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					Theory in Practice




          By:
     Michael Nguyen




        BUS 444
       Dr. Meilich
         5/4/04
                      1
Quiksilver’s History


       Quiksilver is a globally integrated company that designs, produces and distributes
branded clothing, accessories and related products for young- minded people (Quiksilver
Homepage, 2004). Their brand represents a casual lifestyle—driven from their authentic
boardriding heritage. Success of Quiksilver’s introduction to America and its well-
known brand name is credited to two devoted surfers named Robert B. McKnight and
Jeffery Hakman. Hakman was a professional surfer, while McKnight surfed primarily for
the love of the sport. McKnight graduated from the University of Southern California
with a degree in business in 1976, the same year he decided to move to Hawa ii and
reunite with Hakman. While in Hawaii, the two discussed their desire to start a business
that could finance their leisure lifestyle, which was surfing and relaxing at the beach. It
was at this time when they decided to get the licensing rights for Quiksilver, which was a
small, six- year old company based in Torquay, Australia. Quiksilver was originally
founded by two Australian surfers, Alan Greene and John Law, albeit unsuccessfully. In
April of 1976, Greene and Law agreed to allow McKnight and Hakman access licensing
rights on the condition that they pay a royalty of one percent of sales for three years, then
three percent thereafter. Amazingly, they required no initial investment. After
borrowing $20,000 from McKnight’s father, the two started their business with 600 pairs
of shorts. Three days later, all 600 shorts were sold, and customers were demanding
more. This is the story of how Quiksilver U.S.A. commenced.
       This company is interesting to me because I surf, skate, snowboard, and I e njoy
the boardriding lifestyle. Once I graduate from CSUSM, I would like to work in the
boardriding industry.


Mission and Major Goals


―Our heritage comes from the beach and the sport of surfing and extends out to include
other lifestyles where the dictates of fashion and function come from active people with
high standards. Since its birth over twenty years ago, Quiksilver has maintained its




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commitment to performance, style, and endurance and has taken the message around the
world.‖
―Our goal is to provide the market with purity of concept and provide our customers
product they can wear with pride since it represents quality and value from a solid
foundation. Quiksilver’s substance lies in its history, its product quality and innovation
and its authentic connection to the extreme sports culture. This dedication has made
Quiksilver a world standard.‖
       -Robert B. McKnight – Chairman and C.E.O.


       Quiksilver’s strategy was certainly emergent because their initial idea was to start
a business that would allow just enough money to let them lead the leisure lifestyle they
desired. When they began their operation, they had no idea that the Quiksilver brand
would turn into such a huge success. However, since the birth of their operation, they
have followed their commitment to the development of innovative products that relate to
and reflect the fast growing global lifestyle, which would give their brands credibility and
authenticity that is truly unique in their industry (Quiksilver Homepage, 2004). Their
current format is intended to generate products and images that are recognized around the
world as symbols of fun, freedom and individual expression. As illustrated by their
consecutive profitable yearly earnings, their strategy seems to be quite effective.


CHAPTER 2 – Apparel Industry


Threat of new Entrants
With respect to both manufacturing and retailing, the U.S. apparel industry is large,
mature, and highly fragmented. The threat of new entrants into the apparel industry is
medium- high. There are literally thousands of small to medium sized apparel
manufactures within the U.S. alone. However, for established companies like Quiksilver,
it has the advantage of scale economies due to its brand differentiation. In addition, its
consumers have very strong brand loyalty. Capital requirements are low- medium,
because very large investments are not necessary to manufacture clothes. Government
policy is low-medium, thanks to laws ensuring a safe working environment, providing



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fair compensation without the use of sweatshops. Incumbent’s control of distribution
channels are high, because established companies have already set up distribution
networks. Financially, switching costs to buyers are low. However, often of more
importance, are the switching costs involved with switching between brands, which can
be very high. Expected retaliation depends on your target market. For those new
entrants that wish to compete with large, established companies, expected retaliation is
very high. Established companies do not take kindly to new entrants and will likely spark
price wars in order to put them out of business, as well as send a signal to other potential
entrants. Because of the current mature stage, low barriers to entry, and fragmentation of
the industry, the threat of new entrants is medium. In addition, for many of these same
reasons, it is very difficult for a new entrant to gain any significant market share.


