on our screen as well as in our head. This leads to either missing details or poor sentence structures. Once refreshed go through the case solution again - improve sentence structures and grammar, double check the numbers provided in your analysis and question your recommendations. Be very slow with this process as rushing through it leads to missing key details. Once done it is time to hit the attach button.
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Case Study: New Balance Athletic Shoes
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Introduction New Balance was established by William J. Riley in 1906 in the city of Boston. Riley began by making arch supports for customers who needed to spend all the time on their feet. In time the structure of arch supports led to the development of his first running shoe in 1925. As part of a regional running club, Riley took advantage of an opportunity to enhance running shoes of the time and his styles ended up being widely popular.
His brand-new running shoes ended up being so popular that by the 1940’s that production spread from running to numerous other sports.
Then the expansion of the manufacturing substantially increased as he realized a need to running shoes with more choice for wider feet, and the business grew significantly through the 1960’s (Veleva, 2010).
James Davis purchased New Balance in 1972, from Paul Kidd, after looking into a number of business chances and trying the New Balance tennis shoes for himself. Davis currently owns New Balance in addition to his wife, Anne Davis, who holds the position of vice-chairman and executive vice-president (Veleva, 2010).
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By the 1990s, rising labor costs and changes in customer need pushed much of the manufacturing processes overseas. Although the growth into foreign production opened unlimited opportunities, it likewise exposed the industry to intense examination for numerous human rights problems in the supply chain (Veleva, 2010). New Balance, among other business, recognized an increasing requirement to concentrate on sustainable company strategies that incorporated internal Business Social Duty programs. Strengths and Weak points
Overall Governance New Balance has focused on a sustainable service model and responsible business management for several years before CSR ended up being a hot subject.
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Before CSR was had actually formed roots at New Balance, they currently had a program they referred to as “Accountable Leadership Steering Committee (RLSC). The RLSC was charged with driving modification in 4 areas of social duty: community investing, environmental, compliance, and the product life cycle (Veleva, 2010).
Most of the employees and senior staff agreed the company was committed to doing the right things for the right reasons, but most of the senior management still believed RL was more of a cost than a, “strategic business driver with measurable social and business benefits” (Velvea, 2012). Even once the company began to make changes at New Balance, they did not do a very good job at communicating their efforts to the employees or the community.
The root of the CSR issues at New Balance could be attributed to the lack of clear leadership and direction from the top. When the employees are constantly feeling pulled in various directions and trying to balance, profitability, performance, manager expectations, and social responsibility – strong leadership and clear direction need to be made abundantly clear. This was not happening effectively at the highest levels at New Balance (Veleva, 2010). Products and Services
New Balance continues to impress critics throughout the running world, with magazines like Runner’s World rankings showing rave reviews of the newly developed 320 (Chang, 2012). New Balance has led in areas of innovation by working with athletes to improve their technology and design. They were able to reduce the sole thickness of the 320, while maintaining the comfort level to the runner, lowering weight and fatigue (Chang, 2012).
Recent design successes, along with the trademark success of the larger range of width of their products, are just a few examples of how New Balance continues to be a forerunner in athletic shoe design.
By deciding to establish an “Endorsed by No One” campaign, New Balance has decided to embrace the concept of not having professional athletes or celebrities endorse their products (Velvea, 2010). Although some would attribute some of New Balance’s success to this campaign, Nike and Reebok have seen tremendous success with celebrity athletes such as Michael Jordan, Andre Agassi, and Tiger Woods just to name a few.
One could easily argue that Nike’s success is a direct reflection of their commitment to their celebrity sponsorships, and while New Balance has found a niche by staying clear of these expenses, it could also be a root cause for why they dominate less than eight percent of the market share (Veleva, 2010).
Operations New Balance decided to improve their operations by implementing a “lean production system” in all of their domestic facilities. The lean production system was taken from Toyota’s manufacturing processes to, “deliver goods on demand, minimize inventory, maximize the use of multi-skilled employees, flatten management structure, and focus resources when and where they are needed” (Veleva, 2010).
