Business Strategy Game Report of Company Jump-Lead Industry 31
Overview of the Company
The company Jump-Lead operates in Industry 31 which is a global footwear industry and consists of total 12 companies competing against each other. All the companies in the industry started with equal volume of sales, global market share, revenues, profits, costs, footwear quality and so on. Jump-Lead began its operations ten years ago. The decisions from Year 11 will be taken by the new managers. The revenue for Year 10 amounted to $238 million with a Net Profit of $25 million (which is equal to $2.50 per share). The Return on Equity stood at 17% and the Credit Rating was B+. In Year 11 the company's managerial responsibilities were invested to new managers and Jump-Lead is financially stable and is performing well. The buyers of the footwear are satisfied with the products. There are four geographical market segments namely; North America, Latin America, Europe-Africa and Asia-Pacific. The production plants are set up in North America and Asia-Pacific. Each segment carries out branded footwear sales to retailers, online footwear sales directly to consumers and private label sales.
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Porters' 5-Forces help the marketer to contrast a competitive environment. Five forces analysis looks at five factors namely the threat of the substitutes, the power of buyer, the power of supplier, the threat of entry, and competitive rivalry.
1. The threat of substitutes: the threat of substitution occurs when there is product-to-product substitution which will lead to the price reduction or increased level of satisfaction for the consumers.
The company targets two regions mainly Asia-Pacific and Latin America. As the company has a hybrid strategy; it adopts cost leadership for Asia Pacific region which means that quality can be a threat to the company, while in Latin America the company adopts a differentiation strategy which can face the threat of the range of the products offered to the customers.
2. The power of the buyer: The bargaining power of the customers refers to the ability of the customers to put the firm under pressure, which also affects customer's sensitivity to price changes. As there are many numbers of companies which are operating in the same market as Jump Lead with the similar product and price the customer have high bargaining power.
3. The power of the supplier: The bargaining power of suppliers is also described as the market inputs. It is reversible of the power of the buyer. The company has its suppliers in two regions North America and Asia pacific which means that the company is not dependent upon one supplier as a result of which it can be concluded the company has high bargaining power of the suppliers. However the result differs from region to region.
4. The Barriers to entry:
5. Competitive rivalry: This is most likely to be high where entry is likely and the company is opening in the market where there are a high number of competitors and thus the company faces high competitive rivalry. The following are the competitors of Jump Lead: A Company, British shoe ltd, C connect, D Company, E Company, FALTOO Company, GREEN TEC, H Company, IMPERIAL Group, K Company, L Company.
American can purchase products free tariff by using “the Free Trade Treaty” between all countries in North America and Latin America. Also, import tariffs are supported by other regions such as Europe-Africa, Latin America and Asia-Pacific excluding North America. North America does not have import tariffs on shoes production that made in both Europe-Africa and Asia Pacific.
The company are operating their outlets in different regions therefore, the impact of exchange rates will have an big impact on company`s profit margin. Local currencies are different in each region, in addition to the fact that it is not possible to predict in advance the interest rates so this will affect the company, too
In terms of consumers' demand, athletic footwear provides a range of shoes that attract different age groups. Adults and teenagers in these groups are interested with these shoes for different purpose, e.g. adults prefer to wear these shoes for leisure activities and teenager prefer to wear them for fashion. Some older adults, in particular, tend to wear the shoes for comfort and health reasons for their feet. The buyer diversity assists manufacturers to create new global strategies in the competitive world.
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The internet has significant impact on company's decision making and is key in its supply chain; by using the internet and web base sales, the company`s sales have been steadily increasing. Buyers and consumers have an opportunity to see, and purchase their models and styles by using company`s Web-site.
For the Company's CSR, even though the Company has an opportunity to use green and recyclable materials and by using energy efficient products to reduce the carbon footprint, in Year 10, the company did not use these materials because of cost however, this does not mean that the company will never use these materials. Furthermore, the Company can make contributions to charities but this also has cost implications. The Company's image rating also can be increased, over a five year period, by making contributions in the CSR.