1. 1.

CROCS Principles Of Management

2. 2. Term Paper Report On CROCS Submitted by: NAME ID Rahat Md. Zawad Fattah 13-
24313-2 Rahman Arifur 13-24187-2 Rahman, Zamiur 13-24320-2 Bristi, Farzana Afroz 13-
24033-2 Nibir, Sazzadur Siraj 13-24198-2 Submitted to: Musrat Mou American International
University – Bangladesh

3. 3. Acknowledgement we gratefully acknowledge the wonderful co-operation and help that we

received from our faculty Musrat Mou. She helped us to understand the topic and always
inspired to make the term paper a successful one. I hope I would be able to meet up to his
expectations.

4. 4. Table Content No Title 1 Introduction 2 Literature review 2.1 What is SWOT? Why SWOT
analysis is important, and how it affects strategic decision making? 2.2 What is BCG Matrix?
2.3 Explain Porter’s competitive five forces model? 2.4 Organizational Structure? 3 Findings
and analysis 3.1 SWOT Analysis of crocs 3.2 BCG Matrix of Crocs 3.3 Porter’s five forces of
crocs 3.4 Strategies of their marketing products (Corporate level strategy, business level
strategies and others) 3.5 Organizational structure of Crocs (Mechanistic or Organic) 4
Recommendations 5 References

5. 5. Executive summary Crocs Inc. is an American shoe designing, manufacturing, distributing,

and selling company founded in 2002. The company deals in a product which is an extension
of traditional footwear. The most striking attribute is the fact that the US company markets
plastic shoes which are available in bright colors. In addition to light green, red, yellow and
turquoise; consumers can purchase more subtle colors. Up to 26 colors are available for the
main models. Crocs come in a variety of styles. They are usually manufactured in company-
owned facilities, located in Canada and Mexico, as well as outsourced contract
manufacturers in Italy, Romania and China. Some of the well-known brands are Styles
Beach and Cayman. Crocs also expanded into fashion accessories. It has launched a line of
handbags that are also produced in a wide range of colors. Crocs also recently entered the
market with golf shoes (Ross & Ross 2008). Crocs shoes are made of plastic foam, which is
derived from ethylene-vinyl acetate and were originally designed to be worn at the beach or
boat. Since the invention, Crocs has been successful beyond these activities and they are
now brought in all sorts of daily activities. Children, especially, are largely attracted by the
colorful patterns and simple shapes. Despite the childish appearance of the product, this
method was then extended to adults and these shoes are increasingly worn by movie and
television stars. We have reviewed trends in the footwear and apparel industry; closely
examined the Company’s strategic, Operational and financial situation, and diagnosed the
reasons for its distress. We recommend that Crocs implement a turnaround strategy with the
following key features: Specialized Executive Body: In any successful organization it is
mandatory to have good or specialized Executive body. But we found several management
turnover couple of a year. To be more professional and specialized, Crocs should have
maintained their executive body over few years. High production cost: Crocs reserved
merchandise inventory and their technology isn’t good enough and they have many internal
cost. If they overcome it they can provide a product in minimal rate and earn more profit.
Customer Satisfaction: Customer satisfaction is the key to be more successful. If crocs can
 increase their distribution channel, they can come closer to their customer. Come up with
varieties of products: Crocs can come with new fashion accessories.

6. 6. 1. Introduction Crocs Inc. was established in 2002 in Colorado, USA by three friends
named Lyndon duke Hanson, Scott Seamans and George boedecker. They are the world
leader in innovative casual footwear for men, women and children. . Crocs offers several
distinct shoe collections with more than 300 four-season footwear styles. All Crocs™ shoes
feature Croslite™ material, a proprietary, revolutionary technology that gives each pair of
shoes the soft, comfortable, lightweight and odor-resistant qualities that Crocs fans know and
love. Crocs fans “Get Crocs Inside” every pair of shoes, from the iconic clog to new
sneakers, sandals, boots and heels. Since its inception in 2002, Crocs has sold more than
200 million pairs of shoes in more than 90 countries around the world. Love them or hate
them is the crocs shoe’s tag line. They achieved a huge success among the U.S footwear
around 49.3B in annual sales which spit about 60-49% between fashions athletic. Among
them shoes representing 55%, sandals 25% and boots and others 20%. The 1000 pairs
made available at the site were sold out in three days. . The brand celebrated reaching $1
billion in annual sales in 2011.

