QSPM Matrix
(Attractiveness score: 0.5= not acceptable; 1= possibly acceptable; 1.5= probably acceptable; 2 most acceptable)
Competitive Advantage Marketing Strategy
INO Shoes will use its smart performance technology as its main competitive advantage. Players will effectively feed their information to a smart application in computers or smart phones where they can review their performance and other important fitness and health information. The technology is set to give professional and casual tennis players a new age in playing tennis. With no such technology in any tennis footwear, INO Shoes is set to woe consumers into the world of technology in tennis. As technology advances, consumers will be highly eager to embrace such technologies in tennis. Professional players will effectively track their performance, which will set new trends in training and playing tennis. Additionally, setting affordable and low prices for high-quality shoes will also create a sustainable competitive advantage. This is especially based on offering school customizable shoes.
Management Plan
Company Organization
INO Shoes will be directed by the general manager who will oversee the company’s management. The general manager will be Tim Harris, a professional manager with over ten years’ experience in the sporting apparel industry. Under the general manager will be three line managers including the manufacturing manager, chief finance officer, and the sales and marketing manager. The manufacturing manager will be heading the production, design, quality management, human resource, and the research and development departments. In the design department, a vice president will head the operations working closely with designers and the research and development department. The design department will be responsible for designing INO Shoes with cushioning, leather, shock absorption, durability, and flexibility technologies. After designs are made, they will be passed to the production department. The production department will be managed by a vice president who will make sure that; production meets required standards, is within the budget, and delivered on time through the help of supervisors in each phase of production. It will also feature a safety measures sub-department that will oversee safety training inside the factory, and ensure that the company and equipment in use meet safety standards as required.
After production, the products will move to the quality control department, which will be headed by a vice president. The quality control department will test new products and check for any hitches while approving quality products for packaging and distribution. The department will also be in charge of packaging. After packaging and approval, the product will enter the sales and marketing department for distribution. The department will be headed by a vice president, who will ensure implementation of INO Shoes’ promotional, marketing, advertising, and distribution strategies. Under the manager will be a sales vice president, charged with developing sales plans according to the target market and distribution strategies. It will also include a branding sub-department that will champion the company’s branding strategy. Lastly, the chief finance officer will head all financial responsibilities of the company. Under the chief financial officer will be the financial controller and an administration manager. Moreover, the team will appoint a legal team of only three professional and a secretary to work closely licensees to handle contracts, while giving legal advice to the company on matters of concern such as patents. The company’s company organization is expected to ensure effective and efficient operations in the daily running of INO Shoes that will ensure increased growth and success (Talloo, 2007).
Management Team
INO Shoes has ensured that it picks the most talented professionals in the management team. The management team comprises of the general manager and the three managers. All these professionals have undergone a rigorous interview and vetting process. Tim Harris is the general manager of INO Shoes. Harris has a rich experience of business having worked as a manager in the sporting apparel industry for over ten years. Additionally, Harris is an aggressive entrepreneur having been a shareholder in different sporting apparel stores and owning a retail store for a wide variety of athletics apparel. Harris has an MBA in strategic management, a degree in strategic marketing, and a degree in law. His business experience, entrepreneurship experience, legal knowledge, and hands-on leadership are significant assets for INO Shoes. Harris’ responsibilities include strategic planning, addressing legal issues, and most importantly offering leadership and vision to ensure company success and growth.
Jack Stone, an expat American, is the manufacturing manager of INO Shoes. Stone is a highly qualified and experienced engineer with an MBA in business and engineering. After completing his MBA, Stone became the operations manager at a footwear and apparel company. Stone is also a shareholder in a local building and construction company in his area. His experience and expertise include strategic operations management, safety and quality control, and production management. Stone’s technical experience and expertise will complement his responsibilities, which include commercializing and use of high-tech technologies in shoe making and the R&D department.
