Tiffany & Co Strategic Management

BUS317 Strategic Management
BUS317 STRATEGIC MANAGEMENT
Group Case Study Report

Conduct a case analysis based on current information for the case study
Tiffany & Co.
Group members:
Lecturer: Frankie Yee
Lecture day: Wednesday PM class
Due Date: 21 July 2010
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Table of Contents
1. Executive Summary 4
2. Introduction 5
3. Company Situation 6
3.1. Current Performance Assessment 6
3.2. Past Performance Assessment 6
3.3. Past financial performance assessment 7
4. External Analysis 8
4.1. PESTEL Factors 8
4.1.1. Political/Legal 9
4.1.2. Economic 9
4.1.3. Socio-Cultural 10
4.1.4. Technological 11
4.1.5. Environmental 11
4.1.6. Implications 11
4.2. Industry Analysis 12
4.2.1. Industry Overview 12
4.2.2. Porters 5 Forces 13
4.3. Competitive Analysis 16
4.3.1. Current Situation 16
4.3.2. Immediate Issues To Be Addressed By Tiffany 17
4.3.3. Information Needed 18
4.3.4. Competitive Positioning Map 19
4.3.4.1. Implications 19
4.3.5. Strategic Group Analysis 21
4.3.5.1. Implications 21
5. Internal Analysis 22
5.1. Tiffanys Key Success Factors 22
5.2. Resources 22
5.2.1. Financial Resources 22
5.2.2. Human Resources 23
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5.3. SWOT Analysis 24
6. Problem Definition 27
7. Development of Strategies 28
7.1. Target Market 28
7.2. Objectives 29
7.3. Ansoffs Product/Market Expansion Matrix 30
7.3.1. Market Penetration 30
7.3.2. Product Development 31
7.3.3. Market Development 31
7.4. Positioning Strategies 32
7.4.1. Current Problem 32
7.4.2. Approach to Positioning A General Overview 32
7.4.3. Positioning Strategies 33
7.5. Product Scope 33
7.6. Branding Strategies 34
7.6.1. Product Differentiation Strategy 34
7.6.2. Aggressive advertising campaigns 34
8. Evaluation of Strategic Options 36
8.1. Affordability versus Exclusivity 36
9. Implementation 38
9.1. GANTT Chart 38
9.2. Budget 42
10. Evaluation and Control 43
10.1. Evaluation 43
10.2. Control 43
10.2.1. Balance Scorecard 43
11. Appendices 47
12. Bibliography 48
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1. Executive Summary
Despite the fact that Tiffany & Co. (Tiffany) currently holds the leading position with a 23
percent share in the $70 billion fine jewellery industry, strategic management is still the key
for this worlds premier luxury brand to survive and prosper in an increasingly competitive
environment over the immediate and long term future.
This strategic business plan first conducts environment scanning in the form of external and
internal analysis. The external environment presents a predominance of opportunities which
Tiffany needs to capture such as economic growth and evolving demographic markets, while
the main threats to defend against are competitive pressures and suppliers bargaining power.
The internal environment shows strong brand recognition but the lower-end silver jewellery
dilutes the luxury brand image such that some distinguishing consumers now view Tiffany as
the inexpensive, common brand.
After identifying the main problems faced by Tiffany, the target market and objectives are
also established to serve as a basis for strategy formulation. With focus on the Asian market,
the key strategies developed are:
Market Penetration Increase number and size of stores worldwide with standardised
glass palace-themed store outlooks
Market Development Set up speciality bridal stores under the brand extension Tiffany
Romance
Product Development Adapt jewellery designs to cater to Asian culture and tastes
For planning and implementation purposes, the GANTT chart is used to illustrate the process
of decisions, actions and evaluations required for Tiffany to achieve strategic competitiveness.
Finally, the balanced score card is put in place to keep track of the financial, customer,
internal business and innovation progress and to work towards its successful venture in Asia.
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2. Introduction
Tiffany & Co. holds the leading position in the fine jewellery industry with a deep history
since 1837. This public company is worth US$5.4 billion and has become one of the most
well known companies in the world, ranked 76th top best global company (Interbrand 2009).
Tiffany has a vertically integrated channel as a supplier, designer, manufacturer, distributor
and retailer of luxury fine jewellery. The main distribution channels are Tiffany stores
operated across North America, Asia Pacific and Europe with robust business via internet
sales.
For over 170 years, the name of Tiffany & Co. has been synonymous with romance, style,
quality and luxury. Although the company has been staying successful in the fine jewellery
industry with 87% of sales coming from jewellery, it continues to expand its consumer
market by expanding its product line to offer a wide range of other premium luxury goods
including timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories.
The most important asset of the company is the strong, well-defined brand. Beyond the
trademark name and the Tiffany Blue Box, the brand has developed into one of the best-
known symbols for quality, prestige and value in retailing, and the value of this brand is
expected to continue to increase over the long term (Stephanie Blackburn 2004).
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3. Company Situation
3.1 Current Performance Assessment
Tiffany & Co. recently accounted its first quarter earnings for 2010. The company is
performing well with worldwide sales increasing 22% to $633.6 million and strong net
earnings increasing 135% to $64.4 million, due to growth in most regions and product
categories. Despite the 2008 Global Financial Crisis, Tiffany has been able to sustain a
continuous increase in its global net sales by a higher-than-expected margin of $3 million this
year (Tiffany & Co. 2010).
Tiffany is also opening 16 new retail stores to reach a total number of 221 worldwide with 91
stores in America, 27 stores in Europe and 103 stores in Asia-Pacific. This greatly improves
the availability of Tiffany products for consumers all around the world to turn to this brand
with a legacy of excellence in design and craftsmanship. However, an important note is that
the Asia-Pacific and Europe combined retail sales are less than US retail sales, even though
the number of international retail stores are nearly double that of the US (See Figure 1).
Figure1: Comparison of Global Net Sales and Retail Stores Worldwide (2007 2009)
3.2 Past Performance Assessment
Highlights of Tiffany & Co.s past performance:
1867: Tiffanys first international recognition at the Paris Exposition Universelle.
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1886: Tiffany introduced the worlds first engagement ring the Tiffany Setting.
1979 1984: Tiffany was owned by Avon Products. The introduction of low-margin watches,
china and glassware caused a severe decline in the brand image and sales as customers
complained about inferior quality and service.
1984 1987: Under William Chaneys new management, Tiffany successfully restored its
image and went public with 30 retail locations worldwide.
1999: Michael Kowalski became CEO and Tiffany opened its first online store.
2000 2009: With continued expansion and brand building over the last decade, Tiffany has
experienced a steady 68% growth in net sales from $1610 million to $2710 million.
3.3 Past financial performance assessment:
Ratios Industry Average Calculation

