“Demonstrating responsible leadership, we build global brands that athletes are proud to wear, associates are proud to create and communities are proud to host. ” – NEW BALANCE MISSION (Veleva, 2010, p. 3) Founded in Boston Massachusetts in 1906, New Balance Inc. is a privately held company that is focused on the manufacturing of high quality athletic shoes. With a ‘function over fashion’ approach the company has developed as a major player within the industry, and is currently one of the top five shoe manufacturers in the world .
Initially New Balance produced arch supports and orthopedic shoes, marketed to provide relief from orthopedic problems. In 1962 the company shifted its focus with the development of the first ever performance running shoe named The Trackster. This invention gave New Balance a growing reputation of manufacturing innovative and specialized shoes that it continues to uphold to this day . Acquired by entrepreneur James Davis in 1972 New Balance began to experience growth, which was especially significant through the 1990s. This was largely a result of a series of acquisitions of brands such as Dunham, Warrior and Brine (Veleva, 2010, p. ). These new brands expanded the company’s product line to include apparel, athletic accessories and sports equipment. By 2008 the company earned sales of approximately $1. 6 billion and was the 2nd largest producer of athletic shoes in the United States after Nike . New Balance today is the only the company that produces shoes within the United States, which accounts for approximately 25% of its production (Veleva, 2010, p. 3). The rest of its suppliers are located in a variety of locations including China, Indonesia, Taiwan and Cambodia (Veleva, 2010, p. 3).
COMPETITION – Differentiation Strategy. In comparison to its competitors, New Balance has differentiated itself through its products, marketing strategy, and strong inherent commitment to corporate social responsibility. This differentiation strategy is especially important given the high degree of concentration in the U. S. retail chain market, where the largest 50 chains account for approximately 80% of the market (Veleva, 2010, p. 3). Their current motto ‘Lets Make Excellent Happen’ perfectly captures the company’s focus on performance rather than fashion . Its many innovative products are targeted specifically to athletes at ifferent competency levels. The company’s marketing strategy also supports this focus following an ‘Endorsed by no one’ philosophy. Positioning itself as the ‘anti-Nike’ New Balance chooses to invest its money in innovation and design rather than paying big stars to represent its company. The aim of this strategy is to ‘celebrates the true stars: every day athletes who choose New Balance footwear and apparel because they fit and because they perform’ . Finally the company has also demonstrated a strong commitment to CSR and has maintained a strong culture of ‘doing the right thing’.
In 2006 the owners of New Balance, James and Anne Davis further solidified their commitment to CSR highlighting it as a central component of the company’s mission. Two clear examples of its initiatives include its use of recycled material in all its footwear products and its complete elimination of harmful materials such as Polyvinyl Chloride from its products. As the first shoe manufacturer to implement such policies New Balance demonstrates a strong commitment to address sustainability issues through different levels of the life cycle of its products (Veleva, 2010, p. 0). This is further reflected in the 2009 CSR Index where New Balance ranked 29th out of 50 companies; The ranking determined by how the public views a company in regards to community development, corporate governance and workplace policies.
CURRENT CSR STRUCTURE The Responsible Leadership Steering Committee (RLSC) heads the current CSR strategy at New Balance. The focus of this committee is based on five key principles: 1) Operate with integrity and humanity 2) Encourage the advancement of sustainable business practices globally 3) Offer generously what we can give ) Work to reduce our negative impact on the environment and 5) Commit to the highest standards in our facilities for the development of a healthy workforce. Each area specified here has a sub-team that identifies issues of concern and works towards tangible outcomes. This sequential process has allowed the company to progress in each area of its CSR strategy. The social responsibility manager of the company, who reports to the VP of Intellectual Property, heads this committee. There is however no senior-level CSR manager that is directly connected with the CEO of the organization.
Many competitors such as Nike and Timberland have already positioned individual CSR representatives at a Vice President level (Veleva, 2010, p. 19). This corporate structure does not support the development of an integrated CSR strategy that is shared through the entire organization. Additionally, without a higher-level CSR representative, it would also be difficult to get upper management from different departments, such as design and marketing, to clearly understand and thus participate in the current CSR goals of the company.