Case Study #1:
Cima Mountaineering, Inc.
In this case study, our team examines the decisions facing a small western mountain boot manufacturing company, Cima Mountaineering, Inc. This paper will provide a brief overview of the case, including a quick background perspective of the company. We will present the two options given in the case, and examine the four possible alternatives, which exist as possible solutions to the company’s dilemma. For each possible outcome, we will provide detailed analysis of each alternative evaluated against various criteria. Finally, based on the results of the analysis, an overall conclusion will be presented.
Cima Mountaineering was founded as the family-owned Hoback Western boot company located in Jackson, Wyoming. The owner’s children, Margaret and Anthony, assumed control of the company in 1975 from their parents, as President and Executive Vice President respectively. In 1978, the company decided to create a new line of mountaineering boots to complement their existing line of western boots, which was enjoying only modest success. In 1981, the company introduced two new boots, a mountaineering boot and a hiking boot, to their product line. A summarized company history timeline is shown in Figure 1.
Figure 1 - Company History
After a record earnings year in 1994, Margaret and Anthony realized that the market was shifting. They were beginning to lose sales to foreign companies who were introducing low cost, good quality, and stylish hiking boots. At the time of this case, Cima Mountaineering had already lost two key retailers, and sales revenues were beginning to level off. Figure 2 shows the historical sales revenues at Cima. While growth through the late 1980’s and early 1990’s was quite good, recent market studies showed that there were untapped market segments with very attractive growth possibilities. Both Anthony and Margaret recognized this, and offered two competing proposals that attempt to tap into these market segments.
Figure 2 - Sales Revenue
The following is a brief summary of the two proposals given in the case, and the resulting alternatives identified by our team.
Option 1: Anthony’s Proposal
Anthony wants to add two additional models of boots to Cima’s Summit line of hiking boots. In addition, he also wants to add a mountaineering boot targeted specifically for women (MX 350) at a lower price than the comparable men’s model. Anthony wants to maintain the high levels of quality currently present within the entire Cima product line. He is concerned about brand image, and also wishes continue utilizing their existing product distribution network and retail sales outlets. He is willing to consider expanding distribution through catalog retail, but it must be accomplished in a way that will not compromise the company’s brand identity.
Option 2: Margaret’s Proposal
In contrast, Margaret offers a more aggressive proposal, which is focused around the introduction of a third product line, known as the “Weekender”. This is a new market segment for Cima, and Margaret feels that it represents a significant growth opportunity. The new boots are targeted at a more casual audience. As such, they feature new construction techniques, and require careful attention to current fashion and style trends. The boots will be lower priced than any boot in Cima’s existing product line. Margaret also believes that in order to increase sales revenue, that some sort of retail partnership with catalog companies (as well as other options) is necessary.
From these two options, four possible alternatives emerge:
Alternative 1: Implement Anthony’s proposal
Alternative 2: Implement Margaret’s proposal
Alternative 3: Implement a combination of Anthony and Margaret’s proposals Alternative 4: Implement neither (and...