Competitor Analysis With Reference To Macro Factors Marketing Essay

Phase I of Puma’s long-term corporate development plan starts whereby the aim is to restructure the company and establish a solid financial footing.

1997

Phase II of PUMA’s long-term development plan starts. Its aim is to reposition the brand through investment in marketing and product development.

PUMA’s new Italian subsidiary starts operations.

PUMA’s first joint venture is established in Chile.

2000

PUMA launches www.puma.com, featuring regional e-commerce.

2006

PUMA launches Phase I I I of its long-term oriented business plan.

In Phase IV, Company Expansion, PUMA has the long-term mission of becoming the most desirable

Sport Lifestyle Company.

To kick-off Phase IV PUMA starts majority owned Joint Ventures together with former license partners in Japan (apparel business), China/Hong Kong, Taiwan and Argentina and Turkey and founds fully owned subsidiaries in India and Dubai for the Middle East region.

THE PUMA STRATEGY

Puma’s mission is to become one of the most desirable sports brands in the world. The brand strategy is based on three cornerstones, brand identity, marketing and product. The brand identity defines PUMA as the brand that successfully combines the influences from the areas of sports, lifestyle and fashion. Continuous investments in the areas of communication, product design and marketing, have allowed PUMA to bolster its brand position, strengthen its image in key markets and further increase its brand presence with its target consumer. The fusion of these three elements is what makes PUMA the

Ultimate alternative sports brand.

PUMA is determined to become the first genuine virtual sports company in the world. The virtual corporate headquarters are in three decentralized competence centers situated in Herzogenaurach, (Germany), Westford (USA) and Hong Kong.

PUMA and its subsidiaries develop and market a broad range of sporting and leisure goods in footwear, apparel and accessories. The company continuously focuses on environmental responsibility and social accountability. The three pillars of the global company are its virtual corporate structure, strategic planning and its employees. The innovative organizational structure, which is supported by the virtual corporate headquarters and the decentralized centers, has been designed to support the global brand strategy. The multi-cultural mixture of employees forms an essential part of the corporate success. Aside from employing seasoned veterans from the sporting goods industry,

PUMA also recruits talented individuals with a diverse professional and educational background.

PUMA comprises approx. 1,500 employees worldwide, all of whom are committed to environmental protection.

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‘If we set targets which seem practically unachievable we can sometimes achieve the impossible.”

Chapter 2: THE BRAND & COMPANY

Even prior to production, i.e. during the respective development stages, the product -related standards lay down by PUMA and the S.A.F.E. Team has an initial impact on the product. PUMA strictly adheres to its S.A.F.E. Standards

When selecting materials and manufacturing techniques. This means that manufacturers must be awarded a Certificate of compatibility to ensure that the materials used for production contain no harmful substances

For this purpose, each supplier receives the PUMA S.A.F.E. manual before a contract is signed. The standards that the new supplier will be held accountable to are stipulated in the manual, and reiterated in the contract. Only after successful evaluation will PUMA grant permission for production.

Apart from conducting extensive tests on materials, additional tests are carried out by our national and international laboratories several times a year for the purpose of self-control and ensuring product consistency. These tests help PUMA obtain statistical data on compliance with our standards and gather information on overall product quality.

In order to optimize the influence of our

S.A.F.E. standards on product quality, product-related environmental seminars are regularly carried out at various production sites. These seminars comprise discussions and workshops that help to emphasize the importance of product-related standards.

PRODUCT-RELATED ENVIRONMENTAL POLICY

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We are aware of the fact that the environmental standards that we have laid down can by no means be exhaustive. Nor can all substances that may have a potentially negative effect on the environment be taken into account. Instead, to level out these inevitable shortcomings, we place more emphasis on our dialogue with various institutions such as the I.T.S. – Intertek Testing Services which is based in Hong Kong and which carries out tests for us internationally. Other internationally recognized institutes that we rely on include the German TÜV (Germantechnical inspectorate) Rheinland-Brandenburg and Ports & Partner in Fürth/Bavaria.

