Oregon Active Footwear Cluster
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OREGON ACTIVE FOOTWEAR CLUSTER Group 9 // Jan. 5, 2017 MSC INTERNATIONAL BUSINESS Stockholm School of Economics of School Stockholm 2 Index: Page The title 3 MACRO ANALYSIS National/state analysis 7 CLUSTER ANALYSIS Diamond model, 7 gap 19 FIRM ANALYSIS Nike development 23 POLICY RECOMMEND Future recommendation National/State Analysis Cluster Analysis Firm Strategy Policy Recommendation National Overview – United States The 10 most competitive The 10 most competitive countries in the world 2 Performance Overview 3 countries in the world 1 1.Switzerland, 5.81 2.Singapore, 5,72 3.United States, 5.70 4.The netherlands, 5.57 5.Germany, 5.57 6.Sweden, 5.53 7.The United Kingdom, 5.49 8.Japan/Hong Kong, 5.48 9.Norway/ Finland, 5.44 10.Denmark, 5,35 GDP Over Time 5 Facts 4 • Population: 318,9 m • GDP/capita: 57 591 US$ Innovation, Business sophistication, market • Annual growth rate: 1,62% size, financial market development, • General gov. debt: 125% / GDP technological readiness and higher • Tax on personal income: 10,74% education and training is what drives United States position. • Unemployment rate: 4,7% • Exports as % of GDP: 12,0% National/State Analysis Cluster Analysis Firm Strategy Policy Recommendation PESTEL ANALYSIS o The law is derived from five sources: the constitutional law, statutory law, 8 treaties, administrative regulations, and the common law (includes case law o Federal republic o US taxes are low relative to those in other developed countries o Liberal ideology dominates political life o Taxes as a share of GDP is 26% compared to the OECD average on 34% o Two-party political system with both major parties, Democratic and Republican th o Ranks 18 in the world on the Corruption Perception Index, but still POLITICAL o America's system of government is characterized by the separation of powers 1 LEGAL indicating on a pretty low corruption level 9 o Scores 8.07 on The international Property Rights index, placing it 2nd in the NA region and 14th in the world 10 P P o U.S. is accounted for 10% of world exports L o Exports accounted for 12% of U.S. GDP o Located between Canada and Mexico E o Largest exporter in the world for commercial services and the o Strongest military and economy in the world second largest for goods 2 o Benefiting from abundant national resources o 57 591 US$ per capita o Controls the Pacific and Atlantic oceans, the most used ECONOMIC o Income inequality; 0.394. It´s one of the highest in the world trade routes in the world. E S (0=complete equality 1= complete inequality) 3 It connects Asia and Europe, historically the two largest ENVIRONMENTALo economic powers. T o They have an annual military budget of $700 billion o No official language at the federal level but English is their national language. o 2,8% of GDP is spent on R&D which is higher than the OECD average o One in Five U.S. Residents Speaks Foreign Language at Home of total: 2,4% o One of the world's most ethnically mixed and multicultural nations 4 o 73,4% of all households have internet access o Yearly population growth rate 0,71 in 2017 5 TECHNOLOGICAL o Almost 1% of working population works in R&D SOCIAL o 47,5% of the population in age 25-34 has attained tertiary education 6 National/State Analysis Cluster Analysis Firm Strategy Policy Recommendation 5 National Footwear Industry APPAREL AND FOOTWEAR THE SPORTING RETAIL VALUE OF SPORTS PRODUCTS MARKET VALUE IN THE U.S. GOODS INDUSTRY THE SPORTS MARKET MANUFACTURERS SALES IN THE U.S. 2 80 33,78 370, India 33,16 358,88 32,78 32,87 31,85 70 29,64 31,38 360, § The sporting goods industry South Korea 29,58 28,17 350, 342,94 has seen many mergers and Brazil 60 Italy 340, 331,49 50 24,13 inBillion France 23,5 323,75 acquisitions, over the years. 22,23 22,83 330, 40 21,8 20,89 21,48 316,92 United Kingdom 20,2 20,37 320, 309,98 § Key players: Reebok, Adidas, Germany 30 Value 20 13,63 14,48 14,99 15,41 310, 1 Japan 12,4 12,61 13,18 13,88 Puma and Nike. 12,3 U.S.Dollars China 10 300, 8,01 6,9 7,3 7,39 7,53 7,67 7,81 7,96 7,93 USA 5,06 5,12 290, 0 4, 4,2 4,34 4,49 4,7 4,84 5,19 2008 2009 2010 2011 2012 2013 2014 2015 2016 Market 280, 0 20 40 60 80 100 120 2011 2012 2013 2014 2015 2016** Wholesale sales in billion U.S.dollars Exercise equipment Licensed merchandise Athletic footwear Sporting goods equipment Athletic apparel Footwear is increasingly becoming a fashion accessory so the global footwear market is growing faster than ever before. There is also an increasing demand for comfortable and trendy footwear, and there is a massive demand for athletic shoes among both sports- and non- sportspersons. There are two