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0 Executive Summary
ELLO is a shoe company that manufactures branded and private label footwear. Our
footwears have been sold in 4 different regions worldwide, there are North America,
Europe Africa, Asia Pacific and Latin America. We have taken over the positions of
managers for the footwear company since year 11 and we have been in the industry
for 7 years. Our company have experienced growth and decline in the footwear
industry due to several reasons. This manager’s report provides a clear review of the
business operations for ELLO footwear company in the footwear industry for
production year 11 through year 17. Analysis of past performance of the company
would be discussed on the EPS and ROE of the company in the past 7 years. This
report also discussed on the main strategies used by ELLO company as well as the
justifications on the ability to response to changes in the environment. Last but not
least, this report also justified the key points that have been learnt by the co-managers
through past successes and failure. Recommendations for the future are also discussed
in the following report.

2.0 Analysis of past performance
Year

EPS ($)

ROE (%)

Stock Price

11
3.07
18.4
40.62
12
4.03
19.9
55.30
13
2.82
11.9
31.13
14
4.80
17.4
72.04
15
4.16
13.0
50.31
16
2.64
7.5
28.24
17
0.89
2.4
16.21
Table 2.0 Analysis of the past performance, Year 11- 17.

Credit
Ratings
AA
A
A+
A+
A+
A+

Image
Rating
75
66
68
73
69
59
51

2.1 Year-11
In starting year of year 11, the price of the footwear for the internet segment was
$72.99. The co-managers had decided to set the price with 99-cent endings for every
branded and private label footwear in the industry. According to the report of
ScienceDaily (2011), Schindler mentioned that the 99-cent price endings strategy is a
common marketing tool used to attract customers to purchase a product. He has
studied that people perceive a big difference in price when the 99-cent price endings
strategy is used. Therefore, the wholesale price for the shoes in North America and

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2.8 millions in order to increase the image ratings and return on equity. Futhermore. The footwear industry was very competitive as the price set by other competitors were near to the same. due to high expenditures on marketing expenses and high cost materials.99.4% return of equity while the stock price is 40. The SQ ratings of the shoes have been increased to 7 stars and it has became the strength of the company. However. Unfortunately. price for the shoes in Asia Pacific was $40.03 EPS and 19. we have fell to the 5th position in the industry. The percentage of the superior materials had increased to 80% and 88% in North America plant and Asia Pacific plant respectively. The stock price has also fell to $31.62. 2. The cost for the compesation training in NA plant and AP plant were both increased in order to reduce the rejection shoes rate.9% respectively.Europe Africa were $47. As for the private label segment. ELLO company managed to be at the second position in the footwear industry with $ 3.2 Year-12 In the following year which is year 12. The reason of pulling out was to mainly focus on the wholesale segment in Latin America. ELLO company had once again managed to be at the 3rd position with $4.9% ROE.3 Year-13 In year 13. the co-managers have decided to decrease the price for internet segment to $67. The company also increased the cost for advertising to $7.82 and 11.99 due to excessively higher price compared to other competitors which caused low demand orders in year 11. the EPS and ROE falls to $2. However.99 and $41. the co-managers have decided to implement a differentiation strategy due to high competition in the industry. 2 . The prices of the shoes for wholesale segment were remained the same.13 and undoubtedly. Furthermore. the shoes for private label segment were declined except for the Asia Pacific region. the style and features of the shoes have been upgraded as well in both plants. The company has committed to deliver the highest quality shoes to the customer at a reasonable price. the managers decided to pull-out from the Latin America region and focused only on the other 3 regions.99 in Latin America.07 earning per share and 18.

The EPS and ROE of the company have fell to $2. the stock price has also fell to $28.5% respectively. the co-managers have decided not to do any CSR programme in order to reduce the cost. The other competitors had stong celebrity appeals to increase the market share as well as the image ratings. Futhermore.2. Undoubtedly. 2. training and compensation as well as marketing cost. the image rating of the company fell from 73 to 69.4 Year-14 Year 14 was an excellent year for the entire footwear industry. the value of stock price had huge increase from $31. the EPS and ROE have fell to $4.80 and 17. The main reason of such fall was due to the minor changes had been made to the decision entry as well as the company did not able to bid for any celebrity. the company decided to decrease the cost on materials.04 to $50. All of the footwear companies had done well and met the investor expectation. 2. Due to high exchange rates and the company had no plants in Europe 3 .31. The SQ ratings of the shoes have been decreased to 6 stars as well as the price of the shoes have also decreased in 4 regions. In order to do so. as well as the stock price has fell from $72. The credit rating of the company had also went high to A+. Besides that. The comanagers have decided to increased more on advertising and the delivery time had been shortened to two weeks. At this point. As for the corporate social responsibility. TQM.16 and 13% respectively.04. most of the strategies and decisions were remain the same.24. the marketing cost as well as the high exchange rate. the co-managers would have to increase the price of the shoes in the wholesale segment in order to cover the high expenditures on the superior materials cost. Firstly. the company has suffered a great loss due to several reasons. There were only slight changes have been made to the price on internet segment and wholesale segment. The SQ ratings of the shoes were still rated at 7 stars in order to emphasize high quality shoe.4% respectively. The increment of sales in private label segment had successfully increased the EPS and ROE to $4.64 and 7.5 Year-15 In order to avoid from any big loss in year 15.13 to $72. the company did not able to get the private label sale in North America region which greatly impacted on the EPS and ROE of the company.6 Year -16 In year 16.

