Microeconomic Event Related to New Balance Athletic

¶ … microeconomic event related to New Balance Athletic Shoe, Inc.

The shoes industry just like any other business activity encompasses of diverse footwear retailers, manufacturers and wholesalers. The chief wholesalers in the entire United States of America marketplaces especially the brand name owners obtain the shoes from the independent manufactures. The retail footwear organizations range entails the small shoes businesses that provide shoes to the local citizens to the multinational chain companies. However, most of the footwear industries all over the world operate in both the wholesale and retail arenas hence capable of increasing the profitable returns. Operating through both the wholesale and retail arenas also assist the shoe companies to reduce the risks the organization faces. For instance, New Balance Athletic Shoe, Inc. incorporates all the retail and wholesale plants to acquire ready-made materials for the production of the final footwear product (Carroll, Archie and Ann 71).

Analysis of current Operations Strategy

In trying to understand, the operations affecting the New Balance Athletic Shoe, Inc. The paper will dwell on the current microeconomic events revolving around the shoe industry that directly or indirectly affect the company. One of the chief current microeconomic events that affects the manner in which New Balance undertakes it operation is the merger between the Adidas and Rebook into one large shoe industry (Carroll, Archie and Ann 88). The move of making both the Adidas and rebook industry is to try to attract more customers into purchasing more of the Adidas products.

Since the establishment of the New Balance Athletic Shoe, Inc., the plant has developed and enacted numerous unique decisions that facilitated its progress. Some of the crucial decisions enabled the firm in overcoming its competitors in providing the clients with the appropriate footwear products. In trying to make its progress unique from other competitors, New Balance has tried to maintain its focus on manufacturing and operations rather than the usual application of techniques in marketing to attract customers (Carroll, Archie and Ann 94). The manufacturing and operation acts as the basis of the foundation principle of New Balance plant hence enabling it sustenance in the hypercompetitive environment. Unlike most of the footwear industries that mostly dwell on celebrity and publicity to build reputation, New Balance lets the customers make their own decision concerning the purchase of the desired products.

One of the chief reasons that make New Balance organization unique from the other shoes manufacturers in the fact that New Balance is still a private corporation. Most of the largest and leading shoes retailers, wholesalers and manufacturers in the entire world are property of the government and the public. Even though the other competitors are private property, the public have shares hence all the vital shareholders play a role in making managerial decisions. However, the private ownership of the New Balance firm offers the management the ability to be a free-flowing and flexible organization especially when it comes to making decisions (Carroll, Archie and Ann 99). This is an advantage over the other publicly traded shoes manufacturers since New Balance applies unorthodox sales methods, marketing and manufacturing tools in attraction of the loyal customers.

Maintaining the design of the shoes offers the New Balance plant a unique and higher rating position in the marketplaces in relation to the purchase of the athletics products. For instance, while most of the industries concentrate on switching the shoe lines frequently to embrace fashion in the marketplaces; New Balance has maintained a single franchise shoe for the last 25 years (Carroll, Archie and Ann 103). The only difference made to the shoe product of New Balance is the additional product lining for the shoes, which are always short, termed. Currently, the management of the New Balance has decided to innovation of the design of the shoes commodity offered to the customers.

Price and Quantity Demanded

The price of the shoes product especially the athletic shoes is influenced by the quantity demanded of the customers in the marketplaces. The quantity demanded of the product, in which in this case refers to the products of the athletics shoes purchased in the marketplaces. The numbers of the shoes that the customers purchase in the marketplaces influences the price. The assumption made in the sense that the variation in the price that New Balance sets for the products affects the rate at which the customers will purchase the products. Therefore, it implies that when the New Balance increases the price of the footwear products in the marketplaces, the quantity demanded by the customers will decrease (Carroll, Archie and Ann 122). This is also similar to when the price is lower; the quantity demanded by the clients appreciates. However, diverse aspects affect both the price and the quantity demanded of the products by the consumers in the marketplaces.

In assuming that the overall American market specifically for the athletic shoes only is 400 million in the year 2012, it is achievable roughly to estimate the cost the decision of the plant to maintain 25% of the shoes manufactured domestically. In the entire United States of America, New Balance Company, contribute to roughly 11.36% of the sales achieved from the footwear (Carroll, Archie and Ann 115). This implies that in the year 2012, New Balance purchased almost 45.424 shoes to the entire customers from all over the world. However, since only 25% of the overall sales of the shoes in America emerge from New Balance, it means that 11.356 million athletics pairs are purchased to American resident's alones (Carroll, Archie and Ann 116).

In the domestically produced shoes, one third are produced using cut-through-assembly while the remaining two-thirds through sourced-upper. This means that almost 3,785,333 of shoes are attained via cut-through assembly and via sourced-upper 7,570,667 (Carroll, Archie and Ann 117). Since the shoes products of New Balance are domestic, the sales made are higher. Other of the products made in the Asian nations hence making the cost of the products higher than the other shoes products. In the year 2012, the cost of the shoes produced via cut-through-assembly contributed to almost $13 million higher since the athletics shoes produced in U.S. The decision to use the sourced-upper on the shoes cost 50 cents more than the usual price. This is for the reason of the importing tax on the finished products obtained from the Asian nations. Therefore, maintenance of the 25% of New Balance in the United States cost almost $52,994,662.50 each year (Carroll, Archie and Ann 119).

The materials obtained for the manufacture of the athletics shoes product by the New Balance organization are mostly obtain from the Asia nations. Although the products are available from other locations in the entire world, mostly the Asian counties offer the best alternative. Since the rate of currency in the Asian nations is lower in comparison to the rates in United States, the New Balance prefers obtaining from Asia to maximize the profit. Even though the taxation rates are higher, the difference in currency still contributes to the success of the firm.

