New Balance Athletic Shoe Inc.

THERE IS NO “TOO FAST” FOR LOVE

By La’Trina Franklin

Summary
Arch Supports & prescription footwear remained the focus of New Balance sine the 1960’s. 1961-Trackster was invented the world’s 1st performance running shoe made with a ripple sole and available in multiple widths. Selling arch supports to police officers and waiters giving them ease and comfort while on duty. New Balance has been a brand concerned with meeting the needs of the everyday athletes. Part of producing superior footwear and athletic apparel is manufacturing it to fit all widths and sizes, because a better fit produces better performance. To ensure the best fitting, best performing shoes and apparel, the company focuses on improving technology and production methods. A big part of that is maintaining five manufacturing facilities here in the United States where they continue to produce shoes and apparel that meet the standards that the founder employed for more than 100 years. New Balance have also remained committed to a core set of values that include integrity, teamwork and total customer satisfaction. Today New Balance is a family of

brands including New Balance, Dunham, PF Flyers, Aravon, Warrior and Brine. New Balance holds onto its history through the numbering system that owes its origins to a man named Arthur Heckler. Instead of naming the different shoe models, Heckler chose to number them because he wanted to place an emphasis on the New Balance philosophy, not any one particular shoe. To this day, that philosophy is upheld as model numbers are advanced to incorporate new technologies and designs.

Key Facts
New Balance began as a Boston-based arch support and prescription footwear to improve shoe fit in 1906 by William J. Riley a 33 year old British émigré who committed himself to helping people relieve the pain suffered from time spent all day working on their feet. His design fit better, and felt better than anything else on the market, and by 1909 Riley was listed in the Boston business directory under 'shoemaker.' 19 years later Riley designed his first running shoe for the Boston running club known as the Boston Brown Bag Harriers. The success of this shoe spread quickly and by 1941 New Balance was creating custom-made shoes for running, baseball, basketball, tennis and boxing.

With the introduction of the Trackster in 1961, New Balance began a new direction in shoe manufacturing. The Trackster was the first running shoe available in multiple widths, a feature which would become the standard for New Balance offerings. 1934 Riley partnered with his leading salesman Arthur Hall the company developed into a specialized shoe manufacturer in the 1970's, and has grown to become a leading global athletic products company.

✔ Key Investors:
Teamwork was a critical component to the development of New Balance; the owners were willing to take risks and encourage others to do the same. The executive management team, many of whom have been with the company for over 20 years are as follows: James (Jim) Davis, Chairman Anne Davis, Vice Chairman & Executive Vice President Administration Robert DeMartini, CEO John E. Larsen, President Emeritus/Advisor Jim Tompkins, President & COO John Withee, Executive Vice President & CFO Paul Heffernan, Vice President, Consumer Experiences

Fran Allen, Executive Vice President Sales, U.S & Canada Herb Spivak, Executive Vice President Global Quality Assurance & Product Integrity John Wilson, Executive Vice President Manufacturing Joe Preston, Executive Vice President, Global Footwear, Product & Marketing Alan Rosen, Vice President & Treasurer Carol O'Donnell, Vice President Corporate Human Resources Edith Harmon, Vice President Advanced Concepts Stephanie Smith, Vice President Retail Peter Zappala, Vice President Key Account Sales Jim Sciabarrasi, Vice President Sourcing & Procurement Jim Connors, Vice President Global Design & Development Bill Hayden, Vice President Finance Edward Haddad, Vice President Intellectual Properties & Licensed Products

