NIROME LEATHER PROCESSING INDUSTRY

FUNCTIONAL DEPARTMENT

1. Production Department
2. HR Department
3. Finance Department
4. Marketing Department
5. Sales Department
6. Purchasing Department
ORGANISATIONAL CHART
PRODUCTION DEPARTMENT

INTRODUCTION

Todays Nicrome shoe is a contemporary well-run business with bright prospects for
further development. Intelligent heart is represented by the management, leading services and
departments. Making strategic decisions is a prerogative of the supervisory board of JV Nicrome,
CJSC.

Total area of the factory based in rented premises comprises more than 18 500 square meters.
Personnel comprises more than 460 people. Approximately four fifths ofthem are women. Apart
from producing departments, the administrative and manufacturing complex includes company
shop, cafeteria, delicatessen shop, welfare spaces, storage faculties, area with a parking lot, etc.
Nicrome produces 23-25 thousands of pairs of shoes every month; its annual production program
always contains a broad assortment exceeding one hundred designs. Gross product value at
present reaches 2.5 blns of Belarusian Rubles. Manufacturing capacities can be increased, if
necessary.
CHART

PROCESS

Company structure includes the department of marketing and strategic development,

production and technical department, accountant's office, chief mechanic department, materials
department, sales department, foreign economic relations department, department of organization
and remuneration of labor, economics department, department of construction and design,
personnel department, production control department, and a number of supporting services.
Manufacturing unit of the factory is represented by three major shop floors: cutting department,
sewing department and footwear assembly department.

At present two basic methods of sports footwear production are used in the world. The
method of preparing the inner mould and directly attaching the sole afterwards is the most
productive one. Maximum degree of process automation is achieved under such circumstances.
The method is mainly used for making cheap footwear (up to the lower limit of the average price
range), only synthetic materials are used in production.

In the second case a rough piece is made on the shoetree with the use of a pulling over
and lasting method. The sole is glued to it afterwards with special glues. This technology is more
traditional, but it allows achieving fundamentally different parameters of product quality. All
footwear for professionals in sports and best samples of footwear for outdoor activities are made
with the use of this technology.

Pulling over and lasting method is used at the Belkelme factory. All processes starting
from the stage of design and up to cutting critical raw material (leather) are fully automated.
Footwear is stitched manually with the use of modern imported equipment. High qualification of
employees allows realizing almost any design. The processes of assembling finished shoes are to
be automated in the long view. As it was already noted, an important competitive advantage of
the company consists in relying on its own design developments.

Designers and design specialists use special software (Russian and Italian) enabling them
to accelerate creative processes tenfold. Computerization has also allowed to drastically change
the performance of departments related to preproduction. And using rough pieces of the
ultramodern Elitron cutting complex for cutting allows to minimize the losses of valuable raw
material.

Shoe Making- How Shoes are Made

Footwear can be defined as garments that are worn on the feet. There main purpose is
protecting one's feet. Of late, footwear has become an important component of fashion
accessories. Although, their basic purpose remains that of protection, adornment or defining style
statement has become their additional and a significant function. There are many types of
footwear- shoes, boots, sandals, slippers etc. They are further categorized into many more types.
Shoes and Shoe making

Shoes are further divided into many categories such as athletic shoes also known
as sneakers, galoshes, high heels, Stiletto heels, kitten heels, lace-up shoes, high-Tops, loafers,
Mary Janes, platform shoes, school shoes and many others. Shoemaking can be considered a
traditional handicraft profession. However, now it has been largely taken over by industrial
manufacture of footwear. A variety of materials are used for making shoes- leather fabrics,
plastic, rubber,fabrics, wood, jute fabrics, and metal. More than 200 operations are required for
making a pair of shoes. However, with the development of modern machines, a pair of shoes can
be made in very less time as each step in its manufacturing is generally performed by a
separate footwear making machine.
Parts of a Shoe

A shoe consists of sole, insole, outsole, midsole, heel, and vamp (upper). They are the
basic parts of a shoe that are mostly included in all types off shoes. Other parts of a shoe are
lining, tongue, quarter, welt and backstay. These parts are included as per the design of the
shoes.

Sole:

The exterior bottom part of a shoe is the sole.

Insole:
 The interior bottom of a shoe, which sits directly beneath the foot, is its insole. They can
be removable and replaceable too. In some of the shoes, extra insoles are often added for
comfort, health or other reasons, such as to control the shape, moisture, or smell of the shoe.

Outsole:

It is that layer of the shoe that is in direct contact with the ground. These can be made of
various materials like leather, natural or synthetic rubber etc. Often the heel of the sole is made
from rubber for durability and traction and the front is made of leather for style. Special purpose
shoes often have refined modifications, for example, athletic cleats have spikes embedded in the
outsole to grip the ground, dance shoes have much softer or harder soles.

SILK SCREENING IMAGE

Midsole:
 The layer that lies between the outsole and the insole for shock absorption, is the midsole.
Some special shoes, like running shoes have other materials for shock absorption, that usually lie
beneath the heel where one puts the most pressure down. Materials used for midsoles depend on
the shoe manufacturers. Some shoes can be made even without a midsole.

Heel:

The rear part at the bottom of a shoe is the heel. It supports the heels of the feet. Heels of
a shoe are often made from the same material as the sole of the shoe. It can be high for fashion
purpose or for making a person look taller. They are also flat for comfort and practical use.