2001 2005 2009
Current Ratio 1.7 : 1 2.98 4.02 4.3
Quick Ratio 0.8 : 1 1.05 1.35 1.5
Stock Turnover 7.5 times 1.24 1.01 0.9
Gearing Ratio 1.7 : 1 1.73 1.6 1.1
Return on Equity 15.50% 22.65% 19.20% 16.99%
Gross Profit to 40.80% 56.86% 56.06% 42.16%
Sales
Implications:
Tiffany is highly capable of paying its liabilities from its current and liquid assets with the
current and quick ratios substantially higher than the industry average. The difference
between the ratios shows that the majority of assets is in the form of stocks.
The low stock turnover is not necessarily a negative implication due to the high-cost
nature of the luxury brand. Tiffany can address this decreasing stock turnover by
implementing strategies to generate customer loyalty and return purchase.
Despite holding on to a large amount of stocks, Tiffany has been efficient in utilising its
assets to generate sales as its return on equity and gross profit are higher than the industry
average. However, it needs to expand the number of stores and build the brand to improve
its profitability.
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4. External Analysis
4.1 PESTEL Factors
Below is an outlined PESTEL analysis of the fine jewelry industry that will further aid the
comprehension of implications that Tiffany should take in regard as vital references to its
sustainability in its industry.
Economic
Political-Legal 1. Increase in GDP and GNI in Asia-
Pacific.
1. Foreign Trade Regulations: PNTR
2. Rising wealth in Asia indicates
signed by U.S. and China.
increasing demand for fine jewelry and
2. Responsible mining due to
luxury goods.
antiquated laws set by the federal
3. Increased consumer spending due to
government in U.S.
rising wealth in Asia.
3. Weaker political stability and
4. Higher discretionary spending through
security in Brazil, a diamond
credit card use.
producing country, affects price and
5. Reduction in trade barriers and
availability.
manufacturing costs allow for economic
integration and globalization.
Socio-cultural
Technology
1. Human rights abuses in Marange,
Zimbabwe bring the attention of conflict 1. Increasing Internet usage and e-commerce: China
diamonds to the public. surpassed the U.S. in 2008 to become the largest
2. There is a population boom in Asia, and Fine Jewelry nation of Internet users in the world and by end
increasing numbers in Baby Boomers 2009 was showing no signs of slowing down.
due to the aging population.
Industry 2. QAD & MFG/PRO software increases efficiency
3. Bridal market boom: Generation X and for inventory scheduling management for stock
Y have higher spending power on check and availability.
higher-priced wedding jewelry. 3. Rapid rate of product innovation fuels Research
4. Growing number of women in the and Technology of fine jewelry industry to
workforce. innovate new designs constantly.
Environmental
1. Cyanide contamination affects

human health and created social
problems
2. Environmentalists are concerned of
the side effects it caused to the
human beings and it has raised calls
for responsible mining operations.
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4.1.1 Political/Legal
1) Foreign trade regulations: Asia Pacific Economic Cooperation (APEC) may provide
impetus for a series of bilateral trade agreements. In recent years, U.S. and China signed a
Permanent Normal Trade Relations (PNTR). Chinas deduction of diamond import tax
from 17% to 4% also promotes trade (Gillet 2009).
2) Pressure from Government on Environment: With the recent concerns over

