Presentation about crocs company and economic analysis

1. A STUDY OF DEMAND AND SUPPLY
Dr. Doaa Salman
Managerial Economics
PREPARED BY:
1- Esraa Farghaly.
2- Reham Reda.
3- Islam El-Saadany.

2. 1
Table of Contents
Introduction ..................................................................................................................................................2
Market analysis ............................................................................................................................................3
Crocs, Inc. SWOT Analysis ..........................................................................................................................3
Market share for the year 2019 ....................................................................................................................7
Demand Analysis .........................................................................................................................................9
Supply analysis ..........................................................................................................................................10
Factors affecting demand and supply.........................................................................................................12
Elasticity Comments...................................................................................................................................15
Conclusion .................................................................................................................................................18
References.................................................................................................................................................19

3. 2
Introduction
Crocs Inc. was started in the year 2002 in the state of Colorado of USA. It is one of the fastest
growing companies in the world, manufacturing footwear range for consumers of all age as Crocs
(brand). Crocs is sold over 100 countries across the world. Their unique product of sale is known
as Croslite (made of special plastic king). This is their trade secret, is original tech in the industry.
This becomes its competitive advantage over time as it provided its consumers with high comfort,
light weight and bright in colors and new age design, above all was odor free. Main reason behind
the company’s success in its short stint of a decade and high increase in popularity is due to its
efficient supply chain.
Crocs strategy is to maintain a flexible, globally diversified, low-cost manufacturing base. They
believe that if they follow this strategy, they can minimize production costs, increase overall
operating efficiencies and make production and development times short. Their internal
manufacturing capabilities help them to change production quickly as they need and respond to
orders for high demand models and colors flexibly throughout the year, while outsourcing allows
them to take advantage of the efficiencies and cost benefits of using contracted manufacturing
services. They also contract with third-party manufacturers to produce certain of footwear styles or
support their internal production processes. Crocs has its own standards of comfort, functionality
and style. They want to enhance the awareness of the Crocs brand in the international arena.
They set international goals in product design and development. They decide to create and
introduce new and innovative footwear products in accordance with their standards of comfort,
functionality, and style. We believe that we can think out a variety of different design ideas on a
cost-efficient basis and evaluate trends more quickly by introducing outside sources to the design
process. We devote to continuing to contribute to important resources to product design and
development to sustain our commitment to innovation, execute our growth strategy and drive our
global brand.
• Crocs has sold more than 300 million pairs of shoes. That’s a lot of shoes!

4. 3
• Crocs™ shoes are sold in more than 90 countries – the brand now does business in more
than 30 languages. That means you can spot Crocs whether you are walking the streets of
New York City, Hong Kong or London.
• Headquartered in Niwot, Colorado, Crocs has more than 4,000 employees globally.
• Crocs is traded on the NASDAQ stock market (NASDAQ: CROX).
• Crocs has regional offices in Boston, Massachusetts; Amsterdam, Netherlands; Singapore;
Seoul, Korea; Tokyo, Japan; Shanghai and Padua, Italy.
Market analysis
• Market Volume is around $64.5B.
• Monopolistic Competition
• Market is divided among various competitors
• They offer similar products with differences in specs and features
• Many producers / many consumers
• no business has total control over the market price
• Consumers perceive that there are non-price differences among the competitors' products
• Physical and distribution product differentiation
• There are few barriers to entry and exit
• Producers have a degree of control over price.
.

5. 4
Crocs, Inc. SWOT Analysis
It is an important technique to analyze the present Strengths (S), Weakness (W), Opportunities
(O) and Threats (T) Crocs, Inc. is facing in its current business environment.
▪ Strengths
1. Strong dealer community – It has built a culture among distributor & dealers where the
dealers not only promote company’s products but also invest in training the sales team to
explain to the customer how he/she can extract the maximum benefits out of the products.
2. Superb Performance in New Markets – Crocs, Inc. has built expertise at entering new
markets and making success of them. The expansion has helped the organization to build
new revenue stream and diversify the economic cycle risk in the markets it operates in.
3. Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling
the company to overcome any supply chain bottlenecks.
4. Strong Brand Portfolio – Over the years Crocs, Inc. has invested in building a strong brand
portfolio. The SWOT analysis of Crocs, Inc. just underlines this fact. This brand portfolio
can be extremely useful if the organization wants to expand into new product categories.
5. Good Returns on Capital Expenditure – Crocs, Inc. is relatively successful at execution of
new projects and generated good returns on capital expenditure by building new revenue
streams.
▪ Weaknesses
1. Financial planning is not done properly and efficiently. The current asset ratio and liquid
asset ratios suggest that the company can use the cash more efficiently than what it is
doing at present.
2. There are gaps in the product range sold by the company. This lack of choice can give a
new competitor a foothold in the market.
3. The marketing of the products left a lot to be desired. Even though the product is a success
in terms of sale, but its positioning and unique selling proposition is not clearly defined
which can lead to the attacks in this segment from the competitors.

