Final Quiz - Case - New Balance

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Questions and Answers

What was New Balance's global sales ranking in 2004?

Second

Fourth

Fifth

Third (correct)

In the U.S. market, what position did New Balance hold in terms of market share?

Third

Fourth

First

Second (correct)

Which key aspect differentiates New Balance's product offerings?

Focus on performance and fit (correct)

Limited edition designs

Sponsorships with athletes

High-fashion styles

What was a significant characteristic of New Balance's products?

Wide variety of widths Signup and view all the answers

Why did New Balance prioritize small, independent retailers?

They cater to dedicated runners Signup and view all the answers

New Balance's focus on manufacturing rather than marketing is best summarized by which phrase?

“We are manufacturers, not marketers” Signup and view all the answers

What advantage does New Balance gain from private ownership?

Flexibility for long-term investments Signup and view all the answers

What percentage of New Balance's manufacturing is conducted domestically?

50% Signup and view all the answers

Which products did New Balance manufacture offshore?

High-volume, predictable styles Signup and view all the answers

What is one of the major costs New Balance incurs by keeping domestic manufacturing?

$50 million annually Signup and view all the answers

One benefit of domestic manufacturing for New Balance is:

Faster response to retailer requests Signup and view all the answers

Why does New Balance retain “Made in the USA” branding?

To build goodwill with U.S. customers Signup and view all the answers

The NB2E initiative aims to reduce:

Manufacturing lead times Signup and view all the answers

How does NB2E plan to improve order delivery?

By transitioning to single-pair flow Signup and view all the answers

What key strategy did New Balance adopt in relation to Asian suppliers?

Develop close relationships to reduce lead times Signup and view all the answers

New Balance's choice of independent sales agents provides which advantage?

High-powered incentives for agents Signup and view all the answers

How did New Balance use its sales force automation system?

To allow remote order placement Signup and view all the answers

New Balance's teamwork emphasis is reflected in:

Hiring people with team-based experience Signup and view all the answers

New Balance's competitive position was challenged by:

Adidas' acquisition of Reebok Signup and view all the answers

What effect did the Adidas/Reebok merger have on New Balance's market position?

No significant change Signup and view all the answers

How does higher market share benefit companies like Adidas?

Increased bargaining power with suppliers Signup and view all the answers

What approach did New Balance choose in response to the Adidas/Reebok transaction?

Focus on partnerships with retailers Signup and view all the answers

NB2E's goal for delivery time is:

24 hours Signup and view all the answers

What was one obstacle New Balance faced in implementing NB2E?

Difficulty in reducing inventory reliance Signup and view all the answers

New Balance's domestic factories aimed to reach a lead time of:

Less than 24 hours Signup and view all the answers

What is a central concept illustrated by the New Balance case?

Role of operations in competitive strategy Signup and view all the answers

The BTO model is used when:

Products require multiple widths and sizes Signup and view all the answers

In contrast, the BTS model is effective when:

There is a large SKU range Signup and view all the answers

What is one risk of New Balance's private ownership?

Restricted access to public capital Signup and view all the answers

New Balance's training for new hires includes:

A six-to-eight week dedicated team period Signup and view all the answers

The “Made in USA” label provides New Balance with:

Stronger domestic brand loyalty Signup and view all the answers

NB2E is ultimately designed to:

Enhance operational responsiveness Signup and view all the answers

Which factor does New Balance prioritize less than its competitors?

Marketing and advertising Signup and view all the answers

How does NB2E affect New Balance's inventory costs?

Aims to reduce finished goods inventory Signup and view all the answers

What is a benefit of New Balance's lean manufacturing approach?

Lower lead times in domestic production Signup and view all the answers

Why does New Balance prefer independent sales agents?

Incentivizes through commissions Signup and view all the answers

New Balance's annual “cost penalty” from domestic manufacturing is:

$50 million Signup and view all the answers

Why did New Balance choose not to own factories in Asia?

Wanted flexibility with foreign suppliers Signup and view all the answers

What advantage does NB2E provide in the long term?

Consistent, reliable lead times Signup and view all the answers

Which of the following is a key competitive element for New Balance?

