Business Policy Final Project
Miriam Niembro
Martha Niembro Lara Ruah
Malgorzata Chojecka
About: ² Leading competitor in the jewelry industry. ² Brand that shows value, quality, superior design, and
exclusivity. ² Sales: Retail, internet, catalog, business-to-business &
wholesale distribution.
Products: ² Fine & solitaire jewelry, engagement rings, and
wedding bands. ² Non-gemstone, sterling silver, gold, and metal jewelry ² Timepieces, leather goods, sterling silverware, china,
crystal, stationery, fragrances, and accessories.
Target Segment ² Gift-givers & Gift-receivers ² Self-buyers ² Special occasions ² 25-45
PART I
COMPANY´S OVERVIEW
Financial Assets
ANNUAL INCOME STATEMENT
January 31 2014 2013 2012
Total Revenue 4,031,130,000 3,794,249,000 3,642,937,000
Cost of Revenue 1,690,687,000 1,630,965,000 1,491,783,000
Gross Profit 2,340,443,000 2,163,284,000 2,151,154,000
Operating Income 304,329,000 697,217,000 708,426,000
Net Income 181,369,000 416,157,000 439,190,000
Financial Assets
BALANCE SHEET
January 31 2014 2013 2012
Assets 4,752,351,000 4,630,850,000 4,158,992,000
Liabilities 2,031,914,000 2,032,118,000 1,810,087,000
Stockholders Equity 2,720,437,000 2,598,732,000 2,348,905,000
Financial Assets
CASH FLOW
January 31 2014 2013 2012
Operating Activities 154,652,000 328,290,000 210,606,000
Investing Activities (246,781,000) (331,146,000) (242,583,000)
Financing Activities (65,426,000) 71,446,000 (213,817,000)
Financial Assets
MAJOR HOLDERS BREAKDOWN
% of Shares Held by All Insider and 5% Owners: 13%
% of Shares Held by Institutional & Mutual Fund Owners: 86%
% of Float Held by Institutional & Mutual Fund Owners: 99%
Number of Institutions Holding Shares: 498
Financial Assets
MAJOR DIRECT HOLDERS
Quatar Investment Authority
Shutzer William A
Kowalski Michael Joseph
Marquis Charles K
Fernandez James N
TOP INSTITUTIONAL HOLDERS
Vanguard Group, Inc. (The) 6.50%
Capital World Investors 6%
Oppenheimer Funds, Inc. 3.43%
State Street Corporation 3.42%
Harris Associates L.P. 3.35%
BlackRock Institutional Trust Company, N.A.
2.22%
Jennison Associates LLC 2.04%
JP Morgan Chase & Company 1.68%
Ruane, Cunniff & Goldfarb Inc. 1.67%
TCW Group, Inc. (The) 1.66%
Financial Assets
News
² Stocks up ² From “neutral” to “buy” ² Target $100 ² Strengths
² Higher domestic sales ² Margin rise ² Operation improvement
http://www.thestreet.com/story/12701109/1/why-tiffany-tif-stock-is-up-on-thursday.html
Physical Assets
² 1st building on 38th street.
² National Regisrty of Hsitoric Places. ² 290 stores worlwide
² Headquarters at 5th Avenue.
² Raw Material include ² Metal
² Silver ² Gold
² Platinum ² Diamonds
Physical Assets News
² “Tiffany Reports First Quarter Results; Higher Sales and Margins Generate Strong Earnings Growth”
² 13% increase in worldwide net sales ² 50% growth in net earnings ² Worldwide net sales rose 13% to $1.0 billion ² In the Americas region, total sales increased 8% to $439 million.