These improvements helped significantly improve vast processes across New Balance manufacturing, and in one example reduced the time to make a pair of shoes in the Lawrence facility from eight days down to three hours (Veleva, 2010). New Balance has a significant opportunity to expand its operations in the western region.
While the commitment to northeastern operations may have provided an early advantage, there is certainly an opportunity to capitalize on the explosive growth within the western market (Chang, 2012). It is important to balance growth across various markets, to ensure market share is captured, in order to get ahead of the expanding market culture before brand dominance is established by the competition.
Community Support New Balance continues to stay committed to social responsibility by donating employee volunteer hours and funding to various organizations. The flagship of community support provided by New Balance is through its New Balance Foundation. The New Balance Foundation is committed to building healthier and stronger communities – with considerable focus on helping to prevent childhood obesity (NewBalance.com, 2013). Annual grants from the foundation in 1981 were approximately $30,000 and have grown to over $6.4 million in 2011.
New Balance commits to, “a holistic approach that includes medical, academic and grassroots nonprofit partnerships and work with partners who engage kids and their families through exercise and play as well as nutrition (NewBalance.com, 2013)”.
Another challenge facing New Balance, has been the Non-Governmental Organization (NGO) campaigns taking a direct aim at athletic shoe manufacturing, with initial issues such as codes of conduct and improvements with supplier monitoring (Veleva, 2010). In recent years, the focus has shifted to, “maximum work hours, health and safety in overseas factories, use of temporary workers, transparency, responsible purchasing practices and ‘exit strategies’ when closing factories overseas (Veleva, 2010)”.
New Balance has to contend with these direct transparency issues and incorporate policies to take into account different cultural differences; such as, some Asian workers prefer to work longer hours in order to earn enough to return to their families sooner (Veleva, 2010). Analysis
The review of New Balance operations exposed opportunities and challenges to improve the company’s overall execution of an effective CSR policy. Some of the company’s strengths are: Long term commitment to responsible corporate leadership;
Strong product line to help contribute to funding of research and philanthropy; Sustainable commitment to process improvements through innovative measures; Established programs to continue to monitor and improve CST processes. During the analysis of New Balance there were opportunities uncovered that will need to be addressed in order to accomplish a stronger CSR foundation. Those opportunities are: Improved communication from top level executives with clear direction; A reevaluation of celebrity endorsements of their top products; Continued evaluation of western operations and expansion;
Industry leading examples for cultural and human rights policies. Implementing CSR In order for New Balance to become a world leader in CSR, it will need to focus on and improve the humanitarian treatment of all workers that come in contact, with all levels, of the manufacturing and supply chain. In order for New Balance to truly set an example in sustainable leadership, in a responsible way, it needs to keep human rights at the top of the priority list.
The government places strict guidelines for the treatment of US workers, but it is the unprotected worker that needs to have a voice within an effective CSR policy. Key leadership needs to seek out feedback from any and all supply chain companies, and seek assistance from local government and NGOs, to get feedback from overseas employees. The information should be collected and made readily available and transparent to all invested parties. Supply chain companies that have exemplary processes in place should be rewarded, and companies that are found to be lacking the highest standards should be reprimanded, and should be replaced if immediate changes are not implemented.
The annual RL Report should be reevaluated to allocate adequate resources, to ensure the ethical treatment of employees is held to a higher standard as popular environmental projects. Open evaluation of the results from these evaluations will lead to stronger and truly sustainable operations as improvements are made. Supply chain human rights improvements should have immediate expectations, with limited turn times for corrections within a 30 day timeframe.
More complex issues should be evaluated on a quarterly basis, with senior leadership action plans communicated when more time is deemed necessary. Again, prudence and transparency is key to a successful CSR implementation plan.
