A Strategic Analysis of a Sports Equipment Company: UVEX Sports - Essay Example

?A Strategic Analysis of a Sports Equipment Company: UVEX Sports Table of Contents 0 Introduction 3 2.0 Task A: Market Environmental Analysis 4 2.1Purpose Of The Section 4 2.2 PESTEL Analysis 4 2.3 Critical Success Factors 6 2.4 Porter’s Five Forces Model 6 2.5 Market Structure 8 2.6 Strategic Group 9 2.7 Market Segmentation 9 2.8 Main Implications 9 3.0 Task B: Strategic Analysis 10 3.1 Value Chain Analysis 10 3.2 VRIN Model 13 3.3 Resources And Capabilities 15 3.4 Distinction Between Threshold Vs. Unique Resources/ Capabilities 18 3.5 Main Implication Of The Analysis 19 3.6 Core Competencies 19 4.0 Task C: Strategic Fit 21 4.1 SWOT Analysis 22 5.0 Conclusion 24 6.0 References 25 7.0 Bibliography 30 1.0 Introduction Uvex is considered to be one of the most successful brands in Germany. The company is at present into its third generation and is a family run enterprise. It provides head-to-toe protection to its customers in sports, work and leisure categories. The manufacturing work is undertaken in Germany as well as in Europe (Uvex Winter Holding, 2011). The main objective of this report is to present the strategic analysis of Uvex Winter Holding. Therefore, it will try to identify the internal as well as the external factors affecting the success of the business. 2.0 Task A: Market Environmental Analysis 2.1 Purpose Of The Section The key purpose of this section has been to identify the conditions in which the Uvex Sports Equipment Company tends to operate. Both the macro as well as the micro environmental factors affecting the company will be analysed. 2.2 PESTEL Analysis Political Factors The products of UVEX are manufactured taking into consideration highest quality standards. The products undergo strict in-house inspection thereby exceeding the legal requirements (Uvex Sports, 2011). Implementation of the REACH which is an improvement of EU chemical policy impacts the successful operations of the firms. Economical Factors Being one of the major brands of Germany, the company is successful at helping the nation to reduce the level of unemployment by increasing the number of employees each year. It is to be noted that approximately two-third of the UVEX’s 2080 strong workforce as on 31st June 2011 have been employed in Germany itself. Social Factors UVEX provides premium quality and highest safety standard sports products. The company manufactures the goods keeping at consideration the requirements of the people at work, leisure and sports. The products are meant for any race, lifestyle, age and religion. The products are fashionable and have special designs in any of its products thus appealing to the youngsters by a great extent. The main focus of the company is towards the people who like sports as well as athletes. It has been observed that people from almost each class can purchase the products of UVEX (Uvex Safety Group, 2011). Technological Factors UVEX makes use of the safety expert systems which is a major system used for the purpose of analysis as well as optimization of the supply with the help of Personal Protective Equipment. It is to be mentioned that such safety expert systems provide the company with great benefits (UVEX Safety Group, 2011). Environmental Factors It has been apparent that UVEX not only offers its customers with the products which are environmentally sound but UVEX also tends to ensure that the environment in which it operates is not being harmed because of its operations. The company’s policies mainly focus upon the protection of the employees, consumers and the environment in which it operates. Furthermore, the company prepares climate controlling clothing designed with the help of intelligent material and manufacturing techniques for the purpose of complementing the body’s regulating system to remain cool and dry. It invests in solar power system so that it can reduce annual Carbon Di-Oxide (CO2) emission (Uvex Safety Group, n.d.). Legal Factors It has been found that UVEX Sports and Swix Sport USA in relation with the US Consumer Product Safety Commission proclaimed the call upon the Fun Ride Ski Helmet in numerous colours. It was found that the helmet did not have adequate shock absorption as well as resistance to dispersion which could lead to severe head injury (Uvex Safety Group, n.d.). 2.3 Critical Success Factors The main critical success factors of Uvex are high brand recognition and awareness among the consumers. The skilled human capital of the company is also considered vital for the success of the company. 