Edwinn Matonis MGMT 411 Professor Cline Industry Analysis: Crocs Case

Matonis

Executive Summary:
Crocs is a footwear company founded in 2002 by three sailors and solidified by their business partner, Ronald Snyder who later became the CEO. Throu h a series of business initiati!es, Crocs was able to o from bein sold in small !enues to bein in hu e outlets all throu hout the world. "y focusin on their product attributes, supply chain acti!ities, customer needs, mar#et trends, and retailers, Crocs was able to deli!er a !ariety of consumers a $uality product $uic#ly with minimal strain. %owe!er, despite these superior ad!anta es, Crocs is now bein threatened by other industry ri!als for mar#et share. %ow should Crocs differentiate its products to pre!ent itself from bein o!erta#en& %ow should Crocs le!era e its competencies in production, mar#etin , inbound lo istics, and infrastructure to come out ahead of their ri!als& "y constantly watchin and ad'ustin to mar#et trends, impro!in and le!era in its supply chain competencies, addin !alue, and by spreadin into new mar#ets and se ments, Crocs can ensure itself lon (term success in the footwear industry.

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Ta le of Contents:
I! II! "istory####################!!!Pa$e 4 %usiness Pro$ression###############Pa$e 4

III! Case Issues###################!Pa$e & I'! External Analysis (Porter)s *ive *orces+#######Pa$e , '! Internal Analysis ('alue C-ain+##########!!Pa$e .

'I! Internal/External Com0any Analysis (S12T+####!Pa$e 3 'II! Alternatives##################!!!Pa$e 4 'III! 5ecommendations############!!###Pa$e 16

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History
Crocs was is a footwear company founded in 2002 by three sailors, inspired by a pair of foam clo s one companion brou ht alon while !enturin the Caribbean. The foam clo s offered a slip resistant bottom and were easy to clean, odor resistant, and remar#ably comfortable. The three sailors put their minds to ether and reali*ed the reat potential of sellin such a shoe. +mmediately, the partners be an to a ressi!ely mar#et and sell these types of shoes to e!ery sailor they could et their hands on, little did they #now at the time, these shoes would become a reat hit to all different #inds of consumers !ia rapid word of mouth. Seein the rand(scale potential in these shoes, the three men decided to call their friend, Ronald Snyder, who later becomin the president, then CEO of the company. -oo#in for a name that accurately con!eyed the products. characteristics, the team decided to settle on the name Crocs due to the nature of the shoes attributes.

Business Pro$ression
/lmost immediately, Snyder and his team decided to purchase 0oam 1esi ns, a company that created a !ariety of products and held within the company.s lifeblood, the Croslite formula. Once they achie!ed this oal, the e2ecuti!e team focused on achie!in a lobal focus before the competition could emulate. 3nowin that the fun#y loo#in shoes would ha!e troubles sellin on their own, a plethora of company salesman would tra!el to related !enues and small stores to inform the consumers about the !ariety of benefits associate with owin a pair of Crocs. 0ortunately, these attempts were well recei!ed and demand for these Crocs footwear spi#ed. +n the meantime, Snyder and his team were loo#in for ways to ma#e Crocs stand out from other footwear companies, not only in terms of the consumer, but also in the minds of the retailers.

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Snyder $uic#ly reali*ed that many companies in this industry stoc#ed their in!entory seasonally, lea!in a reat deal of uncertainty of product turno!er for the stores and ultimately, ma#in it difficult for retailers to stoc# the correct amount to satisfy demand. Crocs saw an opportunity here and catered their supply chain model around $uic# deli!eries and demand fle2ibilities, bein able to create e2cess capacity and ship at a rapid pace if need be. +n addition to this, Snyder decided to decentrali*e factories, mo!e operation locations, and for o their compoundin partner in +taly, all to reduce costs and increase their control of inputs to outputs to satisfy demand at a faster pace. -ar er companies then be an to see the !alue in Crocs and basically came to them to stoc# their shel!es with these products. 1emand continued to increase for their footwear and consumers be an to become interested in Crocs new product lines, many of them laced with common materials such as leather, cloth, and furs. 5ith these all in place, Crocs continues to impro!e its business model to benefit all parties.

