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Introduction
An assessment of the companys performance is needed to understand whether or not the management in place has been effective. This can be determined by checking how much market share the firm currently has in comparison to the past. Market share can be computed as a percentage of sales compared to the total share of sales in the industry over a period. For a business, it can greatly impact an organizations operations, for instance, share performance, prices, and scalability. Since it is market competitiveness primary indicator, it allows executives to establish total market growth or drop, look for major trends in customer behavior, and see their potential and opportunity.
In the shoe industry our company is in, firms are willing to even operate at a loss in some divisions to ensure that they force rivals into bankruptcy or out of the market. When this happens, they then increase their market share and can now raise their prices. In fiscal markets, market share can significantly influence stock prices, particularly in cyclical sectors when the narrow margins and competition is stiff. Any noticeable difference may result in strength or weakness in the eyes of the investor. Organizations may apply some techniques to attain more market share, for instance, introducing new technology to attract consumers who may have considered purchasing from a rival, similar to what we did ten years ago.
Another strategy companies have used in the past is nurturing customer loyalty which is a method that can lead to both a solid existing customer base as well as expansion via word of mouth. Additionally, talented employees can prevent costly turnover costs, enabling the firm to focus on its core competencies. Our company has not performed well for the past ten years, as shown by how it has dropped in market share. However, the management team understands our weaknesses in the leadership of the organization. Additionally, we have identified some opportunities we can take advantage of if rehired that will help the firm grow. This essay aims to report on how the company has declined in market share performance over the past decade, lessons we have learned as the management team and plans to ensure future growth if rehired.
Discussion
Market Share Performance over the Years
Ten years ago, the overall market share for the company stood at 40.4% compared to competitors 59.6%, as seen in figure 1.0. The domestic market share recorded was 35.1%, the foreign market share was 49.2%, and the home market share stood at 36.0%. That year, the number of units we sold was 598,547, which was a 24.6% increase from the previous year, making us rank first in the industry. The sales dropped by 0.1% in the home market, rose by the same percentage in the domestic market, and grew by 19.0% in the foreign market. In that year, it is evident that we performed well overseas. Much of this can be attributed to the introduction of new designs for the shoes and favorable foreign government regulations.
Introducing new designs of a product ensured that the customer base was treated with something different from the past. The shoes design had internal spring blades for energy conservation, which aligns with our sustainability goals, which in turn created a good image for the brand. The world is fighting against the negative effects of global warming and climate change (Huang et al., 2019). Therefore, organizations that realize this and ensure that in their operations, the aim is tailored toward protecting the environment are readily accepted by customers in the market.
A great brand image is capable of creating credibility and customer loyalty for an organization. Customers start trusting the brand when it is known for delivering high-quality products that are safe for the environment. This can raise the retention rate and how often they return (Huang et al., 2019). The idea of conserving energy in the new design attracted much attention in the international markets, which also brought new buyers. When launching something new, we understand that the focus should be on the peoples perception of us (Farradia, 2021). A positive perception establishes loyalty, making the customers purchase the goods (Farradia, 2021). The media plays a role in marketing products of companies that have environment-friendly practices.
Apart from the strong brand image we created by the idea of introducing new shoes with internal spring blades for energy conservation, the government regulations in the foreign markets proved favorable to us. Most of the time, governments, in an attempt to protect local players, set laws and policies that hinder the success of international companies (Huang et al., 2019). For instance, a limit is put on the number of units to be sold by a foreign player (He & Xiao, 2019). This measure will guarantee that an organization sells less than it projected, even if the market accepts or prefers them. Lastly, a drop in the domestic market share that year can be attributed to the increase of many local businesses in the industry offering lower prices for their products.
In the past five years, statistics show that the market share performance has been poor. The number has dropped from 36.3% to 25.8%, last years record, which is a massive decline, as seen in figure 2.0. This suggests that the company has been failing greatly in the market. The home market share stood at 32.3% five years ago, the domestic market share at 30.6%, and the foreign market share at 59.5%. The business was already doing poorly in five years alone since the last figure was 40.4%. This can be attributed to improved performance by rivals in our industry. Failure to change or substitute some individuals in the management team has worsened the situation, dropping by 10.5% further in the last five years. The global appeal has constantly improved by great margins, which can be due to the fact that the firm has made more efforts to ensure it remains conscious of the environment in its operations. The brand image has remained strong internationally as a result of the company going green, which allows sales to increase by 33.4% in the foreign market.