Vamp, or upper:

The upper part of a shoe that helps in holding the shoe onto the foot is the vamp or
simply called the upper. This part is often embellished or given different styles to make shoes
attractive.
Shoe Making Process

A footwear company has mainly four departments in which a progressive route is

followed for producing finished shoes. These are- Clicking or Cutting Department, Closing or
Machining Department, Lasting & Making Department, Finishing Department and the Shoe
Room.

Clicking or Cutting Department

 In this department, the top part of the shoe or the "upper" is made. The clicking operative
is given skins of leather, mostly cow leather but not restricted to this type of leather. Using metal
strip knives, the worker cuts out pieces of various shapes that will take the form of "uppers".
This operation needs a high level of skill as the expensive leather has to be wasted at the
minimum level possible. Leather may also have various defects on the surface such as barbed
wire scratches which needs to be avoided, so that they are not used for the uppers.
Q.C DEPARTMENT:

Q.A DEPARTMENT
SHOE FACTORY EQUIPEMENT

Closing or Machining Department

Here the component pieces are sewn together by highly skilled machinists so as to
produce the completed upper. The work is divided in stages. In early stages, the pieces are sewn
together on the flat machine. In the later stages, when the upper is no longer flat and has become
three-dimensional, the machine called post machine is used. The sewing surface of the machine
is elevated on a post to enable the operative to sew the three dimensional upper. Various edge
treatments are also done onto the leather for giving an attractive look to the finished upper. At
this stage only, the eyelets are also inserted in order to accommodate the laces in the finished
shoes.

Lasting & Making Department

The completed uppers are molded into a shape of foot with the help of a "Last". Last is a
plastic shape that simulates the foot shape. It is later removed from the finished shoe to be used
further in making other shoes. Firstly, an insole to the bottom of the last is attached. It is only a
temporary attachment. Sometimes, mostly when welted shoes are manufactured, the insole has a
rib attached to its under edge. The upper is stretched and molded over the last and attached to the
insole rib. After the procedure completes, a "lasted shoe" is obtained. Now, the welt- a strip of
leather or plastic- is sewn onto the shoe through the rib. The upper and all the surplus material is
trimmed off the seam. The sole is then attached to the welt and both are stitched together. The
heel is then attached which completes the "making" of the shoe.
That was the process for heeled shoes. When a flat shoe is in the making, there are considerably
fewer operations. The insoles in this case is flat and when the uppers are 'lasted', they are glued
down to the surface of the inner side of the insole. The part of the upper, that is glued down, is
then roughed with a wire brush to take off the smooth finish of the leather. This is done because
rough surface absorbs glue to give a stronger bond. The soles are usually cut, finished and
prepared as a separate component so that when they are glued to the lasted upper, the result is a
complete and finished shoe. Soles can also be pre-molded as a separate component out of various
synthetic materials and again glued to the lasted upper to complete the shoe.

Finishing Department and the Shoe Room

The finishing of a shoe depends on the material used for making it. If made of leather, the
sole edge and heel are trimmed and buffed to give a smooth finish. To give them an attractive
finish and to ensure that the edge is waterproof, they are stained, polished and waxed. The
bottom of the sole is often lightly buffed, stained and polished and different types of patterns are
marked on the surface to give it a craft finished look. A "finished shoe" has now been made.
For shoe room operation, an internal sock is fitted into shoe which can be of any length- full, half
or quarter. They usually have the manufacturers details or a brand name wherever applicable.
Depending on the materials used for the uppers, they are then cleaned, polished and sprayed.
Laces and any tags that might have to be attached to the shoes, such as shoe care instructions, are
also attached. The shoes, at last, get packaged in boxes.
HR DEPARTMENT

INTRODUCTION:

Organization is the process of combining work which individuals or groups has to

perform with the facilities necessary for its execution, that the duties so performed provide the
best channels for efficient, systematic, positive and coordinated application of the available
effort.
HRM is the planning organizing directing and controlling of the procurement,
development, compensation, integration, maintenance of human capital of an organization to
achieve individual, organizational and societal objectives.
The Human Resources Department (HR) provides overall policy direction on human
resource management issues and administrative support functions related to the management of
employees for all City departments. The mission of the department is to be a strategic partner by
providing Human Resources programs that attract, develop, retain, and engage a skilled and
diverse workforce. The vision is to be universally recognized for Human Resources excellence
and as a premier employer. In addition to providing strategic central human resources functions,
the Human Resources Department is responsible for administering the Health Benefits, Workers
Compensation, and Long Term Disability programs. Further responsibilities include citywide
coordination of the Combined Municipal Campaign program, the Employee Recognition
program, temporary employee services, and publishing newsletters reporting City events,
activities, and employee information. The department manages the E.B. Cape Center, whose core
curriculum includes professional development, safety and technical training for all City
departments.

Department Short Term Goals

Continue to pursue technological advances that improve operating efficiencies.

 Integrate new technologies across divisions to increase efficiency and effectiveness of central
HR functions.

Maximize features of SAP, NEOGOV, salary continuation program, automated personnel

transaction program, and the new learning management system to improve operating efficiency
in HR and other department

CHART

Corp. Head
Head of Human Resource
quarters

Recruitment HR Executive HR Assistant Admin

& Training
Manager
Manager

Footwear Unit Footwear Unit

Tyre & Tube Domestic Gujrat Export
Unit Gujrat Muridke

Chief Deputy
HR Admin IR Manager Compliance
Security Manager HR
Manager Manager Manager
Officer
HUMAN RESOURCE ISSUES:

Human resource related issues are two-fold in the leather industry

1. At technician/supervisor/production manager level Even though there some institutes to train

people at this level but such trained people are not inclined to work in leather manufacturing set-
up and thus they go into alternate industries

2. At the operator level At this level there is a lack of sufficient number of training institutes to
train people at the operator level who can work on the shop floor. Short term training courses of
three to six months duration will help in this regard.

