Nike versus New Balance: Trade Policy in a World of Global Value Chains SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Nike versus New Balance: Trade Policy in a World of Global Value Chains
In 2013, Michael Froman, the newly appointed United States Trade Representative, was responsible for leading the U.S. negotiating team in the formulation of the terms of the Trans-Pacific Partnership (TPP). During the negotiations, Froman had to adopt a position on the sensitive issue of tariffs on imported footwear. On the one hand, Vietnam, a TPP member country, was America's second largest foreign footwear supplier and was pushing for the elimination of tariffs. On the other hand, U.S. labour unions argued that Vietnam's strength in the footwear industry was based on unfair subsidies and labour practices. Even among U.S. footwear companies, there was disagreement. New Balance, the only U.S. athletic footwear company that produced parts of its shoes in the U.S., was openly opposed to the elimination of tariffs, as their removal could lead to factory closures in the U.S. Nike Inc., however, manufactured all its shoes overseas and was an overt proponent of the abolition of tariffs. Froman had to carefully weigh the arguments of all the stakeholders to determine whether or not to accept the lowering of tariffs on footwear imported from Vietnam and, if he accepted, whether or not to impose conditions on Vietnam.
Swot Analysis of "Nike versus New Balance: Trade Policy in a World of Global Value Chains" written by Simon Brodeur, Ari Van Assche includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Footwear Tariffs facing as an external strategic factors. Some of the topics covered in Nike versus New Balance: Trade Policy in a World of Global Value Chains case study are - Strategic Management Strategies, Policy and Global Business.
Some of the macro environment factors that can be used to understand the Nike versus New Balance: Trade Policy in a World of Global Value Chains casestudy better are - – challanges to central banks by blockchain based private currencies, increasing commodity prices, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing,
competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Nike versus New Balance: Trade Policy in a World of Global Value Chains
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nike versus New Balance: Trade Policy in a World of Global Value Chains case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Footwear Tariffs, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Footwear Tariffs 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains can be done for the following purposes –
1. Strategic planning using facts provided in Nike versus New Balance: Trade Policy in a World of Global Value Chains case study
2. Improving business portfolio management of Footwear Tariffs
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Footwear Tariffs
Strengths Nike versus New Balance: Trade Policy in a World of Global Value Chains | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Footwear Tariffs in Nike versus New Balance: Trade Policy in a World of Global Value Chains Harvard Business Review case study are -
Effective Research and Development (R&D)
– Footwear Tariffs 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Footwear Tariffs is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Footwear Tariffs 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.
Innovation driven organization
– Footwear Tariffs is one of the most innovative firm in sector. Manager in Nike versus New Balance: Trade Policy in a World of Global Value Chains Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Footwear Tariffs is present in almost all the verticals within the industry. This has provided firm in Nike versus New Balance: Trade Policy in a World of Global Value Chains 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.
Analytics focus
– Footwear Tariffs 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 Simon Brodeur, Ari Van Assche 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
– Footwear Tariffs has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Footwear Tariffs 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.
Sustainable margins compare to other players in Global Business industry
– Nike versus New Balance: Trade Policy in a World of Global Value Chains firm has clearly differentiated products in the market place. This has enabled Footwear Tariffs to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Footwear Tariffs to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Footwear Tariffs in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Footwear Tariffs has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Footwear Tariffs to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Footwear Tariffs 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Footwear Tariffs in the sector have low bargaining power. Nike versus New Balance: Trade Policy in a World of Global Value Chains has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Footwear Tariffs to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Nike versus New Balance: Trade Policy in a World of Global Value Chains | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nike versus New Balance: Trade Policy in a World of Global Value Chains are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Nike versus New Balance: Trade Policy in a World of Global Value Chains, is just above the industry average. Footwear Tariffs 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 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 Footwear Tariffs supply chain. Even after few cautionary changes mentioned in the HBR case study - Nike versus New Balance: Trade Policy in a World of Global Value Chains, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Footwear Tariffs vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Nike versus New Balance: Trade Policy in a World of Global Value Chains has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Footwear Tariffs 's lucrative customers.
Slow to strategic competitive environment developments
– As Nike versus New Balance: Trade Policy in a World of Global Value Chains HBR case study mentions - Footwear Tariffs 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.
Need for greater diversity
– Footwear Tariffs has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Footwear Tariffs 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.
Products dominated business model
– Even though Footwear Tariffs 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 - Nike versus New Balance: Trade Policy in a World of Global Value Chains should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Footwear Tariffs products
– To increase the profitability and margins on the products, Footwear Tariffs needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nike versus New Balance: Trade Policy in a World of Global Value Chains, it seems that the employees of Footwear Tariffs don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Footwear Tariffs 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Simon Brodeur, Ari Van Assche suggests that, Footwear Tariffs 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.
Opportunities Nike versus New Balance: Trade Policy in a World of Global Value Chains | 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Footwear Tariffs can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Footwear Tariffs is facing challenges because of the dominance of functional experts in the organization. Nike versus New Balance: Trade Policy in a World of Global Value Chains case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Footwear Tariffs to increase its market reach. Footwear Tariffs 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 Footwear Tariffs has opened avenues for new revenue streams for the organization in the industry. This can help Footwear Tariffs to build a more holistic ecosystem as suggested in the Nike versus New Balance: Trade Policy in a World of Global Value Chains case study. Footwear Tariffs can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Footwear Tariffs 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.
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 Footwear Tariffs 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Footwear Tariffs 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. Footwear Tariffs 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.
Buying journey improvements
– Footwear Tariffs can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nike versus New Balance: Trade Policy in a World of Global Value Chains 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Footwear Tariffs can use these opportunities to build new business models that can help the communities that Footwear Tariffs operates in. Secondly it can use opportunities from government spending in Global Business sector.
Building a culture of innovation
– managers at Footwear Tariffs 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 Global Business segment.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Footwear Tariffs 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 Footwear Tariffs to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Footwear Tariffs has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Nike versus New Balance: Trade Policy in a World of Global Value Chains - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Footwear Tariffs to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Footwear Tariffs 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nike versus New Balance: Trade Policy in a World of Global Value Chains are -
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.
High dependence on third party suppliers
– Footwear Tariffs 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.
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 Footwear Tariffs.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Footwear Tariffs with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Footwear Tariffs needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Footwear Tariffs has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Footwear Tariffs needs to keep up with the evolution of technology in the Global Business 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.
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. Footwear Tariffs 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Footwear Tariffs business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Footwear Tariffs can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Footwear Tariffs 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 Global Business industry regulations.
Shortening product life cycle
– it is one of the major threat that Footwear Tariffs is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Footwear Tariffs in the Global Business sector and impact the bottomline of the organization.
Consumer confidence and its impact on Footwear Tariffs 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.
Weighted SWOT Analysis of Nike versus New Balance: Trade Policy in a World of Global Value Chains 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains 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 Nike versus New Balance: Trade Policy in a World of Global Value Chains 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 Footwear Tariffs needs to make to build a sustainable competitive advantage.