environmental protections and responsible mining, Tiffany has to take in regard the
federal antiquated laws to promote responsible mining, and has been actively promoting
responsible mining for its minerals and metals (Wharton, 2004; Tiffany & Co. 2010).
3) Government stability: The price and availability is dependent on the political situations
in diamond producing countries. The weak political stability and security in Brazil,
prevents Tiffany & Co. from expanding in the country.
4.1.2 Economic
1) Economic growth: There has been a steady increase in the Gross Domestic Product
(GDP)/ Gross National Income (GNI) in Asia-Pacific in the recent years (Euromonitor
International, 2010). The rising wealth in Asia hence indicates the increasing demand for
fine jewellery and luxury goods.
2) Increased consumer spending: As a result of the aforementioned factor, there is an

increase in consumers spending over luxury items such as fine jewellery. It has been
reported by Merrill Lynch that the luxury goods market has always been solid with
increasing sales and profits even in times of an economic crisis (Reuters, 2008).
3) Higher discretionary spending through credit card use: It has been reported that there
has been a 40 percent growth in credit card adoption in China (Euromonitor International,
2010), as well as a surge of card transactions in Asia by 158 percent from 2004 to 2009,
approaching nearly a quarter of global card volume (USA Today, 2010). In addition, it
has been found that card use begets higher spending, as David Robertson of Nilson
Report commented, It's a proven fact that if you can make people move from cash to
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electronic payment, then the average amount spent will increase, along with the average
number of transactions," (USA Today, 2010).
4) Economic integration (Globalisation): The reduction in trade barriers and

manufacturing costs such as logistics, labour costs and raw materials in emerging
countries such as China and Vietnam facilitates capital flow for international business and
encourages factories and plants to be set up there. This allows for economic integration
and globalisation in international businesses.
4.1.3 Social-cultural
1) Human rights: The recent widely reported debacle on human rights abuses in the
Marange diamond district of Zimbabwe in mid-2009 had brought about public attention
to ethical means of mining for diamonds (Human Rights Watch, 2009). Morally ethical
consumers might be apprehensive about the origins of the diamonds, unless responsible
jewellers provide assertion and reassurance that their diamonds purchased are not of
Marange origins, or conflict diamonds (Tiffany & Co., 2010; Amnesty International USA,
2007).
2) Evolving demographic markets: According to the Population Reference Bureau (2010),

Asias share of population in the world may continue to hover around 60 percent through
2050. Baby Boomers (Schiffman et al., 2005, 416) are increasing in numbers due to the
aging population and are typically high spenders in the luxury market.
There is also a bridal market boom over the recent years prominent in Generation X and
Y. As the average age of people getting married is higher, these consumers possess higher
spending power and are more likely to purchase higher-priced engagement and wedding
rings.
It has also been reported by estimation that the female labour force participation in Asia
has been growing steadily over the last 5 years (The Straits Times, 2009). Women are
found to be more emotionally attracted to products with hedonic appeals, such as
jewellery and perfume. This indicates that it serves as an opportunity to the jewellery
industry.
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4.1.4 Technological
1) Increasing Internet usage and e-commerce: There are increased numbers of Internet
users in Asia (Refer Appendix C and D). China surpassed the U.S. in 2008 to become
the largest nation of Internet users in the world and by end 2009 was showing no signs of
slowing down. (Internetworldstats, 2010; Euromonitor International, 2010).
2) New Communication technologies: QAD & MFG/PRO software allows for increased
efficiency for inventory scheduling management between customers and suppliers
constantly. The ability to check for real-time data would help consumers check for
availability online and supplier update stock availability with efficiency.
3) Rapid rate of product innovation: Technology fuels Research and Technology of the
fine jewellery industry to innovate new product designs constantly. It allows jewellery
designers to create pieces to suit seasonal trends and generate consumer demand.
4.1.5 Environmental
1) Environmental and social impact of mining industry: Cyanide contamination affects

human health and created social problems (International Cyanide Management, 2010).
Environmentalists are concerned of the side effects it caused to the human beings and it
has raised calls for responsible mining operations.
4.1.6 Implications
1) Predominance of opportunities: Tiffany can leverage on its core competencies and

resources to implement strategies to earn superior profits.
2) Potential threats all arising from suppliers: Tiffany needs to establish stronger
relations with the government, environmental organizations and its consumers.
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4.2 Industry Analysis
4.2.1 Industry Overview
Value Market worth $70 billion.
Worldwide jewellery sales of $185 billion.

