Analysis of Competitive Advantages

Analyse and Evaluate the Competitive Advantage of Decker Outdoor Corporation

 Analysis of Competitive Advantages

Executive Summary

This report reviews and studies the operational environment of Decker Outdoor
Corporation, the factors’ of strategic decision made over time and offers
recommendations based on the analysis of the industry strategies. Next position is
analysed using the Porter`s five forces framework, Generic strategies and the Value
chain analysis to assess the internal and competitive environment as well as the lifecycle
of the sector. Successful factors of Decker Outdoor includes the Decker Outdoor online
shopping which is extremely innovative, strong brand partnership through UGG, financial
strength, as well as product quality at affordable prices. Decker Outdoor internal
capabilities are established through its strategic capabilities in evaluating them for
competitive advantages using the VRIN framework. Decker Outdoor strategic route to
competitive advantage are analysed with the Ansoff matrix, showing the four directions
to be pursued.

Table of Contents
 Analysis of Competitive Advantages

1. About the Company .................................................. Error! Bookmark not defined.

2. Main Body ................................................................................................................ 4

2.1. Competitive advantages based on market positioning ....................................... 4

2.1.1. Porter’s Five Forces ................................................................................... 4

2.1.2. Generic Strategies ..................................................................................... 6

2.1.3. Value Chain Analysis ................................................................................. 8

2.2. Competitive Advantages Based on Core Competency or Resources ................ 9

2.2.1. Resource Based View ................................................................................ 9

2.3. Routes to Competitive Advantage ................................................................... 14

2.3.1. Ansoff Product Market Matrix Decker Outdoor ......................................... 14

3. CONCLUSION ....................................................................................................... 15

4. Reference .............................................................................................................. 16
 Analysis of Competitive Advantages

1. Introduction
Decker Outdoor Corporation is an international leader in designing, promoting as well as
distributing state-of-the-art footwear, apparel in addition to accessories created for both
day-to-day casual lifestyle use as well as high performance activities. The Firm's
portfolio of brands consists of Teva, UGG Australia, Sanuk, Ahnu, TSUBO, HOKA ONE
ONE, and MOZO. Furthermore, Decker Outdoor products are sold in over 50 nations
and regions via select specialty and department stores, 120 Firm-owned and operated
retail outlets, and select internet stores, as well as the company sites (Decker Outdoor
Corporation, 2013). Celebrating the 40th birthday of its establishment in 2013, Decker
Outdoor holds a history of developing niche shoe brands into lifestyle market leaders
drawing millions of loyal customers internationally. As a result of the scale and scope of
Decker Outdoor’s operations the focus of this report would be surrounding high
performance shoes. Additional recommendations would consist of strategic analysis to
adopt SBU level strategies.

2. Main Body

2.1. Competitive advantages based on market positioning

2.1.1. Porter’s Five Forces

FIGURE 1: Forces Analysis for Decker Outdoor

Source: (Author).
 Analysis of Competitive Advantages

2.1.1.1. Threats of New Entrants

As a result of the large scale of Decker Outdoor, the firm is able to control its coasts to
maintain performance advantage over developing rivals in the industry. Its website is
more sophisticated as well as appealing to browse, contributing to its big marketing
budget. The capital contribution into website development is high and should be
frequently updated with new marketing campaigns and latest features to appeal to online
buyers. There are a lot of proprietary product disparities in the industry as a result brand
identity has an instant competitive advantage. Decker Outdoor brand is popular
internationally and plays a key role in customer decision making. Selling high
performance shoes is extremely competitive; nevertheless, barriers to entry into this
sector are relatively high (Hoffman, 2008). The capital requirement for establishing a
conventional brick and mortar business is relatively higher than establishing an online
store (Net Advantage, 2009). Therefore barrier of entry in the footwear industry is high.

2.1.1.2. Bargaining Power of Buyers

Buyers in the athletic apparel and footwear sector possess a great amount of power
(Thompson and Strickland, 2008). There are a huge number of buyers relative to the
number of companies in this sector. As a result, a firm like Decker Outdoor must
constantly market its products and differentiate its brands against other players, so as to
augment sales as well as market share. The use of online channels has facilitated the
enhancement of accessibility and interaction among users. For instance, Decker
Outdoor’s website permits buyers to tailor and design their own high performance shoes
by allowing buyers to identify the desired colours and the option to customise the shoe
with their name. Brand identity plays a vital role in the purchasing behaviour; strong
identity will provide consumers loyalty and trust. The majority of consumers are price
sensitive as well as switching cost is low for the consumers.

