CROCS - MISSION STATEMENT

THIS DOCUMENT CONTAINS THE STRATEGIC MARKETING PLAN FOR CROCS INC.

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TEAM ERIE UTA:
MALAVIKA RAVI- 15UTA21
MONIKA.S- 15UTA24
NIVETHITHAA.S- 15UTA31
SANJAY.R- 15UTA40
SHARAVANA BALAJI.S- 15UTA44
VYSHNAV DEVE.S- 15UTA59
NIVEDA.S- 15UTA62

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INDEX

SL.NO TOPIC PAGE NO.
1. Executive Summary 3
2. Mission statement 3
3. Strategic Problems
4. Strategic Objectives
5. Five force model
6. EFE Matrix
7. Financial ratios
8. IFE Matrix
9. BCG Matrix
10. Grand Strategy Selection Matrix
11. Advantages and disadvantages of alternative strategies
12. QSPM
13. Recommended Strategy
14. Implementation Steps
15. Proforma Analysis

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I. EXECUTIVE SUMMARY:
Born in Colorado as a simple, comfortable boat shoe, today Crocs footwear can be found
across the globe. It is headquartered in Niwot, Colorado. With distinct collections, Crocs
offers colorful, lightweight comfort that lasts long. All Crocs shoes are uniquely designed and
manufactured using the Croslite technology. Each pair of Crocs has the soft, comfortable,
non-marking and odor-resistant qualities that Crocs customers know and love. For a long
time Crocs was able to rely on its trusted success formula. It has acquired various firms such
as Foam creations (2004), Jibbitz (2006), Bite footwear & Ocean minded (2007), Tidal Trade
& Tagger (2008). However, sales are declining and forces from the environment ask for
strategic changes. In the long run, changes in Crocs’ brand portfolio and new footwear
products should attract new segments and increase the target market. They can enter into new
markets by product development combined with market development and market penetration.
The analytical study comprises of internal audit, external audit which covers Crocs’
strengths, weaknesses, opportunities and threats. Few strategic management tools like
Internal Factor Evaluation Matrix (IFE), External Factor Evaluation Matrix (EFE), Porter’s
Five force Model, Grand Strategy Matrix, Boston Consulting Group Matrix (BCG) and
Quantitative Strategic Planning Matrix (QSPM) were used to develop a strategic plan for
Crocs to offset the problems. Also Financial Ratio analysis was performed which gives a
clear idea about where the company stands based on the footwear industry average. Thus
based on the above tools, we converge into Product development combined with Market
development strategy. Further, a three year projected income statements on Optimistic,
Pessimistic and Realistic scenarios were developed based on the above strategic assumptions.


II. MISSION STATEMENT:
Crocs Inc. Mission statement is “To bring profound comfort, fun and innovation to the
world’s feet”.
Ocean Minded’s Mission statement is “To become the global leader in sustainable lifestyle
footwear, apparel and accessories whilst ensuring that the four pillars of the Ocean Minded
brand-Quality, Authenticity, Responsibility and Community-resonate throughout our
company, products, associates and actions”.

III. STRATEGIC PROBLEMS:
Strategic problems are important external/internal issues which is a primary concern for the
organisation which requires immediate action.

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 Infringement of intellectual property rights is a major strategic problem for Crocs. In
2007, many Croc-offs were seized in Philippines and Denmark.
 Low product development is another strategic problem as they do not cover all the
segments of consumers in the market.
 They have a weak distribution channel which gives them less than 10% of single
customer accounts. Their sales growth rate has declined from 27% in 2011 to 12% in
2012.

IV. STRATEGIC OBJECTIVES:
The strategic objectives are the fundamentals for a strategic plan. These objectives can be
classified into short term and long term objectives which is aligned with the organisations’
mission and vision.
Short-term objectives (less than a year):
 Increase retail stores by 100. i.e. from 287 to 380 by the end of 2013
 Give the employees more training and increase their efficiency and prepare them for
market development.
Long-term objectives (more than a year):
 Protecting patents and shutting down crock-offs.
 The value of Crocs stock on the NASDAQ stock exchange should have a stable
growth in the forth coming years.
 Expand the product line by 2015.
 There should be an increase in the sales growth by 25% in three years by 2015.

V. EXTERNAL AUDIT:
 INDUSTRY ANALYSIS- PORTER’S FIVE FORCE MODEL:

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 INDUSTRY RIVALRY:
They are the competition among the existing firms. This explains how intense the
competition between the rivals is.
 Large industry size: Large industries allow multiple firms and produces to prosper
without having to steal market share from each other. Large industry size is a
positive for Crocs.
 Capability of competitors: A large number of competitions will weaken Crocs.
On the whole Industry rivalry is powerful and has a huge impact on Crocs.
 THREAT OF NEW ENTRANT:
Crocs can protect its technologies through patenting and it even has a strong brand name. The
customers are loyal to existing brands and it makes it difficult for a new entrant to get
successfully established in the market. On the whole threat of new entrant is less powerful
and has a low impact on Crocs.
 THREAT OF SUBSTITUES:
In actual there are no substitutes for this product category which makes Crocs more powerful
and has a less impact on Crocs.
 BARGAINING POWER OF CUSTOMERS :

