Crocs (A): Revolutionizing An Industry’s Supply Chain Model For Competitive Advantage Case Solution
1. Core competencies of the Crocs
Key and Experienced Executives
Snyder has brought a number of executives as a think tank of the company, these executives have played vital role in the growth of the company. As Croc has expanded and plans to expand more its operations more in different regions, it will need the local market knowledge.Therefore, it has to hire the local experts who know the market conditions more than others.
Croc has not only considered the retail options however,it has also shown efforts in participating in the trade shows, festivals such as boat shows and garden shows.These efforts played a significant role in its growth. Croc should analyze the possibilities of its participation in mega events such as Olympics as there are many games in Olympics related to water where croc shoes can be used.
Integration of Supply-chain
Croc has been continuously working on making its supply-chain efficient, financially and operationally. It has co-ordinated the production in America, Asia and Europe to make lower the operating and variable costs and to improve profitability of the company. This is a vital and effective cause of growth as only production in one region can make the products of Croc expensive for the people in other regions due to transportation costs and import export duties.
Vertical Integration into Materials
Vertical integration into materials will help to identify the markets of the material used by Croc as this will help in the improvement of production costs as the product may be produced only where the material is cheap in that region. For example, if the plastics are cheap in China, then plastic shoes should be made there and if leather is cheap in South America, then leather related products should be made there (Isaksen, 2007). This alternative provides an opportunity to reduce the tariff costs and also control the total inventories. Moreover, it also increases the profit margin by decreasing the component costs of suppliers.
Growth by Acquisition
It is obvious that growth can be achieved by acquisitions as this growth is prompt, but costly.Croc is in a position where it needs further expansion in its production facilities and this expansion may be crucial and need prompt action, therefore acquiring the suppliers or shoes factories will make the growth of Croc prompt and timely (John Coffey, 2012).The main advantage of this alternative is that it will result in cost reduction for the new capital requirement and also searching for new location.
Growth by Product Extension
Product extension is also a crucial factor for the company to grow due to the highly competitive market environment. Therefore, products are becoming obsolete and demanding innovation in new product. In the case of Croc,the customers are demanding from the company to expand its product range as the case shows that retailers are demanding Crocto supply shirts, socks, caps etc.Croc should consider employing all the demanded products in its product range, as this will help croc to diversify to enter new markets and to gain extra market share (Luxin, 2007).Growth through product expansion will provide more choices to the customers as well as it will enhance the awareness of the brand.
Effect of Alternatives on the core competences
Croc can face disadvantages if it adopts any alternatives as if it starts to develop its new product, then it can divert the focus of Croc from its original brand of products, which played an important role in the success. Secondly, more acquisitions may create administration and operation issues as the more the size of the company, the more the chance of mismanagement and more chance of failure. Therefore,the expansions, which do not contradict with the core competences, should only be done.
Crocs should plan production and inventory by projecting the data for the products’ demand as it provides chances to meet the demands of the customers on timely basis. In addition to this, Crocs should plan the inventory on the basis of expected order from the customers and then develop the production strategy accordingly as it will reduce the chance of shortage of inventory in the time of need.
The gross margin of the company greatly affects the decision making as for the expansion of the company, it yields the retain earnings.More importantly, the gross margin provides clear visibility of the value of the company’s inventory as well as it allows the company to make the production related decision effectively and efficiently……………………..
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