Mercury Athletic Footwear Harvard Case Solution & Analysis

Mercury Athletic Footwear Case Solution

Introduction:

Mercury

Daniel Fiore, the founder of Mercury, sold the company to West Coasts Fashion, a large designer of women’s and men’s branded apparel, in late 2003. Mercury is specialized in designing and distributing the branded athletic and casual footwear. With continuous efforts, the company succeeded in identifying the customers’ need and fashion pattern which resulted in growth in the revenue and EBITDA. The company reported a revenue of $ 431.1 million and EBITDA of $ 51.8 million in the year 2006, which was a great success. WCF in the year 2007 had announced a divestiture of Mercury, its non-core assets and renewed focus on its higher end business.

Active Gear

Its casual footwear was sold by more than 5700 North American department.After. years of company’s steady growth which is reflected in its 2006 annual report, it reported revenue of $470.3 million and operating revenue of $ 60.4 million. Despite of this great success, the company due to its smaller size created a strong negative image in front of its stakeholders. Therefore, the company is in a need to focus on its expansion strategy and searching for the market opportunities.

Q1) Is Mercury an appropriate target for AGI? Why or why not?

In order to analyze the appropriateness of Mercury for AGI, we need to consider the similarities and differences in the two businesses.

Differences:

Differences between the two companies

Particulars Mercury Active Gear
Demographical target Youth Market Family Members
Brand Image Classic and Lifestyle Flexible
Price Level Mid - Range Low and High
Similarities:
Similarities between the two companies

Particular Mercury Active Gear
Business Nature Footwear Footwear
Product Lines Athletic and Casual Footwear Athletic and Casual Footwear
Location North America North America

• Both the companies are dealing in the similar industry and products.
• Both the companies’manufacturers are located in China, which can ensure the competitive advantage over the rivalries.
• It is estimated that on acquiring Mercury, Active Gear will be able to increase its revenues in the upcoming years by twice the amount they are currently.
• Moreover, despite of the profitable company’s image in the footwear industry, Active Gear due to its small size has created a strong negative image in front of the stakeholders of the company. Therefore,it was highly important that the firm should expand in proportion to its profitability.
• Culture plays a vital role here because if the culture differs drastically, then it not only inhibits efficiency but it also affects the effectiveness of strategic planning.....................

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