Vans Case Study

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Vans is considered as the largest and most profitable show manufacturer in the world. Vans’s success relies on the network structure that Vans founder and CEO Philip Knight created, allowing the company to produce and market shoes. Basically, the virtual organizational architecture that would allow Vans to focus on some functions such as design and leave others like manufacturing to keep costs low and to give the company greater flexibility. By far, the largest function of Vans Oregon is the design function responsible for pioneering innovations in shoe design while the rest of the major functions are scattered in Southeast Asian suppliers like China and Malaysia. Strategic alliances are important aspects of Vans production particularly since 99 million pairs of shoes manufactured annually are made through such.  Moreover, the network structure provides Vans two important advantages: quick responding to changes in sports shoe fashion and low cost. Vans makes use of a global IT system that can literally change the instruction it gives each of the suppliers in real time (Jones and George, 2003, p. 232). As such, within a matter of short period its foreign manufacturers are producing new kinds of shoes. Vans’s cost are also low because of Southeast Asian labor are a fraction of that of its US counterparts. With Vans’s ability to outsource and use foreign manufacturers keep the headquarter’s structure flat and flexible. This relatively inexpensive functional structure to organise its activities enabled Vans to obtain talent and resources worldwide.   Although the virtual structure provides high flexibility for Vans to be responsive to market trends and changes, Vans is hindered by the loss of hands-on control of several functions and employees. Considerably a hollow organization, Vans has a weakened organizational culture and employee loyalty. Inherent risks are also evident including relationship management and contract partner failure and/or business exit. True enough, Vans is faced with minimal tasks environment but with international environment that is otherwise conflict-laden and competition-pressured. While in the internal environment Vans is considered as a technological innovator; technological capabilities also make a standout within the athletic shoes industry. Globalization, as such, not only requires Vans to globalise its communication technology but also contributes to ever-fiercing competition thus the continued product innovations (Frenkel, 2001). Stonehouse et al (2004) notes that continuous product development is considered necessary because Knight believes that there is a seven-year brand cycle within the athletic footwear industry. Vans combated the perils of globalization through embracing a continuous business model without sacrificing the core design of its products. Pal (2008, p. 265) describes Vans’s business model that transformed into a network-centric organization using information technology to better equip coordination among its more than 800 partners in over 52 countries. Technology has created a fierce competition within the industry and it is the only way to innovation. Luo (2001, p. 227) maintains that Vans monitors the industry for changing trends and often leads it in product innovation. Public is increasingly becoming aware of new technological improvements in footwear as well hence increasing stability, support, comfort and performance are at the core of Vans’s research and design. Vans adapts to rapidly changing environment through the use of technology. Likewise, Vans also capitalizes on healthier lifestyles of the people although the industry in general is in its mature stage of the industry life cycle. Further, major threats for Vans are government regulation especially those that attacks the corporate social responsibilities (CSR) and ethicality of Vans, and also economic downturns and changes in shoe fashion. All these makes high end shoes like Vans an unaffordable luxury good....
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