M Case Essay

382 Words2 Pages
Question 1: Review the projections formulated by Liedtke. Are they appropriate? How would you recommend modifying them? In determining whether the projections made by Liedtke are appropriate, we shall take a brief look at the current Athletic and Casual footwear industry’s nature, characteristics and outlook. The industry life cycle as stated in the case is at a mature stage. According to Porter, an industry in its maturity stage will see the buyers in that industry wielding more power than suppliers as capacity catches up with or even exceeds demand. Suppliers must now be weary, as volumes purchased by the industry now become important to them. A loss of a large client is potentially damaging to the survival of the supplier/company. This phase also heightens the threat of substitutes and mergers and acquisitions are common place. Rivalry among competitors is fierce as they seek to consolidate their position. Prices at this phase can also fall, putting a strain on profitability. From the case, we can see that low growth and stable profit margins are key characteristics. Despite overall stability in profit margins, due to the intense competition, earnings of individual firms can be volatile. Consequently, the market for athletic and casual shoes remains fragmented. Companies competed on the basis of style, price and quality in the Casual segment of the industry; while brand image, specialized engineering and performance and price were the major bench marks for the Athletic segment. Owing to the cyclical and varying nature of trends and taste, inventory management and the optimization of production lead times, which were between (12-16) months, are key aspects that company’s must have effective control over. Most companies used independent contract manufacturers in China and other parts of Asia, due to their much cheaper cost of production. Department

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