7. 7. 2. Literature review:  2.1 What is SWOT? Why SWOT analysis is important, and how it
affects strategic decision making? Answer: SWOT stands for Strength, Weakness,
Opportunities and Threats. SWOT analysis is a structured planning method used to evaluate
the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. A SWOT analysis can be carried out for a product, place, industry or person. It
involves specifying the objective of the business venture or project and identifying the
internal and external factors that are favorable and unfavorable to achieving that objective.
Setting the objective should be done after the SWOT analysis has been performed. This
would allow achievable goals or objectives to be set for the organization.  Strengths:
characteristics of the business or project that give it an advantage over others 
Weaknesses: are characteristics that place the team at a disadvantage relative to others 
Opportunities: elements that the project could exploit to its advantage  Threats: elements in
the environment that could cause trouble for the business or project

8. 8. Importance and effects of SWOT analysis: SWOT analysis can be a great tool to help one
understand what is involved in making business decisions. SWOT analysis is a great way of
expressing relationships between components of business decision making. Actually these
four factors are the major players when it comes to business decision making. Each refers to
things that may be internal or external to the business, which might have significant impact
on achieving goals and objectives.Identification of SWOTs is important because they can
inform later steps in planning to achieve the objective. SWOT analysis may be used in any
decision- making situation when a desired objective has been defined. The decision makers
should consider whether the objective is attainable, given the SWOTs. If the objective is not
attainable a different objective must be selected and the process repeated. SWOT analysis
may also be used in pre-crisis planning and preventive crisis management. SWOT analysis
may also be used in creating a recommendation during a viability study/ survey. So, SWOT
analysis is very important for strategic decision making.
9. 9.  2.2 What is BCG Matrix? Answer: The BCG Model is based on the product life cycle
theory that can be used to determine what priorities should be given in the product portfolio
of a business unit . To ensure long-term value creation, a company should have a portfolio of
products that contains both high- growth products in need of cash inputs and low-growth
products that generate a lot of cash. It has 2 dimensions: market share and market growth.
The basic idea behind it is that the bigger the market share a product has or the faster the
product's market grows the better it is for the company. Placing products in the BCG matrix
results in 4 categories in a portfolio of a company: 1.Stars (high growth, high market share) 
Use large amounts of cash and are leaders in the business so they should also generate
large amounts of cash.  Frequently roughly in balance on net cash flow. However if needed
any attempt should be made to hold share, because the rewards will be a cash cow if market
share is kept. 2. Cash Cows (low growth, high market share)  Profits and cash generation
should be high , and because of the low growth, investments needed should be low. Keep
profits high  Foundation of a company

10. 10. 3. Dogs (low growth, low market share)  Avoid and minimize the number of dogs in a
company.  Beware of expensive ‘turn around plans’.  Deliver cash, otherwise liquidate 4.
Question Marks (=high growth, low market share)  have the worst cash characteristics of all,
because high demands and low returns due to low market share  if nothing is done to
change the market share, question marks will simply absorb great amounts of cash and later,
as the growth stops, a dog.  either invest heavily or sell off or invest nothing and generate
whatever cash it can. Increase market share or deliver cash.

11. 11.  2.3 Explain Porter’s competitive five forces model? Answer: Porter’s 5 forces model is
one of the most recognized framework for the analysis of business strategy. Michae; Porter
introduced many important ideas in strategic management. One of his major contributions
was explaining how managers can a sustainable competitive advantage. An important of
doing this industrial analysis is done by using the five forces model. This theoretical
framework derived from industrial organization (IO) economics to determine competitive
intensity and attractiveness of a industry. It also describes the attributes of an attractive
industry and suggests when opportunities will be greater and threats less. These five factors
are: 1. Threat of new entrants: How likely is it that new competitors will come into the
industry? 2. Threat of substitutes: How likely is it that other industries’ products can be
substituted for our industry product? 3. Bargaining power of buyers: How much bargaining
power do buyers have? 4. Bargaining power of suppliers: How much bargaining power do
suppliers’ have? 5. Current rivalry: How intense is the rivalry among current industry
competitors?

12. 12.  2.4 Organizational Structure? Answer: Work specialization: The degree to which tasks
in the organization are didided into separate job with each step completed by different
person. It means individual specialization of employees. Departmentalization: How jobs are
group together is called departmentalization. Five common departmentalization are 1.
Functional: Grouping job by function performed. 2. Process: Grouping job on the basis of
product or customer. 3. Product: Grouping job by product line. 4. Customer: Grouping job by
type of customer and need. 5. Geographic: Grouping job on the basis of territory. Chain of
command: the continuous line of authority that extends from upper level to lower level of the
 organization. Span of control: the number of employees who can effectively and efficiently
supervised by a manager. Centralization: the degree to which decision making is
concentrated at a single point of the organization. Decentralization: organization in which
decision making is pushed down to the manager who are closest to the action.
Formalization: The degrees to which the organization is standardize and the extent to which
employee behavior is guided by rules and process.