We understand the nature of environmental commitment to be genuine teamwork. Therefore, communication with our service partners as well as business partners is one of the most essential instruments for us.

DEFINITION

Environmental Scanning refers to the organizational practice of scanning, identifying, analyzing the external environmental (e.g. issues, trends, threats, opportunities) as part of a larger process of strategic decision making. The practice can be compared to horizon scanning, which focuses more explicitly on longer-term, less immediate issues.

METHODS

There are three ways of scanning the business environment:

Ad-hoc scanning – Short term, infrequent examinations usually initiated by a crisis

Regular scanning – Studies done on a regular schedule (say, once a year)

Continuous scanning – (also called continuous learning) – continuous structured data collection and processing on a broad range of environmental factors

Most commentators feel that in today’s turbulent business environment the best scanning method available is continuous scanning. This allows the firm to act quickly, take advantage of opportunities before competitors do, and respond to environmental threats before significant damage is done.

Chapter 3: THE MACRO ENVIRONMENT

Environmental scanning usually refers just to the macro environment, but it can also include industry and competitor analysis, consumer analysis, product innovations, and the company’s internal environment. Macro environmental scanning involves analyzing:

The Economy

GDP per capita

Economic growth

Unemployment rate

Inflation rate

Consumer and investor confidence

Inventory levels

Currency exchange rates

Merchandise trade balance

Financial and political health of trading partners

Balance of payments

Future trends

Government

Political climate – amount of government activity

Political stability and risk

Government debt

Budget deficit or surplus

Corporate and personal tax rates

Payroll taxes

Import tariffs and quotas

Export restrictions

Restrictions on international financial flows

Legal

Minimum wage laws

Environmental protection laws

Worker safety laws

Union laws

Copyright and patent laws

Anti- monopoly laws

Sunday closing laws

Municipal licenses

Laws that favor business investment

Technology

Efficiency of infrastructure, including: roads, ports, airports, rolling stock, hospitals, education, healthcare, communication, etc.

Industrial productivity

New manufacturing processes

New products and services of competitors

New products and services of supply chain partners

Any new technology that could impact the company

Cost and accessibility of electrical power

Ecology

Ecological concerns that affect the firms production processes

Ecological concerns that affect customers’ buying habits

Ecological concerns that affect customers’ perception of the company or product

Socio-Cultural

Demographic factors such as:

Population size and distribution

Age distribution

Education levels

Income levels

Ethnic origins

Religious affiliations

Attitudes towards:

Materialism, capitalism, free enterprise

Individualism, role of family, role of government, collectivism

Role of church and religion

Consumerism

Environmentalism

Importance of work, pride of accomplishment

Cultural structures including:

Diet and nutrition

Housing conditions

Scanning these macro environmental variables for threats and opportunities requires that each issue be rated on two dimensions. It must be rated on its potential impact on the company, and rated on its likeliness of occurrence. Multiplying the potential impact parameter by the likeliness of occurrence parameter gives us a good indication of its importance to the firm.

RESPONSES

When an issue is detected, there are generally six ways of responding to them:

Opposition strategy – try to influence the environmental forces so as to negate their impact – this is only successful where you have some control over the environmental variable in question

Adaptation strategy – adapt your marketing plan to the new environmental conditions

Offensive strategy – try to turn the new influence into an advantage – quick response can give you a competitive advantage

Redeployment strategy – redeploy your assets into another industry

Contingency strategies – determine a broad range of possible reactions – find substitutes

Passive strategy – no response – study the situation further

• Porter’s competitive forces model (focusing on rivalry between competitors)

Chapter 4: COMPETITOR ANALYSIS

In marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. This analysis provides both an offensive and defensive strategic context through which to identify opportunities and threats. Competitor profiling coalesces all of the relevant sources of competitor analysis into one framework in the support of efficient and effective strategy formulation, implementation, monitoring and adjustment. Given that competitor analysis is an essential component of corporate strategy, Porter (1980, 1998) argued that most firms do not conduct this type of analysis systematically enough. Instead, many enterprises operate on what he calls “informal impressions, conjectures, and intuition gained through the tidbits of information about competitors every manager continually receives.” As a result, traditional environmental scanning places many firms at risk of dangerous competitive blind spots due to a lack of robust competitor analysis

COMPETITOR ARRAY

One common and useful technique is constructing a competitor array. The steps include:

Define your industry – scope and nature of the industry

Determine who your competitors are

Determine who your customers are and what benefits they expect

Determine what the key success factors are in your industry

Rank the key success factors by giving each one a weighting – the sum of all the weightings must add up to one.