Average 4.6% Compounded Annual Growth Rate (CAGR).
Surging global demand stimulated by rising wealth in Asia.
China (13%) and India (12%) together will emerge as market
equivalent of US (26%).
Size & Growth
(Source: Gem and Jewellery Export Promotion Council of India and KPMG)
Gender (Males, Females).
Market Age (Baby boomers, Gen X, Gen Y).
Segments Income (High-income, Middle-income)
Highly competitive international brands.
Emerge in 3 forms:
1. Big Brothers With a presence across various segments of
the value chain.
E.g. LVMH (De Beers), Richemont (Cartier).
2. Volume Players Companies with depth and large capacity
Key Players in a single segment whether mining, diamond manufacturing
or retailing.
E.g. Tiffany & Co.
3. Specialists Companies that develop specialized expertise in
niche areas at various points in the chain.
E.g. Harry Winston, Bvlgari.
Key Geographical Consumer
Markets:
Key Customers 1) US
2) Asia
3) Europe
(Source: Gem and Jewellery Export

Promotion Council of India and KPMG)
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4.2.2 Porters 5 Forces
The Porters 5 Force Model recognises the relative strengths of five competitive forces on the
fine jewellery industrys competitive intensity and profit potential.
Bargaining Power of Buyers (Low):
Largely fragmented across geographical locations e.g. US,

UK, Asia-Pacific.
High switching cost for consumer who pursue for
collections.
Highly differentiated designers collection.
Threat of Substitutes Bargaining Power of Suppliers

(Moderate-High): (Moderate):
Rivalry among competitors (High):
Asian consumer has a lower Tiffany & Co. is able to
brand loyalty as compared to Increase intensity of rivalry from vertically integrate and being the
US. direct competitors such as DeBeers supplier of its own, bargaining
LV, Cartier and Bulgari power of suppliers is relatively
Substitute luxury product low.
with cheap jewellery or Market maturity
limitation Diminishing supply of
diamonds, greater than 1 carat,
Seasonal sales trend also in the industry result in
depend on the disposable moderate-high bargaining power
income of customer of other diamonds supplier
Threats of New Entrants (Low):
New entrants faced:

High initial investment and startup costs
Limited distribution channels
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(i) Bargaining Power of Buyers (Low)
Fragmented Market: The consumers of fine jewellery are largely fragmented across
geographical locations e.g. US, UK, Asia-Pacific, thus their bargaining power is relatively
low.
Product Differentiation: Products in the fine jewellery sector are highly differentiated.
For example, affluent consumers pursue exclusive designs by Tiffanys renowned artists
Paloma Picasso and Frank Ghery; while the younger consumers are attracted to collecting
Charmed by Tiffany bracelet charms. These factors result in the inability for consumers
to switch to other products easily thus lower bargaining power.
(ii) Bargaining Power of Suppliers (Moderate)
Vertical Integration: In most cases, the bargaining power of suppliers in the fine
jewellery industry is strong due to the importance of diamonds as raw materials. As
Tiffany backward integrates to become its own supplier, bargaining power of suppliers is
reduced.
Other Suppliers Limitation: With global diamond jewellery sales soaring this decade,
the dwindling supply level may increase suppliers power towards jewellers for
profitability by raising prices.
(iii) Threat of New Entrants (Low)
High capital investment: The high initial start-up costs required to acquire high quality
diamonds serve as main entry barriers for new entrants. In addition, the capital investment
must be high enough to allow the new entrant to enter on a large scale to enjoy economies
of scale and compete cost effectively.
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Limited Distribution Channels: As Tiffany has access to extensive distribution channels,
new entrants lacking connections with jewellery distributors and retailers face limited
retail/ distribution channels thus they are unable to produce substantial threat.
Product Differentiation: Product differentiation plays an essential role in reducing
competition in the industry. New entrants face difficulties in competing with Tiffanys
strong brand heritage and unique trademarked design collections.
(iv) Threat of Substitutes (Moderate - High)
Low Brand Loyalty: Compared to the strong brand loyalty in US, Asian consumers have
a reputation for mixing and matching conspicuous brands rather than sticking to one, the
resultant low brand loyalty increases the threat of substitutes.
General Consumer Goods: In times of economic downturn, consumers might substitute
luxury fine jewellery and turn to costume jewellery, cheap jewellery or even imitations.
This is evident in the 5% decrease in net sales during the 2008 global financial crisis.
Counterfeit Goods: Counterfeit goods are imitation designs sold at a fraction of
Tiffanys prices. The proliferation of counterfeit goods and inability to eradicate them has
caused Tiffany to lose millions of dollars each year.
(v) Rivalry among competitors (High)
Direct Competitors: In view of Asias rising wealth and demand of jewellery, the large
number of firms consolidating in the market and offering more choices to consumers has
intensified the rivalry. The close competitors DeBeers LV, Cartier and Bvlgari compete
for international market share alongside countless other smaller national and international
players. The rivalry is so intense that Tiffany and its close competitors have adopted both
product differentiation and vertical integration.
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4.2.3 Implications
Due to high barriers of entry, there is minimal competitive threat from new entrants.
Therefore, Tiffany only needs to focus its efforts on dealing with the intense rivalry
amongst the direct competitors in the industry.
It can be foreseen that bargaining power of suppliers will increase as demand for
diamonds continues to rise and supply diminishes. In order to prevent suppliers from
squeezing them for profitability, Tiffany needs to find more suppliers and invest in mine
operations to reduce its dependency on a supplier.
Since counterfeit goods are inevitable and difficult to eradicate, Tiffany can counter the
threat of substitutes in three ways strengthening its brand positioning relative to
substitutes, building customer loyalty and raising switching costs of buyers.
4.3 Competitive Analysis
4.3.1 Current Situation
Competition is intensifying in the $70 billion diamond jewellery market as rising