6. 5
4. Limited success outside core business – Even though Crocs, Inc. is one of the leading
organizations in its industry it has faced challenges in moving to other product segments
with its present culture.
5. Investment in Research and Development is below the fastest growing players in the
industry.
▪ Opportunities
1. New trends in the consumer behavior can open new market for the Crocs, Inc. It provides a
great opportunity for the organization to build new revenue streams and diversify into new
product categories too.
2. The new taxation policy can significantly impact the way of doing business and can open
new opportunity for established players such as Crocs, Inc. to increase its profitability.
3. Stable free cash flow provides opportunities to invest in adjacent product segments. With
more cash in bank the company can invest in new technologies as well as in new products
segments. This should open a window of opportunity for Crocs, Inc. in other product
categories.
4. New environmental policies – The new opportunities will create a level playing field for all
the players in the industry. It represents a great opportunity for Crocs, Inc. to drive home its
advantage in new technology and gain market share in the new product category.
5. Lower inflation rate – The low inflation rate brings more stability in the market, enable credit
at lower interest rate to the customers of Crocs, Inc.
6. Decreasing cost of transportation because of lower shipping prices can also bring down the
cost of Crocs, Inc.’s products thus providing an opportunity to the company - either to boost
its profitability or pass on the benefits to the customers to gain market share.

7. 6
▪ Threats
1. Changing consumer buying behavior from online channel could be a threat to the existing
physical infrastructure driven supply chain model.
2. Increasing trend toward isolationism in the American economy can lead to similar reaction
from other
3. Government thus negatively impacting the international sales.
4. New environment regulations under Paris agreement (2016) could be a threat to certain
existing product categories.
5. Rising pay level especially movements such as $15 an hour and increasing prices in the
China can lead to serious pressure on profitability of Crocs, Inc.
6. Liability laws in different countries are different and Crocs, Inc. may be exposed to various
liability claims given change in policies in those markets.
7. Intense competition – Stable profitability has increased the number of players in the
industry over last two years which has put downward pressure on not only profitability but
also on overall sales.
8. The demand of the highly profitable products is seasonal in nature and any unlikely event
during the peak season may impact the profitability of the company in short to medium
term.
9. As the company is operating in numerous countries it is exposed to currency fluctuations
especially given the volatile political climate in number of markets across the world.

8. 7
Market share for the year 2019
COMPANY SALES
MARKET
SHARE
CROCS 1.2 b 2%
NIKE 40.8 b 63%
DECKERS 2.2 b 3%
ADIDAS 7.7 b 12%
SKETCHERS 5 b 8%
STEVE
MADDEN
1.8 b 3%
WOLVRINE 2.2 b 3%
Dr. Martens 0.2697 b 0.4%
VANS 3 b 5%
Birkenstock 0.1665 b 0.3%
UGG 0.1074 b 0.2%
TOTAL
64.4436
b
100%
CROCS
2%
NIKE
64%
DECKERS
3%
ADIDAS
12%
SKETCHERS
8%
STEVE MADDEN
3%
WOLVRINE
3%
VANS
5% MARKET SHARE
CROCS
NIKE
DECKERS
ADIDAS
SKETCHERS
STEVE MADDEN
WOLVRINE
VANS

9. 8
Nike is Crocs’ top competitor. Nike is a Public company that was founded in Beaverton, Oregon in
1964. Nike operates in the Apparel & Footwear industry. Nike has 72,799 more employees vs.
Crocs.
Deckers has been one of Crocs’ top competitors. Deckers is headquartered in Goleta, California,
and was founded in 1973. Deckers is in the Household Products industry. Deckers generates
174% the revenue of Crocs.
Adidas is perceived as one of Crocs’ biggest rivals. Adidas was founded in 1924 in
Herzogenaurach, Other. Adidas competes in the Leather Goods field. Adidas generates $23.9B
more revenue than Crocs.

