New Balance Athletic Shoe, Inc - Essay Example

In reality, management seeks to develop a balance between product diversity and production feasibility. As markets mature and competitive pressures increase, more emphasis is given to product diversity. A challenging problem is the prediction of acceptance rates and market-development cycles. However, this cannot be done precisely at the start. But as companies gain better models and data, more precise market adjustments become possible. "If NB2E was to be successful-approaching Tompkins' goal of 100% availability within 24 hours while reducing inventory levels-manufacturing cycle times had to be dramatically reduced.

These changes required complete realignment of factory operations" (Bowen et al 2008, p. 11). This pressing strategy has two sides: on the one hand it will require additional financial spending and restructuring within the company, on the other hand it will help New Balance to respond effectively to increased market pressure. "Doing this would require us to reduce work in process significantly and get the line associates and supervisors to embrace that change. The real challenge would be to keep making shoes every day while this transformation was ongoing.

" (Bowen et al 2008, p. 11). Product strategy is usually couched in terms of product success. However, management must be realistic about product failures -- new-product failure must be part of overall company expectations. Of course, newproduct failures can be eliminated by going out of business. But staying in business implies that new products will be developed and some will fail. Companies must determine an acceptable failure rate for their new products. Low failure rates are not always complimentary statistics, since they may indicate a lack of innovative ability and risk-taking (Crawford 2006).

The second pressing strategy is structuring of supply chain. Successive channel stages attempt to overcome any discrepancy between product assortment and market requirements. Customer requirements of one or two units are at variance with supplier requirements of mass production. "In terms of manufacturing cost, labor and overhead each accounted for roughly 25% of the total, while materials accounted for the remaining 50%." (Bowen et al 2008, p. 9).Channels are thus used to overcome barriers.

These barriers include the separations of time and space between producers and markets, the costs of moving goods, the communications barriers between producers and users of products, and the separation of demand. In surmounting such barriers, middlemen serve two groups -- manufacturers and customers. Their economic justification stems from performance of their functions more effectively than others. "New Balance continued to forge closer partnerships with its suppliers" (Bowen et al 2008, p. 9). In order to improve the situation, New Balance could develop a new line of products targeted at low class consumers.

The idea is to develop a product line which meets daily needs of a beverage consumer but its manufacturing process is based on professional sport shows technology and materials. In product development, for example, screening, consumer reaction,