History In 1976, two friends, Alan Cohen and David Klapper, partnered to run a franchise called Athlete’s Foot. Athlete’s Foot was a large athletic footwear business. By 1981, Cohen and Klapper’s vision had grown larger than what Athlete’s Foot was able to contain. Therefore, in 1981, Cohen and Klapper decided to open their own company as a spin off of Athlete’s Foot. They decided to call it Finish Line. At the time of Finish Line’s start up, Cohen and Klapper still maintained 10 Athlete’s Foot stores.
After the first Finish Line stores were opened, Cohen and Klapper converted all previous Athlete’s Foot stores into Finish Line stores in 1986 when their franchises expired. As of 2002, Finish line was the second largest athletic retailer with over 550 stores in 46 states. Finish Line’s success can be attributed to many things, such as, great knowledge of the athletic industry, structured growth, superior executive leadership, and great following of a well thought out mission. This mission states, “Finish Line will provide the best selection of sport inspired footwear, apparel and accessories to fit the fast culture of action addicted individuals.” Finish Line’s success has come via many milestones throughout their history. Finish Line’s milestones are documented in the following timeline.
Finish Line Timeline October 1976 – Finish Line opens its doors for the first time as a chain of the Athlete’s Foot. o 1981 – Two additional partners, Dave Fagin and Larry Sablosky, are brought on board, and the first Finish Line stores are opened. o 1986 – The Athlete’s Foot franchise expires, and all Athlete’s Foot stores are converted to Finish Line. o October 1991 – Finish Line opens 100 th store. Stores are located primarily in the Midwest o 1992 – Finish Line becomes a publicly traded company traded on NASDAQ (FIND).
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o July 1995 – Finish Line opens 200 th store.
o November 1997 – Finish Line opens 300 th store. o February 1999 – Finish Line hits a record $500 million in sales (for Fiscal 1998).
o July 1999 – Finish Line records its first online sales on web o September 1999 – Finish Line opens 400 th store. o 2002 – Finish Line becomes the second largest athletic retailer (based on sales revenues), and expands the company to over 480 stores across the nation.
o June 10, 2003 – Finish Line breaks ground on $20 million expansion to its Indianapolis based corporate headquarters and distribution center. o July 18, 2003, Finish Line senior executives open the NASDAQ market o August 2003 – Finish Line opens 500 th store In addition to the events listed on the timeline, Finish Line continues to succeed and create news in their industry. Most recently, Finish Line hired New York based ‘Heavy’, an advertising firm, to help develop a new commercial advertising that Finish Line is the best destination for the best selection of athletic footwear. Finish Line has also announced that they are paying dividends on all class A and class B stock. They are also instituting a stock buy-back of 2. 5 million dollars worth of class A stock which is about ten percent of all outstanding stock.
Dating back to June 2004, Finish Line also filed suit against rival Footlocker for a spy plot. This was where Footlocker was being accused of recruiting Finish Line employees to retrieve secret sales information. Finally, in June 2004 Finish Line announced a 62 percent rise in earnings for the first quarter. Finish Line has done an excellent job of expressing their company’s mission and vision.
Stated below, are Finish Line’s specific mission and vision statements, which we feel are large contributors to their continued success. Finish Line’s strategies of implementing these ideas financially and strategically are also well thought out and as well as very relevant. Mission Statement Finish Line will provide the best selection of sport inspired footwear, apparel and accessories to fit the fast culture of action addicted individuals. Strategic Visioning at Finish Line Over the past three years, Finish Line has given clear indications that it envisions itself pursuing new objectives in business. The following is a listing of opportunities that contribute to what would be Finish Line’s vision statement. o 2002 The Finish Line “Blue Label” is released and the vision is to develop it as a product relevant to core consumers.
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o 2003 Finish Line decided that there was a need to devote a larger amount of sales anticipation and shelf space to “active-wear and accessories” since the possibility for profit margin is possibly higher than those in footwear. o 2004 It had been determined that the future success of Finish Line is closely tied to the integrity and premium value of the brand names that it represents (Source 1).
