Running Head: Crocs
Jess R. Vasquez
Colorado State University – Global Campus
Foundations of Effective Management
Jama Bradley, Ph.D.
21 November 2009
Crocs Inc., was founded in 2002 and immediately realized success. The company had a great idea and moved quickly to capitalize upon it. Early in 2006 the company entered into its IPO, it too was a huge success. “At the height of the real estate market, in 2006, the company sold shares to the public, raising more than $200 million in the biggest stock offering in shoe history” (Mui, 2009). These successes were due in large part to the fact that the product had a large appeal and the supply and production models used were revolutionary to the apparel industry and were incredibly efficient. However, was too much focus and importance put on building a strong supply and production model and too little emphasis placed on understanding the importance of managing its value chain?
The supply chain created was one which was developed in three stages. First, the company moved to purchase the manufacturer of the product in order to have proprietary rights to the raw materials. The second stage was to begin to use contract manufacturers in different countries. Third, the company moved to bring some of the global operations which had been contracted out, in house. This was accomplished by developing company-owned manufacturing sites and warehouses located in strategic areas depending on need (Holloway & Lee, 2007). Value Chain: Industry Differentiation
Crocs is a unique company as it is manufacturer, distributor, and retailer of its own product. This operation has obvious advantages; most important is the ability to lower overall cost to the end use customer. The company was certainly profitable. In 2005 and 2006 the company’s net profit margin of 18.2%, led the industry; Deckers Outdoors had the second highest margin at 10.4%. Crocs aggressive manufacturing and distribution strategies clearly gave it a competitive advantage. The company had successfully introduced a supply chain model never before used in the footwear industry, but did this success possibly give management a false sense of being “bullet proof” to changes? Traditional Value Chain
Typically the requirements of a successful value chain include these areas: * Coordination and Collaboration
* Technology Investment
* Organizational Process
* Human Resources
* Organizational Culture and Attitudes (Coulter & Robbins, 2007) Crocs seemed to follow this general template in the development of their value chain. It was certainly coordinated in its production and supply efforts. The leadership was right for where the company was trying to go and that was to become more of a global presence. The culture would have been influenced by this aggressive leadership style. The company had invested heavily in machinery to increase production. It had also developed a system that could quickly adjust its manpower requirements as was necessary. It relied heavily on the fact that the shoes were selling themselves, so the company did not seem to invest resources in improved technology, e-commerce. Apparel Global Value Chain
Within the apparel value chain like the traditional method is a series of key steps:
The level of marketing requirements often varies with the business model being deployed by a company. It can be virtually non-existent or it can be the main driver of competitive advantage. The marketing department is typically responsible for: * Assisting the design team to understand market trends, end consumer profiles, changing market needs and new opportunities; * Developing programs to keep brands fresh and relevant to the end consumer; * Monitoring competitor activities and providing input on product prices, styling, etc; * Developing and implementing promotional or public relations campaigns aimed at...
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