New Balance Case Study

Q1) How should New Balance respond to the Adidas/Reebok transaction?

In response to the Adidas/Reebok transaction, New Balance should not panic or revamp its business model but continue to focus on their core strengths and rely on the brand image they have build for decades.
The “big players” in the market, namely Nike, Adidas and Reebok greatly differ in business model and focus compared to New Balance. While they battle the fight of convincing the fashion-oriented youth with extensive marketing campaigns, sport star endorsements and a great number of shoe models, New Balance was able to avoid attrition and successfully create a loyal following. New Balance Shoes provide great performance while still being comfortable and adaptive. Having

Starting as just a mail-order business with some retailers, it quickly opened new manufacturing facilities, starting with New England in the early 1980s as well as it signed contracts with other international distributors. While producing at lower costs outside the US, New Balance sold its shoes at a higher price than the average market and started to have huge sales anyways. Moreover, what makes New Balance’s operation strategy unique is that they offer their shoes in multiple widths and always have inventory in case the retailers get out of stock. This supports directly two of New Balance’s main competitive objectives being first that they want their customers to feel uniquely served by offering several widths of their shoes for different kind of feet and letting the customer not wait for the delivery of the shoes but always having inventory to push into the retail stores in case of scarcity. A good customer experience is one of their key competitive

The NB2E aims at enabling the company to make their products 100% available within 24 hours in order to better respond to the demand, reduce inventory (and client’s inventory as well) and reduce manufacturing cycle times (average lead time was then 2.5 days). To so New Balance has to move from a batch production to a pair-to-pair flow and reorganize production process and work in progress to get a more continuous flow.
These objectives are coherent with New Balance’s strategy and improves the company’s flexibility. They are able to respond faster to delivery and save costs but also help their clients (retailers) to reduce their inventories as well and quickly respond to the market. This is also helpful to develop fashion-oriented products, which have a shorter time to