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Zoots

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Submitted By remembermo
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1) What do you think of Zoots strategy till date? Did their business model make sense?

Zoots was an innovative dry-cleaning chain that had been founded by Krasnow and Tom Stemberg (the founder of office supply giant Staples) in 1998. Krasnow and Stemberg each provided $200,000 in seed funding by themselves. And the first Zoots store opened that October and was served by a centralized processing facility located in Wilmington, Massachusetts.

They expanded their business very aggressively. At first, the growth strategy was to both build out the scale of its first network by opening new stores to feed this hub and to open new regional networks with their own centralized processing facility. And they also grow by acquisition; they acquire a delivery business in 1999. They are growing very rapidly and revenue is well above industry average.

However, he was caught off guard by the complexity of managing the centralized processing facilities and encounters some serious problems. By early 2000, Krasnow and the management team had decided to put the growth strategy on hold and focusing on operations. Later, they changed their focus on Improving facility efficiency and quality and Building up volume in existing networks. After a while, their operating begins to stabilized and back to track. By mid-2003, they hire a new CEO, which is very professional and suitable for the business. They the made more changes on their strategy. The most important is they transitioning residential delivery from an operations focus to a sales and service focus.

Their business model is good I think. Because dry-wash industry is highly fragmented and the traditional business cannot satisfy customer needs. And the company is using a new business model which can well solve the problem and improve the profitability of the business. And the company’s strategy is more of a trail and error

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