Case Study Steinhouse Knitting Mills (Canada)

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Political/ Legal: The Apparel industry in general and particularly the Sweater industry is facing problems of declining sales and increased overheads. Steinhouse operates in the higher price band and this sector is dominated by named brands such as Polo and others and departmental stores and the customers prefer such brands over the lesser-known brands such as Steinhouse. Large retailers such as Walmart, prefer to buy directly in bulk from low wage countries such as Bangladesh, China and others. The US market has a very high potential and trade barriers are not present meaning that the company can sell their products freely in the market. They are also allowed to sell in Europe and sales would depend on their quality, brand and price.…show more content…
Subsequently, Steinhouse incurs greater expenses . There is an increased demand for higher gauge lightweight sweaters that are made of natural fibers such as wool and cotton. The higher the gauge, the finer the knitting and more lightweight and expensive is the sweater. The machines that the company has are not capable of producing such sweaters and the company does not want to invest in new machinery since fashion tastes keep changing. The capital cost for modem knitting machinery is about 300, 000 USD and about 20 machines would be required to meet the demand. The yarn required for these machines would have to be imported Social and Cultural There are two main categories of sweater buyers, one who are brand conscious and prefer to buy named brands such as Polo and the others who are on budget and buy sweaters from low wage countries such as Bangladesh and China. Walmart and other retailers buy directly from low wage manufacturers and Steinhouse cannot match the prices offered by these companies. There is increase in US markets for high end and economical priced sweaters. Independent buyers are going bankrupt because of retailers such as Walmart. Competition The largest company is Boutique Knitting. In Canada, the major Sweater manufactures are located in Ontario Quebec and Manitoba and in 1996, the Sweater sales was totally about 500 million USD. Current competition is Coopers Knitting, San

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