Additionally, the customer satisfaction rate stood at seventy-five percent, which signifies that our products are appreciated by users. To this point, the management focused more on profits than gaining more market share, a trend we copied from rivals. For instance, we recorded a net profit of $8,767,434 which was a 30.6% rise compared to the previous year. The unit sales showed an increase from what we recorded the past year. However, 397,701 is still a drop from 598,547, as recorded ten years ago when the new designs were introduced, as seen in figure 3.0.
The figures for five years ago compared to one year ago reveal that we need to do a better job if rehired. For instance, the customer satisfaction rate has dropped from 75% to 60%, which can explain the decrease in the number of unit sales from 397701 to 132770 in a five-year period. The net profit recorded was -$5,581,977 due to the decrease in sales in both the home and domestic markets. That year, the overall market share stood at 18.2%, almost twice what we recorded five years ago, as seen in figure 4.0.
Despite the decline in market share, we have managed to maintain a good global appeal in foreign markets. This is a great sign that offers us a chance to improve. Additionally, customer satisfaction has remained above average, which shows our efforts toward sustaining loyalty from the customer base, as seen in figure 5.0. One major lesson we learned in the past ten years is that concentrating more on international markets has made it difficult to be a major player in the local market. Furthermore, being involved in country politics has resulted in many people viewing us as an opponent instead of neutral partner (Mao et al., 2021). All the customers have their opinion regarding politics, and siding with one of the dominant parties has ruined our relationship with a portion of the buyers. We plan to remain neutral in future political events in an attempt to protect our association with consumers.
Capitalizing On Opportunities For The Purpose Of Future Growth
Upon rehire for the next five years, there are several opportunities we aim to take advantage of as there are still many growth avenues to bring returns. For instance, there has been womens growth witnessed in purchasing shoes, a trend we expect to continue (Cheng, 2021). According to statistics, as a firm, we have below ten percent market share of the female apparel market in the country. However, that line of business experienced a growth twice the men in terms of pace in the last quarter (Cheng, 2021). On a wholesale-equivalent basis, their revenue was 40% of the total wholesale revenue. That represents a drop of 3% year over year on the basis of currency-neutral. All this information reveals that the females category grew faster than their male counterparts, totaling more than 50% of total wholesale revenue and slid 4% for the entire year.
The trend has shown consistency over the past four years, with womens wholesale revenue often recording a higher growth rate than that of males. The COVID-19 pandemic has accelerated our digital momentum, which offers a boost to womens growth (Cheng, 2021). Digital sales rose by 79% last quarter on a currency-neutral basis. In total sales, the digital sales contribute 30%, which is a good sign. Through various applications, we have focused on creating membership worldwide around the brand (Cheng, 2021). The firm has obtained close to five million novel members during the last quarter alone. More than half of the newly-gained persons identify themselves as women (Azhar et al., 2019). The company can capitalize on this by producing more female designs and promoting them with help from popular female athletes, which would improve the firms market share.
Another opportunity available to the company that we can take advantage of if rehired for the next five years is the popularity of the new design we introduced ten years ago with internal spring blades. The shoe gained much attention from the people and media, especially overseas, due to the goal of its creation, which is conserving energy (Ibrahim et al., 2019). Over the years, it has generated close to ten percent of wholesale revenue. Footwear remains a hot product in the market, even after ten years since first worn and promoted. The companys wholesale revenue from the shoe is projected to continue improving.
In spite of the store closures during the pandemic, the design still finished the year 2020 with revenue up to 11%, which is by far our fastest-growing. High demand from females is partly the reason the particular design has performed well. Women have played an important role in the growth of the design, and thus, there is a great opportunity to turn the shoe into a brand on its own (Ibrahim et al., 2019). As the firm offers more products for females, grows business globally, and expands lifestyle offerings, there is a chance for the shoe to accomplish even better scale.