Clara Brooke is the chief financial officer of INO Shoes. Brooke graduated from the Harvard University with a Bachelor in Commerce. She has worked for three major financial institutions including Citi Bank as a senior financial advisor. Brooke has substantial experience in tax management, financial law issues, and strategic finance management. Her experience and expertise will ensure effective and efficient business structuring, budgeting, and forward planning.
Board of Directors
The board of directors will consist of five members. The chairperson of the board will be the majority shareholder of INO Shoes. Two other officials who will be elected by all shareholders will hold the executive board that will ensure operation of day-today business. The last two officials will also be erected by shareholder and will be in charge of a supervisory board, which will administer the executive board. However, both boards will be answerable to the chairperson. This system will ensure effective and efficient governance avoiding any conflict of interest and concentration of power on an individual shareholder. The board’s responsibilities include governing the company by forming broad policies and aims, choosing, appointing, assisting and appraising the performance of the general manager, certifying the convenience of satisfactory financial resources, endorsing annual budgets, and accounting to the stakeholders in terms of organizational performance.
Management Strategy
INO Shoes intends to manage strategically the company in line with its business goals and objectives. The first strategy is through cost leadership, which involves providing the lowest prices in the market. Management will work together to ensure economies of scale in all departments and operations. To achieve this, the production will consistently produce large stocks to ensure maximum employee productivity. Additionally, the company will collaborate with suppliers to ensure raw materials are purchased in bulk and in convenient prices. Secondly, the company will also implement a differentiated management strategy, which involves gaining consumers through value-added means. The management will work closely focusing on designing the smart performance technology, which is set to add value for tennis players. Moreover, the R&D is set to increase efforts to introduce similar technologies in the product offering consumers increased and sustainable value for their money. The company will also offer customization options for schools and tennis championship organizations.
Operating Plan
Personnel Plan
INO Shoes personnel plan is an incorporated model addressing employee benefits, rights, and working conditions as per the industry and company policies. The human resource department is responsible for the development, implementation, and review of the personnel plan. All job titles have clear job descriptions that are supposed to guide employees on their duty and ensure human resource only recruits employees who meet requirements. Salary administration will be handled by the human resource upon appointment. Individual pay hike requests will be approved after a standard evaluation is conducted with consultations from the management team. All new employees will undergo induction programs to ensure they understand the business of the company (David, 2004). Supervisors will also be required to conduct employee appraisals to ensure effective and efficient operation of the company. All employees will be entitled to coaching and professional development through various programs. The company will also ensure that the working environment meets the required standards in terms of safety, security, and hygiene to ensure employee comfort. Communication will be through limited channels to ensure effective and efficient flow of information. Lastly, disciplinary cases will be handled through an already developed policy and procedure (David, 2004).
Suppliers/Distributors
INO Shoes believes that the supply chain is a key component in achieving its objectives and aims. The company will begin by enhancing service levels to ensure effective and efficient internal and external operations. More capital will also be invested in improving service levels. The second strategy is developing a communication strategy. INO Shoes will offer suppliers with efficient feedback channels to ensure they identify opportunities, threats, and challenges to business feasibility. The communication strategy will also increase interaction with suppliers for timely delivery of supplies. Thirdly, INO Shoes will work on building close relations with suppliers by making them aware of the company’s management strategy in offering convenient prices for consumers. Supplier will effectively agree to reduce prices if the company orders supplies in bulk. Another strategy involves increased efficiency in the organization especially production process. INO Shoes will ensure enhanced maintenance of equipment to avoid delays or drawbacks in production (Szymanski, 2006). This will ensure products are produced at the right timelines for them to get to the market. Lastly, the company is ready to embrace innovation by seeking new ways of supply chain management (David, 2004). This calls for close collaboration with key suppliers both externally and internally.
