Case analysis: Geo shoe company
Geox case study
Geox case study
GEOX: BREATHING INNOVATION INTO SHOES
The impact of innovation has been increasing in the recent few years. Innovation is taking place in all products including shoe manufacturing factories. Mr. Palegato’s story points to “necessity” as the driving force behind innovations.
However, we also learn that most innovation ideas are not put to use due to lack of ability to implement them. He approached different shoe manufacturing firms who did not buy his idea of ‘breathing shoe’ product.
Product diversification and development is seen as another driving force behind the success of many companies. Geox Company realized the importance of product diversification and extended their breathability technology into fabric products. Geox embraced innovation in its operation which gave the company a competitive advantage.
GEOX: BREATHING INNOVATION INTO SHOES
Continuous innovation is necessary for the survival of human race due to the ever changing natural demands. Product development is essential for company’s performance in the current competitive world markets. Though initially started by manufacturing shoes for the children, Geox extended breathing technology into jackets and other fabric items.
The company invested heavily in research and development by involving engineers and best universities. The company carried out continuous experiments in its state of the art laboratories, continuously generating new research ideas for the company.
Patents and copyright laws are important in driving innovation. Gaining patent rights has helped many companies to survive in the world market. Geox shoe producing company is known for innovation and company patent rights have been protected sufficiently and their innovations are not under threats of copying and imitation by its rivals.
Geox investments in research and development yielded a stream of patents; over 50 patents were obtained to its name by September 2009. There were patents related to equipment, machinery and even processes and materials.
Smart people with smart ideas have always found their way out just like Mr. Polecat. Although most people are creative, many lack the ability to translate their good ideas into business opportunities. Engaging in marketing research gives any given company an opportunity to be competitive.
Technological development is necessary to support innovations. Goex did not enter into main shoe market until they introduced a different technology in their breathing technology to help them expand into producing sports shoes. Technology is seen as a pre-condition for innovation. Innovation alone cannot guarantee good performance of company products especially in the fashion-mindful shoe industry.
Competition should not deter the implementation of business ideas. Fierce competition in the shoe manufacturing sector did not deter Polegato from pursuing his business idea. Instead it helped him come up with better ideas to win customers. Competition from other players in the industry helped the firm to grow in strength.
Global footwear industry
The world market is growing and more so the demands for shoes just like other goods and services. The USA provides the biggest market for shoes although Asian market is growing rapidly. This market is highly segmented hence provides manufacturers the opportunity to specialize, for instance in casual wear, children and sports.
Market segmentation gives new entrants an opportunity to venture into big market by starting off with a particular market segment and later expand into the bigger market. Geox entered the shoe market by producing shoes for children before venturing into the larger market.
We should be flexible and avoid sticking to our areas of specialization all the time. Although specialization has been found to increase individual competence in a particular area, overspecialization may lead to loss of opportunities for many people. Having interest in things outside your area of expertise helped in establishment of Geox company which is quite different from Polegato’s areas of specialization.
Setting clear company objectives is necessary for the performance of any company. Geox Footwear Company just like other firms in footwear industry has clear objectives that guide their operations. Their operations are lined towards achieving the set objectives.
Outsourcing is necessary for cutting costs and helps in saving costs associated with setting up new firms in a new area. The money saved can be utilized in other areas that are more demanding. For instance, Geox outsourced its production to Asian shoe factories which contributed over 95% of its total production. Outsourcing was the company’s easiest way of entering new markets of Asia without necessarily installing full operational plant.
Brand name is necessary marketing tool for company products. Geox name had been established as a popular brand name across the globe, this acted as a major marketing tool for its products. Company brand name differentiates its products from those of its competitors and is easily accepted in the market without even much advertisement and sales promotion.
However advertisement and sales promotion plays a crucial role in popularizing company products. However, communication strategy determines the effectiveness of advertising to the audience.
A well established distribution channel is equally necessary for company performance. Customers require goods when they need them and this depends on the efficiency of company’s distribution network. Geox had excellent distribution network spread across the globe of over 10,000 multi- brand stores and 997 single stores Geox stores located in major world cities.
Staff development through training and promotion cannot be underestimated. Staffs need to be motivated to give their best in terms of performance. For instance, Geox School was established in 2001 which was training school for both new recruits and company staff.
Footwear key players
Footwear industry is one of the most competitive industries in the world today. The major players includes boss holdings, brown shoe company, coach inclusive company, Iconix Brand Group, Rocky Brands, skin Inc. among others.
However, challenges are inevitable and companies should be prepared for the challenges that arise. For instance, global economic downtown exhibited in 2009, adversely affected Geox just like many others.
However drastic measures are called for to overcome external challenges. For example, the company halted its expansion strategy until the period of economic recovery to consolidate its weakened financial status. In most cases, strategic change is necessary to minimize production and operational costs sometimes leading to the laying off some staff to cut down company costs.
From the story of Mr. Mario Polegato and Geox Shoe Company, we realize that most innovative ideas are left unutilized due to lack of ability to implement them. It’s my view that had not Mr. Polegato had the ability and means to raise funds to implement his breathing shoe technology, the idea could have been wasted.
Innovation is key for survival of any company in the evolving world market hence patenting laws need to be enhanced to promote innovation. Governments should embrace the idea generation to encourage creativity among its citizens.
Companies should carry out industry and external market analysis to inform its strategic marking process. Analysis of industry will assist in establishing company strengths and weaknesses as well available opportunities to exploit, and threats posed by the industry players. External analysis will prepare the company for unforeseen challenges and benefits.
Investment in research and development should be accompanied with investments in new technology and infrastructure that provide conducive environment for the function of companies. Globalization and opening of borders have greatly contributed to the growth of many firms by offering markets for their goods and services.
Innovation is taking its rightful place as the main weapon for company survival in the global market. Therefore, this noble concept should be supported by all governments and major players tasked with regulation of trade and patent rights. Technological development, political stability, favorable economic environment and ecological and social factors have both negative and positive influence on performance of manufacturing firms. Companies should always be prepared for the unforeseen circumstances that have led to downfall of many companies in the past.
Ali Farahoomand. (2011) Breathing innovation into shoes; Asia case research
Centre, University of Hong Kong. POON Kam Kai series; 10/472c