The first project of him was called “Flexible Arch”, a design of athletic shoes with three support point which provides both comfort and balance for users. He named it, New Balance. Later on, he became a shoemaker in Boston. In 1934, William J. Reilly became a business partner with Arthur Hall. Arthur Hall was successful at selling this new arch-supported shoes designed by Reilly to police officers whose jobs require lots of walking and running. In 1954, Arthur Hall sold his business to his daughter and her husband (Eleanor and Paul Kid).
Eleanor and Paul Kid’s company designed and manufactured “Trickster”, he world’s first running shoe with ripple sole. Sole is the bottom of the shoes that supports our heel and foot arch. Shoes with ripple sole helps you run lighter, easier and reduce pressure on your feet. This characteristic is most helpful people who usually suffer from foot ache after exercising. In addition, “Trickster” was the first type of shoes that come with varying widths. This provides a wider variety of choices for the consumers ( The Shoe Game – New Balance History,(n. D. )) Paul Kid sold his company to Jim Davis.
At that time, the company was still small. After a while, the company designed and leased 320 types of running shoes making it the best seller in the athletic- shoe market. Henceforth, New Balance has established many stores all over the world. It ranks number 7 of the world’s top ten sportswear brands. ( Top 10 Sportswear Brands Of The World,(n. D. )) However, New Balance is still developing and going to be one of the biggest producers of sportswear in the market. In addition, New Balance has very good technical innovations that some other companies do not have.
In this research paper, I will give a information about the Pestle’s analysis of New Balance Thailand, Potter’5 forces and some advices to guide the many to improve its performance in future. 2. Passionately 2. 1 Political Politic in Thailand has been very instable for years. Anti-government protested around the capital city and in some provinces as well. Some schools, Universities, workplaces and shopping malls had to be closed. This protest has become the crisis for Thailand. There were bombs which make people frightened people who live in Bangkok.
After that, Thai military has taken over the government in order to solve this situation to make things better. Military’s rules create a big change to Thailand because Thailand was a democratic country. Until now, Thailand politic is still instable. Therefore, companies have to consider carefully before investing something in Thailand. The military control causes some change to the law making it more dangerous for all kinds of investments. Companies have to be prepared of more risks since they have no idea when things will be changed again. The average tariff rate in Thailand varies from 0-80%. Import duty & taxes when importing into Thailand, (n. D. ). ) Restriction on goods import such as sport shoes, and clothes is not often changed. Even though Thailand has military control which changed some laws but company may not be affected y restriction and tariff rate. 2. 2 Economic In 201 3, Thailand gross domestic product (GAP) was 387. 25 USED. GAP of Thailand represented 0. 6 percent of the entire economy in the world. The average of GAP in Thailand was 96. 29 USED from 1 960 to 2013. The highest GAP recorded at 387. 25 USED and lowest at 2. 76 SAID. According to the reference in June, 2014, GAP growth rate was 0. 0 percent. Unemployment rate was 1. 15 percent. Inflation rate was 2. 09 percent. Interest rate was last 2 percent in September, 2014. (Thailand GAP 1 In this factor, company may not be affected by Thailand economy because Thailand is one of rapidly growing market in the area when compared to other countries in SEAN . Nowadays; all countries’ economies are linked with each other. A company must see world economies to help make decision. 2. 3 Social In 201 3, Thailand population was about 67. 3 million in which female are more than male. More than 30 ethnic groups of people inhabit in Thailand. Thailand Population 1960-2014,2014). Thailand, sport players have been increasing more and more every single day. Especially in Bangkok, the capital city of Thailand, most of people like to do sports. The latest sport that has become a new trend is cycling. In every province in Thailand, government provides an Aerobic dancing area for people. According to the ministry of public health, Thai people are facing the problem of obesity. Ministries of public health are encouraging people to do sports and to exercise. Nowadays Thai people become more interested in sport. Some sports have even become trends for people.
