An Analysis of Sher-Wood Hockey Sticks Paper Example

Introduction

Sher-Wood hockey sticks is a hockey sticks manufacturing company in Canada. The company specializes in the manufacturing of wooden bats for all categories of players ranging from the National Hockey League players to junior level players. The company also manufactures other elaborate hockey sticks such as albeit, although in smaller volumes (Toolkit, 2011). In 2011, Sher-Wood's key executives began wondering whether to move the company's production of premium and composite hockey sticks to China, its main supplier in a bid to boost its sales. The reason for this was because the company had been losing its market share due to the consistent fall in retail prices. To gauge whether the company had a choice, I will conduct a SWOT analysis to understand its competitive advantage, do a portfolio analysis using BCG matrix, conduct an industry analysis using Porter's five forces and finally use ANSOFF matrix to recommend a directional strategy for the company.

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SWOT ANALYSIS

A SWOT Analysis is an important approach for understanding a company's strengths and weaknesses as well as identifying its opportunities and threats (Jain, 2018).

Strengths

Composite hockey sticks have been the primary type of sticks used by the NHL players for decades. For this reason, these composite sticks have developed in popularity among all other forms of players including junior players, amateur players, and children players.

Just like most of its competitors including Reebok-CCM and Warrior, Sher-Wood began outsourcing the production of most of its wooden sticks from China in 2006. This shift allowed Sher-Wood to concentrate on its core business which is the manufacture of hockey sticks.

Global sourcing gave the company a competitive retail price, which has boosted demand for its products in the past decade. The cost of production is also lower than before, and the quality of its products has remained decent for years.

Weaknesses

There has been an imbalance between Sher-Wood's product output and market demand because the company has only outsourced the production of its wooden sticks, which is roughly half of the company's hockey stick models.

The company's brand reputation and the image have been continuously diminishing over the past few years because of the unexpected loss of Jason Spezza, an NHL star to Reebok.

Sher-wood does outsource high-end sticks, which has led to a low return on investment for the home manufacturing plant. This is because the retail price of the high-end hockey sticks has continued to fall, thus, diminishing the market share. Categorically, the sales volume of Sher-Wood's high-end hockey sticks dropped by almost 50% between 2009 and 2010.

Opportunities

The company has a chance to outsource all its sticks from China to regain its market position.

Since the company has been in business with China for over ten years, it has accumulated its manufacturing capacity that it can use to provide sufficient lead time to manufacture high-quality hockey sticks and regain its market position.

The company has an opportunity to utilize the relationship it has built with China for years to acquire high-quality products at competitive prices

Threats

Cultural differences between China and Canada is a significant threat for business operations between the two countries.

Technological differences between the two countries could be a threat moving forward.

The geographical distance between China and Canada results in extra lead time.

The impact of Sher-Wood's bad image and reputation could be a threat to business.

BCG MATRIX (directional strategies)

The BCG matrix is a technique designed to direct long-term strategic planning of a business (How to use the BCG Matrix - Smart Insights Digital Marketing. 2018).

1. Dogs: The company should consider outsourcing all its sticks to minimize waste of resources.

2. Question marks: the company should invest more in high-end hockey sticks to push them into star quadrant.

3. Stars: composite hockey sticks generate the most income for the company. Therefore, the company should invest more to sustain them.

4. Cash cows: Sher-Wood should strive to gain as much as possible from composite hockey sticks because they are mature and well-established.

PORTER'S FIVE FORCES (industry analysis)

This tool analyses competition of business (Jain, 2018).

1. Supplier power: Sher-Wood should consider outsourcing all its sticks from China following its unique products, its size, and strength as well as its guaranteed low costs.

2. Buyer power: Considering the number of hockey manufacturing companies outsourcing to China, it is easy to drive the prices.

3. Competitive rivalry: most Sher-Woods competitors have outsourced the production of their ticks globally. Thus, the only way to remain relevant in the market is to do the same.

4. The threat of substitution: Reebok and Warrior offer close substitute products to Sher-Wood, which means customers can switch their alternatives any time. The company should look for ways to produce unique products to gain a competitive edge in the market.

5. The threat of new entry: Sher-Wood needs to have substantial barriers to new entrants such as economies of scale to increase profitability. This is why it needs to move the production of all its sticks to China to increase sales.

ANSOFF MATRIX (recommendation of directional strategies)

This matrix helps a company come up with the best marketing strategy (9Jain, 2018).

1. Market penetration: Sher-Wood has already built a market for its existing products. Therefore, to grow, the company has to go out of its way to increase its market share.

2. Market development: Sher-Wood could also use this strategy to target new markets with its existing products. The company should enter international markets for expansion.

3. Product development: The company already has a good market share with the current products. However, the company cannot use this strategy because the existing products have no reached saturation.

4. Diversification: Sher-Wood cannot use this strategy because its products are not new in the market.

References

Hollitz, J. E. (2015). Thinking through the past: A critical thinking approach to U.S. history volume II: since 1865, fifth edition. Stamford, CT: Cengage Learning.

How to use the BCG Matrix - Smart Insights Digital Marketing. (2018). Retrieved from https://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix/

Jain, s. (2018). BCG Matrix, SWOT Analysis and Porter Model. Retrieved from http://www.academia.edu/8739483/BCG_Matrix_SWOT_Analysis_and_Porter_ModelToolkit, W. E. (2011). AP-2009-045 _ CITT-Appeals-Decisions-SHER-WOOD HOCKEY INC.