10. 9
Demand Analysis
YEAR PRICE Q. D
2009 16.6 36,800.00
2010 17.69 42,618.00
2011 20.04 47,736.00
2012 21.55 49,947.00
2013 21.27 54,326.00
2014 20.92 55,700.00
2015 18.53 57,763.00
2016 18.21 56,097.00
2017 17.31 57,850.00
2018 17.71 59,815.00
According to the Demand table which is representing through the graph, we can notice that in
2010 Crocs demand increased although there was an increase in the price and this happened due
to many reasons one these was strong customer reception to our products and the cost-savings
initiatives undertaken in 2009 helped in producing more and increasing our capacity , this year
sales are being driven by product innovation, improved service, and brand building initiatives as
well as new distribution from the expansion of our company-operated stores and key wholesale
accounts. In the following years till 2015 the consumer demands for our expanded product
assortment continue growing. We reengaged the consumer during this period through great
product and more effective marketing and merchandising programs. Our recent performance
demonstrates we are succeeding at generating new demand and evolving into a year-round brand
as we continue to diversify our product line. In the year 2016 the demand decreased slightly due
to global effects on the whole economy then started increasing in the following years.
0
5
10
15
20
25
0.00 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 60,000.00 70,000.00
Price
Qd
DEMAND CURVE

11. 10
Supply analysis
The supply of Crocs has an increasing trend since 2009 till 2018, that increase in supply has
many reasons one of these reasons is to meet the increased demand that resulted from the wide
and huge distribution channels and the expansion globally. Also, we depend on third-party
manufacturers located in China, we may to meet sales demand. In the year ended December 31,
2009, third-party manufacturers produced approximately 73% of our footwear products as
measured by number of units; one such manufacturer in China produced and we produced
approximately 27% of our footwear products at our Company-operated manufacturing facilities in
North America and Italy. In the following years Crocs was able to maintain a strong brand image,
expanding distribution channels, streamline its supply chain and sell its product in new markets
abroad these factors were a good driver to the supply. They expanded their footwear product line
and react to the rapidly changing tastes of consumers and provide appealing merchandise in a
timely manner.
Third party manufacturers located in China and Eastern Europe produce most of the footwear
products. Crocs depend on the ability of these manufacturers to finance the production of goods
0
5
10
15
20
25
0 20,000 40,000 60,000 80,000
Price
Qs
SUPPLY CURVEYEAR PRICE Q. S
2009 16.6 42,148.00
2010 17.69 48,900.00
2011 20.04 53,933.00
2012 21.55 57,178.00
2013 21.27 62,201.00
2014 20.92 63,460.00
2015 18.53 66,839.00
2016 18.21 64,171.00
2017 17.31 65,380.00
2018 17.71 66,844.00

12. 11
ordered, maintain adequate manufacturing capacity and meet its quality standards. They compete
with other companies for the production capacity of the third-party manufacturers, and they do not
exert direct control over the manufacturers’ operations. As such, they have experienced at times,
delays or inabilities to fulfill customer demand and orders, particularly in China. They cannot
guarantee that any third-party manufacturer will have enough production capacity, meet the
production deadlines or meet our quality standards. In addition, we do not have long-term supply
contracts with these third-party manufacturers and any of them may unilaterally terminate their
relationship with Crocs at any time or seek to increase the prices they charge it. As a result, we
are not assured of an uninterrupted supply of products of an acceptable quality and price from our
third-party manufacturers. Foreign manufacturing is subject to additional risks, including
transportation delays and interruptions, work stoppages, political instability, expropriation,
nationalization, foreign currency fluctuations, changing economic conditions, changes in
governmental policies and the imposition of tariffs, import and export controls and other non-tariff
barriers. Crocs may not be able to offset any interruption or decrease in supply of its products by
increasing production in the internal manufacturing facilities due to capacity constraints, and they
may not be able to substitute suitable alternative third party manufacturers in a timely manner or
at acceptable prices. Any disruption in the supply of products from a third-party manufacturer may
harm the business and could result in a loss of sales and an increase in production costs, which
would adversely affect the results of operations. In addition, manufacturing delays or unexpected
demand for their products may require faster use, more expensive transportation methods, such
as aircraft, which could adversely affect our profit margins. The cost of fuel is a significant
component in transportation costs. Increases in the price of petroleum products can adversely
affect the profit margins.