In addition, the New Balance Foundation should continue to build value in its efforts to prevent child obesity. As health care in America continues to be plagued with the ill effects of obesity, the focus on healthy athletic alternatives is in perfect alignment with the vision of New Balance. Contribution funds should strive to reach an excess of $7 million by 2014, through awareness campaigns, employee contribution efforts, and community action committees in partnership with New Balance
. Also, New Balance should leverage their political influence to seek government contributions and assistance in their health based community programs, as these programs can certainly provide a service to the greater population. Conclusion
New Balance has set itself apart, as a company that strives to sustain its business operations through responsible contributions to its people and communities in which it operates. But in order to be a truly great company that sets an example for all corporations to strive for, it needs to ensure the efforts made are not a mask for profit.
If the end goal is only to improve the bottom line through community efforts, then the win-win strategy will only maintain the appearance for so long before the true intentions are known. People run companies – companies are not responsible or irresponsible – people are, and the leadership of the company determines the vision and direction. In order to maintain a genuine CSR policy, the leaders need to hold each other accountable to each other and themselves.
References Chang, C. (2012). New Balance Athletic Shoes Case. StudyMode.com. Retrieved 11, 2012, from http://www.studymode.com/essays/New-Balance-Athletic-Shoes-Case-1241026.html ewBalance.com. (2012). New Balance Responsible Leadership Report. Retrieved October 13, 2013, from assets.newbalance.com/nb-us/rl_flipbook/files/inc/171206508.pdf NewBalance.com. (2013). Responsible Leadership. Philanthropy and Community Investment Foundation.
Retrieved October 14, 2013, from http://www.newbalance.com/ Responsible-Leadership_Philanthropy-and-Community-Investment_Foundation/ about_responsible_leadership_philanthropy_foundation,default,pg.html Veleva, V. (2010). New Balance: Developing an Integrated CSR Strategy. In R. Ramadan (Ed.), Organizational Leadership 690: Responsible Corporate Leadership. Course Package: Harvard Business Review Articles: Coursepack. Manchester, NH: Southern New Hampshire University Bookstore. (Reprinted from Richard Ivey School of Business.)
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New Balance Athletic Shoe, Inc. – Case Solution
New Balance is one of the world's five largest manufacturers of athletic shoes. It is considering if it should respond to Adidas' planned acquisition of Reebok. The acquisition would result in the consolidation of the second and third-largest companies in the footwear industry. This case study discusses the unique sides of New Balance's strategy which highlights fit and performance. Now, New Balance is facing the challenge of whether to change strategy in light of the recent development in its competitors' consolidation move.
H. Kent Bowen; Robert S. Huckman; Carin-Isabel Knoop Harvard Business Review ( 606094-PDF-ENG ) April 20, 2006
Case questions answered:
Case study questions answered in the first solution:
- What are the key elements of New Balance Athletic Shoe, Inc.’s current operations strategy? What are the key assumptions and decisions implicit in this strategy? Please be specific.
- What key OMT philosophies, concepts, frameworks, tools, and insights can be used to analyze the situation at New Balance? Please be precise and remember to use the appropriate terminology and related case references.
- What is your assessment of the implications (financial and strategic) of the decision to keep 25% of manufacturing in the US? Assume that the US market for athletic footwear was 400 million in 2005.
- What should New Balance do about Adidas planned acquisition of Reebok and the NB2E initiative? What aspects of operations strategy may need to change and why?
- What would be needed to implement your recommendations? How would you handle the related risks?
Case study questions answered in the second solution:
- Evaluate New Balance’s current operations strategy. What are the key decisions implicit in this strategy?
- Assuming that the total U.S. market for athletic footwear was 400 million pairs in 2005, how costly was New Balance’s decision to maintain 25% of its manufacturing in the United States? What is your assessment of that decision?
- How should Davises react to Adidas’ planned acquisition of Reebok? What aspects of New Balance’s operations strategy should they change?
- Moving forward, how important is the NB2E initiative for New Balance?
Case study questions answered in the third solution:
- How should New Balance respond to the Adidas/Reebok transaction?
- How has New Balance’s operations strategy supported its competitive objectives?
- What is your assessment of the company’s objectives for the NB Executional Excellence initiative?
Not the questions you were looking for? Submit your own questions & get answers .
