Dearn Shoes Ltd ACCA SBL Pre-Seen – June 2025

If you’re preparing for the ACCA Strategic Business Leader (SBL) exam in June 2025, you’re likely well into analysing the pre-seen material focused on Dearn Shoes Ltd.

Let’s jump straight into it.

Area 1 – Company Introduction

What Does the Company Do?

Dearn Shoes Ltd is a long-established shoe manufacturer and retailer in Lucland, founded nearly 100 years ago. It has built a reputation for producing well-made, reasonably priced shoes for all ages.

Dearn operates with four main footwear categories: formal, semi-formal, casual, and children’s shoes. The company uses a distinctive hybrid production model:

• Handcrafted (In-House): Dearn retains production of its formal, handcrafted shoes at its own factory in Layne, a town in south-west Lucland. This supports its reputation for quality craftsmanship.
• Mass Production (Outsourced): The majority of Dearn’s manufacturing is outsourced to a third-party manufacturer, X Co, located in Totland.

Dearn’s operations are currently limited solely to Lucland, as it does not engage in export activity. The company sells its products through two main channels:

1. 75 branded retail outlets (physical stores).
2. An online platform (e-commerce).

This section clearly defines Dearn’s current market position, production model (hybrid, outsourced risk), and limited geographical reach all key areas for SBL analysis (Strategy and Risk).

Location of the Company

Dearn’s headquarters, its main warehouse, and its only factory are all located in Layne. The company is a major local employer, giving it an important socioeconomic role within the community (a key stakeholder).

Despite having a national presence and significant market share, Dearn remains a privately owned company and is not listed on the Lucland Stock Exchange.

Governance and Oversight (SBL Focus)

In terms of corporate governance, the company has made certain choices that require scrutiny:

• Missing Committees: Dearn has chosen not to establish formal audit, nomination, or remuneration committees. This represents a key governance gap that limits independent oversight and best practice.
• Internal Audit Structure: It does have an internal audit team, but this team reports directly to the Chief Financial Officer (CFO). This reporting line raises questions about the independence of the internal audit function, as the CFO is an executive whose work should be subject to audit.

The organization’s governance setup is still described as being in line with principles of good corporate governance, which is an assertion that SBL candidates should critically evaluate against the facts (e.g., the lack of independent committees).

Ownership and Governance

Dearn is primarily family-owned, with the founder’s family holding a commanding 70% of the shares. The remaining shares are held by directors (15%), employees (10%), and others (5%).

Key Governance Implications

• Separation of Powers (A Strength): Although the family retains ownership control, they are not involved in day-to-day management or board-level decisions. This separation enhances objectivity, placing the strategic direction fully in the hands of the executive team.
• Board Composition (A Concern): The board includes both executive and non-executive directors and follows a traditional, hierarchical, functional structure.
  • Lack of Fresh Perspective: Most board members have been with Dearn for over two decades. This long tenure is a significant SBL risk, as it can lead to ‘groupthink’ and a resistance to change.
  • Risk-Averse Culture: The current leadership style is risk-averse, which means the board focuses more on operational consistency and stability rather than bold innovation or strategic growth.

This combination of long-serving directors and a risk-averse culture is a major factor that will likely constrain Dearn’s ability to adapt to changes in the modern shoe market.

Key Stakeholders

Dearn’s primary stakeholders include:

• Shareholders (particularly the founder’s family and directors),

• Staff across head office, factory, warehouse, and retail outlets,

• Customers, with a strong base of repeat family buyers,

• Third-party manufacturer X Co,

• Distribution partner DT Global Transport,

• Suppliers across materials and logistics,

• The National Shoe Union (NSU), which represents employees’ rights,

• The Lucland Shoe Association (LSA), which promotes industry standards.

Stakeholder relationships are generally strong, particularly with staff, who show high levels of satisfaction and loyalty. However, challenges have emerged in the relationship with X Co due to declining product quality and delayed deliveries.

Capital Structure and Funding

As a private company, Dearn’s capital structure is predominantly equity-based. Due to its conservative financial strategy and lack of external public shareholders, the company appears to have a limited reliance on debt or other external funding sources.

Implications for Strategy

• Self-Funding & Autonomy: The company is largely self-funded, relying on retained earnings and organic growth. This structure gives the board a high degree of autonomy but may limit the speed of strategic change.
• Constrained Agility: The board’s risk-averse stance poses a constraint on its agility in capital investment. This is especially problematic for large expenditures required for modern business necessities, such as digital transformation or a major operational overhaul.

The lack of substantial bank debt or external investors suggests financial stability but also a potential constraint on responsiveness in a fast-changing market like the modern footwear industry.

Performance Insights

Dearn’s financial performance over the last five years shows stagnation, despite being the fourth largest manufacturer in Lucland (9.4% market share). Revenue has seen a gradual decline, dropping from a peak of $371.5 million in 20X1 to $352.5 million in 20X4. This suggests the company is struggling to achieve new growth in a highly competitive and changing market.

However, margin growth has plateaued, likely due to growing cost pressures and operational inefficiencies linked to its overseas supplier, X Co.

The most concerning issues relate to customer perception and digital performance:

1. Falling Customer Satisfaction: This has plummeted from 8.7 in 20X0 to just 7.0 in 20X4, now sitting below the industry average. This decline is attributed to two major factors:
   • Quality Issues: Manufacturing faults from the outsourced production at X Co in Totland have led to a rise in customer returns, damaging Dearn’s reputation for quality.
   • Poor Digital Experience: The company’s online offering is underwhelming, lacking key consumer convenience features.
2. Digital Underperformance (A Major SBL Issue): Online sales represent only 12% of total revenue, significantly underperforming the industry average of 25%. This major weakness is directly linked to:
   • The absence of a home delivery service, which is a critical consumer expectation in Lucland.
   • An e-commerce platform with limited functionality, which reduces sales conversion.
   • The reliance on in-store collection for online orders, which removes the core benefit of online convenience.

These facts highlight a need for urgent strategic action focusing on supply chain governance (X Co) and a complete digital transformation.

Strategic Implications 

• Product Quality Risks: The continuous quality problems from outsourced manufacturing at X Co directly threaten Dearn’s established reputation and customer satisfaction. Failure to address this reliance immediately will further erode brand trust.
• Digital Underperformance: Dearn’s limited online reach is a critical strategic weakness. The outdated e-commerce platform and the compulsory in-store collection model severely undermine the company’s competitiveness in a market increasingly focused on digital convenience.
• Resilience in Physical Retail: Dearn’s 75 physical outlets are a proven strength, especially its high reputation for excellent customer service and children’s shoe fitting. This physical presence must be maintained while being strategically integrated with digital development.
• Staff Engagement as a Strategic Asset: High employee satisfaction and low staff turnover create a strong, stable internal culture, particularly in its home base of Layne. This highly committed workforce is a key resource that can be leveraged to drive major strategic changes, including innovation, enhanced customer engagement, and sustainability initiatives.
• Flat Revenue Trajectory: Stable financials are being offset by a lack of revenue growth, signaling stagnation. This trajectory demands that the board approve new strategic initiatives, likely focusing on digital expansion, process innovation, or product repositioning.

Business Model

Dearn operates a distinctive hybrid business model that mixes two production approaches: mass production (outsourced) and handcrafting (in-house).

This dual structure provides a key advantage: it allows Dearn to effectively serve a broad range of customer needs across all four of its product categories (formal, semi-formal, casual, and children’s shoes).

However, this complexity introduces two major challenges that require strategic management oversight:

1. Operational Complexity: Managing two vastly different production lines (one internal, one external) increases the difficulty of coordination and oversight.
2. Increased Risk: Relying on outsourced mass production introduces significant supply chain and quality control risks (as already noted with X Co).

1. Value Proposition

Dearn positions itself in the market as a provider of reasonably priced, well-made shoes, focusing on delivering consistent customer value through key strengths:

• Quality and Craftsmanship: Maintaining a reputation for quality through handcrafted formal shoes produced in Lucland.
• Customer Service: A strong heritage of excellent customer service, particularly the renowned retail fitting service for children’s shoes.
• Heritage Brand: An established brand image rooted in family-friendly values and, for specific lines, ethical production standards.

The central strategic challenge for Dearn is that this value proposition is being inconsistently delivered across its product portfolio:

• While formal shoes maintain high quality and ethical standards, the casual and semi-formal shoes, which are mass-produced by X Co, have resulted in increasing complaints over quality and reliability.

This inconsistency is actively eroding the brand’s reputation for being “well-made” and threatens its ability to compete based on perceived value.

2. Operating Model

• Manufacturing: Semi-formal, casual, and children’s shoes are mass-produced by X Co in Totland. (Risk alert: quality control issues). Only formal shoes are handcrafted at Dearn’s factory in Lucland.
• Distribution: All products are centralized at the Layne warehouse. While retail outlet replenishment is automated, the process for online order fulfillment remains manual, which significantly limits scalability as digital demand grows.
• Sales Channels: The company relies heavily on its 75 branded retail outlets across Lucland, which are vital for its identity and renowned service quality. The online store is currently restricted to the domestic market and, crucially, requires in-store collection, severely limiting customer convenience.
• R&D and Style Management: Dearn reviews and refreshes its styles only once a year. Each shoe category includes 20 styles, with poor performers replaced. This slow refresh cycle limits its agility and responsiveness to fast-moving fashion trends, especially in the competitive casual footwear segment.

3. Revenue Model

• Revenue is entirely derived from Lucland, with no export income.
• Approximately 60% of revenue is generated via in-store sales, 12% from online (collection only), and the remainder through indirect fulfilment.
• The product mix targets:
  • Formal shoes: Premium market, aged 30–50.
  • Semi-formal: Over 55s (Dearn is market leader).
  • Casual: 18–30 age group (Dearn struggles here).
  • Children’s: Strong brand, known for fittings.

4. Technology and Systems

• The company relies on systems that are largely off-the-shelf and ageing, particularly within the Finance department. This indicates a potential risk of inefficiency and a lack of real-time reporting capability.
• Dearn has limited inventory visibility. While stock levels are updated daily for retail outlets, visibility for the rest of the supply chain is only updated weekly. This disconnect can lead to poor decision-making, missed sales, and potential stock-outs.
• The existing e-commerce platform is outdated and acts as a major strategic constraint, as it lacks essential features for a modern digital business.

5. Strategic Interpretation:

• Manufacturing Balance: The hybrid manufacturing model creates both brand strength (via the quality of Made-in-Lucland (MiL)-accredited formal shoes) and significant reputational risk (due to the unreliable outsourcing to X Co).
• Missed Opportunity: The current lack of export markets represents a major missed growth opportunity. The company’s unique handcrafted shoes are ideally positioned to meet growing global demand for high-quality and ethically produced goods.
• Transformation Need: Dearn is strategically positioned to successfully adopt a selective transformation strategy. The focus should be on:
• Modernizing delivery and digital processes (addressing the e-commerce weakness).
• Tightening supplier governance (addressing the X Co quality issue).
• Elevating the brand by emphasizing ethical production and experiential value, moving away from being solely a cost-competitive provider.

Prospects of the Company

Dearn’s outlook is mixed. It benefits from a solid foundation including a strong heritage, established brand recognition, and good operational efficiency in traditional retail. It retains a loyal customer base (especially families) and leads the market in the semi-formal and children’s shoe segments.

However, to remain competitive, Dearn must address several pressing challenges:

• Digital Transformation: To secure growth in online retail, Dearn must launch a comprehensive e-commerce revamp, introduce home delivery (a fundamental customer expectation), and dramatically improve its digital marketing capabilities.
• Quality Control and Supplier Relationships: Resolving the growing customer dissatisfaction linked to X Co is essential. This may require strategic interventions such as renegotiating supplier terms, enhancing monitoring and governance, or even exploring the partial reshoring of production.
• Product and Market Innovation: Given the shifts in fashion, rising sustainability concerns, and demographic changes, Dearn needs a more agile approach to product design, branding, and customer engagement. This is most urgent for the underperforming casual shoe segment.
• Sustainability and Reputation Management: Environmental scrutiny is increasing. Dearn must visibly and credibly counterbalance its use of overseas mass production and synthetic materials with concrete sustainability efforts, perhaps leveraging and extending its Made-in-Lucland (MiL) accreditation.

If Dearn can modernize selectively adopting new technology and processes without sacrificing its core values of quality and service it can regain market momentum. Strategic agility, technology adoption, and customer-focused innovation will be vital in positioning the company for long-term success.

Area 2 – Governing Body and Ownership of the Company

Board Composition & Governance Framework

Dearn Shoes Ltd operates as a private company, meaning it is not listed on the Lucland stock exchange and is therefore exempt from many public company regulations. Despite this, it aims to maintain sound governance practices.

Family Control: The company is predominantly family-owned, with the founder’s family holding 70% of the shares.

Separation of Powers: Crucially, the family does not participate in the company’s day-to-day management or board-level governance. This separation of ownership and management is a positive factor for objective strategic decision-making.

Other Shareholders: Shares are also held by directors (15%), employees (10%), and other shareholders (5%).

Dearn is governed by a Board of Directors led by an Executive Chair, and includes both executive and non-executive directors.

• Missing Committees (SBL Concern): The board has not established separate Audit, Nomination, or Remuneration Committees. This creates significant governance gaps by lacking formal, independent oversight in critical areas like executive pay, succession planning, and financial reporting.
• Internal Audit: It does have an internal audit function, but it reports directly to the Chief Finance Officer (CFO). This reporting line compromises the independence and authority of the internal audit team.
• Long Tenure Risk: Most board members have been with Dearn for over 20 years. While this offers strong internal cohesion and consistency, it also poses a risk of ‘groupthink’ and limits the board’s exposure to fresh perspectives and digital innovation.
• Risk-Averse Culture (Strategic Constraint): The company’s governance approach is notably risk-averse. It prioritizes operational stability and incremental change over disruptive innovation. This culture, while ensuring consistency, may seriously hinder responsiveness to fast-evolving market conditions, particularly in areas like digital retail and sustainability.

Executive Leadership Culture

Dearn’s Board of Directors is structured with a clear functional hierarchy of key executive roles and four Non-Executive Directors (NEDs), although the independence of the NEDs is not clearly stated (a governance concern).

This structure aims for operational efficiency, but its governance robustness needs enhancement, especially considering supply chain and digital challenges.

• Executive Chair – Leads the board, oversees corporate governance, and steers specific strategic initiatives.
• Chief Executive Officer (CEO) – Leads the executive team, implements board decisions, and is responsible for overall strategic execution.
• Chief Finance Officer (CFO) – Manages financial strategy, reporting, internal audit, and oversees the warehouse and Lucland factory. Also maintains the relationship with outsourced partners.
• Chief Operations Officer (COO) – Oversees retail outlet operations, e-commerce sales, and business development.
• Chief Commercial Officer (CCO) – Responsible for customer experience, brand positioning, and overall commercial strategy.
• Chief Product Officer (CPO) – Heads R&D, product design and development, and marketing initiatives.
• Chief Information Officer (CIO) – Manages IT systems, the website and e-commerce platform, and communication with outsourced production facilities.
• Chief Human Resources Officer (CHRO) – Oversees recruitment, retention, training, and development across all areas of the business.

Organisational Design

earn operates a functional, top-down, hierarchical structure. This means that authority and decision-making are concentrated at the top (the Board), and communication follows formal, established channels. This structure ensures day-to-day operations are structured and consistent.

The company is organised into distinct functional areas:

• Head Office Departments: These include core support and planning functions such as Finance, HR, IT, Purchasing, Business Development, Customer Service, and R&D.
• Operational Divisions: These handle the physical flow of goods and sales, including the Warehouse, the Layne-based factory, and the national retail network.
• Reporting: Departmental managers form the senior management team and report directly to their respective board members.
• Strengths: This structure strongly supports operational reliability and effective cost control (aligning with the board’s risk-averse culture).
• Weaknesses (SBL Concern): It is less suited to rapid innovation or modern business needs requiring strong cross-functional collaboration (e.g., integrating the e-commerce platform with the retail network).

Strengths

• Experienced and cohesive executive team.
• Internal audit function providing oversight.
• Strong alignment between board roles and operational functions.
• Clear chain of command ensures consistency and accountability.

Weaknesses

• Absence of formal board committees could limit independent oversight.
• Risk-averse culture may limit strategic agility.
• Limited board diversity in terms of background, tenure, and perspectives.
• No direct shareholder involvement from the family, despite majority ownership, which may distance strategic vision from ownership values.

Recommendations for Governance Enhancement

1. Strengthen Board Independence and Oversight – Establish formal Audit, Risk, and Remuneration Committees. These independent committees will significantly enhance checks and balances, formalise oversight, and improve accountability in critical financial and operational areas.

2. Broaden Strategic Thinking – Actively recruit new Non-Executive Directors (NEDs) who possess current expertise in crucial areas, specifically digital transformation, sustainability, and supply chain resilience. This will inject fresh perspectives and challenge the current risk-averse culture.

3. Enhance Internal Communication and Cross-Functional Collaboration – Institute project-based task forces that cut across existing functional departments (e.g., IT, Marketing, Operations). These teams should focus on driving high-priority, collaborative projects, such as digital retail development, new marketing strategies, and environmental initiatives.

4. Adopt Succession Planning and Leadership Development – Establish a formal process for succession planning for all executive roles. Implement leadership development programmes to train and prepare high-potential, mid-level staff for future senior management positions, countering the risks associated with the long-tenure board.

5. Increase Transparency and Reporting – Develop and publish clear governance disclosures and regular, detailed performance reports. This increased transparency will significantly boost stakeholder confidence and position the company favorably should it decide to pursue external financing or a stock exchange listing in the future.

Area 3 – Ethics & Corporate Social Responsibilities (CSR)

Ethical Positioning & Public Perception

Dearn Shoes Ltd, with its nearly century-long history, has traditionally promoted strong internal values of craftsmanship, quality, and long-term employee commitment. A key asset is the ‘Made in Lucland’ (MiL) accreditation for its formal shoes, which signals compliance with standards in product safety, labour practices, and sustainability.

Mounting Scrutiny and ESG Pressure

Despite its heritage, Dearn’s broader ethical and Corporate Social Responsibility (CSR) positioning is facing mounting scrutiny. This is due to two critical external factors:

1. Supply Chain Risks: The reliance on outsourced manufacturing (X Co) introduces significant ethical risks concerning labour rights and oversight.
2. Underdeveloped Sustainability Strategy: The lack of a comprehensive environmental plan leaves Dearn exposed to criticism.

Dearn operates in a sector increasingly driven by Environmental, Social, and Governance (ESG) expectations. Stakeholder pressures are growing as consumers become more environmentally and ethically conscious, especially regarding:

• Outsourcing Practices and labour rights in the external supply chain.
• Product sustainability (materials, waste, and end-of-life).

The current MiL accreditation is a strength, but Dearn must strategically extend its ethical commitments across the entire product portfolio and supply chain to meet modern ESG demands.