Operating/Manufacturing/Layout Process
The manufacturing process strategy will be an in-house operation. A factory layout design will be developed a layout of all production areas for the tennis shoes. This will also feature a layout process that will improve efficiency and effectiveness by organizing equipment according to their purposes. The first area will be designated for modelling the simulations of shoes to be manufactured. In the manufacturing process, the first step will involve stocking all areas of production with the required raw materials; leather and soles (Szymanski, 2006). The second step will involve cutting of soles and leather in different designs as per product range. Again, the shoes will proceed to the fitting phase where they will be fitted to soles and stitched up through special equipment. The shoes will be made in different sizes, colors, designs, and features. For special features such as the smart performance technologies, shoes will be hand-made and assembled to ensure high quality products. Finished products will then move on to the quality control department for testing and approval. After approval, the product will be graded in different colors, features, and designs for packaging in eco-friendly boxes.
Operating Strategy
INO Shoes intends to collaborate with key distributors to ensure that latest INO Shoes are on store shelves in less than a week. The company will contract distributors in several areas to distribute the product to all selected stores and retail stores. This strategy will ensure that consumers enjoy the latest trends in tennis footwear, which means more profits for the company. Increased communication and effective freight management will ensure timely deliveries to all partners in the retail market. The company will also collaborate with storeowners to ensure both businesses benefit by ensuring stocks are ready upon consumer requests. This will also help the company understand consumer preferences and buying behaviors. The efficient distribution or supply of shoes to wholesale and retail stores will ensure efficient and effective management of inventory.
Financial Plan
INO Shoes financial plan bases on conventional estimations and assumptions, sales forecast/BEP, capital requirements, financial ratio analysis, and a financial strategy.
Financial Assumptions
INO Shoes also expects to have a yearly revenue growth of 15%. Based on the marketing plan we expect our sales to improve monthly especially based on our competitive start up prices. With increased revenues, we will be able to support our increasing operational costs while generating significant profits in the next three years. With a talented management and sales and marketing force, INO Shoes will effectively meet the anticipated revenue growth annually. INO Shoe’s revenues are diffidently sensitive to changes in the economy. Nonetheless, people will endure divorce events and firms ill still require corporate intelligence collecting notwithstanding harmful changes in the general economy. Moreover, the increased revenue generated by INO Shoes will guarantee that the company can remain operational and profitable despite any reasonable downsides in the top-line income. The third assumption is that the organization will acquire $100,000 capital loan to develop the business. This capital loan will cater for the manufacturing costs and operational costs meant to regenerate once the company makes its first annual sales. Additionally, other sources of income will include management investment of $50,000 totaling the total financing to $150,000. This capital will be adequate in handling the startup expenses and allowing the company to operate for six months.
Another assumption is that INO Shoes will guarantee production of high quality shoes for playing tennis on a national level. There will also be already preordered customized shoes for schools and tennis championship tournaments. Furthermore, INO Shoes will actively participate in community development through sponsorship of local tennis teams and players.
Sales Forecast
INO Shoes expects to grow sales by 3 percent each year for the next three years. This is expected to generate a cash flows amounting to over $500,000 for each of the next three years. The sales forecasts are based on several factors. One, sales will be low as we start, but are expected to rise significantly in three month. This will be facilitated by an effective promotional and advertising strategy. Second, with increased use of promotional tactics prior to the launch of the product, it is expected that the demand for the product will be high. Additionally, because of the high tech design and unique features, our product will be received well in the market. Again, based on our collaboration with schools and tennis organizations we expect to have several orders for our products meaning there will be a ready market and demand. Third, we have the human resource to meet the expected capacity for pre-ordered products and for the distribution demand from retail stores. Sales will be based by 48 hours of production on a weekly basis. Additionally, we have strategically planned to begin sales at the beginning of the hockey season, meaning demand will be higher than other seasons. Promotional activity will begin prior to the first sales through numerous promotional strategies especially INO Shoes website. These factors will effectively ensure that the sales forecasts are realistic and achievable.
Sales forecasts for 2014
Key Marketing Metrics
INO Shoes has put in place several key marketing metrics to ensure that the sales forecasts are achievable by measuring the metrics on a frequent basis. However, they may need adjustments and fine correction as we advance. These metrics are our best estimations based on current market research.