New Balance Athletic Shoe, Inc. Case Answers
You will receive access to three case study solutions. The second and third solutions are not yet visible in the preview!
1. What are the key elements of New Balance Athletic Shoe, Inc.’s current operations strategy? What are the key assumptions and decisions implicit in this strategy? Please be specific.
We know that an operations strategy is a framework/plan for utilizing the available resources that will drive the business execution. It basically is a way to align your resources according to your strategy. New Balance Athletic Shoe, Inc. was committed to delivering high-quality products that meet the demands of performance-oriented runners, unlike the industry norm, which was more focused on the fashion trend of the shoes.
Thus, they align their operations accordingly by committing to operations and manufactured-based strategy to deliver high-quality products that performance-oriented individuals can rely on and use reliably for a longer time.
Some of the key elements and the inherent assumptions and decisions in their operations strategy are as follows:
1. Unlike their competitors (Nike and Adidas), New Balance Athletic Shoe, Inc. was spending very little on marketing its products and was more focused on the cutting-edge R&D and manufacturing aspects of its products.
Because it believed (assumption) that its customers were performance-oriented and would want high-quality products and less focused on the fashion aspects of the shoes.
This is also why it did not endorse sports personalities. It did not want to spend extra money on advertising the product rather than deliver a high product to its distributors and retailers, who can then have a loyal customer base because of the high-quality product.
2. New Balance Athletic Shoe, Inc. acquires 75% of its finished goods from China, and the remaining 25% are assembled in its USA-based factories. However, the raw material for in-house shoes was also procured from china but was assembled here.
The two variants that were made in-house were much more expensive than those procured from China ( $13 and $0.5). We believe that reason for this is that New Balance wanted some control over a certain portion of its finished goods. Also, the lead times associated with in-house products were much lower than the ones sourced from China.
Furthermore, New Balance Athletic Shoe, Inc. was also constantly updating its foreign vendors with the learnings that it got by producing in-house, thus enhancing its suppliers’ capabilities.
3. Although one must have lower inventories for low costs, at times, a business can lose out on a significant portion of its sales, it does have a certain product in stock when it is in high demand.
Thus catering to this aspect, New Balance Athletic Shoe, Inc. stocked huge inventories to meet the retailers’ uncertain demands. We also believe that this strategy is also enhancing the relationship between retailers and New Balance, as they rely on them for providing products anytime.
New Balance Athletic Shoe, Inc. was also looking to further improve its value proposition by reducing the overall lead times.
4. NB had an entrepreneurial culture and wanted to improve and innovate continuously, thus keeping this in view. They outsourced a network of expert Salesforce, with an entrepreneurial mindset to improve their sales and distribution processes.
2. What key OMT philosophies, concepts, frameworks, tools, and insights can be used to analyze the situation at New Balance? Please be precise and remember to use the appropriate terminology and related case references.
If we analyze the sense of purpose, i.e., their objectives, Vision, and Mission, we note that they want to deliver high-quality products by emphasizing R&D and meeting the needs of performance-oriented runners. Their product strategy was clear that they would not cater to fashion trends of the industry but rather focus on the product’s performance aspect.
Although we do notice that in the shoe market, customers value “Time to market” very high because they want up-to-date trendy products, this is unlike Sports Obermeyer, where we saw that it was more focused on meeting the fashion trends of the market on time by managing the production of its products in several stages to get more information about the demand.
New Balance Athletic Shoe, Inc. has differentiated itself from competitors (Nike and Adidas) by focusing on the shoe business’s manufacturing and operations aspect and not on the marketing side.
Because they believe that they cannot overtake these marketing giants by following a marketing-based strategy as these big players possess more financial resources than New Balance.
Thus they have focused on their core competencies to achieve differentiation through manufacturing and operations-based strategy. Thus, through this focused strategy, New Balance Athletic Shoe, Inc. can achieve process efficiencies and learn by limiting its scope and thus leading to specialization.
From Toyota Production Systems’ philosophy, we have learned that “People (workforce) are the most important assets.” It is important to inculcate a problem-solving mindset in your employees to not rely on individual heroics when a problem arises. Rather, every employee should be prepared to deal with contingencies and resolve the problem’s root cause.