Intensity of Rivalry
Due to the saturation of the industry, intensity of rivalry is high. The industry growth rate
is slow, but should rise as consumers become more confident with the economy.
Diversity of competitors is high, because there are manufactures producing very high-end
garments such as Gucci, as well as manufacturers that sell to discount stores. Fixed costs
are low-medium, because designing and manufacturing clothes is not extremely
expensive. Storage costs are high, because inventory is one of the largest expenses of
any company, but especially in the apparel industry. Product differentiation is high
because people’s perceptions vary significantly from brand to brand and they are willing
to pay large sums of money for a specific high-end brand such as Gucci. Brand
placement and quality play a major role in perception of consumer’s minds. Switching
costs for consumers are very high for those who are brand loyal to a specific brand.
Finally, exit barriers are high, because there is potential for large losses if a company is
forced out.


Power of Buyers
The power of buyers is medium. In the apparel industry, there are many buyers and
many manufacturers. If consumers are not satisfied with the end product, they can force
the manufacture to improve the quality or find another supplier to purchase from.



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Product differentiation is high in the apparel industry. People place a much higher value
and are willing to pay a much higher price for a Gucci shirt because of its perceived
differentiation, as opposed to a ―generic‖ brand. Consumers see Gucci as highly
differentiated, with very few substitutes. The threat of backward integration is low,
because the majority of consumers do not have the time or skill to manufacture their own
clothes. Finally, the buyer’s knowledge about the industry’s cost structure is medium,
because many people know what it takes to manufacture clothes, they just do not have the
time or resources to do it themselves.


Power of Suppliers
Concentration of suppliers relative to the apparel industry is low, because there are many
suppliers of linen and fabric to produce apparel. The availability of substitute supplies is
low, because there are not many alternatives to the current fabrics used. The importance
of the industry to the supplier is medium, because clothing is the dominant use of fabrics ;
however, there are many other uses for fabrics such as upholstery. Differentiation of the
supplier’s products is low, because consumers do find the fabrics used to be highly
differentiated unless the pattern of the fabric adds to the differentiation suc h as the Louis
Vuitton design. Finally, the threat of forward integration by the supplier is low- medium,
because it is not likely that fabric manufacturers will successfully produce their own
clothing line and gain any significant market share with the industry as fragmented as it is
today.


Power of Substitutes
The availability of good substitutes is low, because there are not many direct substitutes
for manufacturing clothes.


Bottom Line - Quiksilver
Overall, the apparel industry is not a very attractive. Because the industry is fragmented,
it is very difficult to gain a significant share of the market. New entrants will find it very
difficult to achieve enduring profitability. However, for an established company like
Quiksilver, the opposite is true. Executives of the company are exactly where they want



                                                                                                 5
to be. Quiksilver has found its niche, producing and marketing it’s clothing to those with
a ―boardriding‖ lifestyle. This segment of the market has grown rapidly in the recent
years due to mass recognition and commercialization of skateboarding, such as the X-
Games and similar events that have begun to air on television, fueling the growth of
similar sports and consumers who identify with the Quiksilver brand. Quiksilver has
flourished in a fragmented industry because of its very strong brand loyalty due to its
differentiated clothing and commitments made by founding executives to stay true to
their roots where the ―dictates of fashion and function come from active people with high
standards‖ (Quiksilver Homepage, 2004). In addition, Quiksilver is globalizing, which
holds a large potential for profits and increasing brand awareness. With recent successes
abroad, Quiksilver has become one of the most profitable companies in the ―boardriding‖
segment.
* All research for the five forces was found using Standard & Poor’s Industry Survey of
the Apparel Industry, since it is Quiksilver’s greatest means of generating revenue.


CHAPTER 3


Efficiency: Quiksilver is one of the most efficient surf apparel manufacturers. Because it
started investing so heavily in R&D and operations management in the early 1980’s, it is
one of the best performing clothing manufacturers of ―surfwear‖. When the company
began U.S. operations, it took nearly a week to produce 100 pairs of similar boardshorts
at a cost of $5.75 per unit. In 2002, it was able to produce 1000 pairs of boardshorts in
different styles and colors in a single day at a cost of $1.50 per unit (Lipke, D., 2003). As
a result of the company’s continual focus on efficiency, sales have risen in 2003 to 975
million, up from 705.5 million in 2002. This has led to a rise in net profit margin to 6.0%,
up from 5.3% in 2002 (SEC database, 2003). Finally, return on equity was13.1% at the
end of 2003, which further illustrates how efficient Quiksilver has become.