Rate each competitor on each of the key success factors

Multiply each cell in the matrix by the factor weighting.

Sum columns for a weighted assessment of the overall strength of each competitor relative to each other.

COMPETITOR PROFILING

The strategic rationale of competitor profiling is powerfully simple. Superior knowledge of rivals offers a legitimate source of competitive advantage. The raw material of competitive advantage consists of offering superior customer value in the firm’s chosen market. The definitive characteristic of customer value is the adjective, superior. Customer value is defined relative to rival offerings making competitor knowledge an intrinsic component of corporate strategy. Profiling facilitates this strategic objective in three important ways. First, profiling can reveal strategic weaknesses in rivals that the firm may exploit. Second, the proactive stance of competitor profiling will allow the firm to anticipate the strategic response of their rivals to the firm’s planned strategies, the strategies of other competing firms, and changes in the environment. Third, this proactive knowledge will give the firms strategic agility. Offensive strategy can be implemented more quickly in order to exploit opportunities and capitalize on strengths. Similarly, defensive strategy can be employed more deftly in order to counter the threat of rival firms from exploiting the firm’s own weaknesses [3].

Clearly, those firms practicing systematic and advanced competitor profiling have a significant advantage. As such, a comprehensive profiling capability is rapidly becoming a core competence required for successful competition. An appropriate analogy is to consider this advantage as akin to having a good idea of the next move that your opponent in a chess match will make. By staying one move ahead, checkmate is one step closer. Indeed, as in chess, a good offense is the best defense in the game of business as well.

A common technique is to create detailed profiles on each of your major competitors. These profiles give an in-depth description of the competitor’s background, finances, products, markets, facilities, personnel, and strategies. This involves:

Background

location of offices, plants, and online presences

history – key personalities, dates, events, and trends

ownership, corporate governance, and organizational structure

Financials

P-E ratios, dividend policy, and profitability various financial ratios, liquidity, and cash flow

Profit growth profile; method of growth (organic or acquisitive)

Products

Products offered, depth and breadth of product line, and product portfolio balance

New products developed, new product success rate, and strengths

Brands, strength of brand portfolio, brand loyalty and brand awareness

Patents and licenses

Quality control conformance

Reverse engineering

Marketing

Segments served, market shares, customer base, growth rate, and customer loyalty

Promotional mix, promotional budgets, advertising themes, ad agency used, sales force success rate, online promotional strategy

Distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical coverage

Pricing, discounts, and allowances

Facilities

Plant capacity, capacity utilization rate, age of plant, plant efficiency, capital investment

Location, shipping logistics, and product mix by plant

NEW COMPETITORS

In addition to analyzing current competitors, it is necessary to estimate future competitive threats. The most common sources of new competitors are:

Companies competing in a related product/market

Companies using related technologies

Companies already targeting your prime market segment but with unrelated products

Companies from other geographical areas and with similar products

New start-up companies organized by former employees and/or managers of existing companies

The entrance of new competitors is likely when:

There are high profit margins in the industry

There is unmet demand (insufficient supply) in the industry

There are no major barriers to entry

There is future growth potential

Competitive rivalry is not intense

Strategic group mapping, to position competitors (using the variables of price/quality and Geographic coverage)

Gaining a competitive advantage over existing firms is feasible

Chapter 5: CASE ANALYSIS & CONCLUSION

It is well admitted fact that the internal factors of any company are very important these internal factors are bounded with the available resources and the capabilities which company has in order to sustain in the competition and capture the maximum available market share.

