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Tiffany & Co.’s Internal and External Analyses Essay


Introduction

Tiffany and Co. was started in 1837 in the U.S.A. As of January 2012, the Company had over 247 retail stores and boutiques worldwide. It is a holding company operating through subsidiary corporations. It uses direct selling techniques of the Internet, business gift operations and catalogs for its main products like jewelry, timepieces, sterling silverware, china, crystal, stationery, fragrances, and accessories. In the fiscal year 2011, the company recorded net sales of $3.6 billion with earnings of $3.40 per diluted share. The company declared during the same period, a dividend of $0.29 on every common share (Tiffany and company 4, 11; Tiffany reports 1).

Internal analysis

Strengths

To start with, the company has an excellent physical presence and brand awareness worldwide. In fact, its board members expressed overwhelming confidence in the company’s future.

Secondly, the company has a pool of qualified and experienced staff necessary for efficient service delivery. In addition, the company relies heavily on its online e-commerce and strategically placed marketing messages to drive sales (Tiffany and company 5).

Third, the company has a strong brand name for its products which consumers associate with high quality. Even most of its advertising activities are done primarily to buttress its style, luxury, sophistication and romance (Tiffany and company 5).

Finally, the company has a strong financial position with excellent expense control mechanisms which has supported its worldwide expansion strategies even during periods of recession.

Weakness

To start with, the company has concentrated its manufacturing plants only in the U.S.A. This might lead to high transport costs, business closure after a fire incident and high prices on far away customers.

Secondly, the company has a long supply chain for the acquisition of raw materials. Although the company boasts of its acquisition and polishing styles, its consumers incur high product prices.

Finally, the company concentrates much on its head office staff. For instance, in 2011, the company relocated only head quarterstaff with the aim of improving service delivery. However, this might result in internal competition from other employees (Tiffany and company 5).

External analysis

The size of the Tiffany product market is on the rise. This is evidenced in sales of which in 2010 increased by 14 percent to the U.S $ 3.1 billion. Specifically, all the regions recorded improved sales: America (11 percent), Asia-Pacific (23 percent), and Europe (23 percent) with only Japan recorded a 1 percent decline. The increased high-level advertising, customers changed attitude towards quality and improved economic conditions partly explain this trend (Tiffany and company 4).

Opportunities

First, the strong balance sheet has increased its potential access to credit. In fact, the company can easily generate free cash flow of U.S $ 172 million (Tiffany and company 4).

Secondly, the company has excellent customer loyalty especially in Asia-Pacific regions which has resulted in high sales and earnings.

Finally, there is a very strong demand for the company’s products. Mostly in Asia-Pacific countries, the overwhelming numbers of new customers are a positive indication of its revenue base contribution.

Threats

First, the negative speculation concerning the decline in the luxury products market is a headache to manage. It is envisioned that affluent customers are changing their demand patterns for precious goods and that they have reduced their asset values as economic uncertainty continues. This might reduce the company’s revenue base.

Second, there has been over the proliferation of new stores offering low quality but similar products. This might not only dilute the company’s brand name products but also limits its display space in many lucrative malls (Tiffany and company 11; Barman and Evans par.7).

The third concern is the ethical issues related to securing inputs. Securing the finest quality diamonds requires backward integration. However, the corporate social responsibility of Tiffany is only concentrated within the U.S.A. market without any meaningful support to producers. This might result in civil accusations between civil societies and the company (Gutter par. 1).

Finally, the increase in raw prices might have a direct effect on the end product prices. In fact, the high cost of a diamond usually has resulted in price adjustments to cushion the company. This usually requires making a tradeoff between business initiatives to increase sales, brand maintenance and profits and customer satisfaction.

Works Cited

Barman, Barry and Evans Joel. n.d. Chapter 5: Retail market strategy. n.d. Web.

Gutter, Danielle Lynn. n.d. Sustainable luxury jeweler practices and their effect on sales and reputation. n.d. Web.

Tiffany and company. 2010. Web.

Tiffany reports. 2012. Tiffany reports fourth quarter and full year results 2012. Web.

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IvyPanda. (2020, July 14). Tiffany & Co.'s Internal and External Analyses. Retrieved from https://ivypanda.com/essays/tiffany-amp-cos-internal-and-external-analyses/

Work Cited

"Tiffany & Co.'s Internal and External Analyses." IvyPanda, 14 July 2020, ivypanda.com/essays/tiffany-amp-cos-internal-and-external-analyses/.

1. IvyPanda. "Tiffany & Co.'s Internal and External Analyses." July 14, 2020. https://ivypanda.com/essays/tiffany-amp-cos-internal-and-external-analyses/.


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IvyPanda. "Tiffany & Co.'s Internal and External Analyses." July 14, 2020. https://ivypanda.com/essays/tiffany-amp-cos-internal-and-external-analyses/.

References

IvyPanda. 2020. "Tiffany & Co.'s Internal and External Analyses." July 14, 2020. https://ivypanda.com/essays/tiffany-amp-cos-internal-and-external-analyses/.

References

IvyPanda. (2020) 'Tiffany & Co.'s Internal and External Analyses'. 14 July.

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