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  • MGMT S-5033 Supply Chain Management Panagiotis Markidis Case Study Assignment # 2 07/21/2015

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    !!Harvard!Summer!School!Programmes!!

    Assignment!Cover!Sheet!!!Submitted!by:!! ! Panagiotis!Markidis!!Date!Sent:!! ! ! 07/24/2015!!Module!Title:!! ! Supply!Chain!Management!!Instructor:!! ! !!!!!!!!!!!Zal!Phiroz!!Date/Year!of!Module:!! 2014/2015!!Submission!Deadline:!! 07/24/2015!!Word!Count:! ! 4576!!Number!of!Pages:! ! 26!!Question:!CROCS!(A):!REVOLUTIONIZING!AN!INDUSTRYS!SUPPLY!CHAIN!MODEL!FOR!COMPETITIVE!ADVANTAGE!

    1.! !a.! Crocs! have! been! discussed! by! many! industry! experts! as! a! fad! product.! ! Applying! Crocs! core!

    competencies,! how! can!Crocs! supply! chain!model! be! used! to!mitigate! the! potential! of! the! brand!becoming!a!fad?!

    b.! Why!do!competitors!in!the!industry!not!have!as!flexible!a!supply!chain?!2.! What! strategy! did! Crocs! use! to! reduce! the! ordering! risk! for! smaller! businesses?! ! What! impact! did! this!

    strategy!have!on!economies!of!scale,!and!on!the!supply!chain!as!a!whole?!3.! Why!did!Crocs!not!sell! to!Wal`Mart?! !What!effects!did! this!decision!have!on! the!overall!supply!chain,!and!

    relationship!with!other!retailers?!4.! Crocs!is!sold!to!buyers!within!a!number!of!consumer!markets!(gardening,!boating,!medical,!etc.).!!How!does!

    this!business!model! affect! the!overall! supply! chain?! !What! areas!of! concern!within! the! supply! chain!may!result?!

    !This! is! to! certify! that! the! work! I! am! submitting! is! my! own.! All! external! references! and!sources! are! clearly! acknowledged! and! identified! within! the! contents.! I! am! aware! of! the!University!of!Warwick!regulation!concerning!plagiarism!and!collusion.!No!substantial!part(s)!of! the!work!submitted!here!has!also!been!submitted!by!me! in!other!assessments!for!accredited!courses!of!study,!and!I!acknowledge!that!if!this!has!been!done!an!appropriate!reduction!in!the!mark!I!might!otherwise!have!received!will!be!made.!!

  • MGMT S-5033 Supply Chain Management Panagiotis Markidis Case Study Assignment # 2 07/21/2015

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    !

    CONTENTS Question 1: a)......p.3-10 Question 1: b)......p.10-13 Question 2: ... .....p.14-16 Question 3:..............................................................................................p.17-19 Question4:...............................................................................................p.19-21 Reference List ... p.22-26

    !!!!!!!!!!!!!!!!!!!!

  • MGMT S-5033 Supply Chain Management Panagiotis Markidis Case Study Assignment # 2 07/21/2015

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    Question!1:!

    a.!Crocs!have!been!discussed!by!many! industry! experts! as! a! fad!product.! !Applying!

    Crocs!core!competencies,!how!can!Crocs!supply!chain!model!be!used!to!mitigate!the!

    potential!of!the!brand!becoming!a!fad?!

    !

    It! is! extremely! important! for! a! company! to! achieve! a! strategic! fit,! by! having! the! ability! to!

    balance! between! the! 2! defining! forces! of! the! supply! chain,! the! responsiveness! and! the!

    efficiency,! while! succeeding! to! identify! and! fulfill! the! customers! needs! (Chopra! &! Meindl,!

    2013).! In! this! attempt! to! balance! between! these! 2! driving! forces,!many! companies! tend! to!

    underestimate! the! importance!of!adapting! their! supply!chains!and!product! lines! to!meet! the!

    ever! changing! customer! needs.! As! a! result,! a! lot! of! companies! face! major! challenges!

    regarding!their!products!life!circles!and!the!probability!of!becoming!a!fad!brand.!

    !

    The! product! life! circle! (PLC)! is! defined! as! the! time! a! product! remains! in! the! market! with!

    respect! to! business/commercial! costs! (Day,! 1981).! According! to! Bass! (1969),! the! typical!

    product! life! circle!can!be!described!by!a!bellRshaped!curve.!There!are!4!stages!of!a! typical!

    product!life!circle:!introduction,!growth,!maturity!and!decline!(Kotler!&!Armstrong,!2008).!

    !

    !

    !

    !

    !

    !

