Strategic Management Analysis For Speedo Management Essay

Speedo was launched in Australia in the year 1914. Since its establishment the company is seen to have expanded and adapted to changes in the market successfully. The brand has maintained its position over the years and emerged as a leader in the swimwear market. The company initially produced only swimwear and gained expertise in this field, so much that many of the sports people preferred Speedo swimsuits to others. In fact Speedo took advantage of this and sponsored sport persons at Olympics. The global market for swimwear was changing with time owing to the increase in tourism, evolving water sports etc. The company has been consistently launching new products and experimenting with them to relate to the market demand. Speedo adopted different strategies at different points of time to keep up with the market change. (Qumer, 2009)

The various theories informing the business strategies adopted by Speedo over the years are analysed in this report. The business level strategic theories discussed in literature are Porter’s Generic Strategy, M-style, Resource Based View and Stakeholder’s Theory etc. The strategies adopted by Speedo seem to be much in line with the Porter’s Generic Strategy Theory. Porter suggests three generic strategies to tackle the competition in the market, which are cost leadership, differentiation and focus. Cost leadership theory basically means controlling the overall costs and manufacture low cost products as compared to the other industries in the market. This involves a lot of detailing like control of the overhead costs, advertising, in sales facilities and steps to minimize costs in every possible way. Minimizing costs are the fundamental basis of the entire strategy for the industry. Differentiation theory means that the company believes in manufacturing products that are unique to their brand. Speedo seems to be following the Differentiation Generic Strategy and will be discussed in detail. Focusing on a particular type of market is the third generic strategy. This focus can be on the basis of geographic location, group of consumer or even costs. The main idea is to supply to the narrow target more effectively and efficiently. (Porter, 1980)

The differentiation strategy means differentiating the product on the basis of every possible aspect of the product or service. This strategy helps in fighting the five competitive forces mentioned by Porter. The strategy earns brand loyalty from the customers, which indirectly helps in eliminating any strong competition and reduces sensitivity to costs. This in turn gives way to higher margin that helps in dealing with power of the supplier and lessens the power of buyer. Customer loyalty also reduces the threat of new entrants to the firm. Since the firm differentiates its products in the first place, substitutes are hard to find. The case study mentions how analysts have said that Nike Inc. quit the swimwear market due to the strong presence of Speedo. In an effort to be exclusive some firms end up spending too much in production and this increases costs. This can be a disadvantage as not all sectors of consumers will be able to afford it. (Porter, 1980)

Porter (1980) mentioned some basis of differentiation like the product’s design, features and technology used in producing it and the dealer network. There are several evidences in the case study, which indicate that Speedo indeed used different technologies to produce unique products. Speedo launched the fastest swimsuit S2000 in 1992, which gave 15% less drag compared to other swimsuits. They used various fabrics in the manufacturing of swimsuits like chlorine-resistant Lycras and Endurance fabrics, sun protection fabrics that allow enhanced movement and shape. Fastskin suit launched in 2000 used fabric that was similar to denticles on skin of shark, Fastskin II launched in 2004 used Computational Fluid Dynamics technique and the FS-PRO 21 in 2007 that was considered to be the fastest and most lightweight swimsuit are all proof to the fact that Speedo uses technology to differentiate its product from its competitors. Another high-tech product was LZR Racers launched in 2008, which was considered to be the fastest swimsuit in the world. A few other technology-based products that are unique to Speedo are Endurance Plus range, which was chlorine resistant and lasted longer and Speedo Biofuse. Also Speedo was the first to launch a 100% recyclable packaging in the market. The headwear and goggles they made were 100% PVC free. (Qumer, 2009)


Porter (1980) clarified that the differentiation strategy does not mean ignoring costs but it just changes the focus of the firm. However it is said that adopting differentiation strategy helps in attracting the knowledgeable consumers with relative understanding about the product and its uniqueness and hence these consumers will not give much importance to the costs (Akan, Allen, Helms and Spralls, 2006). Speedo was the most successful performance swimwear brand in 2008. Also like the argument suggests, many athletes used Speedo products because of the varied and useful technologies used. However, this strategy seems to have ignored the commercial or common consumers who will not understand the importance of the technologies used. The company has now launched a few other leisure products to become a fashion brand as well.

  Implementing innovative marketing strategies is another feature of differentiation (Akan et al., 2006). Akan et al (2006) mentioned that to develop a broad range of new products along with refining the present, and building up a brand identity are a few tactics of differentiation strategy. Speedo has never been into advertising its products. A unique way of advertising that the company has adopted since it is established, is sponsoring the athletes. Speedo started sponsoring players at Olympic games since 1932 and has continued the legacy since then. Also the launch of a website to attract online shopping and increase the revenue is a unique way of marketing in itself. The launch of podcast in 2006 helps the company in advertising by word of mouth and that is what Speedo believes in. Another aspect is recruiting and thorough training of the employees about the in-depth knowledge of the product due to its exclusive quality (Darrow et al, 2001 cited in Allen and Helms, 2006). Speedo’s research and development unit Aqualab consists of garment engineers, product developers, material experts, athletes and coaches. Training is required because a lot of effort goes into developing technologies and producing the unique products for the market. The company is seen to be giving good attention to that.

Another theory that seems to inform with Speedo’s strategic management is the Ansoff’s matrix. Ansoff provided an alternate method of strategic development called the Ansoff’s matrix. The matrix consists of the first box, which is market penetration and a company generally starts here. Later it has the option of going on to develop new products for the existing market that is the second box; or like the third box expand into new markets with existing products; or taking the drastic step of diversification wit new market and new products. Market penetration is the most obvious initial strategy for any business and helps in increasing the market share. However this has seen to have an adverse effect on competitors, which may lead to intense price wars. Speedo had the highest market share of performance swimwear as of 2008 and in UK alone it has 60% of the market share (Qumer, 2009).  In case of Speedo, it has to face allegations from competitors that the features of their swimwear add to the buoyancy of swimmer and defying rules. (Johnson et al, 2008)

[Adapted] From: Johnson G., Scholes K. and Whittington, R. (2008) Exploring Corporate Strategy: Text and Cases (8th ed.), Harlow: Prentice Hall / Pearson Education.

Product development is the next possible safest option after market penetration for any business or firm. This considers innovating new products in the existing market (Johnson et al, 2008). The company launched a waterproof MP3 Player, Aquabeat. Speedo over the years produced high-tech based performance swimwear with the help of various materials and technologies. The market for these remained the same, that is the professionals, but the product was been constantly developed. The company’s research unit Aqualab is the place where all the research for product development takes place. The latest product from the company was the LZR Racer swimsuit. However, product development does have a risk. It could be anything from increased costs to failures. For Speedo, the LZR Racer seemed to have defied rules of FINA and had to develop swimsuits depending on the new enforced rules. Another example of this is stopping the production of bikinis because they were considered indecent in Australia during the time of Second World War. 

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Market development is another strategy and challenge in itself. It is essential for the firm’s growth. This basically involves selling existing products in new markets and this can be on the basis of users, segments or geography (Johnson et al., 2008). After the success in Australia, in 1959 Speedo started exporting to US. It also opened a international division to look after the markets in New Zealand, Japan and South Africa. By 1960, Speedo opened a subsidiary in London called Speedo Europe. To overcome the problem of unknown customers and unknown environment Speedo gave firms in Japan and South Africa its manufacturing and distribution licences. Around 1970’s Speedos international presence was strongly felt wit products been launched in Brazil, Mexico and Eastern Europe. By 1990, Speedo had a strong presence all over the world.

Diversification is a different level of strategy all together. It is about keeping aside the existing market and products and entering a new market with new products. It extremely increases the scope of the organisation. Reasons of opting for diversification can be to increase the profit by using the resources and competencies and broadening the firm’s activities (Johnson et al., 2008). The company’s main strategy by the year 2000 is stated as establishing itself as a fashion brand. This is completely different from the performance swimwear forte of the company. To make a place as a fashionable brand in the market, the company introduced range of leisurewear. It included swimwear along with other casual wear like shirts, shorts etc. By doing this Speedo is basically exploring a new target market and also producing new products. It seems to have utilised the capital obtained from the success of performance swimwear into this. The company realised that to make this successful it has to implement some advertising strategies. Speedo also signed various licensing contracts with various designers in different countries to produce the authentic technical swimwear characteristic to the company along with some fashion statement that related to the local consumer market.

Reed and Luffman (1986) mentioned that there has not been much literature about the matrix proposed by Ansoff except for the diversification theory proposed by it. They stated this is probably because of the challenges a firm would face by following that strategy. However the end result expected out of this theory is said to be growth. For Speedo to get into the fashion market was a strategy of economic growth only. Rumelt (1974 cited in Reed et al, 1986) concluded from his research that many of the companies he researched, although had bad performance results they would have been worst without diversification. Since Speedo has been established as leaders in the market, diversification is only a method of growth with little risk for them.

