Case #2 Analysis: Columbia Sportswear

Jessica Williams
BAUD 5355 VC01
June 19, 2015
 Competitor Analysis: Columbia Sportswear

The final subject of an analysis is to understand competitor environment as well

as the company's external environment. This analysis is based on each company that

the company competes with. Understanding competitive rivalry increases a company’s

ability to develop and sustain their competitive advantages.

Immediate Competition: The immediate competition is based off of rivals that

Columbia Sportswear competes with, directly.

Nike: Nike is considered a competitive rival for Columbia. Nike makes over $20

billion in revenues and has a strong global presence. Nike sells apparel,

footwear, sports equipment and accessories, though the outdoor apparel and

accessories – like backpacks, are the top competing products between the two.

VF Corporation (Timberland and The North Face): VF Corporation is also

considered a direct competitor of Colombia Sportswear. With revenues

considerably less than Nike (at $9.3 billion), VF corporation designs,

manufactures and distributes its product. Timberland footwear and The North

Face outerwear are lines in the VF Corporation that directly compete with

Columbia.

L.L. Bean: L.L. Bean is smaller than the two companies mentioned above but

still provide Columbia Sportswear with competition. L.L. Bean receives revenues
 of $1.44 billion. L.L. Bean and Columbia Sportswear are very similar in regards

to company size and target market. L.L. Bean’s strengths lie in its top notch

customer service, as the company was awarded the Customer Choice award for

three consecutive years from the National Retail Federation and American

Express.

Recreational Equipment Incorporated (REI): REI has revenues of $1.79 billion

and focuses on high-end outdoor gear and clothing. REI also operates as the

largest consumer cooperative in the U.S. Although REI stores carry the

Columbia brand in their stores, they are a direct competitor due to selling their

own brand of items, which compete with the Columbia brand.

Impending / Invisible Competition: As with most industries, there is always room for

added competition. Currently, the sportswear market is saturated and will take

significant resources to become a competitor with a branded company, such as

Columbia. There are many customers that are loyal to brands in the market currently; it

would be difficult for a new brand to come in and sway faithful customers. Even with

the market being discouraging to new entrants in this market, there are always

opportunities – especially if the new entrant can come in with relatively low upfront

costs. This possibility makes it imperative for executives at Columbia to constantly be

aware of the changes in the industry.

Overall Assessment: While Columbia Sportswear has direct competition with large

companies, such as Nike and The North Face, the threat of new competition is low. To
stay competitive, Columbia has to acknowledge and always be a step ahead of the

competition without losing sight that new competition may not be a high possibility, but a

possibility none the less.

Strengths: Columbia Sportswear has been in business since 1937. Columbia

Sportswear is a family owned business and functions on those values. Columbia

Sportswear also has a dedicated, skilled workforce. Columbia Sportswear is also an

established company that is considered reliable, which has built brand equity for the

company. The brand has also been able to be in control of the entire production

process, which saves on expenses.

Weaknesses: Compared to large competitors, such as Nike, the resources available to

market the company in similar form is lacking. A side from marketing, the brand

focuses on functionality but not on style which makes the appearance of items a bit off-

putting. The North Face has made strides in combining style and functionality, and

while being a direct competitor of Columbia Sportswear, the company needs to follow

the North Face’s lead. Another issue that Columbia Sportswear faces is that it’s sales

peaks in the fall and winter seasons making summer and spring weaker in sales.

Columbia should be focusing on year round outdoor activities and not weigh so heavy

on skiing apparel.

Opportunities: Marketing to all genders and ages can be a great opportunity for

Columbia Sportswear. While the company was formed on hats and then fishing vests,

both of which seem to have a strong male presence, offering functional items for

women’s fitness and outdoor needs is imperative. The North Face and Nike have
campaigns that focus on women, which have opened up the market for even more sales

in this area. A majority of Columbia’s marketing focuses on males; marketing to women

would open a new opportunity for Columbia. The company already sells items targeted

at women, but marketing them would open doors for the company.

Threats: As difficult as it may be for a new outdoor apparel company to come into the

industry and take loyal customers from Columbia Sportswear, it’s not impossible. As

mentioned earlier, if another company targets a market that Columbia is not marketing

to, they will end up with the market share that Columbia loses. The major threat here

would be a current competitor or a new competitor leveraging sales on what Columbia

Sportswear is lacking to market to.

Core competences are defined as “resources and capabilities that serve as a

source of a firm’s competitive advantage over rivals.” Core competencies are groups of

resources and capabilities.

The main capabilities of Columbia Sportswear are based on producing outdoor

products, apparel, and shoes that provide the customer with functionality. The core

competence of Columbia Sportswear is the ability to control the entire production

process.

Valuable Competencies: Columbia’s valuable competency lies in production. The

company is capable of designing, sourcing and distributing its products. Work ethic,

dedication and perseverance of Gert Boyle, Chairperson of Columbia Sportswear, also

attributes the success of the company.

Costly to Imitate: Due to the economies of scale and operational efficiencies, it is

costly to compete in the apparel industry. There are imitations that costs Columbia

Sportswear between $100 to $200 million a year. These imitations come by counterfeit,

or “knock – offs” .

Non-substitutable: The equivalent substitutes here would be competitor products that

may offer that same value and functionality as Columbia Sportswear but at a fraction of

the cost.
 Value Chain Analysis: Columbia Sportswear

Value chain analysis will provide information about primary (inbound/outbound

logistics, operations, marketing & sales, and service) and secondary (firm infrastructure,

human resources management, technological developments and procurement)

activities.

Primary Activities

Inbound/Outbound Logistics: Not uncommon to the apparel industry, a

majority of Columbia’s manufacturing occurs in Asia. The distribution center is in close

proximity to highways which allows for a quick transport. Columbia also directly

manages the shipping through its own transportation department handled out of the

distribution center.

Operations: Columbia continues to expand its presence by introducing new

apparel lines. Acquisition of companies, such as Omni-Shade sun protection and

Titanium Golf apparel, has assisted in the growth of Columbia’s operations. Columbia’s

operations are broken up into four distinct regions : U.S. (with 56% of net sales), Latin

America and Asia Pacific (20.1% of net sales), Europe, Middle East, and Africa (16.3%

of net sales) and Canada (7.6% of net sales).

Marketing and Sales: As mentioned in the SWOT analysis, Columbia Sports

has issues marketing. The company was formed on hats and then fishing vests, both of

which seem to have a strong male presence, offering functional items for women’s
fitness and outdoor needs is imperative. Another issue that Columbia Sportswear faces

is that its sales peaks in the fall and winter seasons making summer and spring weaker

in sales. Columbia should be focusing on year round outdoor activities and not weigh

so heavy on skiing apparel.

Support Activities

Leadership Structure: Timothy Boyle, CEO & President; Michael Blackford, VP

of Global Innovation; Thomas Cusick, VP of Finance and CFO; Peter Bragdon, VP of

Legal and Corporate Affairs.

Technology Development: Columbia Sportswear has worked hard at protecting

their technology to avoid counterfeit items from entering the market.

A financial analysis can be used to assess the capability, stability and profitability

of a company. The analysis is includes quantitative historical performance found in the

financial reporting documents such as balance sheets, income statements, as well as

statement of cash flows. The analysis is meant to portray a company’s financial ability

through profitability, solvency, liquidity, and stability. Included below is financial

information in regards to Columbia Sportswear.