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Strategic Management-Puma Case study

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Introduction

Strategic Management Task.1 PUMA Case study and SWOT analysis Strategy is a term which is most discussed in many organizations now. To cope up with the changing market and competition, organizations now must seek long term plans and actions to sustain in the market. Strategy can be defined as the scope of an organization over the long term, which achieves advantage in a changing environment through effective utilization of resources and competencies (Johnson et al, 2005, p9). In order to derive to an effective strategy of an organization, organization must understand their core competencies, market and environment. By analysing these factors organization would be able to come to a conclusion to how effectively they play the game of business. There are several methods by which organizations can analyse their environments both internally and externally. Careful and insight analysis will identify the factors that effect the organization significantly and possible corrective action to be taken. This analysis will lead to strategic thinking of an organization to manage their product positioning, change in corporate strategies etc. To be a successful organization, organization must be unique in their business model, understand their economics, calculated aggressive risk and consistency in their business model, strategies over long period and strategic implementation (Eenennaam, 2006, NYENRODE business University, Speech). Analysis methods such as SWOT, PESTEL, five forces, market research, value chain analysis, and Porter's Diamond methods etc. are useful in analysing organizations environments. The SWOT analysis is a process of analysing organizations strengths, weakness, opportunities and threats. SWOT will provide external opportunities, threats and internal strengths and weaknesses. SWOT is used to analyse and asses organization's strategic situation in the competitive market place (Porter, 1981). In this assignment Puma's SWOT was analysed with the help of analytical tools such as PESTEL and Five forces etc. Puma is German based global sports Wear Company which combines both sports and fashion. Puma offers highly desirable sports and lifestyle products. ...read more.

Middle

The Power of Buyers and Suppliers These two forces might impact organizational performance in terms of financial growth and margins (Johnson et al, 2005, p84). * Puma's major supplier is Yue Yuen Inc. etc. Puma share these sourcing partners along with the industry giants Nike, Reebok and Adidas. * Some of its suppliers have their own retailing capabilities established in particular markets. * Since there are only few suppliers around, it is difficult for Puma to shift their sourcing as it involves costing factor. * Since Puma's products are highly differentiated from that of competitors in terms of design and technology, it had relatively low bargaining for buyers. Competitive rivalry is a force which describes the intensity of competition between existing companies. There are several factors that impact the competition force such as low differentiation, high exit barrier, and high fixed costs etc. From Five forces analysis organizations can make a decision to enter or exit from a particular market segment. In combination with PESTEL analysis five forces provide complete insight of Puma's competitive position. Puma can now concentrate on the forces and competitive abilities to make it even stronger. There are some specific actions that Puma could possibly follow to minimize the five forces imposed by the external environment. Some of the key actions are mention below. * To reduce the threat of entry Puma is suggested to build a strong image and brand name and can tie up with suppliers to minimize the distribution channel risks. * To reduce the threat of bargaining with suppliers, Puma is advised to work in partnership with suppliers and improve their efficiency in supply chain management * Puma can improve their incentive system and value added services to minimize the bargaining power of customer. * To reduce the threat of substitutes, Puma is advised to take serious legal actions against copycat products. They can also conduct customer survey to learn more about customer needs and preferences. ...read more.

Conclusion

Acquisition/takeover with Treton allowed them to establish distribution channel in Europe. Treton is a largest manufacturer of sports equipments and using their distribution channel Puma reached the European market. Puma in order to increase market share, is advised to look for more acquisitions in emerging countries like India. A take over of footwear manufacturer in the targeted market will improve the chances of getting higher market share. Puma is also advised to look for investors to invest in their research as innovation is one of their main strengths. Overall best strategy for Puma would be differentiating in the market and geographical expansion. Differentiating strategy will keep Puma's brand image live and attractive and geographical expansion will improve the market share in turn improves turnover. Puma with their strong marketing skills would be able to implement differentiating strategy quite effectively. To achieve these strategies Puma is advised to concentrate on both sports apparel and accessories market. To be as a cost leader Puma is suggested to stream line their processes to minimize expenses. They are also advised to look for direct sales and logistic channel to minimize the costs. Conclusion Driven by strong marketing activities Puma is making difference in the footwear industry. By combining technology with innovation, Puma was able to grab buyers attention and provide highest possible support. As there is a constant demand for lifestyle brand, Puma has a large amount of opportunity to grab market share with both hands. Their two stage strategy was implemented with perfection to make Puma as respectable brand from no where. Puma is expected to increase their sales and market share by implementing differentiation strategies. Puma is already showing good returns (return on investment) when compared to their competitors but their geographical spread was not quite good enough to compete with the rivals. Expansion strategy makes sure that Puma doesn't miss any opportunities in the potential markets and compete strongly with Nike, Adidas and Reebok etc. With these strategies the 'jumping cat' is expected to jump over Nike and Adidas in coming years. ...read more.

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