² Strengths
² Periodic comparison of assets providing a trend in growth ² Explains the trend in asset growth ² Provide for comparison and enhanced understanding
² Weakness ² Does not provide specific details ² It misses aspects such as deprecia5on
http://investor.tiffany.com/releasedetail.cfm?ReleaseID=849272
Human Assets
² CEO ² Mr. Kowalski
² 10,600 Full Time Employees (Yahoo,2014). ² 5,100 in U.S. (2013)
² Employee Giving Program ² Time Off
² Vacation and personal days
² Requirements ² Min of 5-7 years of retail/training experience ² Strong team management skills ² Strong proficiency with Microsoft Office software ² Ability to interact with customers and other employees ² Full education
Human Assets
News ² “Tiffany & Co. breaks ground on Lexington manufacturing plant ‘’
² Will employ 125 people ² 25,000-square-foot manufacturing plant ² NY stores hire more than 60 new employees ² Products made in Lexington include engagement jewerly
² Strengths ² FormaFed to allow for grasping relevant informa5on ² Reuters is credible ² Provides precise informa5on
² On qualifica5ons and experiences of the execu5ve manager
² Weakness ² Only provides informa5on on the top execu5ve
http://www.kentucky.com/2010/11/04/1507888/tiffany-co-to-open-lexington-manufacturing.html
Intangible Assets Concept:
True love
Timelessness
Luxury
Sophistication Elegance
Intangible Assets
Reputation: ² Diamonds are real gems ² Assured to get what they pay ² Beautiful and high quality ² Name speaks for itself ² Provides excellent customer service ² Present a good image ² Integrity when it comes to jewelry sales.
Intangible Assets
² Copyright: ² Tiffany Legacy
² Tiffany Celebration
² Pure Tiffany
² Tiffany Hearts
² Tiffany Jazz
² Tiffany Signature
² American Garden
² Atlas
² Lucida
² Schlumberger
² Selections
² Streamerica
² Tesoro
Intangible Assets
² Trademarks: ² Tiffany Blue Box ®
² Tiffany Blue®
² Tiffany®
² Tiffany & Co.®
Intangible Assets
² Licensee of jewelry desgins ² Elsa Peretti, Paloma Picasso, Jean Schlumberger & Frank
Gehry
² Peretti & Picasso ownership of copyrights for their designs
Registered Designs: ² Sterling silver screwball keyring ² "Please Return to Tiffany & Co. New York” ² Registration number
Intangible Assets
Intangible Assets
Competitive Advantages:
² The brand itself ² Reputation
² Consumer loyalty ² Excellent service
² Registered designs
² Designers ² Trademarks
Intangible Assets
News:
² Paloma Picasso's Olive Leaf collection for Tiffany & Co
² Strength ² Worldwide renown designer
² Exclusive design
² Competitive advantage ² Value = sales
² Rare = source of inspiration
² Hard to imitate = no other collection will be the same ² Exploited = design in different elements
hFp://www.vogue.com.au/fashion/accessories/galleries/paloma+picassos+olive+leaf+collec5on+for+5ffany+co,25732?pos=1
Structural/Cultural Assets
History: ² 1837 – New York.
² Charles Lewis Tiffany & John F. Young ² Stationery and costume jewelry.
² 1845 - “real” jewelry. ² 1853 - Tiffany and Company. ² 1940 - Silverware, timepieces & perfumes.
Structural/Cultural Assets Core Principles: ² Global Presence ² High Service Standards ² Commitment Quality and Innovation ² Marketing & Branding ² Recruitment & Training ² Supply Chain ² Intellectual Property Rights ² Counterfeit Protection ² Corporate Social Responsibility ² Key Growth Strategies
Structural/Cultural Assets
² Only 1 company-operated store ² Strong advertising campaigns ² Differentiated products/innovative designs ² Effective competitive pricing ² Weak attempt to cater to men's product categories ² Weak efforts to offer later store hours of operation ² Knowledgeable, well-trained sales staff
Structural/Cultural Assets
² Strong efforts in collection of customer data ² Good supplier relationship ² Secure & easy to use Website ² Strong presence/locations in major US cities ² Mechanistic structure
Structural/Cultural Assets
Key Growth Strategies: ² Expand channel of distribution ² Increase sales by developing new products ² Increase control over supply ² Achieve improved profit margins ² Direct diamond sourcing & internal jewelry manufacturing ² Enhance customer awareness (marketing & PR) ² Customer service with superior shopping experience
Structural/Cultural Assets
News
² Patrick Dorsey is retiring after 29 years ² General Counsel ² Leigh Harlan
² Strength ² Actualized vision with previous experience
² Strong leadership skills
² Weakness ² Antiquity
² Know how to do things
hFp://markets.on.ny5mes.com/research/stocks/news/press_release.asp?docTag=201404110800BIZWIRE_USPRX____BW5076&feedID=600&press_symbol=268527
Structural/Cultural Assets
Competitive Advantages:
² Well-established and performed core principles ² Strategies:
² Superior shopping
² Direct diamond sourcing ² Internal jewellery manufacturing
² Differentiated products
² Innovative designs
PART II
COMPANY´S SOCIAL RESPONSIBILITY & THE NEW
BUSINESS ENVIRONMENT
Vision & Mission
”To be the world’s most respected and successful designer, manufacturer and retailer of the finest jewelry."