    !

    !

  • MGMT S-5033 Supply Chain Management Panagiotis Markidis Case Study Assignment # 2 07/21/2015

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    !

    Introductory!stage!

    !

    A!products!life!circle!begins!with!the!development,!when!there!are!no!sales!or!profits!and!the!

    introduction!which!is!the!period!when!sales!begin!slowly!and!the!product!is!introduced!to!the!

    market.!In!this!stage,!Crocs!deployed!a!very!insightful!strategy!of!releasing!the!product!only!to!

    small!retailers!and!tried!to!responsively!adapt!to!their!needs.!

    !

    Growth!stage!

    !

    After!establishing!their!presence!in!the!market!products!move!to!growth!stage.!For!the!case!of!

    Crocs,!if!we!consider!the!product!as!typical!(or!a!fashion!with!long!life!cycle!and!slow!decline),!

    and!not!as!a!disruptive!innovation!that!became!a!fashion!product,!the!growth!stage!could!be!

    from!2003!to!2006.!During!this!period!the!revenue!of!the!company!skyrocketed!from!1.2million!

    in!2003!to!355million!in!2006.!

    !

    Maturity!stage!

    !

    After!the!growth!stage!the!product!enters!the!maturity!stage.!For!Crocs!this!period!was!from!

    2006R2007.!This!period!was!characterized!by!big!changes!to!the!supply!chain!of!the!company!

    through! vertical! integration,! acquisitions! and! organic! growth.! New! lines! of! products! were!

    introduced! and! changes! in! the! manufacturing! and! distribution! part! of! the! chain! were!

    implemented.!

    !

    !

  • MGMT S-5033 Supply Chain Management Panagiotis Markidis Case Study Assignment # 2 07/21/2015

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    Decline!stage!

    !

    The!final!stage!of!a!products!life!circle!is!the!decline!stage.!Even!thought!not!presented!in!the!

    case,!Crocs!faced!a!decline!face!of!its!products!during!2008(at!the!time!the!world!was!facing!

    an!economic!crisis!that!began!with!the!recession!in!US!markets!and!eventually!influenced!the!

    global!markets).!During!that!period!and!because!of!the!various!challenges!that!the!company!

    faced,!many!industry!experts!characterized!Crocs!as!fad!products.!!!!

    !

    There!are!3!main!types!of!product:!fashions,!fads!and!styles.!

    !

    Fashion!

    !

    !fashion!product!is!characterized!by!the!high!correlation!it!has!with!the!various!trends(Kotler!

    &!Armstrong,!2008).! In!particular,! it! is!a!product! that!can!have!a!short!or! long! life!cycle!and!

    decline!either!rapidly!or!slowly.!In!some!cases,!it!can!become!an!all!time!classic!and!stay!at!a!

    plateau!of!sales.!

    !

    Style!

    !

    Style! is!the!product!that! follows!the!overall!wave.!It! is!rather!periodical!and!it! fades!out!as!a!

    new(improved)!version!appears!to!the!market!(Kotler!&!Armstrong,!2008).!!An!example!is!the!

    touch!screen!phone!that!replaced!the!old!buttonRones.!!

    !

    !

    !

  • MGMT S-5033 Supply Chain Management Panagiotis Markidis Case Study Assignment # 2 07/21/2015

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    Fad!

    !

    A!fad!product!is!a!product!that!has!limited!utility!and!is!around!for!a!short!period!of!time!(Kotler!

    &!Armstrong,!2008).!!Its!sales!rise!exponentially!and!rapidly!following!a!trend!and!immediately!

    after!they!peak!the!drop!in!sales.!Typical!examples!of!fad!products!are!the!Hoola!Hoops!and!

    Rubiks!Cube.!

    !

    !

    All! these! different! types! of! products! follow! different! patterns! in! their! life! cycles.! These!

    differences!are!illustrated!in!the!following!graph.!

    !

    Sour

    ce:!

    Kotl

    er! &!

    Arm

    stro

    ng,!2008!

    !

    !

    !

    !

    !!

    !

    !

  • MGMT S-5033 Supply Chain Management Panagiotis Markidis Case Study Assignment # 2 07/21/2015

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    !

    !

    It!can!be!easily!assumed!that!the!fad!products!face!the!shorter! life!cycles.!But!what!is!really!

    interesting! is! that! many! industry! experts! have! considered! Crocs! to! be! a! fad! product.! This!

    characterization!came!as!a!result!to!the!huge!drop!of!sales!in!2008.!This!substantial!drop!was!

    a!combined!result!of!the!depression!in!the!US!economy!and!some!weaknesses!of!the!Crocs!