2004 also brought forth the planning of 60 new stores and 25 store remodels. A revised multi-channel sales approach has been developed emphasizing three components: the Internet (finish line.
com), Finish Line Maga log, and the 531 Store Locations for Direct-to-Consumer Sales. In hopes of increasing productivity as a whole, Finish Line made plans to increase inventory productivity, which is currently measured by sales per square foot. From 2003 to 2004, this number increased on an average of nineteen percent in Finish Line stores. Strategic Objectives – Finish Line’s Operating Strategy (1) Emphasis on Customer Service and Convenience Finish Line strives to be the best location in the mall for buying athletic gear. Few stores are able to match its high quality store displays and competitive prices on brand name products. Finish Line employees are always easily identifiable, and it is very rare that a customer can approach the shoe wall without being greeted by an employee.
(2) Inventory Management A point-of-sale program drives Finish Line’s inventory replenishment system. All Finish Line store inventories are kept readily updated and available for any other store to access it in order to optimize business. The company also performs with a highly automated merchandise reorder program and shipments are sent out every third day. (3) Diverse product line & Broad Appeal Finish Line understands that different products sell in different stores; therefore, they keep a unique product mix on their shelves that appeal to specific client al. Financial Objectives The Finish Line’s financial objective for fiscal year 2004 was to implement a multifaceted aggressive growth strategy to take market share away from their competitors. Finish Line reported that they succeeded in their plan, and it was due to several key factors and strategies.
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Their strategies focused on premium and exclusive products, continued growth in their soft goods business, greater inventory productivity, an aggressive new store-opening plan, and increasing their brand awareness with consumers. o Premium and Exclusive Products Finish line believes that their premium product positioning in the market has been a key ingredient to their success. Finish Line’s superior product selection and in-store presentation has further differentiated their stores from the competition and made them the premier destination for new and exclusive styles of athletic footwear and apparel. Finish Line’s unit sales of premium footwear priced at $100 or above more than doubled for the fiscal year 2004. Finish Line anticipates this trend to continue this fiscal year as they remain committed to premium product offerings and presentation.
o Continued Growth in SoftgoodsAnother strategy for Finish Line to increase its sales was to continue growth in their soft goods business. The company’s shift to a larger licensed assortment of goods in all professional (NFL, NBA, NHL, MLB) leagues as well as the NCAA, contributed significantly to their 35 percent comparable store sales gain. Finish Line’s success in licensed apparel was both fan- and fashion- based with significant emphasis on retro styles. o Greater Inventory Productivity Finish Line uses a specific measurement as an accurate and important indicator of their success and profitability called their Per Square Foot (PSF) store sales. For the fiscal year 2004, Finish Line increased their PSF performance by nineteen percent. Exceeding the company’s footwear and soft goods sales goals, by closing and remodeling unproductive store locations, and building slightly smaller new stores achieved this improvement.
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Finish Line’s inventory quality was also much improved in fiscal year 2004 from that of the previous fiscal year. o New Store Expansion Finish Line successfully completed their real estate expansion plan opening 58 new stores and remodeling 27 existing stores while closing four under-performing stores. By opening more stores in high profile malls throughout the U. S. , Finish Line was able to increase visibility and traffic for their stores and their brand.
Finish Line also expects to continue their aggressive growth strategy with an additional 60 stores and 25 remodels planned for the current fiscal year. Finish Line has done an excellent job of acquiring their diverse product lines that they feel service the needs and wants of their client al. A description of Finish Line’s key products and services are as follows. Key Products and Services Over the past 10 years, Finish Line has grown with the athletic industry. Selection and product lines have expanded significantly.
A typical Finish Line carries an extensive variety of men’s, women’s, and kid’s athletic and casual shoes. Typically, a Finish Line store will show between 600 and 1, 300 different kinds of athletic footwear, including basketball, running, walking, gym, aerobics, hiking, cross-training, skate shoes, cleats, casual shoes, and sandals. Brands carried by Finish Line include Nike, Adidas, Reebok, New Balance, And 1, Oakley, Puma, Airwalk, Converse, Fila, Lugz, Saucony, Timberland, and Vans. However, Finish Line is not just all shoes. Approximately twenty percent of all sales come from apparel and accessories.
This includes the latest in performance and fashion products from Nike, Oakley, Adidas, Fossil, Jansport, professional and collegiate licensed products, t-shirts, shorts, caps, and outerwear from other well-known manufacturers. One way the company serves its customers is by implementing the “We ” ve Got It!” strategy. If the store does not have that shoe in stock at that store, the company can order from the company’s inventory of over 4, 000 different types of shoes and send the product directly to the customer’s home. Customers can also shop online at finish line.