13. 12
Factors affecting demand and supply
1. Seasonality
Due to the seasonal nature of our footwear which is more heavily focused on styles suitable for
warm weather, revenues generated during first and fourth quarters are typically less than
revenues generated during second and third quarters, when the northern hemisphere is
experiencing warmer weather. We continue to expand our product line to include more winter-
oriented styles to mitigate some of the seasonality of our revenues. Our quarterly results of
operations may also fluctuate significantly as a result of a variety of other factors, including the
timing of new model introductions or general economic or consumer conditions. Accordingly,
results of operations and cash flows for any one quarter are not necessarily indicative of
results to be expected for any other quarter or year.
2. Competition
The global casual, athletic and fashion footwear markets are highly competitive. Although we
believe that we do not compete directly with any single company with respect to the entire
spectrum of our products, we believe portions of our wholesale business compete with
companies such as, but not limited to, Dickers Outdoor Corp., Sketchers USA Inc., Steve
Madden, Ltd., Wolverine World Wide, Inc. and VF Corporation. Our company-operated retail
locations also compete with footwear retailers such as Genesco, Inc., Macy’s, Dillard’s, Dick’s
Sporting Goods Inc., The Finish Line, Inc and Footlocker, Inc. The principal elements of
competition in these markets include brand awareness, product functionality, design, quality,
pricing, customer service, marketing and distribution. We believe that our unique footwear
designs, the Croslite material, our prices, expanded product-line and our distribution network
continue to position us well in the marketplace. However, some companies in the casual
footwear and apparel industry have greater financial resources, more comprehensive product
lines, broader market presence, longer standing relationships with wholesalers, longer
operating histories, greater distribution capabilities, stronger brand recognition and greater
marketing resources than we have. Furthermore, we face competition from new players who
have been attracted to the market with imitation products like ours as the result of the unique
design and success of our footwear products.

14. 13
3. Global economic conditions
Uncertainty about the current and future global economic conditions may cause consumers and
retailers to defer purchases or cancel purchase orders for our products in response to tighter
credit, decreased cash availability and weakened consumer confidence. Our financial success
is sensitive to changes in general economic conditions, both globally and nationally.
Recessionary economic cycles, higher interest borrowing rates, higher fuel and other energy
costs, inflation, increases in commodity prices, higher levels of unemployment, higher
consumer debt levels, higher tax rates and other changes in tax laws or other economic factors
that may affect consumer spending could adversely affect the demand for our products. As a
result, we may not be able to maintain or increase our sales to existing customers, make sales
to new customers, open and operate new retail stores, maintain or increase our international
operations on a profitable basis, or maintain or improve our earnings from operations as a
percentage of net sales. Our financial success is also significantly related to the success of our
wholesale customers who are directly impacted by fluctuations in the broader economy
including the global economic downturns which reduce foot traffic in shopping malls and lessen
consumer demand for our products. In addition, any decrease in available credit caused by a
weakened global economy may result in financial difficulties for our wholesale and retail
customers, product suppliers and other service providers, as well as the financial institutions
that are counterparties to our credit facility and derivative transactions.
4. Political instability
We conduct significant business activity outside the U.S. which exposes us to many risks such as
political unrest, changes in law, terrorism, or war, any of which can interrupt commerce;
expropriation and nationalization; difficulties in managing foreign operations effectively and
efficiently from the U.S.; and difficulties in understanding and complying with local laws,
regulations and customs in foreign jurisdictions. In addition, we are subject to customs laws
and regulations with respect to our export and import activity which are complex and vary
within legal jurisdictions in which we operate. We cannot assure that there will be no control
failure around customs enforcement despite the precautions we take.

