MGT6890 Strengths Largest boardsport brand Third-party manufacturing Liquidity, leverage, & profitability Volcom Inc. (Volcom) started very small, the founder borrowed 5,000 dollars from his father to start the business. They new nothing being expert, their sales went negative to huge positive, because of their spirit and creativity work. The company growth was due to the wide array of products developed and offered. Volcom designs, markets and distributes premium quality young men’s and young women’s clothing, accessories and related products under the Volcom brand name.
It also provides a range of sunglasses, goggles, t-shirts, bags, hats, belts and other accessories under Electric brand name. Volcom also designs certain signature product styles, called V. co Operative. The company’s product portfolio also includes t-shirts, fleece, bottoms, tops, Jackets, board shorts, denim, outerwear, sandals, girls swimwear and a complete collection of kids clothing for young boys aging four to seven years. It also carries out the production and sale of music and films.
The company started from a small room, than expanded across the United Stated and over seas. It markets its products in the US, Europe, Canada, Latin America, Asia Pacific and Puerto Rico through its in-house sales personnel, independent sales representatives and distributors. It is headquartered at California, the US. Volcom was the first major apparel company founded on the boardsports of skateboarding, surfing, and snowboarding. They take advantage of this differentiated themselves from other market of that time.
The company’s headquarters in Orange County was essential to Volcom’s strategy. According to Danny Kwok, Co-president of Quiksilver, “Orange County was to the outh-apparel market what New York was to the fashion world. ” During recession in 2008 the company was profiting, “in 2008, consolidated product revenues increased 25. 2% to $332. 1 million from $265. 2 million in 2007. Volcom experienced revenue growth in each of its product lines. The lines with the strongest growth were girls’ swim, snow products, and men’s, which increased 64. 1%, 26. %, and 22. 0% to $6. 1 million, $28. 2 million, and $162. 3 million, respectively. The company’s other lines, boys products and girls, increased 9. 2% and 4. 1% to $21. 9 million and $80. 5 million. ” verall the company immersed itself world wide, used celebrities to market their products, and experience revenue growth as an results. Weaknesses Outsourcing Third party manufacturing Market share Even though the company has a lot of strengths, there are still few weaknesses, one that includes, operating through third party manufacturing facilities.
Volcom did not own or operate any manufacturing facilities; rather, the company worked with local sourcing agents aligned with independently owned foreign contract manufacturers. Volcom’s apparel and accessories were generally purchased or imported as finished oods; the company purchased only a limited amount of raw materials. The manutacture ot each product line was contracted separately based on tabric and design requirements. Also, company participating outsourcing, in 2008 Volcom contracted for manufacturing with roughly 49 foreign firms.
This could give people negative outlook on the company, because some people frown upon outsourcing. “An estimated 66% and 14% of total product costs during 2008 and 72% and 13% of total product costs during 2007 came from manufacturing operations in China and Mexico, respectively. Two of Volcom’s Chinese manufacturers, Dragon Crowd and Ningbo Jehson Textiles, ac- counted for 18% and 14% of product costs during 2008, respectively, and for 19% and 14% of product costs during 2007, respectively. No other single manufacturer of finished goods accounted for more than 10% of production expenditures during 2008 or 2007” (Christine B.
Buenafe and Joyce P. Vincelette). So obviously there is huge cost of outsourcing, and which leads decrease in profit. Opportunities ??? Domestic retail and brand acquisition ??? Marketing advertisement Celebrities were wearing their clothes ??? Third party eliance, manufacturing, distribution, retailers Volcom should expand their retail stores around the US, not only with high end Macys or Nordstorm, also with one-stop shopping centers. Besides, sports related celebrities company can branch out to celebrities in the music, movies, and television series.
They can go to school events, to market and recruits that will help them to expand their self more domestically, and familiarize with people their products. Volcom should focused on opening their own manufacturing facilities, instead of operating through third party, which will allow hem to increase their profit. Threats Retailer consolidation Decreasing consumer consumption The people will always try to mock their product, lower prices; because they have to compete with their competitors Volcom should not compromise quality of their product.
They have to stay one step ahead of their competitors. Besides sharing information and offering entertainment and opportunities to purchase products online, retail companies were competing to flag consumer attention before they clicked someplace else. Invasion is external threats; it is very difficult to discover eople needs before anyone of the competitors do. Unsustainable competitive actions, and reactions that force a response, for example, in 2008 Quicksilver is the one of the largest apparel company with revenues of $2. 6 billions, compare to Volcom it is higher in profit. So obviously it’s a threat for Volcom. The companies Billabong, O’Neill, Burton Snowboards, Hurley (Nike), Pacific Sunwear of California Inc. , or “PacSun” with more products and services broader ranges are more competitive than Volcom. The company like, Billabong which product distribute in more than 100 different countries. In 2008, the company had revenues of $1. 38 billions; they also sponsor pro surfing tournaments countries like, Australia, South Africa, and Spain to promote their self.
Nike they are very focused with niches and became the best company. “In this broad category, Volcom held market shares of 0. 7%, 0. 6%, and 0. 8% for the years 2008, 2007, and 2006, respectively. Nike Inc. held 8. 3%, 8. 0%, and 7. 9% of the market, respectively. Quicksilver’s market share was 2. 2%, 2. 4%, and 2. 6%, and Billabong had 1. 9%, 1. 6%, and 1 . 7%”. If Volcom doesn’t make ‘smart’ decisions they will disrupt the market.