Growth in exports specially footwear segment: The Council for Leather Exports has developed
a plan to target increase in exports of leather and leather products from India from US $ 3.5
billion in 2007-08 to US $ 7 billion by the year 2010-11 at a CAGR of 26.1%. According to the
road map, footwear would be the largest segment of exports by 2010-11 approximately about
65% of the total exports. The footwear export from India is expected to almost treble from US $
1.5 billion in 2007-08 to US $ 4.5 billion in 2010-11.

Maximum incremental human resource requirement in the stitching category: As we have seen
in earlier sections footwear and other leather product segment employs the maximum human
resource and close to 50% of the total workforce in this segment is involved in stitching/closing.
And given that no major technological breakthrough is expected, approximately 50% of the
incremental human resource requirement in this segment will be in the stitching category.

Human resource department of the organization caters to the need of both employees and
workers of the organization, resulting in a good relation between employees and workers. They
are well satisfied with the attitude of the management towards them and in the facilities provided
to them. So there are no labour strikes, absenteeism and attrition.
The company provides 38 excellent training programs for the employees to improve the
skills and productivity with in a lesser time. The employees are getting the statutory benefits like
Bonus, ESI scheme, Employees Provident Fund, Festival Holiday Allowances from the
company.
They are often given awareness class related to cleanliness, health and safety. Department
heads also make visits to quarters were workers are staying in order to ensure cleanliness in their
surroundings.
HR department maintain a help desk in order to redress grievance of the workers and
answer to their queries. There are total of 214 workers in the organization.
Organizational Analysis
It involves a study of the entire organization in terms of its objectives, its resources,
resource allocation and utilization, growth potential and its environment.
The organizational analysis includes the analysis of
Short term and long term objectives of the firm.
Allocation and efficient utilization of human resources to meet the operational targets.
Organizational Climate including the managements attitude towards employee
development
Environmental Scanning to identify the factors affecting organization which it can
control and the constraints which it can not.
Task role / Operational Analysis
It is systematic and detailed analysis of jobs to identify job contents, the knowledge,
skills and aptitudes required and the work behavior. Attention is paid to tasks to be performed,
methods used, the way employees have learnt these techniques and performance standards
required is analyzed in this stage. The purpose of operation analysis is to decide what should be
taught.
Manpower Analysis
In this analysis the persons to be trained and the changes required in the knowledge, skills
and attitude of an employee is determined. First of all, it is necessary to decide whether
performance of employee is below standard and training needed. Secondly it is decided whether
employee is capable of being trained. Thirdly, the specific areas in which employee requires
training. Lastly, whether training will improve employees performance or not is determined.
Training can be relevant and viable if the three types of analysis given above are carried out on
continuously.

Setting training objectives and policy

The overall aim of a training programme is to fill in the gap between the existing and the
desired pool of knowledge, skills and aptitudes. Objectives of training express the gap between
the present and the desired performance levels.
The main objectives of training may be defined as follows
i. To impart to new entrants the basic knowledge and skills for efficient performance definite
task.
ii. To assist employees function more efficiently by exposing them to latest concepts,
information and techniques and developing the skills they require in the particular job.
iii. To build up a second line of competent officers and prepare them to occupy more responsible
positions.
iv. To broaden the narrow minds of senior managers through interchange of experience within
and outside so as to correct the narrow outlook caused due to over specialization.
While setting training objectives, following criteria may be used.
a) Nature and size of the group trained
b) Roles and tasks to be coined out by target group
c) Relevance, applicability and compatibility of training to the work situation
d) Identification of the behaviour where changes required
e) Defining the existing and desired behaviour in terms of ratio, frequency, quality of interaction,
repetitiveness, innovations and supervisions, etc.
f) Operational results to be achieved through training e.g. Productivity, cost, down time,
creativity, turnover, etc.
g) Indicators to be used in determining changes from existing to the desired level in terms of
ratio and frequency.
In order to achieve the training objectives, an appropriate training policy is necessary.
A training policy represents the commitment of top management to employee training. It
consists of rules and procedures concerning training.
A sound training policy defines the following issues.
The results expected to be achieved through training
i. The responsibility of the training function
ii. The priorities for training
iii. The type of training required
iv. The time and place of training
v. The payments paid to the employees during the training period
vi. The outside agencies to be associated with the training
vii. Relationship of training of the companies labour policy
Designing a training Programme

Once the objectives and policies of training are decided, appropriate training programme
can be designed and conducted. Decisions on the following items are required for this purpose.

Responsibility of training

The responsibility of the training programme has to be shared among

a) The top management
b) The Personnel department
c) The line supervisors
d) The employees who should provide feedback and suggestions
Selecting and motivating target group

The type of training method to be used will depend upon the type of persons to be
trained. So it is necessary to decide in advance who are to be trained workers, supervisors or
executives. The employees will be interested in training if they believe that it will benefit them
personally. A climate conducive for learning has to be created through physical and
psychological environment.