2.1.1.3. Buyer Power of Suppliers

There are a lot of suppliers in the footwear sector (Bell, 2008). Essentially, there is
extremely minimal differentiation amid the supplier which makes supplier power non-
extant. Rubber, cotton and leather are commodity goods and are available in plenty in
the market. Conglomerates such as Decker Outdoor have a positive advantage and
power over their suppliers. These suppliers turn out to be reliant on these companies as
their way to survival. Furthermore, Decker Outdoor has standardised its input
 Analysis of Competitive Advantages

procedures relating to the materials employed, their workforce, services, supplies, as

well as logistics (Walford, 2007). Companies are able to change between suppliers
rapidly and at low costs, because of the global network of low cost labour in various
regions. In addition, inputs are freely substituted and there are plenty of suppliers
available.

2.1.1.4. Threat of Substitutes

The propensity of buyers to substitutes is low. Customer substitutes for high
performance shoes are low since there are minimal alternatives to change to. A number
of substitutes for high performance shoes may be dress shoes, sandals, or boots.
Customers are not likely to substitute as a result of the performance specification of the
shoe (Walford, 2007). For instance, a mountain biker would not put on boots when
riding. As a result, there are no actual substitutes for high performance footwear.

2.1.1.5. Rivalry among Existing Competitors

The rivalry among extant competitors in the footwear sector is extremely high (Mintel,
2012). Big corporations such as Adidas, Reebok, Nike, and Decker Outdoor have grown
vastly and established their footwear firmly in the high performance shoe sector. These
companies are as well internationally recognized and possess a big loyal consumer
base. The companies similarly take part in online selling, enabling them to augment
sales whilst reducing costs of operation. The huge companies of the sector invest
heavily in developing a strong brand identity. The competition is aggressive and
therefore the rivalry is extremely high.

2.1.2. Generic Strategies

Porter’s generic strategies involve three major strategic directions that companies can
take in order to achieve competitive advantage over competitors. The three strategies
include Cost Leadership, Differentiation and Focus. Porter’s generic strategies are an
important way towards the strategic design process for a company’s strategic
management exercise. However it would also be fundamental to note that the method is
not one that can be considered as fools-proof.

To fully understand how Decker Outdoor gains a sustainable competitive advantage

over its competitors the situation ought to be analysed from various angles. These entail
a look at the different marketing strategies. To differentiate its brand and increase
consumer loyalty, Decker Outdoor employs differentiation business level strategy. It
 Analysis of Competitive Advantages

provides high quality products at affordable prices. Decker footwear is viewed as a fancy
brand in terms of high performance shoes. The firm segments its merchandise in
different ways. Primarily, it manufactures casual shoes and high performance shoes for
three different demographics: women, men and children. Every segment is cautiously
analysed in terms of design preference, sociological needs, and physical capabilities
(Bell, 2008). Alongside the business level strategy it should be pointed out that Decker
Outdoor employs strong diversification in terms of corporate level strategy to back up its
product differentiation. Decker footwear creates value and upsurge consumer
satisfaction: apparel, footwear such as sheep skin boots, athletic sandals and so on.
Decker Outdoor manufactures shoes for every type of key sports: cycling, football,
aquatic activities, hiking and so on. Such an extensive variety of products is an attempt
of Decker Outdoor to expand ‘Affiliation’ dimension. Decker Outdoor consistently
searches for what may be included to their present range of products to increase
consumer satisfaction and reinforce the relationships between company and customer.

The key advantage of producing several product lines is the decrease of risk. In a multi-
product collection, if one product is not prosperous, there are several others to
recompense this risk (Kyrgidou and Hughes, 2010). In addition to providing differentiated
goods, Decker Outdoor similarly adds value with the customisation option. Decker
Outdoor designs most of its products for high performance use; nevertheless, so as to
diversify its merchandises, a big percentage of their product sales are derived from high
performance shoes, apparel and casual shoes. The firm targets buyers who can afford
premium prices compared to the footwear which are positioned through the cost-
leadership approach. The main reason behind premium pricing is the brand itself, as well
as all apparent benefits that are strongly connected with Decker footwear.