The other opportunity is in rethinking the apparel, as the firms DNA is shoes. However, we envision broad opportunities across the apparel segment, which comprised 56% of the business last year. The customers do not view themselves as only yoga practitioners, runners, or athletes. Rather, they shop for products across male, female, and kids sections. With this strategy, we will be doing something similar to what Lululemon Athletica did and has experienced much success promoting particular items for non-workout events (Ibrahim et al., 2019). The new approach will aid in simplifying the brand and focus resources more on the opportunities and capabilities that will foster a good future (KieBbasa & Tartaraj, 2022). Apart from adding incremental sales chances, the adjustments could as well be margin-improving for the business.
Current Weaknesses and Possible Threats
Current Weaknesses
Even as we plan to take advantage of the opportunities to improve the companys market share, the management is well aware of our weaknesses as a firm and the threats facing us. This is the knowledge that will help to identify new strategies to handle them and protect the organization from losses. One of the most glaring weaknesses is poor working conditions in foreign nations. We have been greatly criticized by activists for issues such as paying low salaries to employees overseas (Ibrahim et al., 2019). This is something that has made some of the customers aim to buy products from other brands as they do not wish to partner with a firm mistreating other people. It is our plan to ensure that workers in overseas plants are treated better financially. A new agreement will be established within the first six months if rehired for the next five years. The employees will be allowed join groups and associations to represent their interests during any meeting with us.
Another weakness is that retailers, for the past ten years, have had a stronger hold. Our retail industry makes us weak as a result of the sensitivity to pricing (Mao et al., 2021). We directly sell sixty-five per cent of the firms products to retailers or wholesalers. With retailers acting as the main customers, the firm has failed the price structures. We plan upon rehire to develop strategies that will allow more control over pricing and try to limit the number of goods sold directly to retailers or wholesalers.
Another weakness that we identified is our over-reliance on a single market. Despite being established and well-known in the international market, we have remained dependent on the American market in terms of revenue and sales. Two years ago, this market contributed around 35% of the total sales whereas the others came from overseas. In spite of worldwide popularity, depending on one market has proven wrong, especially when the economy is bad (Mao et al., 2021). Our aim is to expand the business operations into more countries. Additionally, we plan to add more resources to the plants located overseas.
Lawsuits as well have been a huge concern for us. Former disgruntled employees have gone to the court system and accused us of different issues. For instance, in the United States alone, there have been five cases of racial discrimination filed against the management in the last five years. In overseas plants, ten cases have been filed for poor wages and mistreatment of employees in the same period (Mao et al., 2021). One of them claimed that in addition to paying workers poorly, we possess a toxic organizational culture for females.
She filed her case against the business claiming that we violated the Equal Pay Act. She insisted through her lawyer that we engage in systematic gender pay bias whereby males received more than females while performing similar roles. It is the plan of the management team to resolve any legal issues of the past out of court with the aggrieved. This will save the company not only time but money as well. In addition to that, the brands image has been ruined due to many lawsuits, and thus, it would be a priority for us to restore the reputation.
Possible Threats
Eliminating the weaknesses will give us a better chance of growing the company in the future. However, there are a few threats that we have noted that may act as obstacles, and our aim is to eradicate them if rehired. One of them is the presence of counterfeit products, which are created to appear similar to the companys authentic footwear. Fake items can greatly impact both the brand image and revenue. We deal internationally; thus, the danger of counterfeit goods has increased. Numerous merchandisers, as well as retailers, provide their items at lower prices, so it becomes hard for low-income earners to resist the urge to buy them. The cheap goods are made from poor-quality materials but still resemble the brands label. This could tarnish our reputation as the purchasers might feel that the organization has begun manufacturing low-quality items.
Another threat that we recognized and planned to alleviate its impact on the companys market share is the rise in competitive pressure. Even though the organization is among the major players in the athletic sector, competition as well as new rising brands, both locally and internationally, remain a possible threat. With a greater competition ratio, we understand that we have to allocate more finances to advertising and promotion in the next five years to remain relevant. We had already planned to do this prior to the tenth year as part of the market share restoring strategy. The safest way we propose to overpower the rivals is to design innovative items tailored based on athletes needs. It is important to note that other brands are spending more and are willing to operate at a loss to ensure they push the firm out of business and gain greater market share.