Main Ethical Threats

Product Quality and Consumer Trust

The quality issues stemming from the outsourcing relationship with X Co in Totland have raised significant concerns. Inconsistent quality checks and rising customer returns due to faulty shoes indicate a breakdown in both ethical sourcing and operational control. If not addressed swiftly and transparently, these problems will severely damage Dearn’s long-standing reputation for quality.

Ethical Best Practice

To mitigate this risk, Dearn must ensure full supply chain accountability:

• Enhanced Due Diligence: Implement thorough checks on suppliers’ labour practices and operational standards.
• Transparent Reporting: Report openly on supplier performance and compliance.
• Regular Quality Audits: Conduct frequent, unannounced quality audits of all third-party manufacturers, particularly X Co.

Labour Practices in the Supply Chain

Dearn’s reliance on outsourced manufacturing at X Co in Totland raises significant ethical concerns. There is growing awareness of poor employment protection legislation in countries like Totland, meaning the working conditions, wages, and workers’ rights at X Co may fall short of international standards. Although Dearn operates responsibly in Lucland, its supply chain risks damaging its social and ethical reputation.

Ethical Best Practice: Mitigating Social Risk

To counter this risk, Dearn must proactively enforce ethical sourcing policies and demand that its suppliers, particularly X Co, comply with internationally recognised labour standards. Key actions include:

• Supplier Audits: Implement frequent, independent audits to monitor working conditions and labour practices.
• Public ESG Statements: Publish clear Environmental, Social, and Governance (ESG) statements to publicly reinforce accountability and commitment to ethical sourcing.

Environmental Impact of Mass Production

Dearn uses man-made materials and synthetic rubber in several of its shoe types. These materials are non-biodegradable, which significantly contributes to landfill waste and greenhouse gas emissions. Furthermore, Dearn currently has not committed to industry-wide recycling initiatives or meaningful eco-friendly product innovation.

Ethical Best Practice: Addressing Environmental Risk

To improve its environmental profile and meet growing ESG expectations, Dearn must immediately implement the following strategies:

• Eco-Conscious Product Lines: Introduce new product lines that use more sustainable materials.
• Material Innovation: Actively explore the use of recyclable or biodegradable materials to replace current synthetics.
• Carbon Reduction Targets: Formally commit to specific carbon reduction targets across its production and logistics operations to mitigate its climate impact.

Accessibility of Ethical Choices

Here is the simplified, SEO-friendly, and educational rewrite of that final content, focusing on the ethical inconsistency and the need for broader certification for the SBL exam:

🏷️ Ethical Inconsistency Across Product Lines

Currently, only Dearn’s formal shoes, which are handcrafted in Lucland, carry the MiL (Made in Lucland) mark. This is the company’s only ethical assurance.

Other key categories like semi-formal, casual, and children’s shoes are mass-produced abroad and do not carry similar ethical assurances. This creates a significant inconsistency in the ethical value offered to customers across the entire product range, potentially confusing consumers and damaging overall brand trust.

To address this strategic weakness and meet stakeholder expectations, Dearn must:

• Broaden MiL compliance or implement an equivalent ethical certification across more product lines (especially outsourced ones).
• This action will enable consumers to make more consistent and confident values-based choices when purchasing any Dearn product.

Digital Transparency and Data Responsibility

Dearn’s currently limited digital presence also raises concerns regarding transparency, especially in how it manages customer data, online returns, and digital engagement. Although data security is not flagged as an immediate high-risk item, the company’s necessary expansion into e-commerce will mandate the adoption of clear ethical data practices.

To prepare for robust digital growth, Dearn must focus on:

• Strengthen Data Governance: Implement strong data governance frameworks to protect user information and ensure compliance.
• Ethical Digital Strategy: Include explicit privacy and ethical AI considerations in any new digital marketing or analytics strategy to ensure responsible use of customer data.

Environmental, Social, and Technological Risks

Risk Type	Key Issues	Suggested Mitigation
Environmental	High carbon emissions in production; synthetic waste; no recycling scheme	Invest in green technologies; launch recycling pilot; shift to sustainable materials
Social	Supplier labour risks; reputational damage; staff morale if issues escalate	Conduct supplier audits; enhance CSR communication; build a code of supplier conduct
Technological	Underinvestment in digital transparency; weak online engagement; e-commerce functionality gaps	Upgrade digital platforms with sustainability features (e.g., carbon footprint tracker)

Corporate Social Responsibility (CSR) Practices

While Dearn Shoes Ltd does not have a formally labelled Corporate Social Responsibility (CSR) program, it demonstrates several embedded socially responsible behaviours that are valuable internal assets:

• Employment Practices: The company shows a strong culture of employee respect and fairness, evidenced by low staff turnover, a long-term commitment to staff, and strong employee satisfaction scores.
• Customer Service Excellence: Dearn has an established reputation for excellent customer service, especially in the accurate fitting and expertise provided for children’s shoes.
• MiL Accreditation: The ‘Made in Lucland’ (MiL) accreditation applied to its formal shoe line ensures compliance with high standards in product quality, safety, labour practices, and sustainability for that specific segment.

Despite these positive behaviours, Dearn’s overall CSR initiatives appear significantly underdeveloped. Specifically, the company lacks clear programs or policies for:

• Ethical Sourcing: Ensuring fair practices and labour standards in its outsourced supply chain.
• Sustainability Reporting: Publicly disclosing its environmental impact and targets.
• Environmental Stewardship: Committing to comprehensive environmental conservation efforts beyond the MiL product line.

Recommendations for Strengthening Ethics & CSR

1. Develop a Formal CSR Strategy

• Introduce a sustainability and ethics charter.
• Appoint a dedicated CSR or ESG officer reporting to the board.

2. Strengthen Supplier Governance

• Formalise an ethical sourcing policy.
• Conduct annual ESG audits of suppliers and publish findings.

3. Expand the Scope of MiL Accreditation

• Apply for accreditation beyond formal shoes, particularly in children’s and semi-formal lines.

4. Introduce a Sustainable Product Line

• Follow industry trends by offering one or more eco-friendly, ethically sourced shoe ranges.

5. Engage in Industry and Community Initiatives

• Collaborate with the Lucland Shoe Association to pilot national recycling schemes.
• Enhance community outreach via educational partnerships or responsible footwear donation drives.

6. Launch Transparent Communication

• Use Dearn’s website and stores to publish ESG goals, progress reports, and ethical commitments.

Area 4 – PEST Analysis

A PEST analysis is used to examine the major Political, Economic, Social, and Technological factors that impact an organization like Dearn Shoes Ltd.

As a major shoe manufacturer and retailer operating in Lucland—a developed and politically stable environment—Dearn must strategically navigate complex external forces:

• Evolving Regulations: Staying compliant with new laws regarding trade, labour, and data.
• Economic Shifts: Managing changes in consumer spending power and global costs.
• Changing Consumer Expectations: Adapting to shifts in demand for sustainable and ethically produced goods.
• Technological Advancements: Embracing digital transformation in retail and manufacturing.

Understanding this external landscape is crucial for setting Dearn’s future strategy.

Political Factors

Regulation and Industry Oversight

Dearn operates under a robust regulatory framework in Lucland. This environment is characterized by strict laws that all businesses, including shoe manufacturers, must comply with:

• Broad Compliance: Dearn must adhere to stringent national legislation covering employment, health and safety, consumer protection, competition, and data protection.
• Industry Oversight: The Lucland Shoe Association (LSA) provides specific industry guidance and manages the ‘Made in Lucland’ (MiL) accreditation.
  • The MiL mark, which Dearn’s formal shoes carry, certifies compliance with high standards in quality, safety, labour, and sustainability.

This highly regulated environment means Dearn must continuously maintain high product safety (e.g., legally mandated materials testing) and ethical labour practices across its operations to protect its reputation and key accreditation.

Trade Policies and Outsourcing

Lucland’s political stability and favourable trade policies initially allowed Dearn to significantly reduce costs by outsourcing most manufacturing to Totland 15 years ago (leveraging Totland’s lower production costs).

However, this arrangement exposes Dearn to several political and regulatory risks:

• Foreign Standards: Outsourcing subjects Dearn to foreign labour standards (a social/ethical concern) and potential changes in Totland’s trade policies or import regulations.
• Supply Chain Disruptions: Shipping from Totland via DT Global Transport (a third party) means that political or logistical disruptions (such as tariffs, customs delays, or geopolitical issues) could severely affect Dearn’s supply chain reliability.
• Risk Overlap: The recent quality control issues (defects, late deliveries) with the supplier (X Co) highlight the need for contingency plans if Lucland were to impose stricter import quality regulations or if trade relations with Totland deteriorated.

Currently, Dearn does not export any shoes. While this shields it from international trade barriers on the sales side, it also means the company misses out on potential government export incentives that could support strategic growth.

Labour Laws and Union Influence

Dearn operates within Lucland’s comprehensive labour laws and an environment of high unionization.

• Union Influence: Most industry employees, including those at Dearn, belong to the National Shoe Union (NSU). This requires Dearn to strictly adhere to fair labour practices, wage standards, and collective bargaining agreements. High union presence can exert political pressure on issues like working conditions and pay.
• Labour Relations: While Dearn currently benefits from strong employee loyalty and low turnover (reflecting good existing worker satisfaction), it must remain vigilant in maintaining positive labour relations to avoid regulatory sanctions or costly disputes.
• Cost Impact: Any changes in employment law (such as stricter workplace safety rules or higher minimum wages) would directly impact Dearn’s operational costs and cost structure.

