New Balance Athletic Shoe Company: Analysis
New Balance Athletic Shoe, Inc. (NBAS), or New Balance, is footwear based in Boston, Massachusetts. New Balance was founded in year 1906, had been grown rapidly to be one of the huge makers of sports footwear in the world. It began existence as New Balance Arch Support Company and sold arch supports and other shoe accessories. In the 1970s New Balance expanded to involve specialized shoe design. Today New Balance Athletic Shoes, Inc. includes the brands Dunham, PF Flyers, Warrior and Brine.
New Balance Arch Support Company was founded in 1906 by William J. Riley, 33 year old English immigrant to the US. The original company then only provided some accessories designed for making people’s shoes fit better. During the 1960s, New Balance was began examine how the running activity impact on the foot. As a result they developed a comfortable running shoe with a rippled sole and wedge help prevent injuries increase.
In 1934, Arthur Hall joined the company and charge of New Balance’s marketing strategy that was to advertise their products to people who needed to be standing for few hours every day for the jobs. Some sources show that most of New Balance company’s primary customers at that time were police officers and waiters.
2. Discuss the job design and method of work organization employed by New Balance Corporation for both local and global market to remain competitive. Critically derive the advantages and disadvantages of going global.
Job design is defined as work arrangement aimed at reducing or overcoming job dissatisfaction and employee alienation arising from repetitive and mechanistic tasks. It is one of important factor of the company which can help a company to become a successful and competitive company in the market. Job design is related in many aspects in company management which is on quality, speed, dependability, flexibility, cost, health, safety and quality of working life.
2.2 Job Design
According to the American Society quality is defined as totality of features and characteristics that satisfy needs without deficiencies New Balance Corporation produce a good quality in local whereby they produce a quality shoeââ‚¬â„¢s which able to meet the customer requirements. They are able to remain competitive at home by creatively adapting new technologies to shoemaking for quality improvement.
Meanwhile, speed is very important in a job design which the local New Balance Company have computerized sewing equipment and automated stitchery that allow one person to do the work of 20 and this is able to them to meet the shipment time line. In local, workers are able to produce a pair of shoes in 24 minutes but in China they need 3 hours. This makes the China Company not able to meet the cycle time and delay the shipment time line.
Dependability is important factor in job design which the new balance local workers have a computerized sewing equipment and automated stitchery which able them to make do work with less of down time in equipments. Workers are dependable to the condition of the equipment which they running. The local workers are flexible in doing different jobs and switching tasks every few minutes because they had been trained to do different job task.
Cost plays a major role in which company productivity depends on the ratio of output labor over input labor. New Balance labor cost per shoe is $4 an hour in Maine compared to $1.30 in China. The $2.70 labor cost differential is a manageable 4 percent of the $70 selling price.
2.3 The method of work organization
The method of work organization that the New Balance Corporation uses is the flat organization. They use flat organization because they want to increase the coordination of each departments and able to spread of information among different departments on time. In this organization method the upper level management and the lower level management easy to communicate. Lot of improvement can be done in the flat organization and this make the New Balance Corporation improve their shoe design in China. The company policies are easier and quicker to implement in this flat organizations.
The company have done lot of improvement in job design in local but didnââ‚¬â„¢t do any changes in china in this make them hard to be successful in foreign whereby they have not much technologies there to improve their system
3. Observe the strategy formulation and processes to continuously improve to meet the customer needs, and quality at lower cost.
Shoes play an important role to develop the personality of men and women. They are not only used to look attractive but they also used to make feet comfortable and safe. There are numerous brands of shoes available in the shoes market and each offers a number of benefits as well as a claim to be the best. But one brand of shoes that people consider because of its design and fit is New Balance shoes.
New Balance produces the quality shoes for the customers. New Balance does have strategy formulation to continuously improve to meet the customer needs, and quality at lower cost. New Balance strategy formulation is vital to the well being of a company and best organization. There are two major types of strategy formulation
First is the corporate strategy. New Balance will decide which line or lines of business to engage in for their business. Second is business or competitive strategy, which sets the framework for achieving success in a particular business. So, New Balance is using new latest technologies and engineering in the manufacturing of shoes to meet customer needs. In the shoe market, these types of shoes are produces in a number of styles with incalculable features that customer wish for athletic shoes. There are also numerous people who have wide feet and often they have to order for special custom shoes to meet their needs. For such types of people, New Balance make the strategy by using latest technology and engineering in manufacturing to produce the shoes which is offered in elongated widths. With doing this the customers will get what they needed. Nowadays purchasing shoes as well as other footwear is just a matter of a simple click of mouse. The internet has made search easy over any kind of products and New Balance shoes are also one of them. New Balance made this process to easily go through to customers and they can purchase without any difficulty. In their website not only get shoes but also detailed information about the desired shoes.