Quality: Superior quality and value has always been a goal of Quiksilver executives even
before operations began. This was the premise behind the first product Quiksilver
produced. Quiksilver founders sought to produce a pair of surf trunks that would have



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superior quality. They wanted high quality, performance focused, reliable, stylish and
practical surf trunks that customers perceived as having a greater value superior to other
brands. Employees pride themselves on continually producing products that are
innovative, durable, stylish, and made of high quality. It is surely important to top level
executives because each product with a Quiksilver label represents the company, and if
one is defective, it may turn a consumer over to a competitor’s brand. Consumers
realized the added value of the Quiksilver boardshort, and this enabled Quiksliver to raise
prices to further enforce the high quality of their products (Dougherty, C., 2003).


Innovation: Quiksilver is the innovator and pioneer of ―surfwear‖ fashion. Using product
innovation, Quiksilver originators Robert McKnight and Jeffery Hakman produced the
first-ever pair of shorts specially designed for surfing. Their superior design enabled
surfers to freely move about in the water, freeing them from the previously restraining
swim trunks. The high quality material used ensured a long life span. As soon as the
Quiksilver ―boardshort‖ hit the stores, they were purchased. As word spread, demand
and awareness grew; Quiksilver ―boardshorts‖ were perceived as unique and highly
valued because they were the first of its kind. Quiksilver continues to invest in R&D to
continue to be the innovator of surf apparel materials, design and fashion.


Responsiveness to Customers: Quiksilver was very responsive to its customers because
they identified surfers’ needs, and then satisfied them with the ―boardshort‖. In turn, its
customers placed a high value on its products, because of their perceived differentiat ion.
In turn, this became their competitive advantage. As with all Quiksilver products,
designers strive to improve garments based on fabrics, technology, and creativeness. In
addition, Quiksilver recognizes that other ―boardsports‖ are becoming popular, and
designers are continually striving to improve current designs that appeal to these
emerging markets.
       Because the brand name and logo are perceived as being differentiated, the threat
of substitutes is not a large concern for Quiksilver. In add ition, consumers place such a
high value on these products that they are willing to pay a higher price for a Quiksilver
garment because of the reputation for high quality.



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CHAPTER 5


       From my research, it is evident that Quiksilver uses a differentiation business-
level strategy to appeal to its consumers. Although their products serve the same basic
needs as similar products, it’s the brand name, quality, and association with the products
which consumers place a high value on.          As a consumer myself, the history of
Quicksilver plays a large role, with its roots in the ―boardriding‖ lifestyle (surfing,
snowboarding, skateboarding, etc), to which consumers such as myself identify with and
respect the fact that the Quiksilver brand and its products have remained true to the
surfing culture. During the late 1970’s, Quiksilver founders realized that there was a
need for shorts specifically designed for surfing that would allow the user mobility and
also be durable to hold up in the pounding surf. Thus, Quiksilver identified a specific
need of a group that needed to be satisfied, and it came up with a solution of how to
satisfy that need by creating a value to surfers. In producing the first-ever Quiksilver
―boardshort‖, the company gained a competitive advantage over its rivals by creating,
designing, and supplying surf trunks that satisfied customer needs better than its rivals
did. This innovative design was slightly more difficult and costly to produce, but most
likely Quiksilver was able to pass this increased cost onto its consumers because it was
the only company with the design and technology to produce the boardshort.            The
premium price that was charged most likely increased consumers perceived value of the
product, which in turn increased demand.          While demand increased, Quiksilver
experienced high sales revenues and profitability, which it then put back into R&D to
stay at the forefront of innovative surf wear (Mergent Online, 2003). After the first few
years, demands began to grow so rapidly that I conc lude Quiksilver began to realize
economies of scale, which likely lowered per unit costs as well as the overall
manufacturing cost structure.    However, because Quiksilver executives were more
concerned with innovation and quality, they chose to invest the revenue in R&D, which
then would have increased costs. Quiksilver’s strategy involves allotting large revenues
to R&D in order to continue creating products before any other company, therefore
differentiating its products and gaining brand recognition through its innovations. By




