Sher-Wood Hockey Sticks Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Sher-Wood Hockey Sticks Case Solution

Outsourcing to China and Sher Wood Concern

In my view, Sher-Wood cannot entrust its remaining manufacturing activities to China as it will lead towards cost and supply chain inefficiencies as well as outsourcing difficulties, as the company would lose its direct control over its main activities. Due to export regulations, shipping equipment to China is a time challenge. The company must also send experts to set up the machine and manage the production team,because transportation is costly and time consuming, which will make manufacturing of a personalized toothpick particularly difficult. In addition to this, the “Made in China” label will have a negative impact over the hockey market and its sales will decline as hockey is a Western sport. The dismissal of 40 affected workers tend to lead towards employees’ dissatisfaction and immorality. In general, outsourcing the rest of the manufacturing industry to China,wouldn’t address the company’s concerns.

Alternatives and Their Pros and Cons

One option is offshore outsourcing, which involves the involvement of service providers from neighboring countries. In this way, Sher-Wood will be able to monitor the production more closely and effectively, which will make the shipping costs and barriers of high-quality products less difficult, especially if the production takes place in a free zone exchange and deadlines whose transport consumes less costs. On the other hand, it is difficult to trust the foreign manufacturers in terms of intellectual property rights and product quality. Another option is to form strategic alliances while maintaining in-house production. In this way, the company would share costs and risks, which would lower the prices and would ultimately increase the sales. In addition to this, economies of scale are achieved through an increased production and lower unit costs. However, when forming strategic alliances; Sher-Wood needs to share its knowledge and skills, and when it comes to trade secrets; the problems can arise. Eventually, business partners will become potential competitors.

Solutions and Recommendations

Solution to problems can be difficult at times if several issues arise at the same time, and managing them altogether would be hectic and time consuming for the business,i.e. Sherwood.

Sherwood was doing well in the market and it was able to give competitive edge to its customers; however, as these problems struck the organization; its performance didn’t remain consistent, allowing the competitors to overcome Sherwood.

Decrease in the market share could become more immense, a solution to whichcould be the acquisition and merger techniques with the company or the competitors to get in a win-win situation. Mergers and acquisition are not easy to complete, because they require an increased amount of cash to buy a particular business. However, as Sherwood is trying to expand in China, therefore it would also require more investment rather than utilizing the company’s money in some mergers or acquisition, then it would be possible for the company to reduce its competition level prevailing in the market, as one of the competitors would be associated with Sherwood and they can both enjoy the profits together. Moreover, as there are only four major players in the market of composite hockey sticks, so if one supports Sherwood then it would be possible for Sherwood to have an increase in its market share.

Similarly, if Sherwood improves the quality of its products then there is a possibility that the customers who have instilled a negative word of mouth about Sherwood, would start spreading positive word of mouth. However, this can be done only through extensive marketing techniques, such as: advertisement and portraying the company’s image regarding its enhanced quality, in front of the target market.

Furthermore, prices should be decreased by Sherwood, because customers are not willing to pay a high price for Sherwood’s products as its quality is not good as compared to competitors’ products, and the value that it is providing is not enough. The company can decrease the prices by using bundle pricing techniques, in which it can give a package of products complementing each other and then price the whole package accordingly. As a result, this could increase the sales, and the company can use penetration pricing technique as well to charge a low price as compared to its competitors. Hence, this can also increase the company’s sales because, the customers would receive products that would be cheap and affordable.

Lastly, the company can provide packages on the retailers’ end as well, in order to involve the retailers in the product selling. This can be done if more margins are given to the retailers so that they could sell the products effectively and efficiently, and have a sense of involvement in the company’s products. If they are given more leverage, then it could be possible that the retailers would promote the company’s product on the retail level, and rather than offering the customers with competitors’ products, the retailer would provide a good word of mouth about Sherwood’s products to the customers, eventually resulting in an increased sales. Therefore, in other words giving something to the retailers will provide something to the business in return, such as: more sales.

Another issue prevailing in Sherwood hockey stick manufacturing company is that it is planning to transfer its operation to China, which is not an easy task and requiresnumerous formalities to be dealt with, such as: tax regulations, duties, withholding tax etc. However, moving its production facilities can be beneficial as well, because as China has low cost of labor, thus Sherwood could enjoy the economies of scale and economies of scope. Similarly, expense of salary would be less because the payment would have to be made in Chinese currency, which is way cheaper than Canadian dollar.

Moreover, the owners can generate more profit without increasing the sales, because they would be benefited by the exchange rate factor. Similarly, China is a country that is full of resources and there would be no problem in importing goods to China, because almost everything is available in China.

Lastly, layoffs can be managed if proper training and development programs are provided and the employees are taught of each and everything in detail. Doing so would enable the employees to perform better in terms of management and operations etc. In addition, layoffs are usually disadvantageous, because they tend to deteriorate the company’s brand image....................

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