The case provides several issues that class members will need to address: 1.
How well positioned is Puma for the future now that things have gotten turned around? 2.
How important is it that Puma strive to gain sales and market share, given that the industry arena in which it competes is “fragmented” with many competitors? 3.
Does Puma currently have a good strategy for the long-term or are strategic changes and adjustments needed?
What is your opinion of the job that Puma’s management has done since CEO Jochen Zeitz took over? Is the company in good shape and in a good market position? Would Puma management agree with your assessment? How does your characterization of where Puma is and how well it is doing compare with the message and image that Puma management is trying to get across? 1.
What is your opinion of the job that Puma’s management has done since CEO Jochen Zeitz took over? Is the company in good shape and in a good market position? Would Puma management agree with your assessment? How does your characterization of where Puma is and how well it is doing compare with the message and image that Puma management is trying to get across? Puma has done well under Zeitz’s leadership. There is not a lot to quibble with here. But at the same time, the company has a long way to go in establishing itself in the ranks of the industry leaders. It has a small market share and its brand image still suffers in comparison to those of Nike and Adidas. In the U.S. market, Puma is an also ran; it is stronger and has considerably more visibility in Europe. 2.
What is competition like in the international sport apparel industry? What do we learn about competition in this industry from a five-forces analysis? A representative five-forces models of competition in the sport apparel industry is shown below:
Competitive pressures stemming from the threats of additional entry into the industry (moderate to strong)
Entry in the form of existing industry members moving into new geographic areas and new products categories where they currently do not have a presence is highly likely.
Market maturity works against further entry on the part of altogether new players (unless a new entrant has an innovative product and the resources to readily carve out a niche for itself)
Barriers to entry vary in strength and impact
Low for apparel market, because design know-how is fairly easily obtained (while some designers are better than others, popular designs can be easily imitated) and it is easy to find contract manufacturers for new products —
Higher for footwear, because technical know-how needed and incumbent makers of athletic footwear enjoy scale economies and brand loyalty; moreover, footwear incumbents like Nike, Reebok, and Adidas are sure to vigorously defend their market positions —
No / low investments in production facilities due to outsourcing trend —
Capital costs to build a well-known brand name are high (biggest entry barrier) —
Can be hard for an industry unknown to gain retail exposure and adequate shelf space (another big entry barrier)
Barriers to exit
Very low, as almost no long-term contracts
No long-term guarantee/warranty liabilities towards customers.
Large incumbents in apparel segment will find it hard to prevent entry of small niche players
As brand image plays a very important role, it is hard to drive competitors out of the market with fierce price competition
Due to heterogeneity of the buyers side of marketplace, it is hard for a single company to serve all the different needs of end-users—there is ample room for many different kinds of players in this industry
Competitive pressures stemming from substitute products—relatively weak
Few, if any, substitutes for athletic footwear / sports apparel (except as concerns casual wear)
Many of the industry’s products meant/appropriate for everyday life, need not be sportive
Competitive pressures stemming from bargaining power of...
Please join StudyMode to read the full document