crocs_final_2-protected - Executive Summary Crocs,...

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Executive Summary Crocs, Incorporated is a global company that produces and retails footwear and apparel; their current corporate level strategy has been to diversify into related industries, while utilizing existing distribution channels. Because the footwear industry is volatile, and consumer trends, disposable income and other economic factors influence demand, we recommend that Croc’s explore unrelated industries, so that they may diversify that risk. Though the company enjoyed record profits in 2007, many of these environmental factors adversely impacted the company’s financial and strategic position. In order to most successfully diversify, we recommend that Crocs, Incorporated partner with a well-established firm in another industry. Since Croc’s patented Croslite material has many uses and advantages, the company should leverage that material in whatever industry it chooses to compete. We recommend that Crocs enter into a joint venture with Inter IKEA Systems BV and create a co-branded patio-furniture line to be sold in IKEA retail centers. Introduction Crocs, Inc designs, manufactures, and retails footwear and apparel for men, women, and children. The company’s mission statement is to bring profound comfort, fun, and innovative footwear to the world’s feet. The company’s core product is the Crocs sandal, a shoe made of its patented Croslite material. The current financial position of the company is relatively weak compared to other industry competitors, and its strategic position is not effective for generating enough revenue for the company to be profitable.
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Internal and External Analysis Current Strategy At the corporate level, Crocs has been too slow to diversify into other markets. Though the footwear industry expects relatively stable growth, as does the population increase, the company’s signature product, the Crocs sandal, has suffered sharp decreases in demand since 2007 (IBIS World: Industry Report). In 2006, Crocs, Inc acquired FURY, a supplier of hockey equipment and apparel, and in 2008, Crocs created a separate business unit, Jibbitz, which manufactures and retails shoe charms. The company now holds each of these as wholly owned subsidiaries (Crocs, Inc). These ventures have not been effective in achieving diversity for the company’s portfolio. For example, as earnings for Crocs began to decline, so they did for Jibbitz; this was because Jibbitz products are sold in all the same channels as Crocs, and they are generally perceived as accessories specifically made for Crocs shoes. The financial success of Fury has also been questionable. Crocs, Inc has recently taken removed the company’s website; however, it does contend that many of their products may be purchased through many specialty retailers. At the business level, Crocs, Inc has been too slow to respond to consumer trends.
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This note was uploaded on 01/18/2012 for the course DEP 235 taught by Professor Eeer during the Spring '11 term at Assoc. of Chartered Certified Accountants.

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crocs_final_2-protected - Executive Summary Crocs,...

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