STRATEGIC MANAGEMENT

CROCS CASE STUDY (ASYNCHRONOUS ACTIVITY)

Adhishree Bhattacharya1823001

Anamica Verma 1823004

Charul Agarwal 1823008

Muskaan Khurana 1823019

Introduction

Crocs, Inc was formed in 2002 in Colorado, USA and is now amongst the popular brands in
the World. The company started by making footwear for all the age groups under the Crocs
Brand, and now selling their shoes in over 100 countries around the world. The shoe brand
feature the proprietary closed cell resin, croslite, special kind of plastic that softens up due to
the body warmth of the wearer following a best fit and a high level of comfort. The
unusual ,’trade Secreted’ substance has been regarded as significantly real in the Footwear
Industry and the Shoes’ special looks and segment of bright coloured designs have made
Crocs largely chosen by people who searches for the comfortable, slip-resistant, lightweight
and Odour-free footwear.

Until 2006, Crocs Inc was the company with highest gross profit margin in the footwear
Industry of 56.5% as compared to its competitors Nike and Timberland with 43.7% and
47.3% respectively. But their drop was almost as striking. The company left with its surplus
stock, volume and incurring huge losses. The share price of Crocs fell from a $68 to $1 as
investors calculated the result of massive overtrading. There were certain key mistakes done
by the company and which they didn’t realize of until it was too late.

Competitors:

The worldwide easy going, athletic and style footwear markets are profoundly competitive. In
spite of the fact that we accept that Crocs doesn't contend straightforwardly with any single
organization regarding the whole range of our items, Crocs accept parts of our discount,
retail, and web based business organizations rival organizations including, however not
constrained to, Deckers Outdoor Corp., Skechers USA Inc., Steve Madden, Ltd., Wolverine
World Wide, Inc. furthermore, VF Corporation. Our organization worked retail stores
additionally contend with footwear retailers, for example, Genesco, Inc., Macy's, Dillard's,
Dick's Sporting Goods Inc., The Finish Line Inc., and Footlocker, Inc.

The key components of rivalry in these business sectors incorporate brand mindfulness, item
usefulness, structure, quality, valuing, client support, and showcasing and dissemination.
Crocs accepts that our one of a kind footwear structures, the Crocs lite material, our costs, our
extended product offering, and our dissemination organize keep on situating us well in the
commercial centre. Nonetheless, various organizations in the easy going footwear industry
have more prominent budgetary assets, more exhaustive product offerings, more extensive
market nearness, longer standing associations with wholesalers, longer working narratives,
more noteworthy dispersion abilities, more grounded brand acknowledgment and more
noteworthy showcasing assets than we have. Besides, Crocs faces rivalry from new players
who have been pulled in to the market with items like their own as the consequence of the
interesting plan and achievement of their footwear items.

To develop itself, CROCS could improve its conveyance and co-ordinations arrange in order
to additionally smooth out our flexibly chain, speed up to market and lower costs. It could
stable its stock cost, which will build the venture by open.

CROCS centres around shoes so much that I don't figure it will enter different regions now.

The rivalries are overwhelming. The best three organizations that are CROCS's rivals are
TBL, NKE and Deck. These contenders have solid capacities. On account of the dubious cost
of stocks, Crocs can't get a lot of speculation from open.

Crocs advances different kinds of online advancement, trades and collaboration between
enterprises. It will improve the organization itself and the market. Also, for staying aware of
the pace of design and improve the capacity of ensuring foot, CROCS are spending more
cash on innovative work. The individuals in CROCS are for the most part doing great in their
field. They help one another, follow the organization's objective with the goal that they will
set up a solid shoes Kingdom.

Supply Chain Management of Crocs:

The development of a versatile supply chain started when Crocs founders first acquired the
external manufacturing business (formerly known as Foam Creations), which was in charge
of production. It meant that Crocs owned the trademarked Croslite resin manufacturing
facility — this also allowed Crocs to change the amount of products depending on customer
requirements. Crocs maintained their supply chain of raw materials, which was based in
different countries and an Italian company compounded (together) the raw materials from
those suppliers. To ensure a smooth transition following the acquisition of the manufacturing
facility, Crocs has maintained its dealings with this Italian third party company. The
compounded raw materials in this Italian company were then shipped to the manufacturing
unit of Crocs in Canada — shoes were assembled here. The final products were then shipped
to a third party distributor (at the warehouse 's expense) responsible for delivering shipments
to the retailers.

