STR/581 WEEK 2 Strategic Plan, Part 1: Environmental Scan

STR/581 WEEK 2 Strategic Plan, Part 1: Environmental Scan This week’s assignment is to review Skechers environmental analysis then talk about how it will affect the creative value that Skechers already has on the market. How Skechers continues to maintain competitive advantage over the rest of the competition will be covered in this paper Skechers external, general, and industry operating environments will also be covered. In 1992 Robert Greenberg seen that a new type of street show would do well on the market and founded Skechers. L.A. Gear were the popular shoes for women and Nike was leading the market in the tennis shoes for men. Today Skechers is a leading in the international footwear market. Skechers offers more than 3,000 styles of shoes for women, men, and children and is a two-billion-dollar leader in the market (A Brief History of Skechers Shoes, 2017). According to the Skechers 2020 SWOT analysis the strengths is that Skechers has expanded not only in the types of shoes but globally as well. Skechers has been able to do this due to the aggressive marketing and strong brand recognition. The weaknesses have been the dependence that they place on the small customer segment and that most Skechers stores are located inside of or near shopping mall, and American malls are dying off. The opportunities are great due to the health-conscious customers who are in the middle of an increasing athletic wear craze, people are walking and running more. With technology growing as rapidly as it has and the ability to conduct direct-to-customer business, the opportunities are endless. Skechers does have limited digital capabilities and that is a threat to the company. With the COVID-19 outbreak and the slow down in the economy global sales have gone down (Skechers USA SWOT & PESTLE Analysis, 2020). How Skechers Creates Value & Sustain Competitive Advantage Initially, Skechers facilities was going to be a distributing outlet for Dr. Martens. Within a year, Mr. Greenberg had designed and developed his own brand. His market target was the younger “hip” consumers (A Brief History of Skechers Shoes, 2017). In the past eight years, Skechers had made dramatic changes to all of it branded retail facilities, which includes brick-and-mortar as well as ecommerce. This was done in an effort try to control the domestic and wholesale markets. By shifting more towards the international sales, it gave the company opportunity to control the marketing and the branding. The main target market that Skechers went after was the athletic women. Athletic women’s shoes are often ignored, and Mr. Greenberg recognized that opening in the market and went for it (Trainer, 2020). It is with hard work and dedication, being able to recognize where the need in the market it that this company has been able to succeed thus far. Finding that need and going for it is what creates value for Skechers. Customer service and a fair product prices are what helps Skechers to sustain a Competitive Advantage (NYSE: SKX Recommendation, 2016). Skechers Environmental Scan An environmental scan is when an organization tracks the trends and occurrences in the company’s internal and external environment, in order ensure future success (Hitt et al., 2016). To successfully complete an environmental scan a PESTLE Analysis will need to be reviewed. A PESTLE Analysis is another business tool that is used in business. It is more indebt than the SWOT. The PESTLE is an analysis on political, economic, social, and technological factors. The PESTLE is also used to evaluate the general environment and is often jokingly referred to as PEST analysis (PESTLE Analysis, 2011). Skechers External Environment The external environment is all the outside factors that have any influence or impact on the operation of business (Hitt et al., 2016). The external environment for Skechers is analyzed based on several factors. Some of these factors include (but not limited to) the economy which has been severely affected by COVID-19, buyer and supplier power, industry competition and the threat of substitutions. At this time, Skechers has been affected the most by the pandemic that swept across the world. Skechers had to withdraw its first quarter guidance because the outbreak of the virus affected the retail landscape throughout the world and ended up temporarily closing the company-owned and third party owned facilities. The temporary closure of these stores was due to the uncertain, unpredictable, a rapidly evolving virus.