Can talk about our lack of focus on private label in the past 3 years. And mention briefly that we plan on appealing to private label markets.Strong Internet Market Share in the last three years. Highest Margins.
We have exceeded expectations every year with regards to EPS and are seeking aggressive growth strategies.
Our ROE went down because customers weren't willing to pay as much for the product (due to increased competition created from competitors’ lower prices-largely H) and the product was becoming more and more expensive to produce (due to reject rates, overpaying of employees, excessive ending inventory due to overproduction)
Our stock price went down because we lost some market share due to inefficient cost control and lower prices of competitors.The market is moved by popularity, and we didn’t meet our cost standards. We will.
Revenues have consistently risen over the years; however, we are looking to improve our margins and our revenue through the strategy that we will take.
Our market share has fluctuated largely because of our inability to compete with lower prices, due to cost (from overproduction, reject rates, etc.)Furthermore, this will not be an issue because we will be adjusting our strategy to cut unnecessary costs dramatically, while allowing us to have the flexibility to charge competitive prices at higher than normal SQ.
Image rating is consistent with investor expectations.
We make most of our revenue from wholesale sales; however, our internet segment gives us the highest margins.
Weaknesses: wholesale price and rebate offers were a common weakness among all regions. Less retailers were willing to hold our product- most likely as a result of prices that will be adjusted to be more competitive.
Internet price is the same throughout.We need to focus on improving our SQ rating so as to compete in lower prices and higher quality.
We have had a strong market share due to the fact that we’ve had consistently lower price than most. Since B has dropped their price, they have become our biggest competitor in the internet market.
At this time, B is competing with a low cost strategy: this is reinforced by the fact that they opened a new plant in latin America- where they can produce at even lower cost/lower price throughout all regions.In the wholesale market we usually have one of the highest wholesale prices. This is not necessarily a bad thing, but considering that H is matching us or above our price at times, and they have more SQ, it is now a challenge. We must improve our SQ with our new strategy in order to compete with H.
In year 13 Company C has the largest internet share.Our company lost some internet share, but kept significant margins above 26 percent.Most companies are leaning toward the many models/mid to lower price in internet and wholesale segments; H has chosen to do the opposite. We think it beneficial to follow suit. There is currently a trend towards producing less models as the years progress.
Notes: Overproduction has been the norm over the last 4 years. The industry has overproduced by 25 percent in Year 13. We are overproducing and having surpluses every year. This cost money.
Our labor costs are considerably lower in Asia which allow us to produce more shoes there than in North America. Of all the shoes in the market, most of them are using a greater amount of There is a higher than normal (58.4%) superior materials usage which leads to superior prices being 16.8 percent above the base and standard materials being 4.2 percent below the base.
Best in Asia because it is more cost efficient to produce in the Asian plant and to send it to the Asian Market (thus not incurring any Tarriffs)
Margins are significantly higher in internet market.Our profit margins have improved in Latin America, but we must improve our margins there- perhaps with greater celebrity appeal, improved SQ and other initiatives. All profit margins will go up once number of models produced goes down to 50 in NA and AP.
We viewed Latin America as not that profitable and decided to focus more on others, like Europe.
We decided to be the highest in Advertising everywhere.
We obtained 1 celebrity and wanted more, but we did not win the bid for 2 others (we wanted the celebrities to boost us in Europe)
We took out a 5 million dollar loan that has not been repaid, because we were planning on originally buying a plant- instead we used the money to buy a celebrity.
We decided to issue dividends for year 12 and 13 to share our growth with others. We may or may not issue dividends every year now. </li></li></ul><li>Strengths and Weakness (North America)<br />*Weakness in red.<br />
SWOT Conclusions <br />Strengths: Credit Rating, little debt, Internet Segment<br />Weaknesses: Model numbers, cost managing, idle cash, reject rate, lack of celebrities<br />Opportunities: low model, high quality market<br />Threats: production cost reduction of LA plant belonging to B.<br />
Trends and Averages in Each Market Segment<br /><ul><li>Prices
Company B- Consistent Large Market Share and low wholesale prices. Mediocre advertising and celeb appeal.<br />Company C- Moderately prices. Avg models. Consistent with price. Not 100% sure of strategy. <br />Company D- In year 13 they moved to lower models. Other things consistently sub-par. Med-Low price.<br />Company E- Seem to have comparable overall strategy with price and celebrities. Essentially our biggest competitors<br />Company F- a member of the “Consistent price and model group.” Mid price mid models.<br />Company G- Changed strategy from high price and s/q to more models and “joined pack”<br />Company H- Most consistent with our revised strategy of lower models. Higher s/q and price <br />Compan A- Originally wanted high price, quality, s/q and moderate models. Looking to transcend to fewer models and make H main competitor. <br />Competitor’s Overall Strategy<br />
Products or Functions Lagging Behind as Weaknesses:<br />Overproduction- Excessively meeting demand<br />Retail Outlets available- Looking to pursue more opportunities in across market segments. <br />Profit Margin- Weakness because it’s costing too much to pursue our original strategy and we can’t create lucrative margins from expensive costs<br />Products and Functions<br />
Cash allocation weaknesses:<br />-Took out unnecessary loan that we still have to repay<br />Too much ending cash every year<br />Didn’t allocate enough cash on celebrities<br />Cash Allocation strengths:<br />smart in advertising, but now other companies are starting to exceed us as the consistent industry leader<br />Divident payments were more than any other group over the first 3 years. <br />Cash Management <br />
Key Issues<br />Surpluses every year- the effects of inventory cost on our bottom line.<br />Cost<br />Lack of Celebrity Appeal<br />Our SQ needs improvement to compete<br />Lack of Private Label production<br />
Strategy<br />We paid 29.2 million total and 30.15 per pair in last year alone for our excess inventory- we can overcome this by producing less branded footwear in all markets and using the rest of production capacity to compete in the private label market.<br />Acquire two celebrities with high appeal to boost marketing efforts and customer demand for us. <br />Compete at the high end, low model market<br /><ul><li>Produce at 50 models for both plants; thus reducing cost substantially.
Increase our SQ by upping superior materials and purchasing the SQ upgrade</li></ul>Lower our branded production in both plants and make the difference in the private label market.<br />Ship to the most profitable locations at no less than 13 contribution margin per pair at each region.<br />
"The person who gets the farthest is generally the one who is willing to do and dare. The sure-thing boat never gets far from shore."-Dale Carnegie<br />