New Balance Athletic Shoe, Inc. has instilled an entrepreneurial culture and empowered its employees, ultimately resulting in quick decision-making. They have also developed a “Teamwork” culture because they have cross-functional teams. Thus, people with different skills must be able to solve problems together and add to every other individual’s overall learning on the team.
They also believe in the “continuous improvement” mantra, which is kaizen, as they want to take risks and build upon what they have already done and performed.
On analyzing their “Product design and development ” strategy, we noticed that they worked along two dimensions. One was further to enhance the quality aspects of the existing models. The second effort was made towards incorporating new technologies and features into the upcoming products.
Thus, New Balance Athletic Shoe, Inc. was trying to
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New Balance Athletic Shoes Case Study
Problems In reviewing the case of New Balance Athletic Shoe, Inc. it is clear that there are a few major problems that the company is facing. First of all, New Balance falls behind its other major competitors, Nike, Adidas and Reebok, in the area of marketing. Unlike its competitors, New Balance does not undertake celebrity endorsements. This puts them at a disadvantage when it comes to brand building. This also causes the company to lose out somewhat on gaining awareness on a global scale as it lacks endorsements in major sporting events. Most global brand names generate strong brand recognition through celebrity endorsements in sporting events that would give them the needed momentum to carry their brand name further into the global market. A second problem that New Balance faces is its limited product line. New Balance prides itself on providing quality athletic shoes for the serious athlete. However, the market has been shifting to not only include serious athletes, but it now also caters to the more fashion-oriented crowd. This crowd tends to be from the younger generation, the part of the population that New Balance has so far not been focusing on. New Balance has geared itself toward the older crowd, which has severely limited the company as far as its ability to expand into new product areas and remain competitive in the changing market. Another problem that New Balance has been facing is manufacturing costs. With its competitors outsourcing most of their manufacturing to other countries such as China, Nike, Adidas and Reebok have been able to cut their manufacturing costs significantly. New Balance on the other hand only outsources 75% of its U.S. volume while retaining the remaining 25% for final assembly in one of its five factories. Strategies In dealing with New Balance’s weakness in the area of marketing it would be beneficial for the company to find a celebrity to endorse their product line. New Balance has always been against celebrity endorsements which emphasize fashion trends and sway potential customers more by popular personalities than by performance and function. This has severely limited the company’s ability to reach the same kind of global awareness as its competitors. New Balance should find a serious, yet well known athlete who holds to the same kind of ideals as the company, to endorse their brand. This will create the type of brand recognition that they need in order to stay competitive.
In this essay, the author
- Explains that new balance athletic shoe, inc. is facing a few major problems in marketing and brand building.
- Explains that new balance's limited product line has limited its ability to expand into new product areas and remain competitive.
- Compares new balance's manufacturing costs with competitors' outsourcing to china, where nike, adidas, and reebok can cut their costs significantly. the company only outsources 75% of its u.s. volume while retaining 25% for final assembly.
- Recommends that new balance find a serious, yet well-known athlete who holds to the same kind of ideals as the company, to endorse their brand.
- Argues that new balance should expand into the area of fashion-oriented shoes to address its lack of product line diversity.
- Opines that new balance should outsource more of its manufacturing to china to remain competitive and achieve a more efficient cost structure.
- Explains that new balance can track its progress or lack of progress with its new strategies by monitoring sales. positive irr means the line was successful as long as it stayed above the hurdle rate or the lines cost of capital.
- Opines that new balance should also look at their operating costs. if outsourcing more of their manufacturing is truly working, this would affect their profit margin.
- Analyzes how nike's success in the footwear, apparel, and accessory markets is linked with marketing branding concept.
- Explains how the swoosh symbol helped nike establish as market leader in the sports equipment market.
- Explains how nike appealed to a wide range of customers with its latest marketing campaigns. brand extension is the use of established brands in new service and product categories.
- Explains that brand extension can damage the core brand reputation and even reduce brand equity that can be catastrophic for the future of the business.
