Sher-Wood hockey stick manufactures is a Canadian company that started in response to the increase popularity of hockey in 1949. It was previously known as Sherwood-Drolet limited. The company has successfully been making high quality hockey sticks that for a long time have been attracting hockey players. Hockey started in the 19th and slowly spread to various parts of the world.it found its way to America in the 1980s. As the game continued gaining reputation, Sher-Wood manufactured the hockey sticks that were highly demanded and the company gained a large market share. The game became so widespread and actually acted as a source of both income and pride to many. Unfortunately, in 2011, its management team realized that the company was rapidly losing its market share since its products were considerably expensive. The team was looking for a better way to boost the demand of high end composite hockey and goalie sticks.
Will the executives’ decision of outsourcing the production of hockey sticks to china help Sher-Wood regain its market share?
Analysis
The hockey stick manufacturing industry was continuously advancing with time. Companies employed precise technologies in quality control and production processes. Sher-Wood used materials that would enable them to produce high quality hockey equipment that will absorb shock. This was an added advantage over other manufacturers who used titanium to produce composite hockey sticks. The greatest challenge facing Sher-Wood is stiff competition from other companies. Big companies had merged with comparatively small companies in an effort to reduce competition and own a large market share. The companies are continuously improving the quality of their products. In so doing they woo many clients that were previously Sher-Wood’s. There were regulations in china that had to be met before transferring the production facilities to china. Sher-Wood’s targeted young hockey players.
Strategy option and analysis
Off sourcing should be considered as an option, however, it should be taken phases so that the establishment of their company in China does not mean the home company is completely swept away. A step by stem offshoring would enable the management to move the necessary and required personnel and technology. Considering the availability of labor available in china, these would yield more profit as the company costs will reduce. However, ensuring a gradual shift will help the company see off the pick season and establish a new company therefore there will be less shortage or no effects at all on the market demand.
Another alternative would be to try minimizing production costs and increase returns. The company should put in place measures that would reduce production costs. This will be achieved marketing strategies and production methods that would see the company gain an upper hand in the market. For example, instead of targeting junior teams, it should target the whole market both juniors and seniors teams. This will provide a large market that when combined with good marketing strategies, advertisement, and market research; it will provide a better understanding on the market needs.
Analysis of the alternatives
The two alternatives will be analyzed in terms of their impact on the company’s management objectives, mission, and their viability. Considering the situation of the company, we look at the immediate interventions that will bring positive changes and enable the company rise again. Analyzing the possible effects of the alternatives will enable the management decide on the most appropriate plan to embrace.
Off shoring is advantageous in that the company will acquire cheap labor in china. It will also be easy to compete with other produces since their prices will be relatively low. They will fully utilize their facilities and increase production; this will cover the capacity deficits it had experienced in production in the previous years. However, there are negatives on off shoring, first is the high cost of relocation and expert importation and secondly, the regulations in Quebec hindered this movement. Generally, off shoring is more advantageous for cost reduction and R&D standpoints.
Minimization of production costs and increasing returns is achievable through sound production and marketing strategies. However, these strategies will require more investment to implement and therefore ask more from the company budget. In the long-run, the strategies will only be increasing the invisible production costs thus reducing the real company profit.
Action plan
As observed therefore, the practical and sustainable alternative will be a gradual sequential off shoring of the company to China. This can be budgeted as a priority in the company’s long-term objectives, probably in three to five years’ time. The management plans on how technology and experts will be moved with an aim of training the locals to minimize on the skill-importation budget.
Recommendation
In addition to outsourcing, the company should also have:
- Provided a competitive retail price to boost the demand. These would have attracted more retailers to partner or engage with the company and thus distribute the products to various markets.
- Conducted a thorough market research and product promotion campaigns. This would have helped the company to discover the various tastes, preferences and needs of its customers and therefore manufacture products that will be appealing and meet their expectations.
- Reduced the size of its staff and redirect the funds that would otherwise have been used to pay them to product promotion and quality improvement processes.
- Evaluate its management team to access if they possess the necessary abilities, experience and acquaintance to effectively handle the changing nature of consumers and the industry at large.
- Employ modern production facilities that would have enabled the company to quickly and easily produce high quality equipment. This could have reduced the time, effort and money used in the production process. Though acquisition of the facilities would have been a costly undertaking, the company would have improved its operation and consequently improve its sales. Customers are special stakeholders in any business and the company should not have dreaded risking its resources in an effort to satisfy its customers.
Conclusion
Off shoring will benefit the company as it will provide the desired quality and quantity at the right time and at lower prices due to the advantages associated with it. This will make the company stronger competitively in terms of prices and quality. This is the most probable option that will yield desired profits and make the company get back to its earlier glory. It therefore falls that, off shoring will be the best alternative that the company should take; it’s the most viable and profitable.
