Tiffany & Co.
Susan Tartara, Christina Caamano, Sara Birnbaum, Corinne WhiteMBAe 2010-2
Business StrategyAnalysis
Agenda• Environmental Analysis• Strategies• Corporate Governance• Organization• Leadership• Entrepreneurship• S-Curve• Discussion
People, Philosophy, Personality
Internal Environment
• Customer Service Orientated
• Greater than normal Training for sales representatives
• Dedicated to the “Tiffany Experience”
• Brand Loyalty is sustainable
Competencies
Internal Environment
• Customer Service
• Design and Innovation
• Marketing and Brand Maintenance
• Quality and Craftsmanship
Resources
Internal Environment
• Sourcing Socially Responsible Materials
• Access to excellent talent
• Design
• Marketing
SWOT Analysis
Strengths
Brand
Financials
Quality Control
Distribution Control
Internet Shopping Embraced
Weaknesses
Mature in Industry Lifecycle
Commodity Prices
Recessions
Reduced Discretionary
Spending
Dependence on stores
Opportunities
New Target Markets
Online Market
Revamp Advertising
Socially Responsible
Mining
Vertical Integration
Product Differentiatio
n
Innovation
Threats
Rivalry
Cheaper Products
Comparable Products
Online Retailers
Low switching
costs
Value Chain Analysis
Value Chain of Tiffany Co
In Bound Logistics- Warehousing of raw materials and the distribution to their manufactures
Operations- transforming inputs into finished products
Outbound Logistics- Warehousing for finished products
Marketing and Sales- customer needs
Service- Support after sale
Support for the Value Chain
Infrastructure of the firm- Organizational structure, company culture, control systems
HR Management- Employee recruiting, compensation, training
Technology Development- Value creating services
Procurement- Raw materials, equipment
Cost Advantage of the Value Chain
- Economies of Scale- Learning - Capacity Utilization- Linkages among activities - Degree of Vertical Integration - Timing of market entry- Firms policy of cost or differentiation - Geographic Locations
Competitors
• Cartier• BVLGARI• Harry Winston• Chopard• Fred Leighton• Michael Katz
Competitive Strategy
• Differentiation strategy• Brand loyalty• Price sensitivity• Value creating strategy
Competitive Strategy
• Increased marketing
• Accelerated pace of store openings - 17 stores
• New product expansion- Yellow diamonds, handbags and accessories
• Expansion of internet sales- launch of online business in continental Europe
Global Strategy
Tiffany’s global locations:• America’s• Asia Pacific• Europe
Internet salesBusiness to Business (B2B)Wholesale Distribution
Tiffany Global Expansion
• Opening of 17 new Company-operated stores (six in the Americas, eight in Asia-Pacific and three in Europe);
• The Company operated 220 TIFFANY & CO as of January 2010 91 in the Americas, 102 in Asia-Pacific and 27 in Europe vs. versus 206 locations a year ago (86 in the Americas, 96 in Asia-Pacific and 24 in Europe).
S - Curve Analysis
• The specialty retail industry is currently in the mature stage of the industry life cycle
• From the 1970’s to the 1990’s, the specialty retail industry experienced a large growth with the increase in shopping malls in the United States
• A channel being used for many specialty retailers to grow is the internet. Companies of all sizes are able to offer their products online to a larger consumer base then previously possible
S-Curves
TIF
Finanical Snapshot• For the year, net sales dropped 5 % to $2.71bn. But net
earnings from continuing operations rose to $265.7m from $232.2m on the back of aggressive cost-cutting.
• S G and A expenses rose 7 % in the quarter, as a result of higher incentive compensation for management.
• Balance sheet liquidity at January 31, 2010 included: cash and cash equivalents of $786 million (versus $160 million a year ago), and total short-term borrowings and long-term debt of $754 million (versus $709 million a year ago).
• In the Asia-Pacific region, sales rose 14% to $318.0 million in the fourth quarter due to strong growth in all countries except Japan
U.S. Retail vs Jewelry Sales
19
U.S. Specialty Jewelers Sales
20
Financial Snapshot Q1 2010
• Net sales increased 17% to $981.4 million, compared with $837.6 million in last year's fourth quarter
• Tiffany’s planned capital spending is jumping to $200m, from $75m last year
Key Strategies of Tiffany &Co.
• To selectively expand its global distribution without compromising the value of the TIFFANY & CO. trademark (the “Brand”).
• To increase store productivity• To achieve improved operating margins • To enhance customer awareness • To maintain an active product
development program • To provide superior customer service
QUESTIONS