Case Study Description of New Balance Athletic Shoes
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.
Swot Analysis of "New Balance Athletic Shoes" written by Kim B. Clark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Balance Forecasted facing as an external strategic factors. Some of the topics covered in New Balance Athletic Shoes case study are - Strategic Management Strategies, Forecasting, Growth strategy, IT, Manufacturing, Risk management and Technology & Operations.
Some of the macro environment factors that can be used to understand the New Balance Athletic Shoes casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, increasing commodity prices, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings,
digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, etc
Introduction to SWOT Analysis of New Balance Athletic Shoes
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in New Balance Athletic Shoes case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Balance Forecasted, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Balance Forecasted operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of New Balance Athletic Shoes can be done for the following purposes –
1. Strategic planning using facts provided in New Balance Athletic Shoes case study
2. Improving business portfolio management of Balance Forecasted
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Balance Forecasted
Strengths New Balance Athletic Shoes | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Balance Forecasted in New Balance Athletic Shoes Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Balance Forecasted in the sector have low bargaining power. New Balance Athletic Shoes has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Balance Forecasted to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Balance Forecasted
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Balance Forecasted does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Balance Forecasted are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High switching costs
– The high switching costs that Balance Forecasted has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Balance Forecasted has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Balance Forecasted to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Balance Forecasted has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in New Balance Athletic Shoes HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Technology & Operations field
– Balance Forecasted is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Balance Forecasted in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Balance Forecasted is one of the most innovative firm in sector. Manager in New Balance Athletic Shoes Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Technology & Operations industry
– New Balance Athletic Shoes firm has clearly differentiated products in the market place. This has enabled Balance Forecasted to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Balance Forecasted to invest into research and development (R&D) and innovation.
Strong track record of project management
– Balance Forecasted is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Balance Forecasted is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Kim B. Clark can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Balance Forecasted has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Balance Forecasted has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses New Balance Athletic Shoes | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of New Balance Athletic Shoes are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the New Balance Athletic Shoes HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Balance Forecasted has relatively successful track record of launching new products.
High cash cycle compare to competitors
Balance Forecasted has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Balance Forecasted products
– To increase the profitability and margins on the products, Balance Forecasted needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Balance Forecasted, firm in the HBR case study New Balance Athletic Shoes needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Balance Forecasted has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Balance Forecasted has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Balance Forecasted even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Balance Forecasted has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study New Balance Athletic Shoes, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study New Balance Athletic Shoes that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case New Balance Athletic Shoes can leverage the sales team experience to cultivate customer relationships as Balance Forecasted is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Balance Forecasted is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Balance Forecasted needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Balance Forecasted to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study New Balance Athletic Shoes, in the dynamic environment Balance Forecasted has struggled to respond to the nimble upstart competition. Balance Forecasted has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities New Balance Athletic Shoes | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study New Balance Athletic Shoes are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Balance Forecasted to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Balance Forecasted to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Balance Forecasted to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Balance Forecasted can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Balance Forecasted can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Balance Forecasted can use these opportunities to build new business models that can help the communities that Balance Forecasted operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Developing new processes and practices
– Balance Forecasted can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Better consumer reach
– The expansion of the 5G network will help Balance Forecasted to increase its market reach. Balance Forecasted will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Creating value in data economy
– The success of analytics program of Balance Forecasted has opened avenues for new revenue streams for the organization in the industry. This can help Balance Forecasted to build a more holistic ecosystem as suggested in the New Balance Athletic Shoes case study. Balance Forecasted can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Balance Forecasted has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Balance Forecasted can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Balance Forecasted can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Balance Forecasted in the consumer business. Now Balance Forecasted can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Balance Forecasted can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. New Balance Athletic Shoes suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Balance Forecasted can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats New Balance Athletic Shoes External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study New Balance Athletic Shoes are -
Regulatory challenges
– Balance Forecasted needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Balance Forecasted can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study New Balance Athletic Shoes .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Balance Forecasted in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High dependence on third party suppliers
– Balance Forecasted high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Balance Forecasted needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Environmental challenges
– Balance Forecasted needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Balance Forecasted can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Balance Forecasted can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Balance Forecasted will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Balance Forecasted.
Stagnating economy with rate increase
– Balance Forecasted can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Balance Forecasted is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of New Balance Athletic Shoes Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study New Balance Athletic Shoes needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study New Balance Athletic Shoes is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study New Balance Athletic Shoes is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of New Balance Athletic Shoes is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Balance Forecasted needs to make to build a sustainable competitive advantage.