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The purchasing attitude of consumers has a great impact on the firm.
 Product is more important to customer: When customers desire for a particular
product, they are willing to pay more. This positively affects Crocs.
 Large number of customers: When there are large numbers of customers their
bargaining power gets limited. This helps Crocs.
 Limited buyer choice: When choices are limited customers end up paying more
for their available choices which helps Crocs positively.
Overall, the bargaining power of customers is less compared to other factors.
 BARGAINING POWER OF SUPPLIERS :
In Crocs case, the firm has the patent for Croslite the proprietary material which gives Crocs
the desired comfort for the products. This reduces the bargaining power of suppliers. So, this
is a very less powerful factor of all.





X. PROFORMA INCOME STATEMENT:
OPTIMISTIC FORECAST:
The optimistic rate for forecast is 27% as we have taken the highest growth rate for the
revenues compared with the previous income statements and calculated the changes for each
item on that basis.

OPTIMISTIC

2013 2014 2015

(in thousands)
Revenues 1423734 1804519 2287146
Cost of sales 656456.5 836241.2 1065264
Restructuring charges 0 0 0
Gross profit 769591 974165.5 1233121
Selling,general&admin expenses 543410.1 641396.6 757051.9
Restructuring charges 0 0 0
Asset impairments 5280 19771.91 74039.51
Income(loss) from operations 245258.7 411508.2 690450.8
Foreign currency transaction (gains)losses 5253.763 11040.81 23202.33
Other income -4273.68 -6737.14 -10620.6
Interest expense 1086.699 1410.889 1831.793
Income(loss) before income taxes 246249.1 416622.8 704873.8
Income tax expense 25985.6 47536.19 86959.29
Net income 218733 364268.7 606637.6

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PESSIMISTIC FORECAST:
The pessimistic rate for forecast is 12% as we have taken the lowest growth rate for the
revenues compared with the previous income statements and calculated the changes for each
item on that basis.

PESSIMISTIC

2013.0 2014.0 2015.0

(in thousands)
Revenues 1260666.8 1414830.6 1587846.8
Cost of sales 571717.6 634282.5 703694.2
Restructuring charges 0.0 0.0 0.0
Gross profit 689092.4 781030.0 885233.8
Selling,general&admin expenses 523617.0 595523.2 677304.1
Restructuring charges 0.0 0.0 0.0
Asset impairments 3765.3 10055.2 26851.9
Income(loss) from operations 163007.3 181779.2 202712.8
Foreign currency transaction (gains)losses -1279.2 654.5 -334.9
Other income -4657.5 -8001.6 -13746.7
Interest expense 821.3 805.9 790.8
Income(loss) before income taxes 154980.0 165023.3 175717.4
Income tax expense 8442.1 5017.1 2981.7
Net income 152950.5 178112.7 207414.5
REALISTIC FORECAST:
The realistic rate for forecast is 19% as we have taken the average growth rate of the previous
income statements for the revenues and calculated the changes for each item on that basis.

REALISTIC

2013 2014 2015

(in thousands)
Revenues 1342200.2 1603756.6 1916282.8
Cost of sales 614087.1 731778.3 872025.3
Restructuring charges 0.0 0.0 0.0
Gross profit 729341.7 874933.2 1049587.8
Selling,general&admin expenses 533513.5 618247.2 716438.4
Restructuring charges 0.0 0.0 0.0
Asset impairments 4522.7 14506.8 46531.5
Income(loss) from operations 204133.0 285073.1 398106.6
Foreign currency transaction (gains)losses 1987.3 1579.7 1255.8
Other income -4465.6 -7355.8 -12116.5
Interest expense 954.0 1087.4 1239.3
Income(loss) before income taxes 200614.6 276515.0 381131.5
Income tax expense 17213.8 20860.0 25278.4
Net income 185841.8 262954.0 372062.8

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Recommendation:
The mission statement of Ocean Minded talks about the accessories but in reality they do not
sell accessories so they can reframe the mission statement and remove accessories because it
is misleading the customers.
EXTERNAL FACTORS EVALUATION (EFE) MATRIX
KEY EXTERNAL FACTORS
Weight
(0-1)
Rating
(1-4)
Weighted Score
OPPORTUNITIES
Expansion into developing countries 0.15 4 0.6
Expansion into fashion industry 0.13 3 0.39
New successful acquisitions 0.08 3 0.24
Targeting middle class consumers 0.09 2 0.18
Develop products for all the seasons 0.1 3 0.3

THREATS
Imitation of crocs in the name of crocs-off 0.15 4 0.6
Negative publicity 0.1 2 0.2
Intensive competition 0.13 3 0.39
Saturated market in USA and Europe 0.07 2 0.14

TOTAL 1 3.04