2.4 Porter’s Five Forces Model Bargaining Power of the Customers It can be stated that the bargaining power of the customers is quite high because switching to other brands or any stores is quite easier for them and is not transcends to higher cost (Slideshare, 2008). Bargaining Power of Suppliers The bargaining power of the suppliers is high since there are few large suppliers instead of fragmented sources of supply (Slideshare, 2008). Threats of New Entrants It is observed that there is fierce competition in the sports goods industry. It becomes relatively easier for any other companies to enter into sports goods industry (Slideshare, 2008). Threat of Substitute There is high threat of substitute products in case of sports goods industry. There are substitutes like internet, retail chains prevailing outside of the town and small specialty stores that sell various sporting goods (Slideshare, 2008). Rivalry The main rivals of UVEX are Adidas, Puma and Nike. Although, the sales of these companies have declined because of the financial downturn, they have dominated the market with high quality sport goods since long. These players are also found to be adopting almost similar strategy to UVEX such as use of internet so that the customers can buy from their online stores (Slideshare, 2008). 2.5 Market Structure The mission of the company is to protect the people and therefore the company has positioned itself as a pioneering, value-oriented supplier of brand systems as well as an international skilled manufacturer. The company aims at enlarging its presence in the fast growing market (Uvex Safety Group, 2011). 2.6 Strategic Group It is to be mentioned that the strategic groups have distinct level of performance, risk as well as risk-adjusted performance (Purdue University, 2011). The main strategic group of UVEX is UVEX Safety Group. The company is committed at providing its customers with a product range which has been manufactured with the help of state-of-the-art technology. It is this unique capability of the company that makes it distinct from that of the competitors (Uvex Safety Group, 2006). 2.7 Market Segmentation UVEX essentially tries to focus upon the age group of 15 to 35 years. It prepares its products for all social classes such as upper middle class, lower upper class and upper class. The products are prepared for both male and female. The main users of the products are the athletes, gym regulars, sports enthusiasts and image seekers (Uvex Winter Holding, 2011). 2.8 Main Implications It has been noted that the macro environment factors have a major implication on the operations of UVEX. There is high rivalry in the market and the customers and the suppliers also have very high bargaining power. Therefore, it is quite significant for UVEX to prepare its strategies accordingly (Slideshare, 2008). 3.0 Task B: Strategic Analysis This section of the report tries to highlight the unique capabilities and the resources of UVEX. It focuses upon the internal resources that the company possess and which impact the successful operations of the firm. 3.1 Value Chain Analysis UVEX implements the value chain as one of the processes that assists in determining the competitive advantage affect. The total value as delivered by the UVEX is determined through the value chain analysis. Supporting Activities Human Resources It has been noted that the company considers its human resources as one of the most significant assets. The company tries to recruit highly committed and motivated staffs so that it can guarantee success in short period of time, thus maintaining competitive advantage. It has been found that UVEX Group employed approximately 2090 people all around the world as on December 31, 2010 (Uvex Winter Holding, 2011). Firm Infrastructure The company tries to follow a culture of safety in this organization. “Culture of Safety” is more than a mission statement for the company (Uvex, n.d.). It has been noted that the most of the employees of the company have devoted their significant time in order to bring the company to the position that it has achieved today. The CEOs and other board members contributions have been quite pivotal to the success of the company. It has a flat hierarchy, open communication and has a culture promoting fast and efficient decision making (Uvex Winter Holding, 2011). Technological Development It has been found that technology plays a vital role at developing the products at UVEX. The various technologies such as ski helmet technologies, injected shell technology, ski goggles technology and sports eye wear technology are being used by the company in order to ensure highest degree of safety and quality (Uvex Sports, 2011). The company also maintains glove database in order to ensure that its customers are informed regarding the stocks of various glove models and its stability. Procurement In order to procure the goods and services and to avail the raw materials the company tries to maintain close contact with its suppliers and manufacturers. It tries to exchange the information with them in order to ensure that these suppliers are effectively implementing REACH or not. REACH denotes Registration, Evaluation, Authorization of Chemicals which is a novel EC Regulation that tends to centralize and ease chemical laws on a Europe-wide level (Uvex Winter Holding, n.d.). Outbound Logistics The outbound logistics for the company are the finished products that can be used by the ultimate consumers. The various products of the company are sports and leisure products such as ski, cycling and riding helmets, sports eye wear, hearing and hand protection, safety footwear and work wear among others (Uvex, n.d.). Primary Activities Inbound Logistics UVEX makes use of the exceptional temperature regulations