Strategic Choices in a Turbulent Environment: A Case Study of Starter Corporation

Abstract

The Starter Corporation, the industry leader in the sports licensed apparel business in the 1980s and 1990s, declared bankruptcy in 1999. This case study examines Starter’s rise and fall, focusing on the interaction between management decisions made over the years and the profound changes that were taking place in the sports licensing industry. It was found that Starter’s dependence on professional leagues for licensing agreements, a flood of new entrants into the licensing industry (especially large footwear manufacturers), the threat of substitute products, dependence on overseas and other suppliers, and players’ strikes and lockouts created a volatile business environment in which Starter had to compete. The major question raised in this case concerns the relative importance of environmental factors and strategic choices by management in Starter’s demise. Michael Porter’s (1980) “five forces model” of industry competition provided a theoretical starting point for this study.