15. 14
5. Foreign currency Fluctuations
Foreign currency fluctuations could have a material adverse effect on our results of operations
and financial condition. As a global company, we have significant revenues, costs, assets,
liabilities and intercompany balances denominated in currencies other than the U.S. dollar. We
pay most expenses attributable to our foreign operations in the functional currency of the
country in which such operations are conducted and pay most of our overseas third-party
manufacturers in U.S. dollars. A significant portion of our revenues is from foreign sales. Our
ability to maintain the current level of operations in our existing international markets is subject
to risks associated with international sales operations as well as the difficulties associated with
promoting products in unfamiliar cultures. In addition to foreign manufacturing, we operate
retail stores and sell our products to retailers outside of the U.S. Foreign manufacturing and
sales activities are subject to numerous risks, including tariffs, anti-dumping fines, import and
export controls, and other non-tariff barriers such as quotas and local content rules; delays
associated with the manufacture, transportation and delivery of products; increased
transportation costs due to distance, energy prices, or other factors; delays in the
transportation and delivery of goods due to increased security concerns; restrictions on the
transfer of funds; restrictions, due to privacy laws, on the handling and transfer of consumer
and other personal information; changes in governmental policies and regulations

16. 15
Elasticity Comments
2009-2010
Revenues increased $143.9 million, or 22.3%, during the year ended December 31, 2010
compared to the same period in 2009, due to a 15.8% increase in unit sales and a 6.6% increase
in average selling price per pair of shoes, as shown in the table below, both of which were driven
by increased demand and improvements in the global economy. During the year ended
December 31, 2009, we sold $58.3 million in end of life and impaired products as we disposed of
excess and impaired inventory as previously mentioned. The following table sets forth revenue by
channel and by region as well as other revenue information for the years ended December 31,
2010 and 2009.
2010-2011
During the year ended December 31, 2011, revenues from our wholesale channel increased
$116.6 million, or 24.2%, which was primarily driven by strong demand in all three operating
segments, particularly Asia. Revenues from our retail channel increased $73.8 million, or 31.7%,
as we continued to grow our retail presence by opening new retail stores. We also continue to
close certain kiosks as branded stores allow us to better merchandise the full breadth and depth
of our product line. Revenues from our internet channel increased $20.9 million, or 27.9%,
primarily driven by increased internet sales in the Americas and Europe operating segments.
2011-2012
During the year ended December 31, 2012, revenues increased $122.4 million, or 12.2%,
compared to 2011, primarily due to an increase of 2.2 million, or 4.6%, in global footwear unit
sales and an increase of $1.51, or 7.5%, in footwear average selling price. For the year ended
December 31, 2012, revenues from our wholesale channel increased $47.5 million, or 7.9%,
which was primarily driven by increased wholesale sales in Americas and Asia. Revenues from
our retail channel increased $68.2 million, or 22.2%, primarily driven by strong demand in all
three reportable segments as well as the continued growth of our retail presence by opening 107
company-operated stores (net of store closures) during the year. We closed certain kiosks as
branded stores allowed us to better merchandise the full breadth and depth of our product line.
Revenues from our internet channel increased $6.7 million, or 7.0%, compared to 2011 primarily

17. 16
driven by increased brand awareness in the Americas and Asia operating segments and focus on
improving our regional web store presence.
2012-2013
During the year ended December 31, 2013, revenues increased $69.4 million, or 6.2%,
compared to the same period in 2012, primarily due to an increase of 4.4 million, or 8.8%, in
global footwear unit sales. This increase was partially offset by a decrease of $0.28 per unit, or
1.3%, in average footwear selling price.
For the year ended December 31, 2013, revenues from our wholesale channel increased $27.9
million, or 4.3%, compared to 2012, which was primarily driven by increased wholesale demand
in our Asia Pacific, Europe and Americas segments partially offset by decreased wholesale sales
in our Japan segment. These increases were driven by strong commitments from current
wholesale customers and global distributors in emerging markets specifically in our Asia Pacific
and Europe regions. We faced challenges in our Americas segment due to lower than anticipated
at-once sales as a result of accounts remaining lean on inventory and in our Japan segment due
to continued macroeconomic pressure on consumer spending and unfavorable exchange rates
between the Japanese Yen and U.S. Dollar.
2013-2014
During the year ended December 31, 2014, revenues remained relatively flat, increasing $5.5
million, or 0.5%, compared to 2013 primarily due to an increase of 1.4 million, or 2.5%, in global
footwear unit sales primarily driven by improved year-over-year performance in our wholesale
and internet channels. This increase was partially offset by a decrease of $0.35 per unit, or 1.7%,
in average footwear selling price.
2014-2015
During the year ended December 31, 2015, revenue declined 9.0% compared to the same period
in 2014. The decrease in revenue is due to the net impact of (i) a $85.3 million, or 7.1%,
decrease associated with foreign currency exchange rate adjustments associated with a strong
U.S. Dollar, (ii) a $37.8 million, or 3.1%, increase associated with higher sales volumes, and (iii) a
$34.4 million, or 2.9%, decrease associated with store closures, partially offset by (iv) a $25.7
million, or 2.1%, decrease associated with a lower average selling price due to changes in
product mix.

