Payless Shoe

1) Industry segment analysis

„« Competitive Industry with low growth opportunities

„« Matured industry but low entry barriers

„« Sensitive to fashion trends and typical cyclical (Easter, early summer, back-to-school and winter season)

„« Price Sensitive, Price War. Highly influenced by the level of disposable income: interest rates, energy costs, and consumer household debt service obligation.

2) Principal factors

„« Price is one of the most important factors, so it is important to have a cost advantage.

„« Advancing in fashion trend

„« Brand image

3) Supply chain analysis

„« Fragmented industry

„« Companies take care of design and marketing

„« Manufacturing and distribution are outsourced

„« It is fragmented by functions

4) Capital and Technology

„« Labor intensive industry (No capital intensive)

„« Design and Marketing are important

„« Industry in not highly subjective to technology change

5) Regulation analysis

„« Industry in not highly exposed to regulation

6) Company Competitive position

„« Company has limited resources, so it is not at advantage in terms of price

„« Company is targeting certain segment such as fashion oriented female who are less sensitive to price and put priorities on trend and design

„« Company sustain reasonable price and focus on brand image, design and quality

7) Market position

„« Company experiencing decrease in market share

„« However, it is due to companyÐŽ¦s differentiation strategy

„« Company has been trying to build-up brand image to protect its profit margin in an exchange of market share

8) Performance

„« Completed restructuring in 2004

„« Redirected its strategy in 2005 (Changing its target customer)

„« Experienced decrease in revenue, but increased operating income and profit margin

„« Despite its increase in operation income and EBIT, still below the industry average

9) Management & Strategy

„« The strategy of the company is well-articulated and realistic.

„« Despite its limited resource, management