International Business Case: Running Room Company Analysis

This case study analyzes the Running Room Company, a family-owned business in the athletic footwear and apparel industry. The analysis includes a SWOT analysis, evaluating the company's strengths (outsourced production, global brand), weaknesses (dependence on footwear, outsourcing issues), opportunities (emerging markets, product diversification), and threats (international trade issues, economic recession, competition). The case also performs a city attractiveness analysis, assesses political, economic, social, technological, legal, and environmental factors, and proposes an implementation plan based on a cost leadership strategy. Corporate objectives are defined, and recommendations are provided, including market penetration strategies and alternative market entry options into U.S. cities. The study concludes with a detailed discussion of the company's competitive environment and strategic recommendations.

RUNNING ROOM COMPANY

SWOT Analysis
Strengths
• The company has outsourced its production
aspects hence has no outlet of its own.
• This has helped the company to focus on
activities that add value to their products such
as design innovation.
• The company has also positioned its brand
name globally increasing its customer base.

Weaknesses
• Since Running Room Company mainly focuses
on the production and sale of footwear which
makes it dependent on this industry.
• This is because it is not diverse in terms of its
operations.
• Outsourcing despite of being strength is also a
weakness since it has tainted the company’s
brand name due to unfriendly labor conditions
(Armstrong et al., 2015).

Opportunities
• New and emerging markets such as India and China
are the biggest opportunity for Running Room
Company.
• It is capturing most emerging markets as a result of
its segmentation and branding.
• The company is now diversifying into the production
of accessories in the recent years.
• Running Room Company also focuses on designs in
their footwear which increases their sales volume.

Threats
• The company is subject to some of the international trade
practices vicissitudes such as labor strikes and currency
fluctuations due to its global supply chain (Leonidou et al.,
2018).
• The ongoing financial recession has posed challenges on
Running Room Company since most customers are
becoming price conscious.
• The company also faces stiff competition from other
companies in the footwear industry such as Yeezy and
Adidas.

City Attractiveness Analysis
• The establishment of the criteria will be based on
Running Room’s aspects of attractiveness.
• The company has a great aspect standing and potential
future of an organization in terms of attractiveness.
• With the analysis of the company, it can be rated at
90% in terms of its attractiveness.
• Such means that 10% falls under what the customers
are attracted to and the different aspects we have.
• These weighted ratings include aspects of the
environment and technological framework.

Advantages and disadvantages
Political factors
• Running Room Company’s home country, the US,
has favorable policies that favor Running Room
Company’s operations such as well-arranged
global tax agreements and low interest rates.
• The company is however prone to changes in
manufacturing and tax laws.
• In other instances, political conflicts make
importation and exportation difficult hence
affecting the company.

Economic factors
• Market collapse is one of the economic variables that
would affect Running Room Company.
• For instance, recessions would make the company’s
consumers switch to cheaper products (Hernández-Perlines
et al., 2017).
• The revenues of the company tend to be dependent on the
low cost of labor in less economically developed countries.
• On the other hand, Running Room Company has finances
that enable it chase small new markets that they sell their
products.

Social factors
• Most individuals are now moving their focus
and attention towards being health conscious
and better lifestyles hence increasing the
company’s customer base (Koh & Wong,
2015).
• The company’s dubious production practices
however face a lot of criticism.

Technological factors
• The company has adopted new technology
trends that have helped with innovation.
• Social media on the other hand has been
efficient in helping build the company’s brand.

Legal factors
• In recent years, Running Room Company has
been found to be dodging large amounts of
tax.
• In addition, the company often meets legal
consequences for its poor marketing practices
such as giving false discounts.

Environmental factors
• The company produces its products in large
amounts which harms the environment due to
air and water pollution.
• However, the company has shown a change in
their production practices as well as
participating in projects that ensure a
sustainable environment.

Implementation Plan
• The strategy used by Running Room Company Inc. is the cost
leadership competitive strategy.
• This entails reducing the costs of doing the business.
• Minimizing the costs ensures that Running Room Company Inc.
reduces its costs appropriately.
• The company has ensured the provision of its footwear and
accessories to global markets.
• The nature of Running Room Company Inc. ensures the
company provides its products globally.
• For instance, the company has been able to maximize
efficiency through outsourcing in the sportswear business.

Corporate Objectives
• The nature of the business which is global enables Running Room
Company to reach it users’ across the markets through outsourcing,
therefore achieving the competitive scope of the cost leadership
strategy.
• This cost leadership strategy leads to achieving the objective of
expanding the customer base of the Running Room Company global
platform.
• As a result of Running Room Company being a global sportswear
producer, there exists a number of external factors that affect the
company.
• The company faces very strong competition in its footwear and
accessories market from other companies in the same industry.
• The bargaining power of the company’s customers is moderate.

Recommendations
• Through market penetration intensive strategy
Running Room Company has been able to achieve
growth primarily.
• Maximizing marketing shares is the goal of these
growth intensive strategies.
• This strategy has supported the company’s
competitive strategy of cost leadership by ensuring
the company is able to reach the existing markets
using the available assets.

Alternatives for Entry into U.S. Cities
• As one of its objective, Running Room Company has
been able to increase its markets share by
outsourcing.
• Product based divisions is an attribute of the Running
Room Company’s organizational structure.
• These product-based divisions’ entails of global teams
which are responsible for the management of
operations of specified products.
• This is required due to the corporate nature of the
footwear and accessories business.

References
• Armstrong, G., Kotler, P., Buchwitz, L. A., Trifts, V., & Gaudet, D. (2015). Marketing: an
introduction.
• Hapsari, C., Stoffers, J., & Gunawan, A. (2017). The Influence of Perceived Cultural and
Business Distance on International Marketing Strategy Decisions; A Case study of Telkom
Indonesia International. International Review of Management and Marketing, 7(3), 238-
245.
• Leonidou, L. C., Katsikeas, C. S., Samiee, S., & Aykol, B. (2018). International marketing
research: A state-of-the-art review and the way forward. In Advances in Global
Marketing(pp. 3-33). Springer, Cham.
• Koh, A. C., & Wong, J. K. (2015). The Impact of International Marketing Research on
Export Marketing Strategy: An Empirical Investigation. In Proceedings of the 1990
Academy of Marketing Science (AMS) Annual Conference (pp. 172-175). Springer, Cham.
• Hernández-Perlines, F., Moreno-García, J., & Yañez-Araque, B. (2016). The mediating
role of competitive strategy in international entrepreneurial orientation. Journal of
Business Research, 69(11), 5383-5389.