e Far East, to manufacture its goods. Some countries have strict tariffs and quotas with regard to American shoes, and some legislators have sought similar, retaliatory measures against products manufactured in these countries. Even though LA Gear is an American company, its shoes are produced in the Far East and it may fall victim to higher quotas and tariffs when it imports shoes. There is also increased tension in some of these countries where the shoes are manufactured; internal commotion could jeopardize production. Currency fluctuations also can play havoc with the company's income statement and balance sheet. The industry has also experienced negative publicity surrounding foreign manufacturing facilities; typically, this publicity has focused on Nike, but other manufacturers, including LA Gear and Reebok, have also been affected. LA Gear could investigate manufacturing opportunities closer to the United States; if not in the country, then perhaps in Mexico where the cost of manufacturing would still be low, and where transportation costs to the American market would be smaller than those associated with Asia (Cole 7).
The footwear industry is no longer in a growth phase, which means that new competitors in the market will not enjoy the high rates of growth and profit margins that other companies have seen in recent years. It is unlikely that a company would enter this market and be able to make significant inroads into the markets of Nike or Reebok, although LA Gear made some progress in the late 1980s and early 1990s. Instead, new entrants are likely to come from companies already engaged in apparel manufacture; LA Gear has explored merging with others in the industry, but none of those talks has come to fruition (Melville 6).
Industry Analysis-Substitute Products
Because athletic footwear is generally worn by non athletes, substitute products in the form of other types of casual shoes pose a threat to the indus...