The best indicators to examine whether Head Ski had the competitive benefit in the ski industry would be to look at revenue ratios and compare them to competitors, which will permit us to evaluate whether Head Ski has above typical revenues. The very best ratios to take a look at are: return on assets, return on sales as compared to other ski companies that offer expensive skies, and return on equity, integrated with numbers that show how much Head Ski is funded by debt.
Taking a look at net margin as compared to rivals would also work. If they have the highest net margin as compared to rivals, than they have the most competitive advantage.
Head Ski successfully matched consumers require for high quality metal ski for which consumers wanted to pay premium (as shown by market trends), with Head Ski capability to produce distinction by producing ski with exceptional features and quality. The skies were offered mostly by knowledgeable specialized retailer in the ski specialty shops, which reflected growing customer choice to buy skies in ski boutique.
Head ski used distinction method by utilizing technique focused on exceptional product quality, and concentrating on remarkable service, and prominent high-quality image. Head Ski created a new metal ski almost 5 years prior to the introduction of next competitive item, by releasing its exceptional R&D and creating skies that were drastically various in design than anything before. Head skies had distinct item functions (durable and long enduring, reliable: did not break, and special performance (turning, tracking, passing through), which were superior to other products and for which clients wanted to pay more, expensive to imitate (Head ski presented numerous significant upgrades to the line of product throughout the years and did not be reluctant to recall faulty product), and arranged to be exploited (VRIO).
Despite the difficulty of organizing complex ski manufacturing process, Head ski developed many processes from scratch, bettered them, and deployed manufacturing cost efficiencies when possible (laminating press). It implemented effective compensation reward system that consisted ofraises based on seniority, merit reviews and profit sharing plan. As a result, attempts to unionize Head ski plant have been consistently rejected.
Quality in service: Head ski was known for exceptional service thorough its ski dealer organizations and regarded them be the most valuable asset. 85% of Head skis were sold through carefully chosen high quality ski specialty shops, where sales staff was highly knowledgeable. Dealers were expected to service Head skies, and for more comprehensive repairs, skies were sent back to the Head ski factory, where skies were repaired under 3 weeks. This level of after-sale service was superior to competition, unique to Head ski, customers valued it, and were willing to pay more for it. It was organized to be exploited but not very costly to imitate, as others could set up similar service (VRO).
Shaping perceptions through marketing(Superior to competition): 85% of Head skies were sold through carefully chosen high quality ski shops, with experienced and knowledgeable sales staff, as part of marketing strategy. This strategy helped to shape the perceptions of Head ski being superior in quality and the choice ski for knowledgeable and experienced skiers. This reflected customer needs as ski sales through specialty outlets stores grew faster than through other stores. In addition, Head ski established itself as an important factor in ski racing world, as “one third of top ten places on all ski racing events were on Head skies), thus adding legitimacy to the product and adding to the value of its brand. Moreover, customers were able to test the product before purchasing it, by renting skies.
Ski rental strategy was the most effective way to introduce new customers to the “ease if Head ski”. This integrated soft-sale approach that relied on word of mouth marketing was unique to Head ski, valuable to the customer, costly to imitate as it required integration of complex relationships, and well organized to be exploited (VRIO). 3. The uniqueness of Head ski has a sustainable competitive advantage can be sustained. Head Ski understands its customers requirements and preferences and creates a unique product that customers value and are willing to pay more for.
Sources of Head Ski competitive advantage are sustainable, hard to replicate, and hard and costly to imitate. Head ski had a long history of culture focused on quality and attention to detail that grew out if its entrepreneurial history. It is difficult to imitate such distinctive, integrated strategy that involves “service, dealer relations, product quality, style, advertising”. Attempts to imitate Head ski strategy would likely fail because of the difficulty of replicating every aspect of the strategy, followed by integrating them in the right way.
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