because there were too many standardized or similar products in the market and was proven to be too competitive for ELLO to operate in that industry. By applying differentiation strategy.4%. Secondly. design. we also improved our customer service by using several approach in different time such as offering free shipping. shortening delivery time. we also pursued in 4 . We also found that. and performance by increasing the usage of superior materials for our footwear.0 The main strategies pursued ELLO’s company strategies are to compete actively in 3 segments which is the wholesale segment. even if we able to sell the shoes. we had fell to the 6th position in the footwear industry. enhanced styling and features and also emphasize on TQM and Six Sigma quality programs. Unfortunately. 2. we could avoid from price war within the industry and command a better price for our products. The main reason of such outcomes was the company did not managed to sell any shoe in private label segment in 4 regions. Since then. internet segment and private-label segment. Differentiation strategies have been adopted by ELLO in wholesale and internet segments. 3. we decided to implement the first mover advantage by offering high quality footwear with 7 stars S/Q rating in Year 13 which was different from the competitors. ELLO updraded the features and styles of the shoes to clearly set ourselves with the competitors. The EPS and ROE of the company had fell terribly to $0.Africa and Latin America. the company had started to suffer losses in distributing the shoes. Therefore. we strived to create superior product features. Firstly. Thirdly. We believe that if we provide better customer service. The company did not met the investor expectation and therefore the company had fell to the last position of the footwear industry. the profits would be very low due to strong competition in the industry. The wholesale segment were doing good because the co-managers have decided to increase the models availability of the shoes.89 and 2. and offering better rebate service and also improved in retailer support and utilization.7 Year-17 Year 17 was the last year and it was a terrible year to ELLO company. Our strategy was to deliver the highest quality shoes while maintaining at a competitive price. our customer would be impressed and satisfied hence attract more customers.

we had successfully upgraded our plant in North America and Asia for our assembly line to reduce reject rate by 50%. The year after was quite challenging as other companies started to put the head into the game. nothing much changed only minor alteration. adjusting with the price. push their marketing efforts. The increment of the compensation and training for the employees have increased the productivity and reduce reject rate. In year 15 and year 16. For the first three years. However. our company has forced to decrease the SQ ratings to avoid price war as the costing for our shoes were too high. We constantly engaged in production R&D that could improve our product quality and reduce wastage. Changes such as the price and SQ ratings affected us as it pushed down our revenue and company market share. the strategies above remain the same. bid for celebrities and offered the best price for private label. due to the sudden rise in the exchange rate and also increasing competitors in the 7 stars footwear industry. For our private-label. This sector proved to be very unpredictable and competitive.production R&D activities. and increased our shoes models in the late stage of the competition add promotion. 4. competitors may choose to leave or come in anytime and private labels may require us to make adjustment. This strategy fits ELLO well because we could adjust our price more efficient with appealing attributes required by the private label and also able to response to the external threat such as exchange rate more effectively. we have tried to adapt with the drastic and unexpected situation. Emphasize on marketing and brand buildings activities helped us to increase our brand image and also strengthen our brand name. Due to strong competition. We mainly focused on advertising because it has tremendous effect on the value perceived by the buyers therefore increase their confidence to purchase our footwear. We continuously emphasized on marketing activities such as increase fees in advertising and celebrity appeal. we choose to use the best cost provider strategies. Lastly.0 Ability to response to changes in the environment In a very competitive industry and rapid changes over the year. we also understand the importance of marketing and brand building activities. 5 . We choose to produced 6 stars footwear because the cost was lower. we constantly increased our advertising budget to bring out the best effect. However.

