Charm City Run Interim Report
Charm City Run Interim Report
Our interim report will discuss the company background, as well as financial ratios for Foot Locker when compared to Finish Line since Charm City Run’s financial ratios are not public records. We discuss strategic resources for Charm City Run, one being its organizational structure and its exceptional customer service. We will also discuss a possible opportunity for Charm City Run to expand their target market into a broader shoe market for consumers beyond the athlete industry. We go into detail about how the threat of substitutes poses a threat in our industry and possibly affects our opportunity for growth. Our appendix and references
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104).
One of the five measurements of a financial ratio analysis is asset management, also known as turnover. Dess, et al. (2012) evaluates turnover by calculating the cost of goods sold over inventory (p. 497). Inventory turnover evaluates how a company can flip its product within a given time (Adkins, n.d.). The higher the turnover, the more “light inventory” a company has as Adkins (n.d.) explained. Turning over inventory, especially in the shoe retail industry, is imperative to keeping up with the competition and making a profit. Inventory turnover allows for the best price stability that, in turn, offers a better profit margin from selling at competitive prices. Customers want to see the newest arrivals, not the old products that everyone else has. For Footlocker and Finish Line, turning over the old with the new inventory can be costly and will jeopardize their clientele. Therefore, in comparing Finish Line to Foot Locker (Figure 3), Finish Line turns over inventory faster while it makes more use of its freed cash from its profit margin for other opportunities.
Charm City Run’s Strategic Resource A strategic resource can be defined as a “firm’s capabilities that are valuable, rare, costly to imitate, and costly to substitute, and experience many barriers to imitation” (Dess, et al., 2012, p. 95). Charm City Run possess strong organizational
Based on The Running Room’s current situation, Cisco considers a number of alternatives to her present marketing strategy. On one hand, she could continue to maintain a broad target market to appeal to both casual athletes--with more fashion-conscious products that aren’t necessarily running shoes--and serious runners, while attempting to tap into the growing market for women’s athletic shoes with expanded product lines for female athletes. This strategy would help her maintain her aging loyal customers, as she could offer athletic shoes that reflect the new exercise programs that they are becoming involved in instead of running. Conversely, she could narrow her target market to just serious runners, by investing in the high-end molded running shoes and the additional training and promotion that would be required to sell them. An analysis of The Running Room’s strengths and weaknesses can help her determine that the second strategy is the most worthwhile to pursue moving forward. As a former nationally-ranked runner herself, and with both a proven track record for catering to serious runners (who make up a majority of her sales) as well as the flexibility to switch product lines fairly easily, Cisco’s business strengths would support a shift to a more serious runner target market with relative
In addition, there are 59 franchised Foot Locker stores operating in South Korea and the Middle East, as well as 15 franchised Runners Point stores in Germany. Runners Point is a specialty athletic store and online retailer based in Recklinghausen, Germany. On July 10, 2013, Foot Locker had announced that is had completed the acquisition of Runners Point Group. 2016 was the seventh consecutive year of sales growth and profit growth for Foot Locker. After further research, an interesting fact that I learned is that in 1963, the F.W. Woolworth Company purchased the Kinney Shoe Corporation. In the early 1960’s Kinney had branched into various specialty shoe stores, including Foot Locker. The Woolworth Company incorporated a separate company in 1988, called the Woolworth Corporation. The new company, Woolworth Corporation was responsible for the operations of the Foot Locker stores. Being a frequent customer of Foot Locker, it is intriguing to learn the history of the
Everyday, billions of people look down at their feet and squeeze them into a pair of shoes. For probably most of those people in America, when they look down at their feet, they see a shoe with a swoosh on it. This swoosh belongs to no other than one of the most popular sneaker companies, Nike. I decided to look further into this popular shoe company's success. It turns out Nike isn't even one of the oldest shoe companies, but it is less than 60 years old. Nike had to figure out how to become better than just an ordinary sneaker company.
Nordstrom’s inventory turnover, which in this case measures how quickly the company goes through their inventory in any given year. For Nordstrom, a starting inventory turnover of 5.41 in 2009 from 4.84 in 2005 was considered a five-year high. It was night and day to them as the health of their business turned faster versus it turning slower. The changes that were upon Nordstrom during these years gave them a very high competitive advantage in the fashion industry.