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com. Competitive Strength / Business Position Strong Average Weak Reasoning for Nine-Cell Product Category Placement (Least-to-most attractive) Sporting Equipment: Shopping malls are not prime location for shoppers looking to buy sporting equipment, such as a basketball or a baseball bat. Many customers looking for these items will chose sporting goods stores or value stores, such as Wal-Mart. Watches: Mechanical items haven’t always been a specialty at Finish Line, but in most locations, a various display of sport-watches are available under glass at the register.
Gym Bags: Finish Line offer’s high quality gym bags made by brand name companies that usually charge a higher price for their logo and quality acclaim. Hats: Specialty hat stores are becoming more and more popular in shopping malls. With stores like Hat World, Finish Line has a disadvantage in their ability to sell hats. Other Clothing: Mainly cotton t-shirts and athletic shorts; Finish Line often uses the middle of their store to fill with these types of products. Sandals: Finish Line specializes in higher-cost, brand name sandals. A value buyer will definitely chose a department store over Finish Line to buy a pair of flip-flops.
Men’s and Women’s Casual Shoes: In more recent years, Finish Line has developed a tendency to carry casual shoes made by athletic shoe companies. Quality buyers usually look past these products as they are not as popular to the casual dresser as a pair of shoes from an up-scale department store such as Lazarus or Nordstrom ” sChildren’s Shoes: Finish Line always has a complete kid’s selection of shoes. However, the potential for growth in sales is small. Socks: Although the potential growth in the sock market is next-to-nothing, socks are a core sale of Finish Line. As long as shoes are sold, socks are sold to accompany them.
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Shoe Accessories: Same as the sock market, except that extra shoestrings and shoe cleaning products are not necessity products. However, there is room for growth in customer demand of these products. Replica Jersey’s: Shoe stores have taken a huge grasp of the ever-popular jersey market. Although there is potential for this market to crash due to a change in consumer preference, there is also potential for Finish Line to build a competitive advantage in this market. Men’s & Women’s Athletic Shoes: These are Finish Line’s core competencies. There is a higher growth potential for women’s athletic shoes, but men’s shoes are the highest sales contributor Finish Line has.
Core Competency Finish Line’s superior product selection and in-store presentation has further differentiated the company from the competition and made them the premier destination for new and exclusive styles of athletic footwear and apparel. Finish Line’s core competency is the line of shoes they provide. That is where the most revenue comes from, and the most widely recognized feature in all of the Finish Line stores is the “Shoe Wall” and the shoe displays as you first walk into the store. In comparison with the industry, Michael Porter has provided an excellent tool, the five forces model, to measure and compare the attractiveness of the Finish Line Corporation. Porter’s Five Forces Substitute products are very low in the athletic shoe industry. Shoes are one of our basic needs.
The only thing that differs between them is the fashion and the type of shoe that we need i. e. , running, walking, hiking. That is the only way in which Finish Line’s competitors can compete with them, and they offer the most diverse line of premium athletic shoes in the market place. Finish Line’s suppliers are a very high competitive pressure. Without their suppliers they would not be in the industry; as that is what the customers are coming to purchase.
The focus of this force is for Finish Line to negotiate with their suppliers to find the right target markets, and then sell to those customers. Barriers to entry are high in this industry. To be able to make contracts with the suppliers as good as or better than the competition is almost impossible. Also new entrants are faced with finding profitable retail locations.
The buyer’s competitive pressure is medium. Although customers do not have a direct say in the price of the products they are buying, they can demand that the store has the inventory on-site to take it home with them. Fortunately, Finish Line has conquered this by promising customers that if the shoe is not in the store, the customer can order it in the store and the product will be mailed directly to their house. Rivalry among competitors is very high.
This is the greatest competitive pressure as each competitor is trying to out-perform the other store. Finish Line supplies its customers with premium athletic shoes along with a diverse line of apparel and accessories. The following strategic map is used to show Finish Line’s position in the market and in comparison to other competitors in the industry for athletic shoes and apparel. As one can see, Foot Locker has the majority of industry sales revenues due to their acquisitions of stores such as Champ’s, and their online sales on both their Foot Locker and Eastbay websites.
