Assignment for Course: MGT 5170 – Applying Strategy for Managers

Title of Assignment: Week #6 Linking Questions

LINKING QUESTIONS # 6

What are the primary components of your company strategy for branded footwear?

1. How do Internet sales of branded footwear fit into your company's overall strategy? What
is your company's Internet strategy?

Internet sales are a major part of our strategy as we are currently controlling 39.2% of the
market share in Y14 which is almost 15 points ahead the industry average. Also, our profits in
this segment are extremely high generating over 30% profit margin on the internet sales per
warehouse.

2. What is your company's strategy for private-label footwear?

After analyzing the private label sector, we have concluded that it is just not profitable for us
to pursue this segment. Our main competitor Best Kicks is pricing their shoes at almost a
breakeven point in this market to steal the entire market share in the N.A. and A-P markets. Also,
they are trying to be sneaky and pricing their shoes a bit higher in the E.A, and L.A. markets, but
considering the loss of profit on shipping costs, it makes no sense for us to compete in this
market. For this reason, we will focus on selling more internet/wholesale shoes at a much higher
profit margin and let the other competitors battle it out in the private label sector.

3. What is your company's strategy for growing the business?

Looking at the Plant Capacity report, the supply/demand analysis suggests that “capacity is
shy of what is needed to meet future demand.” Therefore, we will begin construction on a L.A.
plant to meet the added demand that is coming in the future. The L.A. plant was chosen because
it has the lowest shipping rates to the other countries, thus making it ideal to be the first plant we
expand to.
4. What are the 3-4 chief elements of your company's production strategy( as concerns
number and location of plants, making plant upgrades, worker compensation, use of
TQM/Six Sigma programs, use of overtime, and so on)?

Our production strategy is to max out capacity by making all shoes possible including
overtime shoes. Plant upgrades were done in Y10-Y11 to both plants N.A. and A-P plants to
improve S/Q rating by one, and also reduce run setup by 50%. These upgrades have enabled
us to generate higher profits by spending less on materials and style points to raise the S/Q
rating. Additionally, we have heavily invested in improving the best practices training to
increase S/Q points and make workers more efficient.
 5. What are the 3-4 chief elements of your company's marketing strategy (as concerns
pricing, advertising, rebates, use of celebrity endorsements, S/Q ratings for branded
footwear, number of footwear models, and deployment of all the other weapons of
competitive rivalry to outmaneuver rival footwear companies)?

Our shoes are priced based on the expected demand, we want to make sure we don’t
undersell or oversell based on the forecasts. We have invested early in Celebrity endorsements to
raise demand for our shoes, and enabling us to have higher prices due to the brand loyalty these
partnerships have created. Our shoes are providing consumers with a higher perceived value than
the competition. We have spent more money in advertisement in the N.A. and E.A. markets
while also increasing the rebates to make sure we sell the right amount of shoes. We have
upgraded all our shoes to S/Q rating of 7 to become a prestigious and distinctive brand with a top
of the line image.

6. What are the 3-4 chief elements of your company's finance strategy as concerns use of
debt, dividend payments, sales/purchases of stock, use of cash, and approaches to
achieving a good credit rating?

Well since the beginning we decided to payout the first loan taken out in Y7 with a new loan
taken out Y11 with a higher credit rating to save .5% on the interest rate, and then again takin out
another loan in Y12 to finance upgrades and marketing expenditures to make sure we have cash
in hand and place our company at a low default risk. For Y15 we have A credit rating, and are
taking this opportunity to take out another loan to finance 22% of our new $90 million plant
since our revenues for Y14 have given us plenty of cash. In Y15, we are planning to buy 50,000
shares back to boost our already high stock price of $84.67, and we will pay dividends to make
our stock even more attractive. So far our credit rating has not dipped below B, and is currently
rated at A. We forecast to have A+ credit rating for Y16 and overall our financial management
has been superb compared to the competition.

7. What options for being a first-mover does your company have? Do any of these first-
mover options hold competitive advantage potential?

Our company did a great job being a first mover to capture celebrity endorsements at low
bids to boost our brand’s strength and loyalty for the foreseeable future. This move has given
us the luxury to remain profitable every single year, even after the crisis in Y13 where the
demand decreased and prices were forced to go down due to the excess worldwide surplus.
Right now our best first move is to be the first one to expand our capacity to be prepared for
the added demand that is coming in the next years to also save on shipping costs and gain
even more profit selling in the same market. This move will enable Elite Footwear to leave
the competition in the dust as they will not be able to compete with the added capacity which
will force them to also expand.
 Bibliography

Harms, C. C., Reidenbach, M. A., Stappenbeck, G. J., Thompson, A. A., Jr., & Thrasher, I. F.

(2017). Player's Guide. Retrieved October 20, 2017, from https://www.bsg-

online.com/users/CorporateLobby.html