As the paragraph above, Thai people are more interest in Sport. Top 10 sport shoes that Thai women like are New balance because they are attractively colorful especially to women so now they can wear shoes with efferent apparels. With the quality of the product that includes technical innovation, the shoes are light weighted and very comfortable to wear. That is why the product is very popular among Thai women. In this factor, if the company opened a shop in Thailand, it will be beneficial to the company itself because the company already has a good reputation among Thai people. . 4 Technological Technology is important in every society and industry. Before producing something new, make sure the product is innovative. In footwear industrial, the technology and innovation are energy boots, and AD scan and printing. Energy boots are the product from ideas. Energy boots run ins shoe are different from other running shoes because they have trendy innovation called boots which is the innovation that help restore energy to wearer. And Energy capsules that help keep energy from wearer and give energy back to wearer in every step they run or walk.
In addition, energy boots have torsion system which allows feet to move comfortably. Running innovation( ENERGY BOOST ,2013) AD scanning printing is the new innovation of the company named Three over seven. Once you download the company’s application, you can send the stricture of your feet via the application. The company will make specific shoes just for you and deliver them to your house. (Three Over Seven AD scans and prints custom-fit cockles shoes,(n. D. )) New balance has an expertise in producing an litchi shoes and known as innovative company with those two technology strategies mentioned above.
This will make new balance became more innovative in the future. In this factor, new balance which cannot catch up with new technologies might fall behind and lose benefits. 2. 5 Environmental The weather in Thailand is divided into three seasons. But most of the time, Thailand weather is hot and humid all over the year. In the northern, northeastern and center areas are basically based on seasons. However, the Southern have only two seasons; hot season and rainy season. Natural disasters happen in Thailand many times such as flood, tsunami and gangs. The Weather in Thailand and Thailand However, when compared to other countries, natural disasters don’t happen very often in Thailand. New balance has released products according to the change of season such as new balance rainy Mac park. This product is suitable to wear in rainy season because they are made of the waterproof fabric. In this factor, the company may not effected by natural disaster but If the company wants to open up the factory in Thailand, they may have to consider about natural disaster; for instance, the flood. 2. 6 Legal In order to import, importers must ask for permission.
Every importer must have an import license. The government always checks whether the products are legally imported or not. This is for the safety and benefits of the country. When importing, government will check if import goods is in the red line or green line. Red line goods needs to be assessed again. For new balance in Thailand, CAR sports Co. Ltd is a sale agency. CAR must have a license to legally sale the product in Thailand. If new balance itself wants to open up a shop in Thailand without a domestic sale agency, company must have a business registration approved by government.
In this factor, company may not be affected by the law because every international company must have business registration in order to open business in Thailand. 3. Potter’s 5 Analysis 3. 1 Threat of new entrants The number of new companies entering sport business is very small. In order to start a business in shoes and apparels industry, huge capital is needed. New companies may not have strong financial like well-established companies. Although there few new company, there are current competitors to compete.
All of the manufacturers in the industry must be approved by government, according to the law, to make sure factories are safe for everyone so that means government regulation is very low. Manufacturing cost has become a problem for New Balance. New Balance manufactures 75 percent of its total products in foreign countries. At the same time, they are manufacturing in the United States 25 percent. Manufacturing in the United States became the disadvantage for the many. Other companies, such as Mike, manufacture in countries like China where labor and recourses are cheap to minimize the cost as well as maximize the profit.
All in all, threat of new entrants is low. 3. 2 Threat of Substitutes In athletic shoes and apparel industry, athletic shoes are very easy to substitute; for example, running shoes are easy to substitute because customers have more alternatives and people use running shoes to play basketball or tennis. Sportswear can be replaced by t-shirt, shorts, or other casual clothes. Athletic shoes can be substituted by sandals, casual shoes and etc. All types of shoes have their own purpose. Athletic shoes are used for sport purpose. People can’t use sandals to run 20 kilo.
That means athletics shoes can’t be substituted with other kind of shoes. In conclusion, the threat of substitution is low because athletic shoes’ objective is to help people to be safe and comfort when they exercise. 3. 3 Suppliers Footwear industry is downstream industry. In this place, upstream input suppliers are the people who command the price. Materials that are used to produce are cotton, rubber, foam, glue and polyester blend, and vinyl. All of hose things are classified as commodity goods, and the prices were based on market values.
Besides that, manufacturing location in some countries has low cost to produce such as China, Thailand, Vietnam and India. Companies have a choice to move if manufacturer cost is expensive. In conclusion bargain power of supplier is low. 3. 4 Customers power Mostly, every athletic shoe is similar. Some may be different with technological development In this place they are substitutable and price can be the option that people use to buy. Key factors that determine if people will choose to buy products are reputation, innovation, quality and cost imperative.