Case Issues
/s pre!iously stated, Crocs has inte rated into newer mar#ets in order to attract a wide !ariety of customers all across the lobe. %owe!er, as Crocs de!elops into new mar#ets to ain reach out to new se ment, it has a ris# of bein attac#ed by other footwear companies. +n addition, Crocs also has the threat of bein copied and dethroned. 5ith that said, how does Crocs continue to its differentiated from its competitors& +n addition, how does Crocs protect itself from bein emulated or becomin a fad item& Throu h an +nternal and E2ternal /nalysis, it will be possible to see where Crocs. distinct competencies lie and how they can be le!era ed.

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External Analysis: Porters Five Forces

P25TE5S *I'E *25CES: C52CS

Throu h this analysis, we can see detect a few thin s about the footwear industry. 0irstly, it is apparent that there aren.t any immediate threats of new entrants. This means that most of the competition Crocs faces are a ain other companies in the same industry. 0ootwear companies such as 7i#e, 1ec#ers Outdoor, and Timberland all offer a !ariety of different products for all different types of consumers as well. Crocs is oin to ha!e to find a way to differentiate themsel!es from the masses of ri!als while at the same time, pre!entin the competition from stealin 8imitatin their competencies, therefore, competition in this industry is !ery hi h. Substitutes for footwear could be said to be low because all we all wear shoes, snea#ers, boots, and sandals for all different occasions and mostly all of the companies offer a multitude of each of the followin . Therefore, the li#elihood of a new type of footwear comin out that neither of the companies thou ht of is $uite low. 5hen analy*in the power of the buyers and suppliers, it is apparent that the supplier power is low since most companies, especially Crocs, has a hi h control of its operations and thus cuts out the middlemen. %owe!er, "uyer power in this industry is hi h because consumers ha!e a lot of choices and often times want the best $uality product at the lowest possible cost. To sum up the e2ternal analysis, Crocs seems to ha!e to focus on differentiatin themsel!es from their ri!als and by findin new ways of reachin out to consumers to steal away some of their buyin power.

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Internal Analysis: Value Chain

'A78E C"AI9 A9A7:SIS: C52CS

"uman 5esources:

No Information Available
Snyder and his team look over the operations very closely to look for new ways to increase efficiencies, maintain a new flow of innovations, and to have outstanding customer responsiveness while upholding utmost quality. Continuously looking for ways to make the business more "lean"

Infrastructure: (;ISTI9CTI'E C2MPETE9C:+

In ound 7o$istics: (;ISTI9CTI'E C2MPETE9C:+

Materials from inputs to outputs are carefully managed through the supply chain and are optimized to lower costs, increase speed, decrease bottlenecks, and optimize firm and consumer value. n constant communication with stores and warehouses to ensure that products are always in stock and that the consumers that need to be serve are being accommodated. Continuously looking for new market trends, ways to make new products, and ways to reach out to a variety of new market segments

Information Systems:

5<;:

Production: (;ISTI9CTI'E C2MPETE9C:+

!ll in"house, quick to make e#cess capacity to meet increasing demands,

Mar=etin$ (;ISTI9CITI'E C2MPETE9C:+

Marketed as a shoe that is slip" resistant, easy to wash, impervious to odors, and e#tremely comfortable $hese shoes wouldn%t sell without a great sales person

Aftermat No information available

0rom the :alue Chain analysis, it is clear to see that Crocs has a !ariety of distincti!e competencies. 0irstly, Crocs has a reat deal of control o!er their supply chain acti!ities and can produce products to e2cess capacity in a matter of moments with minimal la . This ad!anta e shows that Crocs can $uic#ly account for supply and demand and thus has a stron competency in their production process. +n addition to that, Mar#etin seems to be a !ery stron suit from Crocs as well. /s mentioned in the case, the products would ha!e a hard time sellin themsel!es due to their obscure appearance and uncommon fit with the current footwear trends. %owe!er, as we can see in the cases appendi2, the firm continues to e2perience rapid rowth each year,

Matonis e2periencin rowth rates hi her than any other in the industry. The rate of this rapid success

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can be hi hly attributed to their well refined mar#etin strate y. Two other distincti!e competencies Crocs seems to hold is their control of materials throu h the supply chain <+nbound -o istics= and their corporate infrastructure. 0rom be innin to end product, Crocs seems to be able to control all of its resources !ery well, which can be attributed to its push for !ertical inte rations. +n addition, the Ronald Snyder as CEO i!es the firm a competiti!e ad!anta e which is hard to imitate. Snyder is inno!ati!e, insi htful, and aware of the lobal conditions and immediate ri!als, which allows him to chan e the business model accordin ly. Throu h all of this, Crocs has apparent distincti!e competencies in production, mar#etin , their inbound lo istics, and their infrastructure with moderate to hi h le!els on e!erythin else.