wealth in Asia increases demand for fine jewellery (Forden 2006).
Demand will grow fastest in emerging markets like China and India. The trend will
benefit Tiffany because the nouveau riche will splurge on jewellery from well-known
brands to show off their wealth (Forden 2006).
Tiffany is one of the leaders within the jewellery industry (Blackburn 2004), in terms
of jewellery design, number of stores and worldwide sales.
The market in which Tiffany is operating is highly fragmented and provides much
opportunity for market share capitalisation.
Tiffanys primary competitors are specialty fine jewellers De Beers, Cartier, Bvlgari,
and increasingly from mainstream luxury labels with their own jewellery collections.
Tiffanys indirect competitors, such as Gucci Group and Coach, are angling to take a
significant bite out of the lucrative China market. Tiffany could lose its foothold in the
overseas market if it still does not effectuate its expansion plans (Dishman 2010).
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Despite the strong brand image which the Tiffany blue box portrays, the company may
dilute its luxury brand identity (valued at $3.64 billion) with its attempts to make the
blue box affordable for the middle income.
4.3.2 Immediate Issues To Be Addressed By Tiffany

Issues Justifications/Action by Tiffany
1. Who is Tiffany Due to the large variety of luxury goods and broad price range Tiffany
competing offers, Tiffany has different sets of key competitors depending on the
against? market segment it is operating in.
Direct competitors: Tiffanys closest competitors at the brand

competition level are De Beers LV, Cartier and Bvlgari.
Indirect competitors: However, as consumers in the Asian emerging

markets are fickle and can carry several high-end brands at the same
time, Tiffany will also face competition at the industry level from
firms such as Gucci and Coach.
2. What are their In view of the increasingly brand-conscious Asia market, Tiffanys
strategies? competitors are using various elements, all aimed at promoting brand
image:

Product differentiation strategy
Aggressive advertising campaigns
Celebrity endorsements
3. What strengths De Beers is the worlds largest diamond supplier thus it has a strong
and weaknesses supply of diamonds and has mining expertise. Its joint venture with
do they pursue? the worlds largest luxury retailer, LVMH Mot Hennessy Louis
Vuitton, serves as a formidable competitor for Tiffany. However, it
does not have a strong branding as Tiffany and lacks physical stores
internationally.
Cartier, the worlds largest jeweller, finds its strength by balancing

new and classic products and between accessible and high-end lines.
Its brand is highly recognised in the China and Hong Kong market.
Cartier and Bvlgari have thriving sales in high-end markets and
average purchases of $3400 while Tiffanys average customer
purchase is $180. However, Cartier and Bvlgari may expect channel
conflict from the wholesale division and lower brand loyalty.
Gucci and Coach have broad offerings, from handbags to jewellery,

to entice a wide consumer market. Both companies are poised to
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penetrate the China market with 50 stores each while Tiffany has
only 12. But both brands are not the top choice for fine jewellery as
they lack the prestige to appeal to the truly affluent.
4. What are their The risk of differentiation is that it is not sustained and competitors can
likely response imitate. Therefore, any action from Tiffany will prompt a swift response
patterns? from its competitors as most of these companies have similar
distribution channels, economies of scale and substantial financial power
to retaliate any aggressive moves by Tiffany. In this regard, Tiffany will
have to anticipate their responses prior to implementing a new strategy.
4.3.3 Information needed
Tiffany needs to conduct marketing research on the following:
Information Justifications
Market share by product groups To evaluate all major competitors and

