Globalization season, which was a huge part of

Globalization season, which was a huge part of

Globalization has changed the competitive landscape of all businesses and the footwear industry is no exception. Datamonitor’s profile of the industry estimates that in 2008 the global footwear market was valued at $196. 6 billion and projects that figure to grow to 232. 1 billion by 2013.

How can firms such as CROCS or ECCO succeed in this global market? Datamonitor points out that this industry is highly competitive and that rivalry between firms is strong. A key success factor for the footwear industry is the successful development and management of a profitable supply chain.Different firms take different approaches to this issue. Neilsen points out that several large players such as NIKE and Timberland act more like “branded marketers,” who do little manufacturing in house. They instead focus on design and marketing while outsourcing production to cut costs. CROCS and ECCO handle much more of the manufacturing in-house as both firms feel they have a competitive advantage by controlling this aspect of the business.

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The key is for a footwear company to find the right mix of integration that will enable them to focus on their core competencies and to maximize value creation(Chase 418).Other critical success factors include brand recognition and repeat sales, reports Joe Ayling. Shoes are a necessity and a loyal customer base who continues to purchase your products is vital to the long-term success of a global shoe company. The key here is to balance the need for repeat sales with the customer still feeling they had a good value from the durability of their original purchase (Ayling).

A brand that is perceived as consistently delivering value to the consumer will always succeed. The value a firm seeks to deliver can be identified in their corporate vision and mission.CROCS rapid success is impressive considering a firm that first appeared in 2002 rose over $200 million dollars in its IPO, the biggest ever in the shoe industry (Ylan). However, searching their website does not reveal any type of compelling corporate vision other than mentioning their proprietary croslite shoe material which “represents a substantial innovation in footwear comfort and functionality. ” Hoyt’s case study does reveal that they were very successful at developing a revolutionary supply chain that enabled them to fill new orders for retailers in season, which was a huge part of their strategy.As demand for their product skyrocketed, CROCS was able to manufacture the needed supply quickly and flexibly which made them very popular with retailers.

Anderson points out that their battle plan was to “think bigger than you are,” an approach the CEO had learned at his previous employer. By building the infrastructure ahead of demand CROCS was able to capitalize on the unexpected explosion in their product’s popularity. However, depending on one propriety product which is easily imitated and making changes to an industry’s supply chain does not add up to an enduring value-adding vision that sustains a brand through normal economic cycles.

ECCO on the other hand has a compelling vision on their website: “to be the most wanted brand within innovation and comfort footwear. ” They work towards this vision with passion as Neilson points out that they “remain extremely committed to comfort, design and a perfectly fitting shoe. ” These are values any consumer would appreciate and when successfully executed will create repeat customers. ECCO focuses on innovative production and is a pioneer in using direct injection technology which is key in creating quality shoes that are light and flexible.They are similar to CROCS in this regard as both firms focus on special technology to differentiate their product. ECCO has a clear vision which the technology aims to serve however, something CROCS lacks. Both firms are unique in that they do a good deal of manufacturing in-house rather than outsourcing everything like some of the other major players in the industry.

For CROCS the aim was to provide timely inventory fulfillment for retailers in-season, previously unheard of in the shoe industry. Hoyt points out that they developed a model that allowed them to respond with speed and flexibility to changing demand in the marketplace.They accomplished this by taking over the production of their croslite material, building their own factories in several key global locations and adding warehousing operations to each factory. Since the supply chain available through outsourcing did not provide the model they needed they simply built their own! They built capacity at a rapid pace to keep up with explosive demand and grew revenues in a dramatic fashion along the way.

For ECCO, having production in-house is about producing the quality ECCO stands for.They add value in each step of the process, from “cow to shoe” as the company likes to say (Nielson). They own and operate tanneries to ensure their leather is of the best possible quality. Like CROCS, they could not find a supplier to meet their needs so they met them on their own.

ECCO still finds ways to take advantage of lower labor costs around the world and has factories set up in many key locations including Indonesia and Thailand. As Nielson’s case study emphasizes, building a major presence in China is the next part of their strategy to maximize efficiency and minimize cost.They maintain the integrity of their vision by having different business units focus on core competencies so the value chain is not weakened by taking production international. Areas with cheaper labor focuses on less-skilled production tasks whereas the more hi-tech needs of the firm are handled in areas with higher labor costs and greater availability of skilled employees (Nielson). A company flourishes when it focuses on core competencies.

For CROCS these are their revolutionary supply chain, good relationships with retail customers and leveraging demand for its proprietary croslite shoe product.It is unclear whether these are enough for CROCS to continue as a company. As Ylan points out, CROCS may not have a leg to stand on as they are “stuck with a surplus of shoes” as they have a product that has “hit a saturation point; the problem with a nearly indestructible product is that shoppers rarely need to replace it.

” Repeat business is a problem and they may also be suffering from too much growth too quickly and could become a forgotten fad rather than a sustainable brand. The impressive infrastructure and capacity they built during a boom period has now become a heavy burden as the company is weighed down by debt (Ylan).The best course of action for CROCS may be to become part of a larger parent company. It is hard to imagine CROCS will ever again enjoy the popularity it did during its first few years and its future as a stand-alone business is questionable. A larger firm can exploit the supply chain they have built for other product lines and CROCS can continue to fill the niche market demand for its croslite products. ECCO has core competencies that can sustain it as a highly competitive brand in the footwear industry. Their website identifies these areas of focus as product development and production technology.

Their use of direct injection technology along with high-quality leather form the heart of their product’s value and continuing to refine these processes while minimizing cost and inefficiencies in their value chain is a prudent goal. ECCO has proven successful at managing its value chain but its future growth will be dependent on growing brand recognition so more consumers try their products. They commitment to quality is likely to earn loyal customers once they get someone to own their first pair of ECCO shoes. Beaudry points out that ECCO is successfully gaining new customers by entering new market segments.They have introduced a specialty running shoe using their direct-injection technology which retailers are very excited about. Beaudry points out that their earlier entry into the market for Golf shoes was highly successful because customers liked them so much they are deciding to consider ECCO for their other footwear needs.

I believe it is ECCO’s vision which has made it successful over a 40 year period and will continue to allow it to successfully compete on the global footwear industry. CROCS was more of a fad that lacked an enduring brand message that could sustain growth.

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