Government Policy & Stability

Lucland’s government is generally stable and pro-business, offering a predictable operating climate for Dearn. The strong protection of Intellectual Property (IP) rights directly benefits Dearn, allowing it to safeguard its own shoe designs.

Future Regulatory Focus (Key Risk)

Looking ahead, political attention to environmental and ethical issues in manufacturing is rapidly rising. This trend poses a key future risk:

• If the Lucland government enacts new sustainability regulations or introduces local content requirements (e.g., incentivizing domestic production or penalizing high-carbon imports), Dearn will be forced to adapt its strategy.
• This adaptation may involve significant investment in greener technology or a necessary reconsideration of the balance between its domestic and overseas production to maintain compliance and avoid penalties.

Key Political Considerations for Dearn

• Maintain Compliance & Standards: Dearn must guarantee absolute compliance with all relevant legislation (e.g., employment, safety, and consumer protection). Rigorously uphold the MiL accreditation standards for its formal shoes. This involves performing rigorous product safety testing and enforcing ethical labour practices across both the Lucland factory and the outsourced production in Totland.
• Non-compliance could lead to severe legal penalties and brand damage. Actively engage with key bodies like the Lucland Shoe Association (LSA), government agencies, and the National Shoe Union (NSU). Building strong relationships can help Dearn anticipate or influence policy changes, potentially securing benefits like industry grants or favorable trade terms, and effectively managing union expectations on wages and conditions.
• Supply Chain Governance: Continuously monitor and manage political risks related to its outsourced supply chain. Develop contingency plans for potential shifts in trade policy (such as new tariffs or changes to import/export rules). Implement a robust governance system to hold overseas partners to high standards.
• Strengthening quality control and ethical audits for the Totland manufacturer will help pre-empt regulatory issues and satisfy the growing scrutiny of offshore production.

Economic Factors

Domestic Growth and Consumer Spending

The health of Lucland’s economy is a direct driver of Dearn’s performance. The key issue is a significant economic slowdown:

• Slowing Growth: Economic growth has plummeted from $5.1\%$ five years ago to just $1.1\%$ in 20X4, with a forecast of only $0.8\%$ for 20X5.
• Impact on Demand: This deceleration results in less growth in household disposable income, which is the primary driver of shoe sales. Consequently, demand is softening, and shoppers are becoming highly price-conscious.
• Shift in Buying Patterns: Industry data confirms consumers are trading down, with the proportion of mid-priced shoe sales falling while sales of lower-priced shoes are rising.
• Price Competitiveness: Dearn, which positions itself as offering “reasonably priced, well-made” shoes, must closely monitor its price competitiveness to avoid losing customers to cheaper alternatives.
• High Risk: The severity of these trends is highlighted by the fact that a potential economic downturn is explicitly listed on Dearn’s risk register.

Market Growth and Competition

The economic environment for Dearn is characterized by slow growth and intense competition:

• Stagnating Industry Growth: The overall Lucland shoe industry is growing only modestly, with a historical average of $\sim 1.7\%$ and a forecast of only $\sim 1.06\%$ annually for the next five years. This stagnation intensifies market rivalry.
• Intense Competition: With five major domestic players controlling almost half the market, competition for market share is intense. As the fourth-largest player, Dearn faces larger competitors (Flamingo, Rigo, Parrish) who can leverage their scale for better pricing and marketing during economic difficulty.
• Cost Inflation: Dearn faces inflation in key input costs, including materials, energy, and wages (especially for skilled labour in its handcrafted segment and leather costs).
• Margin Squeeze: These rising costs will squeeze profit margins if Dearn cannot raise its retail prices. However, raising prices is difficult in the current weak economy where consumers are highly price-sensitive, risking a decline in sales volume.

Consumer Purchasing Power and Product Mix

Softer household incomes in Lucland are causing consumers to buy fewer or cheaper-quality shoes. This has fractured the market:

• Mid-Range Struggle: Mid-range products are struggling.
• Market Polarization: Demand persists at both ends: budget-friendly footwear and premium, high-quality shoes.

A key growth area, despite the domestic slowdown, is handcrafted luxury shoes specifically, “Made in Lucland” footwear. Sales of these high-end products are forecast to drive industry growth, largely through exports to wealthier markets.

• High Domestic Exposure: Dearn currently does not export and generates all its revenue within Lucland. This lack of diversification means the company is highly exposed to adverse domestic economic conditions.
• Missed Growth Opportunity: Unlike competitors capitalizing on overseas demand for Lucland-made quality, Dearn is not benefiting from this growth avenue or buffer.
• Domestic Focus: Dearn must focus intensely on capturing local demand. This requires ensuring its product offerings are attractive in the low- to mid-price segments that are currently gaining market share, while also leveraging its own domestic luxury segment (formal shoes) more effectively.

Import Costs and Currency Factors

Dearn’s cost of sales is heavily influenced by its manufacturing arrangement in Totland. While it initially benefits from lower production costs there, this outsourcing exposes the company to critical economic risks:

• Exchange Rate Risk: Dearn is exposed to exchange rate fluctuations between Lucland’s currency and Totland’s. Any depreciation of Lucland’s currency would make imports from Totland more expensive, severely squeezing Dearn’s margins.
• Logistics Costs: The reliance on international shipping means global increases in fuel or logistics costs would directly raise shipping expenses.

While Dearn has historically enjoyed reliable logistics with its distribution partner, the cost stability of this supply chain is an ongoing economic factor to monitor. Furthermore, if Totland experiences economic changes (such as wage inflation or political instability driving up costs), the original outsourcing savings might diminish, forcing Dearn to reassess its supply chain strategy.

Key Economic Considerations for Dearn

• Resilience to Domestic Slowdown: Dearn must mitigate reliance on the sluggish domestic economy by diversifying revenue streams. Explore export opportunities for its high-quality, Lucland-made formal shoes, leveraging the MiL accreditation to tap into growing overseas demand for premium footwear. Domestically, focus on value-for-money propositions and essential product lines to retain price-conscious consumers.
• Cost Management: With rising input and labour costs (inflation), Dearn needs to aggressively improve operational efficiency and cost control. This includes optimizing the supply chain, such as negotiating better shipping rates or finding cost-effective alternative materials. Invest in productivity enhancements at the factory to offset rising wages. Implement a careful pricing strategy to maintain margins without alienating price-sensitive customers.
• Market Strategy in Slow Growth: In a low-growth environment, Dearn must intensify its competitive strategy to maintain market share against larger rivals. Increase marketing efforts or offer strategic promotional deals. Closely monitor evolving consumer trends. If lower-priced segments are growing, ensure Dearn’s casual and budget lines are appealing. Conversely, the handcrafted formal line should be highlighted to capture the niche of consumers still spending on higher-end shoes. Agility in its product mix and marketing will be crucial as domestic spending patterns continue to evolve.

Social Factors

Demographics and Customer Segments

• Older Demographic Strength: Dearn is the market leader in semi-formal shoes, which target the over-55 age group. Lucland’s aging population suggests a stable or growing market for these comfortable, traditional styles, benefiting Dearn’s core revenue.
• Struggling with Youth: Dearn is struggling to engage the younger segment, as casual shoes target the 18- to 30-year-olds. These younger buyers are typically fashion-conscious and digitally savvy, expecting trendy designs and seamless online convenience.
• Rapid Fashion Trends: Fashion trends in Lucland are now changing rapidly. Younger consumers want to refresh styles frequently to align with influencers and peers (the “fast fashion” trend).
• Competitor Agility: Competitors like Flamingo have successfully capitalized on this by speeding up their design-to-shelf cycles to just a few weeks.
• Dearn’s Bottleneck: Dearn’s slow style update process, it reviews and updates styles only annually is perceived as too slow to attract the crucial 18–30 segment.
• The main social challenge for Dearn is ensuring relevance to younger demographics (by increasing speed and offering convenience) without alienating its core older customer base (which values stability and tradition).

Consumer Behaviour and Expectations

• Key Expectation: A common expectation is e-commerce with home delivery.
• Dearn’s Bottleneck: Dearn notably does not offer this, instead requiring online customers to collect orders in-store (an unusual practice in Lucland). This policy severely limits Dearn’s reach, resulting in online sales of just 12% of revenue, far below the industry average of $\sim 25\%$.
• Competitor Advantage: Modern consumers will favour competitors who provide doorstep delivery and easy returns.
• Traditional Strength: Lucland consumers highly value customer service, which is a traditional strength of Dearn’s, built over decades through excellent in-store service and personal selling (e.g., shoe fitting).
• Evolving Needs: As retail trends evolve, Dearn must not only maintain this high service standard but also meet new expectations.
• High Return Rate: The industry sees a high return rate for online purchases (many customers order multiple sizes). This trend impacts costs (logistics and processing).
• Sustainability Pressure: It also raises environmental concerns, pressuring retailers to find solutions like improving online sizing tools or encouraging more responsible shopping to reduce unnecessary shipping and waste.

Ethical Consumption and Sustainability

• Consumer Values: A growing number of customers are actively unwilling to buy shoes made in countries with poor labour protections and harmful environmental practices.
• Dearn’s Exposure: This is directly relevant to Dearn, as the majority of its shoes are mass-produced by a third party in Totland, a low-cost manufacturing country where labour and environmental standards lag behind Lucland’s.
• Reputational Risk: Consumers concerned about exploitation or pollution view Dearn’s outsourced production critically. Some shoppers, despite tighter budgets, are paying more for brands (like Parrish) that emphasize ethical sourcing, Lucland heritage, and high quality, proving that “value-driven” consumers will support brands aligned with their values.
• Inconsistent Message: Dearn’s early adoption of the MiL mark for its formal line reflects some commitment, but this message is undermined if the bulk of its products come from Totland.
• Industry Impact: The shoe industry’s significant environmental footprint (e.g., $1.4\%$ of global greenhouse gas emissions in 20X4) and huge waste generation are now under scrutiny.
• Public Pressure: There is increasing public pressure in Lucland for sustainable practices, such as using eco-friendly materials or implementing recycling programs.
• Dearn’s Awareness: Dearn is aware of this risk (listing the environmental impact and customer reaction on its risk register) and knows it must address sustainability (e.g., reducing plastic-based materials, offering recycling or repair services) to meet community expectations.