For SQ ratings. For example. Each year. only then ELLO company started to bid for a celebrity. Some companies in the industry were playing with the price structure until we or perhaps other company get the negative impact.99 for wholesale segment. Besides that. their performance and SQ ratings. Price was vary for different continent and for the Asia Pacific region usually have the lower price. 6 . we increased the price due to higher SQ rating. the main key point that we have learnt throughout the BSG is always move faster and do bigger before our competitors do. either we push up or lower it down. we can still be competitive in the industry. Futhermore. we did not want to get influenced and controlled easily by our competitors in terms of pricing. our SQ rating was at 5. marketing effort and SQ ratings. We tried to play safe in order to generate revenue and market share. we worked hard to compete and observed each other strategy based on the competitive intelligence reports. we increased it by 1 and the maximum was 7. we would not know what would the competitors would do. ELLO company had not bid for a celebrity to the point that all of the competitors’ ROE and EPS had increased due to their celebrity appeals. the competitors have built new plant in Latin America region to avoid from high tariffs and high exchange rate but our company was yet to build one therefore we had to bear with the high cost expenditures. we had slightly decrease our price for the first 3 years from $48 to $46. we observed the changes and the pattern of our competitors in term of pricing both wholesale and internet. We decided to move apart from them by using differentiation strategy. It was indeed a very competitive industry with companies offered a low price with high SQ ratings. On the other hand. The reason why of we did not go beyond because we could not compete with our competitors with higher SQ rating and their pricing was quite low too. It is relatively important to be one step ahead of the competitors because the company will have the first mover advantage. either to increase or decrease. With 6 competitors in the market. The major changes that we did to adapt with the industry was the pricing. Therefore. At first. The years after. There was a year that we need to lower down our SQ rating from 7 to 6 as we could not compete with the company on the top. 5. Throughout the year. That was how we adapt to changes.0 Key points learnt First of all.

Company with more influential celebrity lineups enjoy an advantage in marketing their shoes over those companies without a celebrity endorsement. The company should commit to the vision and mission as it will shows us ‘where are we going and why’. The reason for not commiting till the end is because we were unsure on our strategies and decisions. They set their prices as low as they could to the point that the operating profit has became negative. It then caused our production cost to be a lot higher than our competitors who build a plant in other regions. Strategic vision and mission statement able to provide a clear direction and strategic path to the company. For example. However.0 Recommendations for the future Due to limited capital availability. the key point that we have learnt is do not get influenced and controlled easily by your competitors.Secondly. the demand in other regions was growing. footwear company should 7 . It was a ‘commit suicide’ way for the competitors to operate the footwear company as the main objective of the game is to increase the net profit. ELLO did not able to build a plant in Europe-Africa and Latin American. ELLO company did a differentiation strategy which increased the SQ ratings of the shoes and sell it at a standard price. Instead. ELLO company did not get influenced or controlled by the competitors because the company would have suffer a great loss if we follow the same way. building plants in foreign regions have became an option to expand. The competitors constantly reduce the price of the shoes in wholesale segment and private label segment. Therefore. Thus. Endorsements from appealing celebrities enhance the brand image of the footwear company and it positively affects consumer purchase. we did not build a plant in other regions. clear strategic vision and mission statement are strongly needed before any decision has been made. establish a plant in foreign country can avoid from high exchange rates on cost to export our product to other regions Secondly. it is better for the company to contract with celebrity figures as soon as possible. Lastly. ELLO company constantly changed the SQ ratings of the shoes. we commited to deliver the highest quality shoes to the customers but in the end we failed to do so. ELLO company did not have a strategic vision and mission statement therefore the company had continously changing the strategic plans. Therefore. At the first place. 6. the key point that we have learnt is we must develop a strategic vision and mission statement at the first place.

the bid price will go higher to the point that the expenditures on celebrity endorsements will be exceeded. [online] Available at: http://truist. 7. Look back at the financial history and the competitive intelligence reports. Singapore: McGraw Hill. M. Peteraf. A. Perhaps at this time. you can learn and observe the pattern of your own company and also fellow competitors in the industry. Strategy should be set based on long run but not short run. Also to issue stock shares even at beginning of the year. We believed ELLO should be a dominant-business enterprises. 2013. ELLO company can compete with other competitors at the same level. The last recommendation is to increase SQ rating for the product across the continent. 19th ed. Why Corporate Social Responsibility is so Important in 2013.. 2013. It is important to evaluate the competitors. From there. Once the strategy has been chosen. That will make the company financial stable and refinance it when the company think it is time for it. Gamble. Truist. Says Expert. Building capacity also can be method to push the company up. plan the stategy wisely is relatively important to the company.com/why-corporate-social-responsibility-is-so-important-in2013/ [Accessed: 16 Nov 2013]. By increasing SQ rating. which having a major core business that involved themself in wholesales and internet segments that accounts most of their total revenues.. Then small amount of revenues can be collected from private-label segment which is more competitive and unpredictable. stick with it over a long period. It is important to analyse your industry together with the competitors so you are on the right track.0 References ScienceDaily 2011.contract with celebrity figure before the competitors start to do so because once the competitors started to bid for a celebrity. J. [press release] 12 September 2011. Thirdly. Thompson. pricing will not be a problem. Another tips can be consider is to borrow less. A. and Strickland. Crafting and Executing Strategy. 99-Cent Pricing May Not Be Worth the Penny. 8 .