Case Analysis

Topics: Prediction, Futurology, Forecasting Pages: 6 (2005 words) Published: August 16, 2013
Problem:
The problem found in Sport Obermeyer Ltd. is that they had way too much of an excess of merchandise and styles that were not being purchased. It was the worst selling records they had ever had, and had to sell everything with a huge discount. This happened because of the company’s inability to forecast properly. Another reason why they ended up with such an excess of merchandise may have happened is due to the fact that Obermeyer has recently faced increased competition. The main competition in ski apparel which they face is Colombia Sportswear. “The company’s Buying Committee bases quantity ordering decisions on average sales forecasts generated by a number of internal parties. Techniques like this, as well as using a large amount of greige material to delay product differentiation, have helped Sport Obermeyer manage its vast lead times. The nature of the apparel industry necessitates that high quality clothing makers and sellers deal with long lead times; in Sport Obermeyer’s case this is roughly two years. Routine outcomes of having such a long lead time, however, include stockouts of popular items during peak selling periods, and leftover stock of unpopular items which ultimately are sold at below-cost rates.” Solution:

Since he problem found in Sport Obermeyer Ltd. is that they had way too much of an excess of merchandise and styles that were not being purchased. It was the worst selling records they had ever had and had to sell everything with a huge discount. The solution to this conflict was to try harder for next year to forecast better for the upcoming season. Obermeyer would need reasoning as to why his committee was predicting with the numbers they had chosen. Since there was so much discretion between each committee member it made it hard to figure out how much of each item may actually sell. Another approach would be to average out all the predictions from each committee member and see if that number works best. The main issue with this approach would be that if there is a large range the numbers for predictions can exceed the amount of money allotted for the season. Sport Obermeyer has several strengths and weaknesses within how they are able to run their business. Knowing your strengths and weaknesses help you to overcome your problems and come up with clear solutions that your company will benefit from. Strengths:

* History of product innovation.
* Buying committee forecasts balance expectations.
* Experienced leadership and focused management team.
* Deliver products to retailers early in the selling season. * Variety of SKUs, with color/size product diversity.
* Use of greige fabric delays product differentiation.
Weaknesses:
* Excessively long lead times, though this is the nature of the industry. * Minimum order quantity at Chinese manufacturers.
* Leftover unpopular merchandise at end of selling period. * Stockouts on most popular items during peak selling.
Another solution that Sport Obermeyer came up with to solve this problem was to “decide sample production volumes. The sample production (10,000 units made in Hong Kong) will be used for the Las Vegas trade show that takes place 17 months prior to the actual retailing season. The decision for the season’s full production has to be made after some indication of demand that the show will determine. However, the sample production volume is determined primarily through the recommendations of the buying committee.”

Expanding internationally would help the company to be able to sell more of their merchandise considering they have so many different SKUs. This would be a lengthy process that may take around two years to achieve. But with a slowly calculated expansion I believe the expansion would be very manageable. Sport Obermeyer already barters with South Africa; the company has some business contacts there. One of the advantages of having the company expand into South America or any country...

Cited: Hammond, Janice H, and Ananth Raman. Sport Obermeyer, Ltd.. Boston, MA: Harvard Business School, 1994.
Sport Obermeyer Case Study. Jun. 2012. 10 Jul. 2013. <http://www.studymode.com/essays/Sport-Obermeyer-Case-Study-1021250.html>.
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