Crocs Inc Case Study Solution
Rivalry among the existing players:
The rivalry among the existing players is considered to be high in the footwear industry in the United States. The reasons that underlie the higher rivalry are discussing below:
Intense Competition:
One of the major reasons behind the higher rivalry among the existing players in the intense competition in the market. The market is full of various players who dominate the market. additionally, due to a decrease in revenues, various players in the market use different tactics to improve its consumer base and maintain its profitability which makes rivalry among the existing players to be more intense.
Low Switching Cost:
The switching cost of a buyer from one manufacturer to another is considered to be zero which is one of the reasons behind the high rivalry because the competitors want to maintain its consumer base. (Islam)
Recommendations
The recommendation for Crocs Company which would help the company in order to improve its performance and to maintain its competitive edge in the footwear industry are as follows:
Increase Online Selling:
On the basis of the above analysis, one of the recommendations for the company is that the company must have to improve its online selling or e-commerce channel because now a day’s consumer prefers to shop online. The pros and cons of increasing online selling channels are as follows:
Pros:
- An increase in online selling would help the company to improve its consumer base and reach to the customers globally.
- It would provide benefits to the company in such a way that the company would sell its products in those countries where its physical stores would not exist which ultimately improves the consumer base.
- By increasing focus on online selling, the company would reduce or save its various start-ups, set up or operational costs such as purchasing cost or rent for the land of physical stores, salaries of a sales force and various utility bills etc.
- It would save the time of the customers and improves the shopping experience of the customers in such a way that the customers would shop by their homes rather than visiting the company’s stores.
- It would also reduce the supply chain activities of the company which includes transportation and various distribution cost (sending goods to the physical stores of the company) which ultimately improves the profitability and revenue streams of the company.
- Online selling enables the company to sell its products 24 hours a day, and seven days a week (24/7).
- It would help the company to recognize the selling trend and consumer preference.
- Online selling helps the company to easily access the various markets and sell its products within minutes.
- The cost which would save by reducing various overhead cost would use in further expansion and other operational areas of the company.(Officials, 2018)
Cons:
- Online selling would require the latest and updated software in order to facilitate its customers.
- Planning, designing, creating, hosting, securing and maintaining a professional e-commerce website isn’t cheap, especially for large and growing sales volumes.
- Improves the threat of competition because of zero switching cost.
- Limited interaction with the customers
Product Development:
Another recommendation to the company is to move towards product development without compromising the quality. Product development refers to the modification in existing products or to develop and the new products in the existing market. The pros and cons of product developments are as follows:
Pros:
- Product development would enable the company to improve its product portfolio which helps the company to improve its profitability and the consumer base.
- It would allow the company to bring innovation in its products
- It would enable the company to maintain its competitive position in the market.
- It enables the company to consistently meet the consumer’s needs and to create value for the consumers.
- Improves the brand name of the company and to help the company to maintain long term relationship to customers.
Cons:
- An additional cost is required In order to modify or develop new products.
- An increase in product portfolio would also improve the complexity in business operations of the company and the handling of products.
- Chances of failure of new product
Diversification:
Another recommendation for the company in order to improve its performance in the industry is to diversify or expand its business operation by performing merger and acquisition to the competitors.With the shrinkage in the industry’s profit margins and declining in the industry’s growth, it is expected that in upcoming years, the company’s revenue would be declined. The pros and cons of the diversification are as follows:
Pros:
- Reduce dependency over a single product or business line.
- Improves the revenue and profit margins of the company
- Diversification improves consumer base of the company
- By performing merger or acquisition would reduce the threat of competition
- Allow the companies to share various resources that lead the company towards cost-saving.
- Allows the company to gain its footholds in those market markets where the company wishes to operate.
Cons:
- Improves the complexity of the business operations
- Require additional capital for investment
- Diversifying into a new market segment will demand new skill sets. Lack of expertise in the new field can prove to be a setback for the entity.
Improves Research and Development:
Another recommendation for the company is to invest in research and development and to improve the existing technology. The pros and cons are as follows:
Pros:
- Improving technology would help the company to maintain the data of a large consumer base and maintain the competitive position of the company
- It would also help the company to understand consumer preferences and manufacture the products that satisfy consumer needs.
- It would help the company to offer unique products at low prices which ultimately improves the company’s profitability and the consumer base.
- Help the company improves its product offering and innovation
Cons:
- It requires a high capital investment which ultimately in creases expenses of the company
- It requires higher professional to operate it flawlessly
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