² For over 175 years, Tiffany has offered our customers timeless style and quality. As the world’s premier jeweler and America’s house of design, we maintain a standard of excellence in each beautiful piece we create. These high standards extend to the commitment we make to our customers, the environment and the communities in which we work. They are also evident in the way we treat our employees and the benefits offered to them.
Code of Ethics ² The Tiffany & Co. Business Conduct Policy sets forth expectations of
Tiffany employees, including compliance with all relevant laws and regulations.
² This policy also prohibits payment of bribes or the acceptance of payments or other inappropriate gifts and sets expectations in areas such as potential conflicts of interest and political contributions.
Social Responsibility
² The Tiffany & Co. Foundation : has donated, on average, nearly 2% of pre-tax earnings to charitable purposes
² In 2012, Tiffany & Co. provided more than $5 million to nonprofit organizations through our global corporate giving program.
² Responsible Mining
² Supplier Responsibility
The New Business Environment
² Technology: smartphone app.
² Globalization : they oparate stores in America, Asia-Pacific, Japan, Europe and the United Arab Emirates. ² Now they are opening 2 level luxury store in Moscow, Russia.
The New Business Environment
News
² Tiffany Raises Profit Outlook on Strength of Sales in China ² Sales in China now account for about 22 percent of overall revenue,
compared with 11 percent five years ago.
² Strengths ² Still growing market ² Asian people like brands
² Weakness ² Soon it might be a lot of competition
http://www.nytimes.com/2013/08/28/business/tiffany-raises-profit-outlook-on-strength-of-sales-in-china.html
PART III
INTERNAL ANALYSIS
1.Production/Operations ² 290 stores ² Americas 48%
² US 91 stores ² Canada & LA 24 stores
² Asia-Pacific 23% ² 66 stores
² Japan 14% ² 55 stores
² Europe 12% ² 34 stores
² UAE & Russia 3% ² 5 stores
Internal Audit
News ² The New Tiffany Flagship Store on
the Champs-Elysées ² 1686 - 1st store ² Yellow diamond
² Strengths ² Tourism ² Global image ² Sales increase ² Diverse markets ² Location
http://www.tiffany.com/WorldOfTiffany/LatestNews/Article.aspx?ArticleID=1597&PageType=2
Internal Audit
2.Marketing ² Tiffany & Co. brand
² Core principle
² Facebook ² 4million fans
² Twitter ² U.S & Brasil
² 600,000 followers
² Pinterest ² 28,000 followers
Internal Audit
News ² Ogilvy & Mather wins global Tiffany & Co. account
² 4 month period ² Global market communication partner ² Brand position & advertising
² Strenghts ² 1 of the largest ² Experience ² Creativity
http://www.ogilvy.com/News/Press-Releases/February-2014-Tiffany.aspx
Internal Audit
3.Research & Development
² To promote the development of standards for responsible mining at the large- and small-scale level.
² To remediate areas where both small- and large-scale mining have occurred.
² To protect places of natural and historic importance from the threat of mining.
² To promote economic and social development in areas where the mining of precious metals, diamonds and gemstones occurs.
