Question
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
c. Growth by product extension
3. To what degree do the alternatives in Question 2 fit the companys 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 companys gross
margins affect this decision?
Question 1: What are Crocs core competencies?
Crocs has a number of core competencies:
• highly responsive supply chain
• global capabilities
• ability to service small retailers
• grass-roots “funky” marketing
• “can-do” culture
• product design
At the time of the case, these competencies provided a number of important advantages for
Crocs:
• Highly responsive supply chain: enabled the company to produce additional product
during
the selling season to fully meet customer demand. In the traditional supply chain, a seasons
sales would be limited to pre-booked orders plus a small additional build of about 25
percent.
Thus, it would be impossible for a traditional manufacturer to achieve the explosive
growth
that Crocs has experienced.
In addition to creating the capability to build additional product during the selling season,
Crocs added extra production capacity (1 million pairs per month at the time of the case) in
order to be able to immediately respond to increases in demand and increasing flexibility
in
making production decisions. It also had redundant operations (e.g. in compounding and
molding), so that production could be quickly shifted to the location best suited to meet
demand.
• Global capabilities: enabled Crocs to draw on the unique strengths of operations in all
parts
of the world to meet its production needs. In China, Crocs could outsource production to
low-cost, highly flexible suppliers. It could produce in Canada for the local market as well
as
for countries such as Israel that have duty-free relationships with Canada. It could utilize
the
proximity of its Mexican operation to provide rapid response to supply needs in the U.S..
These global supply chain capabilities supported the company’s global marketing strategy.
• Ability to service small retailers. Small retailers played an important part in Crocs’
growth,
and comprised a significant source of revenue. They were important in establishing the
brand, provided marketing buzz, provided feedback and test market outlets for new
products which reduced fashion risks, and generated good margins. However, small
retailers
were more difficult to serve, as they generally bought in small quantities and did not have
warehousing capabilities. Thus, Crocs flexible supply chain was essential to serving these
retailers. Once established with small retailers, large retailers sought out Crocs and