The main competitors that we determined for Running Central based on the athletic footwear industry in the Peoria area were Dick’s Sporting Goods, Finish Line, and Champs Sports. Secondary competitors could be considered places like Wal-Mart, Shoe Carnival, Payless, Shoe Dept., and DSW who sell but aren’t specialized in athletic shoes. Due to the fact that Peoria has a lot of primary and secondary competitors for Running Central, we determined that there is an overstored market. In order to stay competitive in an overstored market, Running Central has focused on non-price actions that are exclusive to their store and will drive sales and profits; this being through their extraordinary customer service.
To conduct this study on Nike I used a mix of primary sources, books, and websites that are all dedicated to Nike Brand’s past and present history. All of the sources I used have proven to be credible in the sneakerhead world and are sources that Nike will leak information to so they can publish it and make it known to everyone it may interest. Additionally, I used a connection I have with the District Loss Prevention Manager at Nike, Inc for the greater New York City Area to obtain an interview in order to gain insight into why Nike conducts limited releases the way they do. To protect his identity, for this paper I will be referring to him as “Bill Harris” as he provided me with insider information that is classified and
The asset turnover ratio shows the $ value of sales that are made on $1.00 of assets. In the retail industry, companies have a small number of assets when compared to other industries. However, businesses in retail also have more sales when compared to other industries because that is exactly what being in retail depends on. For this reason, retail companies can expect to/should have a high asset turnover ratio. Lululemon’s asset turnover ratio has stayed around the same for the past 5 years, and is fairly low for their industry.
Strategy for Competitive Advantage. The strategy chosen will be Innovation. Resouces will be identified that will add value, improve efficiency and effectiveness for the business. In addition these resources will have to be unique to the business and have appropriability, which means to have the ability to generate earnings from the resource.
The athletic shoe industry is made up of companies that produce footwear for athletic use. This is a strong industry and has been around for over 100 years. The athletic shoe industry is one of the fastest growing footwear industries and have top growing sales compared to other footwear industries (NDP Group, 2016). The key players that currently dominate the market are Nike, Adidas, and Puma (Kates & Bolduc, 2013). This paper will use the porter five forces, industry life cycle, and the key players to understand the industry. Over these years the athletic shoe industry has grown into a competitive market.
1) high and/or increasing turnover indicates: efficient inventory management since have turned over (sold) inventory many times during year
Inventory turnover is also an asset utilization ratio determining how many times a company uses inventory in stock within a year (Block, Hirt, & Danielsen, 2014, p. 63).
Differences in the amounts of assets necessary to generate a dollar of sales cause asset turnover ratios to vary among industries. For example, a steel company needs a greater number of dollars in assets to produce a dollar in sales than does a grocery store chain. Also, profit margins and turnover ratios may vary due to differences in the amount of expenses incurred to produce sales. For example, one would expect a grocery store chain to spend more per dollar of sales than does a steel company. Often, a large turnover will be associated with a low profit margin, and vice versa.
Resource Based View is still a hot topic although the theory is more than 20 years old. The Resource-based view's foremost proposition is that an organisation's capacity for competitive advantage is limited to the management of its own bundle of resources (Wernerfelt, 1984;Rumelt, 1984).
In early 1980’s, the athletic footwear market was maturing. Price competition was becoming more severe. “For the first time, there is more product out there than demand for it”, a leading consultant mentioned in the case. To cope with this change, Nike expanded into a new market
Adidas and Nike, being larger more top heavy corporations, will naturally have longer time periods between research and development and product release. We suggest that New Balance take advantage of its smaller size by releasing the types of new products previously detailed at a faster pace than their larger competitors. It is in this area that we feel New Balance's demand forecast is flawed. The forecast's short term reliance on current products in the company's shoe line is an error that may cause New Balance sales. As evidenced by the average two year appearance in Runner's World ratings, the life span of a running shoe is short. We do not believe that New Balance can rely on the 320 to carry sales until their new trainer is available (>1yr.) to gain market share. New Balance needs to rapidly release newly developed, state of the art running shoes prior to both industry leaders to put the company in a position to capture additional market share.