In order to remain competitive, New Balance is focus on quality and productivity improvement. Therefore, New Balance should introduce Total Quality Management (TQM) into their organization. TQM is a system for creating competitive advantage by focusing the organization on what is important to the customer. Principles of TQM are Do it right the first time and an approach for zero defects. According to TQM, good quality reduces time of rework and able to spent more time in manufacturing. TQM recommends management to find new ways to meet or exceeds customerââ‚¬â„¢s needs. TQM also stresses top management to provide support and direction to implement quality improvement concepts into their management and process planning. Awareness and skill training of top-level manager to non-manager, full employee empowerment and effective communication both vertically and horizontally of all levels must be in practice to improve the quality goals.
4. Shoe manufacturing process and the key factor in the designs of product and services.
New Balance, who began research about running, will impact the foot. As a result of research, the New Balance development department developed a running shoe with a rippled sole and wedge heel to absorb shock. This running shoe had been reducing number of injuries. Afterwards the runner had been request more comfortable and performance running shoe. The process was almost same at all manufacturers.
4.1.1 Raw materials
They have little type of materials combine to make running shoe. They have three layers at sole, included insole, midsole and outsole. The man-made ethylene vinyl acetate was a thin layer of insole. The cushioning midsole material will difference between difference manufacturers. For the outsole usually made from hard type carbon rubber or softer type of blown rubber. An assortment of materials will be produce different textures on the outsole. Usually the rest of shoe will cover with synthetic material such as artificial suede or nylon weaves with plastic slabs or boards supporting the shape.
4.1.2 The shoe manufacturing process
The skilled labors are needed to running shoe making processing due to labor-intensive process. First of all the rolls of synthetic material and dyed roll are prepared, then the rolls are stamped with die machine according shapes had been designed and cut out in cookie cutter fashion with markings. After bundle and labeled this component will sent to next operation.
4.1.3 Assembling the upper and the insole
In this department the pieces component are sewn together and the lace holes punched. Following with insole is stitched to the sides of the upper. Stiffening agents are then added to the heel region and toe box, and an insole board is inserted.
4.1.4 Attaching the upper and bottom part
The upper part are heated and fitted around, cement applied between upper and insole board. Finally the machine presses two pieces together, the pre-stamped of midsole and out sole are aligned with the upper are placed in heater to reactive the cement to join upper and bottom. When the cement cools they joined together and the excess cement is scraped off. The shoe was complete.
4.2 Method of production New Balance used.
They are two type of production method are used by New Balance which it is batch production and mass production.
4.2.1 Batch production
The batch production method is used to the limited edition of shoe such as type of Undefeated x New Balance 1500 model .This manufacturing technique use at this type of shoe due manufacturer producing limited quantity only. The batch production methods are use when the manufactures produce the limited quantity of group component at workstation before moving the group to next following step in production. This type production method had several advantage such as cheaper to produce a number of item in one go and the machine can be use more effectively, the raw material can purchase in bulk and worker can be specialize and skilled in that task. The high quality product can be produced as workers are more expert to their task.
Batch production method has disadvantages, once the product in progress is difficult change over or switching to another batch due to must re-configured before next batch can produce. The downtime of machine will increase for re-configured.
4.2.2 Mass production
Mass production also called as flow production, is the production of large quantity standardized product. They involves the use of production line in shoe manufacturer where the out sole midsole and insole are joined at bottom part of shoe. It is suitable for New Balance to produce a high volume of same model of shoe. This type of process is for made stock product, selling to mass market customers. The advantage of this type production is capital intensive, means it use high ratio of machine relation to worker is case on an assembly line. The higher number of product can decrease the cost per unit. This is because production line can operate continuing 24 hours.
However, mass production in not flexible due to machine difficult switches the production process. That mean all products running should be very similar or standardized, and cases unable to meet individual tastes.
4.3 Key factor in the designs of product and services
The product designs have following various methodologies; For example design of ROCK&TONE, in initial stage they had been research and learned from the rehabilitation communities, which showing that rocker bottoms shoe can encourage the use of muscle groups resulting toning and caloric expenditure. With this kind of design enhancing normal walking activity and turning into a continuous activation of muscles indirectly increases the burning of calories. If with the healthy diet, should resulting weight loss.
Service design had been done by New Balance was they designed difference type of shoe for difference purpose, for example the running shoe was design to use by runner. Furthermore New Balance was provided that online shopping can purchase the product though internet and shipping whole world. They also setup the feedback tool at the New Balance wed for customers, which helping New Balance to continue improve their product and service for customers.
The New Balance production process was similar with another manufacturer, the both production method which it can reduce the production cost per unit of shoe and increase margin profit. Though the product key factors, New Balance was meet idea generation with research and follow the popular trends with wearing shoe for keep fit purpose. And the service design was increase quality and customers satisfaction.