Company Description and SWOT Analysis
Strategic Management/BUS 599
Describe trends in the sports industry
The products fit in well with the existing trends in the retail market for sporting items. Everyone loves their favorite teams and will always show their pride, whether it’s a key chain, a hat or a DSI lawn letter in the yard. One trend in the industry is sports teams all over the world
are trying to grow their fan base in an effort to increase revenue streams. Another trend in the industry is that teams are using technology and social platforms to increase awareness about their teams and what they can offer. For me the most important trend is creating owned events. Sports Planning Guide (SPG) states that, “award-winning E-sports in places like Tulsa, to “Boarder War” high school showdowns, to college football games at NASCAR tracks, created events are becoming more common. Creating “owned” properties is something CVBs and sports commissions rarely tried to tackle in years past” . All of these trends are something that DSI can ride to success on and the only thing needed would be the fans and the exposure.
Justify at least three (3) reasons why you have chosen this type of product
DSI justifies its choice to enter into the area of the market based on; wanting to provide a new way to show team pride (sense of unity), wanting to fulfill a gap in the retail market (product need) and using locally sourced materials has a positive effect on other local businesses and city morale. Doug Whyte writes, “The simple fact is that people are looking for ways to identify with something, to feel a sense of belonging-ness with a group of like-minded individuals”. Other reasons I chose this type of product to market is because there are currently no products like it on the market and
EAST/WEST fans are very competitive and this product can take that competitive edge to the next level. WSI’s plan to grow the business is as follows:
1. First year – 2017 DSI will build a strong customer base which will increase sales hopefully by 90% – 100%. This will enable is to hire one employee to assist with generating business and product assembly.
2. Second year – 2018 DSI plans to increase product sales by 70% over what the company did in 2017. These sales would create the need for one additional employee to handle deliveries, take
orders and product assembly. This takes into account West minimum wage of $9.86 and a cost of living increase of 1.5%.
3. Third year – 2019 DSI will expand its market to include other college teams in Florida, Georgia and Mississippi and ramp up its on-line presence to accommodate orders and increase company exposure. If projected sales go according to plan then an increase in profits will be about 25%. This will create the need for a bigger production facility and additional employees.
One (1) strategic position from the course text
DSI knows that the best strategy for the company will be focusing on the market segment. If the customer is happy with the product then they will provide positive feedback. Social media platforms like Facebook and Twitter will play a major role reaching the market segment. DSI’s objective is to make a solid product that can evolve and become part of the serious sports fan arsenal year-round and to be the leading motion activated, talking lawn letter provider in the western area. To achieve this goal, we have developed and implemented a strategic position that emphasizes:
1. Products are made locally and from locally sourced materials
2. Individuals can customize each product
DSI’s sports enthusiast and craftsman created a strategic position of convenience based on evaluating the following factors:
A. Industry Trends
B. Our Target Market
C. The Product Environment
Our target is the consumer looking for a unique product that shows their team loyalty. This is a strong market that is growing and changing fast. This is also a market that is looking for that unique item that shows team pride but is like no other. Our target customers often try the latest items available and since this item can be customized would be a great addition to a loyal fans yard, sidewalk or entryway.
Approach used to implement this strategic position
There are many competitors in the Birmingham area like Dicks Sporting Goods and Academy Sports that EAST/WEST fans could shop at. Currently none of the competitors provide items like motion activated talking lawn letters and this provides DSI the opportunity to fulfill a need in our market. Given that Dicks Sporting Goods and Academy Sports are large sporting businesses there will be some pressure but since DSI offers a very unique item it may be some time before they notice such a small local company. This should allow DSI the time to build up a strong customer base and be the first company to offer this type of product. DSI will also distinguish our products with a unique logo and slogan that cannot be mistaken for any other company or business.
Overview of distribution channels
A strong and dependable distribution channel is very important to the success of a new business. Direct to consumers will be the distribution channel used by DSI. Since the company is new and small and does not currently have a large operating budget the channel works best. All lawn letters will be made on-site and will not currently be marketed in stores. Once orders are placed products will either be delivered if within 20 miles or shipped via FEDEX or UPS. These are direct-to- consumer products via on-line ordering. Our future website and on-line orders will be managed in-house once the website is developed.
Three (3) types of risks (including any regulatory risks) that DSI will face
The three types of risk that DSI will face are product risks, regulatory risks and competitive risk. The products will be at risk if the local suppliers of oak or motion activated sensors choose to raise their prices or go out of business. Regulatory risks won’t be a major factor unless the company goes nationwide. Also under regulatory risks would be the fact that WSI would have to show its financial records and other reports to the public which could be misused. Competitive risk, while not a problem yet, will be the most difficult to manage of all the risks. This risk will also affect DSI’s pricing and production costs.
Describe your company’s plan to mitigate such risk
To mitigate these risks DSI could obtain yearly price lock guarantees from its suppliers. Another way would be to increase on-line sales with discounts, promotions, and loyalty rewards so that DSI can stay competitive. Product materials could also be ordered in bulk and the savings could be passed on to the customer (last resort option).
The United States has a huge love affair with sports and everything else that comes with it like clothing, stickers and other sports accessories. Steven Kutz writes, “ Over the past year, Americans spent a whopping $100 billion on sports and sporting accessories” . Fan loyalty plays a big part in the success of the sporting industry. The sporting industry is expected to reach $73.5 billion by 2019 and was last worth $60.5 billion in 2014. More specific to what DSI offers would be the merchandising information.
1. Unique products that is handmade and NOT manufactured
2. Locally owned/operated which keeps overhead costs low
3. Customer friendly and knowledgeable staff
1. Little to no brand exposure that currently competitors have
2. No marketing budget to develop brand awareness
3. Our variety of products is limited
4. Competing with Dicks Sporting Goods and Academy Sports
5. Amount of available capital
1. Low barriers to entry/low capital investment
2. East/West games (vendor space)
3. Chance to increase profits with exposure as markets grow
4. Offering a variety of products can expand customer base and profits
1. Competition (Academy Sports/Dicks)
2. Increases in raw material prices (oak)
3. Slow economy reduces customers’ cash flow
Abrams, R. (2014). Successful Business Plan Secrets & Strategies. Palo Alto: Planning Shop.
Heither, D. (2015, Oct 19). Sports Industry To Reach $73.5 Billion By 2019. Retrieved from Forbes: https://www.forbes.com/sites/darrenheitner/2015/10/19/sports-industry-to-reach-73-5-billion-by-2019/#25bef8811b4b
Kutz, S. (2017, Sept 12). $100billion – that’s how much Americans spent on sports over the past 12 months. Retrieved from MarketWatch: https://www.marketwatch.com/story/heres-how-much-americans-spend-on-sports-in-one-chart-2017-09-11
Labor Law Center Inc. (2018). State Minimum Wage Rates. Retrieved from Labor Law Center: https://www.laborlawcenter.com/state-minimum-wage-rates/
Premier Travel Media. (2017). 10 Sports Industry Trends for 2018. Retrieved from Sports Planning Guide: http://sportsplanningguide.com/10-sports-industry-trends-2018/
Scarborough, A. (2016, Aug 31). The Speech that launched the Alabama dynasty. Retrieved from ESPN: http://www.espn.com/college-football/story/_/id/17427220/nick-saban-speech-launched-alabama-crimson-tide-dynasty
Whyte, D. (2017, March 29). Why Being A Sports Fan Makes You Happy. Retrieved from The Cusp.: http://thecusp.com.au/sports-fan-makes-happier/154