When we talk about the internal factors like strength and weakness of PUMA then we are able to gain and sustain some important realizations.

Puma’s strength is lies in the famous brand name and variety of product range such as Athletic foot wear, Apparel, Accessories, gloves. Puma has very less no of outlets that is the weakness of Puma.

Puma can take an opportunity of selling consignments goods and it can also take an opportunity of sponsorship.

That was an over view which describe some internal factors of realization. In terms of available resources some factors are really important.

Strengths:

Experience in R & D

Internal strategy

Management

Branding

Weakness:

Missing sport segments

Comparable lower financial resources

Distribution system

WINNING STRATEGY

Continued to strengthen PUMA’s status as a Sport lifestyle brand in the past year by successfully fusing influences from sport, lifestyle and fashion. Extensive global campaigns such as “I’m Going” and “Urban Mobility” displayed the hallmark values of the PUMA brand – inclusiveness, innovative design, sophistication and individuality.

 

With major global sports events, 2008 offers many chances and opportunities to further strengthen PUMAs image as a desirable Sport lifestyle brand. PUMA already sprung to a fast start in 2008 with the launch of the award-winning “Until Then” campaign, which presented a captivating vision of the future of football and new football collection v1.08.

PUMA successfully kicked-off the year with the African Cup of Nations in Ghana. PUMA showed outstanding brand visibility with equipping nine out of 16 teams and won the title through Egypt’s victory for the sixth time. This has provided strong momentum leading into June’s European Championships, hosted by the PUMA-sponsored Swiss and Austrian federations. Its goal in the last years was to turn the PUMA brand into one of the leading competitors in football. The European Championship provides the ideal platform to not only strengthen, but to clearly expand PUMA’s position as one of the top three football brands in the world.

At the Olympic Games in Beijing, athletes of 15 national teams will be sponsored by PUMA. They will ensure great brand visibility, helping us to further strengthen our position as one of the leading running brands in the year of the Olympic Games. The brand message will focus on the PUMA Runway collection, combining the best from the worlds of performance and fashion.

 

With unique product innovations and marketing concepts, will take part in the Volvo Ocean Race, the world’s premier offshore ocean race, starting in October 2008. By joining the race, PUMA has entered its new premium category Sailing and is the first Sport lifestyle company to participate in a venture of this kind. 

(ref. PUMA.com)

In the recent times PUMA is emplacing more on the brand development through contributing in different sports events and sponsorships. It creates a lot more brand awareness for the people. The above information provides us the well established evidence that its strategy is the winning strategy

In terms of key markets puma is very much sustainable in the key development areas of footwear, apparel and accessories. PUMA is using its resources and financial stability in these key areas which are the most development factor for the sustainable Markey growth.

SUSTAINABILITY

It is the integration of the three pillars of environmental, social and economic performance of an enterprise that shows the broader picture. Sustainability is more than the protection of the environment or the monitoring of social standards. We understand it as a social vision that links the actions of the present with the options for future generations.

Environment – product-related

We have maintained our product-related environmental standards which include restrictions on substances such as Heavy Metals, Azo-Dyes, Disperse Dyes, Chlorophenols, Formaldehyde and Organizing compounds.

PUMA chooses to apply the precautionary principle as defined by the United Nations Rio Declaration of 1992, which states that a “precautionary approach shall be applied” where there are “threats of serious or irreversible damage” and “lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”.

For example, the use of Organ tin compounds is suspected to have a negative influence on the hormone system of certain animals. PUMA has arranged a meeting with the association of the chemical industry as well as our competitors to reach a workable solution and establish limit values for PUMA products – even though no legal restrictions exist for these substances.

Environment – production-related

With the revision of our S.A.F.E. Manual in May 2002 we increased the priority of production-related environmental protection within our S.A.F.E. Concept.

We included a new section on waste management and recycling. With this new section Puma’s supplier factories not only have to account for the storage, sorting and disposal of their waste while working with PUMA, but are also encouraged to minimize, reuse and recycle their garbage.