Community Relations and Brand Image

• Local Goodwill: Dearn is one of the main employers in Layne, and its long history fosters immense goodwill and loyalty among locals (many families have worked there for generations).
• Brand Perception: This history imbues the brand with a sense of tradition, trustworthiness, and social responsibility toward the local community.
• Expectations: Community stakeholders expect Dearn to continue providing stable employment and to act as a responsible corporate citizen. Decisions involving further outsourcing, store closures, or major operational changes are highly sensitive and would likely face local scrutiny.
• Marketing Asset: Dearn can strategically leverage its strong community ties and history in its marketing to differentiate itself from newer or foreign competitors (e.g., by celebrating its Lucland identity and decades of craftsmanship).
• Reputation Management: Maintaining a positive public image is vital in the current market, as brand reputation strongly influences consumer choice. This involves consistency between its stated mission/values and its actions, along with ethical conduct and community involvement (e.g., charity).

Key Social Considerations for Dearn:

• Evolving Customer Engagement: Dearn must update its approach to better engage younger, fashion-conscious consumers. Simultaneously, Dearn must preserve the factors that older and family customers appreciate (comfort, quality, and excellent service) to maintain loyalty across all demographics.
• Ethics and Sustainability: Dearn must formalize and strengthen its ethical sourcing and sustainability practices to meet rising public expectations (ESG). Highlight its MiL-accredited local production (formal shoes) as proof of ethical commitment. Increase transparency about its Totland supply chain, ensuring that partner factories meet acceptable labour and environmental standards. Introduce initiatives like using eco-friendly materials, offering shoe recycling or repair programs, or reducing waste in packaging. Emphasizing a “Lucland heritage with modern sustainability” narrative can help win over ethically minded customers.

• Customer Experience & Community Trust: Continue to deliver exceptional customer service while adapting to convenience trends. Introducing home delivery and easy returns is essential to align Dearn with standard retail expectations in Lucland. Engage with local communities via events or sponsorships to further solidify Dearn’s image as a community-centric brand. Given Dearn’s role as a key local employer, maintaining open communication with employees and residents during any strategic or operational changes will be vital to uphold trust and social goodwill.

Technological Factors

E-commerce and Digital Innovation:

Market Lag: Online sales now account for about $25\%$ of total industry revenue in Lucland, yet Dearn’s own online sales significantly lag at only $12\%$.

Outdated Platform: This underperformance is directly caused by Dearn’s underdeveloped e-commerce platform, which offers limited functionality and lacks expected features like robust online browsing, personalized recommendations, or integrated digital marketing.

Logistical Gap: Dearn’s insistence on in-store pickup rather than offering home delivery is a critical technological and logistical gap that directly harms online conversion rates in the age of convenience apps and one-click ordering.

Technological Arms Race: The ability to effectively use digital marketing tools is crucial. Dearn needs:

• Data Analytics for customer personalization.
• Omnichannel CRM systems to integrate customer data.

Missed Opportunities: If Dearn cannot effectively engage customers through modern digital channels (e.g., social media campaigns, email marketing, and online loyalty programs), it will fail to capture growth from the younger, tech-oriented consumer segment.

Manufacturing Technology and Automation:

Lucland Factory: Dearn has made significant investments in advanced manufacturing technology at its Lucland factory. This machinery assists skilled labour, boosting efficiency while successfully maintaining the craftsmanship of its formal, handcrafted line.

Warehouse Automation: The company uses an automated picking system in its central warehouse to fulfill retail store orders, which effectively speeds up distribution to its 75 physical outlets.

Manual Online Fulfillment: A clear gap exists in e-commerce fulfillment: online orders are still picked manually. This manual process limits scalability and is an area urgently needing automation as online sales grow.

Advanced Manufacturing: Industry-wide, trends point toward 3D printing and other advanced manufacturing technologies. This tech can rapidly produce prototypes or custom-fit shoes, reducing development time and catering to niche markets. Dearn must monitor these developments as they could quickly become industry standard.

Supplier Technology: Dearn relies on X Co’s manufacturing technology in Totland for mass production. If X Co’s technology and quality control systems are outdated, they could be the root cause of the observed quality issues.

Strategic Influence: Dearn may need to strategically support or influence X Co to adopt better processes, or even consider investing in technology to bring more production back onshore if domestic efficiency proves better for long-term quality and cost control.

AI and Retail Analytics:

Competitors are leveraging AI-driven tools to optimize sales trends, predict fashion preferences, manage inventory, and personalize customer recommendations on e-commerce platforms. In footwear, AI is used for innovative applications like virtual shoe fitting and enhanced customer service via chatbots. Dearn, however, has not yet embraced these cutting-edge tools. Its reliance on relatively dated IT systems (older off-the-shelf solutions for finance and HR) suggests it lags behind in this crucial area. Upgrading to a modern ERP or analytics platform could unlock significant efficiencies and strategic insights:

Faster Response: Embracing data analytics would help Dearn identify purchasing patterns (e.g., regional or seasonal demand shifts) and enable a faster, more informed response to market changes, which is vital in a tech-enabled environment.

Real-time Visibility: A new inventory management system could provide real-time supply chain visibility, directly addressing the current deficiency where non-retail stock updates only weekly.

Data Security and Privacy:

Strict Regulations: Lucland’s strict data protection laws require businesses to safeguard personal information.

Exposure: As Dearn expands its online platform and collects more customer data (emails, payment info, browsing habits), it must implement robust cybersecurity measures.

Consequences: Any breach or misuse of data would not only incur significant regulatory penalties but also severely damage trust among Dearn’s traditionally loyal customer base.

System Vulnerability: This risk is compounded by Dearn’s current IT limitations; outdated systems are inherently more vulnerable to modern cyber threats.

Investing in up-to-date, secure technology (and potentially obtaining data security certifications) is crucial for both regulatory compliance and maintaining customer confidence.

Additionally, technology is vital for supporting other compliance areas:

• Intellectual Property (IP) Protection: Technology can help ensure its designs are not stolen or counterfeited.
• Sustainability Standards: Technology is needed to effectively track and report environmental data and adhere to any emerging sustainability reporting standards.

Key Technological Considerations for Dearn:

• Digital Platform Enhancement: To remedy its critical digital weakness, Dearn must urgently invest in upgrading its e-commerce platform and customer experience. This means adding essential functionalities like home delivery options, improving the site for detailed product displays and easy returns, and incorporating personalization features. By modernizing the platform and fully utilizing digital marketing (e.g., SEO, social media), Dearn can successfully attract younger consumers and dramatically boost online sales from the current 12% toward the industry norm, which is essential for securing its future market position.

• Automation and Innovation in Operations: Dearn must accelerate the adoption of advanced technologies in its manufacturing and logistics to boost efficiency and speed. This includes immediately exploring automation for online order fulfillment, which is currently a slow, manual bottleneck. Furthermore, Dearn should consider innovative technologies like 3D printing for rapid prototyping or offering custom-fit products. By keeping pace with industry advancements and potentially leveraging AI for demand forecasting or inventory management, Dearn can significantly improve product development speed, allowing it to respond much quicker to fast-changing fashion trends.

• IT Modernization and Cybersecurity: Dearn must urgently modernize its core IT systems (including finance, inventory, and CRM) to gain crucial real-time data visibility and enhance strategic decision support. A robust, upgraded infrastructure is necessary to support growth, but it must be paired with prioritizing cybersecurity and data privacy compliance. As Dearn digitizes its operations, protecting customer data and transaction security is essential for maintaining brand trust and avoiding legal penalties. This likely requires hiring specialized IT security expertise or partnering with external technology firms to bolster Dearn’s defenses.

Summary of PEST Analysis

Political: Dearn operates in a stable but highly regulated environment, mandating strict compliance across safety, labour, and data protection. While its domestic formal shoes benefit from the MiL quality standard, the reliance on outsourcing to Totland poses scrutiny and potential trade policy risks. Dearn must ensure strict compliance across its entire supply chain and proactively engage with industry bodies (LSA) and government agencies to manage risk and uphold its reputation.

Economic: The most immediate challenge is a slowing Lucland economy, which is shifting consumer demand toward lower-priced shoes and squeezing Dearn’s margins due to cost inflation. With 100% revenue reliance on the domestic market and no export activity, Dearn is highly exposed. The strategy must focus on building cost efficiency and a competitive pricing strategy domestically. Crucially, Dearn should diversify revenue by exploring the export of its Lucland-made products to reduce dependence on the sluggish home market.

Social: Dearn faces a dichotomy: a strong but aging core customer base (over-55s and families) contrasts with its struggle to attract younger, tech-savvy consumers who demand convenience, fast style updates, and strong ethical assurances. Furthermore, there is rising public demand for sustainable products and local craftsmanship. Dearn must enhance its customer experience with omnichannel features (like home delivery) and refresh its brand appeal to meet modern ethical and style expectations without alienating its loyal older customers.