Functions of HR Department:
Manpower Planning
Job analysis and Job description
Compensation and Benefits
Recruitment & Selection
Annual Objective Setting Plans
Performance Appraisals
Training & Development
Employee Welfare and Motivation
Implementation of Organizational Policies

Preparing Trainers
 The success of a training programme depends to a great extent upon the instructors or the
resource persons. The trainer must know both the job to be taught and how to teach it. He should
have an aptitude for teaching and should employ right training techniques.
Developing training package

This step involves deciding the content of training, designing support materials for
training and choosing appropriate training methods. It may involve the specific instructions and
procedures for doing a job. In addition to the contents, methods and time period it also includes
budget.
Supporting materials may include detailed syllabus, study notes, case studies, pamphlets,
charts, manuals, brochures and movie slides.

Conducting the training

This is the action phase of training. Here the trainer tells, demonstrates and illustrates in
order to put over the knowledge and operations. However, before it a learner should be put to
ease. It is necessary to explain why he is being taught to develop his interest in training.
Instructions should be clear and complete. Key points shall be stressed upon and one point
should be trained at a
time. Trainees should be encouraged to ask questions.

Follow up and Evaluation

In the evaluation step, the effectiveness of training programme is assessed. The feed back
generated through follow up will help to reveal weaknesses or errors if any; Necessary corrective
action can be taken. If necessary training can be repeated until trainees learns whatever has been
taught to him. It also helps in designing future training programme.
FINANCE DEPARTMENT

INTRODUCTION:

Finance is life blood of every organization. It deals with procurement of funds and their
effective utilization in the business. Department has one department head, one senior executive
and four junior executive. Their functions mainly include checking daily cash accounts, MIS
preparation, bank reconciliation, central excise and export related works, finalization of account
statement etc.Nicrome shoe industry is financially stable and had got CRISIL A+ rating.
 Materials department of the organization place order according to need of material thats
used for production. Company follows EOQ system. Whenever they find that it has reached
reorder level or safety stock, order is placed.

Nicromes strategy in early 2000s was to develop, flag ship stores, Nicrome Town shops
in bigger cities, first national, and then abroad. Nicrome was the first company to establish
flagship stores and it turned out to be a sensation. There are independent small retail stores that
sell Nicrome products all around the world as well. Also, on seeing the potential of the low price
market, Nicrome took efforts in 2005 to tap in to the low price segment by striking a deal with
big retail discount stores like Walmart and rolled out starter shoes at a cheaper price, competing
with private label brands. However, to avoid brand dilution, Nicrome did not use the swoosh
logo in these shoes. Currently, Nicrome has a high quality website and uses it as an online selling
channel. Nicrome, a part of the website allows a customer to customize his own shoes and buy it.
The website is available in 14 languages and is different according to the country requirements.

Nicrome

MARKETING DEPARTMENT

INTRODUCTION:

Nicromes geographic market is spread throughout the globe. In March 2009, Nicrome
announced its plan to reorganize its global business in order to bring goods closer to the
consumers as well as to reduce management overlap. Following this plan Nicrome then decided
to develop its market share in North America, Western Europe, Eastern/Central Europe, Greater
China, Japan and Emerging Markets.

Main Business

Nicrome Inc. specializes in footwear, apparel, equipment and accessory products for men,
women and children. The company offers footwear for football, basketball, golf, sport-inspired
casual shoes, kids shoes and other athletic and recreational purposes. The company also markets
sports apparel and accessories, along with sports inspired apparel and athletic bags. Nicrome also
offers performance equipments which include bags, sport balls, eyewear, electronic devices, and
other equipments designed for sports activities under the brand name
.
Political

The support accorded to Nicrome by the US government, particularly in the general

macroeconomic stability, low-interest rates, stable currency conditions and the international
competitiveness of the tax system, form the foundation critical to Nicromes growth.
Nicromes main production faculties lie in the Asian countries where political unrest prevails.
The rise and fall of governments results in change in policies relating to employment laws, trade
restrictions, etc. This political unrest may affect Nicrome.

Economic
 The economic downturn has resulted in the slowdown in sales. This will affect the growth of
Nicrome. Also, labor cost and raw materials prices are increasing, which will affect the profit
margin of the company.
Nicrome deals in different currencies for trading purpose. Hence, costs and margins are not
stable over long periods of time due to changing exchange rates.
Social
People today prefer to buy products which have brand value associated with them. They now
want fashion-oriented products for leisure activity instead of sports activities. There are also an
increasing number of women consumers in the market due to changing lifestyle and trends.
The bad publicity due the poor labor and factory conditions in Asian Countries resulted in
decline in sales as society wants socially responsible firms.
Technological
Nicrome has integrated technology to develop its products fast. Nicrome always adopts
latest technology for its product manufacturing and development.
Environment/Green
Nicrome makes every attempt to reduce the impact of each of its products on the environment
from design to manufacturing, and ultimate disposal. Nicrome shoes produce solid waste. The
largest of these by weight is cured rubber used in shoes soling. Nicrome employees engineered a
creative way to keep it out of landfills and convert it into more outsoles, called REGRIND.

THE COMPETITION
Main Competitors
 Nicromes main competition comes from Adidas AG along with companies such as Puma AG,
New Balance, etc. Due to Nicromes brand awareness, its competitors have to put in more effort
to sell their products & new entrants in the industry should have huge amount of capital to invest
in advertising to create brand awareness. This restricts the amount of entrants in the market.
Sales & Profit Trend
We can see that from the year 2006 to 2008 both Adidas and Puma have growing sales &
profits. But in 2009 both companies saw a drop in sales & profits. This may be due to the
footwear market is saturated & there is high competition where companies are striving for
maximum market share &/or to maintain their existing market share.
Market Share
Adidas Group & Reebok together hold 22 percent of the market share, followed by Puma 7
percent and New Balance 6 percent. Since the athletic footwear market is saturated, there may be
a possibility that the companys market share erodes.
Target Market
All the companies in the athletic footwear market are targeting the same type of consumer
those who are interested in sports like the aspiring athletes, teams, individual athletes, etc., along
with the urban youth.
THE COMPANY
Sales & Profit Trend
Nicromes revenue and net income are constantly growing from the year 2005. This shows
that Nicrome has a strong grip on its market share. Consumers like Nicromes innovative new
products and are willing to pay a higher price than its competitors.