From the analysis of the case study it can be seen that Speedo has adopted good strategic theories and is gaining benefits from them as expected. Looking at the performance of the company it can be stated that the company changes its strategies with the environmental changes in the market and adapts to situation taking relevant actions.


It is clearly evident from the case study that Speedo has grown to the leadership position in the performance swimwear market and also successfully edging towards the leadership in the overall market as well. However to maintain the position of the company and survive the growth lifecycle of firms, the company cannot let loose and has to practice some suitable strategy in the future too.

Strategic decisions many a times include the options of resources of the organisation (Schendel and Patton, 1978 cited in Bowman and Hurry, 1993). Since the company is already at a high position it is very well aware of its resources and capabilities. In order to use them strategically and maintain its position the Resource Based View theory can be a good option. It says that the competitive advantage of a company and its efficient performance is because of its distinct capabilities (Johnson et al, 2008). A strategic capability means the resources and competencies of the firm. Speedo’s research centre Aqualab is the origin of all the new technologies of the company. The company should maintain and develop the centre with respect to changing technologies. Also the brand and patents obtained by Speedo for the unique technologies are its intellectual resources. The company has enough financial resources owing to the success and can utilise the same for expansion and development. Competency is the skills and abilities by which resources are deployed. The innovative technologies, used in the production of the swimsuits are the core competency of Speedo. The company should bank on this competency and continue to strengthen it further to maintain its position in the market. However care should be taken as to not defying any rules while doing so.

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Rare, valuable, inimitable and non-substitutable resources help to maintain the competitive advantage and improve performance (Barney, 1991 cited in Srivastava; Fahey and Chritensen, 2001). For Speedo, the innovative marketing strategy of sponsoring the athletes is rare and should maintain that. The brand name and its relation with the customers are non-substitutable and Speedo should continue the manufacturing of authentic products. Research based view proponents (Barney, 1991; Grant, 1991; Wernerfelt, 1984) have all discussed the role of resources in producing something worthy for the customers while identifying marketing resources like the brand and customers, the relationship of distributors in gaining advantage (Srivastva et al, 2001). The company’s relationship with the distributors all over the world to expand its market and increase sales is very valuable to the company and the company should maintain and build up more such beneficial networks.

Human resource systems are also considered as a strategic capability of firms for sustained competitive advantage (Lado and Wilson, 1994). Although this aspect has not been mentioned much in the case study and it talks more about the product, considering the human resource as valuable, since that is where all the innovations come from will be a good practice for future. Priem and Butler (2008) has concluded from his research that sometimes organisations fail to recognise their and resources and hence their strategic capabilities. A suggestion to Speedo is that it should not fall prey to such a thing and have a more resource-based view.

The Stake Holder’s strategic theory can be another recommendation for Speedo. Stakeholder is basically anyone who gets affected by the firm’s efficiency and objectives (Johnson et al, 2008). The stakeholders mentioned in the case study are the athletes endorsing for Speedo, the board of directors, the employees, the distributors and the most important are the consumers. While Speedo has always been market driven and paid more attention to consumer demands, little has been mentioned about the employees or the management. The managers and their thinking influence the work culture and innovative ideas within the company and this fact should not be neglected. Hence the expectations of the management as one of the important stakeholders should be taken care of.

The secondary stakeholders are the government authorities or communities that affect the business (Mainardes, Alves and Raposo, 2011). FINA, which is an international organisation for swimming is the secondary stakeholder Speedo should be careful about. In future, the company should make sure they do not violate any FINA rules while using technology to produce the high-tech swimwears. Successful strategic planning actually means to integrate the interests of all the stakeholders of the company (Mainardes et al, 2011).

From the analysis presented, it can be said that an appropriate strategy in place along with successful implementation has led Speedo to achieve the leadership position in the swimwear market. The company should make sure to outline future strategies depending on the current market environment and exploit fully the brand identity and monopoly in the market that it has attained over the years. Innovation and technology is seen to be underpinning all the actions of the company, be it the product or the marketing strategies. Speedo should concentrate on these basic resources. The company should maintain its hold over the performance swimwear market and continue with its strategies of expansion into fashion wear. Speedo should also consider expansion in other sportswear and related stuff of other sports too. An important suggestion would be to revisit the strategic plan over small duration of time in this highly competitive market.

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