develop product profiles
Range of products offered Find out the range of products competitors
have
Benchmark Tiffanys own strategies
Strengthen Tiffanys foothold on specific
key/niche markets
Competitors consumer profiles Look into competitors consumer base and
find out weaknesses
Penetrate into new segments where
competition has not yet ventured into and
become first movers
Others: To decide appropriate platform to compete
successfully and sustain the competitive
Marketing expenditure by
advantage
main categories
To anticipate likely responses to new
Objectives and strategies
strategies
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4.3.4 Competitive Positioning Map
The below chart identifies Tiffanys positioning within the fine jewellery industry, in relation
to companies competing directly and indirectly with varying prices, product scope and
competitive strategies.
4.3.4.1 Implications
(a) Tiffanys brand positioning needs to be maintained.
It is more lucrative for Tiffany to maintain its current market position, instead of aiming
for a higher positioning but dense market to compete closer with Cartier, Bvlgari and De
Beers.
The Universalist approach and middle- to high-end target market is wide and allows
Tiffany to capture more potential market share, but the caveat is that it may dilute the
luxury brand identity.
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Recommendations:
Tiffany needs to build brand image and maintain its roots of quality fine jewellery.
Tiffany needs to constantly innovate its product line to remain as the pioneer of fashion-
forward designs.
(b) A major problem is having the lowest average purchase amongst its competitors.
Tiffany is now middle-class compared to De Beers and Cartier.
While the average purchase of a Tiffany shopper is $180, only $30 more than in 1984, the
Cartier customer spends $3400.
Recommendations:
Tiffany needs to differentiate more and enhance the brand value in the consumers mind
to draw more revenue from them.
Identify a niche market to provide specialised products and services for, to charge a
higher premium and enhance brand image.
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4.3.5 Strategic Group Analysis
4.3.5.1 Implications
(a) Gucci and Coach are indirect but emerging threats.
These mainstream luxury labels are fast penetrating the China market with their fast
expanding number and size of stores.
Coach is even investing in intensive market research to determine the right product mix
for the Chinese market. Therefore, Tiffany could lose its foothold if it doesnt expand fast
and adapt to market demands.
Recommendations:
Tiffany needs to stop delaying and effectuate its plan to open 16 more stores this year.
Tiffany can also adopt a glocalisation strategy and adapt its products to appeal to the Asia
market.
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5. Internal Analysis
Internal Environment:
The internal environment can potentially create key assets and competencies upon which
strategic position can be built (Drummond & Ensor). The following section analyses
Tiffany & Co.s internal resources which are crucial to the success of a company.
5.1 Tiffanys Key Success Factors
Success Factor Description

Since 1837, Tiffany has been renowned for its famous
1. Strong iconic brand
designer collections and unique Tiffany Blue Box.
High reputation for excellent quality craftsmanship
2. Exclusive product quality
thereby creating value and trust for all Tiffany products.
Tiffany is able vertically integrate its channel thus
achieving economies of scale to lower production costs,
3. Economies of Scale
gain competitive advantage and fend off threats from
new entrants.
Tiffany has different product categories, with prices
4. Wide range of products
ranging from $30 - $1.5 million, to cater to more market
& product differentiation
segments and offering more choices to consumers.
Tiffany has 221 retail stores across US, Europe and
5. Extensive distribution Asia-Pacific and secured websites for online sales
channels and strong direct transaction. Access to direct distribution channels
sales capabilities translates to more sales opportunities, a better position
and a larger market share.
As a pioneer of design in the fine jewellery industry,
6. Constant strive towards Tiffany constantly revolutionises its product designs
innovation through collaborations with renowned designers to
generate consumer interest.
5.2 RESOURCES
5.2.1 Financial Resources
Financial resources concern the companys ability to pursue its chosen strategies e.g. capital
investments, distribution channels, production capacity and working capital, which will place
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great strain on the business finances. Such strategy requires detailed and careful management
from a financial perspective whereby the assessment of the financial position of Tiffany
constitutes an important aspect of the internal analysis which must be carried out to determine
the strengths and weaknesses of the organization to ensure strategy-fit capability.
As one of the leading players within the fine jewellery industry (See Figure 2), Tiffany is
a public company worth US$5.4 billion with $70 billion worth of market value which
explains its financial stability.
Tiffany is also well recognized for its high quality craftsmanship by the National
Jewellers 22nd Annual retailer Hall of Fame 2010
With continued expansion and brand building over the last decade, Tiffany has
experienced a steady 68% growth in net sales from $1610 million to $2710 million.
5.2.2 Human Resources
Tiffany recognises the importance of human resource and human capital investment in order
to sustain its competitive advantage. Therefore, the company strongly believes in
providing product, technical, leadership and professional development training for its
employees such as the Retail Management Associate Programme.
Additionally, tuition reimbursement and a forgivable loan program are also available for
employees who pursue continuing education.
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Employees are also given benefits such as:

Income Protection & Security
Financial Savings & Retirement Benefits
Rewards & Recognition
Personal & Professional Fulfilment
This elucidates the companys sincerity in building employee relations as well as honing their
life skills and well-being.
5.3 SWOT Analysis
The table below summarises Tiffany & Co.s Strengths, Weaknesses, Opportunities, and
Threats in the Asia market perspective.
STRENGTHS WEAKNESSES
1. Strong brand name and recognition: 1. Product assortment tarnishes its brand
Tiffanys leading brand name and image:
recognition, valued at $3.64 billion, is the Tiffanys short-term success of the less
strongest form of differentiation in the luxury expensive silver jewellery to appeal to the
goods market. middle class has alienated more mature,
affluent clients who now view Tiffany as an
2. High International Market Share: inexpensive, common brand. Once renowned
With the highest market share amongst its for its luxury brand, those in the know don't
direct competitors (See Figure 2), it means go to Tiffany for jewels anymore. It's for
that Tiffany products are well-known and tourists.'' (Rice, 1989)
well-received in the consumer markets. This
provides opportunity to charge premium 2. Low brand loyalty in Asia:
prices while enjoying economies of scale. Asian consumers have a reputation for
mixing and matching conspicuous brands
3. Distribution Strength: rather than sticking to one, this result in low
With retail sales presence of 221 stores brand loyalty towards Tiffany and low
internationally, Tiffany has strong direct average purchase.
sales capabilities that may be turned into a
primary driving force to build the brand. 3. Lack of adapting and appealing to the
Page 24 of 49
Asia market:
4. Broad range of products: Tiffany has failed to get much traction in
The broad range of offerings enables Tiffany China because its stores are too small (Forbes
to meet a wide range of customer needs by 2009). As Asians associate size of stores with
balancing between affordable and high-end brand prestige, Tiffany is paling in
lines. comparison to Louis Vuitton and Gucci
which have large flagship stores. In addition,
5. Product differentiation: Tiffany use of Caucasian models in its
High quality craftsmanship of jewellery and worldwide advertising campaigns does not
universally acclaimed designers collection connect with Asian consumers.
e.g. Paloma Picasso 4. Lack of mining expertise:
Tiffany only began to venture into the
6. Vertical integration: diamond business in recent years. This weak
Vertical integration allows Tiffany to gain a link has caused the company to write off up
high degree of control over its entire value to $50 million losses from investing in mines
chain, from sourcing diamonds to retailing in Canada and Sierra Leone (OConnell
the exclusively designed jewellery products. 2009).
Tiffanys wholly-owned subsidiary,
Laurelton Diamonds, supplies more than
50% of Tiffanys diamonds (OConnell
2009) thus effectively reducing the strong
bargaining power of typical diamond
suppliers.
OPPORTUNITIES THREATS
1. Continuous economic growth in the Asia 1. Diminishing diamond supply
Market: The soaring demand for global diamond
There has been a steady increase in the Gross jewellery this decade has led to a diminishing
Domestic Product (GDP in Asia-Pacific in diamond supply that may increase suppliers
the recent years (Euromonitor International, power to squeeze jewellers for profitability
2010). The rising wealth in Asia hence by raising prices.
indicates the demand will grow fastest in
emerging markets like China and India as
Page 25 of 49
more people achieve incomes that let them

splurge on fine jewellery and luxury goods. 2. Environmental and social impact of
mining
2. Increasing Internet usage and e- With the recent concerns over environmental
commerce: protections and cyanide contamination
With the increased numbers of Internet users affecting human health, there is increasing
in Asia surpassing that of Latin America, pressure on Tiffany to lead the jewellery
there is potential opportunity for Tiffany to industry to promote responsible mining and
expand its e-commerce in the region to establish a chain of custody for diamonds
complement retail sales. that may incur costs and create rumour mills.
3. Easing of trade barriers

The easing of trade barriers has led to a
3. Counterfeit goods:
reduction in manufacturing costs and
increased capital flow for international Counterfeit goods are imitation designs sold
business. Additionally, with bilateral trade at a fraction of Tiffanys prices. The
agreements and economic integration, these proliferation of counterfeit goods and
factors create lower-cost opportunities for inability to eradicate them has caused Tiffany
Tiffany to expand its operations in to lose millions of dollars each year (Orji
international markets. n.d.). In times of economic downturn,
consumers are tempted away by lower priced
4. Increasing demand for mens luxury:
alternatives counterfeit goods.
The fasts pace of growth for mens products
is especially noticeable in developing
markets, such as India and China where the
market is growing at a brisk pace of 25-35%
(Trefis 2010). It is believed that the rising
demand for mens luxury provides a
tremendous growth opportunity to Tiffany
given the lack of competition in the niche
market segment.
Page 26 of 49
5.3.1 Implications:
Having identified the strengths, weakness, opportunities and threats of Tiffany, Tiffany
should seize the growing Asia market opportunities and leverage on its core competencies
(strengths) e.g. brand recognition, product differentiation and quality craftsmanship, to
create new synergies with the proposed strategies in this report.
Tiffanys brand is both a strength and a weakness. The legendary jewellery brand has
strong recognition yet some affluent clients view it as inexpensive and common. As such,
Tiffany has to reinforce its high-end image as the essence of luxury.
Although Tiffanys Asia-Pacific sales figures have increased steadily by 12%, it has
neglected the unique needs and preferences of this increasingly affluent market. Failing to
integrate products according to the Asian preference could escalate the rivalry intensity in
the jewellery industry and shift competitive positions.
6 Problem Definition
Problem definition: "Every problem has a gift for you in its hands." - Richard Bach
After an analysis of the external and internal environments, Tiffany needs to determine
problem areas that can be turned into opportunities to achieve strategic competitiveness
through planned business strategies.
Main problems faced by Tiffany & Co.:
Brand image: Tiffany positions its brand as be associated with luxury and exclusivity.
However, the more mature and affluent consumers now view Tiffany as an inexpensive,
common brand.
Competition: Manage increasingly aggressive competitive pressures
Sales: Increase sales and number of outlets internationally
Product: Address cultural differences and meeting consumer wants across international
markets
Supply: Establish a stable diamond supply to reduce strong bargaining power of suppliers
Page 27 of 49
7 Development of Strategies
7.1 Target Market
With reference to the product-market scope, Tiffany needs to focus on specific demographic
market segments whose needs best match its offerings.
Generation X females, working young professionals, managers, executives and