The aspect of maintaining a quarter of the overall production of the shoes products domestically by New Balance stores, which is completely impossible for the competitors, is an advantage in the marketplaces (Carroll, Archie and Ann 128). Since the customers prefer the products manufactured domestically, this offers an opportunity to the customers in obtaining the desired footwear. The positive image is an opportunity that New Balance plant has undertaken to overwhelm competitors such as Adidas and Nike.

Conclusion

Since the development and expansion of the New Balance since the year 1906, the shoe industry has tried to embark on quality and fit of the shoes. This is contrary to the other manufacturers and suppliers of the shoes that focus on aesthetic features to attract customers. Other chief companies such as Adidas, Nike and Rebook concentrate on the outlook and appearance of the shoes forgetting the fit and quality (Carroll, Archie and Ann 92). The plan of Adidas to acquisition Rebook which implies that the second and third largest companies in the shoe industry merge is a key threat to almost all the other existing shoes companies. In this case, it is vital to consider whether the New Balance Athletic Shoe, Inc. will still maintain its normal operation or attain new strategies and revolutions in performance in response to the Adidas-Rebook initiative.

Coffee Industry in Colombia

Introduction

Coffee beverage is known for its addiction all over the world. Every day, over two billion cups of coffee sells throughout the world. It is a tradition acquired by not only students, but their parents too. Starbucks is most popular for its coffee. This mass consumption of the hot beverage raises the concern on what impact the coffee industry has on its farmers especially in Colombia. There is the major trade of coffee between Colombia and North America that has brought about dependency. The Western companies biases in their purchases, and this brings about the question of fair trade initiative despite the economic benefits.

Coffee's popularity as a trading commodity is second to oil. More than 100 countries in the world trade coffee. In Colombia, this cash crop takes over 19% of total land used in agriculture. This is because its consumption and farming is significant in this particular region. In 2009, Colombia traded over 8 million bags of coffee each weighing 60kg. Over $1.3 billion worth of products traded between Colombia and Canada. This has brought a good relationship between the two countries. Canada ' popularity in its major coffee import that makes up to 18% of its total imports makes it necessary to retain its good relationship with Colombia.

The global coffee popularity brought about an everlasting battle in the coffee industry. The coffee market expansion made the colonists to assert control over the coffee production. The Dutch East Indies Company was among the other colonist companies that that were impressive in the coffee cultivating regions. Their agenda was to make profits for the developed countries through this business at the expense of the poor farmers. During the colonization days, the farmers lived a poor life, and were heavily overworked. Despite this, they were poorly paid, and their complaints were unheard. They complained of the hard work, trading, coffee prices, and the cultivation practices.

Four transnational corporations control the coffee industry. They include Nestle, Kraft, Sarah Lee, proctor & Gamble. The domination of the coffee markets in the coffee consuming countries depends on the power exerted by these companies. This reflects a radical change from the previous tradition of a well-balanced producer-consumer relationship. Fair compensation for the producer however, has no power over the market. The issue of instability in the coffee markets has also had negative and devastating effects on Colombia. This includes the mass displacement of the Colombian farmers to give way to more plantations. Different corporations that oversee the protection of these consumers and farmers are unsuccessful in assisting these farmers.

The price action in coffee has a big impact on any country relying on its trades. This means that the hefty decline in coffee prices and demands may lead to an economic crisis. In the 1990's there was a major crisis in Colombia due to price decrease. The fall in prices resulted from the deregulation of international prices in a new world scenario that lacked an international agreement that would protect the interests of the producing countries. In addition, the International Coffee Agreement had the mandate to regulate the coffee supplies in the world market. In 1989, it had collapsed, and by 2000, the payments to the farmers were lowest since the last thirty years. Before this collapse, the Colombians had a comfortable life from coffee dues. However, this changed abruptly due to the coffee price changes and a civil war that tore the nation.

By the year 2000, the coffee prices fell significantly leaving the production profits in the hands of the consumer countries. There was a constant struggle with the prices that left the poor farmers while all the profits went to Canada. Colombia's economy deteriorated together with violence, bringing about a state of dependency. This called for a need in foreign currency, and at the same time production was increasing in other countries like Brazil. The economic crisis became alarming with a GDP of only $100 within the 10 years from 1990-2000. Within the same period, Canada's GDP had risen to $1,000.

The Colombian coffee farmers continued to produce the coffee despite the poor pay. Despite the constant quantity of coffee in the market, Colombia's coffee exports fell by 25%. This consequently dropped the living conditions for the farmers in Colombia. Due to the poor living conditions among the farmers, over 3.5 million farmers moved, and this population represented 7.5% of Colombia's population then. Majority moved to the urban areas, while others moved abroad in search of greener pastures. This move saw many fields comprising of over 87000 hectares abandoned. These were some of the signs reflecting the effects of unregulated coffee price actions. It was caused by capitalist ideologies that were developed by the developed world.

The distress in the coffee industry was overwhelming. However, some improvements appear in the protection of the producing countries. There has been a rise in the Fair Trade coffee that saw increased profits in the Colombian coffee. In addition, there are new trade agreements similar to the International Coffee Agreement, signed in 2007, which provided chances for open dialogues among all the trading countries, and promotes sustainable trade and development for all involved parties. The fair Trade Coffee is the most successful means of providing good returns to the coffee farmers. Fair Trade coffee introduced first through the Dutch Fair trade Organization in 1973. The purpose of this organization was to establish a trading partnership that had an open dialogue, respect and transparency that is seeking bigger equities within the international trade. The fair Trade had agreements that worked as alternative trading regimes, and assisted the exploited farmers in getting a fair share of their products. The fair trade has seen an elevated market with over 800 organizations involved.