Internal Audit
News ² “Tiffany & Co. Breaks Ground on Lexington Manufacturing Plant”
² Will employ 125 people ² 25,000-square-foot manufacturing plant ² NY stores hire more than 60 new employees ² Products made in Lexington include engagement jewerly
² Strenghts ² Emphasizes the company’s insistence on research ² Broader perceptive of research,
² Such as the benefits to society ² Provides an insight
² On the research and development program of the company
² Wekanesses ² Does not provide information on the historical progress
http://www.facebook.com/note.php?note_id=493417158697
Internal Audit
4.Financial & Accounting
² Strengths ² Revenue growth ² Expand profit margins
² Solid financial position
Internal Audit
² Weaknesses ² Deteriorating net income ² Disappointing return on equity
² Weak operating cash flow
News ² Stock Upgrades: Stick With Tiffany's Carats
² More than 6% ² Street estimate ² Advances another 1.38%
² Strengths ² Higher stocks ² Raise price target ² More attractive to invest
http://www.minyanville.com/trading-and-investing/stocks/articles/Stock-Upgrades253A-Stick-With-Tiffany2527s-Carats/5/30/2014/id/55139?camp=syndication&medium=portals&from=yahoo
Internal Audit
5.Information Systems ² Past customer purchases
² Tastes
² Birthday
² Sit-downs sales in its stores ² Superior knowledge
² Product offerings ² Customer history = individual attention
² Countercyclical growth due to loyalty
Internal Audit
News ² “ISO Standards Information: Tiffany & Co.”
² Customer service very important ² Special system for customer relationship ² Management information system
² Strenghts ² Details on other aspects of the company ² Effective information system ² Explains key points ² Video to promote clarity of information
hFps://sites.google.com/site/isostandardsinforma5on/5ffany-‐com
Internal Audit
6.Management Board of directors
Internal Audit
Rose Bravo Gary Costley
Lawrence Fish
Abby Kohnstamm
Charles Marquis Peter May William
Shutzer Robert Singer
News ² Tiffany Names Ralph Nicoletti as Chief Financial Officer; Jim
Fernandez, Tiffany’s Veteran COO and CFO, to Retire ² Mr. Nicoletti will be CFO ² Mr. Fernandez is going to retire
² Strenghts ² Experience ² Helps with worldwide expansion
² Wekanesses ² Lost great employee ² New CFO doesn’t know company
http://www.marketwatch.com/story/lieff-cabraser-investigating-possible-securities-fraud-at-great-lakes-dredge-dock-corporation-2013-03-19
Internal Audit
B) Organizational Structure
Internal Audit
Michael Kowalski CEO
Ralph Nicoleg CFO
Frederick Cumenal President
Beth Canavan Exec. Vice President
Andrew Hart Diamonds & Gemstones
Judy Baldisard CFO Diamonds
Caroline Naggiar
Marke5ng
Patrick Dorsey Legal & Secretary
Jon King Exec. Vice President
Victoria Berger Ross HHRR
Pamela Cloud Merchandising
John PeFerson Opera5ons
C) Organizational Culture ² Long-term development ² Quality, value, durability, and innovation ² Customer service ² Promotion from within ² Highest ethical standards ² Commitment to excellence
² Support communities
Internal Audit
News ² Former Tiffany Executive Is Accused of Stealing Jewelry
² Ingrid Lderhaas ² 165 pieces ² $1.3 million
² Wekanesses ² Image &reputation ² Vs. Culture ² Fill position ² Monetary loss ² Lack of security
http://www.nytimes.com/2013/07/03/nyregion/ex-tiffany-executive-accused-of-stealing-jewels.html
Internal Audit
PART IV
EXTERNAL ANALYSIS: PORTER´S 5 FORCES MODEL
1.Current Rivalry Among Existing Firms
1.Current Rivalry Among Existing Firms
22%
27%
11%
15%
25%
Industry Market Share
Tiffany & Co.
