[Title of Paper] [Student Name] [School] [Course/Number] May 19, 2010 [Instructor Name] FROM: Roosevelt Speight TO: Board of Directors of Mercury Shoes RE: KEY ISSUES OF MERCURY SHOES INTRODUCTION AND BACKGROUND OF MERCURY SHOES Patricia and John O’Brien, a sister and brother founded Mercury Shoes in 1974 at the University of Colorado; initially they produced normal running shoes. But then in 1980s, they started manufacturing high quality running shoes for athletes. Mercury Shoes has concentrated is design, market and sell on three main brands known as Boost, TrailStep, and Sweatless Apparel.
In Mercury International Ltd, approximately 4,800 employees are working worldwide with operation in 170 countries. Mercury has dominated athletic footwear and apparel industry with fourth position all over the world. Overall, Mercury is one of the major incorporations in sports related industry with the great rivals such as Nike, Reebok, Adidas, Puma, etc. OBJECTIVE OF MERCURY SHOES The main objective of Mercury Shoes is to be on number one position all over the world within the next four years.
And, in order to meet this objective the growth rate of Mercury Shoes is expected to be 10% to 15% per annum in terms of revenue, sales, profit margin atleast for next four years. (Mercury International Ltd. , www. mercuryshoes. com) KEY ISSUES WITH MERCURY SHOES Though, Mercury International Ltd. is having a great market share in the athletic wear industry, it is facing a number of key issues in maintaining its market share and meeting these objectives in reality. The key issues are as follows:
Changing youth fashion – This is the prime issue faced by Mercury Shoes in keeping updated as per the market demand and fashion of youth athletes. New trends and new products with new brands are always demanded by youths and therefore, sometimes it becomes very difficult to stick customers to same brand. Even though, the company is going through market research and development, the results are not always fruitful. There are various competitors existing in the market who have greater influence on consumers than Mercury Shoes.
To overcome the problem of changing fashion, Mercury Shoes will have to conduct proper market surveys, should take the opinions of its loyal customers about their tastes, likes and dislikes and accordingly should make changes in the production, should recruit talented and innovative designers, should adopt proper marketing skills to promote products, etc. all these measures help in meeting the issue of changing fashion and can maintain the market share and customer’s demand by implementing these options. Market Forces – Mercury Shoes sell its products through high end retail shops, special athletic sports stores, and department stores.
But, while dealing with end consumers through these links, there are other market forces which highly influence the purchasing power of customers. These market forces are government policies; interest rates, inflation, consumer sentiments, unemployment rate, etc. can adversely affect the income of consumers and as a result purchasing desire. To overcome the problem of external factors, Mercury Shoes should make its customers available fair discounts, new marketing schemes such as buy two get one free and many more, seasonal sales, after sales service, warranty eriods, etc. offers force customers to purchase its favorite brand’s products and company also becomes successful in retaining customers during worst economic period. Competition – The competitors of Mercury Shoes are very strong and they have captured the entire sports industry. The competitors include Nike, Adidas, Converse, Puma, etc. The stock prices of competitors have increased by more than 20% while the stock prices of Mercury shoes decreased from $29. 45 in last quarter of 2008 to $42. 36 in 1st quarter of 2009. (Mercury International Ltd. ,www. ercuryshoes. com) Limited Brands – Mercury Shoes is specializing in very limited number of its products mainly Boost, TrailStep, and Sweatless Apparel. Whereas, other competitors are specialized in production of variety of products, in sports industry. The competitors provide products such as basketball, football, cross-training, outdoor activities, women’s fitness, etc. Whereas Mercury Shoes lacks these areas of products and as a result lacks customers. Along with its main brands, Mercury Shoes must become specialize in introducing other brands, too.
So that company will enjoy more market share and slowly will capture the entire sports related industry. Mercury Shoes must introduce special brands for women’s fitness as women spend maximum of their household income for shopping as a result company will be in a position to earn more profits. Also, the company should introduce brands for all possible sports equipments which are necessary for athletes. Skilled Labor – The quality, skilled and innovative labor is an important criterion for a successful sports business to compete in the international market.
Though, Mercury Shoes is having skilled labor in its production and designing team but it is lacking with regular market updates compared to its giant competitors. To be on a number one position, Mercury Shoes needs very intelligent, skilled, talented and excellent employees in the organization. And to update them regularly, Mercury Shoes needs to undertake various formal training programs for its employees in the streams of designing, fashion and technology in sports management.
