Browns Sportswear Business Analysis

Browns Sportswear Business Analysis

Date of submission:

Browns Sports Footwear is one of the former leading rubber solesports shoes, sneakers and trainers in England. The company has beenin existence for about 95 years now. Over the recent past, thecompany has assigned a new brand-manager to help it get back to theglory days. At present, it is trailing behind industry leaders.Regardless, the company believes that it has what it takes to restoreits image and get back into profitable business. This paper is ananalysis of PESTEL, five forces, McKinsey, Strategic grouping, valuechain, Bowman’s Strategy Clock and SWOT of the company.Recommendations made are based on the analyses, for the purpose ofbusiness strategizing.

Analyses

PESTEL

Economic

Thecompany is facing trading challenges that affected all businessduring the 2008-209 economic meltdown. The meltdown affected majorbusinesses that were operating in The European and Western Markets.Earlier on, an economic turndown on the 90s was blamed for thecompany’s decline. This has led to some major business decisions,such as closing down of shops.

Societal

Thereis a growing societal preoccupation with fitness. People areinvesting more on sports footwear, which is the major business linefor Brown Sportswear. This is what is referred to as “athleisure’wear in the case study.

Technology

Technologyis turning out to be a major marketing and advertisement tool (Queen,Doorley and Paquette, 2013). Unfortunately, one of the reasons forthe company’s failure on the 90s was failure to invest intechnology. Similarly, there is a trend towards wearable technology,which is taking over the industry.

PorterFive Forces

Porter Five Forces

Intensity

Competitive rivalry within the industry

Low to Medium

Bargaining power of customers

Low to Medium

Threat of new entrants

Medium to High

Bargaining power of suppliers

Medium

Threat of new substitutes

High

Withinthe industry, there is intense competition from establishedcompanies, especially Nike, Adidas, Convas and Vans. These threatenBrown’s market share growth. The company’s market is concentratedin the UK and the US. The production is largely conducted in the UKhowever. According to the analysis of the customers, retail customersare most likely to exert some bargaining power, unlike wholesalecustomers. There is however no threat of new entrants, given the highcapital and research for investment required. Finally, within theindustry, new products from the leading companies are most likely topresent the biggest threat in the business. Another major threat inthe footwear industry is counterfeit products (Le’Cordeur, 2012).This affects even the leading companies such as Adidas.

Strategic grouping

Footwear

Nike, Adidas

Burberry, Dr. Martens

Onistuka

Sportswear

Tiger

Adidas, Puma, Nike

Timberland, Havaianas

Designer wear

LaCoste

Sketchers

Superga, Fred Perry

High Price Low

Theabove analysis is conducted by identifying the competitivecharacteristics of the rival companies within the industry. Accordingto Gaston-Breton and Martin (2011), this can be achieved by selectionof axes that are most relevant to the marketing strategy within aparticular industry. As such, all the companies that were judged tofall within the same square were assigned a strategic group each. Inrecognition of the dynamic nature of target marketing within thisindustry, some of the decisions were made based on the total industrysales revenue and shares. Similarly, customer preference wasconsidered.

McKinsey Seven S

Hardelements

Strategy:

While targeting more customers and retaining their loyalty, Brownshas been concentrating on affordable and durable footwear. The mainstrategy is to increase the sales, which went down after the glorious1980s years.

Structure:

Thecompany needs to restructure its brand management. By using anewcomer to the industry, the impact is most likely not to be whatthey expect in the coming few years.

Systems:

Thecompany is employing a new marketing strategy by targeting salesstores. This is a system that it has copied from heritage brands,such as Burberry and Dr. Martens. They are also contemplating usingcelebrities as well as media platforms to advertise themselves.

SoftElements

Skills:

Technologyis gradually taking over sportswear manufacture. This is seen inleading companies such as Nike. As such, the company’s labor forceneeds highly skilled technologist to produce the right products.

Style:

Asearlier mentioned, the company is using advertising and marketingstyles that are already being used by other leading companies. Thisway, the company is looking to upgrade is management style, so as toperform with limited financial resources.

Staff:

Giventhat the company is in a resurgence stage, it needs to employ highlyskilled and experienced staff, from production, marketing up to saleslevels. This would enable it to increase its sales and revenue at thesame time.

Value Chain

The company’s value chain is similar to that of others within theindustry. The industry’s value chain segments are design,manufacturing, marketing, securing clients, distributing andservicing (Li, 2013 and Canaito et al., 2012). The industry’s valuechain factors technology in all these segments. This drives thedesign and production of active lifestyle sportswear, as well ascustomer satisfaction. On the other hand, Browns’ managementoperations highlight its core value of business honesty, especiallyin production of high quality products. This is alongside adherenceto ethical concerns in the sportswear industry. In this regard, thecompany measures its production of non-leather based products, bothat home and abroad. By going with a slogan “As British as Browns”,the company is adding value to its products by playing the cultureand identity card. This is alongside using celebrity endorsement inthe marketing process to appeal to new clients.

Bowman’s Strategy Clock

LowPrice/Low Value

Brownsdoes not compete in this category. However, given that their productslacked differentiated value on the 90s, it attempted to make itthrough cost-effective selling volume. According to Shavarini et al.(2013), in this position, the products are inferior to those of therivals. However, a business puts an attractive price to attractcustomers.

LowPrice:

Brownsis a low-cost leader. According to Utrilla et al. (2012), this fallsunder the category of companies that drive the process to bareminimums. Browns has attempted to persuade the customers to enter thelow price arena, in return for high quality products.

Hybrid(moderate price):

Brown’sproducts have a high perceived value. However, it has managed tooffer them at low process. This is why it realized an increasedrevenue in 2015, up to 10% from 7%.

Differentiation:

Brownsattempts to keep its prices low, at the same time, seeking a highermarket share. Leaders in this position are companies like Nike andAdidas, which have high value with a lower premium.

Increased Price/Standard product:

Brownsavoids this position of the Bowman’s strategy clock. Over years, ithas avoided increasing prices without doing the same for quality.West, Ford and Ibrahim (2015) say that this strategy works in theshort term, but has detrimental long term effects.

HighPrice/Low value:

Companiesin this industry cannot be in this position. This is because thefootwear industry is not monopolistic.

LowValue/ Standard Price:

Giventhe resurgence strategy, Browns avoids this strategy. This is becausecompanies using it risk losing market share (Doyle, 2011 and Thomsonand Baden-Fuller, 2010).

Giventhe truly competitive marketplace of the industry, the sixth, seventhand eight strategies are not ideal.

SWOT

Belowis the company’s SWOT analysis as per the case study and theprevious analyses.

Strengths

  • Well recognized brand in the UK

  • High quality products

Weaknesses

  • High prices

  • Labor issues with mass production

Opportunities

  • Growing market for sportswear across Europe and Asia

  • Rising disposable income among designer wear clients

  • Innovative products

  • Footwear technology

Threats

  • Well established rivals such as Nike and Adidas

  • Industry volatility

  • Product cost inflation

Recommendations

The Browns resurgence appeal is convincing. It is expected that themarket trends, as evident from the case, will favor its expansionambition into new markets, especially the Asian market. Similarly,the company’s strengths and opportunities offer a realistic chancefor risk-adjusted returns in over the coming financial years.However, it is recommended that the company diversifies its productmix so as to compete strongly against the leading rivals. At the sametime, given that failure to embrace technology was one of the factorsthat lead to its decline in the 90s, it is advisable for the companyto double its effort in the same.

Bibliography:

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