Market Share
Nicrome is the market leader in the athletic footwear industry with a 31 percent market share.
This shows that Nicrome with its strong research and development and extensive product range
along with the marketing expertise have captured the consumers preferences.
Business Sector
Nicrome is part of the Consumer Goods sector which mostly consists of Fast Moving
Consumer Goods such as dairy products, farm products, etc. In this sector, Nicrome belongs to
the Textile-Apparel, Footwear and Accessories Industry.
Project Focus
Nicromes focus is on product development & providing its customer with innovative &
compelling products. The introduction of Nicrome +iPod establishes this fact that Nicrome wants
to cater the customer need for new & innovative products. Nicrome also lays heavy emphasis on
maintaining its Brand name & value in the market. Hence, it invests large amounts of money in
research & development of its products so that it can maintain its position as the market leader.
NICROMES MARKETING STRATEGY
Segmentation & Targeting
Nicromes target market for its shoes, clothes and other accessories are males and females
between the age of 13 and 35 years. Nicrome segments its markets on the basis of age, gender,
geographic locations, psychographic, and benefits sought.
On the basis of age, Nicrome targets a variety of age groups from young adolescent to middle-
aged adults. Nicrome has different advertisements for men and women of every race and
nationality separately. Nicrome now is focusing on targeting more on women and Generation Y.
Also teams of any sport are targeted by Nicrome.
Nicromes aim is to push its products in countries that apply to certain sports, which are
popular in that particular country. For example, Products relating to Rugby are advertised more
frequently in Europe when compared to U.S., as Rugby is popular in Europe.
Nicrome promotes a positive and confidant attitude and targets people who want to attain that
attitude. It also is targeted towards customers who are interested in athletics.
On the basis of benefits sought, Nicrome provides shoes, apparel and equipment for a variety of
sports all over the world. It also offers products to many different people who have different
tastes, interests and needs. This can be seen from the fact that Nicrome Nicrome has a website
where consumers can design their shoes according to their requirements and tastes.
Positioning
Nicrome promotes products that ooze with style, attitude and self-confidence. This message is
clear in Nicromes tagline Just Do It or If you have a body, you are an athlete which is shown
in many advertisements of Nicrome. The former message of Nicrome has been used since 1989,
when it was first introduced and the latter was developed by Bill Bowerman when Nicrome first
started. This message clearly defines Nicromes image which is a positive and self-confident
nature.
Porters Generic Strategy (Differentiation/Low Cost Leadership/Focus)
Since the footwear market is highly competitive, companies are striving to provide the best
possible deals to the consumers. This means that they are trying to cut down costs. Since
Nicrome outsources its manufacturing to other countries, it doesnt have any capital tied up in
machinery, equipment or factories. This means it doesnt have any expenses that may arise out of
maintenance of any of the above.
Nicrome also lays heavy emphasis on Differentiation and continually strives to innovate and
develop its products. The introduction of Nicrome +iPod sports kit in the year 2008. This enables
runners to log and monitor their runs via iTunes and the Nicrome + website.

Growth Strategy
On May 5th, 2010 Nicrome revealed its Global Growth Strategy to achieve sustainable, long-
term growth across its global portfolio of brands. With a revenue target of $27 billion by the year
2015, Nicrome outlined each and every category of their product line from Nicrome SB to
Womens Training and hoped to reach that goal through a consumer-focused strategy. The
company also expects to generate over $12 billion of cumulative free cash flow from operations
through 2015. Both goals extend NICROME Inc.s long term financial model of high single-digit
revenue growth, mid-teens earnings per share growth and expanding returns on capital.
NICROME INC.S MARKETING MIX
Marketing Mix

Product Mix
Nicrome product range includes an assortment of goods which include shoes and apparel for
sports activities such as Basketball, Football, Athletics, Golf, Cross training, etc., for men,
women as well as children.

