Preparation for the exam - Strategic Management Research Paper

Preparation for the exam - Strategic Management - Research Paper Example These grants were used for computer systems development, electronic textiles, and competitive enhancement initiatives. The government somewhat supports activities that can make its sportswear industry competitive in the global arena. New Balance, furthermore, is specifically affected by tariff policies. The â€Å"yarn forward rule† ensures that imported products pay proper duties: The rule, which has been included in most U.S. free trade agreements, denies duty-free treatment for apparel unless it is almost entirely manufactured in the FTA country. In fact, if any component of the item—thread, elastic strips, or fabric—is sourced elsewhere, duties are applied on the entire garment. (Kennedy and Appell, 2012) This rule benefits New Balance that has local manufacturing plants. Looser tariffs, however, will be bad news for it. Aeppel (2013) reports: Shoe tariffs add about $3 to $5 to the cost of a pair of midprice imported running shoes. While that might not seem li ke much, New Balance says the loss of that buffer would make the economics of its American-made strategy that much harder. If the tariffs go away, â€Å"it puts our competitors in a position to realize an even greater margin than we are,† says Matthew LeBretton, a New Balance spokesman, â€Å"and they can then reinvest that in their business.† As long as New Balance has U.S. plants, it benefits from the competitive advantage of import duties. Import flooding of cheap apparel from other countries, however, affects it too. Price-sensitive consumers prefer inexpensive products, even if they have lower quality. Economic The economic situation of the U.S. is improving, although at a very slow rate. According to the U.S. Bureau of Economic Analysis (2013): Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.5 percent in the first quarter of 2013 (that is, from the four th quarter to the first quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 percent. Slow economic growth affects employment and income rates of consumers, which affect demand for sportswear products. The monthly data for disposable income increase is not so buoyant either: â€Å"In March 2013, real disposable personal income increased 0.3 percent† (U.S. Bureau of Economic Analysis, 2013). Despite the laggard economy, since sportswear products depreciate in time, people still buy them, although not in the same rates as better economic conditions. Sivy (2013) notes the depreciation of the U.S. dollar, which has not been the same value as in 2009. With low dollar value, imports become cheaper, and this can affect the sales of New Balance. Social America is becoming more diverse with low fertility rate, and so it is becoming a mature market too. El Nasser and Overberg (2011) summarise the 2010 C ensus: The USA is bigger, older, more Hispanic and Asian and less wedded to marriage and traditional families than it was in 1990. It also is less enamored of kids, more embracing of several generations living under one roof, more inclusive of same-sex couples, more cognizant of multiracial identities, more suburban, less rural and leaning more to the South and West.