Columbia Sportswear Case Analysis
Essay by abrown5 • May 19, 2015 • Case Study • 1,528 Words (7 Pages) • 5,906 Views
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MGT-5900 | A STRATEGIC CASE ANALYSIS |
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Table of Contents
Strategic Issues
Situation Analysis
Industry Analysis
Industry
Competition
Distribution
Suppliers
Market Analysis
Target Consumer
Product Benefits
Marketing Strategy
Distinctive Competence
Current Strategy Evaluation
General/Global Business Environment Analysis
Company Analysis
Current Strategy
SWOT Analysis
Financial Analysis
Employees and Labor Analysis
Strategic Alternatives
Strategic Recommendations
Implementation Plan
Strategic Issues
Columbia Sportswear needs to expand product exposure and increase direct consumer access to their products while simultaneously maintaining their current profitable, yet competitive, retailer relationships in a manner that reduces the power of those retailers. To do so Columbia needs to address several key problems – seasonal fluctuations resulting in unpredictable cash flows, protection of their key intellectual property and technology, undeveloped distribution channels, uneven relationship power dynamics, and limiting the impact of commodity fluctuations.
Situation Analysis
Industry
Columbia operates in the hyper-competitive, heavily saturated and heavily fragmented global outdoor apparel and footwear industry that requires successful companies to quickly and efficiently produce products that meet or exceed ever-changing customer needs and demands. The global apparel industry overall is a large, mature industry although there are some growth segments within the industry, particularly those in the outdoor activities-related market segments, including apparel, equipment, accessories, and footwear, and therefore companies competing within these segments, including Columbia, must constantly seek to innovate, cut costs, and differentiate themselves, and their products, so as to defend, or increase market share and build brand equity. The global nature of the industry requires significant manufacturing and distribution capabilities both aspects of which are subject to the effects of changes in commodity prices and availability, particularly that of crude oil as it relates directly to many, if not all, aspects of the value chain. Additionally, global climate changes are having a direct impact on the entire industry, especially those companies’ whose products are more focused on colder weather market segments.
Competition
The major competitors in the outdoor activities-related apparel market segments include Nike, VF Corporation (VF), L.L.Bean, and REI, which together accounted for over $33B in sales in 2011 and each of whom are strong players in their target markets. Nike is a strong global company with a large product breadth, sales in 170 countries, and is a constant product innovator with topnotch marketing. VF is one of the largest companies in the industry with a diverse portfolio of brands and products across multiple market segments that it is able to manage, very effectively, through all stages of the value chain competitively with a high awareness of their customers’ needs and demands. L.L. Bean brings a historic brand, an unparalleled reputation for quality and customer service, and finely honed distribution capabilities to be a global leader in their target market segments through their expertise in mail order and e-commerce channels. REI is a consumer cooperative that has utilized its environmentally conscious, nature loving, activist mission focus to develop a strong brand equity and intense loyalty to become a leading competitor in their target markets. All of these companies are strong, consistent players in the outdoor activities-related market segments, which makes the environment highly competitive, and therefore they are all considered potential threats.
Distribution
Columbia utilizes a distribution network that includes wholesale distribution channels, independent distributors, licensees and direct-to-consumer channels, which includes both e-commerce and retail stores. The direct-to-consumer channels have been limited thus far due to a combination of poor economic conditions and slow movement in e-commerce capabilities development, which has led to over-dependence on other, more established channels, wholesale distribution channels in particular. Development of relationships in efficient distribution networks is of particular importance in the industry and therefore distributors and retailers in the wholesale channels have become a significant factor for Columbia due to their over-reliance on them for sales and marketing of their products and therefore must be considered during strategy development. Additionally, development of new relationships with distributors and retailers in emerging markets must also be taken into consideration as they have the potential to provide cultural insights in product design and development as well as possible cost savings through the use of local resources. Columbia is also facing an increasingly common dilemma of competing with the private label brands of the very retailers they rely upon for a majority of their sales.
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