Strategy in Action - Is Gray Nicolls Batting on a Sticky Wicket?
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If you’ve played hockey,cricket or rugby (or bought sports equipment for your children who play these sports) then you’ll be familiar with the brands that form the product portfolio for a long-established family firm called Gray-Nicolls. This excellent Telegraph article takes us behind the scenes of Gray-Nicolls to learn about the strategic challenges facing the firm.
There are lots of interesting business studies angles in the article.
For example - organisational structure. Unusually the company has no chief executive. All major decisions are made jointly by the five directors. A recipe for disaster, or at least slow decision-making?
Your students might also pick up on an apparent contradiction. Despite being a leading brand in its featured sports, Gray Nicholls had just £16.7m of revenues in 2009 and pre-tax profits were £780,000. Although the business has been running for over 150 years, it has come close to financial failure several times. Why might that be?
A clue might be in the external environment facing the firm…....
There is reference to UK retailers, growing competition from major sportswear players such as Adidas, and escalating prices from the Chinese suppliers of Gray-Nicolls’ footwear and clothing products. It sounds like Gray Nicholl is being squeezed from both sides of the supply chain.
Retailers are looking to cut selling prices to boost volumes; suppliers are looking to pass increasing raw material prices onto the firm. No wonder net profit margin looks pretty low. Achieving sales growth is also proving tough in mature, low-growth markets.
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