Enhancing product fit and width options Signup and view all the answers

Study Notes

New Balance Quiz - Case Study Analysis

Global Sales Ranking (2004): New Balance was ranked third globally in terms of sales in 2004.
US Market Share: New Balance held third place in terms of market share in the US.
Product Differentiation: Key aspects differentiating New Balance's products are limited edition designs and sponsorships with athletes. They also focus on performance and fit.
Product Characteristic: A significant characteristic of New Balance products is frequent seasonal releases.
Retailer Preference: New Balance prioritized small, independent retailers due to cost-saving on advertising
Manufacturing vs Marketing: New Balance's focus on manufacturing rather than marketing is summed up as "We are manufacturers, not marketers".
Private Ownership Advantage: Private ownership allows New Balance flexibility for long-term investments.
Domestic Manufacturing Percentage: 25% of New Balance's manufacturing is conducted domestically.
Offshore Production: High-volume, predictable styles were manufactured offshore.
Domestic Manufacturing Costs: Additional costs incurred by domestic manufacturing include higher wages for executives and increased import tariffs.
Domestic Manufacturing Benefit: Faster response to retailer requests and reduced lead times from Asian suppliers were listed as benefits of domestic manufacturing.
"Made in the USA" Branding Reasoning: New Balance maintains "Made in the USA" branding to gain public goodwill and to build their reputation within the US market.
NB2E Initiative Focus: The NB2E initiative is aimed at cutting manufacturing lead times and costs.
Asia Supplier Strategy: New Balance chose to develop, rather than outsource, close supplier relationships with Asian providers in order to cut lead times.
Sales Representatives Replacement: New Balance's sales force automation system aimed at enabling remote order placement.
Teamwork Emphasis: New Balance emphasizes teamwork through encouraging cross-functional training and experience.
Competitive Challenges: New Balance's competitive position was affected by Adidas/Reebok merging.
Market Position Impact: The Adidas/Reebok merger did not significantly impact New Balance's market position.
Higher Market Share Benefits: Increased bargaining power with suppliers and reinforced and enhanced product design options are advantages of higher market share.
Transaction Response: New Balance cut costs by eliminating domestic production in response to the Adidas/Reebok merger.
Delivery Time Goal: NB2E's primary goal for order delivery is 24 hours.
NB2E Implementation Obstacle: Difficulty in reducing inventory reliance contributed to challenges in implementing NB2E.
Domestic Factory Lead Times: New Balance's domestic factories aimed to reduce lead times to 12 hours.
BTO/BTS Model Effectiveness: The BTO model is optimal when product varieties are extensive and the demand is predictable. The BTS model works better for long-life-cycle products with large inventory spans.
Private Ownership Drawbacks: The limited ability to access public capital and increased operational costs are possible downsides to New Balance's private ownership structure.
New Hire Training: New Balance hires include a dedicated six to eight-week team-based training period for new employees.
Made in USA Advantages: A "Made in USA" label helps establish stronger domestic brand loyalty. and increase sales in the American market.
NB2E Goal: NB2E's ultimate target is improved operational responsiveness and increased international expansion.
Competitor Factor Prioritization: New Balance prioritizes lead time reduction slightly less than its competitors.
Inventory Cost Impact: NB2E aims to reduce finished goods inventory.
Lean Manufacturing Approach Benefits: Significant benefits of lean manufacturing are reduced product lead times during domestic production.
Independent Sales Agents Reasoning: Independent sales agents are chosen with the goal of increasing sales commissions and accelerating international growth.
Domestic Manufacturing Cost: Domestic manufacturing can incur $50 million in added costs.
Asia Factor Explanation: New Balance's decision to use foreign suppliers in Asia relates to lower manufacturing costs in comparison to remaining domestic.
Long-Term NB2E Advantage: Reliable and consistent lead times is a long-term advantage of NB2E.
Key Competitive Factors: Product fit and width options are prominent competitive advantages for New Balance.

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Description

Test your knowledge on the key aspects of New Balance's business strategy and market performance from their case study. This quiz covers sales rankings, product differentiation, and the company's manufacturing focus. Dive in to see how well you understand this iconic brand's approach to the market!