Technological: Dearn significantly lags in digital capabilities, evidenced by low online sales (12%), an outdated platform, and manual processes for online orders, while competitors adopt AI, 3D printing, and automation. Dearn needs urgent investment to upgrade its e-commerce platform and leverage technology for better customer engagement and personalization. Simultaneously, it must modernize its core IT infrastructure and prioritize cybersecurity to safely support digital growth and comply with data protection obligations.

Strategic Implications

By proactively understanding and addressing these PEST external factors, Dearn can significantly enhance its resilience and long-term performance. Politically, maintaining strict regulatory compliance and strong industry relationships will secure its license to operate. Economically, focusing on efficiency and exploring new market segments (like exports) will help offset the pressures of a slow-growth home market.

Socially, adapting to evolving consumer trends both in fast fashion and ethics is crucial to maintaining customer preference and relevance across all demographics. Technologically, investing in a comprehensive digital transformation (from e-commerce to automation and data security) will boost operational efficiency and unlock new opportunities for growth. By taking these strategic steps, Dearn can successfully position itself to uphold its proud 100-year legacy in Lucland while securing future success in a changing business environment.

Area 5 – Ansoff’s Matrix

Ansoff’s Matrix is a strategic planning tool that helps businesses explore growth opportunities by considering whether they should develop new or existing products and whether they should target new or existing markets. The matrix identifies four strategic options:

1. Market Penetration – Existing products, existing markets

2. Product Development – New products, existing markets

3. Market Development – Existing products, new markets

4. Diversification – New products, new markets

Dearn Shoes Ltd can apply this framework to evaluate how it may grow sustainably amidst rising competition, shifting consumer behaviours, and evolving market expectations.

1. Market Penetration (Existing Products, Existing Markets)

This is Dearn’s current strategy. The company offers four types of shoes (formal, semi-formal, casual, and children’s) to the domestic Lucland market through 75 retail outlets and a limited-functionality online store. It relies heavily on brand reputation, in-store service, and value-for-money pricing.

Tactics already in use:

• Maintaining high customer service quality, particularly in children’s fittings.
• Annual style reviews to refresh product offerings.
• Investing in automated warehouse processes for retail replenishment.

Opportunities:

• Boost sales volumes through local marketing campaigns, customer loyalty schemes, or seasonal promotions.
• Increase share in segments where it already leads (e.g. semi-formal and children’s shoes).
• Improve online conversion within Lucland by enhancing website functionality and offering home delivery.

Risks:

• Limited growth due to market maturity and economic slowdown.
• Intensifying price-based competition from rivals like Flamingo and Betterby.

2. Product Development (New Products, Existing Markets)

Dearn has potential to introduce new or enhanced product lines tailored to the Lucland market.

Opportunities:

• Launch an eco-friendly footwear line using biodegradable or recycled materials to attract environmentally conscious consumers.
• Develop a youth-oriented fashion range or athletic collection to re-engage the 18–30 demographic.
• Offer customisable shoes or explore technology-integrated footwear (e.g. smart insoles, fitness trackers) in line with industry trends.

Challenges:

• Requires investment in R&D and possible changes to the supply chain.
• Risk of cannibalising existing products without clear differentiation.

Strategic Consideration:

This route allows Dearn to retain its domestic focus while modernising its appeal and meeting evolving consumer expectations, especially around sustainability and innovation.

3. Market Development (Existing Products, New Market)

Dearn currently sells only within Lucland. Market development would involve selling its existing shoes in new geographical markets, particularly exporting its MiL-accredited formal shoes to countries with rising demand for high-quality footwear.

Opportunities:

• Tap into international markets that value craftsmanship and ethical sourcing.
• Partner with distributors abroad or establish an online international platform for formal shoes.
• Leverage the MiL mark as a unique selling point overseas.

Risks:

• Logistics complexity, regulatory compliance, and brand unfamiliarity in foreign markets.
• Initial capital outlay required to establish distribution channels or export infrastructure.

Strategic Consideration:

Given its strong in-house manufacturing of formal shoes, this strategy could be low-risk and revenue-enhancing without needing to introduce new products.

4. Diversification (New Products, New Markets)

This is the most ambitious growth strategy and currently least aligned with Dearn’s core operations.

Speculative ideas could include:

• Moving into non-footwear leather goods (e.g. belts, bags) for Lucland or export markets.
• Launching a fashion or apparel range targeting family or lifestyle branding.

Risks:

• High investment and execution risk.
• Diverts focus from core competencies and brand identity.

Strategic Consideration:

Diversification may be considered only if other growth routes are saturated and Dearn has the capacity to manage multiple brands or product types. It is not a short-term priority.

Strategic Insights & Recommendations

Dearn’s most viable and strategic growth options within the Ansoff framework are:

Product Development: Introduce a sustainable shoe line and enhance offerings for younger consumers to refresh brand relevance.

Market Development: Begin exporting Lucland-made formal shoes to capitalise on heritage and quality, reducing reliance on the domestic market.

Market Penetration: Optimise only through better digital integration and competitive pricing, but has limited long-term upside in a slow market.

Diversification: Avoid at this stage due to the company’s limited digital maturity and focus on urgent operational efficiency improvements.

Area 6 – Porter’s Diamond Analysis

Porter’s Diamond Framework explains why certain industries within specific nations are more competitive globally. It identifies four interrelated determinants that contribute to national competitive advantage:

1. Factor Conditions

2. Demand Conditions

3. Related and Supporting Industries

4. Firm Strategy, Structure and Rivalry

Applying this model to Lucland’s shoe manufacturing and retailing sector helps explain the industry’s enduring strength and sets the context for Dearn Shoes Ltd’s strategic choices.

1. Factor Conditions

Lucland possesses a number of advanced factor conditions that benefit its shoe industry:

• Skilled Labour: The handcrafting segment of the industry relies heavily on skilled workers, particularly in producing high-quality leather shoes. Lucland has a heritage of craftsmanship, which supports the premium segment. Dearn’s own factory in Layne uses such skilled labour for its formal shoes.

• Infrastructure: Lucland benefits from efficient logistics and supply chain infrastructure. Dearn’s operations—including production in Layne, warehousing, and retail distribution—are supported by reliable transport, including DT Global Transport for shipping from Totland.

• Technology Readiness (Limited in Dearn’s Case): While other firms are experimenting with innovations such as 3D printing and augmented reality, Dearn has only selectively invested in manufacturing automation and has an underdeveloped digital presence.

Strategic Implications for Dearn:

• Leverage the strength of its skilled workforce and MiL-accredited production to build brand equity.

• Invest in digital infrastructure to upgrade technological competitiveness and supply chain visibility.

2. Demand Conditions

Domestic demand in Lucland is sophisticated and evolving:

• High Expectations: Lucland consumers expect quality, ethical standards, and increasingly, environmentally responsible products. This aligns well with Dearn’s formal handcrafted range but challenges its mass-produced offerings from Totland.

• Fashion-Conscious Market: Demand is shifting toward trendy, frequently updated styles, especially among younger consumers. Speed to market is a growing differentiator, as seen in competitors like Flamingo.

• Growth in Ethical Consumption: Consumers are willing to pay a premium for sustainability and local sourcing, especially in formal and luxury footwear.

Strategic Implications for Dearn:

• Improve agility in product design to better respond to local fashion trends.

• Consider expanding its ethical range beyond formal shoes to meet rising sustainability expectations.

3. Related & Supporting Industries

Lucland’s shoe industry benefits from well-established support systems:

• Lucland Shoe Association (LSA): Promotes the industry through expertise, guidance, and the MiL mark. Dearn is already aligned with this through its accredited formal shoes.

• National Shoe Union (NSU): A powerful labour body that affects employment practices. Dearn enjoys strong staff satisfaction and low turnover, suggesting a well-managed relationship here.

• Retail Infrastructure: The presence of branded retail outlets and growing e-commerce activity enables direct access to consumers.

Strategic Implications for Dearn:

• Deepen engagement with the LSA to co-develop sustainability initiatives or export promotion.

• Expand collaboration with domestic tech and design partners to enhance digital offerings.

4. Firm Strategy, Structure & Rivalry

• Industry Competition: Lucland’s market is dominated by five major players (including Dearn), with over 200 smaller firms. Rivalry is intense, especially in casual and children’s segments, where Dearn faces stiff competition from Flamingo, Rigo, and Betterby.

• Strategic Orientation: Dearn has a functional, top-down structure with a risk-averse board. Most competitors have adopted more agile strategies, especially in terms of product refresh and digital engagement.

• Local Commitment: Companies that promote local production and environmental responsibility (e.g. Parrish, Kind Shoes Co) are gaining popularity, suggesting strong competitive advantage for firms aligning with national values.

Strategic Implications for Dearn:

• Reassess board-level risk tolerance to allow more agile, innovation-driven decision-making.

• Compete on more than just quality and service—speed, digital presence, and ethics must be integrated into Dearn’s competitive strategy.

Conclusion: Competitive Advantage For Dearn Within Lucland

Diamond Element	How It Supports Dearn	Strategic Focus for Dearn
Factor Conditions	Skilled workforce and established production base in Layne	Expand use of automation and digital tools in supply chain
Demand Conditions	Discerning, ethically aware customers with evolving fashion needs	Develop faster style turnaround and sustainable offerings
Related & Supporting Industries	Strong support from LSA, NSU, and domestic logistics infrastructure	Collaborate with industry bodies and digital solution providers
Firm Strategy, Structure & Rivalry	High rivalry and emerging ethical competitors	Increase strategic agility, invest in differentiation and delivery

By aligning more fully with Lucland’s national strengths—particularly craftsmanship, ethics, and digital innovation—Dearn can strengthen its competitive positioning and respond more effectively to modern retail dynamics.

