CASE STUDY
Three Star Shoes is one of the largest shoe-making firms in Nepal, with a flourishing
export market in India. The firm currently employs 3,000 people and, counter to the
general manufacturing sector trend, is expanding both operations and its number of
employees. The firm produces casual/sportswear shoes at a low price point (in
comparison with international brands), at typically around $4 to $30 per pair. Today,
Three Star has set a benchmark in the footwear industry that other brands strive to
meet. This is because of advancements in manufacturing technology, delivery of
quality products, durability, affordability, and keeping up with the expectation of
customers.
The domestic market is witnessing a change in the buying pattern of customers.
Therefore, the R &D department focused on innovative shoe designs to make an
affordable product and fashion wear. Foot specialists and experts who had
worked for various shoe companies were brought in as consultants to design the
product and draw up a business plan. On the basis of people’s preferences, the
classis design remains the same, but the company is introducing variants that fit
the needs of various consumer groups: ladies, kids, teenagers, sportspersons,
athletes, and more. It intends to set up a manufacturing plant aimed at producing
critical inputs such as polymerizing vinyl chloride, which would also be used as
inputs for other manufacturing sector firms. Observing high demand of leather
footwear, ladies footwear and casual shoes, manufacturers are planning to
expand the product line-up with installation of a new plant.
However, despite the deep penetration in the domestic footwear market,
stakeholders said that various problems had prevented the domestic footwear
industry from making faster progress. They have pointed out issues like unfair
customs duty on raw materials and unavailability of skilled manpower. On the
other hand, there is lack of healthy competition in domestic market. Unlike Nike
or Reebocks, which are pirated because they are expensive, it looks like Three
Star's copycats want a slice of the pie that the shoe has carved for itself in Nepal's
domestic market because of its low price. Inevitably, the design of shoes will be
pirated with the brand name.
Though Three Star did not start out to be a social brand, its cheap pricing and
quality automatically launched the concept of social and corporate responsibility.
Hence, domestically manufactured products have the potential to outshine
foreign products if the government provides them appropriate support.
Discussion Questions:
a) Analyze the case from the perspective of operations functions.
b) Describe the success factors that help the company to compete in the
market.
c) Give your opinion to tackle the existing problems that the company is
experiencing.