Geox and the Footware Industry

Topics: Strategic management, Competition, Innovation Pages: 7 (2186 words) Published: July 18, 2011
Case Analysis: Geox and the Footwear Industry

4410B – Strategic Management – Professor Deane

April 30, 2011
Jacob Clelland
250 422 823

EXECUTIVE SUMMARY
The Geox group is an Italian footwear company has made its mark through technology innovation in fabrics and materials. It has been operating since the 1990s and became public in 2004. Geox focuses on providing its costomers with high comfort through technological innovation. They focus heavily on research and development in order to produce cutting edge technology that will differentiate their brand within the footwear market. The footwear industry is a mature market with many international competitors. In Europe, the footwear is dominated by many small & medium enterprises, which gives firms more flexibility to cater to specific consumer needs. The basic drivers for consumers buying decisions include demography, disposable income, basic needs, style and new materials. Fashion trends have a major influence on the footwear industry as well as new technology. The industry is very labor intensive and most companies follow a delocalization manufacturing strategy to capture lower labor costs. The primary market segments include Sport/Athletic, Work and Brown. Geox competes mostly in the Brown market but acts as a competitor in the Athletic market because of their focus on technology. Competition is harsher in the Sport/Athletic market as it is the largest market in the footwear industry. Geox should continue to exploit new market opportunities embedded in technological innovation and should focus on allocating their resources to maximize returns. They should continue to search for ways for knowledge spill-over as it has lead to positive effects and complementary activities. Geox needs to effectively communicate its brand and innovation by creating uncontested market space and a niche within the industry. Geox should focus on relocating non core business activities to lower wage countries in order to keep cost down.

BACKGROUND
Geox, an Italian based company, was started as a small family handicraft firm that evolved into a multinational footwear manufacturer. It has been operating in the footwear industry since the 1990s and became public in 2004. Geox core concept for starting a footwear company was to offer high comfort footwear by applying a microporous membrane to the sole of the shoe to allow air moisture to exit without reentering. Geox developed its brand and position in the footwear market through its technological advances in footwear material. Geox dominated in the global footwear market with their cutting edge technological innovation. However, despite their recent dominance, there have been many changes in their competitive environment that could hinder their performance or slow their growth in the future.

INDSUTRY ANALYSIS
1.1 Environmental Analysis (PEST)
Observing the social aspect of the market, there has been an increasing trend towards footwear companies that targeted very narrow and differentiate market niches with a clearly definable brands and images. Additionally, there has been a noticeable trend towards shoes acting as fashion and lifestyle symbols with many reputable fashion designers endorsing them. The economic landscape of the market has shifted and focused more on the rise of Southern Asian countries who have been growing very quickly over the past decade. With the growth of the middle – and upper class, there has been an increase in demand for mid-high end shoes with reputable brands. Analyzing the technological aspect of the market, most of the technological advancements arise in the athletic and sportswear segment. The main reason for this is the consistent demand of material and fabric innovation for optimal performance. Because of the effects the fashion industry has on the footwear industry as well as the seasonality of the business, product innovation and obsolescence is very high. After analyzing some of the major...
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