Area 7 – Porter’s Generic Strategies

Porter’s Generic Strategies framework outlines three key strategic options for achieving competitive advantage:

1. Cost Leadership – Competing by being the lowest cost producer in the industry.

2. Differentiation – Competing by offering unique value, such as superior quality or service.

3. Focus Strategy – Targeting a specific market segment, using either cost focus or differentiation focus.

Dearn Shoes Ltd operates in a moderately saturated market where differentiation and focused branding are critical due to changing consumer behaviour, modest industry growth, and rising sustainability concerns.

DEARN’S CURRENT STRATEGIC POSITION

Dearn exhibits elements of both differentiation and focus, rather than pure cost leadership.

Differentiation Characteristics:

• Quality and Heritage: Its formal shoe range, handcrafted in Lucland and MiL-accredited, reflects strong brand values centred on quality and tradition.

• Customer Experience: Dearn is known for high service standards in its retail outlets, especially for children’s shoe fitting, which reinforces a customer-centric approach.

• Ethical Sourcing (Partially): While its formal shoes are produced domestically under ethical conditions, most other shoes are mass-produced overseas, diluting the differentiation narrative.

Focus Characteristics:

• Targeted Segments: Dearn serves clearly defined customer groups—over-55s for semi-formal shoes, young adults for casual shoes, and families for children’s shoes. It has achieved market leadership in children’s and semi-formal shoes, suggesting effective niche positioning.

• Domestic Market Only: With no export operations, Dearn’s strategy is entirely focused on the Lucland market.

Not a Cost Leader:

• Dearn does not compete on price alone. While it offers reasonably priced products, it is neither the cheapest (like Flamingo) nor aggressively positioned to scale cost leadership across the board. Its hybrid production model and ethical sourcing commitments for formal shoes imply higher costs in certain product lines.

Strategic Evaluation

Strengths of Current Approach:

• Dearn’s differentiation through heritage and service has built strong customer loyalty, particularly in the children’s segment.

• It successfully focuses on specific market segments where brand trust matters (e.g. parents prioritising fit and service for children).

• High staff satisfaction and operational consistency reinforce service quality, which supports differentiation.

Weaknesses and Risks:

• Inconsistent value proposition: While formal shoes reflect Dearn’s ethical values, casual and semi-formal products—manufactured by X Co in Totland—may not align with rising customer expectations for sustainable and ethical production.

• Limited digital differentiation: Dearn’s online platform is weak and lacks delivery, undercutting its competitiveness in a channel where differentiation (UX, convenience) is vital.

• Stuck in the middle?: Without clear cost leadership or full differentiation across all product lines, Dearn risks being perceived as average, especially by younger, value-driven consumers.

Recommendations: Strengthening Strategic Focus

To sharpen its competitive edge, Dearn should pursue a Differentiation Focus Strategy more decisively:

Reinforce Differentiation

• Expand MiL principles across more product lines (e.g. children’s and semi-formal shoes) to align brand perception with ethical expectations.

• Highlight heritage, quality, and sustainability in brand messaging.

Deepen Segment Focus

• Strengthen its hold on family and older adult segments by improving product comfort, durability, and ethical transparency.

• Consider relaunching or repositioning the casual range to better attract younger consumers—possibly with sustainable or customisable features.

Digital Differentiation

• Upgrade the online platform to reflect the same high-quality experience as in-store. Add home delivery, size guidance, and digital fitting tools.

• Use customer data to personalise product recommendations and promotions.

Avoid Price Wars

• Resist competing purely on cost. Instead, build emotional loyalty through values-led branding, storytelling (e.g. heritage of craftsmanship), and post-sale service (e.g. free repairs or recycling).

Conclusion

Dearn is best suited to a Differentiation Focus strategy—leveraging its strong brand heritage, craftsmanship, and trusted retail experience while honing in on selected customer segments (families, older adults). To make this approach sustainable and defendable, it must resolve inconsistencies in its value proposition, improve digital engagement, and extend ethical and quality commitments across its full product range.

Area 8 – Porter’s Five Forces Analysis

Porter’s Five Forces framework helps assess the competitive intensity and attractiveness of an industry by evaluating five key forces:

1. Competitive Rivalry

2. Threat of New Entrants

3. Bargaining Power of Suppliers

4. Bargaining Power of Customers

5. Threat of Substitutes

This analysis explores how these forces shape the shoe manufacturing and retailing industry in Lucland, and how they affect Dearn Shoes Ltd’s ability to maintain and grow its competitive position.

1. Competitive Rivalry – High

The Lucland footwear industry is highly competitive:

• The top five manufacturers—including Dearn—hold a combined 45% market share, with the remainder fragmented across over 200 smaller companies.

• Price competition is strong, especially from companies like Flamingo (low-cost, mass production) and Rigo (youth-focused, trend-led).

• Key players differ in production approach, with Parrish and Kind Shoes Co focusing on handcrafted, sustainable models that appeal to high-end and ethical consumers.

• Dearn competes directly in all four shoe categories but lacks dominant leadership in casual shoes, where brand loyalty is strong for competitors like Rigo.

Strategic Implications for Dearn:

• Dearn must avoid being “stuck in the middle” and instead reinforce clear points of differentiation (e.g. ethical production, heritage, quality service).

• Staying relevant across all segments requires agility in product development, especially to counter fast fashion dynamics.

• Strategic partnerships or niche branding (e.g. exclusive sustainable collections) could help reduce head-to-head price-based rivalry.

2. Threat of New Entrants – Moderate

Although barriers to entry are not negligible, new players continue to emerge:

• Capital requirements for online-only or niche production models are relatively low.

• Ethical and sustainable micro-brands like Kind Shoes Co have successfully entered by targeting specific value-driven segments.

• However, building a trusted brand, retail network, or earning MiL accreditation takes time and investment.

Strategic Implications for Dearn:

• Protect its legacy and brand reputation by expanding MiL-accredited products and reinforcing community-based marketing.

• Enhance its digital footprint and customer experience to discourage new entrants from gaining a foothold online.

• Innovate faster to reduce the appeal of newer, trendier entrants among younger consumers.

3. Bargaining Power of Supplliers – Moderate to High

Dearn has limited control over one of its critical suppliers:

• X Co in Totland manufactures the majority of Dearn’s products. Quality and delivery issues have been rising .

• The dependence on a single third-party supplier increases risk and reduces Dearn’s leverage.

• Dearn’s in-house Lucland factory offers more control but produces only its formal shoe range.

Strategic Implications for Dearn:

• Reduce dependence on X Co by diversifying suppliers or reshoring production where feasible.

• Introduce stricter service level agreements and conduct regular quality audits.

• Consider backward integration or investment in supplier development to safeguard product quality and timelines.

4. Bargaining Power of Customers – High

Customers in Lucland have considerable power due to:

• Easy price and quality comparisons across brands and platforms.

• Growing expectations for ethical sourcing, sustainability, and fast delivery.

• High online return rates and an industry-wide lack of standardised sizing, adding pressure for flexible service.

Strategic Implications for Dearn:

• Improve customer retention through loyalty programmes, superior service, and value-added offers (e.g. free repairs, recycling schemes).

• Invest in digital customer experience and analytics to personalise interactions and reduce return rates.

• Educate customers on Dearn’s value proposition (e.g. ethical sourcing, community engagement, quality guarantees).

5. Threat of Substitutes – Moderate

Substitutes for traditional footwear include:

• Imported low-cost footwear from international online retailers.

• Second-hand or refurbished shoes from resale platforms.

• Alternative products like multipurpose trainers or lifestyle shoes replacing formal footwear in casualised work environments.

Strategic Implications for Dearn:

• Emphasise craftsmanship, heritage, and comfort to distinguish from mass-produced substitutes.

• Consider adding repair, recycling, or resale services to reduce competition from second-hand markets.

• Expand into adjacent categories (e.g. comfort-led or smart shoes) that meet changing lifestyle needs.

Summary of Competitive Forces

Force	Strength	Impact on Dearn	Strategic Focus
Competitive Rivalry	High	Margin pressure, customer switching, brand loyalty challenges	Sharpen differentiation and brand identity; focus on customer engagement
Threat of New Entrants	Moderate	Entry of niche ethical or digital players	Improve agility and brand strength; enhance digital experience
Bargaining Power of Suppliers	Moderate-High	Overreliance on X Co; quality issues	Diversify suppliers, improve contracts, or explore partial reshoring
Bargaining Power of Customers	High	Expectations for convenience, ethics, and price	Strengthen service, loyalty, and transparency; improve delivery and return processes
Threat of Substitutes	Moderate	Shift to second-hand, fast fashion, or multifunctional alternatives	Innovate and offer value-added services; reposition with heritage and sustainability

Area 9 – SWOT Analysis

The SWOT framework enables a strategic assessment of Dearn Shoes Ltd by categorising its internal strengths and weaknesses alongside external opportunities and threats. This analysis draws upon the insights from earlier sections of the deep-dive and reflects Dearn’s current strategic position in the Lucland shoe industry.

Strengths

• Established Heritage and Brand Reputation

Dearn has operated for nearly 100 years and is recognised for producing reasonably priced, well-made shoes. Its heritage and MiL accreditation support strong brand credibility in Lucland.

• Handcrafted Formal Shoe Line

Dearn retains full control over the production of its formal shoes, which are manufactured in Lucland using skilled labour. This supports quality assurance and appeals to ethically conscious consumers.

• Customer Service Excellence in Retail Outlets

Particularly noted for its accurate children’s shoe fittings and overall service quality, Dearn has built loyalty and trust through its 75 branded stores.

