Competition & Business Risk Assignment

Prof: Dr. Donald Tan

BSG: EStriker Shoe Company Pte Ltd.,

Prepared by: Rajesh Guttikonda, Sanjay Kumar, Ramu DineshKumar & Zhan HuaZhi Date: 14th November 2010.
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Table of Contents:

1.Executive Summary ..3 2.Sport Shoe Industry .3 3.Appreciations ...4 4.Status of the year 10 ...5 5.Strategy plans and options .. 6 5.1Cost Leadership. 6 5.2Differentiation ..7 5.3Cost Focus. ..7
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5.4Differentiation focus.7 6.Strategy Decided. ...8 7.Conclusion ...9 References .10 Appendix A, Appendix B, Appendix C. .10

1.EXECUTIVE SUMMARY Report illustrates about sports shoe market in the 21st century and the holistic view of the company future establishments and its strategies. A helicopter view of the sport shoe companies evolution, appreciation of the companies and different generic strategies available for competing with the rival companies. It includes year 10 status of b.s.g game and the strategy adopted by the company in the year 11, marketing strategy, sustainable competitive strategy and price of the product.
2.SPORT SHOE INDUSTRY

The nineteenth century saw the introduction of an all leather spiked running shoe. The need for greater speed in the modern games necessitated further refinement of lightweight shoes with improved traction. The term athletic shoes is typically used for running in a marathon, basketball and tennis and also used in various sports. Attributes of an athletic shoe include a flexible sole, appropriate tread for the function ability to absorb impact. Nowadays the industry and design have expanded, and the shoes are based more on the design of bottom of the shoe than the aesthetics of the top or the shoe. Manufacturers have tailored athletic shoes for the different purposes that they can be used for. A specific example of this is the spiked shoe developed for track running. As running shoes become more advanced, amateur joggers, as well as marathon runners are beginning to purchase shoes based on their running style and foot arch. This is often important for injury prevention, as well as to increase running efficiency. There are a variety of specialized shoes designed for specific uses: Racing flats Track shoe Skate shoes Climbing shoe Approach shoe Wrestling shoes

 Cleats Football boot Dance Shoe

Here is a simple list of top ten sports shoes brand. Nike Adidas Reebok Puma Fila Converse New Balance K-Swiss Asics Hi-Tec

3.APPRECIATIONS Globally the footwear industry has an expanding market. World population increases, living standards also rises, this the demand for foot wears. An athletic shoe company owes its success to its competitive advantage. A companys competitive advantage is the very core of its existence as a company. Rapid growth in footwear production
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Manufacturers have flexible designs and high output There is a massive increase in innovative shoe designs, increasing competition. High innovation and quality designs are a must for success. Producers have to be protective of their information and manufacturing technology Huge warehouse The pricing strategies adopted by the company Advertisements

The company mainly have to concentrate on advertisements with the best celebrities, which creates more credits to Industry there by increasing the revenue of business in this field.

4.STATUS OF YEAR 10 In the year 10 the net revenues of the company E is $ 239147 net profit is $ 25000 total assets of $264229 with long term debt of $83400 which created current ratio of 2.35 and having an inventory days of 11. Debt to assets ratio is 0.38 The market segment is divided into four regions geographically namely Asia pacific, Europe, Latin-America and North America. It participates in three segments likely Internet segment, Wholesale market and Private label to sale the shoes produced in the factory. In each geographical region company is having 16% of market share marketing 200 models of shoes at the price of $48 per pair. In the Internet segment alone it is having 16% market share with 200 models and with S/Q rating of 5 at the price of $75. In wholesale market they have priced the shoe at $48 marketed 200 models with market share of 16.25%. In private label market company has achieved 16% with S/Q rating of 4 at the price of $35. Company is effectively implementing cost leadership strategy to achieve competitive advantage in the market place, by doing so it has achieved good revenue in its market. And by increasing the no of models, rebate offer, decreasing delivery time and use of better material quality had achieved better S/Q ratings for the company in all its marketing
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divisions. Disadvantage in this strategy implementation is that they had failed to create corporate social responsibility and citizenship with no investments for them, No expenditure on celebrity appeal, No plant upgrade and less expenditure on styling factor, TQM six sigma quality programs and superior material. Internet market has been affected due to no free shipping decision taken by the company. The financial aspect of the company is having two potential long term loans and 10000k shares of stock outstanding. Company had an advantage of no exchange rate adjustment. And with no sale of existing capacity due to good growth rate company had managed do show good earnings.