- States that brand equity is a set of associations and behaviours on the part of brand consumers, channel members and parent corporation.
- Explains that a positive customer-based equity is likely to result in high customer royalty and low price sensitivity.
- Explains that nike's achievements in product development can be identified as constant battle for customer loyalty and positive customer equity creation. new product range stimulates product promotion activities that communicate corporate responsibility massages and let customers know their stance on environmental issues.
- Explains how nike developed a unique position in the marketplace through brand names, image, design, guarantees, packaging, and delivery.
- Explains that nike's main business activity is the design, development, and worldwide marketing of high quality athletic footwear, apparel, accessory products and equipment.
- Explains that nike is one of the first larger brands to enter a new market for sports bracelets.
- Opines that nike should adopt an aggressive strategy against its main competitors to increase market share.
- Explains that nike's brand motto is "just do it" which is meant to target ordinary people, showing that anyone can be an athlete and encourage health. fundamental decisions like positioning, targeting, objectives and budgeting are key elements to enhancing brand equity.
- Explains that nike's 'swoosh' is one of the most recognizable brands in the world. it is a motivational message to consumers that if they use nike products they too, may gain the ability to fly.
- Explains that nike is one of the most recognizable sportswear brands in the world. the ‘swoosh’ logo helps the brand with this, as its simplicity makes it easy to recall.
- Explains that nike has grown from a small fledgling shoe retailer into 'world-wide corporate giant'. nike's key strategic challenges include increased competition from adidas with their technological shoe, the adidas one.
- Recommends nike develop a shoe that will compete with the new, technologically advanced adidas one running shoe.
- Recommends nike produce a shoe that exceeds the technological capabilities of the adidas one shoe, and offers an affordable approach to high tech footwear.
- Explains the steps nike must take in order to create the new running shoe.
- Recommends nike make an aggressive move into the extreme sports market. espn holds summer and winter x-games each year to cater to the youth culture.
- Recommends that nike move to gain a portion of the market for extreme sports by budgeting expenses related to sponsorship, advertisement, endorsements, and products for the new market.
- Explains how nike can ensure a smooth transition for both management and employees by using the following steps.
- Explains that training and educational opportunities help employees learn the new behaviors needed to implement the vision. the fourth step is institutionalizing or refreezing new approaches.
- Recommends nike use the five steps for planned change to help implement nike's recommendations of creating a new technological running shoe and entering the extreme sports market.
- Explains that nike has been flourishing in building awareness. the 'swooshification of the world' image has appeared on shoes, hats, billboards and association football balls.
- Analyzes how nike has returned to the "mind" and "heart" of its customers by creating joga.com, a societal set of connections website for football fans.
- Explains that branding is a big role in any company to succeed in the industry and be competitive with the others.
- Explains that bruce, m. k. h. m, and a. j. hill, "fashion brand preferences among young consumers."
- Analyzes pope, n., "consumption values, sponsorship awareness, brand and product use." journal of product & brand management.
- Explains underwood, r., et al. building service brands via social identity: lessons from the sports marketplace.
- Describes valkenburg, p. m., and buijzen's findings.
- Explains that nike, the popular manufacturer of footwear and sport wear, has become a famous trademark as mcdonald's, coca-cola and pepsi.
- Explains that nike's name within the athletic footwear trade grew by the distribution of affirmative reviews by everyone shoppers and athletes.
- Analyzes how the government plays a major role in the sweatshops crisis.
- Explains how nike chooses countries like china and vietnam as their manufacturing locations because they don't want to spend extra money to give to their employees and they want the highest profits.
- Opines that nike should offer health insurances to its employees, pay an average of 12 dollars per hour to their workers, and provide parking, lunch, onsite clinic and public transport costs for their employees.
- Opines that if nike company was able to provide these alternatives, they would attract people from everywhere to work for them and expand their manufacturing plants.
- Explains that nike's goal is to gain more profit to defeat their competitors like adidas and puma. they have to spend an extra amount in upgrading their manufacturing environment in their plants. the company will increase the prices of their products to get the balance that their plan required regarding the income and outcome cash flows.
