Key Questions and Issues
This sub-section situates the discussions on key questions or issues affecting the status of New Balance to the industry and market. The discussions will also describe key responses relating an analysis to a case study presented by Bowen et al (2006) of the Harvard Business School. In ‘Case 27: New Balance Athletic Shoe Inc. ’ depicts the mixed-emotion of NBAS owner-chairman James Davis to the year 2005 news headlines on the Adidas planned acquisition of Reebok.
One of the apprehensions of James Davis was what could be the repercussions of the Adidas-Reebok tandem to the industry. Could New Balance able to compete? How New Balance can regain its competitiveness? These questions posed a challenge to James Davis. Reflective of the year 2005 planned merging of Adidas-Reebok, James Davis has also thought of the impending competition to which Adidas-Reebok compete with Nike. The after-thought would mean that New Balance can still obtain a competitive edge while Adidas-Reebok competes with Nike being the biggest competitor.
With James Davis’ initial reflections on the issue, he held on to his above questions that can be the basis to formulate some plans and resolutions. With the given developments in the year 2005 business environment, James Davis has refocused on product improvement, wherein NBAS has innovated a product brand dubbed as the “New Balance Executional Excellence or NB2E” to compete with the prevailing product competitors.
At this juncture, the succeeding discussions will relate the analysis on how James Davis tries to find the best possible answer to his questions to resolve the issue at hand. Situational Analysis Based on the case study by Bowen et al (2006), New Balance has indicated redefining its status to the industry and market, wherein James Davis strategically position its product line by developing the NB2E brand. Additionally, New Balance standstill in retaining its 2,600 stakeholders or associates and keep hold of the company’s philosophy, cultures and strategies.
To cite, New Balance will prioritize its market positioning in order to strategically and flexibly adapt to the prevailing trend of competition. Accordingly, one of the indicators to analyze the situation was the industry estimates from 2004 to 2009 that indicates the vast opportunities of market, although competition might be tightened as exemplified by merging and acquisition of footwear manufacturers, like the Adidas-Reebok plans of merging. The industry estimates for 50 percent of the USD $32 Billion consumer spending for footwear which closely increases at 6. 3 percent annually can be a significant data which the New Balance links its competitiveness to fast-changing competition in the marketplace.
To sum up, New Balance perceives its “footing” to the industry and market by improving its internal capabilities to innovate the product lines. On the other hand, New Balance situates its internal capabilities to the at large business environment where the competition can still be a normal phenomenon in the continuing upsurge of market demands.
In which case, it can be said that more suppliers take advantage their market positioning to the “currents” of the market equated to the growing demands in footwear. What the New Balance can strategically position then in the middle of competition was to maintaining its established business character to the industry, market and consumers. Likewise, innovating or improving the product lines would promote its competitive advancements. External Analysis As indicated in the case study, the macro-environmental factors correlate on the status of New Balance to the industry.
This status indicates the demographic location of New Balance in the leveling of leadership in competition. The illustration below shows the leveling: Source: Bowen et al (2006) With the above illustration, the leveling of leadership in competition shows New Balance as rank number five. The 2004 comparative data indicates the macro-environmental factor where New Balance must maintain its “stance” in the level of competitive leadership being at rank number five.
On the other hand, it may not only the 2004 ranking of New Balance which it wished to maintain, but to rise above the level of competition. In relation to the discussions above, it is also important to examine the “five competitive forces” attributing to New Balance. This model which was developed by Michael Porter (1980) substantiates the organizational examination of New Balance, referring to establishing competitive strategies. To demonstrate the model, the illustration below shows the components: