Sports Shoes Market: An Overview of Kart Racewears Company - Case Study Example

 KART RACEWEARS INDUSTRY SIALKOT, PAKISTAN INTRODUCTION TO THE KART SPORTS SHOES INDUSTRY Kart Racewears Company is one of the leading leather and sports manufacturing companies of Pakistan. Situated at the world's famous sports products industrial city Sialkot, the Company manufactures leather products, automobiles, apparel agents, car racing sports shoes, leather and boxing gloves and sports kit etc. Established in 1996, the company successfully continued its journey towards manufacturing and met with wonderful achievements by winning ISO 9001 certificate within one decade of its foundation. The current annual sale of the company is estimated to be from US $2.5 to US $5.0 million, while the number of its employees is around three hundred and forty seven. (FPCCI Journal, 2004 p 31) The Company strongly believes in hard work and high quality of its product; it is therefore the popularity and sales of its products witnessed a continuous rise. The hard efforts and committed staff include the tower of company's strength which has contributed to the good name and fame of the industry. Table 1 GROWTH OF KART RACEWEAR INDUSTRY Fiscal Year Sales 1997-1998 US$ 0.8 million 1998-1999 US $ 1.35 million 1999-2000 US $3.10 million 2000-2001 US $2.76 million 2001-2002 US $2.91 million 2002-2003 US $3.31 million 2003-2004 US $3.58 million PROBLEM/OPPORTUNITY STATEMENT Kart Racewears Company grows in an environment where it observes the state of perfect competition all around it. As Sialkot is famous for thousands of sports manufacturing products, which manufacture export quality products used in mega events and grand sports tournaments from Soccer, Hockey and Cricket World Cups to Olympic Games and other national and international sports events and tournaments, there is a wide range of not only competition, but also best possible opportunity to grow while competing with the rival companies and improving the quality and sales of its products by launching variety of products utilizing best of techniques and technology. Kart Company has devised and implemented a comprehensive strategic scheme in order to win applause for itself and the city where it seeks growth encompassing all the corners of the world. The problem of globalization and availability of high quality European products and low rated Chinese commodities serve as a threat for the popularity of the company in the local market. Nevertheless, the company has made tremendous achievements to gain respectable place at international level. Success comes from matching opportunity with capability. The ups and downs of a total industry often obscure how well a specific company is being managed. (Newman & Logan, 1976, p 48) The same is the case with the Kart Racewears. ASSUMPTIONS The globalization is leaving its indelible impacts on all corporate companies everywhere in the world, which will affect the strategic plans of all the brands including Kart Racewears and others. Sources of information flow are regulating the strategic schemes of the industries. As Kart Company adheres to speedy information gathering, it is able to combat the threat of innovative Chinese products and other local and foreign brands. The dealers and sales agents of a product are the best source of information, which inform the companies regarding latest demands of the customers. Better the relations with the traders and merchants, more the chances of a company to grow. Published material including journals, periodicals and newspapers help the manufacturers work on some specific direction and dimension as well. Since the Kart Racewears has hired the services of technically skilled and qualified staff, which are knowledgeable and experienced personnel and can predict the future market scenario, the chances of its development in future are bright. Customers communicate with the rival and competitor companies the new product of a company that benefits the customers in two ways. One, the rival companies also produce the same product and secondly choice for the customers increase while the price of the products decreases. The Kart Racewears finds its way because of focusing its strategy according to the consumer demands. SITUATION ANALYSIS OF THE COMPANY Situation analysis refers to the "systematic collection and study of past and present data to identify trends, forces, and conditions with the potential to influence the performance of the business and the choice of appropriate strategies." (Quoted in en.mimi.hu/marketingweb/situation_analysis.html) Before making the situation analysis of sports industry with special focus on the Kart Racewears, it would be appropriate to look into the environment under which the Kart Company is growing i.e. sports industry of Sialkot and its place in global market. The city has been famous for exporting sports products since 1895 because of its manufacturing of tennis racquets. One of the manufacturers of Sialkot supplied cricket bats and footballs to the British soldiers. (Ghani, 2002) With the passage of time, the city started working at larger scale and sought worldwide recognition with reference to sports and games products. The Sialkot sports industry witnessed its climax when the international organizing authorities ordered for the preparation of footballs in 1994 and 1998 for the Soccer World Cups. Though, the Kart Racewears Company was in its infancy at that time, yet it was the part of the industry when footballs were ordered for the World Cup Tournament in 1998. All that accelerated the passion for growth and development of the sports industry too. It is therefore, there can be found wide variety of sports wears for so many sports including car racing and motorcycle racing too. EXTERNAL ENVIRONMENT ANALYSIS (UNCONTROLABLE VARIABLES) Corporate organizations, enterprises and companies experience various financial fluctuations, and endure both boom and crisis during the course of time while presenting their products and submitting their services in the market either at global or domestic level. These fluctuations are the outcome of many internal and external factors including changes in technology, alterations in government policies, political, social and cultural changes, introduction and inclusion of new inventions, environmental factors and others. The corporate strategy of an organization comprises of the systems and processes needed to realize long term goals and objectives of the organization. The marketing strategy of the organization consists of the systems and processes needed for the dissemination of product or service information in the market. (BNet Business Strategy quoted in jobfunctions.bnet.com/whitepaper.aspx?docid=84981) Competitors and rivals: There is always a competitive business environment in an industry. Rival brands, products and generics are included in the external factors for a company. The inclusion and arrival of other companies and brands in the market are the uncontrollable factors. Chinese sports brands including have affected the marketing of Kart Company in sports garments, but its sports footwear has least affects on it. Technology: Technological advancements surely effect and enhance the sales of a brand. Technological advancement has brought a significant change in media campaign and has opened new dimensions to the sports industry. Technological change reduces the length of the product life cycle and therefore the time to recoup investment. (Johnson & Scholes 1976, p 80). Investment cost can also be increased as the number of technologies in a product is increased. Kart Industry has imported the best possible machinery for the production of footwear. It is therefore no consumer has complained the quality of the products. Government Policies: As the multinational corporations enjoy the status of leader of the global market, so they certainly have to undergo high leveled competition in different markets and cultures. Furthermore, the multinational companies to face industrial targeting too. Industrial targeting is the practice of government assisting selected industries to grow by a variety of means. (Balls & McCulloch 1999: p 383) Uncertain political scenario and law and order situation has inflicted negative affects on the industry at large. Socio-cultural Factors: New trends are introduced by the biggest companies and the second level companies also have to revise their strategies accordingly. Social factors are perhaps most dominating to decide acceptance or rejection of merchandise. People demand change in life style. It also inspired sportsmen and players, who lead most glamorous life and people try to imitate them. People’s interest towards some specific game also contributes to the strategic formulation of firms and industries. It is therefore, Kart Racewears may pay due heed to other sports products too besides car racing shoes. STRATEGIC ANALYSIS The international companies usually devise two kinds of strategies i.e. customer focus and competitor focus. The customer-focus business strategy is articulated keeping in view the trends and choices of the customers according to the changing scenario of corporate environment as well as inclusion of new technologies. The best companies view customers’ attraction as the launching point for developing and enhancing a long term relationship. (Lamb, Hair & McDaniel, 2005, p 11) On the other hand, competitor-focus strategy is adopted by observing the developments, plans and products of the rival companies. Kart Racewears has adopted dichotomous business strategy by utilizing and applying both the two strategies. The management of the company has hired highly skilled staff, which has introduced sports products in a stylish and innovative presentation. It is therefore the sale of the company is rising every year. Competitor-focus strategic plan is more effectively implied in the Kart Racewears. The Chinese sports shoes industry is the biggest threat for the sales of other countries. China has introduced its products in every business field. Not only this, but also Chinese items can be found at cheaper rates in international markets. Kart Racewears has schemed not to compromise on its high quality. It is therefore, its sports wears are far better than those of Chinese products. Its prepared goods are considered long lasting and durable in comparison with the Chinese ones which have concentrated on low price only. Another type of strategy applied by the biggest industries include Dichotomous Strategy, where the advantages of consumer-focused and competitor-focused strategies. Kart Sports Shoes Company also applies dichotomous strategy while articulating any scheme. Most of the products of Kart Shoes are export leveled ones, so they prepare new designs according to the kind of sports. While discussing sports shoes, the Kart manufacturers produce shoes for car racing. It has been estimated that nearly fifty two countries are the client of shoes prepared by the company. It is therefore the company has to revise its market strategy by looking into both customers’ choice as well as the products prepared and launched by the competitors. GENERIC STRATEGIES OF KART RACEWEARS Firms and companies maintain some competitive advantage over their rival companies, which may either be the low cost of product in comparison with the rivals or high profitability. Porter has presented his theory of Generic Strategies in 1980 in the discipline of management. Porter argues that there are three fundamental ways in which firms can achieve sustainable competitive advantage. (Johnson & Scholes, 1993 p 205). These include: Cost Leadership Strategy, where firms aim at becoming low-cost