New Balance Athletic Shoe, Inc.

Case Submitted by Group 2

Aninda Basu: EPGP-12B-016
Kethiri Rakesh Reddy: EPGP-12A-049
Amogh Shilpi Emmadishetty- EPGP-12B-012
Agenda
� Overview : Mission, Objectives, Core Values & Competitive Priorities.
� History of New Balance
� Q (a) : Current Operations Strategy
� Q (b) : What Do The Numbers Look Like?
� Assignment Question (c)
� Assignment Question (d)
� The New Balance Business
� Success of New Balance
� The Six Manufacturing Strategies
� Domestic Manufacturing Details
� Challenges Facing New Balance
� World Class Performance
� Questions & Answer Session
New Balance's Mission

�To Be Recognized as the

World’s Leading
Manufacturer of High
Performance Footwear
and Apparel.
Core Values
�Integrity
�Total Customer Satisfaction
�Teamwork
Competitive Priorities
�Technical Superiority
�Width-Sizing
�Manufactured in the
USA
�Grassroots Promotions
�Retailer Partnerships
Objectives
�Equip the serious
athlete with footwear
and apparel that
provides the best
performance, fit,
quality and comfort
New Balance History
� 1906 – Foundation by William J. Riley
� 1934 – Riley partnered with Arthur Hall
� 1954 – Hall sold the business to Eleanor and Paul Kidd
� 1961 – “Trackster” Launched
� During 60’s –Popularity of New Balance’s reputation for
manufacturing innovative performance footwear grew
� 1972 –Jim committed himself to uphold the company’s
founding values
� 1978 – Anne joined New Balance
� 1980 - New Balance’s First international sales office and
first European manufacturing facility opened
New Balance History
�1982 –Company reached $60million in sales and
debuted the well-received 990 running shoe
�1984 –Jim and Anne got married
�1990 –Company unveiled is New balance Suspension
System
�2004 –New Balance declared that it would match
whatever possible its associates donated
�New Balance adopted New Balance Executional
Excellence (NB2E)
New Balance’s Operations Strategy
�Small Retailer Oriented
◦ Does not discriminate their business due to size of customer
◦ Keep good relationships with small shops and stores

�Independent Sales Force

◦ Agents become the face of New Balance to the retailers
◦ More personal, retailers feel like the business matters

�Work With Their Strengths

◦ FIT
◦ Performance
◦ Manufacturing
Sales Figures
�$9 Billion in shoe sales in 2004

�New Balance has an 11.36% market share in the US

�Total Sales for New Balance in 2004 equaled approx.

$1 billion.
Manufacturing Cost
US Market in 2005 - 400,000,000

New Balance US Market Share – 11.36%

NB Shoe sold – 1x2 = 45,424,000

% of Manufactured in US = 25%

NB’s shoes made in US – 3x4 = 11,356,000

Manufacturing Cost
Cut through Assembly made – 5x33%=3,747,480

Sourced Upper made in US – 5x67% = 7,608,520

Extra Cost of Cut through Assembly – 6x$13 = 48,717,240

Extra Cost of Sourced Upper – 7x$0.5 = 3,804,260

Total Extra Cost to Manf in US – 8+9 = 52,521,500

Why Manufacturing in US
�Spend less on marketing, spend more on production
�Reduce time and cost for delivery
�Quickly move products into the market stream
�Stay true to company's American roots
Dealing With The Acquisition

How to Stay Competitive

�Staying unique will continue to give New Balance a
competitive advantage
�Focus on Comfort, Fit and Performance
�Don’t provide endorsements
�Continue to manufacture within the US
�NB2E
Moving Forward with NB2E
The Theories
The Theories- Contd...
The Theories- Contd...

Services Process
and
Products
Technology

Human
Resources Quality
Capacity

Facilities Sourcing Operating

Systems
NB2E's Effect on New Balance

Increase In Decreases In

• US manufacturing • Inventory Costs

costs • Overseas shipping
• 24 hour domestic costs
shipping costs • Lead Time