After a few years of operating as a single manufacturing entity, Crocs expanded to China in
early 2005 by partnering with a major contract manufacturer. Compounded raw materials
were now sent to two manufacturing locations in Italy: China and Canada. By the end of
2005, both Asian and European markets felt the presence of Crocs, and were slowly
expanding worldwide. In countries where businesses were unable to adhere to Crocs' supply
chain model, new manufacturing operations operated by Crocs were built to meet customer
needs in that area. The Crocs use of contract manufacturers was a key component of its
versatile supply chain, as contract manufacturers were very responsive to consumer demand
and were willing to start or stop customer-based production. Including these suppliers in their
supply chain allowed Crocs to bring consistency in the number of goods being made.

Once the manufacturing was founded, Crocs shifted its focus to compounding raw materials
in 2006. In three of its major markets it built three compounding facilities: Canada, China and
Mexico. Now Crocs had three options to fall back on, instead of relying on one Italian
compounder for raw materials. In addition, the proximity of the compounding facilities to the
production units allowed Crocs to postpone the colouring decision — this meant that the
colouring of the raw materials was focused on the current customer's need for a product. It
helped Crocs satisfy consumer demand and reduced retailers' chances of coping with left-
over / unsold inventory.

Lastly, Crocs' warehousing model essentially seeks to improve supply chain efficiency and
because Crocs originally had just one supply chain distributor in its company. All goods from
various manufacturing units are gathered and processed in one plant in Colorado, and Crocs
added warehouses to each manufacturing facility to make this operation more effective. The
goods are delivered directly from these warehouses to retailers and were contingent on the
distance of the warehouse from these manufacturing units, thereby minimizing the time
needed to transport and distribute products to retailers and other.

Corporate Strategy

Prior to the strategic change by Crocs, the market was mature, rising between 1.5 percent 3
percent a year, and competitiveness was highly intense i.e was a red ocean. In developing a
whole new style of casual shoe, a clog that was partly a shoe and partly a sandal, Crocs
challenged key perceptions and norms in the industry. It used fun, whims and imagination to
create a blue ocean by making luminous, comfortable and lightweight clogs with the perfect
combination of functional and emotional appeal.

Crocs developed a comprehensive and broad distribution network for its buyers, such that its
shoes were available in a range of retail outlets from specialty shops to department stores and
major shoe chains. Crocs used innovative merchandising and word-of-mouth marketing to
create awareness and excitement. Removing regular box packages for individual pairs of
shoes reduced costs. These were also limited by the elimination of stock-keeping units and
the use of cheap plastic resin material in contrast with leather and other fabrics. Crocs were
affordable to consumers while at the same time offering competitive margins for retailers and
the business. Furthermore, Crocs inventory replenishment program, allowed retailers to order
what they wanted and get new stock in a few weeks and so they need not discount their
inventory. Perhaps one of the outcomes is that it has fostered more local entrepreneurship and
the development of new markets.

Crocs originally based its waterproof clogs on water sports enthusiasts (sailors and boaters),
but its "think big" dream of making wide-ranging footwear was popular and attracted new
buyers from all walks of life and world regions.

The decline in sales of Crocs, a key issue, was that the company went from its initial strategy
of a few basic models to a much wider variety of more complex styles and designs. Some of
these footwear styles now use materials such as corduroy and fleece, contributing to the
manufacturing costs and complexity. It has also diversified its business model and activities
with new products and accessories, adding more complexity. The business expanded rapidly
to the principles of blue ocean strategy value innovation that was maintaining a low-cost
structure by the use of cheap and reliable materials, low-cost production while at the same
time creating a purchaser-value leap through colourful, exclusive, comfortable casual shoes,
trendy and enjoyable to wear. The story shows how over time, ignoring the principles and
emphasis on the blue ocean strategy will lead to deteriorating results and negative efficiency.

Conclusion

From the above discussion we get to know the various mistakes Crocs, Inc had done in the
past and the reasons behind it. The ‘revolutionary’ supply chain might be only for a small
time period. Their strategy had led to inefficient production and surplus inventory due to
inexact forecasts pf customer demand. Adding on to this, the Forrester effect explained above
leads to stock-outs, sub-optimal use of resources, bad customer service and the finance costs
all along the supply chain. To expand this a bit more, the loss of the stakeholder’s profile and
loss of loyalty can lead to greater loss for the Company. But after all this, the strategic
soundness of the organisation, including its brand, distribution, product and geographical
diversity enabled the organisation to get through it nicely. And as mentioned in the article, all
companies go through great times and Bad times. It’s how management reacts that makes the
difference.

References

https://www.fastcompany.com/1700818/crocs-comeback-plastic-shoemaker-back-dead-250-
styles

https://www.theguardian.com/business/2010/sep/03/crocs-steps-back-from-business-oblivion

https://www.thenewsminute.com/article/noted-urdu-poet-and-lyricist-rahat-indori-passes-
away-130538