segments within the global footwear market; non- Overview athletic footwear and athletic. Athletic footwear is further divided into running and cross training/tennis shoe, soccer/football shoe, basketball shoe, golf shoe etc. In 2016 the athletic footwear market was led by North America holding 35,6% of the overall market. In the same year, Asia Pacific accounted however for 40.5% in terms of volume.3 National/State Analysis Cluster Analysis Firm Strategy Policy Recommendation State Overview - Oregon 250000 l 1 KEY NUMBERS KEY CLUSTERS 200000 o Activewear and Outdoor Gear Industries 150000 Population 4,16M o Natural Resource Industries 100000 o Advanced Manufacturing Industries OVERTIME Growth rate 1,68% 50000 o High Tech Industries OREGON 3 GDP o Clean/Green Technology Industries 0 High School grad. or higher 89,5% 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 BSc degree or higher 30,1% l FACTS Income/capita $27,173 o Industry clusters drive Oregon´s economy as they bring up 9th largest state in the U.S. (land area) o sales outside the state o Mountain ranges and vast forest areas are two examples of the Food prod. $3B o No focus on the clusters that are winners/losers, rather features that impact the population density looking to improve the competitive success of every industry o The state has no sales, liquor or restaurant taxes Exports, Forest prod. $500M o Oregon Industry Cluster Network were launched in 2005 to o 36 counties in the state of Oregon identify the state´s mature, emerging and potential clusters and o Port of Portland, railways, airports and ships makes international assist cluster participants 4 State Corporate Tax trade easy2 7,60% l CLUSTERS National/State Analysis Cluster Analysis Firm Strategy Policy Recommendation CLUSTER DEVELOPMENT o Boots’ price was $4/pair 1890s in Wisconsin while Establishment of $10/pair in Oregon3. Port of Portland: Adidas moved their HQ major transportation o The Portland Airport was Portland’s local government for two reasons: to gain for import/export2 used for military during identifies athletic shoe and the World War II. more talents in Oregon; More venture and to get a deeper Danner make contract sportswear industry’s capital focus on Jogging Culture Located In Portland understanding of 5 sports start-ups. with the military to 4 potential for growth has been provide outdoor boots3. American customers popular in the area1. 1936 1993 Cluster structures recognised (by municipality)5 1938 2002 2007 Moved to Portland from Adidas moves NA Wisconsin for higher sales HQ to Portland 1910s margins. Now both major Construction of 1918 3 1964 2005 Portland Airport – U.S. military contractors o Pre-existed outdoor lifestyle enabled Nike to increase the biggest in sales and provided Nike with more opportunities to Oregon2 collaborate with other firms. o Nike’s development also drove the growth of the area and attracted more talents. Nike predecessor o More companies were established and interactions Launch of Oregon West Coast Shoe Company was founded increased. Industry Cluster Network established:work boots by business leaders Ecosystem starts to flourish with smaller firms, suppliers, spin-offs of Well-established Only scarce companies locates in the area. The cluster has not Government’s engagement in the cluster former Nike/Adidas employees. Competition between Nike and Adidas infrastructure. formed yet. The interactions between actors are low. starts to increasing from a low level. drives the innovation in the cluster. Pre Stage Phase I Phase II Phase III National/State Analysis Cluster Analysis Firm Strategy Policy Recommendation CLUSTER OVERVIEW 2017 First-ever Industry growth in the past 10 to 20 years has been propelled by the increasing popularity of outdoor recreational activities, Sneaker Week new fabrics and technologies, and the fusion of outdoor-inspired styles in to more general fashion circles. 2010 in Portland2 Pensole Footwear Design Academy was launched by D'Wayne Edwards, the former Outdoor design director for 2013 1 Brand Jordan . Portland State University launched Athletic and Outdoor Product Management Athletic Footwear Cluster Casual Fashion 2015 University of Oregon launched Sports Product Management Program. Total Firms: > 8003 2010 Average Annual Wage: > $82,0003 Athletic and Outdoor Action 2017 Plan 2010-2012 identifies Employment Growth: 11.6%3 A&O as signature industry Focus groups start bringing Direct Employment: and starts several together state and private actors improvement initiatives >14,000 employee3 > 3,200 self-employed3 With more companies moving to Portland and more start-ups arising, the cluster expands and becomes more influential in the industry.