starting from head to toe. It has expertise in research, product development as well as material application in order to stand as the only producer of personal protection related products that can be offered to the customers (Uvex Winter Holding, n.d.). Service The company has a training institution in order to provide various independent courses to the interested parties in the field of laser protection, measuring systems and personal protective equipments (Uvex Winter Holding, n.d.). Marketing and Sales Activities The company’s marketing and sales activities are managed by Uvex Safety Inc. which is headquartered at Smithfield. Operations The company began its operations in the suburb of Furth, Germany. It believes in the principle of “Think Global and Act Local”. The company operates with the help of the staffs who are highly dedicated towards their work in Uvex (Uvex Winter Holding, n.d.). 3.2 VRIN Model Valuable The human resources of the company are the most valuable assets to Uvex Group. Rare The company has achieved high brand awareness and recognition which is tremendously difficult for any company to achieve in such short period of time. Inimitable The strategy which the company follows to market its product and to attract customers is quite unique. Immersed In the Organization of the Company The corporate culture of ‘protecting people’ and thus providing safety goods and services is one of the key success factors of the company (Uvex Winter Holding, 2011). 3.3 Resources And Capabilities Financial Capabilities When Uvex Group financial data is observed, it is noted that there has been significant improvement in the performance of the firm. The company had set the target to achieve revenue of Euro 283 million for the fiscal year 2009 / 2010. In the year 2010, the percentage of net sales of the company had been 61% while it has increased by 5% in the year 2011 and the percentage of net sales of the company is 66% in 2011. There has been slight decline in the percentage of net sales of Uvex Sports and Leisure Segment. In the year 2010, sports and leisure segments percentage of net sales had been 39% while in the year 2011 the percentage of net sales is 34%. The sales of Uvex Group in the year 2010 had been €304m. However, the sales of the company rose to €330m in 2011. There has been rise in the sales of the Safety Group as well. In the year 2010, the sales of safety group had been €1865m while in the year 2011, the sales of safety group is €2187m. The company recorded a pleasing profit under the leadership of Robert Bosch Group in the year 2011 (Uvex Winter Holding, 2011). Financial Competencies As of October, 2011 the turnover percentage of UVEX nationally is 51% and internationally, it is approximately 49% (Uvex Winter Holding, 2011). Human Resources Human resource is a vital part of an organization without which it is quite difficult to operate the business. Germany employs two-third of the total of 2100 employees of the company. It ensures that it has dedicated as well as motivated employees so that the goals of the organisation can be achieved effectively. It educates its employees regarding the best safety practices. It also believes in practicing strong communication flow among the members of the organization so that the employees feel comfortable to work. Human Resource Competencies The human resource competencies in UVEX can be interlinked to the culture of the organization. The company believes in treating its employees with respect and maintaining utmost professionalism so that the employees in turn treat their customers similarly. There is proper management of the human capital in the organization. Physical Resources The UVEX Group consists of 41 subsidiary companies in approximately 22 different countries. There are three internationally oriented divisions of UVEX Group such as Uvex Safety Group, Alpina as well as Filtral, Uvex Sports Group along with Uvex Sports (Uvex Winter Holding, 2011). Physical Capabilities The physical capabilities for UVEX are the proper utilisation of the employees in order to enhance the efficiency of the organization. Intangible Resources The intangible resource for the company is high brand awareness among the people and brand recognition (Honeywell, 2011). Intangible Capabilities Since the company has high brand awareness and brand recognition, therefore it becomes easier for the company to target their intended customer segment. In order to maintain the brand image, it is significant for the company to capitalize on the existing resources. 3.4 Distinction Between Threshold Vs. Unique Resources/ Capabilities The table below depicts the results of the previous analysis and offers an overview of the resources fulfilling the threshold level and the factors that can be regarded to provide competitive advantage. 3.5 Main Implication Of The Analysis The competitive advantage of the company as identified from VRIN model is its strong brand awareness and recognition. In addition to this, the human resources also seem to play a significant role in enhancing the sales and profitability of the company. 