Read the following case study and give your analysis on the stated questions

TODDS SHOE EMPIRE - Running a Luxury brand the old fashioned way

Some thing was not right about the black sport shoes that Diego Della Valle wore on a recent stroll around the sleek campus and factory that form the heart of Todd's luxury shoe empire here. "Idon't like the way they feel" declared Mr. Della Valle, the chairman of Todd's, stopping midstride to study his feet more closely. "It's the part around the toes it needs to be rounder", he said.

Mr. Della Valle does the things the old fashioned way: by instinct. To find out whether a new style of shoes will work in the market place, he does not need any focus groups or poll testing - he wears them. After a few days, if they are not to his liking, he renders his verdict: "These won't go into production".

Despite running Todd's like a traditional old family business, Mr. Della Vale has turned it into a successful multi-national, multi-euro company, whose buttery leather moccasins adorn the feet of the Princess of Monaco, the Hollywood actress Julia Roberts, Mrs. Hilary Clinton and thousands of other loyalists around the world.

Around his sweeping white office there are no computers, he feels more comfortable clinging to an outdated Motorola cell phone. Above him looms the painted silhouette of John. F. Kennedy, one of his idols. His father Dorino, 85, whose business in hand cobbled shoes was transformed by Mr. Della Vale into a family empire, still shuffles in each day with a silver knobbed cane to inspect the things. Across the hall Mr. Della Valle's younger brother Andrea manages operations as well as the soccer team Florentina, which Todd's bought in 2002.

"We don't take risks" said Mr. Della Valle, 56, who has a laser like focus on Todd's shoes. "We want to guarantee our customers we are giving them the best". He has declined to follow the trend of other multi-national companies based in Italy that are moving production to cheaper places like China, even as the industry stakes much of its future success on the growing ranks of wealthy people there. Todd's has 24 stores in China and Mr. Della Valle visits China frequently.

It costs Euro 1590 or about $ 2200 for Todd's to produce a pair of men's crocodile shoes in Italy (the shoes are retailed for Euro 3500). Making the shoes in China will reduce the cost by half. But while "Made in Italy" may cost more, Mr. Della Valle said he still thought it was worth the price. He sniffed at a company like Geox, which has sent most manufacturing of its Italian designed shoes abroad.

Thanks to cheaper labor, Geox had strong margins until the financial crisis hit, but now its performance has stumbled. Todd's by contrast must defend its margins by passing the costs of hand stitching, expensive leathers and continued innovations on to consumers, which it can only do by promoting exclusivity.

"For true luxury brands, lowering prices by outsourcing is not something they really ever consider as a strategy for growth" said Mr. David Varmercati, the chief analyst for luxury goods at Unicredit in Milan. On the other hand he said, "Todd's is certainly giving up some profitability because they don't spend less on manufacturing". Even if outsourcing shoes and hand bags could plump the bottom line, the strategy of Todd's has paid off and is likely to keep doing so as long as it stays a premium brand with a universal appeal. It was one of the few luxury companies world-wide to increase profits through the financial crisis. Profits grew from Eurp 77 Million in 2008 to Euro 86 Million in 2014.

The key for close knit companies like Todd's is a patriarch like Mr. Della Valle, who projects the family values into the product as part of a promise from the company that's incorporated into one person. "But Mr. Della Valle cannot be on top of everything and everywhere" argued Mr. David Varmercarti. "He needs to prepare the company for a transition from an entrepreneurial- style company to a managerial run company".

Back in the office, Mr. Della Valle points proudly to a montage of photographs, including one of Hilary Clinton carrying a Todd's handbag during her first day as the first lady. "We have come a long way in twenty years" Della Valle said. The brothers paused in front of an old wooden table that they, their grandfather sat around, cutting leather and stitching shoes by hand.

Della Valle said, "It's there, so we don't forget our roots".

QUESTIONS FROM THE CASE STUDY

1- What is it that has contributed to the success of the company?

2- Do you think they would be able to sustain their success in the years to come? Why or why not?

3- Do you think lowering their costs by outsourcing the manufacturing to China is a wise strategy? Are there any advantages to be gained by outsourcing? What are the risks associated with it?

4- As a business consultant what type of strategic changes would you recommend to TODD'S to enhance their business in future?