5.STRATEGY PLANS AND OPTIONS

Over all they are four main generic strategies. They are overall cost leadership, differentiation, cost focus, differentiation focus. Out of which first two comes under broad scope, lost two comes under narrow focus.

5.1 Cost leadership:

Porter generic strategy is making an cost advantage to the company as an edge in marketing the products in the market. Cost leadership means to cut down the expenses to company in making the product it does not include the price paid by the costumers to buy the products. Two ways of achieving the cost leadership is decreasing the cost of the product and increase the revenue of the company and the second method is to pass the cost savings to consumer by reducing the product cost there by increasing the market share. It involves being the cost leader in the market by just being the cost leader is not enough because new entrants will cut more cost and take the advantage out of the existing market. To sustain the market by cost leadership without continuous improvement companies will have high capital in investing the technology to cut cost logistics and could have low cost labour, material and facilities

5.2 Differentiation :

This strategy is about making the products which are more attractive and different of that of the competitors. This involves better features models, functionality, durability, sustainability, loyalty to its customers and also brand image of the company in the market All the successful industries have high research, development and innovation, the ability to deliver high quality products, services effective sales, and marketing so that consumers understand better about product.

5.3 focus:

The companies that use focus strategies concentrate on niche market and by understanding the dynamics of the market and unique needs of the customers develop low cost or highly specialised products for the entire consumer in its markets. They serve the costumers well in their market and tend to build strong loyalty to the product. This makes their particular market vulnerable to the competitors 5.4 Differentiation and cost focus Since focus is not sufficient to the market we have to select the focus cost advantage or focus differentiation to establish in the market. The something extra that you add can contribute to reducing cost or to increase the differentiation would generate the cutting edge in the market.

6.STRATEGY DECIDED Our team of managers have decided to go for differentiation strategy for our company, since we have till now seen cost leadership in the company by allocating funds for use of green materials recycled boxes considering environment green. Charitable contributions, energy efficient facility in the plant, work force diversity programs and ethics program to the workforce there by increasing the brand image of the company. We plan for CSR programs and give importance for PR strategies to be connected with the consumers. In Internet segment we planned to give free shipping to attract the sophisticated customers. We have strategized supply chain distribution operations, hub and spoke model strategy for cost saving and faster reach out of the customers to achieve the customer satisfaction. We have differentiation by S/Q rating, models, rebate offer, advertisement, retail outlets and retailer support. We have planned to invest in premium brand celebrity to target younger generation with high end technology, consumer specific customization facility. Our marketing campaign, road shows includes awareness of good health to be fit and how shoes supports the health of knee and foot so that consumers may get attracted to the product and get to know it. We have invested in new plant capacity so to boost S/Q ratings. We have increased the material quality used and implemented better TQM six sigma procedures in the plant to help us differentiate in the market. And finance and cash flow we planned to reduce the long term loan and buy back some stock of the shares. This will increase the credit rating for our company in all its market locations.

7.CONCLUSION Finally report concludes that the existing shoe company has better opportunities to establish in large scale and opportunity to grab large market share provided company should improve credit rating and its brand value towards the consumers perception. Grow big is the reeling point and Win the customer is the corporate DNA. Market research should be helpful to reach out the consumer and to analyse the workmanship of strategies implemented. One of the four generic strategies is developed for year 11 of b.s.g game to get the competing edge in the market.
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References B.S.G game Cor, cir and fir reports Porters generic strategy http://en.wikipedia.org/wiki/Porter_generic_strategies Accessed on 14th November 2010.

Appendix A : Competitive Intelligence Reports for year 10 11

CIR_Y10.csv

Appendix B: Company operating reports for year10

COR_Y10.csv

Appendix C: Foot wear Industry Report

FIR_Y10.csv

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