Answer to Question #260689 in Marketing for Peter

Question

In order to be successful the sneaker Shack must work closely with a number of channel members in their value chain. These channel members into the suppliers of a cleaning materials (Econo Clean SA) and the delivery drivers. Considering this provide an example of each of the following to ensure that transactions are completed(6marks)

Answer 1

The footwear industry where Sneaker Shack lies is greatly globalized. However, competition from countries with low labor costs and less-regulated working conditions has forced the companies' footwear production into severe reorganization strategies and re-location policies and related value chains. Companies therefore find it difficult to endure a substantial level of growth which is strongly pulled by a highly unsteady and rapidly changing demand, which has been brought about by fashion-related and seasonal changes. As a result a serious restructuring of the distribution system is taking place, giving more bargaining power to the distributors and putting pressure on prices. In addition, the dominant business model in Sneaker Shack is in production on a contractual basis for a known buyer who is also a supplier of raw materials. This low value-added production is usually called lohn production1. It can be said that the company is involved within the global value chain with two differences complete integral lohn production and partial john production. In partial lohn production, it does not get-together the final products and they export only upper parts of shoes.