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continuing to produce innovative and stylish ―surfwear,‖ Quiksilver continues to pioneer
fashion for the boardriding culture.
       The biggest advantage associated with their differentiation strategy is that they
were able to make a name for themselves in a now saturated industry by creating a
product that no other company offered. Their superior and unique products built brand
awareness and loyalty, which lead to increased demand and profits. However, in order to
continue with their differentiation strategy, costs increased, but Quiksilver was able to
pass the costs onto their customers.
       The biggest problem the firm faces by pursuing this strategy involves continually
producing products that will be perceived as differentiated. In order to confront this
situation, Quiksilver spends a large percentage of revenues on R&D to continue to
produce products that improve on existing styles, as well as come up with new innovative
designs and styles which represent the boardriding lifestyle (Mergent Online, 2003).
Quiksilver is also facing increased competition from firms attempting to imitate their
products. Such as the case where an employee discovered counterfeit Quiksilver clothing
being produced abroad (Factiva Online, 2003). Because they produce a commodity, it is
easy for competitors to produce cheaper, similar substitutes.           However, without an
authentic Quiksilver logo, it will be difficult to sell to Americans.
       As the industry continues into further saturation, Quiksilver executives have
realized that the only way to compete and increase profits is to operate globally, and has
chosen to segment accordingly. As of fiscal 2003, they have three geographic segments:
the Americas, Europe and Asia/Pacific. The Americas segment includes revenues from
the U.S., Canada and other exports from the U.S. The European segment includes
revenues primarily from Western Europe. Finally, the Asia/Pacific segment includes
revenues primarily from Australia, New Zealand and Japan (SEC database, 2003).
Quiksilver focuses on final buyers who purchase apparel in surf shops and retail stores.
The company targets young- minded individuals ranging from thirteen to thirty-two, who
identify with the boardriding lifestyle.




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CHAPTER 6


       Quiksilver operates in a mature industry environment. Because the market is so
saturated, Quiksilver has decided to expand its operations to increase its revenues and
capitalize on its competitive advantage. Since 1994 to 2000, sales have steadily
increased. Ending fiscal year 2000, overall sales for Quiksilver was 515.7 million (SEC
database, 2003). One major reason for this large increase in sales is due to the fact that
Quiksilver is expanding its clothing line and geographic areas of operations. This
expansion has changed Quiksilver’s scope, target market, PVC; basically all aspects of its
operations. Included in its new target market are females, young males, and Europeans.
This expansion into other markets has greatly influenced the increase in sales, as well as
the number of opportunities to produce apparel and sell to consumers in new markets.
Quiksilver Manages Five Forces
       In an effort to protect its differentiation strategy, Quiksilver continually monitors
it competitors and the external environment in an attempt to manage the five forces of
industry competition. In order to deter new entrants from competing in the ―surfwear‖
segment of the apparel industry, Quiksilver uses pricing games. In an article published
on Factiva, it states that Quiksilver Inc. has become increasingly responsive to new
competitors attempting to take away market share (New Zealand Herald, 2004). This
strategy that Quiksilver is pursuing involves cutting prices every time a new apparel
company with a similar target market enters the industry. Once the threat has been
removed, Quiksilver then raises prices back to normal. The reasonable assumption would
be that the firm has the ability to do so because they have much larger revenues that
allow them to sacrifice the capital. In doing so, it is more logical and economical to deal
with the competition immediately, instead of hoping that the company will fail on its own.
       In an attempt to manage rivals, Quiksilver uses nonprice competition (New
Zealand Herald, 2004). By continually producing differentiated products to brand loyal
customers, Quiksilver is protecting itself from competitors by preventing them from
stealing their customers and taking away its market share. Using product development as
a nonprice competitive strategy, the R&D department focuses on continually creating
new products and designs as well as improving on existing ones (Mergent Online, 2003).