18. 17
2015-2016
During the year ended December 31, 2016, revenue decreased 5.0% compared to the same
period in 2015. The decrease in revenue is due to the net impact of (i) a $46.3 million, or 4.2%,
decrease associated with lower sales volumes, (ii) a $4.7 million or 0.5% decrease associated
2016-2017
Revenues decreased $12.8 million, or 1.2%, during the year ended December 31, 2017,
compared to the same period in 2016.
The revenues decreased primarily due to the sale of our Taiwan business in the fourth quarter of
2016, the sale of our Middle East business in the second quarter of 2017, reductions in the
number of company-operated retail stores, and additional actions taken to optimize our
wholesale, retail, and e-commerce channels. The revenue decline associated with store closures
and transfers was approximately $39.1 million. Higher sales volumes increased revenues by
$39.6 million, or 3.8%, offset by lower average footwear selling prices, which decreased
revenues by approximately $57.2 million, or 5.5%, as our product and channel mix continued to
change. Favorable exchange rate activity drove an increase of $4.8 million, or 0.5%.
2017-2018
Revenues increase d $64.7 million, or 6.3%, during the year ended December 31, 2018
compared to the same period in 2017.
The increase in revenues was driven by 22.5% growth in our e-commerce channel and 7.8%
growth in our wholesale channel, which more than offset a reduction in our retail channel of 3.2%.
The decrease in retail revenues was driven by our targeted reduction in the number of company-
operated retail stores, partially offset by same store sales growth in our remaining company-
operated retail stores. Higher unit sales volume, particularly in our clog and sandal silhouettes,
increased revenues by $25.8 million , or 2.5% , and an increase of $27.7 million , or 2.7% , was
attributable to higher average selling price (“ASP”) as a result of changes in product mix, reduced
promotional activities, and price increases. Favorable exchange rate activity drove an increase of
$11.2 million, or 1.1%.

19. 18
Conclusion
Crocs Company demonstrated a fast and huge increase in sales and revenues since its
foundation in the year 2002. our product’s demand and supply get affected by other externalities
and circumstances other than price. Also, it is not price sensitive and its elasticity is determined by
other factors than price:
i.Seasonality
ii.Competitive pricing
iii.Exchange rate
Our product doesn’t follow the law supply and demand most of the time and Continue expansion
in Asia Pacific and European regions in addition to Continuing Supply Chain innovations and
focusing on signature business also they found Potential for acquisitions and mergers.
Also it is important to stress on our ability to maintain our revenue and profit levels or to grow in
the future depends on, among other things, the continued success of our efforts to maintain our
brand image, our ability to bring compelling and profit enhancing footwear offerings to market, our
ability to effectively manage or reduce expenses and our ability to expand within our current
distribution channels and increase sales of our products into new locations internationally.
Successfully executing our long-term growth and profitability strategy will depend on many factors.

20. 19
References
1. Crocs, Inc annual reports (2009 – 2018)
2. www.crocs.com
3. www.ukessays.com/essays/marketing/crocs-marketing-analysis.
4. www.owler.com/company/crocs
5. https://csimarket.com/stocks.
6. https://www.reuters.com/article/crocs-antitrust
7. https://investors.crocs.com.
8. www.crocsegypt.com
9. www.smallbusiness.chron.com
10. www.nursingtimes.net
11. www.apma.org/workfootwear
12. www.web.archive.org/web/20070616133202/http://www.bloggingstocks.com/2007/06/14/george-
bush-cozy-with-crocs-ceo-an-ugly-tide-that-raises-two-bo/