To date approximately 70% of our suppliers sort their waste for reuse or recycling purposes.

Sustainability 2004

The concept of sustainability can be viewed both as a process and as an end in itself. To achieve sustainable development, one must implement responsive and comprehensive systems and processes that constantly strive towards this ultimate goal. To keep momentum going, appropriate structures must be in place.

The identification of interim goals in our areas of corporate responsibility must accurately reflect the situation in our markets, our suppliers and within our own sphere of influence. As a key mechanism in ensuring the sustainability of the S.A.F.E. improvement process, we have designated at all suppliers a Compliance Officer/Representative. This person serves as the main point of contact in the factory and is the primary advocate for the S.A.F.E. concept. These demands require a person that has the requisite influence within the organization to carry out changes in process and goals.

With sustainability as an end in itself, we initiated several projects to ensure that our products have negligible environmental and health impact. We eliminated all PVC from our products. We also joined the industry-wide call against restricted substances through the RSL Steering Group, an initiative of several global acting brands. New product safety standards in Europe, the Americas, and Asia are promptly communicated throughout the supply chain.

Factories in the Far East also committed to a waste management project. This is significant because some countries in the region have yet to fully develop advanced local waste disposal practices. We encourage suppliers with high environmental impacts such as dye houses, for example, to obtain ISO 14001 certification (internationally accepted environmental management certification scheme). But more importantly we look at how well the factory maintains its commitment to sustainable development through continuous improvement. Taking sustainability to heart not only involves a few reference projects, but also the inculcation of ecological issues throughout the brand and the supply chain. We began collecting environmental data from our production partners in 2004. As we gain the capability to track our environmental performance, we hope to better understand our environmental footprint at the production side.

Our suppliers need models that have succeeded in some aspects of sustainability at their level and within their local context.

Seeking out these model factories has been a major task for S.A.F.E. this year, particularly in our major sourcing areas.

Suppliers that employ best practices in all areas of corporate responsibility are virtually nonexistent. Therefore, model factories are assessed on only particular areas, such as environmental management, health and safety or chemical handling.

Sustainable development can only be achieved in a learning environment for all Puma’s stakeholders. It is imperative that capacity building is a sharing of experience among our suppliers. In the area of training, admittedly we have not been very active in meeting the preventive needs of workers and factories. However, with the increased breadth of our network, it is targeted that a comprehensive training program would be in effect in 2005 to include social standards training, health and safety aspects and worker-management dialogue.

Sustainability 2005/2006

Puma’s capacity building program began with the awareness that monitoring goes hand-in-hand with building up the skills and systems of supplier factories to meet Puma’s compliance expectations. In 2005, capacity building became more embedded in S.A.F.E. strategy and in the overall corporate strategy. Capacity building is a preventive measure against code non-compliance, as well as a means to correct non-compliance in a sustainable manner by targeting the root causes.

Simply put, capacity building means training. However, it means more than that in the context of sustainable compliance – it means skills upgrading, it means the review and introduction of new standards and systems, and it could also mean the need to introduce new structures or groups in the workplace. In other words, the goal in sustainable compliance is to ensure that there is internal human capacity to implement continuous company responsibility.

Partnering with like-minded organizations with specialized expertise is crucial in order to ensure that relevant issues can be addressed to achieve sustainable compliance. It is in this context that we opted to have pilot projects within the same theme with key supplier partners in critical countries of operation. We explored different approaches in tackling these concerns, from raising general awareness to assistance in root cause mapping, to education in related management systems. At the end of 2006, our capacity building can be summarized in the following chart.

Production-related environmental aspects

The production of PUMA goods takes place at over 350 suppliers in 50 countries across the globe. Collecting production related environmental data is therefore a challenging task. We introduced an environmental questionnaire and ranking sheet into our PUMA S.A.F.E. audits to cover basic environmental aspects. For the preparation of this report we went one step further and sent a detailed questionnaire to our key suppliers worldwide. For easier comparability we grouped the information received by our product categories: Footwear and Apparel.