Thecompany is called SHIFT, and it is located in the United States. Itfocuses on designing and producing shoes and apparels that people canuse comfortably in sports and non-sports related occasions. Thetraditional firms in the sports industry such as Nike and Adidas havedemonstrated that they are not willing to explore the larger fashionsector and incorporate the aspects of some of the common trends theymay discover. However, Schiffer (2015) predicted a market wherepeople will need relatively more style in the design ofsports-related products than it was in the preceding period. At thesame time, customers also tend to make buying decisions bydetermining whether they can use the products maximally (Milner &Rosenstreich, 2013).
Noone wants to buy items he or she will only use occasionally.According to the study conducted by Germano (2015), a high number ofAmericans wear traditional sports shoes for casual purposes becausethey want to put them to maximum use. In fact, the emergence of theconcept of economic sharing reflects the fact that contemporary humanbeings would rather rent things that they only want to use a fewtimes rather than buy them. Apparently, people tend to rent out itemssuch as cars and properties such as houses to others when they arenot using them. SHIFT aims at taking advantage of this characteristicy designing clothes and shoes which can either be used as sports kitsor just typical casual wear. This way, they would offer great appealto the market whose commercial awareness has expanded over the years.
PESTLEAnalysis on SHIFT
Thestale political landscape in the United States provides anopportunity for the growth and development of the company. Secondly,the enterprise is likely to benefit from the trade policies which thegovernment has enforced to support the development of SMEs becausethey support the country`s economy by employing many people.Furthermore, the low-interest rates make it easy for new investors toaccess capital and support their businesses.
Arguably,America is one of the countries with a stable economy for businessgrowth and expansion. It is also characterized by a high rate ofemployment. It implies that the company can benefit from people’scapacity to spend their resources on the related products. However,the cost of labor is high compared to countries such as Vietnam andSingapore. Therefore, the cost of operation is likely to be high.
InAmerica, SHIFT can exploit the increasing wealth and resources ofpeople. The government has been committed to reducing the gap betweenthe wealthy and poor, thus facilitating resource collection among lowand middle-class members of the society. Additionally, the companycan develop products which people can use on more than one occasion,thus appealing to their economic need for efficient use of theirresources.
Informationtechnology progress is both an opportunity and threat for thecompany. For instance, SHIFT can use social media as a marketingavenue, a platform for consumer engagement and place to advertise itsbrand. However, they can also be places where the company getsscrutinized and criticized.
Theimprovement of employment law in the United States is a threatbecause it can facilitate the increase in labor costs. On the otherhand, improving the consumer law can be an opportunity for enhancingthe brand of the company by improving customer satisfaction.
Theexpansion of the environmental law can be an opportunity for the firmto create and improve its environmental and sustainability programs,thus enhancing its brand image in the market. Moreover, it wouldallow the company executives to take part in a process of redressingclimate change which is likely to affect the value chain of theenterprise.
Primaryand Secondary Market Targets
Product:The fact that the products can be used on multiple occasions makeseconomic sense to people who are above 26 years because they tend toeconomize the usage of their resources given the fact that they arelikely to have a lot of responsibilities (Twenge, Campbell &Freeman, 2012). However, those who are below 26 years are liable tobe attracted by the fashion sense of the products. Therefore, thisage group is the secondary market target of the company because theyhave different priorities from those who are above 26 years,especially when it comes to making buying decisions (Twenge et al.,2012). They are likely to buy the products because they are relevantto the contemporary trends.
Price:The Company plans to offer low-priced yet high-quality productscompared to its competitors. This objective can be achieved bycutting the cost of operation to create more leverage for reducingproduct prices. Low prices are likely to appeal to people withresponsibilities, specifically those who are above 26 years.
Promotion:The organization plans to use sponsorships celebrities to increasethe appeal of the products among young people aged between 18 and 25years.
Place:The business will be based in the United States because of its largemarket and relatively low-interest rates compared to other countries.The country`s trade policies also support the growth of SMEs.