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Since the company is known for its innovative style and designs to the ―boardriding‖
segment, it is crucial for Quiksilver to continue producing output that its customers find
differentiated and valuable. In addition, as exemplified by its globalization, Quiksilver
executives are also pursing market development in order to capitalize on its strong brand
name. Over the years, Quiksilver has broadened its product lines and segments of the
market in order to appeal to children and young women, and in doing so have created
new market segments.
       Powerful suppliers and buyers are not a major problem for Quiksilver. Quiksilver
products are perceived as highly differentiated and their customers are very brand loyal.
Even if a supplier increases their prices, Quiksilver has the ability to pass the costs onto
their customers, and their customers are willing to pay a premium price because of
Quiksilvers perceived value. In addition, Quiksilver has also made an effort to work
intimately with suppliers in order to build a lasting relationship, which both parties
benefit from (Quiksilver Homepage, 2004). Since the late 1970’s, Quiksilver CEO
Robert McKnight built personal relationships with a few of his suppliers and to this day
uses many of the original suppliers. This has led to very low conflict between supplier
and buyer, and a true effort to help each other out.
       Finally, the threat of substitutes is not a serious problem, but the threat is
increasing (Factiva Online, 2003). However, competitors will have the huge task of
breaking consumer brand loyalty, which is the predominant reason why they have so
successful. There have been cases where competitors have attempted to copy their
designs, but more than likely the fact that the Quiksilver logo was not visible probably
prevented most consumers from purchasing the products.
       The history of Quiksilver has a reputation for being differentiated.             The
Quiksilver name and logo are differentiated themselves, and anything that carries the
brand name and logo are going to be perceived as unique and valuable.


CHAPTER 7


       Quiksilver originated with an innovative strategy, and decided to develop and
market the innovation alone (Quiksilver Homepage, 2004). It made sense because they



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had the complementary assets that were necessary, and the number of capable
competitors was low. Although the barriers to imitation were low, Quiksilver counted on
its first mover advantage to create an enduring competitive advantage and differentiate
themselves from the few competitors that existed. Because they were the first company
to produce the ―boardshort‖ specifically designed for surfing, they were able to establish
significant brand loyalty. In essence, Quiksilver created a standard in ―boardshort‖
production, because all surf company’s design their surf shorts based on the original
Quiksilver ―boardshort‖ design. In addition, they sold large volumes o f the boardshorts,
while their competitors struggled to create their own version. This lead to cost
advantages associated with the realization of scale economies and learning effects. With
these cost advantages, they were able to slash prices in response to new entrants, while at
the same time remaining profitable. Once they became established, consumers faced
high switching costs because of the image associated with the brand name. Over the
years, Quiksilver must have accumulated valuable knowledge in relation to their
customer needs, distribution, process technology, as well as product innovation, and is
demonstrated by their profitability.


CHAPTER 8


        Having been established here in Southern California since the late 1970’s,
Quiksilver has a large cost advantage by riding down the experience curve. Because the
company has been in operation for so many years, Quiksilver has been able to increase
efficiency and decrease operating costs, which gives them an advantage over their
competitors. In addition, they very likely have achieved learning effects and economies
of scale.
        One problem that Quiksilver has faced is pressures for local responsiveness. In
order to address this problem, Quiksilver executives have begun to segment the market
geographically (SEC database, 2003). Quiksilver now segments each market into
different groups, markets, and develops products to suit the needs of each group. For
example, Quiksilver is able to launch a new summer line in Asia, while at the same time
launch a new winter line in California. Although ―surfwear‖ is a similar worldwide,



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because of the brutal sun and mosquitoes, many Australians prefer lightweight, long-
sleeve shirts that are breathable. However, in Japan, where the winters are very cold,
many Japanese prefer heavy long-sleeve sweatshirts. Quiksilver recognizes these
differences in preferences and responds by segmenting each geographic area accordingly.
Although their actions may lead to increased costs, it further differentiates their products
and allows them to pass the increased costs onto its consumers.
       Research up to this point leads me to believe that Quiksilver executives are
pursuing a multidomestic strategy. The company is using its competencies in experience,
efficiency, and economies of scale, while at the same time addressing pressures for local
responsiveness. The company is keeping its focus on staying differentiated in the minds
of its consumers more so than lowering costs because they do not want to cheapen the
value of the brand name. They are able to pursue this strategy is because they have high
brand equity, are perceived as differentiated, and consumers are willing to pay a premium
price for their products. They are slowly transferring their local knowledge and
competencies and continually finding ways to incorporate them in other countries.