Product Life Cycle

The athletic footwear industry and Nicrome Inc. are both at the maturity stage of the Product
Life Cycle. Nicromes revenue and net income are constantly increasing at almost the same pace
for the last 5 years. But in the year 2009, we can see that the rate of growth in revenue and net
income has decreased due to saturation and high competition in the market. Nicrome can
maintain its revenue, net income and market share in the footwear market by introducing new
innovative products to keep the consumer base captivated, expansion into new market like India
and China and use extensive marketing of the product to continue its demand in the market.
Since Nicrome is the market leader in the footwear market, it is safe to say that it is established
within its market segments. The market for footwear is saturated with high competition. This
places Nicrome in the Cash Cows category. Being in the cash cows category means that Nicrome
has to maintain its sales and hold its position of a market leader in the market. To do this
Nicrome has to spend a lot of money in research and development to provide customers with
fresh and original products to keep them loyal to the brand Nicrome. Since the athletic footwear
market is saturated with no scope for much growth in the market Nicrome can choose from either
Market Development or Diversification Strategies. If Nicrome opts for Market Development it
means that Nicrome will focus on the emerging markets such as India, China, etc. with its
existing products. If Nicrome opts for Diversification then it would have to focus on new
markets with new and innovative products.
Price Mix
Nicrome Inc. applies a premium pricing strategy. This strategy implies the product to be
priced higher than that of the competitor based on the quality of the product. Some critics and
people claim that the prices of Nicromes product are high. However, the company owners and
employees argue that these prices reflect the quality of the product. This strategy seems to be
working as consumers who purchase Nicrome products are ready for their prices.
Place Mix
Nicrome products are available in multi-brand stores along with the exclusive Nicrome stores
across the globe. Nicrome sells its products to more than 20,000 retailers in the U.S. and in
approximately 200 countries in the world. Along with this Nicrome has its own Nicrometown
stores. Nicrome also sells its products through its official website, where people can also
customize and design their shoes according to their preferences and directly delivers these from
the manufacturer to their house.
Nicrome sells its products in the international markets through independent distributors,
licensees & subsidiaries.
Promotion Mix
Nicrome reinvests around 12 percent of their revenue into marketing, which includes
advertising, endorsements and sponsorship deals. Nicrome advertises it products through print
media, television and billboards and posters. Apart from this Nicrome has a number of celebrity
athletes like Cristiano Rolando for soccer, Tiger Woods for golf, etc., and professional teams like
Manchester United to focus attention on their products.

EVALUATION OF COMPANYS STRATEGIES AND TACTICS

Evaluation of Nicrome Inc.s Current Position & Evidence of Success &
Prospects of Future Growth/Success
We can see that Nicromes Earnings per Share (EPS) and Return on Invested Capital has
gone down. This may be due to the reduction in Earnings before Interest and Tax (EBIT) due to
fall in revenue Hence, we can say that Nicrome has to maintain its position in its existing market
and grow in the new markets to increase or maintain its EPS and Return on Invested Capital. If
Nicrome wants to maintain its market leadership it has to focus its strategies on product
development to provide its loyal customer base with new, captivating and innovative products.
Along with product development, Nicrome also has to penetrate new & emerging market like
India and China if it wishes to grow be number one in its industry.
Time and again Nicrome has proven to be the best when it comes to satisfying consumers
needs. Nicrome provides people with innovative and original products that others in the industry
are not able to provide, thus upholding its position as market leader in the athletic footwear
market. This gives Nicrome a competitive advantage over its competitors, which provides
Nicrome with opportunities which Nicrome has used to its maximum. With its Marketing mix,
Nicrome has been able to create an all around dominant strategic plan. Nicrome has shown that
they are a true force to be reckoned.

SALES DEPARTMENT

INTRODUCTION:

Prices Although it was not the objective of this survey to deal with price structures (and
thus with profits), nevertheless some information could be collected in this respect. Prices and
costs are no doubt related, but the margin between them may vary according to specific
economic conditions and objectives of business. Certain styles or products may not produce any
profit (some of them may even cause losses) in financial terms, but they are manufactured to
absorb overheads, to keep contacts with important clients, to sell other styles bringing good
profits and/or to serve other business objectives (e.g. market promotion). Profit is the real secret
of business, so it is almost impossible to get reliable data in this respect. (Of course several
consultants and institutions including UNIDO have been involved in projects dealing with
feasibility studies and/or marketing production management whereby such information was used,
but they are property of the assisted ventures and cannot be disclosed.) It is estimated that within
normal circumstances and in a competitive market environment free of distortion (e.g.
protection, subsidy) footwear manufacturing companies are making a profit on common types of
shoes about 7-10% relative to sales (ex-factory) prices.

Other sportswear manufacturers expanding their portfolio

Cheap copies from the Far East
 Threats of New Entrants: (Low)

Barriers to entry in the athletic footwear industry are high due to several factors. It is
as very capital intensive industry. Even though it would not be difficult for a new
company to obtain the raw materials and the labor needed to produce shoes, there is
almost no chance for them to gain popularity in such a mature industry with some of the
strongest brand names in the world. Brand loyalty is extremely strong and it would be
very hard for a new entrant to steal loyal customers from the already existent players.
Economies of scale play a huge role as well and the bigger players have an advant age of
producing the products at a lower price than compared with newer entrants. As the
output is bigger and the fixed costs of factories, machinery, marketing and R&D will be
decreased per unit. Both marketing and R&D constitute high costs and since new
entrants will not be able to take advantage of the economies of scale they will be less
competitive.

The industry itself is in a consolidation phase and only the big ones will survive. The
large companies are strategically and constantly acquiring smaller companies. Some of
the most popular acquisitions include Reebok by Adidas, Converse by Nicrome, Saucony
by Stride Rite, etc. Small companies are bought before they become a threat to the bigger
ones and before they have a chance to gain market share. In other words, it is impossible
to grow in this industry because someone will take over your company.

BUYERS:

The buyers of sports footwear have changed in the past decade.

There has been and increase in women purchasing the shoes,
Generation Y has a different tastes and purchasing methods
Customers more affected by price
Buyer Power: (Very High)
The buyers for this industry are retailers and end users.
 The footwear retailers, i.e. Footlocker, Wal-Mart, range in sizes. However, the top 25
retailers account for two-thirds of the sales of athletic footwear- approximately $15
billion in value. New retailers are entering the market, such as big box stores and
vendors that open their own stores. The lack of concentration among buyers brings down
the margins and gives the power to the vendors. Retailers also have no power in
determining the design of the product. Therefore the big footwear manufacturers
generally dictate the price of their shoes.