Internal/External Company Analysis: S !"

S!1!2!T! A9A7:SIS: C52CS

Stren$t-s
&ide 'ariety of different products and customizable options (le#ible and constantly changing for reduce inefficiencies and optimize output and customer responsiveness !mazing Supply Chain coordination and relationships with outlets Considered plant locations to reduced e#traneous costs such as tariffs, e#cess transportation costs, etc. )lobal *each !ble to handle periods of e#orbitant growth

1ea=nesses
+ot particularly ,cofriendly (ocusing too much on Croslite material as a competency &ithout marketing, shoes come off as goofy and radical

200ortunities
Can e#pand into new markets Can promote their product more aggressively to obtain a new market Can see what the customers want to see from crocs and do -ust that

T-reats
*ivals products. Someone else coming in with a new innovation that makes the footwear we know of today as

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"old"fashioned" or "obsolete"

0rom the S5OT analysis, we can see that Crocs is a !ery solid company with a !ariety of distincti!e competencies, specifically in their supply chain, production fle2ibility, and mar#etin . %owe!er, Crocs seems to ha!e a few barriers ahead of them, which mainly re!ol!e around the immediate threat of competitors, their oofy ima e, and their hea!y focus on Croslite to differentiate their products. Crocs has to watch out for bein outshined, emulated, or loo#ed o!er and could do this by e2pandin into new mar#ets usin an a ressi!e mar#etin strate y that is catered toward creatin optimum !alue for its buyers.

Alternatives
?sin the pre!ious analysis as well as information from the case, two alternati!es seem to be apparent. 0irstly, Crocs could continue to create new styles and types of shoes for different consumers. The pro to this strate y would be the ability to ser!e a !ariety of different consumers with a !ariety of products. The con, howe!er, is di!er in too much away from the shoes initial characteristics. "y offerin shoes with furs, cloths, and leather, the shoe is no lon er able to be odor(resistant or waterproof. /lso, ma#in normal loo#in shoes, consumers may become confused about the brand identity, thus, for oin Crocs products. /nother alternati!e would be to diffuse and focus on mar#ets where Croslite materials can be used. /s mentioned in the case, Crocs purchased 0ury in October of .09, which was a sportin on a different mar#et such as sportin oods store. The pros to focusin

oods would be that they could ma#e a new set of

products such as #neepads, elbow pads, and life'ac#ets, which would increase their influence and their re!enues. The con to this would be di!er in from the mar#et they #now best and spreadin their brand name too thin, causin a lac# of brand identity. %owe!er, if Crocs is

Matonis careful about the way they e2pand themsel!es and learn #nowled e about all mar#ets and consumers, they mi ht 'ust be able to pull of doin both strate ies !ery well.

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#ecommen$ations
+n response to their alternati!es, Crocs could do a hybrid of the two pathways mentioned earlier. Crocs could continue to focus on offerin a wide !ariety of products but only if they.re products consumers are as#in for. Ma#in new !arieties of products without a customer demand is wasteful and foolish. "y focusin on the mar#et at hand and by properly assessin the demands of the consumers, Crocs could e2pand its business model into a !ariety of consumer se ments such as construction, huntin , business, and beauty wear with little hesitation. Crocs would ha!e to ma#e sure to research their consumers, find e2actly what they want, and then offer a $uality product at a reasonable price. +f Crocs feels as if their current ima e would tarnish sales in a more profession se ment, they could always create a new brand name for those products or somehow relate these new products bac# to the old. +n addition to differentiatin their footwear, Crocs could also, with proper in!esti ation, e2pand e!en further into the sportin oods sector.

The primary concern for Crocs in this situation would be e2pandin too $uic#ly into an unfamiliar mar#et. %owe!er, if Crocs really too# the time to understand the needs of the consumers as well as the mar#et trends, while at the same time not driftin too far from their ori inal mission, Crocs could effecti!ely reach out and steal the mar#et on all fronts. +t is apparent that there is a bri ht future for Crocs, and if they continue to le!era e their stren ths and compensate for their wea#nesses, they will, no doubt, pre!ail.