Mr. A Is A Mid-Level Manager At A Running Shoe Company. Sales Have Been Declining Due To A New Competitor Entering The Market With A Lower-Priced Shoe. The Company Is Known For Its High-Quality, Premium Running Shoes. Management Has Asked Him To Brainstorm Strategic Options. What Is The FIRST Step He Should Take To Develop A Strategic Response To This Situation?

Mr. A Is A Mid-Level Manager At A Running Shoe Company. Sales Have Been Declining Due To A New Competitor Entering The Market With A Lower-Priced Shoe. The Company Is Known For Its High-Quality, Premium Running Shoes. Management Has Asked Him To Brainstorm Strategic Options. What Is The FIRST Step He Should Take To Develop A Strategic Response To This Situation? A.) Launch a marketing campaign to emphasize the quality and brand heritage of his company's shoes. B.) Benchmark his competitor's shoes to see what features they offer. C.) Develop a plan to immediately cut production costs to reduce shoe prices. D.) Conduct a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats.
The correct option of multiple choice (mcq) is D), as before making any strategic decision, the manager (Mr. A) must conduct SWOT Analysis in which both external and external analysis are made to check the opportunities, threats, strengths and weaknesses of the organization.

(i) Opportunities

These are positive trends in the market which the organization should avail to compete in the market in order to gain sustainable competitive advantage over its new competitor.

(ii) Threats

Threats are negatives trends which can decline the business’s growth in the market such as the entry of new shoe company is a threat for existing shoe company in this scenario.

(iii) Strengths

These are resources and capabilities which the organization have better than its competitors. Here, the strengths of existing shoe company include high quality and premium brand prevailing in the market.

(iv) Weaknesses

Weaknesses are activities or resources which the organization is not doing well or possessing. Here weakness for existing shoe company, in which Mr. A is currently working as a middle manager, is high price.

So, here Mr. A should make a complete market analysis before taking any strategic decision or response to this particular situation. He should see the following points:

1. Market Trends

He should see market trends. What is trending in the market in which the company is not fully utilizing its resources and capabilities to gain sustainable competitive advantage. Explore the market to make correct analysis of the situation.

2. Understanding of Competitors

Mr. A should make analysis of competitors competing in the market. What are their pricing strategies, brand qualities, market expectations, etc., in order to gain Competitive Advantage over them. If the competitors charge low price, then see what quality they offer to customer at such low-price level.

The company should also make analysis for his products’ substitutes so that the more new customers will remain loyal with brand and not shift towards its competitors.

3. Analysis of Customers

Check the customers’ expectations, their needs and demands, preferences and perceptions about the company’s product pricing, quality, delivery services, their feedbacks about brand and service, etc. It helps in improving the quality of products and services, rebuilding brand image, meeting customers’ needs, wants and wants in order to attract them, satisfy and retain them for a long period of time.

The company should see the bargaining power of buyers. If they afford to buy at the current price, then it is set for them, otherwise, lowering price without losing quality of shoe is an option which can be applies to retain competitive edge over its competitor.

After making the market analysis, if the company knows that the quality of competitor’s product (shoe) is not so good, then the customers will not shift towards new competitor, otherwise, the company should either adopt cost leadership strategy or differentiation strategy in order to compete and retain sustainable competitive advantage over its competitor.

The option A is incorrect choice here as before starting a marketing campaign, market analysis is necessary to better know about competitor position in the market.

The option B is also not correct as benchmarking, in which the quality of product is measured and compared against the set standard, may not work correctly without knowing SWOT Analysis.

The option C is wrong choice as reducing production costs without making market analysis may not work as may be the quality of shoe is low offered by competitor to customers as compared to existing company which offered high premium quality shoe to its customers.

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