When might a company abandon efforts to win contracts for private-label footwear?

The decision for a company to abandon efforts to win contracts for private-label footwear is best understood in the context of opportunity cost and resource allocation. When there are strong prospects for selling all branded footwear produced, the company is facing a scenario where the demand for its branded products is high and the potential for profit is greater than pursuing private-label contracts.

With a limited amount of resources, the company may find that focusing on branded footwear aligns better with its strategic goals, particularly if those products carry higher margins and strengthen brand equity. By prioritizing branded sales, the company ensures that its resources, including marketing efforts and production capabilities, are used effectively to maximize returns.

While price competition, declining demand, and new competitors can pose challenges and require strategic adjustments, these factors alone do not provide a definitive rationale for abandoning private-label contracts. In contrast, the certainty of selling all branded products makes it a compelling reason to shift focus away from private labels, securing the firm's market position and enhancing profitability.