Essay on New Balance Athletic Shoes Case Study

866 Words Oct 14th, 2008 4 Pages
Problems In reviewing the case of New Balance Athletic Shoe, Inc. it is clear that there are a few major problems that the company is facing. First of all, New Balance falls behind its other major competitors, Nike, Adidas and Reebok, in the area of marketing. Unlike its competitors, New Balance does not undertake celebrity endorsements. This puts them at a disadvantage when it comes to brand building. This also causes the company to lose out somewhat on gaining awareness on a global scale as it lacks endorsements in major sporting events. Most global brand names generate strong brand recognition through celebrity endorsements in sporting events that would give them the needed momentum to carry their brand name further into the global …show more content…
Indicators As a general indicator, New Balance will be able to track its progress, or lack of progress, with its new strategies by monitoring sales. If sales go up on the product line being endorsed by whatever celebrity they contracted with, then they know it must be working. Also, if the new fashion-oriented line shows a profitable amount of sales then it is also working towards benefiting the company. In order to monitor whether or not the new line is profitable, New Balance would need to calculate Internal rate of return (IRR). A positive IRR would mean the line was successful as long as it stayed above the hurdle rate or the lines cost of capital. New Balance can also use return on investment (ROI) as an indicator of this strategy’s success. By calculating the ratio of the return on their investment to the cost of investment, the company would be able to tell whether or not increased investment in this new line is worth while. New Balance can also look at their operating costs. If outsourcing more of their manufacturing is truly working then they should see this reflected in lower operating costs. This would then affect profit margin. An increase in profit margin would show a decrease in operating costs and would be another indicator that this strategy is working correctly. Of course the opposite would also be an indicator of this strategy not working to benefit the company. Overall, if these strategies work, New Balance should see an

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