CASE STUDY

Read the following situation carefully and answer the questions that follow:

National Shoe Company Pvt. Ltd. was established in 1981. It is located in Bansbari,
Kathmandu. Recently Government of Nepal has decided to shift the location of this factory due
to increased environmental pollution in capital city. There were very few competitors in this field
when it was established. Therefore, it was quite possible to be a leader in the shoe product.
Now there are many competitors in shoe market both at national and international levels. The
main raw materials used for making shoes include leather, rubber sole, chemical, bottom etc.
The raw leather is collected from various parts of the country, but that is not adequate in terms
of both quantity and quality. The rubber sole is imported from Italy where as required chemicals
and bottoms are imported from India and additional leather from Pakistan. However, the
government increased import duty by 10% on raw materials. The government levies only 15%
tariff rate on finished shoes imported from foreign country. The demand for the products of
National Shoe Company is quite satisfactory. It captures about 35% market of Kathmandu
Valley. However, the company is suffered from outdated technology, lack of well trained staff,
traditional management culture, etc. Many obsolete machines and equipment need to be
replaced by high-tech ones, which requires additional investment. The factory should also
increase its capacity to satisfy the increasing demand of customers. The middle class Nepali
families have positive attitude towards domestic products including the shoes. Many domestic
firms manufacture varieties of shoes with attractive design on one hand and the prices of
Nepal-made shoes are relatively cheaper on the other hand. Moreover, Nepali shoes have
demand in other South Asian nations as well. But the shortage of skilled workers to satisfy the
demand of foreign customers is another problem of this factory. Leather Wings Company and
Birat Shoe Factory, major competitors of National Shoe Company, have already provided six
months warranty to their customer which also creates a big challenge to this factory. Shoes
imported from foreign companies, especially Bentley products are better in quality, but their
market is negligible due to high cost. National Shoe Company has been effective in terms of
cost and quality particularly for valley customers. But the new location may not serve the
existing customers effectively. It is, thus, a high time to assess the competitive strength of the
company and the possible impact of location change of the factory
1.​ ​Explain the target market of National Shoe Company.
Answer: ​The target market can be defined as the set of actual and potential buyers of goods,
services or ideas. So, the target market of the National Shoe Company is a group of actual and
potential buyers of shoes manufactured by the company. The actual buyers of the National
Shoe Company (NSC) are middle class families of Kathmandu Valley as it has been effective in
terms of price and quality for those groups. So, the company has captured 35% of the market of
Kathmandu Valley in the current scenario. Considering the price factor, all middle class people
including the outside valley are the main potential customers of this company in future too. The
other targeted buyers of the company are individuals which have a positive attitude towards the
domestic products. So, NSC can attract and capture this targeted customers by offering
attractive designs and guarantees better than other domestic companies especially Leather
Wings Company and Birat Shoe Factory because they are the main competitors of this
company. Further, there is a good potential market in South Asian countries for this company as
there is high demand for Nepal-made shoes because they are comparatively cheaper with
better quality than other foreign shoes.

2. Identify the major problems of the company.

Ans.​The major problem of the company are as follows:

1.limited resources
It indicates as one of the major problem of the company.The ( raw leather ) are
collected from various parts of the country which is not adequate that's why they
are imported from other countries.

2. Outdated Technology

Outdated Technology is yet another problem of company as we know change is

dynamic. Daily and rapid invention of new technology is growing which makes work faster and
Easier, the company lacks such innovation.National shoe company has not adopted new
technology yet, which is the biggest challenge.

3.lack of a skilled human resources;

The another problem of the company is shortage of human resources, due to lack of
skilled person many companies are facing difficulties for smooth use of technology we
need skilled human resources therefore we can allocate work as per their skills.

4.Traditional management culture

Initially the overall management culture of National Shoe Company was
formulated according to the prevailing culture of the establishment time period of
the company and the company is still operating with same outdated culture
instead of adopting new and scientific management techniques. As there has been
lots of drastic changes due to the time span, its existing management culture is
not applicable in today’s dynamic world. As the management culture is an integral
element of organizational culture which ensures a qualitative functionality to be
competitive, the management system should be innovative and competitive to
stay alive among the rival companies. However the management of National Shoe
Company is just adopting previous system which is not effective for smooth
operation of the company and needs to reform the overall management culture
that are followed by different successful companies in the modern era.