In addition to the two segments casual shoes and high performance shoes, Decker
Outdoor as well has agreements for licensees to manufacture and sell Decker Outdoor
children’s shoes, apparel, footwear, as well as other products. Employing such a
strategy Decker Outdoor increases company access and connection to buyers: the
reach dimension. According to Decker’s Annual Report (2013) a firm will sustain high
quality and premium pricing as a key strategy for growth.
 Analysis of Competitive Advantages

2.1.3. Value Chain Analysis

2.1.3.1. Inbound and Outbound Logistics

Decker outdoor ships products to more than 117 company owned retail outlets. They
transport from factory origin to the receiving docks of a Decker Outdoor distribution. The
logistic operations of Decker Outdoor are complex and consist of three different product
lines: high performance shoes, casual footwear, and apparel. They also involve four
regions managing orders by means of the firm’s logistics service provider network.
Establishing the network of providers is a joint course between the regions and the
corporate logistics group of Decker Outdoor. Decker Outdoor teams up with its various
regional areas to create an international mesh for its domestic consolidators, which
comprise ocean haulers, air freight carriers as well as international haulers (Decker
Outdoor Corporation, 2013). Decker Outdoor began working with logistic service
providers more than ten years ago. Agility Logistic Corporation is responsible for
physically handling the freight from the industrial unit, receiving the cargo, loading the
shipment, planning shipment deliveries as well as picking documents from the factory
and dispatching them to the destination areas. In addition, Decker Outdoor has opted to
manage its logistics provider internally instead of outsourcing management to a top 3PL
logistics firm. As a result of a great knowledge of supply chain management in the firm
they do not feel the urge to employ a distributor. Due to the complex nature of Decker’s
distribution the firm avoids 4PL.

2.1.3.2. Firm Infrastructure

For the past few decades the company has adopted new strategies and advancing
supply chain management, logistics, like it does with promoting its cool sneakers and
products. Increasingly, Decker Outdoor is looking for the right balance among its
creative unit as well as its business unit, depending on a pristine managerial and
financial discipline to stimulate growth (French, 2009). In the past, Decker Outdoor
worked on a guess test basis. The firm would guess the number of pairs required in the
market and expected they could be supplied in retail outlets. Later, Decker re-evaluated
their operation and as a result, the firm has refurbished its computer systems to
distribute the required number of shoes to more places globally at a faster speed.
Through systematically studying new markets, Decker Outdoor has become a cash cow
 Analysis of Competitive Advantages

in the UK as well as is new market sections that it once risked not to compete like high
performance shoes. Decker Outdoor has additionally improved its management crew.

2.1.3.3. Marketing and Sales

The brand image of Decker Outdoor, including the name Decker Outdoor and the UGG
brand are regarded to represent one of the most popular brands in Europe. This brand
equity is evident in the bottom-line revenues that other companies find difficulty
competing with. The Decker Outdoor brand names as well as associated trademarks
have appeared from sporting events to television commercials. Competitive marketing
campaigns, quality products and celebrity endorsements improve the brand through
selling the image of fitness with superior style in mind (Doyle, 2008). Primarily, Decker
Outdoor performs marketing research on a continuous basis to help in retaining
company position as a market challenger in the high performance footwear sector.

2.1.3.4. Operations
The primary mission of Decker Outdoor is to create innovative, proprietary materials,
and cost effective production procedures that lead to high quality footwear and apparel.
Decker Outdoor has everything from; a powerful team of industrial maintenance
technicians, machine operators, leadership team, as well as quality assurance specialist
for all business segments. In addition, the firm has opportunities in the fields of
manufacturing, quality assurance, design, as well as development to make sure that
every project is formulated and designed in the best achievable manner and is
effectively reproduced.

2.2. Competitive Advantages Based on Core Competency or Resources

2.2.1. Resource Based View

The resource-based view (RBV) of a firm lies primarily in the application of bundle of
valuable interchangeable and intangible or tangible resources at the firm’s disposal. For
a firm to transform a short-run competitive advantage into a sustained competitive
advantage requires these resources be heterogeneous and immobile. This is perhaps
the biggest struggle Decker Outdoor faces – the challenge of maintaining a differentiated
product. Herein Decker Outdoor is limited by its package of productive resources.
 Analysis of Competitive Advantages

A closer look at Decker Outdoor’s value chain helps to properly identify its productive
resources. The diagram below adequately summarizes the performance apparel
industry’s global value chain.

2.2.1.1. Financial Resources

Recognising that Decker Outdoor has had a stable increase in its dividends as well as
the firm announced a re-purchase program for its stock. This indicates that the company
has been sitting on huge amount of money, and that the firm is able to maintain its
growth strategies, by means of acquisitions, technology advancements and product
development. As a result, the financial resources of Decker Outdoor are valuable. As a
result of the sector’s attractive dynamics, there are other firms in the industry with similar
stable financial position too. Even though there are numerous profitable firms in the
sector, very few if none, have a similar kind of economic and financial power as Decker
Outdoor (rare). Similarly, it is hard for other players as well as new entrants to imitate
and develop such as strong financial background (strong brand name, higher margins,
big initial investment, economies of scale). With its international presence, strong
reputation and huge customer base, Decker Outdoor undoubtedly is organised to
capitalise on its financial status. This makes Decker’s financial resources it core
competency.
 Analysis of Competitive Advantages