• High Staff Satisfaction and Loyalty

Dearn enjoys low staff turnover and strong employee engagement, with many employees spanning generations of the same family—especially in Layne.

• Market Leadership in Children’s and Semi-Formal Segments

Dearn holds a strong position in these segments and has a reputation for comfort and quality, especially among families and older customers.

Weaknesses

• Overreliance on Outsourced Manufacturing

The majority of Dearn’s products are produced by X Co in Totland, which has been underperforming in terms of product quality and delivery. This raises reputational and operational risks.

• Limited Digital and E-Commerce Capabilities

The company’s online platform lacks home delivery, has limited functionality, and contributes just 12% to total revenue—well below the industry benchmark of 25%.

• Inflexibility and Slow Style Refresh

Dearn updates its product styles only once per year, making it less responsive to fast fashion trends, particularly in the casual shoe segment.

• Conservative, Risk-Averse Leadership

Long-tenured leadership and a top-down structure contribute to stable operations but may limit strategic agility and innovation.

• No Export Presence

Dearn does not export, which limits its growth potential and increases reliance on the domestic market—currently facing economic slowdown.

Opportunities

• Export Potential for MiL-Accredited Formal Shoes

Rising demand for ethically made, high-quality shoes in international markets presents a clear opportunity for Dearn to expand via export.

• Growth in Ethical and Sustainable Consumer Preferences

Consumers are increasingly prioritising sustainability and ethical sourcing. Dearn can capitalise on this by extending MiL accreditation and developing eco-conscious product lines.

• Digital Transformation and E-Commerce Expansion

There is significant scope to improve online sales through website upgrades, digital marketing, home delivery, and virtual fitting tools.

• Product Development in High-Growth Niches

Dearn can develop new product lines, such as sustainable casual wear or customisable athletic shoes, to attract younger consumers.

• Recycling and Circular Economy Initiatives

Industry trends point towards footwear recycling and environmentally responsible practices. Dearn could pioneer initiatives in Lucland aligned with this trend.

Threats

• Intense Industry Competition

Lucland’s footwear market is highly competitive, with strong players like Flamingo, Rigo, and Parrish dominating key segments and newer ethical brands entering the market.

• Rising Customer Expectations

Consumers expect fast delivery, seamless digital experiences, and ethical transparency—areas where Dearn currently underperforms.

• Economic Slowdown in Lucland

Reduced household income is shifting demand to lower-priced footwear, placing pressure on margins and reducing overall spending.

• Supplier Risk

Continued quality and delivery issues with X Co may further damage customer trust and erode Dearn’s brand image.

• Environmental and Regulatory Pressures

As environmental concerns rise, regulation and consumer scrutiny around unsustainable practices (such as use of synthetic materials or outsourced production) may intensify.

Strategic Alignment Summary

Internal / External	Positive	Negative
Internal	Strong brand, loyal staff, niche success	Outdated digital systems, supplier reliance
External	Export growth, sustainability trends	Economic downturn, tough competition

Conclusion

Dearn is well-positioned to consolidate its strength in key customer segments and product lines by enhancing digital capabilities, reinforcing ethical branding, and reducing reliance on underperforming suppliers. With growing public demand for sustainability and quality, the company must modernise its offerings and expand beyond its traditional boundaries—particularly in online retail and international markets—to secure long-term growth.

Area 10 – Mendelow’s Matrix

Mendelow’s Matrix is a stakeholder mapping tool that classifies stakeholders based on two dimensions:

• Power – their ability to influence organisational decisions.

• Interest – the extent to which they are affected by or concerned about the organisation’s actions.

The matrix helps determine the appropriate communication and engagement strategy for each stakeholder group. For Dearn Shoes Ltd, effective stakeholder management is vital to preserve brand reputation, secure supply chain performance, and maintain internal and external trust.

Mendelow’s Matrix for Dearn Shoes LTD

Stakeholder Group	Power	Interest	Position on Matrix	Management Strategy
Board of Directors & CEO	High	High	Key Players	Involve fully in all strategic decisions and risk assessments. Require alignment for any major change initiatives.
Founder’s Family (Majority Owners)	High	Low	Keep Satisfied	Provide regular updates. Engage for long-term vision but not in day-to-day operations.
Employees (Factory, Retail, Office)	Moderate	High	Keep Informed	Maintain open communication, especially during changes (e.g. technology, processes). High satisfaction and loyalty are key assets.
Customers (Especially Families)	Moderate	High	Keep Informed	Strengthen brand loyalty through transparency, service, and engagement—particularly around ethics, delivery, and product quality.
X Co (Outsourced Manufacturer)	High	High	Key Players	Critical to operations; require strong contractual controls and quality oversight. Consider contingency planning.
DT Global Transport (Distributor)	Moderate	Low	Minimal Effort	Maintain service-level expectations. Low engagement needed unless performance drops.
Lucland Shoe Association (LSA)	High	Moderate	Keep Satisfied	Maintain MiL accreditation, participate in industry initiatives, and stay aligned with evolving standards.
National Shoe Union (NSU)	Moderate	High	Keep Informed	Continue positive staff relations. Monitor for shifts in collective demands or legislation.
Customers (Younger Demographics)	Low	Moderate	Minimal Effort	Monitor expectations for sustainability and digital experience. Engage via modern marketing channels.
Bank and Financial Institutions	Moderate	Low	Keep Satisfied	Maintain prudent financial reporting and stability. May play a larger role if external financing is pursued.

Strategic Implications

• X Co and the Board must be managed as key players, as they are central to Dearn’s operational stability and strategic direction. The supply chain challenges with X Co necessitate closer monitoring, stronger SLAs, and potentially diversified sourcing.

• The founder’s family, despite not being operationally involved, holds ownership power. Strategic shifts—especially involving ethics, expansion, or divestment—must be justified to preserve long-term support.

• Employees and the NSU are important for maintaining service quality and productivity. With high satisfaction currently, any restructuring or tech investment must be handled with transparency to sustain trust.

• Customer segmentation needs to be differentiated: Dearn should maintain a high-engagement strategy for its loyal family-oriented base while selectively targeting the younger segment through modernised branding and digital campaigns.

• Industry bodies like the LSA are essential allies in securing reputation and credibility, especially around ethical sourcing and MiL certification. Deepening this relationship could also assist with future export opportunities.

Summary

Key Players (High Power, High Interest)

• Board of Directors
• CEO
• X Co (Outsourced Manufacturer)

Keep Satisfied (High Power, Low Interest)

• Founder’s Family
• Lucland Shoe Association
• Bank

Keep Informed (Low Power, High Interest)

• Employees
• NSU
• Loyal Customers (Parents, Older Adults)

Minimal Effort (Low Power, Low Interest)

• DT Global Transport
• Younger, Less Engaged Customers

Conclusion & Strategic Priorities

CONCLUSION

Dearn Shoes Ltd stands at a strategic crossroads.

As a well-established player in Lucland’s shoe industry with nearly a century of brand heritage, Dearn enjoys trust, loyal customers, strong internal culture, and market leadership in key segments such as semi-formal and children’s shoes. Its MiL-accredited handcrafted formal shoe line, excellent in-store service, and employee satisfaction distinguish it as a reputable and responsible business.

However, the external landscape is shifting rapidly. Consumer preferences are evolving toward sustainability, digital convenience, and style agility. Competition is intensifying from low-cost rivals, fast fashion entrants, and ethical niche players. Internally, Dearn is hampered by an underperforming supply chain partner, an outdated digital presence, and slow product refresh cycles. Its conservative leadership and domestic-only market focus may limit its ability to compete in the next phase of industry transformation.

The challenge for Dearn is clear: modernise while preserving its values. To do so, the company must enhance its responsiveness to market trends, embrace digital and operational innovation, and engage proactively with its stakeholders—all while maintaining its reputation for quality, ethical production, and long-standing community relationships.

Strategic Priorities

To secure long-term competitiveness and relevance, Dearn should consider the following five strategic priorities:

1. Reinforce Brand Differentiation Through Ethical Positioning

• Extend MiL accreditation across more product lines.
• Develop a transparent ethical sourcing policy and supplier code of conduct.
• Communicate sustainability efforts clearly in branding and customer engagement.

2. Modernise Digital Capabilities and Customer Experience

• Upgrade the e-commerce platform to include home delivery, modern UX, and sizing tools.
• Increase digital marketing efforts to attract younger demographics.
• Introduce data analytics to personalise offers and predict customer behaviour.

3. Strengthen Supply Chain Control and Quality Assurance

• Reassess the relationship with X Co, introducing stricter KPIs and exploring alternative suppliers or partial reshoring.
• Improve supply chain visibility through investment in updated inventory and logistics systems.
• Consider more frequent product refresh cycles to respond faster to fashion trends.

4. Explore New Revenue Streams via Market and Product Development

• Export MiL-accredited formal shoes to premium international markets.
• Develop new products, such as eco-friendly or tech-integrated footwear, to meet unmet demand in the youth and active lifestyle segments.
• Pilot recycling or repair services to align with circular economy trends.

5. Reassess Strategic Agility and Board Governance

• Encourage a more risk-balanced leadership approach, open to innovation and strategic transformation.
• Introduce external expertise at board level, especially in digital, ESG, and global expansion.
• Invest in cross-functional collaboration to reduce siloed decision-making and improve responsiveness.

By taking bold but carefully planned steps in these areas, Dearn can remain true to its identity while evolving into a forward-looking, digitally capable, and ethically trusted brand—well-positioned to lead in both its home market and beyond.