Break Even Point
INO Shoes must ensure how many shoes must be sold to break even on this investment by determine the break-even point in manufacturing costs and expenses. The average revenue per shoe unit is $100 with a variable cost per unit of $40, and a total fixed cost of $15,000. According to the break-even chart analysis below, the company will need to sell over 280 shoe units to ensure the investment is worth the money.
Capital Requirements
The company requires a working capital, which is the minimum amount of resources needed to cater for the usual expenses and costs effectively. These capital requirements are essential to operate the business for a whole year. The capital requirements include the following:
- Factory Lease
- Office construction
- Inventory control, (cash registers and computers)
- opening inventory
- Salary and Administrative fees
- Smart performance technology chip and biosensors
The capital requirements will be provided by shareholders investment and short-term loans. These capital requirements are illustrated in the following chart and tables.
Financial Ratios
For INO Shoe Company to become a sustainable business, it will require effective financial management. Finical analysis is an effective tool that can promote our company’s understanding of financial outcomes and trends over time, and offer key indicators of business performance. INO Shoes will use financial ratios to identify strengths and weaknesses from which initiatives and strategies can be developed. These rations will also assist stakeholders to evaluate the overall organizational performance to facilitate effective decision making concerning mission impact and management effectiveness. The financial ratios will be calculated through reliable and accurate financial projections (Greenwood, 2002). Additionally, they will be used to compare goals and internal benchmarks, and competition. Since the company is starting, the financial rations will be based on key financial assumptions and projections.
Financial Strategy
INO Shoes has a will apply a well-established and reliable financial strategy based on three key stands including disciplined investment, discreet balance sheet management, and effective cash returns to stakeholders. Furthermore, INO Shoes will also offer secure and cost efficient financial resources for the firm and to manage INO’s capital structure based on leading competitors with A credit ratings.
Disciplined investment
Because INO has expects to acquire a considerable amount of capital for startup, the main challenge we are facing is preserving it, growing it, and using it effectively to ensure the next generation has an inheritance. Our investment strategy depends on compromising between volatility and return rather than market timings and security. This can be achieved by applying diversification principles as nom single management strategy works always. We believe that our team of experienced personnel can effectively employ a considerable combination of disciplined investment approaches that will effectively maximize profits and returns to shareholders (Greenwood, 2002). One of the key investment plans we are looking to diversify into is setting up our own retail stores and acquiring competitors. Our investment strategy is also based on a sound investment philosophy. One of the philosophy is that developing a sustaining and comprehensive investment policy plays a key role to investment success (Greenwood, 2002). Combination of management styles and managers reduces risks, ensures effective business operation, reduces the need for costly investment decision, and despite the comparative efficiency of capital markets, effective managers and leadership can add value over time.
Modest balance sheet management
We aim to accomplish an A credit rating for our balance sheet management. We are committed to resilient balance sheet that offers increased flexibility and discipline in our investment strategy, facilitating INO to develop a strong business that achieves positively throughout the economic lifecycle. Our first approach is value management, which is a systematic, structured, and analytical process that pursues to accomplish all the required functions at the lowest total cost constant with essential levels of quality and performance (Kidwell et al., 2011). We have based our approach on the theory that there are always more approaches to accomplish project objectives and with increased evaluation of alternatives, it will facilitate the most satisfactory conclusion. Through function analysis, the company will identify the important and priority activities thus pinpointing wastage, unnecessary costs, and functions that will offer an opportunity for value improvement. Again, we will set up effective risk optimization approaches and models based on risk pricing, risk portfolio management, and economic equity distribution. This also involves liquidity and interest rate modelling, credit risk sculpting, volume targeting, and economic equity distribution (Greenwood, 2002). One of the main challenges is maintaining our inventory by ensuring correct and explicit inventory management with suppliers. Effective inventory management will also ensure that the company can easily facilitate effective valuation. Additionally, too much or too low inventory may expose the company to several risks. Too much inventory may cause the risk of obsolesce as competitors may offer higher quality shoes for less (Kidwell et al., 2011). This equally affects the balance sheet in valuing the company, as the excess inventory may be considered valueless. INO Shoes expects to set up all the necessary and effective approaches to ensure a prudent balance sheet management to support our overall financial strategy.