2.2.1.2. Supply Chain Management and Distribution

Decker Outdoor with approximately 90% of its production outsourced to Asia, possesses
a strong competitive advantage due to its effective and well-structure supply chain
((Decker Outdoor Corporation, 2013)). Decker’s strong and well-structured supply chain
is valuable to the firm since it enables the firm to enjoy market leadership as well as high
profitability. In addition, the majority of companies in the sector outsource their
production something that has been increasing with the growth in globalisation (BNET,
2009). As a result outsourcing is not rare, however, to put up a strong supply chain as
Decker’s is extremely rare. Furthermore, it is hard for other players to imitate Decker’s
financial resources particularly for emerging companies. Not only does it require huge
capital investment to imitate such resources, but similarly relevant knowledge and
experience is required.

2.2.1.3. Marketing and Product Innovation

One of Decker Outdoor’s existing strengths is that it has been capable of developing
new innovative merchandise that has been able to sell at premium pricing. The buyers
seem to approve the high quality, which may be seen through the company sales. This
is believed to be the most vital areas in the sector, as it generates brand awareness as
well as consumer loyalty, two essential aspects in this greatly competitive market
(Donaldson and O’Toole, 2007). Decker Outdoor has concentrated most of its energy on
this segment; as a result the firm has been oddly successful. As a result, this is
perceived as the firm’s core competency.

Decker Outdoor
Valuable Rare Imitable Organisation Implication
Financial Yes Yes Yes Yes Realised
Resources sustainable
advantage
SCM and Yes Yes Yes Yes Realised
Production sustainable
advantage
Innovation Yes Yes Yes Yes Realised
and sustainable
Marketing advantage
 Analysis of Competitive Advantages

2.2.2. Knowledge Management Perspective

2.2.2.1. Information Flow

Decker Outdoor operates efficiency due to having a smoothly information flow within the
company. Information can be divided into two kinds: general information and technical
information.
General Information: is information about administration, about the general working of
the whole company or an announcement from the CEO. Those types of information
usually flow from top to bottom, from the CEO, vice presidents to the operational
employees. General information is usually connection between the departments in the
company. Decker Outdoor also has an intranet and a mail system to ensure the
information flow smoothly inside the company.
Technical information: is information regarding to the products. It flows sideways; it can
flow horizontally or vertically within the organization. This kind of information usually
comes from the Design & Development or Production department and then it flow back
to the top and flow throughout the departments. It also flows through the intranet and
mail system however this kind of information is used only by certain group of users who
are involved with the products.
2.2.2.2. Roles and knowledge
Marketing and Sales
a. Explicit knowledge
Marketing & Sales Department has to store new policies about future growth of company
and based on it to develop new strategies. Moreover, it also requires sales data of
company, the customer profile, and customer feedback to analyze the current situation
of Decker Outdoor. Furthermore, Sales & Marketing also needs to research about
competitors especially about Adidas and Puma therefore provide strategies in dealing
with them.
b. Implicit knowledge
Implicit knowledge of marketing staffs could be the experience in selling, in dealing with
customers. Experienced staff may have experience in create good relationship with
customers, may quickly identify the needs and wants of customers and may understand
customer’s feeling while young staff may not have those.
c. Tools
 Analysis of Competitive Advantages

Decker Outdoor also provides their marketing departments with some system for better
knowledge sharing. Marketing staffs can always access to the latest product line to get
information about the product. They are also invited to the sell meeting before the launch
of any new product so they can communicate with each other and give feedback about
that product. Decker Outdoor also provides an extranet for customers to directly access
to latest product and give feedback about that product.
Decker Outdoor’s product trend is now based on customers design, Decker Outdoor
already opened a shop which allows customers to design their own shoes and then
Decker Outdoor make that order and in the near future, Decker Outdoor is going to
make a website that allow customers to do the same.

