QUESTION 1

Speedo was first established in the year of 1914 as a manufacturer of sports trend wear, which later

evolved into fashionable and fitness swimwear, swimsuits for kids, energetic wear, water shorts,

other fitness and water accessories. The Olympic medals haul by the athletes using Speedo when

compared to any other apparel brands makes it stand out. This innovative design and the

technologies used made the athletes use Speedo swimsuits. The pursuit of Sustainable Competitive

Advantage is an idea that is at the heart of much of the strategic management and marketing

literature [See for example, Coyne (1986), Day and Wensley (1988), Ghemawat (1986), Porter (1985)

and Williams (1992)]. Gaining a competitive advantage through the provision of greater value to

customers can be expected to lead to superior performance measured in conventional terms such as

market-based performance (e.g., market share, customer satisfaction) and financial-based

performance (e.g., return on investment, shareholder wealth creation; Bharadwaj, Varadarajan and

Fahy 1993; Hunt and Morgan 1995).

In order to maintain its supremacy, Speedo adopted strategies which will be evaluated in the

following section.

Strategies adopted by Speedo

The first strategy adopted was of diversification of its swimwear into sports and fashion segments.

This will help Speedo to hedge against any future risk arising due to fall of its sports market share,

which is currently the highest grosser for Speedo. But addition to that, Speedo has adopted

extensive marketing strategies like sponsorships and advertisements to maintain its brand equity.

Currently, Speedo is associated with the official swimming teams of many countries like the USA and

UK. They also sponsor the other branches like water polo and diving. These sponsorships help

Speedo in greater visibility among the target audiences. The strategies adopted by Speedo over the

years can be explained by Mintzburg’s 5P model provided below .

Plan – To diversify into the luxury swimwear section.

Position – market dominant power in the sports segment.

Ploy – The initial opportunity to develop into a premium swimwear brand from the hosiery

Pattern – Innovative and quality products resulting in superior performance

Perspective – Regular change and innovation is the key to competitive advantage

The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.

Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it marketsnew or existing products in new or existing markets.

The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy. These are described below:

Market penetration

Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.

Market penetration seeks to achieve four main objectives:

• Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling

• Secure dominance of growth markets

• Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors

• Increase usage by existing customers – for example by introducing loyalty schemesA market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good

information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.

But as it has been highlighted in the theories of Strategic Management, marketing alone is not

enough for maintaining competitive advantage. In order to establish a sustained competitive

advantage Speedo needs to focus on the aspect of value creation through the better utilisation of its

available resources.

QUESTION 2

These can be explained better with the models like resource based View (RBV) and Porter’s theory of

5 forces as discussed below.

1. Resource based View

The resource-based view (RBV) is a business management tool used to determine the strategic

resources available to a company. The fundamental principle of the RBV is that the basis for

a competitive advantage of a firm lies primarily in the application of the bundle of valuable

resources at the firm's disposal (Wernerfelt, 1984, p172; Rumelt, 1984, p557-558). This can be

best described by making use of the VRIN framework.

1.1. Valuability – This property enables an organisation to conceive or implement strategies for

improving its effectiveness and efficiency. Speedo, achieved this by implementing value

chain and creating high level of perceived value among the consumers.

1.1.1.Value Chain

Speedo is a leading international swimwear manufacturing company based in the UK.

In order to manage its customer base, Speedo has set up different, parallel supply

chain to supply its distributors. It can be classified broadly on three ways:

First, the field sales force for dealing with the small independent sports stores. Second,

is the portion dealing with the major high street retailers and sports multiples with the

potential of growth pegged at 80% and third is the partnership model with the sports

retail giants like s Sports Division.

In order to manage such huge and diverse network, communication and cooperation

plays a major role which in turn helps both the suppliers like Speedo and the outlets to

derive value out of the system by enriching the customer focus and in turn

profitability.

1.1.2.Perceived Value

Perceived value is the customer’s opinion of a product's value. Given the large medal

hauls by the sports person in the various Olympic Games, the perceived value of

Speedo products are very high. This advantage is utilised by Speedo to enhance its

market presence and dominance.

