Instructions for the group posting correct answers
Every week, one group will post ‘correct’ answers to the case questions on the blog. Here are the instructions to that group:
- Please post your answers as a comment to the post which contains the case questions.
- The answer should be posted after we discuss the case in class (preferably before noon the following day).
- Please make sure that you post ‘correct’ answers based on the inclass discussion. Points will be deducted if you post incorrect answers to the case questions on the blog.
- Feel free to discuss any answer with me if you are not sure of the correct answer to any question.
1. What are Croc’s core competence?
-Croslite material
-Supply chain flexibility
-vertical integration
-Global SC sales
-ability to serve small retailers
-CAN DO culture
2. How should they exploit these competencies in the future? Consider the following alternatives and comment how each alternative matches / does not match with Crocs core competencies.
Vertical acquisition; low cost commodities
-Matches with tighter control of supply chain and to reduce price and improve costs.
-Does not match with different industries and de-focuses the company.
Grow by acquisition
-Matches with global reach and vertical integration.
-Does not match with old school SCs and also de-focuses the company.
Grow by product expansion
-matches with global reach; leveraging sales, distributors, marketing outlets. Also matches with SC flexibility.
-does not match because SC only supports Croslite products and would have to build different capacity due to the differences in products.
3. What are the drawbacks of having too little or too much inventory?
High inventory drawbacks:
-Increased holding costs
-Possible excess goods if the product is not selling as forecasted.
-Could lead to clutter if other products have to be stored on the floor.
Low inventory drawbacks:
-Increased stock-out costs
-Possible increased costs if products need to be ordered for rush delivery.
-Can lead to bottlenecks if materials are missing for production.
Is Crocs a high margin or a low margin company (compared to competitors)? How does a company’s margin impact its inventory decisions? In other words, should a high margin company carry more or less inventory?
Crocs is a high margin company compared to competitors like Nike, Deckers Outdoor, and Timberland.
A high margin:
-enables a company to store more inventory and have a lower turnover rate
-gives a company access to more cash on hand
Carry more inventory—available more for sale→more demand in more places, also allows them to Dropship as mentioned in the article.
Carry less inventory—less to manage and cost effective. More flexible in supply chain management and it is beneficial if testing a new market.
A high margin company should carry less inventory for the following reasons:
-A model which stock more high-margin products but with a lower turnover rate
-Products usually have a higher cost of production and higher quality
-Carry more inventory along with a low turnover rate → stuck with inventory that can become obsolete or outdated
Please post Case discussion information as a comment to the post containing the original case questions. I’ve copied this post there for the Crocs case.