Sneaker Harvard Case Solution & Analysis

Sneaker Case Study Solution

Introduction

New Balance Company has been introducing a new product that is athlete shoes for young athletes. They are mainly targeting 12-18 ages of athletes. As no competitor is focusing on expanding it for younger people. High influential brands such as Nike and other international brands are more focusing on running male shoes for athletes aging 18-24 and ignoring the respective age which is being considered by New Balance Company.

The winner of Athletes belongs from London, have broken the record of winners from the United States and thus, received a huge feat from his country and fellow beings. Moreover, it would also analyze that he is improving himself. This impressed the company that the younger population also takes part in athlete gaming and have guts to win. Therefore, it would be a suitable target market for the company to expand itself

With speculations, it has been noted that the million dollar athlete industry would be growing with 18%, consequently, it would also have a positive effect on company’s new products and sales. New running shoes with medium tech and appropriate retail price have been developed for James, the winner, and named this product as Sneaker 2013.

However, in order to protect the profits and operations of the newly developed product, projected cash flow has been required in order to analyze if this project would be profitable for the company and would generate higher returns in the future.

Problem statement

Projection is very necessary whenever initiating a new production or a project. New Balance Company is also initiating a new product named as Sneaker 13. Therefore, cash flow projection is required by the company in order to decide whether the development of new market would be beneficial for the company in future.

Key players

The people who would be playing the main role in the product initiation as well as achieving sales growth and making it profitable are as follows:

  • Production team: the production and manufacturers of newly designed shoes would be playing akey As the product would be beneficial and liked by the consumers, it would earn higher revenue and facilitate the company with profitability
  • Marketing Team: marketing plays an important part in order to make sales of a newly designed and initiated market. However. The company has allocated a higher cost such as endorsing an athlete and other advertising costs have been implemented. If the marketing of a respective product would be done ion a right way, the product would succeed.
  • Supply Chain team: the team of supply chain also plays an important part in order to succeed the product. If the right pre-development and post-development suppliers would be selected and the product would be available for customers, it would bring success to the company.

Proposed Solution

In order to make cash flows projections, Indirect Approach has been used. The reason of using such approach is that Revenue stream of the product have been projected by the company which has been done through market analysis which has a Compounded Annual Growth Rate of 1.8% and it has been projected that market would reach to $84.4 billion in 2018 when the Sneaker 2013 project would be ending

Risks

There are many risks associated whenever a company is developing a new product. However, it is very important for a company to manage these risks while planning of development, in order to prevent the respective product and the company to prevent itself from future problems. Main risks that could be associated are:

The product may not be according to customer’s requirement:

It has been analyzed in the market that there are few younger athletes and the market which is being catered by the company. Moreover, there is only 1 winner in three years which could be wearing the company’s shoes. However, in order to manage this risk company should make investment in Research and Development, and estimate the demand through analyzing customer’s preferences by gathering data such as surveys and questionnaires.

Technical hurdles and Operational Risks

As this product is not labor-centric but its technical and capital-centric. Therefore, any technical issues in the development of such product would result in a problem that could be faced by the company.In order to manage this risks, the company should wisely select the people in the product development team that would be experienced enough to operate machines and recent technology efficiently.

Financial risks

Every project and its execution involves financial risks. However, this risk can be minimized by projecting and budgeting all the financial which would be required. However, the company has been projecting cash flows. Other budgeting should also be done such as manufacturing, marketing, income statement, balance sheet, amortization table and much more should also be developed.......................

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