5.low capacity

The low capacity utilization led to high unemployment that created slack in the
economy, making it hard for prices to react to monetary stimulus. With excess
capacity, an increase in the production of goods did not require a significant
investment in capital.

When a company faces an increase in demand for its goods, it is often able to
meet the demand without raising the cost per unit. The company can optimize its
output level with no additional cost for investment in better infrastructure.

3. Conduct SWOT analysis for National Shoe Company.

Ans.

Strength (S) :

The strength of National Shoe Company consists of its market share in Kathmandu valley as
well as its proud history which is still capable of triggering consumers' minds. Also its loyal
middle class consumer due to affordable cost, attractive design and increasing demand may
also count as strength which should be further increased to increase market share and
consumer satisfaction.

Weakness(W) :

The weakness of the company includes outdated technology , lack of well trained manpower,
traditional management culture etc. Due to these factors the company isn’t fulfilling the market
demand which needs to be addressed soon by increasing capital and Hi- Tech machineries as
well as improving internal management system.

Opportunity(O):

The major opportunity of the company is its domestic market share as well as demand from
other south asian nations and the positive attitude of the middle class group towards its
products as well as its increasing demand which should be cashed soon by improving various
internal control majors to occupy the bigger market share which seems to be positive.

Threats (T):

The threat consists of major competitors within & international brands and their attractive
marketing policies such as warranty and discount offers and also increase in import duties are
the major threats which later on impacts on costing of the product which should be taken care of
by various cost control techniques.

4. Why does company assess the possible impact of location change of factory? Explain.

Answer: To begin with shifting a company is always a challenging thing to do. There is a high
chance to lose potential customers. Especially, when there is ongoing high competition between
the rival companies like Leather Wings Company and Birat Shoe Factory; major competitors of
National Shoe Company. Customers might seek for feasible alternatives wherever they find
economical because it might be practically difficult to reach the new location of the factory for
existing customers. Therefore, to overcome this situation or threat factory must apply a strategic
plan to win the competition. For this, factories need to utilize the available resources at an
optimum level, and make the finished product little cost effective and also entity need to bring
required new technological resources replacing traditional one to produce the shoes in greater
quantities with relatively low cost. Which will be more helpful to reduce the market price of the
shoes, to attract the potential and existing customers. All in all, there is always the opportunity
hiding behind the challenge.Thus, organisations like National shoe company must apply the full
strength to stay alive in this competitive world.
5. As a manager of marketing, what strategies would you suggest to improve competitive
strength of the company?

Marketing is one of the key functions of a company. Success of a company or an organization

depends on their marketing ability. Marketing satisfies customers needs. It creates value for the
customers.
For National Shoe Company, I would suggest following strategies to regain their market value
and market share.

1.Placement of Hi-tech machines

After installing the updated and hi-tech machines, the company can produce a large number of
shoes in various and attractive designs. Productivity will increase and a little number of laborers
is sufficient.

2. Differentiation in product with others

Company should make their unique selling point by differentiate their product from others.
Attractive design, targeting to the middle class customers in pricing, branding can help them
stand ahead from others in the market.

3.Affordable costing

Affordable costing is another point which can help the company to sustain and increase their
profit margin. After placing the hi- tech machine, the number of labor will decrease and
production will increase. Large numbers of unskilled manpower increase the production cost but
after the updated machines and skilled manpower there is no need of unskilled manpower.

4. Social media promotion

Social media marketing can reach a product or a brand in a large number of audiences.
Social media is the platform where most of the public spend their time to read news, articles,
ads and many more.

5.Quality assurance

Quality assurance is the key factor for a product. If a customer is satisfied with the quality of a
product, they can refer to it. Mouth publicity can help the company
to reach its goal.
6.Warranty and discount schemes

Warranty and cash discount schemes are the most popular promotion technique of most of the
products and brands. It attracts the customers and increases their willingness to buy a product
when there is a cash discount or prize schemes.
 Group A

Team members

Roll Name Email

No.

36 Mahendra Shrestha mahenstha71@gmail.com

60 Krishnamani Sapkota sapkotakm@gmail.com

48 Bipul Nepal bipulnepal0@gmail.com

17 Suraj Shiwakoti surajshiwakoti07@gmail.com

22 Nishan Shrestha nissanshrestha79@gmail.com