Q1: The goal of NB?

Expanding the market share, the sales volume of company by catching up the upward trend of the
shoes market, especially to approach the group of customer who are not only care about training
and coaching, or serious practice, but also group of customer who are road racer

NB will compete by the price and the quality product

Enhance their own production capacity to meet the demand from dealer, retailers and reduce the
backlog

So, NB decide to increase the capacity by some alternatives as: increase the number of shifts, or
establish a new factory. However, decide to expanding the production plant, at the same time, need
to foster the capability of the distribution network

Q2. NB is facing with problems in predict the demand to prepare the production capacity

+ The backlog of 100,000 pairs of shoes.

+ Uncertainty about future growth or the demand forecast had met problems including the size of
the market, the uncertainty about the growth of running among women, the instability in market
shares that had characterized the industry in the past few years

+ The high competition from new entrants

NB should do in the short terms:

+ To improve the operation efficiency of the factory by rearrange the job allocation,
specialization
+ Allocate the quantity of current production quantity to the retailer and distributor
appropriately to avoid receiving too many orders compared to the available production
capacity
+ Consider about the improving the capacity by increasing the number of shift temporarily

Long term

+ Need to enhance the strong relationship between the dealer and distributor in forecasting the
demand accurately

+ Build a new plant to increase the capacity of the NB

Q3:

Evaluation of David about options:

- Options 1: Increase the number of shifts

Possible, but there are not many skilled labors are willing to work over time, and some problems
relating about the unions, the morale deterioration

- Option 2: Lawrence

+ Material cost and manufacturing overhead is not different from Lawrence

+ Lower cost of labor

+ Available high skilled labor

 - Option 3: Texas

+ Union is not strong

+ Long term contract

+ Low tax rate of income

+ Abundant high skilled labor

+ Overhead cost is higher around 2-3%

- Option 4: International Situation

+ Potential upward demand

+ Avoid 6% tariff of commodities imported into the common market (1$/per pair)

+ Export back to US might be feasible

Important of making decision

- Increase the capacity is the important one but keep the quality is what they worked for many
years.
- When the quantity increase, at the same time the price has played an important role
because of the increase in the number of competitors for such kind of running shoes.
- Running shoes can put a base for diversification and expansion to related market
- Situation for European is potential
- Forecast the future demand pattern is important to estimate about the capacity
- It is important because it will influence the position of NB in the future. What they decide
today, will also influence them selves in the future about their market, their competition’s
capability

Q4: I suggest the International Situation, because currently, the domestic market is developing fast but
also suffer lots of competition. However, the EU market is promising and definitely develops in the near
future. If NB approach these markets early, they can become the one of first mover. They can also gain
some benefit from the government’s priority. Especially, they can also re-export the product back to the
US. And the time is now, because, the EU market is predicted 1-2 years later compared to the US market.
So, they should prepare the plan carefully to accurately forecast the market demand to avoid the risk in
preparing about the capacity. For example, export the products to the EU market and establish the
distribution system to ensure about the market demand and have the relationship with the retailer and
distributor in those market. After that, they can have the estimation about the market ‘s demand, they
can well prepare and avoid risk when they enter this market intensively. Additionally, re-consider about
the market’s distribution in the domestic market, to ensure that whether that they want to dominate the
center market is important or expanding the distribution is more important and re-allocate the quantity
suitable in each region market.