In order to gain more power buyer companies have started merging- Footlocker Foot
Action, Sport Authority- Gart. This consolidation will transfer some of the power from
the big players because in order to be industry leaders they will need these well -
recognized retailers as well. Growing margins suggest that buyer power has been
increasing. The end user of the industry is also considered a buyer and he has unlimited
power. Every company is fighting for the loyalty of the end user through constant
innovations and brand management. However, if the user is dissatisfied, he can easily
switch the brand to another one.

SUBSTITUTES:

Substitutes for athletic shoes are shoes in another category.

When required for professional use there is no substitute goods, but as a fashion item
there are many other goods that could be purchased.
Substitutes: (Low)
Lifestyle athletic shoes sales, for instance are growing at the fastest annual rate
and Puma is undoubtedly the leader in this segment- with more than 50% sales
growth.

First, in the sports industry, other types of apparel could also be seen as a substitute, in
terms of building image and style. Second, in the same product category, other types of
shoes are also substitutes, such as slippers, heels, boots, flip-flops, etc. Even though
sneakers are still the most popular type of footwear in the world. Companies such as
Steve Madden and Sketchers are also seen as threats. Steve Maddens thick high
heeled shoes19 are very popular and since thick heels are considered a more
comfortable version among women they could be a substitute for sneakers. Sketchers
introduced non-athletic heel-less shoes also called sneaker mules20 these shoes, first
gained popularity in Europe but now are also becoming popular in the United States.

SUPLIERS:

-Using production facilities in the Far East has give Nicrome economies of scale. Although
there are now problems arising from these factories, they are switching to making there
own goods, labour and political unrest causes delays in manufacturing and shipping of the
goods,

-Supplier Power: (Low)

-The suppliers do not have the power to bargain the price of their product, since there are
numerous suppliers.

There has been some standardization of production in the industry due to growing
concerns of labor practices of the suppliers and manufacturers. These practices have been
damaging the image of some companies including Nicrome.Therefore, the big companies
prefer to work only with approved manufacturers and suppliers that are known to follow
these labor standards. Both Adidas and Nicrome have created a system to ensure that all
the high quality of the product, the working conditions, and the distribution are at high
standards.

Product

Nicrome offers a wide range of shoe, apparel and equipment products, all of which are
currently its top-selling product categories. Nicrome started selling sports apparel, athletic bags
and accessory items in 1979. Their brand Cole Haan carries a line of dress and casual footwear
and accessories for men, women and children. They also market head gear under the brand name
Sports Specialties, through Nicrome Team manufactures and distributes ice skates, skate blades,
in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories.
Price

Nicromes pricing is designed to be competitive to the other fashion Shoe retailer. The
pricing is based on the basis of premium segment as target customers. Nicrome as a brand
commands high premiums. Nicromes pricing strategy makes use of vertical integration in
pricing wherein they own participants at differing channel levels or take part in more than one
channel level operations. This can control costs and influence product pricing.

Place

Nicrome shoes are carried by multi-brand stores and the exclusive Nicrome stores across
the globe. Nicrome sells its product to about 20,000 retail accounts in the U.S. and in almost 200
countries around the world. In the international markets, Nicrome sells its products through
independent distributors, licensees and subsidiaries. The company has production facilities in
Asia and customer service and other operational units worldwide.

Promotion

Promotion is largely dependent on finding accessible store locations. It also avails of

targeted advertising in the newspaper and creating strategic alliances. Nicrome has a number of
famous athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially
Ronaldo, Renaldo, and Roberto Carlos), Lebron James and Jermane ONeal for basketball,
Lance Armstrong for cycling, and Tiger Woods for Golf. Nicrome also sponsors events such as
Hoop It Up and The Golden West Invitational. Nicromes brand images, the Nicrome name and
the trademark swoosh; make it one of the most recognizable brands in the world. Nicromes
brand power is one reason for its high revenues. Nicromes quality products, loyal customer base
and its great marketing techniques all contribute to make the shoe empire a huge success.
PURCHASE DEPARTMENT

INTRODUCTION
In the present scenario of increased competition, reduced time to market and globalised
outsourcing, material management has evolved as one of the major factors for the success of an
organization. The Purchase function, a key component of material management is now
functioning with more agility and is shouldered with more responsibility than before.
In Nicrome shoe Industry, and its subsidiary companies, the purchase function is carried
out by the purchase department of the respective unit or divisions and is responsible for
procurement of the unit or divisions requirement. The heads of the material department and
purchase department are accountable for effective discharge of purchase functions within the
framework of purchase policy of the company.
OBJECTIVES

Timely procurement and supply of required materials with prescribed specifications and
quality at the most competitive price and terms.
Fair, Consistent and transparent purchase practice.
Continuous search for alternate sources of supply and to develop reliable sources of
supply.

CLASSIFICATION OF MATERIALS

All purchases should be broadly categorized into Revenue and Capital. Under Revenue,
further categorization shall be made into Production and Non production items. The Production
items shall be categorized into A B and C.

PURCHASE THROUGH LONG TERM CONTRACT

The objective of entering into a long term contract is to ensure continuous supply at
competitive rates. Long term contract should generally be entered into a reasonable time but not
more than two years at a time.

CASH PURCHASE
Cash purchase should generally be resorted to only in respect of items of small value and
emergent requirements. The cash purchase is resorted only in respect ofitems of small value and
emergent requirements. Purchase of material up to Rs.5000/- at a time is permitted for cash
purchase.

