New Balance: Background, Analysis, and Recommendations

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Table of Contents

Introduction and background information
Summary of macro-environmental issues
Summary of American show industry
Interconnections between macro and industry analysis
Internal analysis
Recommendations
Conclusion
Bibliography

Introduction and background information

New Balance is a footwear manufacturing company located in Boston. The company was founded in 1906, and since that time it has expanded its market activities in the UK and European countries. The company was founded by William J. Riley, an English immigrant. The first products of NewBalance were arch supports and other accessories. In 1934, Arthur Hall joined the company and sold it to his children. In 1961, the first Trackster,” was sold. Since that time, the main product line of the company has been shoes. In contrast to many other companies, New Balance offers a wide product range including B or D to 4E and 6E width. New balance follows a unique philosophy based on customers’ expectations and unique perception of shows. New Balance relies on innovative technologies and solutions which help the company to improve its product range and deliver the best quality to diverse customers. Since market environments specify the conditions that internal and external organizational arrangements must meet, market forces have a great influence on the total organization (New Balance Home Page, 2008).

Summary of macro-environmental issues

In America and UK, there are favorable political and legal conditions for such manufactures as New Balance. Organizational boundaries are dynamic and adjust to meet the changing needs of their environments. As a result, organizations have life and style of their own, and at certain periods, the influence of different groups may increase. For example, organization structures may change in periods of surplus from their form in periods of production shortages. Social, economic, and political institutions give high rewards to those who produce better consumer items. Energetic people are interested in encouraging change. The abundance of well-developed natural resources, the development of technology, the urbanization of consumers, the impact of such lifestyle factors as convenience and service, and the activities of government all stimulate the development of new products. Throughout all this, however, it should be recognized that competition is the major stimulus for innovation. Pollution and environmental degradation are the main legal demands imposed on manufactures. The state demands the introduction of environmentally friendly technologies and manufacturing processes in order to protect the environment and decrease pollution. For such companies as New Balance, it requires additional investments in technology and production operations (Drejer 2002). That is why New Balance is ready for such hard competition with very careful market research and strategy improvement. The USA is a culturally diverse country so it is an opportunity for New Balance to find the right consumers. The USA has stable legal laws and principles of business that support large corporations such as New Balance. New Balance follows accounting principles and audit procedures applied to all American corporations (Huckman and Bowen n.d.).

Summary of American show industry

The main driven forces in the American show industry are competition and innovations. The main New balance competitors are Nike, Adidas, and Reebok. The competition emphasizes changing profit opportunities available for perceptive executives because of the dynamics of marketing environments. For New balance, it stresses the necessity of striving for the creation of differential advantage in the marketplace. It underscores the primacy of planning and programming innovation continuingly to adjust company offerings to the changing competitive scene. Competition, in marketing terms, refers to the creation of differential advantage particularly by the effective management of innovation to meet changing marketing opportunities. Programmed innovation is the corporate method of achieving continuous market adjustment; competition is its stimulus. Keenly competitive situations stimulate new products, new processes, new services, new ideas, and new techniques as well as price adjustments. The degree of competition is suggested not only by quantitative measures of newness and number of competitors but also by qualitative considerations. Innovative technologies and solutions are the main demands in the shoe industry. Acceptance of innovation is closely related to both managerial activities and the acquisition of a hospitable attitude of mind on the part of management and customers. Customers want new products; they desire change. Although cultures differ as to their rate of acceptance of change, innovation is a means of satisfying the customer’s basic needs. Sources of innovation are internal (top management and executive leaders, sales and other operating units) or external (management consultants and advertising men) (Johnson and Scholes 2006). America has a favorable exchange rate so it does not influence the company and its market operations. The USA is one of the biggest industrial countries in the world-famous for the large number of products sports goods and sportswear. The US market is opened for industrial development. Nowadays, according to the statistics of the market, it is evident that doing business in American can increase the global profit of the company by 12% in less than 3 years. However, at the same time, the US market is fragmented and difficult; thus, detailed research and analysis of the market are vitally important. The US customers can be very difficult and often have quite diverse tastes and requirements. Consequently, in many cases, sportswear companies like Reebok and Nike must re-design or renew products in order to succeed with the customers. Extensive investments are essential, and consequently, the market risks are large where the company either wins big or loses big.

The market is full of very aggressive companies and competitors. As an example, some years ago Reebok and Kike lost in competition with local companies, thus, gave up from doing business in the USA. Moreover, companies usually do not welcome new competitors; thus, constantly improve their strategies to participate hard against newcomers in the market.

Interconnections between macro and industry analysis

The main factors which influence the industry are purchasing power of consumers and their lifestyle, demand for innovations, and income of potential consumers.

Internal analysis

In New Balance, in terms of price competition rather than convenience and service competition, in terms of an economy of scarcity with relatively low consumer purchasing power rather than an abundant economy with widespread discretionary purchasing power, in terms of manufacturers and sellers completely controlling and dominating the marketplace rather than an economy governed to a considerable extent by consumer sovereignty, and in terms of interindustry competition rather than interindustry competition. Sometimes they even conceive of competition in terms of an agrarian economy of pure competition rather than a highly industrialized economy where only imperfectly competitive situations exist. The stimulus for innovation at any time, however, may be curtailed because of either external or internal resistance. The utilization of resources is not determined merely by availability and technological advancement. It is impossible to understand our culture without a comprehension of marketing as an institutional force. Marketing is an institution of social influence in much the same sense, but not of the same degree, as the school or the home. It exerts an extensive influence that can lead to the betterment of social and economic life. Many of the fundamental precepts underlying buyer and consumption behavior are now changing because our basic lifestyle constraints have shifted. Consumption is no longer exclusively a home-centered activity since consumption of many goods outside the home has become common. Cultural diversity is a benefit for New Balance as its target market is diverse in tastes and values, lifestyles, and income.

Recommendations

For New Balance, it will be important to expand its activities in Asian countries and penetrate China and Japan. It will allow new Balance to:

attract more customers and increase profits;
create a strong brand image as a global market leader;
compete with such giants as Nike and Adidas

Conclusion

New Balance is a leading shoe manufacturerworld famous which makes use of innovative solutions and unique market philosophy. The customs, institutions, and motives of men influence achievement in economic areas. In explaining variations in economic development and in analyzing an abundant society, economic theories often neglect these psychological and sociological factors that are associated with and capable of stimulating economic forces and thereby underestimate the importance of marketing as a force in economic development. New Balance recognizes that consumers, stimulated by the achievement motive, try by increasing productivity to satisfy their desires for consumption and to improve their standards of living.

Bibliography

Drejer, A. 2002, Strategic Management and Core Competencies: Theory and Application. Australian Scholarly Publishing.
Johnson, G., Scholes, K. 2006, Exploring Corporate Strategy: Text and Cases. Financial Times/ Prentice Hall; 7 edition.
New Balance Home Page. 2008. Web.
Huckman, R.W., Bowen, H. New Balance Athletic Shoe Inc.

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