Another threat facing our plan for the company is currency forex risks. Since the organization is known for operating internationally, it is influenced by the fluctuation of foreign exchange rates. Our fiscal earnings are reported in the United States currency (He & Xiao, 2019). This impacts the revenue as the dollar is vulnerable to volatility against other fiscal currencies. We suggest establishing plants overseas as separate entities (He & Xiao, 2019). This will alleviate the effects experienced as a result of foreign exchange fluctuations.
Another threat we noted is patent disputes which may hinder the plan to improve the market share. Irrespective of whether or not a company is right, conflicts relating to copyright are greatly contested in the public scene and expose some secrets concerning the matter (He & Xiao, 2019). Other major players have been seen engaging in fierce disputes over specific shoes produced in different markets. Our plan is to hire highly respected commercial lawyers with immense experience in the field to protect the firm from such issues (He & Xiao, 2019). It is important to understand that such matters lead to a poor brand image which can directly affect sales and revenue.
The matter of the patent is a vital issue in the industry as brands continue to understand the advantages associated with it. It offers protection to a business from competition from rivals who desire to produce, sell and use an invention. Holding one provides a company with the ability to benefit by preventing competition during the patents life. By owning exclusive rights, the inventor can guarantee that they get a reward for their process or product. Additionally, this enables the brand to build upon the unique invention and can offer promotion opportunities which may lead to extra profit as well as revenue for the firm.
For instance, at times, Apple protects one invention and then finds a way to profit from it commercially. The patent provides a brand with a competitive edge over its rivals (Gendalasari & Triandi, 2018). Clever entrepreneurs understand what advantage they possess and try to check how they can protect themselves. An organization can leverage its patents, increasing extra inventions to its patent portfolio or discovering other firms that have invented goods that may positively impact the business.
Another potential threat we identified is uncertainty in the economy. Irrespective of the sector, every company is susceptible to the negative influences of a recession. During the pandemic, the world economy was impacted greatly, which in turn interfered with some of the strategies we had laid to ensure growth. However, our aim is to establish new ways to deal with unexpected issues. Additionally, risk management experts will be sourced throughout the world to add to the existing department to ensure the firm is protected early from a crisis that may impair future plans.
Another threat is trade tensions that may arise as a result of poor relations between the United States and other nations. It is known that, in addition to the U.S. market, we are dependent on foreign markets as well. In the past year, we have recorded an increase in stocks in Japan and China driven by a rise in sales (He & Xiao, 2019). In the event there occurs a rift between the three countries, the company will be at risk of experiencing a loss (He & Xiao, 2019). We plan to focus efforts on promoting the products in more regions to avoid losses or a decline in sales if it becomes hard to trade in some areas. This is something that can lead to a closure of the business or bankruptcy in the event the U.S., Chinese, and Japanese markets collapse.
Conclusion
The essay has reported on how the company has declined in market share performance over the past decade, lessons we have learned as the management team and plans to ensure future growth if rehired. It is evident that we have not been as effective and thus, the firm has not performed well in that period as the market share has decreased greatly. For instance, ten years ago, 40.4% was the overall market share for the business. In that same year, the domestic market share did well at 35.1%, while foreign and home market shares stood at 49.2% and 36.0%, respectively. We did great, and this can be seen in the unit sales, which recorded 598,547, a more than 20% increase compared with the previous year. We believe that much of the success can be attributed to the new shoe design aimed at conserving energy. The popularity grew throughout the world due to a stronger brand image internationally.
We could not sustain the success over the years, as seen from the figures recorded in the past five years. In that year, the overall market share was 36.3%, already a drop. One year ago, it was worse as the company reported 25.8%. This shows that the organization has been failing in the market, which is not a good sign for the future. The outcome can be attributed to the other businesses in the industry experiencing improvement in performance while we struggled to compete.
Despite the international appeal remaining high, which can be seen by above-average customer satisfaction, it is safe to state that the company management has failed. However, it is important to rehire us as there are opportunities we have noted, and by eliminating the weaknesses, we can guarantee growth in the future. For instance, the firm has been identified as one with poor working conditions, especially in foreign nations. We have greatly been criticized by activists for paying our employees low wages for their services. This is a matter that has resulted in poor publicity, which in turn leads customers away from the brand. Our plan is to restore a good reputation and create a competitive advantage in our operations to ensure improvement for the next five years if rehired.
References
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