1) What are Crocs’ core competencies?

2. How do they exploit these competencies in the future? Consider the following alternatives:

a. further vertical integration into materials, b. growth by acquisition, and c. growth by product extension.

3. To what degree do the alternatives in question two fit the company’s core competencies, and to what degree do they defocus the company away from its core competencies?

4. How should Crocs plan its production and inventory? How do the company’s gross margins affect this decision?

Answer:

1. Crocs core competencies are in several areas. They are a recognized brand name, They have properitory material that helps them make unique shoes. Crocs also has just in time inventory management. The orders are done in low quantities and delivered so that they could deliver popular styles and colors immediately. Crocs product design is unique, as they have been one of the lightest shoes found in bright colors. They are also odor resistant shoes.

2. I think they can exploit these core competencies by doing growth by product extension. Crocs' is a strong brand name. For a brand as strong as theirs they can easily engage in innovative product research and design shoes that can help create better portfolio for customers. They can also allow users to try new styles, designs using their trademark material. With their manufacturing capabilities in place they do not need to move into acquisition, or vertical integration.

3. They do fit into the core competency of being a brand that stands for innovation and modern thinking,. However if the product extension is not implemented keeping the overall product and brand guidelines, there is a chance that the product & brand goodwill can be tarnished.

4. Crocs is becoming globally sensitive to tax laws of different countries. Their production and inventory timelines do not account for a large period of orders. They also operate in a dynamic period, and allow changes to happen, if the demand shifts. With the new planning system Crocs can add production, and inventory to different global locations depending on the most favorable duty structure. Company has very high gross margins. They have gross margins as high as 50%, and they need to use their cashflow to manage inventory of finished goods. Higher margins around 56% and lower inventory turnover at 3.5% allows access to more cash at hand.