3.6 Core Competencies The core competency of Uvex is its capability of effectively managing the human resources and therefore achieving competitive advantage. 4.0 Task C: Strategic Fit This section of the paper tries to provide an overview of the strategic fit of Uvex Sports. It will try to draw the specific strengths and weaknesses of the company and also will try to highlight the opportunities and threats. The figure below tries to pinpoint the level to which Uvex is matching its resources and capabilities along with the strengths and weaknesses in the internal environment. Strengths/ Weaknesses Fit? Comments Brand recognition and awareness Uvex brand is well recognized and the people are well aware of the company’s products and services which is one of the major strengths for the company Distribution strategy The company has a strong distribution strategy which enables the company to deliver products with greater ease at the right time and right place to the targeted customers. Strong market presence in China One of the significant growth markets have been China and the company already has its presence in China with approximately 20 employees (Uvex, 2011). Products of all categories and ranges The company has products of all ranges and categories from head to toe, thus meeting the needs of the sports persons and athletes. Private ownership ? There is limitation of private ownership which is one of the weaknesses for the company. Financial performance ? The company needs to focus on making its balance sheet stronger in order to beat the tough competition that it receives from the companies such as Adidas, Salamander Shoes & Trend Company and ODLO sports among others (Docstoc, n.d.). 4.1 SWOT Analysis Strengths The key strength of the company is its highly skilled and efficient human resources. Uvex also maintains good distribution strategy that enables it to deliver the goods and services on time. The brand is well recognized and the people are well aware of the Uvex brands which are one of the strengths for the company. The company is present in most of the booming markets. The revenues and the profits of Uvex are augmenting continuously which demonstrates a consistent performance of the company. Weaknesses The main weaknesses of the company are the limitation of private ownerships. Such weaknesses need to be defeated in order to enhance the efficiency of the organization. Opportunities There are various opportunities for the company in the coming days. There is tremendous growth in the adventure tourism in the recent times. This will enable the company to produce products for these targeted tourists. The company is launching new products with advanced technologies thus permitting the company to capture new segments and markets. Threats There is threat of high competition in sports goods industry. It has been evident that the threat of substitute products is also high for such products. 5.0 Conclusion In the world of competition, it becomes quite significant for the companies to develop their strategies in such a way so that they can achieve competitive advantages. It has been identified that UVEX is one of the successful brands in Germany. It seems to have realised its true potential in capturing the market share by preparing strategies accordingly. In order to achieve sustainable growth, it becomes significant for the company to make optimum utilisation of the resources and therefore plan their strategies accordingly. 6.0 References Docstoc, No Date. Uvex Winter Holding Gmbh- Strategic SWOT Analysis Review. SWOT Analysis. [Online] Available at: http://www.docstoc.com/docs/70204639/Uvex-Winter-Holding-GmbH---Strategic-SWOT-Analysis-Review [Accessed October 24, 2011]. Honeywell, 2011. Press Release. News and Events. [Online] Available at: http://www.honeywellsafety.com/Americas/News_and_Events/Press_Releases/Uvex_Launches_Two_New_Lens_Coatings_for_Protective_Eyewear.aspx?LangType=1033 [Accessed October 24, 2011]. Outdoor Safety Institute, 2011. UVEX Funride Ski Helmet Recall. Home. [Online] Available at: http://www.outdoorsafetyinstitute.com/news/single/uvex_funride_ski_helmet_recall [Accessed October 24, 2011]. Purdue University, 2011. Strategic Group Formation And Strategic Group Shifts. A Longitudinal Analysis Of The U.S. Pharmaceutical Industry, 1963-1982 (Competition, Performance; United States). [Online] Available at: http://docs.lib.purdue.edu/dissertations/AAI8519994/ [Accessed October 24, 2011]. Slideshare, 2008. NikeCase Analysis. Industry Analysis. [Online] Available at: http://www.slideshare.net/eonemo/nike-ethics [Accessed October 24, 2011]. Uvex Winter Holding, 2011. About UVEX. What We Do. [Online] Available at: http://www.uvex.de/en/about-uvex/what-we-do/ [Accessed October 24, 2011]. Uvex Winter Holding, 2011. Environmental Statement Of The Uvex Group. Philosophy. [Online] Available at: http://www.uvex.de/en/footer-kategorien/philosophy/environmental-mission-statement/ [Accessed October 24, 2011]. Uvex Safety Group, 2011. Uvex Safety Group Strategy. News. [Online] Available at: http://www.uvex-safety.com/uvex-safety-group/strategy/ [Accessed October 24, 2011]. Uvex Safety Group, 2006. Sozial Standard Uvex Safety Group. Editors. 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