Some groups of customers are loyal to brands. For example Mike and Ideas have lot of loyal customers. Loyal customers are very important to a company. New Balance has loyal customers such as a customer that buy a product more than two times a year. However New Balance still has small number of loyal customers if compare to Mike or Ideas. New Balance has low switching cost. Mostly, New Balance will have promotion to attract consumers such as New Year. Promotion is strategic imperative for every company. All in all the consumer bargaining power is moderate to high because New
Balance has some group loyal customers, even though it is not a huge number. 3. 5 Intensity of Rivalry New Balance has many competitors in this industrial. The competitors can always get a market share. The main competitors of new balance are Mike and Ideas. These two companies play a big role in athletic footwear industry. In 201 1 market share of Mike was 33. 6% and Ideas was. 1% For other competitors, Acacias had 4. 7 percent crop had had 3. 5% ,wolverine World wide had 2. 8%,Cross had 2. 2% collective brand had 1. 7%and other had 20. 9%. New balance had 3. 5% . Athletic footwear companies by lobar market share 2011 Statistic,(n. D. )),which was good if compare to other brands. Conversely, if compare to our main competitors New Balance has a bad performance to gain more market shares in the future. New Balance has strong and well established competitors and New Balance is behind them. Mike finance in second quarter of 2013 increased which earning up to 6 billion USED. Ideas quarter report in 201 2 that average sale was 2. Billion USED Our main competitors have been controlling market share and keep growing to be leaders in this industry.
In conclusion competitive rivalry in this industrial is high. 4. Strategic recommendation for company Firstly, would like to recommend having concentric diversification Strategy. The new products I suggest the company produce are sandals like Havana brand and beachwear. And having various products will draw new consumers to the company, this way; company may have more overall consumers. These two products will help reduce and spread cost of production of company. Secondly, would like to recommend company with the global strategies.
Company must expand more factories in other countries to reduce cost of production. One pair out of four shoes is made in United States. Making a reduce in United States will give efficiency of company on the other hand it is expensive to produce. In this place don’t mean that you should stop manufacturing in United States. The company needs to reduce the number of products that are produced in the United States and increases in other countries such as China. The company sells a product at reasonable price but company receives less profit.
If the company can make more profit they can use that profit to spend on other parts such as advertising. Thirdly, would like to recommend company to force more on marketing. Marketing will lead New Balance to become a well brand name. The company may use famous person to advertise and promote their products. Famous people like a famous sport player. Company may think that we should not waste money on famous people but they can draw attention from consumers and people will remember the brand. Besides that company should be a sponsor for sport events; for example, the Olympic Games.
Marketing will help improve company performance and marketing will lead a brand to be in global market. Lastly, I would like to recommend the company to use cooperative strategies. The company may be a partner With a gym. For example, gym customers will get gift vouchers for New Balance products or New Balance’s customers will have a chance to get the discount at the gym. [f the company uses these cooperative strategies, it will gain more market power. New Balance must have the partnership with many companies to speed up market in the future.
In addition, this company has used these cooperative strategies before. New Balance became the partner of Walt Disney Park and Resort World. However, company must have more partners in order to be in global market. 5. Conclusion Social divergence in Thailand did not affect the company, because the many has a good reputation among Thai . This is crucially important to a company. Politics in Thailand is usually instable. Laws and restrictions in Thailand will greatly affect the company. Sometimes, the government would impose trade barriers in order to protect domestic producers.
However, occasional restriction on imported goods may not be a big concern for the company, but it would be hard for the executives to decide their company’s future operation since they have no idea when things (trade policies) will be changed again. The environmental conditions in Thailand are quite favorable. However, when a company wants to build their factories in Thailand, they must be consider the risk they may face because of the infrequent-but-severe natural disasters that can happen and are difficult to forecast and/or avoid. Technology is important.
Some companies have introduced new technological innovation in the shoe manufacturing industry, which our company cannot catch up with new technologies might fall behind and lose benefits. Overall, every factor is an obstacle that needs to be considered thoroughly and to find the best approach for it. It may not be simple to overcome all at once but our company should develops gradually and constantly in order to face the coming challenges. Thailand is one of the most rapid growing markets in the area, compared to other countries in SEAN.