MGT 657 STRATEGIC MANAGEMENT

CASE STUDY

DAIBOCHI AND SHOEMAKER

PREPARED BY

NAME NO.MATRIC
1. NUR HAZWANI BINTI ABDUL RANI 2017926577
2. NUR ELLISA BINTI ZULKEFLEE 2017972055

GROUP BY:

BA2465A

PREPARED FOR:

MADAM NOORAIN BINTI MOHD NORDIN

DEC 2014
Question 1

Two problems faced by Apex in the above case.

1. Reaching strengthen in competitive advantage.

Since shoemaking is a very labor-intensive business and the company operate in the
heartland of the ready-made garments industry, they have to remain a step ahead in
order to see their compliance standards and worker benefits as their competitive
advantage. Besides the cost of labor in shoe making is included whereby where the
cost of labor in shoemaking, at less than one-fourth that of China, is the lowest in Asia
to gain a significant place as a profitable manufacturing hub.

2. Compliance requirements.
The safety compliances of footwear industries in Bangladesh is facing the problems.
Today, to meet new compliance requirements, Dhaka's tanneries, Apex included, are
being relocated from Hazaribagh, now a largely residential neighborhood, to the city's
outskirts in governmental-built leather industrial park with a central effluent treatment
plant by the government. From supplying leather for shoes to making shoes
themselves was a logical step. Apex started making shoes for Europe. But the quality
was poor and the factory struggled to produce 400 pairs a day. Today, it produces
21,000 pairs daily. When the Japanese economic bubble burst in the early 1990s,
demand for shoes tumbled. Elahi took the footwear outfit in 1993 with the aim of
reentering Europe. But it remained a struggle until 1996 when Apex found an Italian
collaborator that was willing to provide designs, help with production and marketing.
But Apex's shoes were more expensive than shoes made in China.

Question 2
Three key external factors experienced by Apex.

1. Competitive forces

Footwear industry of Bangladesh is a highly competitive market. Apex has to think both of
their old threats as well as new competitors who has much more organized structure than the
old competitors. Once, the founder took the footwear outfit in 1993 with the aim of reentering
Europe. But it remained a struggle until 1996 when Apex found an Italian collaborator that
was willing to provide designs, help with production and marketing. But Apex’s shoes were
more expensive than shoes made in China, since they were marketed to the world via Italy.

2. Technology forces.

In order to meet new compliance requirement, Dhaka’s tanneries, Apex included are being
relocated from Hazaribagh, now a largely residential neighborhood, to the city’s outskirts in
governmental built leather industrial park with a central effluent treatment plan by the
government.

Question 3

Three strategies pursue by Apex.

1. Market Development

This strategy involves introducing present products or services into new geographic area. In
order to reach the pinnacle of success Elahi sought to start a fresh. The company expanded
into finished leather and new markets such as Japan, China and Brazil. As known Apex is
spearheading company strategies into the global footwear trade.

2. Product Development.

By implement this strategy a companies or firms can seeks increased sales by improving or
modifying present products or service. Apex begin by set up a new product development
center in Taiwan, which has a long history of manufacturing shoes. The founder forged a
joint venture in five years ago whereby Blue Ocean Footwear, with Taiwan’s Green Land
Group, which makes shoes for the export market from a newer factory in Gazipur.

3. Market Penetration.
 Apex seek to increase market share for present products or services in present markets
through greater marketing effort. Apex found an Italian collaborator that was willing to
provide designs, help with production and marketing. But Apex’s shoes were more expensive
than shoes made in China, since they were marketed to the world via Italy. In 2003 the father
and son decided that Apex had to sell directly to customers to be Able to compete with China
and India.

Question 4

Three management issues that Apex must address to help it manage strategically.

1. Supply Chain Management.

Apex must identify efficient of supply chain management, which facilitates efficient
production to support the global sports shoes, apparel and equipment business. This is
because to align the supply chain with the company’s overall strategic aims such as supply
chain automation and optimization of transport distances among suppliers, production
facilities, distributors and retailers.

2. Location Strategy.

Physical location is the typical concern in the area of operations management. Apex have to
optimize costs and efficiency through proximity to employees, suppliers and the target
market. The operations managers apply a corporate strategy that chooses production facility
locations based on costs and nearness to the most significant markets. For example, Apex
notified where the cost of labor in shoemaking, at less than one-fourth that of China, is the
lowest in Asia to gain a significant place as a profitable manufacturing hub.