13. 13. 3. Findings and analysis: 3.1 SWOT Analysis of crocs: Strength: 3. Goodwill: Crocs is a
brand that is well known and recognized around the world. They have proprietary rights to
the Croslite material, which gives them a competitive advantage in the marketplace and
Increases the popularity of their shoes. 4. Just in time inventory management: Where
retailers could order only several weeks in advance and order low amounts to deliver
currently popular styles and colors quickly to customers. 5. Has control over manufacturing
and timing: The Company has control over manufacturing and timing because it is not
depending on other companies for manufacturing activities. 6. Brightly-colored: Crocs shoes
are very bright colored. 7. Lightweight shoe: Crocs shoes are very lightweight. So it is very
comfortable to wear. 8. Odor resistant shoes: Since Crocs shoes have some holes in it and it
is made of a good material, so it is odor resistant. Weaknesses: 1. Relatively limited
distribution channel: Crocs has limited distribution channel. So they cannot operate their
sales whole over the country. 2. Seasonal Usage: Crocs does not have a diversified product
offering beyond footwear, which causes revenues to be seasonal (since most of their
footwear is worn in summer) and also very cyclical. 3. Having no other various products:
Company financial performance is highly concentrated and dependent on footwear sales.

14. 14. 4. Ugly shoes: Crocs shoes are kind of ugly shoes. They are not very trendy. They are
not appealing at all. 5. Poor IT system: Crocs has poor IT systems and depends on manual
processes which are not efficient or scalable as the Company grows. 6. Management
turnover: Lastly, Crocs has also experienced management turnover in the past year; their
CEO retired in February2010, they promoted John McCarvel from COO to CEO (leaving the
COO position unfilled) and their general counsel resigned in December 2009. So this kind of
turnover hampers the company’s activities. Opportunities: 1. Expand their business: Crocs
has the ability to expand through growth in direct to consumer sales and internet sales.
Given Crocs’ success internationally, they can continue expanding abroad by reaching
untapped markets. 2. Include products in addition to shoes: They can expand their business
by including wide range of products in addition to shoes. They can make various types of
products to increase sales. 3. Other investor’s willingness: In various current job segments,
Companies and institutes are willing to invest in croc gear. So that will be a great opportunity
for crocs to expand their business forward. 4. Sales of footwear in the United States
expected to grow: 9.7 percent in U.S. population has been increased over last decade. So it
is a great opportunity to increase their sales in U.S. Threats: 1. Competitors: Given that
Crocs does not have patent protection on its proprietary Croslite material, other Companies
have been replicating the material or creating close substitutes, which eliminates Crocs’
competitive advantage. So Competitors can easily copy the basic elements of Crocs’
products with only minor modification. 2. Anti-Crocs sentiment in the market: there is anti-
Crocs sentiment in the market, as evidenced by the website “I Hate Crocs.com”31 which
could reduce demand for its products. 3.Suspicion: Due to the lack of advanced IT systems,
Crocs is more susceptible to human error or fraud.
15. 15. 3.2 BCG Matrix of Crocs 1. Best selling products of Crocs is medical shoes. Doctor &
Nurse use it.it also used by chamist.It is a star product of Crocs. 2. Clogs/Beach were.(?
mark) 3. Sandle (Cash cow) 4. Rain boot or boot. (Dog) 1.Star(Medical Shoes) : We know
that crocs made by cell-resin, Croslite that are order-resistant and comfortable and totally
safe from bacteria. This is the way it usually used by medical /Pharmacist or chemist.
2.Question Mark(Question Mark) : Every time we found variation of this products. That
means it’s growth is high, but the ratio of growth we can’t see enough .So it’s sells amount is
low. That mean it’s market share is low. 3.Cash Cow(Sandle) : Crocs sandle has high market
share or highest sale. But the growth is low. People always use this product for rapid use.
4.Dog(Boot/Rain boot) : When people think they need boot, they try to buy lather product
than croslite product. So Boot stands on Dog stage. Because this product has low market
share and low Growth rate.

16. 16. 3.3 Porter’s five forces of crocs Threat of New entrants  Strong distribution network
required: Weak distribution networks mean goods are more expensive to move around and
some goods don’t get to the end customer. The expense of building a strong distribution
network positively affects Crocs.  Strong brand name is important: If the brand is strong and
difficult to compete, then new competitors will have to improve their brand value in order to
effectively compete. Strong brands positively affect Crocs.  Patents limit new competition:
Patents protect your key technologies and make it difficult for new competitors. Patents
positively affect Crocs.  Customers are loyal to existing brands: It takes time and money to
build a brand. When new companies need to spend resources building a brand, they have
fewer resources to compete in the marketplace. These costs positively affect Crocs. Threat
of Substitutes  Limited number of substitutes: A limited number of substitutes mean that
customers cannot easily find other products or services that fulfill their needs. If substitution
is easy and substitution is viable, then this weakens your power. Limited substitutes are a
positive for Crocs.  Different kind of products: When products and services are very
different, customers are less likely to find comparable product or services that meet their
needs. This is positive for Crocs. Bargaining Power of Customers  Product is important to
customer: When customers cherish particular products, they are willing to pay more for that
one product. This positively affects Crocs.  Large number of customers: When there are
large numbers of customers, no customer tends to have bargaining leverage. Limited
bargaining leverage helps Crocs.  Limited buyer choice: When customers have limited
choices they end up paying more for the choices that are available. Limited buyer choices
are a positive for Crocs.

