The company also began aggressive expansion and investment in Asia, spending $3 million on initial efforts. Expansion into other European areas soon followed. This eliminated a variety of costs associated stemming from overseas tariffs.
By cutting costs on materials and by cutting tariff costs, Catorade managed to become the low-cost industry leader while still providing consumers with value and offering them a wider selection of footwear than anyone else in the industry. Costs were further cut by reducing production levels in Texas, where labor and other costs were historically high. This move was combined with spending an additional $2 million on further expansion in Asia. In year 14 the company invested $5 million in innovation technologies to automate manufacturing, ordering, warehousing and shipping functions. The competitive strategies relying on innovation technologies were modeled after Benetton’s successful innovation technology process that enables them to remain the price-leader in the apparel industry without sacrificing quality.
Because of implementing such cost-cutting and innovative strategies, the company has been able to increase wages and benefit plans over the course of its history. This has enabled the company to maintain low turnover, high morale, and high productivity among workers. Workers in Europe make on average 3,461 pairs of shoes annually, while workers in Asia typically average 2,359 pairs. While wages and total compensation are much higher in U.S. plants like Ohio ($19.5 and $28.0 thousand) than Asia ($3.3 and $4.5 thousand), compensation is typically comparable for workers in the industry in both regions and somewhat higher in Asia.
In a year 18 strategy rating comparison, Catorade remained at the top in terms of product line, high quality and brand image. However, this comparison did reveal lower levels of performance with respect to customer service. Days of inventory are currentl...
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