Signet
Bvlgari
Zales
Blue Nile
News ² Signet-Zale jewelry combo is no threat to Tiffany’s luxury
branding ² Expand jewelry store footprint ² Focused on midmarket end
² Opportunities ² Focused on upper markets ² Luxury positioning ² Long-term growth initiative
² Threats ² Partnership = largest jewelry chain ² Capture middle class market ² Tiffany´s doesnt offers promotions http://blogs.marketwatch.com/behindthestorefront/2014/02/19/why-tiffany-isnt-seen-impacted-by-signets-deal-to-buy-zale/
1.Current Rivalry Among Existing Firms
² High costs of capital ² Consumer loyalty to brand
² Customized products offering
2.Threat of Potential Entrants
News ² Pandora Raises Sales Forecast as Cupid Gives Jeweler a Boost ² Opportunities
² Increasing sales ² Brand gets worldwide recognition
² Threats ² A lot of competition
http://www.bloomberg.com/news/2014-05-13/jeweler-pandora-raises-guidance-as-profit-beats-expectations.html
2.Threat of Potential Entrants
² High Disposable income ² Connection with the brand
² High prices
² Few availability of substitutes & competitors
² Choose according to experience
3.Bargaining Power of Buyers
² Great power ² Few diamond suppliers in the world
² Power to dictate prices
4.Bargaining Power of Supplier
² Engagement rings have few substitutes ² Accessories can be bought at other retailers
² Zales ² 2,100 stores
² Lowest prices
² Blue nile ² Online retailr
² Segnet Jewelers ² Kay & Jared
² Convenient location (near malls)
5.Threat of Substitute Products
News ² Hoping to Sell the Emotion of Love (and Rings)
² Marketing campaign focused on emotions ² Opportunities
² They don’t have the brand popularity ² Threats
² Offer customized jewelry ² More accesible prices ² More locations ² Also appealing for emotions on campaigns
http://www.nytimes.com/2008/11/22/business/22interview.html?_r=0
5.Threat of Substitute Products
PART V
EXTERNAL ANALYSIS: THE GENERAL ENVIRONMENT
² Interest rates 0.25% ² Budget deficit 492b
² Currency value
² Inflation 2%
² Consumer spending rose .3% ² Consumer income
² Unemployment 6.3%
Economic
² Population 316,668,567 (07/13) ² 2.4% increase ² New York 19.3m ² Los Angeles 12.6million ² Chicago 9.1m ² Miami 5.6m
² Washington 4.4m
² Gender ² Female 49.1% ² Male 50.9%
Demographic
² Education ² High school 85.7% ² Bachelors 28.5%
² Hosuing ² Persons per household 2.6 ² Married couples 51.7% ² With kids under 18 25.%
² Age ² 25-54 years: 40.2% ² Millenials 25%
Demographic
² People are paying attention to brands ² Spending more money each year on clothes,
accessories etc. ² Like to show off what brand are they wearing
Socio-cultural
² Minimum wage 9$ ² Code of Professional Practices ² Anti-money Laundering
² Conflict Minerals Provition ² Comprehensive Children’s Jewelry Safety Act ² U.S. Consumer Product Safety Commission
Political-legal
² Introduced a new website ² See the product from different angles
² New app for smartphones ² Engagement rings
² Communicate with other stores worldwide
² Diamond cut laser
² Social media use ² Technology to advertise their brand and products
Technological
PART VI
STRATEGIC FORMULATION
SWOT ANALYSIS
STRENGHTS WEAKNESSES
In-‐House Produc5on Increased debt/interest payments
Strong brand in the fragmented market High prices
Strong direct selling channels Deteriora5ng net income
Broad offering Disspoin5ng return in equity
Revenue growth Weak opera5ng cash flow
Strong financial posi5on No promo5on model
Technological up to date apps
SWOT ANALYSIS
OPPORTUNITIES THREATS
Economic recovery Counterfeit crime
Bridal jelwelry No rewards program
Small store format People spending on first necessi5es
Expansion on product lines (men & millennials) People afraid of spending arer economic crisis
Online market Infla5on on raw materials
Spending on luxury market Other jewellers offering customiza5on
PART VII
STRATEGIC IMPLEMENTATION
² All our strategies are focused on the following levels ² Functional
² Product
² Marketing
² HHRR
² Competitive ² Differentiation strategies
² Capture the male market since it constitutes 50.2% of the U.S. population
² Strategy: ² Expand men´s product offering
² Create less “romantic” advertising to create a link with them
² Don´t portrait them as givers
² Make them aware of the existing offering
Objective 1
² Capture the millennial market since it’s 25% of the population and they have a lot of spending power
² Strategy: ² Create a special line targeted to millennial segment
² Give a special name to the line so the “luxurious, expensive” image of the brand doesn't’t get affected
² More accessible prices
² Youth, fresh and less classic designs
² Promoted by young celebrities
Objective 2
² Create an attachment with the different cultures of the countries in which the stores are located in order to develop a stronger global image
² Strategy: ² Make special edition collections with special collaborations
from local jewellery designers ² Create an attachment to the culture of the place were the
store is located increasing the consumer trust
² Give a competitive advantage due to the exclusive designs
Objective 3
² Reward the most recurring customers without affecting the image of the store by promotions or sales
² Strategy: ² Create a Rewards Program (The Blue Box Club)
² 20 points per $50 spent on merchandise
² Each 100 points a $10 reward is given for the next purchase
Objective 4
² Create awareness and popularity by promoting at big events.
