BSG Player Guide
The IFF's S/Q rating of shoes produced at each plant is a function of five factors: (1) current-year spending per footwear model for new features and styling, (2) the percentage of superior materials used, (3) current-year expenditures for Total Quality Management (TQM) and/or Six Sigma quality control programs, (4) cumulative expenditures for TQM/Six Sigma quality control efforts (to reflect learning and experience curve effects), and (5) current-year expenditures to train workers in the use of best practices.
S/Q rating of 0 to 10 stars to each company's branded footwear offerings
Private-label sales to large multi-outlet retailers of athletic footwear.
The private-label segment is projected to grow a healthy 10% annually during Years 11-15 and a brisk 8.5% during Years 16-20.
Mail-in rebates.
When cross-rival differences on all the other 10 competitive factors are, on balance, quite small, companies offering bigger-than-average mail-in rebates will outsell companies offering smaller-than-average mail-in rebates (or no rebates).
The number of retailers in a region desirous of carrying a company's brand in an upcoming year is based on four factors: (
(1) a company's prior-year market share of branded footwear sales in that region, (2) the maker's S/Q rating for branded footwear, (3) the manufacturer's delivery times in filling retailer orders, and (4) the degree of merchandising support that the company provides to retailers stocking its brand of footwear.
The three region-specific factors are volume sold online are
(1) the S/Q rating of the pairs available in each region's distribution center, (2) the company's current advertising budget in the buyer's geographic region, and (3) the appeal of the company's celebrity endorsers in the buyer's region.
worker productivity levels at different plants can vary substantially because of the overall experience of the work force, the use of different incentive compensation plans, the degree of emphasis placed on best practices training, and the use of up-graded footwear-making equipment.
All workers worldwide are paid 1.5 times their regular base wage for working overtime (more than 40 hours per week).
The amount of support offered to retailers in merchandising and promoting the company's brand.
Companies that provide amounts of retailer above the all-company average in a region have an advantage in attracting footwear retailers to stock their brand and thereby boosting their branded footwear sales in the region. 9. The numbers of independent retail outlets carrying the company's brand. A company's
The number of weeks it takes to deliver orders to retailers.
Companies whose delivery times are in a region are shorter than the all-company average have an advantage in attracting footwear retailers to stock their brand and boosting sales because retailers are less likely to run out of particular sizes and styles
Appeal of celebrities endorsing the company's brand.
Companies with more influential celebrity lineups in a region enjoy an advantage in attracting buyers to purchase their brand as compared to regional rivals with less influential celebrity endorsements (or no celebrity endorsements).
The numbers of independent retail outlets carrying the company's brand
Having more retailers selling the company's brand act to enhance a company's competitiveness and overall brand appeal because of the added retail exposure and the added convenience to footwear buyers of being able to buy a given brand at more locations.
The going market prices of standard and superior materials in any one year deviate from their respective base prices whenever the percentage mix is anything other than 50% for standard and 50% for superior materials.
Materials prices fall whenever global production levels drop below 90% of global production capacity and materials prices rise when global production levels rise above 110% of global plant capacity.
The combined effect of these factors is reliably expected to produce 7-9% annual growth in global demand for athletic footwear for Years 11-15, slowing to about 5-7% annual growth during Years 16-20. But the projected growth rates are not the same for all four regions, as indicated in the table below:
North America & Europe-Africa 5-7% Years 11-15 3-5% Years 16-20
Wholesale sales to independent footwear retailers who carry athletic footwear—department stores, retail shoe and apparel stores, discount chains, sporting goods stores, and pro shops at golf and tennis clubs. Worldwide, there are some 60,000 retail outlets for athletic footwear scattered across the world.
North America and Europe-Africa each have 20,000 retail outlets selling athletic footwear, while Latin America and the Asia-Pacific each have 10,000 retail outlets for athletic footwear.
All footwear companies are subject to exchange rate adjustments at two different points in their business.
The first occurs when footwear is shipped from a plant in one region to distribution warehouses in a different region (where local currencies are different from that in which the footwear was produced). The second exchange rate adjustment occurs when the local currency the company receives in payment from local retailers and online buyers over the course of a year in Europe-Africa (where all sales transactions are tied to the €), Latin America (where all sales are tied to the Brazilian real), and Asia Pacific (where all sales are tied to the Sing$) must be converted to US$ for financial reporting purposes— the company's financial statements are always reported in US$.