17. 17. Bargaining Power of Suppliers  Low cost of switching suppliers: If it is easy to switch
suppliers, then suppliers have less bargaining power. Low supplier switching costs positively
affect Crocs.  Uniqueness of Supplier’s product: If the suppliers produce unique
demandable product and also have patent of that particular product, they will have the
bargain power. This is negative for Crocs. Threats of Existing Rivalry  Large industry size
(Crocs): Large industries allow multiple firms and produces to prosper without having to steal
market share from each other. Large industry size is a positive for Crocs.  capability of
competitors: Here it is important the number and the capability of your competitors. If you
have many competitors, and they offer equally attractive products and services, that means
they have substition power. it will weaken Crocs.
18. 18. 3.4 Strategies of their marketing products (Corporate level strategy, business level
strategies and others) Crocs is one of the world’s best shoe makers. They achieved success
by using very inexpensive materials to make their shoes. And especially their clog designed
shoes are the best and most selling product they have. Crocs is using the corporate level
strategies to market their products. As per our research we came to know that crocs
basically use vertical integration. They utilize the additional suppliers of resin. They also use
additional in house to maintain a quality and minimize backlog. As a single facility of their
production accounts for 55% of footwear products. Again they have a strict limit over their
diversification of products. Crocs usually focuses on their high marginal products. Crocs has
improved their information system to handle rapid operations expansion and financial
controls. They always protect intellectual property rights and trademarks as they are one of
the best shoemakers. They have also developed stand-alone retail stores for brand
recognition. And also acquired a different brand to diversity. After discussing all these things
we can see that crocs is following some certain strategies to market their products.it is
basically corporate level strategy. Where all their goal is to market and expand their market
through some corporation tactics. But first they started their business through mouth
marketing where they don’t have to spend a lot of money before any model or actors. And
also their crostile is designed as a loveable kind hearted animated foamy friend of feet.

19. 19. 3.5 Organizational structure of Crocs (Mechanistic or Organic) Crocs has followed both
mechanistic and organic organization structure. Mechanistic is a rigid and tightly controlled
structure on the other hand organic is highly flexible and adaptable structure. You already
know that crocs is founded in 2002 but within few years the company is familiar to all.
Achieve a huge market share in world market by their specialization on shoes. Crocs is the
company mainly produce shoes, sandals, clogs and boots. We see here the company is
highly specialized. Crocs has rigid departmentalization. They have a lots of outlet in whole
world under geographic department. They have target customers like children, men,women,
boys, girls. They have produced a lots of product in terms of seasons. They have chain of
command mainly centralization. Crocs has a goal set by top management employee just
cope with it. They have also open communication shared idea to each other for innovation of
new product. Without new product any company doesn’t survive. With open communication
and work place spirituality crocs achieve edge over from their competitors. Now we see that
crocs followed both structure properly and go ahead to achieve their goal. 4.
Recommendations Specialized Executive Body: In any successful organization it is
mandatory to have good or specialized Executive body. But we found several management
turnover couple of years. To be more professional and specialized, Crocs should have
sequentially maintained their executive body over few years. High production cost: Crocs
reserved merchandise inventory and their Technology isn’t good enough and they have
many internal cost. If they overcome it they can provide a product in minimal rate and earn
more profit. Customer Satisfaction: Customer satisfaction is the key to be more successful. If
crocs can increase their distribution channel, they can come closer to their customer. Come
with new products: Crocs might come with new fashionable accessories. Consider a
strategic transaction. Finally, we recognize that a public company may not have the
wherewithal to make the kinds of distribution, systems, and marketing changes that we
suggest are necessary. With that in mind, we recommend that Crocs management engage
an investment advisor to consider the options of going private or of selling to a strategic
buyer. Although Crocs may find it easiest to implement the necessary changes as a private
 company or subsidiary, the company does have the needed funds through cash on hand and
free cash flow to implement our recommendations as a stand-alone company. Please see
Exhibit 9 for a breakdown of the turnaround plan costs

20. 20. 5. References: 1. www.crocs.uk 2. www.ask.com 3. www.wikipedia.com 4. Reference

Book “MANAGEMENT” (Stephen P. Robbins & Mary Coulter)