✔ SWOT Analysis
remained loyal to producing a product that was customer satisfied in doing so they focused on multi-width sizing and fit opposed to just a fashionable product. Large retail accounts were managed by a total of 10 head sales agents, 6 of whom were strategic account managers. The company relied on a sales force that was composed of

independent agents and was investing in a sales force automation system to increase the agents’ productivity; in terms of information technology, a new sales force automation system enabled sales representatives to place direct orders remotely, access New Balance’s inventory information, and check on delivery status business-tobusiness. Withee explained, the Business-to-business

application would help retailers directly manage basic ordering, thereby freeing up the sales representative to engage with the retailer and make recommendations about new items to carry or options for reducing inventory levels. Allen noted that as you get to a certain point

in sales volume; you grow out of independent sales force. Since the company does not have any in house accounts they prefer using independent, dedicated sales agencies with an entrepreneurial mindset; but exclusive to New Balance and compensated through a sales–based commission. New Balance divided their specialty dealers into two groups: key accounts and specialty dealers were the privately owned and independent retailer store while the key accounts were there largest retailer customers: Foot Locker a major chain that , on its own accounted for over 3,000 doors (3,500 retailers representing over 1200 sites) in the US. For New Balance to maintain a strong

relationship with both accounts were critical for business and they managed both very well. Nike and Reebok, who outsourced nearly all of their production to Asian manufacturers, while New Balance used outsourcers for only 75%, final product assembly took place in one of New Balance’s five factories in the Northeastern United States. New Balance sourced the soles for most of its shoes from two suppliers in China, they had two materials warehouses in Skowhegan, ME and one in Lawrence, MA, while their manufacturing plants were in Skowhegan, ME, Norway, ME, Norridgewock, ME Lawrence, MA, and Boston, MA which in my opinion was really strategic planning because this give lead time 8-9 days in 2001 but by 2005 lead time was at 2-3 days which also obviously showed they had manpower to back-up the supply and demand during this period.

✔ FINANCIALS: Key Financials for New Balance Athletic Shoe, Inc.

In 2004 New Balance Sales and Media Expenditure among their competitors were $1,022.0 million total brand advertising expenditure was $17.3 million and worldwide

sales for the company was 1,500.00 with N/A Footwear Sales, N/A Total Assets, and N/A Net Income

Company Type Fiscal Year-End 2006 Sales (mil.) 1-Year Sales Growth 2006 Employees 1-Year Employee Growth

Private December 678.8 (est.) (13.6%) (est.) 2,800 0.0%

Adidas Annual Sales Employees Market Cap (£ mil.) 6,709.1 25,067 0.0

Fila USA 176.1 706 0.0

NIKE 8,233.2 30,200 13,488.8

✔ CONCLUSSION:
From the beginning, New Balance has prided itself on its American roots, and to this day headquarters remain in Boston, MA. Demonstrating Responsible Leadership, the company blinds global brands that athletes are proud to wear, associates are proud to create and communities are proud to host. At New Balance adhering to a unique set of philosophies; they focus on function over fashion; making shoes in

multiple widths; continually effort to make many shoes in the US; nurture strong retail partnerships; and support grassroots initiatives. Although the business has grown substantially over the past five years, Nee Balance has not lost sight of who they are or where they are from.

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audience.

✔ RECOMMENDATIONS:
hough the company has remained a “comfort over fashion” image I believe that the company could go a lot further if they touch on fashion slightly Because in

however not losing sight of customer focus.

high sight everyone buys shoes and everyone rather young or old like comfort. From my observation working at Nordstrom

in Indianapolis, IN. at the Circle Center Mall we sold New Balance’s, Nike’s, Puma’s, Reebok and Adidas-Salomon. Typically the younger (youth) went toward the other brands because of the features which were higher priced. Staying competitive with the market is very important for any business and always being aware of the needs of your In my opinion New Balance is looked at as an old

comfortable shoe brand (by consumers) but why not be able to appeal to both young and old.

New Balance never pays famous athletes to wear their shoes and clothing, instead they rely on health club professionals, coaches, instructors, and trainers like us to spread the word and set the example. That's why they offer you the chance to buy their products at below market prices through the New Balance Pro F.I.T. program this is a great example of staying customer focused. Pro F.I.T. membership is free, but the rewards are priceless. It's the company way of recognizing how important their consumers are to the success of the business. This is another ongoing recommended value that New Balance should continue to keep up that set themselves apart from their competitors by far.