The effectiveness of the company's online sales effort at the company's Web site.
The more favorably that your company's S/Q rating, advertising, and celebrity appeal in a given region compare with those of rival footwear companies and the more favorably that your company's average online retail sales price, models offered, and shipping charges compare with those of other online competitors, the bigger your online sales volume and internet market share.
The competitive impact of advertising depends on the size of your company's current-year advertising budget. A company's aggressiveness in promoting its footwear in a given geographic region is judged stronger when its annual advertising expenditures exceed the all-company regional average and is judged weaker the further its ad budget is below the all-company regional average.
When cross-rival differences on all the other 10 competitive factors are, on balance, close to equal among company rivals in a region, companies with above-average current-year advertising expenditures will outsell companies with below-average current advertising expenditures
Athletic footwear manufacturers have three distribution channels for accessing the ultimate consumers of athletic footwear, the people who wear the shoes:
Wholesale sales to independent footwear retailers • Online sales to consumers at the company's Web site. • Private-label sales to large multi-outlet retailers of athletic footwear.
materials prices fall whenever global production levels drop below 90% of global production capacity and materials prices rise when global production levels rise above 110% of global plant capacity.
market prices for both standard and superior materials will drop 1% for each 1% that global shoe production is below the 90% capacity the prices of both standard and superior materials will go up 1% for each 1% that global production levels exceed 110%
The amount the company spends per worker on best practices training—Apart from compensation, the productivity of workers is significantly affected by the effort the company exerts to train workers in using the best-known footwear-making methods.
potentially significant gains in worker productivity that can come from expenditures on best practices training. benefits are subject to diminishing marginal returns from spending progressively more dollars on training.
One way to guard against adverse changes in tariffs and exchange rates is to maintain a production base in each of the four geographic regions and rely upon those plants to satisfy demand for the company's branded footwear in their respective region.
production costs of footwear made at Asia-Pacific plants are tied to the Singapore dollar (Sing$);Europe-Africa plants are tied to the euro (€); Latin American plants are tied to the Brazilian real;North American plants are tied to the U.S. dollar (US$).
Labor productivity is determined more by worker dexterity and effort than by machine speed
this is why piecework incentives can induce greater output per worker.
Tasks are divided among production workers in such a manner that it is easy to measure individual worker output and thus create incentive compensation tied to piecework.
this is why piecework incentives can induce greater output per worker
Expenditures for best practices training have four highly positive benefits in all plants:
(1) helping curb reject rates associated with defective workmanship, (2) helping improve S/Q ratings for both branded and private-label footwear, (3) curtailing materials waste and potentially lowering material costs at the plant by as much as 20% annually over a period of years, and (4) increasing worker productivity up to a maximum of 2.2% annually.
The three global determinants of the unit volume sold online are
1) the number of different models and styles offered at the Web site, (2) the company's internet sales price for these models, and (3) whether shipping fees are added to the buyer's cost of the footwear purchased online or whether the company offers free shipping (and thus absorbs the shipping fees).
buyer decisions to purchase one brand instead of another
more influenced by such competitive factors as advertising, celebrity endorsements, the number of independent retail outlets stocking the company's brand of footwear, and the comparative effectiveness of each company's online sales efforts than by differences in the number of weeks it takes to deliver retailer orders, the sizes of mail-in rebates, cross-company differences in customer loyalty, and the comparative amounts of support provided to retailers in merchandising and promoting their respective brands.
cross-company differences in wholesale selling prices to retailers, S/Q ratings, and the breadth of product selection weigh the most heavily in determining each company's branded footwear sales and market share in each region.
most heavily
annual worker productivity
1) annual base pay -increase by 2% to achieve higher levers. 2) incentive compensation incentive bonus for each that passed inspection.larger the percentage of total compensation that comes from piecework incentives, the larger the annual boost to worker productivity. However, once incentive pay exceeds 25% of total compensation, the incremental gains in productivity become progressively smaller and top out altogether when incentive pay reaches 50% of total compensation.
the more models/styles a company has in its product line, the more reasons consumers have to consider buying one or more pairs of the company's footwear
Product line breadth, as measured by the number of models/styles comprising each company's branded offering.