Production
a. Explicit Knowledge
Explicit knowledge of production department could be the number of materials required,
the different product descriptions and supplier descriptions with a product list. Moreover,
daily input material has to be checked, and each month, finished product in the
warehouse needs to be rechecked to record. Furthermore, production department also
record changing in price of different suppliers to choose the most suitable suppliers
b. Implicit knowledge
Production staffs also have lots of tacit knowledge such as negotiation skill,
communication skill and those skills cannot be transferred, it can only be learned
through practicing.
c. Tools
Production department also has tools that assist in sharing information and knowledge
such as GPO: Global purchasing order and PIM: product integrity management. In
addition, Decker Outdoor has created a system called Decker Outdoor Connect that is
used to support the information sharing between Decker Outdoor and others supply
chain members. Decker Outdoor Connect is a web-based system which connects all the
members in the supply chain, for example: Decker Outdoor put an order on that system,
the manufacturers and suppliers can access in that system and receive that order, they
produce it and then report back to Decker Outdoor through Decker Outdoor Connect.
That system contains 3 main steps:
• Design & Development: only accessible for Decker Outdoor insider, use engineering
software.
 Analysis of Competitive Advantages

• Commercialization: process of putting the prototype in the market for testing.

Accessible for both insiders and outsiders, use GPO and PIM software.
• Mass Production: if product success in the market, continue producing it. Accessible for
both insiders and outsiders, use GPO and PIM.

2.3. Routes to Competitive Advantage

2.3.1. Ansoff Product Market Matrix Decker Outdoor

The Ansoff growth matrix is a strategic instrument that enables firms to analyse products
together with its market development plan. The product-market development matrix of
Ansoff permits an organisation to develop by feature of a new or extant product thriving
in a new or extant market. The Ansoff matrix yields a series of recommended growth
strategies that directs the business’ strategy through the following drivers:

Figure 2: The Ansoff (1957) Growth matrix

Source: (Kumar, 2010)

Decker Outdoor’s primary focus should be to increase their U.S. market share in other
products such as footwear and accessories while maintaining market leadership in high
 Analysis of Competitive Advantages

performance shoes. Decker Outdoor should move into international and emerging
markets with caution to assure they do not expand too quickly. Decker Outdoor needs to
continue to provide value to consumers through innovation and research and
development. Decker Outdoor needs to integrate their marketing plan and make sure
than all sponsorships and endorsements contribute to the value of the brand.

With regard to market penetration, Decker Outdoor may actually obtain market share by
means of renewal and innovation of business methods as well as the brand image as
one. Simultaneously, enhancing environmental position through actually going further
than marginal requirements in environmental preservation to essentially surge the
measures Decker Outdoor may actually grow from the circumstance that profit margins
from high performance shoe buyers are the highest for the firm as well as the fact the
services that high performance shoe buyers need cannot be replicated by low cost shoe
brands makes it a lot more possible.

Decker Outdoor’s product development stage will consist of technological advancement.

The emergence of the internet buying accompanied by enhanced integration of mobile
computing tools like tablet PCs, laptops, as well as smartphones would be a value
growing service provision. Complementary services like home delivery, and design
customisation would be value added advantages in the merchandise offering.

Diversification as well as Market Development may be designed together for Decker

Outdoor. The firm will need to broaden horizons into substitute products like casual
footwear with a similar degree of quality that is distinguishable from the Decker Outdoor
brand name. Simultaneously, increasing the number of high performance products with
primary focus on emerging sporting activities would increase the ranges of product
offerings (McIntosh, 2007).

3. Conclusion
In summary, from the Ansoff Matrix, Decker Outdoor ought to give primacy in applying
the SO strategy of utilising their strengths to benefit in opportunities. This is particularly
evident in Decker Outdoor’s Ansoff Matrix analysis. Bulk amount of money pouring as
well as renovation of brand image would be an advantage for Decker Outdoor.
Implementing novel markets into extant markets and growing rapidly as the market
challenger to be a leader will be easier with strengths like vast resource pool, well-known
name in the business as well as strong merger with other market leaders.
 Analysis of Competitive Advantages

As established in the Porter’s analysis, competition concerns are becoming increasingly

vital. A reactive strategy as a result would be to develop an enhanced environmental
position while surpassing the requirements of existing regulations like the climatic
change Acts. The strategic management developments are to be applied into the
business level structure, functional level structure, and corporate level structure. Further,
throughout the report, it is evident that knowledge management is very essential in
operating a company especially huge company like Decker Outdoor. We can also see
how effective are the knowledge management in Decker Outdoor work and that's the key
point making Decker Outdoor the leader in the industry.

4. Reference

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Hoffman, W. (2008) ‘From bricks to Clicks’. Journal of Commerce, 9(50), 22-22.

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Kumar, D. (2010) Enterprise Growth Strategy: Vision, Planning and Execution. Farnham
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Thompson, A., & Strickland, A. (2008). Crafting and executing Strategy: The Quest for
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Decker Outdoor Corporation (2013) Corporate Responsibility Update [online]. Available
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Walford, J. (2007) The seductive shoe: four centuries of fashion footwear. London:
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