- Opines that as a decision maker, they will be amused with the changes that nike established within their environment, and this will encourage them to work with companies that provide the ultimate satisfaction for their stakeholders.
- Opines that most of the alternatives are ethical since it goes under human rights, the only problem is that the government in countries like china and vietnam would allow people to establish their own independent organization.
- Concludes that nike sweatshops are doing unethical issues against human rights and society such as not paying their workers what is known as the 'living wage' and using children as labor.
- Opines that nike must look at the employment practices in a way that they make sure that the company is following the policies of health insurance, safety, and decent payment to the employees.
- Opines that nike must be able to give people the required skills to satisfy their ambitions.
- Opines that nike management must take action against human rights charges they receive from the physical and sexual abuse that their supervisor inflect on their workers.
- Opines that employees must make their voice heard through speak up sessions to talk directly to the directors of nike about their concerns.
- Opines that consumers must be aware of the changes that might occur in nike through media and social awareness.
- Opines that to fix sweatshop conditions in factories, we must listen to workers.
- Cites pittman, b. (2012, september 14). nike sweatshop history: should action be taken?.
- Explains the history of nike sweatshops, their public image, and their manufacturing process. they will discuss if the given choices are legal and ethical or not.
- Illustrates how nike's stakeholders include shareholders, business partners, workers, and consumers, while the inactive stakeholders are the customers.
- Opines that companies need to create a system where workers can speak in their own voices and express their opinions regarding the treatment they receive from the company.
- Explains the three business segments of adidas, salomon, and taylor made. the adidas business segment provides various sathletes’ products.
- Explains that adidas failed to realize resources fit within the business segments, and integration problems between adidas and salomon's business units. the management attempt to generate efficiency through diversification was wrong.
- Explains that adidas' restructuring of business unit did not change their objectives to be number one leader in the world of the sporting goods industry.
- Analyzes how the adidas – reebok acquisition in 2005 makes sense, as it enables adidas to achieve second highest position within its industry with 26.3% in the world, just behind the nike with 32.9% market share.
- Explains that the acquisition promoted the shipping of the company’s goods in us. the company improved from 14 days shipping to overnight shipping through the restructuring decision.
- Opines that adidas's three business units of adidas, reebok and salomon seem attractive and profitable, while its taylor-made golf equipment is less attractive.
- Explains that adidas's business line-up exhibits good strategic fit with the reebok. after the restructuring and acquisition adidas has been increasing its market share and lowering its operational cost.
- Explains how effective value chain facilitates company on brand building activities to differentiate adidas, reebok, and tailor-made from other competing brands in the industry. supply chain management also improves profitability by marketing quickly and lowering production cost by outsourcing most of the production requirement from asian countries.
- Explains that adidas' excellent supply chain management allows them to attain number one or number two position on each sporting goods segment where they compete.
- Explains that adidas and salomon business unit's marketing, operation, and sales activities are the only value chain match-ups. adidas couldn't add value from their core competencies on any of their products.
- Explains that athletes are important because they provide role models, contribute to our business world, bring countries or groups of people together, and provide sources of inspriration.
- Explains how the media exposure athletes receive causes them to be perceived more as celebrities and have a greater impact in the marketing and selling of products.
- Explains how athletes demonstrate their significance in our society. many young children look up to their favorite athlete and try to be like them.
- Explains that athletes can bring countries together, and the olympic games are a perfect demonstration of this sense of togetherness. seeing athletes compete in times of chaos, hardships and suffering can strengthen their country's spirit and help bond the people.
- Analyzes how athletes can strengthen groups of people. jesse owens' participation in the olympics in germany showed his great will and strong character. muhammad ali's strong belief for his religion brought muslims closer.
- Explains that athletes inspire many different types of people, countries, and other athletes themselves. deprived children, people living in poverty and sick people are the ones who are inspired the most.
- Explains that an athlete's significance has many elements. they strengthen our society and economy overall. their positive actions provide society with great role models, media coverage gives them the role as prominent business figure.