producers within their industry. Low cost manufacturers characteristically sell a standard, or no-frills, product and place considerable emphasis on reaping scale or absolute cost advantage from all sources. As Kart Sports Shoes Company experiences lots of competition in the business environment, it is hard for it to get this sort of competitive advantage at the stage when low priced Chinese products are capturing the markets at global level. It cannot take such strategy of low cost and does not believe in low quality product as well. Low quality may shake the trust of foreign customers who buy their shoes and use them in car racing competitions. In the same way, high rate of product may also jeopardize its sales volume. A Differentiation Strategy has been the most popular one for the greatest industries including Honda, Marlboro, Coca Cola, Virgin Airlines and others. Based on uniqueness in form and appearance, the differentiation strategy turns a product appealing and attractive for users, buyers and clients. Kart Company also observes the same competitive advantage while manufacturing its products. Its sports shoes and jackets are absolutely unique and different in design, shape and presentation. It is therefore there is a wide range of clientele of these shoes especially among the car racers. A Focus Strategy is based on the choice of a narrow competitive scope within an industry. By this, the firms select only one product of the whole industry and keep complete focus on it. It is therefore it becomes easier for a company to take advantage of low cost too as well as uniqueness so that the product can be declared as perfect one. Though Kart Industry manufactures multiple sports and casual wears, yet it has focused on only car racing sports shoes as its target product. It is also fact that its car racing shoes have made the company popular and worthwhile in the competitive state of global manufacturers particularly in sports community. Looking into the business scenario of sports industry, it is really appreciable for the Kart Racewears to adopt a Differentiation Strategy under present situation where globalization serves as a constant threat for most of the brands of Asia and Europe. Moreover low cost Chinese products do not let Western and Asian companies adopt Cost Leadership Strategy, because they are presenting their commodities at the cheapest rates and at low quality too. Western management thinking has traditionally assumed trade-offs between products quality, cost and delivery; high quality cost more and took longer; low cost meant low quality too. (Mair, 1996 p 667). CONCLUSION In the nutshell, it comes to know the very fact that Kart Sports Company has made a sound headway with the help of comprehensive business strategy, human resource, latest information, differentiation strategic plans and in-depth analysis of market scenario. Focusing on car racing footwear, the company has successfully launched its product for this special sport. Hence, its high management has applied Focus Strategy in respect of the sales of its products. The proper allocation of resources and clear internal and external policies reveal the very fact that the company is not only able of surviving in the global arena, but also it will remain at the top in sports footwear for the future years to come. Though Kart Racewears produced wide range of sports products, its car racing shoes gained special attention of the importers and the players alike. The highly committed teamwork and the right person at the right place policy distinguish it from the competitors. The innovative ideas are both gifted and the outcome of continuous efforts, may lead it to more respectable place. It may further grow by producing more stuff for various sports and games other than car racing shoes only. The inclusion of more experienced and qualified staff can raise its sales volume and popularity at world level. Kart’s committed team, experienced staff, innovative ideas, penetration in international markets, dedicated customers, reliable partners and joint venture with multinational products and companies, tangible and intangible assets and intellectual property are among the strengths of the industry. Its fast growing products, wide range of consumers, long list of retailers, shareholders, management, policy formulation, inventory, innovation and unique designs are among its plus points that keep the industry at a higher rank in production and popularity. REFERENCES Ball, Donald A. & McCulloch, Wendell H. (1999) International Business: The Challenge of Global Competition. 7th Edition. IRWIN/McGraw Press INC. p 383. Ghani, Dr. Jawaid. March 2002. Sialkot at Work. The South-Asia.com Johnson, Gerry & Scholes, Kevan. 1993. Exploring Corporate Strategy. Text and Cases. Third Edition. Prentice Hall New York. p 205 Lamb, Charles W, Hair, Joseph F & McDaniel, Carl. (2005). Essentials of Marketing South-Western College Pub; 8 edition. p11 Logan, Newman. (1976) Strategy, Policy and Central Management, 7th Edition. South Western Publishing Company, Ohio. p 48 Wit, Bob De & Meyer, Ron 2003. Strategy Process, Content, Context Third Edition. p 667 Zaidi, M. H. (1997) Leisure Time Activities in Relation to Social Class—A Sociological Analysis. An unpublished Thesis submitted to the Department of Sociology, University of the Punjab, New Campus Lahore. p 3 Census of Establishments (1988) data files; Sialkot Dry Port Customs; Economic Survey (GOP) Sialkot's Entrepreneurial Spirit. p 5 http://www.marketingpower.com/mg-dictionary-view2898.php http://www.triz-journal.com/archives/2000/04/d/ Monthly Journal Federation of Chamber of Commerce and Industries Islamabad. (2004) Prime Media Publications, Khayaban-e- Shamsheer, Karachi. p 31 http://en.mimi.hu/marketingweb/situation_analysis.html http://www.eiu.edu/~mboorom/situationanalysis.html Read More