New Balance Athletic Shoe, Inc. (Abridged) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of New Balance Athletic Shoe, Inc. (Abridged)
Considers whether New Balance, one of the world's five largest manufacturers of athletic footwear, should respond to Adidas' planned acquisition of Reebok-a transaction that would join the second- and third-largest companies in the industry. Highlights the unique aspects of New Balance's strategy-focusing on fit and performance by offering long-lived shoes in a wide variety of widths and eschewing celebrity endorsement of its products-and discusses New Balance's operations decisions to support that strategy. These include significant use of domestic manufacturing at a time when nearly all other competitors sourced finished shoes from Asian suppliers and an emphasis on improving inventory management for its network of small and large retailers. Set just after the announcement of the Adidas-Reebok transaction in 2005, with New Balance having recently initiated a companywide effort to improve operational performance through the application of concepts from lean manufacturing and the Toyota Production System. Asks students to consider whether New Balance should change aspects of its operations strategy in light of the consolidation among its competitors or whether the Adidas-Reebok transaction represents an opportunity for New Balance to emphasize the importance of moving forward with its current approach.
Authors :: H. Kent Bowen, Robert S. Huckman, Carin-Isabel Knoop, Matthew Preble
Swot Analysis of "New Balance Athletic Shoe, Inc. (Abridged)" written by H. Kent Bowen, Robert S. Huckman, Carin-Isabel Knoop, Matthew Preble includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Reebok Adidas facing as an external strategic factors. Some of the topics covered in New Balance Athletic Shoe, Inc. (Abridged) case study are - Strategic Management Strategies, Competitive strategy, Manufacturing, Product development, Supply chain, Technology and Technology & Operations.
Some of the macro environment factors that can be used to understand the New Balance Athletic Shoe, Inc. (Abridged) casestudy better are - – talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of New Balance Athletic Shoe, Inc. (Abridged)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in New Balance Athletic Shoe, Inc. (Abridged) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Reebok Adidas, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Reebok Adidas 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 Shoe, Inc. (Abridged) can be done for the following purposes –
1. Strategic planning using facts provided in New Balance Athletic Shoe, Inc. (Abridged) case study
2. Improving business portfolio management of Reebok Adidas
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 Reebok Adidas
Strengths New Balance Athletic Shoe, Inc. (Abridged) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Reebok Adidas in New Balance Athletic Shoe, Inc. (Abridged) Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Reebok Adidas in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Reebok Adidas is present in almost all the verticals within the industry. This has provided firm in New Balance Athletic Shoe, Inc. (Abridged) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Reebok Adidas 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 Shoe, Inc. (Abridged) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Reebok Adidas 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.
Learning organization
- Reebok Adidas is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Reebok Adidas is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in New Balance Athletic Shoe, Inc. (Abridged) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Reebok Adidas has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study New Balance Athletic Shoe, Inc. (Abridged) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Reebok Adidas
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Reebok Adidas does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Reebok Adidas is one of the leading recruiters in the industry. Managers in the New Balance Athletic Shoe, Inc. (Abridged) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Technology & Operations field
– Reebok Adidas 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 Reebok Adidas in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the New Balance Athletic Shoe, Inc. (Abridged) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Reebok Adidas has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Reebok Adidas to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Technology & Operations industry
– New Balance Athletic Shoe, Inc. (Abridged) firm has clearly differentiated products in the market place. This has enabled Reebok Adidas to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Reebok Adidas to invest into research and development (R&D) and innovation.
Weaknesses New Balance Athletic Shoe, Inc. (Abridged) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of New Balance Athletic Shoe, Inc. (Abridged) are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Reebok Adidas supply chain. Even after few cautionary changes mentioned in the HBR case study - New Balance Athletic Shoe, Inc. (Abridged), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Reebok Adidas vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As New Balance Athletic Shoe, Inc. (Abridged) HBR case study mentions - Reebok Adidas takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Reebok Adidas products
– To increase the profitability and margins on the products, Reebok Adidas needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, H. Kent Bowen, Robert S. Huckman, Carin-Isabel Knoop, Matthew Preble suggests that, Reebok Adidas is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study New Balance Athletic Shoe, Inc. (Abridged), in the dynamic environment Reebok Adidas has struggled to respond to the nimble upstart competition. Reebok Adidas has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study New Balance Athletic Shoe, Inc. (Abridged), 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study New Balance Athletic Shoe, Inc. (Abridged), is just above the industry average. Reebok Adidas needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the New Balance Athletic Shoe, Inc. (Abridged) 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 Reebok Adidas has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study New Balance Athletic Shoe, Inc. (Abridged) 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 Shoe, Inc. (Abridged) can leverage the sales team experience to cultivate customer relationships as Reebok Adidas is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Reebok Adidas is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Reebok Adidas needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Reebok Adidas to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Reebok Adidas has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - New Balance Athletic Shoe, Inc. (Abridged) should strive to include more intangible value offerings along with its core products and services.
Opportunities New Balance Athletic Shoe, Inc. (Abridged) | 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 Shoe, Inc. (Abridged) are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Reebok Adidas can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, New Balance Athletic Shoe, Inc. (Abridged), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Reebok Adidas can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Learning at scale
– Online learning technologies has now opened space for Reebok Adidas 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.
Creating value in data economy
– The success of analytics program of Reebok Adidas has opened avenues for new revenue streams for the organization in the industry. This can help Reebok Adidas to build a more holistic ecosystem as suggested in the New Balance Athletic Shoe, Inc. (Abridged) case study. Reebok Adidas can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Reebok Adidas to increase its market reach. Reebok Adidas 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Reebok Adidas can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Reebok Adidas 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.
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. Reebok Adidas 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. Reebok Adidas 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Reebok Adidas in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Reebok Adidas can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Reebok Adidas to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Reebok Adidas 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Reebok Adidas can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats New Balance Athletic Shoe, Inc. (Abridged) 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 Shoe, Inc. (Abridged) are -
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. Reebok Adidas can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Reebok Adidas demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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 Reebok Adidas.
Stagnating economy with rate increase
– Reebok Adidas 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Reebok Adidas 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 Shoe, Inc. (Abridged) .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Reebok Adidas in the Technology & Operations sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Reebok Adidas has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Reebok Adidas needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study New Balance Athletic Shoe, Inc. (Abridged), Reebok Adidas may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Reebok Adidas with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Reebok Adidas 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.
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.
Increasing wage structure of Reebok Adidas
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Reebok Adidas.
Shortening product life cycle
– it is one of the major threat that Reebok Adidas is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of New Balance Athletic Shoe, Inc. (Abridged) 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 Shoe, Inc. (Abridged) 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 Shoe, Inc. (Abridged) 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 Shoe, Inc. (Abridged) 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 Shoe, Inc. (Abridged) 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 Reebok Adidas needs to make to build a sustainable competitive advantage.