Also, company should develop skills through sports and leisure education packages and certification especially in sports industry. Advertising and Promotion – From the financial reports of Mercury Shoes, it is quite clear that the net profit ratio has been decreased from 4. 38% in 2008 to 3. 79% in 2009, which explains that the sales turnover has been decreased instead of increasing. To resolve the issue of decreased sales, it is necessary to increase the share of marketing in the form of advertising and promotion to meet the objective of 10% growth annually. (Mercury International Ltd. , www. mercuryshoes. om) Mercury Shoes must advertise its products through all possible means such as hoardings, sign boards, sports magazines, peer reviewed journals, etc. Also, Mercury Shoes must undertake online advertising in large scale. Company should promote its products through sponsorship in many international games, and through famous celebrity support which will result in popularizing products and brands of Mercury Shoe s even among the ordinary class of consumers. With the help of advertising, the trademark of Mercury Shoes can appear on the international players’ of pants, shirts, equipments, boards, hoardings etc. nd it can help in increasing the global market share. As a result, competitors can get more challenges in promotion of their business. These are the key issues faced by Mercury Shoes, result of which the demand for its product gets affected and ultimately the brand name, and profit of the company. RECOMMENDATION To come over these issues, and to increase the market share and to achieve the number one position in the sports apparel industry, it is recommended that Mercury Shoes must undertake strategic management.
The company must develop strategies to overcome these key issues. Since, Mercury Shoes is specifically into athletic apparels industry, the potential strategy for the company is Sustainable Business and Innovation. By emphasizing more on this strategy Mercury Shoes can resolve its critical issues, and can reach more towards leadership position in the industry. A sustainable business is one which works in an environmentally accountable mode. The products and functions of business do not affect adversely on the environment.
And innovation means originality or creativity in the products of the business. If Mercury Shoes adopts the strategy of Sustainable Business and Innovation then the business will grow and expand and the issues will minimize. Mercury Shoes has to concentrate on its sustainable business and that can be achieved by modernization and providing enterprise-level sustainability results, by combining sustainability in the center of the organization, by providing importance to stakeholders and mobilizing them for balanced solutions.
A focus on sustainable business means creating sustainable manufacturing, product development and market. The various elements of the potential strategy are as follows: Innovation – Mercury Shoes’ Sustainable Business and Innovation strategy can help in deriving new and innovative products for its consumers. With the help of this strategy company can produce the products with minimum possible materials, can design for easy dismantling and proficient for recycling used products into new products.
With innovation, company can fix its permanent place in entire industry; and can capture market for designing, manufacturing, recycling and reusing. Some of the innovative products can be women’s fitness, safety masks, practice balls, chest protectors, basketball equipments, pitching machines, etc. Integration – Integration of corporate responsibility can help in sharing a common purpose of challenges, approaches and vision into the Mercury Shoes’ business. In essence, Integration can also help in maintaining cultural change to build a more sustainable organization.
Integration can also help in decision making which can realize about greater impact of sustainable business. Integration is one of the key factors of growth plan and corporate strategy for sustainable business of Mercury Shoes. E. g. if Mercury Shoes acquires a business of some other athletic wear company for additional growth and expansion then the company will enjoy benefits of economies of large scale, wider scope, increased market power, and can reduce the cost of production.
Mobilization – The Sustainable Business and Innovation Strategy can help to measure the scale of the systematic change, without scale it is not possible to measure anything. And scaling refers to mobilizing the innovation and technology introduced by skilled and efficient employees. In Mercury Shoes, mobilization can be derived by implementing systematic changes in working conditions of employees so that performance can be scaled out. The best way to implement mobilization in Mercury Shoes is mobilizing its resources to strengthen organizational capacity and deliver benefits to the society.
And these resources are funded by multiple sources such as internal funds like retained earnings, share capital, bank loans, etc. CONCLUSION It is concluded that, with the implementation of this strategy, Mercury Shoes can surely achieve number three position in market. And can expand its business with a high growth rate. Even the company will be in the position to increase its annual revenue, return on assets and its operating margins. Reference Citation: http://www. echeat. com/essay. php? =29329, www. unctad. org/trade… /env%20and%20health%20requirements. pdf, www. ilo. org/public/english/region/asro/manila/… /wp9. pdf, http://www. mercuryfootwear. com/our-services. asp, http://hbr. org/product/mercury-athletic-valuing-the-opportunity/an/4050-PDF-ENG, http://www. quickmba. com/strategy/horizontal-integration/; http://siteresources. worldbank. org/INTBELARUS/Resources/Resource_Mobilization. pdf; http://www. eurojournals. com/rjis_8_10. pdf