CHAPTER 9


       Quiksilver uses horizontal integration as a means of increasing its profitability
(SEC database, 2003). By acquiring competing bathing suit companies Raisins and
Radio Fiji, as well as competitor surf brand Gotcha, Quiksilver appears to be attempting
to manage rivalry within its industry as well as increase its bargaining power. It seems as
though Quiksilver is attempting to consolidate global control of the Quiksilver and Ro xy
brands through acquisitions.      In July of 2000, the company acquired Quiksilver
International Pty Ltd., which at the time was an Australian company. This move granted
them ownership of all international rights to use of the Quiksilver and Roxy trademarks.
Subsequently, in December 2002, they vertically integrated backwards by acquiring Ug
Manufacturing Co. Pty Ltd., and Quiksilver Japan KK, which were their licensees
(through Quiksilver International) in Australia, Japan, New Zealand, and other Southeast
Asian territories (SEC database, 2003). After their acquisition, Quiksilver now refers to




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this group as Quiksilver Asia/Pacific. It is my conclusion that Quiksilver is attempting to
create a global operating platform that will consist of several operations.
        In addition to its attempt to consolidate global control of the Quiksilver and Roxy
brands, Quiksilver has also made an effort to increase its market share and use of its
competitive advantages here in the U.S. In September 2002, Quiksilver acquired Beach
Street, Inc., the owner and operator of 26 Quiksilver outlet stores in the U.S. These
operations have now been integrated into their existing retail stores division (SEC
database, 2003).

CHAPTER 10

        In March of 2004, Quiksilver announced that it has signed a contract to acquire
DC Shoes, Inc (Dougherty, C., 2004). DC Shoes is a premier designer, producer, and
distributor of action sports inspired footwear and apparel, and operates in the U.S. as well
as internationally. By doing so, Quiksilver is pursing a strategy of related diversification.
This diversification by Quiksilver has many advantages and incredible potential to
increase profitability. There are many reasons why I feel this diversification is an
excellent opportunity for growth. First, Quiksilver Inc.’s surf inspired Quiksilver and
Roxy brands will be complemented by the DC Shoes brand because both brands appeal to
the ―boardriding‖ segment. The decision fits incredibly well with Quiksilver’s strategy
of pursuing opportunities in the global youth market because they have an incredible
internal and external fit. In addition, both companies were founded with a vision to
produce high quality output. Both brands were created with the respect for the
authenticity that makes their brands powerful, and both can benefit from product design
that reflects technical excellence and innovative style. Further evidence to support the
diversification is that DC has fantastic global potential because of its growing popularity
in other countries, sizeable revenues, and their culture is very similar to Quiksilver’s
(Dougherty, C., 2004).
        Taking this course of action will likely enable Quiksilver and DC Shoes to
transfer competencies and use them to their advantages. Because Quiksilver is
diversifying into a business related to its existing activities, it allows each brand to use
each other’s competencies. For example, because DC Shoes are distributed to countries


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where Quiksilver products are not, it is now able to capitalize on their established
distribution channels and build on the global platform that DC has developed over the
past ten years. The sharing of resources will also permit both companies to realize
economies of scope, which will result in cost reductions. Since both Quiksilver and DC
Shoes products have a similar global youth market, marketing and the sales force should
be able to find ways to reduce costs. With the diversification, there is also the possibility
of Quiksilver realizing economies of scope if it can manage bureaucratic costs and create
a strategy where significant competitive advantages can be utilized. Another advantage
that Quiksilver has with this diversification is the ability to manage its rivals with price-
cutting. It will most likely pursue a tit- for-tat strategy to send a signal to aggressive
competitors that try to take away market share.


CHAPTER 12


        Within the Quiksilver organization, there is a CEO, COO, two CFO’s, and an
Executive President at the top of the organizational structure. Following, there are three
EVP’s, two VP’s, four Presidents, and a brand manager each responsible for their
respectable divisions (SEC database, 2003). In addition, with nearly 3,400 employees
spanning over numerous countries, I reason that Quiksilver is a rather tall organizat ion.
As with most U.S. companies, Quiksilver groups people and tasks into functions, then
groups functions into divisions. Within the organization, all managers understand their
place in the hierarchy of authority, as illustrated by its tremendous succes s.
        In order to keep operations running smoothly, Quiksilver managers practice
personal control (Mergent Online, 2003). For top- level management to ensure lower-
level employees follow their strategies, managers have continuous personal interaction
with employees. There are a number of advantages that Quiksilver benefits from this
strategy. First, with direct supervision, management and employees speak to each other
on a daily basis, which allows management to get a better understanding of the problems
their employees are facing. For the Quiksilver staff, this facilitates a strong relationship
between lower- level employees and managers. In addition, it allows managers to




