Running Head: FOOT LOCKER, INC.
A Strategic Analysis of Foot Locker, Inc.
Richard A. Sweeney
A Senior Thesis submitted in partial fulfillment of the requirements for graduation in the Honors Program Liberty University Spring 2009
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Acceptance of Senior Honors Thesis This Senior Honors Thesis is accepted in partial fulfillment of the requirements for graduation from the Honors Program of Liberty University.
__________________________ Paul E. Young, Ph.D. Thesis Chair
__________________________ Edward M. Moore, Ph.D. Committee Member
__________________________ Kendrick W. Brunson, A.B.D. Committee Member
__________________________ Marilyn L. Gadomski, Ph.D. Assistant Honors Director
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Abstract During the past couple of years, Foot Locker, Inc. has underperformed the public’s expectations. This has been evidenced by the rapid slide of its share price. The current economical situation has further weighted down on the company’s ability to provide shareholder value. This paper will describe the problems associated with Foot Locker, Inc.’s underperformance in the marketplace. These problems must be remedied if the company is to earn an attractive rate of return for its investors. Using secondary research, these problem areas will be identified by analyzing the current internal and external situation surrounding Foot Locker, Inc., determining the intensity of Porter’s Five Competitive Forces on industry profitability, looking at the competitive positions of Foot Locker’s major competitors based on price and geographical coverage, identifying the key success factors (KSFs) associated with the industry, analyzing Foot Locker’s current strategy, and conducting a SWOT (Strength, Weakness, Opportunity, Threat) analysis. Finally, the future strategic elements essential to building an attractive and sustainable return on investment (ROI), required by its shareholders, will conclude this strategic analysis of Foot Locker, Inc.
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Relevant Company History Foot Locker, Inc. commands a dominant role in the international retail landscape for sports apparel and accessories. Currently, Foot Locker, Inc. has several different subsidiaries under its control. These subsidiaries include Foot Locker, Foot Action, Kids Foot Locker, Lady Foot Locker, Foot Locker International, Champs, and Eastbay. With these retail outlets spread across 20 countries in North America, Europe, Australia, and New Zealand, Foot Locker, Inc. is recognized as the leading athletic footwear retailer in the United States (Foot Locker Inc., 2009). This widely-recognized corporation, as it is known today, has its roots back in 1879 when a man named Frank Winfield Woolworth opened his first five-and-ten store in Utica, New York (Funding Universe, 2005). Woolworth opened this store after discovering how popular a five-cent strategy worked for Moore & Smith when he was employed by the firm in 1878. Woolworth’s first store failed after only a few months. However, he opened a second store in Lancaster, Pennsylvania that same year. “By the mid-1880s”, according to Funding Universe (2005), “there were seven Woolworth’s [the name of the 5 & 10 stores] in New York and Pennsylvania” (para. 6). However, after only a few years, Woolworth fell sick with typhoid fever from his work exhaustion. This sickness prompted Woolworth to delegate his authority in the day-to-day operations of the company to Carson C. Peck. Freed of this burden, Woolworth was able to make his first overseas buying trip to Europe in 1890. The products Woolworth was able to bring back to his domestic stores attracted many customers looking for the unique products to be found only at Woolworth’s (Funding Universe, 2005).
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Woolworth expanded his retail operation in 1897 to include his first international store located in Toronto, Canada. A few years...