Finish Line is a close second with their sales coming from their stores and their personal website. Dick’s Sporting Goods is also in this group because they are located nationally also, but they have a wider product line in their stores than both Foot Locker and Finish Line. Shoe Carnival is also a major competitor, but they are not located nationally, and although their product line is wide, they do not offer the extensive selection of athletic based footwear. The hardest part of getting into this industry is making your chain a nationally known chain, and offering the widest choice of products in your market segment. Narrow Medium Wide Product-Line In analyzing any company, you must realize what variables are in the favor of the company, what variables are against the company, what variables the company could capitalize on, and finally what variables are threats to the overall success of the company.
These variables are easily identified with a descriptive SWOT analysis. SWOT ANALYSISSTRENGTHSo Diverse Product Lines High Quality Brands Up-To-Date Inventory Long Tenure Large Selection Financial StabilityWEAKNESSESo Fierce Rivalry Price CompetitionOPPORTUNITIESo Expanding Finish Line Brand (Blue Label) o Gaining Further Financial Stability by Stock Repurchase o Larger Assortments of Professional League Licensed Apparel Product AvailabilityTHREATSo Competition New Entrant so Changes in Consumer Preference Corporate Culture Finish Line’s culture is one rich in beliefs and values. Every policy and everything Finish Line does is governed by three core values. They call it their, “Sport.
Life. Style.” philosophy. o “Sport. It’s in our blood.
Action. Performance. The game. It’s where we live. At Finish Line, sport is the foundation for everything we do.
It’s reflected in our products. It’s echoed in our stores. It’s defined by our brands and our people.” o “Life. At Finish Line, it’s about more than what happens between buzzers. It’s what happens between sunrise and sunset. It’s being there for a customer who is addicted to action.” o “Style.
Our customer gets it. What’s cool, what’s not? They know what’s real and where to get it. Nobody brings it all together the way we can. It’s about having the right stuff, having the best selection.” This philosophy is also shown through the company’s selection that they offer to their customers. o “Selection.
Having the best selection goes far beyond the product on the wall. It’s illustrated in a thorough understanding of our customer. It’s reflected in the brands, styles and colors we stock. Our buyers and merchandisers are out in front of the trends, finding the product our customers are hungry for. Grounded in Sport. True to Life.
Always in Style.” By constantly following these three main values and offering a large, quality selection to their customers, Finish Line continues to maintain a very strong culture. Even while the company’s size has increased dramatically over the past twenty years, the style of management and commitment to outstanding customer service has remained the same. Hard work, dedication, and commitment to selling quality goods at a fair price are at the core of Finish Line’s philosophy. Strategy-Making and Implementation Process Finish Line’s beliefs, vision, objectives, business approaches and practices, and corporate culture have a huge impact on their strategy execution.
Seeing that the entire company is governed by their three-part philosophy, “Sport. Life. Style.” every action they take and every strategy they implement has this intertwined into it. The company establishes each one of their strategies for the upcoming year by carefully taking into account last years numbers and performance, what can be done to attract new customers and get repeat customers, and how to maintain their strong customer service. The company’s strategies and success of those strategies is predicated on hard work and dedication of all Finish Line associates. Finish Line prides themselves on the development of a skilled and focused management team that is able to creatively keep employees satisfied and working hard for the future success of the company and its goals.
Finish Line strives to train the best and brightest employees in the industry. In order to have the kind of success that Finish Line had during fiscal year 2004; it took a lot of teamwork, trust, and dedication not only within the company, but also with key business partners. Finish Line was able to use all of these key factors to effectively construct strategies that contribute to the overall success of the company. Another key factor in Finish Line’s success is their ability to carefully and properly choose to implement only those strategies that would give them the best chances for immediate and future success. This is because Finish Line’s implementation process goes all the way back to their core values, beliefs, and corporate culture. Recommendations Taking into consideration Finish Line’s strategy as well as the strategic options they have, they have done an excellent job of implementation and are very well aware of their options.
As a group, we feel as though Finish Line has done well due to their discipline and strict following of things set forth from the beginning. We also believe that their continued desire to improve as a whole will enable them to take advantage and implement with great synergy some of the current options they have. After in depth analysis of the Finish Line Corporation, their current position is a very strong one. Finish Line has done a great job of setting the bar for the industry and we believe will continue to strive to increase that bar. In addition to their current strategy, we feel as though Finish Line should continue with their current growth strategy, focus on increasing the Blue Label brand awareness, and continue with their financial objectives for financial stability (stock repurchase).
Works Cited Internet Explorer, web 2004. Investor Relations Home. 2004… The Finish Line, INC.
“Our Company.” 2004.