                                                                                             15
continually track employee performance and make sure employees do not stray from
important tasks. This personal control is closely tied with the culture at Quiksilver.
       One of the many reasons why Quiksilver is so successful is because of the
organizational culture (Quiksilver Homepage, 2004). Quiksilver was founded with the
intent of producing high quality clothing that represented the surfing culture. Their
values have transcended to their organizational culture, where everyone is treated like
family members. Quiksilver executives realize the importance of their employee’s job
satisfaction, and its relationship to motivation and the quality of work they perform.
From my personal experience in the surfing industry, I have found that the majority of
those employed share similar beliefs and values, which builds a strong bond between all
employees. The Quiksilver culture promotes equity between all employees, from the top
to bottom, making everyone feel they are making an important contribution to the
company. This can lead to decreased conflict as well as a decreased need for further
motivation, and promotes commitment to quality work performance. In addition,
employees are encouraged to make suggestions that they feel will improve operational
performance.


IRMe’s

       Quiksilver reminds me of the Southwest case because the culture is very similar
for both companies. There is a strong relationship between lower- level employees and
middle/top- level managers. Upper- level management really makes an effort to build
lasting relationships with employees because they know that it is beneficial for everyone,
including the organization as a whole. Quiksilver also reminds me of the Coors case
because both companies backward integrated in an effort to improve efficiency and
increase profits. With Coors, they began to produce their own bottles, whereas
Quiksilver acquired Ug Manufacturing Co. Pty Ltd. The Harley case comes to mind
because of its differentiation strategy, which Quiksilver pursued as well. In addition,
both companies are able to charge a premium price for their products, which co nsumers
are willing to pay. The BIC case is related to Quiksilver because both companies were
dedicated to producing high quality output, and implemented strict quality control



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standards. Dell is related to Quiksilver because both companies started in industries with
several competitors, and both became successful by targeting a specific market segment
to focus their selling efforts. Honda is related to Quiksilver because much like Honda,
Quiksilver learned how to improve manufacturing efficiency and gained economies of
scale which gives them an advantage over their competitors. Quiksilver is attempting to
consolidate the apparel industry, which is reminiscent of the cigarette industry.
Quiksilver and the Cola Wars case are similar because Quiksilver has gained significant
brand loyalty among its consumers, just like Coca-Cola and Pepsi have done. Timex and
Quiksilver are similar because both had the first- mover advantage, which became their
competitive advantage. Airborne Express and Quiksilver are similar in that both pursued
a differentiation strategy and targeted a niche market. In addition, both are dedicated to
continuous high-quality output, which is vital to their consumers. Quiksilver reminds me
of Marks & Spencer (Europe) because both companies have very loyal employees, brand
loyal customers, and are able to charge a premium price for their garments. Finally,
Quiksilver and Disney are similar because both have gone global with their operations.
However, they differ in that Quiksilver has become very successful in Europe and
Pacific/Asia by addressing the pressures of local responsiveness, whereas Disney has
done the opposite in France by trying to force American style management onto very
anti-American French cultured employees.




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                                      REFERENCES




Agile retailers needed to pin down Gen Y. (2004). New Zealand Herald. Retrieved March
5, 2004 from Factiva Online database.

Counterfeit crackdown a success. (2003). Factiva Online. Retrieved February 26, 2004
from Factiva Online database.

Dougherty, C. (2004). Apparel Giant VF Set to Buy Skateboard-Shoe Pioneer. The San
Diego Union Tribune. Retrieved April 15, 2004 from Factiva Online database.

Dougherty, C. (2003). Independent California Board Retailers Hone Professionalism. The
San Diego Union Tribune Retrieved February 19, 2004 from Factiva database.

Driscoll, Marie. (2004). Apparel Industry Survey. Standard & Poor’s. Retrieved
February 12, 2004 from Standard & Poor’s website.

Hill, C. & Jones, G. (2004). Strategic Management Theory. Boston, MA: Houghton
Mifflin Company.

Lipke, D. (2003). Survival of the fittest as some teeter on the brink of extinction.
Retrieved February 5, 2004 from Factiva database.

Quiksilver Homepage. (2004). Company history. Quiksilver.com. Retrieved February 10,
2004 from Quiksilver homepage.

Quiksilver, Inc. (2003). Mergent Online. Retrieved February 17, 2004 from Mergent
Online database.

SEC Database (2003). Quiksilver Annual 10K Report. SEC Online. Retrieved February 5,
2004 from SEC Online.




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