² Strategy: ² Sponsor Miss U.S.A pageants
² Crowns & jewellery made by Tiffany´s
Objective 5
PART VIII
STRATEGIC EVALUATION
Evaluation Objective 1
² Capture the male market since it constitutes 50.2% of the U.S. population
² How to evaluate this goal?
² Measure sales made by men
² Check if adverising is well received
² Did our offer have been changed ?
Evaluation Objective 2
² Capture the millennial market since it’s 25% of the population and they have a lot of spending power
² How to evaluate this? ² If the line/name and prices have been changed? ² What celebrities were used to promote the
company? ² Collect relevant data about sales (who is buying) ² Are millenials talking about us? (Social-media)
Evaluation Objective 3
² Create an attachment with the different cultures of the countries in which the stores are located in order to develop a stronger global image
² How to evaluate this?
² Check if the collaboration ended in the creation of collection
² Data about sales of those collections ² Consumer trust increased? (Questionnaires)
Evaluation Objective 4
² Reward the most recurring customers without affecting the image of the store by promotions or sales
² How customers react to the rewards?
² Growth on sales?
² A lot of profit lost on those sales?
Evaluation Objective 5
² Create awareness and popularity by promoting at big events
² Which are the right events? ² Popular among the country
² Customers awareness? ² Rating of the events
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interest-rates/central-banks/central-bank-america/fed-interest-rate.aspx> ² Datamonitor. Tiffany & Co. SWOT Analysis. 2012. Web. 1 June 2014. <http://
iln.cite.hku.hk/com/1401/users/kyleung6/26191858.pdf> ² Gupta, A. Tiffany & Co. Strategies. SlideShare. 2008. Web. 14 May 2014 <http://
www.slideshare.net/abhinavcambridge/tiffany-co-strategy> ² Investors. Tiffany & Co. Official Webpage, 2014. Web. 14 May 2014. <http://
investor.tiffany.com/overview.cfm> ² Ling, S. Tiffany & Co. Brand. Wordpress. 2013. Web. 1 June2014. <http://
brandtiffanyandco.wordpress.com/about-us/>
REFERENCES: ² Moth, D. How Tiffany & Co. Uses Social Meida?. 20 Aug. 2013. Web. 11 June 2014.
<https://econsultancy.com/blog/63262-how-tiffany-co-uses-facebook-twitter-pinterest-and-google#i.1jdk5kly5jczdu>
² Tartara, C. Business Strategy Analysis. SlideShare. Feb.2012. Web. 1 June2014. <http://www.slideshare.net/caamch2/tiffany-strategy-presentation>
² Tiffany & Co. Official Webpage, 2014. Web. 14 May 2014. <http://www.tiffany.com/> ² Tiffany & Co. About Report. 2010. Web. 14 May 2014. <http://www.tiffany.com/csr/
aboutreport/2010_CSR%20Report_FULL_052912.pdf> ² United States Inflation Calculator. 2014. Web. 11 June 2014. <http://
www.usinflationcalculator.com/inflation/historical-inflation-rates/>
THANK YOU!