.1 In order to be successful, The Sneaker Shack must work closely with a number of channel members in their value chain. These channel members include the suppliers of the cleaning materials (Econo Clean SA) and the delivery drivers. Considering this, provide an example of each of the following to ensure that transactions are completed (1 mark each).
The footwear industry where Sneaker Shack lie is highly globalized. Competition from countries with low labor costs and less-regulated working conditions has forced the companies' footwear production into serious restructuring strategies and re-location policies and related value chains. Companies find it difficult to sustain a substantial level of growth; it is strongly pulled by a highly unstable and rapidly changing demand, due to fashion-related and seasonal changes. A serious restructuring of the distribution system is taking place, giving more bargaining power to the distributors and putting pressure on prices. In addition, the dominant business model in Sneaker Shack is in production on a contractual basis for a known buyer who is also a supplier of raw materials. This low value-added production is usually called lohn production1. It can be said that the company is involved within the global value chain with two differences complete integral lohn production and partial lohn production. In partial lohn production, it does not assembly the final products and they export only upper parts of shoes.