1.2. Immitability – This can be achieved by virtue of its tradition, customs and culture which are

unique to Speedo and cannot be imitated by the competitors. Speedo has been so far

successful in creating a image among the consumers as a highly efficient and innovative

organisation with the ability to come up with improved solutions to satisfy the consumer

needs. This has been achieved by the constant delivery of the quality products over the

period of time ensuring consumer satisfaction. This level of value cannot be created

overnight and helped Speedo consolidate its market presence and keep the competitors at

bay.

1.3. Raribilty – This is an area which is very difficult to achieve owing the current global market

scenario. In order to generate competitive advantage owing to raribility, Speedo needs to

make use of the patents and copyrights, to protect its innovative designs and the

technologies behind them. Speedo is a topmost manufacturer of swimsuits in the swimwear

market and trades its products all over the world by dominating many swimsuit goods and

introducing latest swimwear into the market. Innovative measures were undertaken by

Speedo in designing the swimwear products in contrast with other competitors. Speedo

mostly concentrated on modern technologies and novel designs. The research and

development department of the Speedo Company is the Aqualab team that consists of

materials professionals, garment engineers, athletes, product manufacturers, and trainers.

But in order to maintain sustained competitive advantage in this respect, Speedo needs to

constantly keep on innovating and refining its technologies to stay one step ahead of the

competition.

1.4. Non-Substitutability – This is an area of distinct advantage for Speedo since, the brand

equity it has been able to build over the years owing to its products cannot be substituted.

As it is evident from the case study, rivals like NIKE and ADIDAS were unable to compete

with Speedo owing to the brand identity of Speedo. Athletes distinctly favoured Speedo

over the other brands resulting in higher perceived value among the normal consumers and

hence hands over a distinct competitive advantage to Speedo. Even remarks from the rivals

seem to help Speedo in building its brand awareness.

2. Porter’s 5 forces

2.1. Buyer’s power –

2.1.1.Buyer volume - 65% of market share

2.1.2.Brand awareness – Very High

2.1.3.Availability of existing substitute products -

2.1.4.Buyer price sensitivity

2.1.5.Differential advantage (uniqueness) of industry products

2.2. Threats of new entrants –

2.2.1.The existence of barriers to entry (patents, rights, etc.)

2.2.2.Brand equity

2.3. Distribution –

2.3.1.11000 retail and high-end stores In North America

2.3.2.4000 retail stores in UK

2.3.3.Customer loyalty to established brands

2.4. Threat of substitutes –

2.4.1.Buyer propensity to substitute

2.4.2.Relative price performance of substitute

2.4.3.Perceived level of product differentiation

2.4.4.Number of substitute products available in the market

2.5. Supplier Power –

2.5.1.Strength of distribution channel

2.5.1.1. 11000 retail and high-end stores In North America

2.5.1.2. 4000 retail stores in UK

2.6. Competitors –

2.6.1.Sustainable competitive advantage through innovation

2.6.2.Competition between companies

2.6.2.1. Nike(15%), Reebok, TYR(20%), Arena, Mizuno and Adidas

2.6.3. Level of advertising expense

2.6.4.Powerful competitive strategy

2.6.4.1. Two pronged strategy

Reference

Rumelt, D.P., (1984), Towards a Strategic Theory of the Firm. Alternative theories of the firm; 2002,

(2) pp. 286–300, Elgar Reference Collection. International Library of Critical Writings in Economics,

vol. 154. Cheltenham, U.K. and Northampton, Mass.: Elgar; distributed by American International

Distribution Corporation, Williston, Vt.,

Wernerfelt, B. (1984), The Resource-Based View of the Firm. Strategic Management Journal; 5, (2),

pp. 171–180.

Coyne, Kevin P. 1986. "Sustainable competitive advantage-What it is and what it isn’t." Business

Horizons. 29 (JanuaryFebruary): 54-61.

Day, George S. and Robin Wensley. 1988. "Assessing advantage: A framework for diagnosing

competitive superiority." Journal of Marketing. 52 (April): 1-20.

http://www.sciencedirect.com/science/article/pii/S0969701299000386

http://www.amsreview.org/articles/fahy10-1999.pdf

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