CASE: Competitive Strategy at Sportsman Shoes

Sportsman Shoes has been a leader in the shoe industry for more than 30 years. Sportsman manufactures and sells athletic shoes for all types of sports. The company has pursued a low-cost strategy in order to sustain its success. It sells a limited number of shoe designs and has held costs low through manufacturing efficiency and standardized operations. However, the past years have been a struggle at Sportsman. The shoe market has seen a rise in the availability of low-cost imported shoes that has threatened Sportsman's competitive position. As a result, company executives have decided it is time for a strategy shift.

Sportsman executives have done extensive market research and determined that many niche athletic shoe markets exist where athletes are willing to pay more for shoes designed to meet the unique needs of their sport. There are very few competitors in these niche athletic shoe markets, and most do not have Sportsman's past experience in keeping control of manufacturing costs. Sportsman has determined that with talented shoe designers in place, they can manufacture athletic shoes to meet the needs of the niche markets using their current manufacturing facilities and employees. By designing shoes that have features that differ from competitors and meet the specific needs of a new group of customers, Sportsman believes the company is an competitive advantage. Further, while their shoes will not be as low cost as they were in the past, they will likely be able to sell their shoes for less than market competitors and still make a healthy profit.

Therefore, Sportsman has decided to shift from its current low-cost strategy to a differentiation strategy and will begin production to make specialty athletic shoes. Sportsman must now make many tactical decisions in various functional areas of the company to support its decision to shift its overall business strategy. Its first priority is to restructure the product development function. As it will need to understand the needs of the niche markets and design shoes to meet those needs, it will need to hire and retain talented shoe designers. The company will also need to hire operations specialists to transition its manufacturing operations to produce the new shoe designs. Beyond hiring new staff, Sportsman also must consider the implications for current employees to help them successfully transition to their new work requirements. Therefore, there are several considerations the company must address in the area of human resource management.

Questions:

1. Following Sportsman's shift in competitive strategy, what are some considerations for the company's human resource management practices?

2. What kind of challenges will Sportsman face specifically in the area of compensation?