The issues surrounding Holey Soles include
•The inability to have a high market share due to dominance from Crocs. •How to reach the goal of $40 million revenue while deciding upon expansion. But the current impending issue is how to reach the goal of $40 million by 2009. THE INJECTION MOLDED FOOTWEAR INDUSTRY ANALYSIS
•Fast growing company.
•Focused on innovative lifestyle products.
•Unique SoleTek and Smartcell foam technologies.
•Competitive pricing for a high quality product.
•Spend time in training and mentoring employees.
•Strong customer service
•Work with clients of all sizes
•Canadian company image.
•Joyce Groote’s management expertise.
•Low cost production in China
•Strong distributors in Denmark and mid to upper chain stores in North America.
•Branding was not sufficiently strong; more effort required to developed the Holey Soles look and standard. •No protection of their existing shoe design by either patent or industrial design in China. •Excess unutilized production capacity during the months of November to January. •Long transit time from China to the warehouses in North America •Quality control issues with first few shipments of new styles of clogs. •Inventory control issues: Keeping enough inventory was an issue because of increased number of large customers and the preference of the chain stores to select a narrow range of colors and sizes. •Lack of specialized employees to match the increase expansion and growth.
•Growing fashion consciousness- Customers look for shoes that are light, comfortable, warm, durable and that look cute which varies from the traditional customer preference of cost effective and durable. •Opportunity of offsetting seasonal fluctuations by expanding product lines to boots and closed shoes and targeting spas and gyms. •Growing international and domestic markets.
•Use of modern technology such as the Smartcel and SoleTek through injection molding of polyolefin/ polypropylene and ethyl vinyl acetate compounds.
•Currency fluctuations in the international business.
•Fast changing taste and trends of customers.
•Elimination of smaller independent business as large chains are expanding their market penetration by offering a more diverse array of products. •Cyclical industry – seasonal demand
PORTERS FIVE-FORCE MODEL
Industry: Injection Molded Footwear Industry
Buyer: Retailor and Distributors
1.Threat of new entrants: Low to Medium
Barriers to entry – Medium to High
•Capital Requirement: (Medium – High) because manufacturing high quality clogs require expensive and specialized equipment and a high level of technical expertise as well as well trained personnel. All this requires a need to invest large financial resources to compete. But on the other hand there are companies that are producing clogs of low quality at a much cheaper cost. •Access to distribution channels: Many competitors lack access to distribution channels. Hence the entry to barrier is High. •Cost disadvantages independent of scale: Crocs through is aggressive acquisitions strategy bought Jibbitz which manufactures accessories that snap into holes in crocs as well as the Washington based Bite which had invented the golf sandal. This enabled competitors like Crocs to compete through using proprietary products. Hence barrier to entry is Medium to High. •Product Differentiation: Companies like Crocs have a strong brand and customer loyalty, which creates barriers to entry. In addition to that larger chains were pushing the smaller ones out of the marker this again created a barrier to entry for new entrants since they would have to spend heavily to over come existing customer loyalties. Hence high barrier of entry. •Switching Costs: Switching costs exist because the buyers would have to forsake a recognized brand, which could hinder their sales...