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Challenges facing the company Beginning in 2008, what used to be described as phenomenal performance faltered, sales growth declined, and as a result, the company racked up huge losses. Operating profit dropped to negative million dollars (see graph bellow). What were the reasons?
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Seydi AbdishevSjobbe de KluvierJurgen Hidri
Turnar und Plan
Presentation outline
Business Challenges Facing the Company
SWOT Analysis of the Company
Turnaround Plan Restructuring management
Reducing Costs
Increasing Revenues
Challenges facing the company
Beginning in 2008, what used to be described as phenomenal performance faltered, sales growth declined, and as a result, the company racked up huge losses. Operating profit dropped to negative 185.1 million dollars (see graph bellow). What were the reasons?
Need for Change
The unprecedented decrease in income of more than 50%
Currency change
Adapt to the changing situation
Need for Change
Revenue going down with 50%
Less budged for advertising
Need for Change
Lack of competitive advantage
More attractive products
SWOT
Strengths Weaknesses
Opportunities
Threat
SWOT
SWOT
Strengths: International brand, e-commerce, wide range of products
Weaknesses: unattractive looking, weak financial performance
SWOT
Opportunities: increase the safety, the rise of social networks, new markets
Threats: Competing against big companies : “Fad” Risk
Guide to Business Planning Turnaround Plan
Restructure management /
ownership
The change plan – an interplay among multiple factors
Reduce Costs
Increase Revenues
Take the Company Private
- Consolidate control over the company by share buybacks:
- Use Leveraged buy-out to avoid spending cash
- Provide a platform to enact changes that current shareholders may not find palatable.
SWOT
Kick resisting board members
A way to buy a company with funds that are nearly all borrowed thru:- Issuing bonds- Issuing preferred stock
Finding a Sponsor
In 2013, Crocs and Blackstone signed an agreement whereby Crocs will receive $200 million dollars, in exchange for issuing $200 million worth of bonds.
Reducing Costs
Cut Stores
- Reduce the number of company-owned.
- Emphasize e-commerce as it is: - Cheaper - Faster - More convenient
Scrap Underperforming products
Design KPIs that would show sales and inventory by product and by location
Use just-in-time inventory management systems.
Adopt a new ERP system - generate a dashboard showing all the important metrics in real-time
Reduce in-house production
Outsourcing saves money No investment No legal compliance No fixed costs No commitment – what happens when you
close down a factory ?
Diversify Suppliers
Lay Employees Off
- Last in the list, but still on the list!
Big no-no’s
Do not mess up with people’s dividends – they are the reason people hold your stock!
Stock Dumping!
Boardroom Coup!
Increasing Revenues
Arguments for diversification
Seasons Seasons
Products (shoes)
Products (shoes)
Sales
1) Diversify away from core product2) Keep core product, but diversify markets3) Diversify both products and markets4) Diversify Suppliers / Producers
Expand into Southern Hemisphere
• Argentina• Australia• Brazil• Chile• Egypt• New
Zealand• South Africa
Personalized Croc Shoes
Allow customers to order personalized Crocs shoes
Raise Product Awareness - Shoes
Raise Product Awareness - Other
Manage Storage Efficiently
Thank You For Your Attention!
