1. 1. Daniel Capps, Megan Schafer & Brendan Markle
2. 2. BackgroundWholesale shoe business Established in1991 in West grove, P.A.One design Closed back, stapled constructed leather clogGrowth Started as small start up Now over 100 employees and $90M in revenues
3. 3. Issues Facing DanskoForeign exchange risk $ value is decling relative to Outsourcing to Asian manufacturers To offset increased production costs & increasecapacityLacking industry expertise Required to sustain growth
4. 4. U.S. Footwear Market 2000-2004Compound annual growth rate of 2.7%Annual sales reached $2.3B in 2004Forecasted value projected at $60B by 2009U.S Footwear Industry$52B in SalesBrown Shoes 47%(Leather,Office,and Casual)White Shoes 30%(Athletic Footwear)Other 23%U.S. Comfort Wear(Style & Comfort)Euro Comfort(Durability & Orthopedic)
5. 5. Financial Analysis operating margins = 50%-60% profit margins of =17% D/E ratio = 0
6. 6. Competitors Eccooperating margin of 7.9% D/E of 1.79 profit margin 4.4%increased marketing spending by 22% Brown Shoe Companyoperating margin 3.33%profit margin of 2.56% D/E of 1.03 Both firms have some international exposure and arediversified against the change in consumer tastes
7. 7. Value Chain
8. 8. StrategyDifferentiation US company with European style 9 different product lines Mom & Pop culture All decisions go through CEO Calbot Home-schooling method Informal mentoring Affects growth
9. 9. Aspects of the firm related to performanceOrganizational Affected by lack of knowledge about the industryCultureEveryone is like familyEducational opportunitiesPeople & Top LeadersCabot insists on having much of the control
10. 10. Issues Going ForwardSkyrocketing manufacturing costs Manufacturing mostly in Europe $ value is decling relative to No experts management model will notcontinue to work need mentors to teach staff how to run a multi-milliondollar company employees not developing as fast as the business
11. 11. Issues Going ForwardShould Dansko partner with a big shoecompany? Suitor has over $1B in annual revenue Many industry experts
12. 12. Option 1: ManufactoringKeep Manufacturing inEuropeMove Manufacturing to Asiaor South AmericaPros--Lower costsCons-Quality could sufferPros-Higher quality-Fits companys imageCons-Expensive
13. 13. Option 2: Outside SourcesHire More Outside Experts Partner with Big ShoeCompanyPros-could mentor current employees-would offer expert solutions tocurrent problemsPros-Gain money and experience bigcompany has-would take stress off currentemployees (and Cabot)Cons-Would be paid more than currentemployees-most experts already have goodjobs-current employees may resent themCons-Dansko would lose its autonomy-Current culture could changedramatically-Dansko might become a face in thecrowd
14. 14. Option 3: Big Box RetailersPros-increased market share-higher revenuesCons-Saturated market-decreased profit margins-no longer gourmet-no longer the shoe everye wants,but cant get
15. 15. Option 4: New Organizational StructurePros-Keep Mandy stress free-Mandy keeps control of the company-get professional advice and mentoringCons-Hard to obtain experts-higher admin costs-Lose some control
16. 16. Recommendationcreate a new organizational structure andbring in expertsbest option to solve multiple problemsMandys stress levellack of industry knowledgekeeping control of the companynot fading into obscurity
17. 17. How will we implement this?Financial Resources extra salaries to hire expertsTimeTo implement new organizational structure 3 months to a yearDepends on adaptation of employees