Holey Soles Essay
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This case analysis will focus on the issues surround the lifestyle product company Holey Soles. Psychologist Ann Rosenberg founded the company in September 2002. She initially operated in her garage and backyard, until she recruited Joyce Groote (now current CEO of Holey Soles) and expanded the company into other parts of North America. Holey Soles focuses on creating innovative footwear made from their trademarked technology SmartCel and SoleTek, which is an injection-molded foam technology.
As of July 2007, sales had grown at 300% in each of the last two years and the company was ranked number four in the 2006 Profit magazine ranking of Canada’s Emerging Growth Companies.
However as they continue to operate, they find themselves getting pushed back by their number one competitor, Crocs. By mid-2007, Crocs sales were 33 times the sales of Holey Soles. Holey Soles has a revenue target of $40 million by 2009, and to achieve this target, they will need to focus on the issues surrounding their company and hindering its growth.
We have decided that the core issue surround the company is how to reach the goal of $40 million.
They need to address the possible alternatives of either expanding into other products besides footwear, implementing a more aggressive marketing strategy, changing their 2-year goals completely, or maintaining the status quo. These alternatives will depend on the assessment of the time frame, cost, and current and potential competition. Upon analyzing all situations and alternatives, we have decided that the best solution for Holey Soles would be to expand the company by creating other product lines made form their trademarked technology. Only through this method will they be able to generate enough revenue to meet their $40 million goal.
Issues The issues surrounding Holey Soles include the inability to have a high market share due to dominance from Crocs, how to reach the goal of $40 million revenue, and deciding upon expansion. We think the core issue is how to reach the goal of $40 million. Decision Criteria
1.Time frame of implementation: They only have 2 years to make reach their intended goal of $40 million. Considering the high target number, 2 years is a very short time frame, and therefore is an important decision criterion. Sourcing from China to other parts of the world also takes a long time, so it factors in how much product can actually be made in the time frame given. 2.Cost of expansion: To reach a goal of $40 million, an expansion of the company would have to take place. This poses the problem of where capital is going to come from. 3.Current competition: Their number one competitor is Crocs. During the 2-year period to reach a goal of $40 million, Crocs will still be selling at the rate they have been, and may also be working towards goals of expansion. 4.Threat of potential competition: In the 2 year time frame given, what’s to say that new competitors will not enter the market? As the clog fad continues, more companies are producing similar products as Holey Soles. Even though most of them aside from Crocs have a poorer design with lower quality materials, the possibility of a company suddenly entering with a whole new technology is always possible.
Alternatives & Assessments
1.Expand by increasing a more diverse range of products sold. By relying on selling the clogs alone, they will never be able to reach their goal of $40 million, nor be able to overtake Crocs since Crocs has taken so much more of the market share already. With their trademarked foam-injection technologies SmartCel and SoleTek, they should put those towards creating newer and more innovative lifestyle products aside from footwear. They already started with the beach bag, so it proves that it is possible to create other products. They already have an advantage due to their company being defined as products that are “lifestyle” centered, rather than simply a “footwear manufacturer”.