WORLD BANK PROCUREMENT

In respect of any item procured out of the soft loan assistance from World Bank, the
procurement procedures of World Bank shall apply.

PURCHASE FROM FOREIGN SUPPLIERS

The regular tendering procedure is to be followed for the procurement from foreign
suppliers. Where the custom duty is not payable on imports because of government exemption
notification or availability of special import license is to be indicated in the purchase order.

REPEAT ORDERS
Repeat orders are placed I some cases in order to save time and cost. Fresh tenders are
not initiated in repeat order procedure. Repeat order is not permitted more than 2 years of
original purchase.

Data acquisition for costing

Consistency of any kind of calculations depends basically on the reliability of input data.
The following key elements interpreted or used improperly may result disappointing results:
a) Direct material costs
 There is no optimum parallelogram, i.e. first waste determined manually depends on the
skills and experience of the technologist or on the algorithm used by the CAD system.
Third waste is directly related to grading of leather, which is based on subjective
judgment of the quality checker, so it is a good practice to grade incoming genuine leather in the
shoe factory according to internal standards. Unit prices of materials and components kept in
stock relatively long should be adjusted regularly to actual purchase prices and to inflation.
b) Direct labour costs
Work content should be based to the extent possible on time studies (STMs).
Bonuses (e.g. for quality, material savings) and additional payments made to direct labour should
be taken into consideration. Only payments proportional to wages and paid by the
employer/company (e.g. social security) should be added as labour surcharges.
c) Overheads
Factory costs (including salaries and surcharges paid to supervisors/foremen, quality
controllers, technicians etc. attached to production units/lines) should be separated from general
or administrative overheads. It is worth separating depreciation from other types of overheads.

RE-Purchasing
Re-Purchasing is done in the following cases:-
a) When less than 3 tenders are received.
b) If the price quoted is significantly high.
c) If the purchase committee feels that carter exists between the quoted suppliers.
d) Change in material or specification after calling for tender.
e) None of the offers meet the desired specification
f) If the vendor withdraw the offer.
g) Change in the market demand and taste after tendering process
SHOES PUCHASE IN DIFFERENT WAY

The lifestyle brand nature of Nicrome and parent Quik silver apparel is supported by
figures suggesting that the bulk of spending on athletic apparel goes toward clothing that the
consumer does not intend to use for sports or other athletic activities. Instead, these clothing
items are more likely to be purchased for comfort or fashion reasons. (The Freedonia Group,
2009) This lifestyle brand status promotes a casual western U.S. genre, further leveraging
share-of-mind and putting a broader set of products into the closets of shoe lifestyle customers.
While the breadth of Nicrome product offering has begun to capture the female segment and
casual wear shoppers, the brands symbolic appeal still appears to be an associative type. Based
on demographics served and price consumer spending. As consumer spending contracts, it
behooves the brand to validate its first audience: skateboarders. They are likely to put a known
brand that they trust ahead of other purchases when prioritizing spending.
Also, I think that an existing smaller market that is underserved could be
identified and more openly embraced in product offerings and marketing communications to
women. The sport is growing among women and Nicrome seems poised to capitalize on the
demographic, so long as it continues to remind consumers that they know skateboarding better
than any other brand options available.

MARKET PRICE FOR PURCHASING

A method to determine whether the desired effect is being achieved would be to conduct
unaided awareness studies with the focal female adolescent and twenty something population. In
addition to measurement of above-the-line influence, a yearon- year analysis of womens
product revenue growth would be crucial. Analysis of the types of products that are being
purchased more frequently would be important too.
Are more shoes and technical gear being purchased or is the growth steady across the
fashion offerings as well?)
Im sure that a comprehensive ongoing analysis of the brands valuation has likely been
conducted either in-house or by parent Quiksilver. However, these brand valuation calculations
can have multiple approaches and ultimately produce a nebulous output. I would encourage a
more qualitatively based analysis of return on objectives for both the rekindling of Nicromes
skateboard core and womens initiatives. While the awareness study would be included in this,
one might also add in brand attitudes, brand associations, website and social media metrics and
sentiment and influence indicators. Since the pervasiveness of social media has reached
deafening pitch, with certain demographics engaging in sharing of brand information, influence
and even skate-related media, it is important to take this into consideration in measurement of the
recommended initiatives.
Suggested starting points for this would include more commonly accepted web presence
metrics such as Razorfishs Social Influence KPI, KD Paines Optimum Content Score and/or
Brian Solis Share of Voice KPI.
I believe that these are only general suggestions to help Nicrome manage an
incredibly successful brand. I suppose this is exactly the type of planning that is ideal in
business: To have successfully grown and reached a number of markets with high brand-
recognition only to need to rekindle the origins in order to ensure continued credibility and
relevance to your foundational skateboarders and brand advocates. I look forward to seeing the
direction of Nicrome over the next few years and hope that the next couple decades are as
exciting and authentic as my research has shown me the last two have been.
Another area of opportunity that might aid in achieving this goal is an increased
involvement in the womens skateboard community. Ever since the 2003 X-Games in which
womens skateboarding was introduced, a broader acceptance of the womens legitimacy in the
amateur and professional realm of action sports has taken shape. Not only does this reassert
Nicromes position as the brand with its finger on the pulse of the sport, but it further develops a
market that may currently purchase the brands goods based more on symbolic benefit than
functionality. As young girls begin to grow up in a world where a woman skateboarding is not
only normal, but also a potential professional career, this markets sports and business potential
becomes a reality.