Steinhouse Knitting Mills

Primary problem:

Sine 1988 , sales had been declining steadily.

Evidence: 1988 sales-$ 7.5million; 1993-$3.5 million; 1998-$2.7million.

Situation Analysis

A Environment

1.Low-wage developing countries with an abundant supply of labour provide tough competition to Canada.

2Growing popularity of the � big and tall size’.

3 Trend to �dressing down’ or � casual days’

4 The weather over last few years has hurt business.( Winters were warm)

5 Fashion business usually changes fast.

6 The low value of Canadian dollar relative to the U.S dollar.

Summary of environmental opportunities and threats:

Opportunities: a Serving �big and tall size �customer groups and market segments;

b. Low value of CDN dollar means lower price for American, good for exportation.

Threats: a Comparative high labour costs , squeeze profit margins; b The trend �dressing down’ shift buyers` needs and tastes away from the products c. Costly follow the fashion pace.

B Industry

1.Clothing industry is labour intensive; Knitting is more capital intensive; men`s sweaters-less susceptible to style changes and quicker to embrace technological advancement

2 Sweaters will be in fashion again.

3 Competitors Analysis:

EXHIBIT 1 Major competitors profiles

Name Location Age in years Employees Sales($000 000) Exporting Male product

Standard Knitting Ltd Winnipeg 23 100 <$25 Yes-U.SEurope,Latin Amer Man`s sweaters

Straton Knitting Mills Ltd Toronto 57 175 <$25 Yes-U.SJapan,Asia<$1000 000

San Remo Montreal _ 100 <$10 _

Cooper Knitting Montreal 70 50 <$10 Yes-U.S

Compatitors survive by reorienting production to suit the demands of Wal-Mart

Zellers, operate more downmarket(100%acrylic or 100%Cotton sweaters to discount stores at $12-$13 each)

4 Buyers analysis: a Largely dependent on Independent stores But they are quickly disappearing in Canada and USA b Large department stores focus on the name brands like Nautica Polo Tommy Hilgiger and Point Zero; c High end of market sells Italian brands for $200 or more; d Wal-mart Price-Costo and Zellers directly buy from Asian manufacturers.

5.Woman probably purchase 75% of all men`s sweaters.

6. Ladies business is very competitive.

7.There are new demands for higher-guage lighter sweaters made of natural fibres and demand of mix of yarn( particularly in US)

Summary of industry opportunities and threats:

Opportunities: Rising customer demand for the product.

Threats: a In’BtoB’ case, their buyers are decreasing; b It would cost lots to buy new machine if take advantage of new demand; new raw material is expensive and not always available.

C The organization

1 Objective now is reverse downward trend and ensure survival.

2 Strengths of company: a Better product quality relative to rivals; b Economy of scale and experience curve advantages c Alliances with sport shirt manufacturer that provide access to attractive market. d. Financially sound with no long-term debt; e Good communication with retailers; f Proven capabilities in improving production progresses

3 Weakness of company: a No clear strategic direction; b No well-developed or proven core competencies; c Higher unit costs relative to key competitors, losing market share because comparative high price; d Too narrow a product line; e Lack of management depth( No organizational culture)f Inferior intellectual capital relative to leading rivals. g Inconsistency between what customer perceive and price point h Inefficiencies from large number of SKUS.

D Market strategy

1 Opportunities: a Have good sales people , save money on advertising; b Have success experience in winning accounts at trade show, government subsidized the cost;

2 Threats: a Sales people do not do any servicing of customers between 2 selling seasons. b Do not do any market studies, not consult customers for style; c Very hard to find good sales representatives