(Skechers Provides Business Update on Impact of COVID-19, n.d.). Buyer power is the customer’s ability to control the pricing and the supplier power is the degree of control that a vendor has on its supplies (Hitt et al., 2016). Skechers can tackle both powers by using innovating new products that are of a better quality and not so expensive. With the use of more than one supplier, Skechers will not be locked down to one supplier. By offering new products, it gives more choices to the customer and will allow for various pricing. Keeping the pricing low is one way to gain competition in the footwear and apparel segment of the market (Skechers U.S.A., Inc. Porter Five (5) Forces & Industry Analysis [Strategy], n.d.). Skechers understands that other brands will be entering the market at lower prices, the key is to keep upon that and continue to research and develop. Having a large variety of products and prices will give the consumers a much larger selection with a Skechers product (A Brief History of Skechers Shoes, 2017). Skechers General Environment The general environment for Skechers includes a variety of several external influences, which include, political-legal, economic, sociocultural, and international factors. To do so, the PESTLE needs to be reviewed: Political: The facilities located in the Asian markets are subject to political interference (Social Responsibility | Skechers Corporate (SKX), n.d.). Economical: As the pandemic closed the world, the global economy took a big hit and with the impact of fluctuations between the different currencies’ world wild, this company felt some damage right along with the rest of the world (Social Responsibility | Skechers Corporate (SKX), n.d.). Social: Noting that consumer preference is leaning more toward performance footwear, Skechers has increased its awareness regarding active footwear for the consumers who are health conscious. Skechers built the “Skechers Foundation” this is to help the public with health and fitness, job training and even education along with help in nutrition (Hitt et al., 2016). Technological: Keeping up with the innovations as technology grows and collaborating with other companies to create sport shoes that too have been upgraded so the consumers have a great experience (Social Responsibility | Skechers Corporate (SKX), n.d.). Legal: Lawsuits about trademark infringements and patents between Skechers has had several litigations brought upon for copywrite infringement. They have been sued by Nike and Adidas many times (Social Responsibility | Skechers Corporate (SKX), n.d.).. Environmental: Skechers is trying to “go green” by reducing any environmental impact and focusing on using multiple initiatives to help in achieving this (Skechers USA SWOT & PESTLE Analysis, 2020). Skechers is doing its best to improve its impact to the world. Right now, there is a complex under construction and the goal upon completion is that all four buildings receive the “LEED GOLD” certification. The statement on the Skechers website states, “Our commitment to humankind and conservation is integral to our brand.” (Social Responsibility | Skechers Corporate (SKX), n.d.). This is a family focused company and they are about putting its customers first. Skechers Industry Operating Environment The industry operating environment consists of demographics, lifestyle shifts and economic cycles (Hitt et al., 2016). Skechers has three segments that they are targeting: domestic wholesale, international wholesale, and retail. As of 2015 there were 390 company-owned stores in 160 different countries. Skechers knows that the footwear market is highly competitive, and they are striving to perform better than its competitors and has shown strong growth. Not only does Skechers reach out to the highly forgotten market of athletic woman, they have also created the “BOBS” line of shoes. By creating this line of shoes, it produces more marketing for the company and being socially responsible. The purpose of these shoes is for every pair sold to a consumer; a second pair will be donated to a child that is in need (Hitt et al., 2016). Conclusion In conclusion, it appears as though Skechers’ largest concern would be it competitive advantage in the footwear market. Skechers is continuing to maintain the competitive advantage with marketing, social responsibility, the quality of the products made and sold, and the outstanding customer service the Skechers provides to the consumer. From personal experience, I can say that Skechers will always expect that the customers are given the highest level of service. If there is a problem, they will fix it immediately because Skechers really does prove the best customer service as well a high-quality product. References A Brief History of Skechers Shoes. (2017). SRI Shoe Warehouse. Hite, J., Raja, P., & Wang, W. (n.d.). SKECHERS 2017 SMF Full Analyst Report. Hitt, M. A., R Duane Ireland, & Hoskisson, R. E. (2020). Strategic management : competitiveness & globalization : concepts & cases. Cengage. NYSE: SKX Recommendation. (2016). Skechers Provides Business Update on Impact of COVID-19. (n.d.). Skechers U.S.A., Inc. Retrieved July 26, 2020, from Skechers USA SWOT & PESTLE Analysis. (2020, April 11). SWOT & PESTLE.Com. Skechers U.S.A., Inc. Porter Five (5) Forces & Industry Analysis [Strategy]. (n.d.). Fern Fort University. Retrieved July 27, 2020, from Social Responsibility | Skechers Corporate (SKX). (n.d.). Retrieved July 26, 2020, from Trainer, D. (2020). Skechers’ Stock Can Keep Running Higher. Forbes. 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