- Explains that nike continues to push the boundaries of design and performance, promoting freedom and choice, but these same people leave out the obvious facts that show how this company exploits third world.
- Explains the history of nike inc.a. foundersb. co-founding business 2c. business success 3iii.
- Explains nike defended, ruined reputation, target of organizational protests, significant progress, and significant progress.
- Opines that nike's "swoosh" is a dream of being the best because it is associated with best. steve prefontaine, michael jordan, and tiger woods are all icons that helped nike promote excellence.
- Explains that bill bowerman and phil knight met at the university of oregon and formed "blue ribbon sports," which gave birth to nike's forerunner ("our chronology" 1/6).
- Describes how the business, once run by two men in 1957, has become what is now, in 2001, a twenty-three thousand employee based company with yearly revenue of eleven plus billion dollars.
- Explains that nike continues to achieve more by finding places with cheap labor so the profit coming from every item is more than the retailed value price. nike's unfair advantage of exploiting third world countries will only continue to help nike grow and become more powerful.
- Describes sweatshops as subcontracting factories that employ thousands of people in places that possess a reputation worse than hell. nike has hundreds of these factories spread throughout the world and the countries they dwell in help define them.
- Explains that the public was revealed a small list of locations in which these sweatshops inhabit.
- Analyzes how nike exploited poorer third-world countries by exploiting sweatshop labor — the cost of living is higher and the economy is naturally wealthier.
- Explains that nike's business began in 1979 with footwear production in south korea, but the statistics do not spread to the united states because labor is too expensive.
- Opines that nike gave the statistics of very few factory locations so the public cannot know how many facilities and number of employees are out there. however, they never volunteered the information on the working conditions inside each individual factory.
- Narrates how julia esmerelda pleites, a nike factory worker in el salvador, describes her personal working conditions.
- Explains that long hours are just one of the many painstaking conditions contracted factory workers have to deal with.
- Analyzes how jim keady, a former pro soccer player, got involved with anti-nike activism when he tried to explore the connection between moral theology and sports for an undergraduate level paper.
- Explains that nike has been targeted for many different injustices and will seemingly forever be observed and audited. gap, avon, toys-r-us, mattel, reebok, and liz claiborne are just a few of the other corporations.
- Explains that nike is a target for many different organizational protests, especially students. students gather because their school apparel is splashed with the nike logo. child labor organizations protest because children were used to make nikes shoes and apparel.
- Opines that nike has a long way to go to improve in order to remove its reputation from exploitation of their trademarks.
- Analyzes how nike's passion and focus is applied to promoting human activity and understanding the dynamics of the physical body. nike is all about the athlete and helping them perform.
- Cites bernstein, aaron, and hsiao, andrew. "before the beginning." nov. 13, 2001.
- Analyzes how nike's good start was highlighted in the christian science monitor, which ran on nov. 13, 2001, and the nike remediation plan.
- Opines that the two brands that pop out are adidas and nike. both brands have been fighting for the top ever since they were created.
- Compares nike's overpriced clothing and shoes with adidas' cheap prices for good clothes, which could constrain future growth and margins.
- Explains that sponsorships have been a big part of the sports/casual world especially starting with nike and adidas.
- Explains that the quality of materials used in making the product determines how long you’re going to have the item. nike has already made some trash jerseys for the nba this year.
- Explains that comfort is always a concern for all customers because they either want to feel good with the shoe or they want it for long periods of time. nike has the most uncomfortable shoe out there and that is the jordan shoe.
- Opines that adidas and nike will be a forever ongoing topic of which brand is considered the best out of all.
- Explains the symbolic consumption of trainers among children and teenagers, since they are not bought because of their functional attributes.
- Explains that people regard these slogans as powerful and able to motivate consumers.
- Analyzes the link between materialism and self-esteem in children and teenagers.
- Explains that young people buy branded trainers because they have an evident identity, they are sexy and powerful, and they allow them to confirm their identity.
- Internal rate of return
- Rate of return
- Athletic shoe
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