Cash Return to Shareholders
INO Shoes understands that its shareholders remain key to the business future development as they offer the much needed capital and support. We do not intend to prioritize one approach of capital allocation over another. Through a balanced approach we intend to assess and prioritize on investment opportunities investment opportunities as they arise, which also includes returning cash to our shareholders. Through effective financial projections, we will have no drawbacks in sustaining profitability (Kidwell et al., 2011). Through this, we are sure to attract increased capital that is crucial for investment in facilitating future growth.
Conclusion
Competitive Strategy
INO Shoes main objective is bring innovation and inspiration to the tennis game by manufacturing and selling high-tech tennis shoes. Most of our competitors are highly diversified meaning they concentrate on various sportswear including tennis footwear. We believe our innovation and high quality commitment in our product we will effectively gain a competitive advantage that competitors cannot afford to beat. This is because all of our efforts and attention are directed to making high-tech and superior quality tennis shoes unlike most competitors who have to give attention and effort to numerous lines of shoes for different sports. With comprehensive market research, we have determined that tennis players choose the type of shoe to wear based on cushioning. Cushioning allows players to feel comfortable and flexible since tennis involves stretched movements while playing. To ensure we meet their demand and guarantee a high quality product, we will use kangaroo leather for the best cushioning. The leather will be handmade and furnished with durability substances to ensure maximum durability. With increased need for flexibility and comfort, the leather will feature several designs to suit different types of weather that allow players maximum ventilation in their foot while playing. Our shoe will also feature state of the art shock absorption technologies that are meant to increase comfort and offer flexibility while playing tennis. Additionally, the soles will be made from high quality lightweight carbon fibers to facilitate maximum durability and ensure consumers get value for their money. As technology has advanced, we intend on making some of our designs through 3-D printed models as limited editions. This will allow as capturing high profile consumers looking for unique shoes for tennis.
Lastly, on our product, we intend to inspire the game of tennis through innovation by creating the first smart tennis shoe. The smart shoe will feature smart technologies that can detect numerous body and performance features such as mileage body condition. Through biosensors fitted on the shoe, it can easily detect and analyze the wearer’s performance information as he plays. After playing, tennis players can easily access the information by removing a memory card or connecting the shoe to a computer via a USB capable. As technology advances such as with smart phones, it remains a challenge to other players in the tennis industry to create such intelligent shoes. With all our resources directed to making tennis shoes we will be in a position to offer highly innovative and reliable shoes. This technology will be based on our research and development department, which will also be responsible for increasingly ensuring increased improvement of the technology to accommodate emerging technologies to ensure sustained consumer value and competitive advantage.
Another major competitive advantage is being the only dedicated tennis shoes company in the country. Many of the current competitors offer various lines of shoes based on several sports (Szymanski, 2006). This requires many resources and increased innovation to maintain market share in all sectors. We are highly expecting that our high quality and high-tech shoes will effectively meet consumer needs in the tennis industry, which will mean INO Shoes will be the brand of choice. Additionally, with all our resources focused on tennis shoes, we believe this is a realistic competitive advantage. We will also introduce our products with a market entry price that will offer consumers cheaper choices for high quality goods. Lastly, our unique package for customized shoes for schools and tennis associations will effectively position the firm as unique, which will attract increased consumers. This also adds up as a competitive advantage as most competitors do not offer customization options. INO Shoes is geared to bringing innovation and inspiration to the tennis game by manufacturing high-tech tennis shoes at affordable prices.
References
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