Case Presentation By Dinesh Jain V Phonekar

Overview : Mission, Objectives, Core Values & Competitive Priorities. History of New Balance Q (a) : Current Operations Strategy Q (b) : What Do The Numbers Look Like? Assignment Question (c) Assignment Question (d) The New Balance Business Success of New Balance The Six Manufacturing Strategies Domestic Manufacturing Details Challenges Facing New Balance World Class Performance Questions & Answer Session

To Be Recognized as the Worlds Leading Manufacturer of High Performance Footwear and Apparel.

Integrity Total Customer Satisfaction Teamwork

Technical Superiority Width-Sizing Manufactured in the USA Grassroots Promotions Retailer Partnerships

Equip the serious athlete with footwear and apparel that provides the best performance, fit, quality and comfort

1906 Foundation by William J. Riley 1934 Riley partnered with Arthur Hall 1954 Hall sold the business to Eleanor and Paul Kidd 1961 Trackster Launched During 60s Popularity of New Balances reputation for manufacturing innovative performance footwear grew 1972 Jim committed himself to uphold the companys founding values 1978 Anne joined New Balance 1980 - New Balances First international sales office and first European manufacturing facility opened

1982 Company reached $60million in sales and debuted the well-received 990 running shoe 1984 Jim and Anne got married 1990 Company unveiled is New balance Suspension System 2004 New Balance declared that it would match whatever possible its associates donated New Balance adopted New Balance Executional Excellence (NB2E)

Small Retailer Oriented

Does not discriminate their business due to size of customer Keep good relationships with small shops and stores

Independent Sales Force

Agents become the face of New Balance to the retailers More personal, retailers feel like the business matters

Work With Their Strengths

FIT Performance Manufacturing

$9 Billion in shoe sales in 2004 New Balance has an 11.36% market share in the US Total Sales for New Balance in 2004 equaled approx. $1 billion.

US Market in 2005 - 400,000,000 New Balance US Market Share 11.36% NB Shoe sold 1x2 = 45,424,000

% of Manufactured in US = 25%
NBs shoes made in US 3x4 = 11,356,000

Cut through Assembly made 5x33%=3,747,480

Sourced Upper made in US 5x67% = 7,608,520

Extra Cost of Cut through Assembly 6x$13 = 48,717,240

Extra Cost of Sourced Upper 7x$0.5 = 3,804,260

Total Extra Cost to Manf in US 8+9 = 52,521,500

Spend less on marketing, spend more on production Reduce time and cost for delivery Quickly move products into the market stream Stay true to company's American roots

How to Stay Competitive Staying unique will continue to give New Balance a competitive advantage Focus on Comfort, Fit and Performance Dont provide endorsements Continue to manufacture within the US NB2E

Continued

Continued

Services Products

Process and Technology

Capacity

Human Resources

Quality

Facilities

Sourcing

Operating Systems

Increase In US manufacturing costs

Decreases In Inventory Costs Overseas shipping costs Lead Time

24 hour domestic shipping costs