Crocs is an American company that sells footwear and apparel of its own. The company operates in many countries with a wide range of all-season casual shoes, clothing, and accessories, while the main product of the company is molded shoes made of synthetic material. It has won the recognition and love of customers, and at the moment, Crocs competes with well-known brands of sportswear and footwear such as Adidas, Nike, and Reebok. After dozens of years, the non-standard shape of the clogs attracted the attention of people, found and still has its audience, and collaborates with various brands and celebrities, thereby increasing interest more and more. Crocs’ marketing campaigns keep the firm afloat and allow it to receive impressive profits, further expand the scale of sales, and delight connoisseurs of comfortable, original, and high-quality shoes throughout the company’s existence.
The footwear industry is an ever-growing sector of the global economy. The steady growth is driven by several factors, including steadily growing consumer demand in Europe and the United States and countries such as China and India. Although the shoe industry is ready for anything, it is a very competitive environment. For a product to be noticed, it must be unique. Crocs resonated with the audience, the bizarre shape won over many, but just as many did not like the unusual shape of the shoes.
Analyzing the company’s internal environment, one can note that the company has come a long way to success. At each crisis stage, Crocs found solutions to problems and not only stayed afloat but found new ways to attract an audience. It should also be noted that there is demand for Crocs products, even though fashion is cyclical, and unique clogs get their popularity in different years in various ways. Now Crocs looks very attractive to investors and large companies since the firm occupies a worthy position in the international market, and supply and demand are only increasing.
To analyze the macroeconomics of the firm, it is necessary to identify potential opportunities and threats to the business that may affect the development of the company. Trends in consumer behavior can be both an opportunity and a threat to Crocs. Fashion and increased sales will create new revenue streams and diversify into new product categories. At the same time, negative buying behavior can threaten the existing supply chain model and lead to lower margins. Among the opportunities in the external environment, a change in tax policy, low inflation, and market development are observed that will “ensure greater stability in the market” and increase competitiveness. (Musanganya & Sinumvayo, 2017, p. 513) Threats include rising wages, intense competition, and the seasonal nature of demand for highly profitable products which can lead to serious pressure on profitability and overall sales. What is more, as the company operates in many countries, it is exposed to fluctuations in foreign exchange rates, which can also negatively affect sales profit.
Based on Porter’s analysis, there is another significant threat that could seriously impede the company. The theory is carried out in the context of five factors that influence business development: buyers, suppliers, existing competitors, new competitors, and substitute products (Bruijl, 2018). The potential threats and opportunities associated with consumer behavior and competition have already been considered; they can affect profitability and sales volumes, depending on the situation, both for the better and for the worse. Porter introduces a critical factor for analysis when talking about substitute goods. The problem of counterfeiting such shoes exists on a global scale since the Chinese counterfeit clogs of very high quality (Bian & Haque, 2020). Due to this, it is sometimes difficult for a company to stay on the market and not lose profits. Usually, it is almost impossible to distinguish a fake from the original because they are easy enough to produce. The fact that shoes can be sold without a box gives the advantage to unofficial manufacturers to succeed and crowd out the competition.
Crocs have some resources to keep them competitive in the global market. A base of reliable suppliers of raw materials helps to overcome various supply difficulties. A strong dealer community is interested not only in promoting the company’s products but also in training and improving the entire team’s skills for further high-quality interaction with customers. Collaboration with different brands also provides a competitive advantage if an organization wants to expand into new product categories. In addition, over the past few years, the company has successfully integrated several technology companies to optimize its operations and build a reliable supply chain. An example of this is Jibbitz shoe accessories, the idea was bought from their inventors for $ 10 million (Moreno, 2020). So, a resource that gives Crocs a competitive advantage is a successful experience of integrating complementary firms through mergers and acquisitions.
Although many strengths create a competitive advantage for the firm, there are also weaknesses. There are gaps in the range of products sold by the company; a lack of choice can give a new competitor a foothold in the market. Product marketing also leaves much to be desired as product positioning and unique selling proposition are not clearly defined (Moktadir et al., 2020). There is also the fact that investment in research and development is lower than that of the fastest-growing brands in the industry.
The firm’s scope can be defined as considerable, being a large firm with its audience, it needs a competitive edge in the international market over its competitors with similar products. In a competitive environment, Crocs strive for an advantage in differentiating their unique product. Differentiation allows the company to “become a mini-monopolist in its segment”, setting a price for the product that will cover all its production costs. (Ali & Anwar, 2021, p. 7) Crocs’ Value Chain includes manufacturing, logistics, marketing, and trade. Manufacturing processes aim to reduce costs as Crocs uses low-cost third-party manufacturers to produce footwear, most of which are located in Vietnam and China. The products are stored in warehouses (with a total area of approximately 1.3 million square feet) and distribution centers of the company located around the world (Jones, 2020). Marketing campaigns are an aspect that a company does not skimp on. Social media promotion, numerous collaborations with celebrities (Drew Barrymore, Natalie Dormer, Post Malone), and collaboration with fashion designers (Kristofer Kane) are examples of the company’s active marketing (Ampountolas, Shaw & James, 2019). Crocs sell its products through its retail and brand stores, corporate e-commerce sites, distributors, and marketplaces. The pandemic is still making its adjustments, and Crocs are currently more focused on developing online platforms.
To conclude, the firm’s marketing campaigns and business strategies provide a robust base for Crocs in monetary terms. Maintaining its competitive advantages, the company is gaining popularity from year to year. Meeting daily needs, comfortable quality clogs are popular with many people nowadays. Considering all the potential opportunities and threats in the analysis, it should be noted that the company has every chance to conquer the world market, and it is gradually striving for this.
References
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Ampountolas, A., Shaw, G., & James, S. (2019). The role of social media as a distribution channel for promoting pricing strategies. Journal of Hospitality and Tourism Insights, 2(1), 75-91.
Bian, X., & Haque, S. (2020). Counterfeit versus original patronage: Do emotional brand attachment, brand involvement, and past experience matter? Journal of brand Management, 27(4), 438-451.
Bruijl, G. H. T. (2018). The relevance of Porter’s five forces in today’s innovative and changing business environment. SSRN Electronic Journal, 1-21. Web.
Jones, L. (2021). Crocs sales soar in fashion comeback. BBC News. Web.
Moktadir, M. A., Kumar, A., Ali, S. M., Paul, S. K., Sultana, R., & Rezaei, J. (2020). Critical success factors for a circular economy: Implications for business strategy and the environment. Business strategy and the environment, 29(8), 3611-3635.
Moreno, A. M. (2020). Hypebeast Fashion: Why Streetwear Is the New Luxury Fashion (Publication No. 28497176) [Doctoral dissertation, State University of New York]. ProQuest Dissertations Publishing.
Musanganya, I., & Sinumvayo, J. P. (2017). SWOT analysis as the decision making support tool to conduct competitive analysis and strategic planning: an update. Scholars Journal of Economics, Business and Management, 4(8), 509-518.