3. Product and Services Quality.

This management issue deals with the design of Apex’s ‘footwear. The operations
management objective is to ensure that product design aligns with organizational capabilities
and business goals. In this case, Apex focuses on designs based on advanced technology that
they explore from Germany and current market preferences.
JUNE 2016

QUESTION 1

5 strengths of Daibochi

1. Strong market position in Malaysia

Daibochi revenue has grown steadily from RM 278.8 million in the year financial ended 31,
2012 to RM 344.5 million in 2014.
2. Have board clients includes F&B, fast moving consumer goods, phamarceutical & industries
sectors
3. Strong financial performance
4. Good plans & strategies
Daibochi expects to commence the supply of new product lines.
5. Good customer-company relationship
The director says that his company sustain company growth by establishing a more regional
client base, developing new production innovation and continuously in a challenging
business landscape/

QUESTION 2

4 Potential threats that would affect Daibochi to sustain its competitive advantage in the PFP
industry

1. Economic encertainties
Economic uncertainty implies the future outlook for the economy is unpredictable. When
people talk of economic uncertainty, they usually imply there is a high likelihood of negative
economic events. Economic uncertainty could involve predictions of a higher and more
volatile inflation rate. (inflation uncertainty) and concerns over economic downturn – lower
economic growth or full-blown recession (negative economic growth). People fear the
prospect of being made unemployed.
2. Competition in industry
Industry rivalry refers to the intensity of competition already established in a given market.
These businesses are pushing against one another, attempting to leverage any competitive
advantage they may have. This typically means price wars, ad campaigns playing on
weaknesses, and product launches that focus on new features or overall quality. When
business owners feel competitive pressure or see an opportunity to improve their current
position, rivalry can become intense. Sometimes it can even lead to industry disruption
 3. Political instability
Political instability can be defined in at least three ways. A first approach is to define it as the
propensity for regime or government change. A second is to focus on the incidence of
political upheaval or violence in a society, such as assassinations, demonstrations, and so
forth. A third approach focuses on instability in policies rather than instability in regimes
4. Environmental problems
Environmental issues are harmful effects of human activity on the biophysical environment.
Environmental protection is a practice of protecting the natural environment on the
individual, organizational or governmental levels, for the benefit of both the environment
and humans. Environmentalism, a social and environmental movement, addresses
environmental issues through advocacy, education and activism

QUESTION 3

2 Business strategies implemented by Daibochi

1. Product development

Product development is a strategy that seeks increase sales by improving or modifying present
product or services. Product development usually entails large research and development
expenditures. A product development strategy is a strategy based on developing new products or
modifying existing products so they appear new, and offering those products to current or new
markets. These strategies typically come about when there is little to no opportunity for new growth
in a company’s current market. At that point, a company has one of three choices: create an
updated product for a current product in a current market, enhance an existing product for a new
market, or simply move away from the product altogether, and cease growth. Most competitive
companies won’t opt for the third choice so a strategy is therefore designed to either evolve a
product for its existing market, or enhance it to introduce into a new market.

2. Cost leadership

Cost Leadership is a situation in which market leader sets the price of a product or service, and
competitors feel compelled to match that price. Cost Leadership is perhaps the clearest of the three
generic strategies. In it, a firm set out to become the low-cost producer in its industry. The firm has a
broad scope and serves many industry segments, and may even operate in related industries, the
firm’s breadth is often important to its cost advantage. The sources of cost advantages are varied
and depend on the structure of the industry
Question 4

Daibochi reduce competitive pressures from its competing rivals and pressure.

1. Quality of the product

Poor quality of the products makes the consumers switch over. Prior to the introduction of
substitutes, the firms may enjoy monopoly conditions. However, the launching of substitute
products bring out the quality issues of the existed products. Through the advertisements or
customer awareness substitute products gradually occupy the market share, even the
existed products prices are reduced to a greater extent also.

2. Higher prices of the product or service

Higher prices of the products are the major risk-oriented threat; it makes the consumers choose
substitute products. Many products may have very high prices in the markets, then also those on
surviving, the reason behind is the uniqueness of the product and less competition from the
substitute products. However, modern technology is bringing substitutes for each and every need of
the customers. In such conditions, marketers have to take strategic decisions while fixing the prices
by keeping the future threat in mind

3. Bargaining power of customers

Customers can affect pricing. Prices are affected by how many customers purchase a product or
service, how significant each customer is to a company, and the perceived cost to a customer of
switching from one business to another. If a company has a limited but powerful client base
purchasing its product, they can often dictate their terms and drive prices down. Similarly, if a
company has a broad client base with multiple industry options, they may be able to focus on price,
quality of service to attract a niche audience within the market.

4. Focus on the needs of your customer

Daibochi provides its client in ASEAN countries with packaging solutions.