Customer:The product is likely to meet the needs of consumers who either havefew resources or want to economize resource utilization by buyingproducts which they can use maximally.
Consistency:The Company will uphold its brand which focuses on producing shoesand apparels which are economical by consistently offering affordableprices despite maintaining high quality.
Creativity:This aspect will be reflected in the creation of items which can beused comfortably in sports and non-sports related occasions.
Culture:The firm will adopt effective value co-creation strategies andconsumer engagement processes to facilitate the incorporation of thesuggestion collected from other people in the design of themerchandise.
Communication:Rather than focus on selling products to consumers, the company willseek to communicate the story behind their brand, and how it willimpact lives.
Shortand Long Term Goals
Theimmediate goal is to look for partners and investors to support thebusiness idea. This goal will be measured by the capital available tosupport the growth of the firm. The second aim of the company is toestablish a factory and offices in the United States to facilitatethe research, design, development, and production of products.Thirdly, it is important to develop a robust and recognizable brandamidst competition in the sports and fashion industry. Theeffectiveness of this goal will be measured regarding the number ofpeople who visit the firm`s website to get information regarding theproducts offered.
Oneof the long-term goals includes sponsoring sports and fashioncelebrities to establish the fact that the company`s products can beused in different settings, including sports and casual settingsamong others. The achievement of this goal will be measured by thenumber of people who adopt the new product in the market. Thesuccesses of this aim will also be assessed using the rate of growthof the company’s market share.
Thefirm’s business idea is its greatest strength. It will operatewithin a market space which had not been exploited by other companiesbefore. Secondly, the company`s brand will appeal to people`s need toeconomize their few resources. People prefer to buy products whichthey see as very useful in their lives. Thirdly, the firms will beoperating at the time when various practical management ideas such ashuman resource frame have emerged, thus making it easy to transformthe activities of employees into organizational results rapidly.Lastly, it is likely to benefit from the government`s commitment tohelping SMEs to grow and expand by lowering interest rates.
Thecompany is likely to lose the segment of people, particularly youngpeople, who prefer to have products for every function rather thanthose which be used on multiple occasions. Secondly, the companywill only offer two types of products, thus limiting profit margin.Thirdly, thorough and expensive research will be required totransform the idea into products. Additionally, developing suchproducts may need unique raw materials which would require asignificant amount of capital.
Thecompany can diversify its products later when it accumulates adequateresources. It also has the chance to expand to growing economies suchas Japan, Brazil, and India among others. Additionally, the firm canpartner with bigger companies such as Nike to gain access to theirresources. Thirdly, the organization can differentiate its productsto attract more segments of people in the market. Lastly, it has thechance to study the trends and experiences of the establishedcompanies and use them to improve its approaches and processes.
Thegreatest danger is the completion in the sports and fashion industry.The company will face stiff competition from established companiessuch as Nike, Adidas, and Under Armor. These companies have theresources and experiences to facilitate a faster growth anddevelopment as opposed to SHIFT. The threat of substitutes from boththe fashion and sports industry is high. The organization is alsolikely to face profit-related challenges resulting from productimitation.
Germano,S. (2015, April 15). Sneaker Makers Train Their Eyes on Fashion.Retrieved July 30, 2015, fromhttp://www.wsj.com/articles/sneaker-makers-train-their-eyes-on-fashion-1429228188
Milner,T., & Rosenstreich, D. (2013). A review of consumerdecision-making models and development of a new model for financialservices. Journalof Financial Services ,18(2),106-120.
Schiffer,J. (2015, October). Is Sportswear the Future of Fashion? Retrieved2015, fromhttp://www.whowhatwear.com/is-sportswear-the-future-of-fashion
Twenge,J. M., Campbell, W. K., & Freeman, E. C. (2012). Generationaldifferences in young adults` life goals, concern for others, andcivic orientation, 1966–2009. Journalof personality and social psychology,102(5),1045.