Billabong Case Study

Topics: Marketing, International Financial Reporting Standards, Finance Pages: 16 (3904 words) Published: December 6, 2012
Billabong Case Study

Managing Change
← Australia’s largest surfwear manufacturer, annual sales = $680 million (2003/04) ← Core business = marketing, distribution and retail of clothing, accessories and eyewear ← Sells products under other brand names including:

• Element (Skate wear)
• Von Zipper (sunglasses)
• Honolua Surf Company
← Founded in 1973 – by Gordan and Rita Merchant
← Reputation = supplying quality surfwear
= innovative product design
← Began with boardshorts, within a few years extended to surfboards, wetsuits and t-shirts ← 1983 – began distributing to US in order to increase sales and establish global identity o this required considerable financial resources and more formal managerial structure ← expanded to NZ (1985) and France (1987)

← Now owns retail stores o/s and manufactures many products in East Asia ← 70% sales in o/s markets
← Billabong has now diversified by selling products under different brand names (see above) ← 2000 – Billabong became a publicly listed company … one of Aust’s 200 largest companies

External sources of change
1. Economic factors
▪ Rising levels of consumer income has improved living standards throughout the Australian economy; which has contributed to the growing popularity of surfing ▪ Global scale = incomes in East Asia and South America have helped to create new markets and encouraged company’s global expansion 2. Social factors

▪ Increasing popularity of surfing and surfwear among the broader community = growth ▪ Increasing popularity of other sports, such as skateboarding, has lead to diversifying of product range and expansion into new markets where surfwear sales still have enormous growth potential 3. Financial factors

▪ Expansion of the Australian financial system in the 1990s was the catalyst for Billabong to become a publicly listed company, listing its shared on the ASX in 2000. ← Resulting in an increase of funding and exposing the company to greater instability as sudden shifts in investment setiment can lead to enormous swings in its share price ▪ Influenced by fluctuations in the Australian $ ← Eg. 2003-04 = reduced value of o/s earnings and wiped millions of dollars off the economy’s profits 4. Political factors

▪ Reduction in barriers to trade has made it easier for Billabong to export ▪ Deregulation of financial markets = buying of o/s businesses, establish o/s production facilities and open retail outlets outside Australia ▪ Benefited from the Australian governments continued protection of the domestic clothing and manufacturing industry through the maintenance of tariff barriers that increase the price of goods produced by Billabong’s foreign competitors 5. Geographic factors

▪ On a social level the company suggests a no. of initiatives to protect the oceans and related natural environments ▪ Products associated with mainstream fashion, but popularity is greatest in areas near the ocean, where people regularly surf 6. Technological factors

▪ Cost of transport affects Billabong’s ability to distribute its products between different markets ▪ IT such as cable television and internet has exposed millions of new customers to surfing and helped Billabong market its products towards a broader customer base.

Internal sources of change
1. E-commerce
← Simplifying the logistical and organizational difficulties associated with operating in a global business ← Uses electronic inventory monitoring to track sales and ensure stores always have adequate levels of stock ← Websites showcase latest products, promote surfing competitions and...
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