businesswomen.
Couples and newlyweds with high dual disposable income of $5000 and above.
As Tiffany cannot penetrate all Asian countries at one go, the following GE matrix also helps
to identify more lucrative geographical market segments in the region which Tiffany would
have the potential and opportunity to expand its market share.
Market attractiveness (Measured by
High
China Singapore Vietnam
Hong Kong
Taiwan
Medium Japan India

comparable growth rates)
Low Australia Cambodia

New Zealand
High Medium Low
Competitive
Position
Screening and selection of specific markets to focus on is critical in order to prioritise the
allocation of resources:
Due to product adaptation costs, it is most efficient to prioritise according to similarity in

cultures to develop jewellery which can suit the group of markets
The countries targeted for market expansion and concentration of sales are also ranked
based on potential of consumer spending power, GDP per capita and business environment
Page 28 of 49
7.2 Objectives
Short Term Long Term
S1) To obtain 30% market share in the Asia L1) To remain as the global market leader in
fine jewellery market. the fine jewellery industry.
S2) To achieve market attention in the L2) To project a global brand image
engagement rings bridal market. associated with luxury fine jewellery with
exclusive offerings to both middle- to high-
S3) To achieve 10% increase in worldwide
end markets.
sales and 15% increase in Asia region sales
annually. L3) To change the attitude of consumers who
view Tiffany as an inexpensive, common
S4) To increase stock turnover to 1.2 times
brand to a specialist in designer collections
by establishing customer loyalty programs
and high-end diamond rings.
that promote repeat purchase.
L4) To attain sustainable growth in primary
S5) To attract Asian consumers with
target markets.
culturally adapted product offerings and
marketing communications. L5) Expansion of its markets through
opening of at least 20 international stores
annually.
Page 30 of 49
7.3 Ansoffs Product/Market Expansion Matrix
The strategic options available to Tiffany are summarised in the Ansoff Product/Market
Matrix, with indication of the strategies to focus on during the time frame stated.
Market Penetration (Ongoing) Product Development (Ongoing)
Standardization of retail stores outlook Product adaptation to cater to Asian

worldwide. cultural taste.
Increase number and size of stores in o Incorporating jade, pearl and gold
Asia. elements.
o Collaborating with Asian designers.
o Developing jewellery sets for new

generation wedding dowry.
Market Development (Now end 2012) Product Diversification (N.A.)
Setting up Specialty stores Currently not an applicable strategy for

Tiffany.
o Bridal niche market.
Niche market has been identified in Asia
o Improve overall sales of Engagement
rings by offering one stop products o Tiffany should place emphasis on
and services for focus differentiation,
weddings/anniversary. o Instead of venturing into new markets
and new product categories.
7.3.1. Market Penetration
Over the years, the various Tiffany stores have all taken on a different outlook with no
standardisation. To further enhance brand equity and image, Tiffany will standardise its
stores outlooks with a glass palace theme, to draw its roots as a premier jewellery
house and portray its luxurious and exquisiteness.
Mainstream luxury brands such as Gucci, Louis Vuitton and Coach are fast penetrating
the China market with their larger numbers of multi-flagship stores and wide array of
product offerings.
In addition to aforementioned strategies, Tiffany will expand not only the size of their
current stores, but to also expand the number of flagship stores all over Asia, placing
importance in various countries such as China, Hong Kong and Singapore.
Page 31 of 49
7.3.2. Product Development
Acculturate to cater to Asian market
As of 2009, Asia would approximately take up 56.3 percent of the worlds total
population (Internet World Stats, 2010). This serves as a large market for Tiffany &
Co. In able to cater to the Asian market, Tiffany & Co. has to assimilate the culture of
the Asian countries using product acculturation, yet retain its luxurious image through
brand standardisation.
With the Asian market as its main focus at present, Tiffany will adopt product
acculturation to deliver and satisfy its target consumers connection to their cultural
roots. As such, exquisite jewellery materials such as pearls, jade and white gold will
be incorporated into its current extensive product selection with significance to the
Japanese, Chinese and Indian cultures respectively.
To further enhance brand equity and generate trust, Tiffany will form collaborations
with various renowned Asian designers for the development and innovation of new
product designs that might be more suited to the Asian market.
To generate additional interest and gain favour from its consumers, Asian celebrities
will be engaged to endorse Tiffanys range of fine jewellery, or even the brand name
itself. Caucasian models have always been used in Tiffanys print ads, and the
engagement of Asian celebrities will better appeal to this market.
7.3.3. Market Development
Niche market to enhance brand image: After losing its lustre since Avon Products had
taken over its operations (Rice and Kretchmar, 1989), Tiffany have had problems
regaining its prestige and brand equity. To tackle this issue at hand, Tiffany needs to
identify a niche market to provide its specialised products and services to while
consequently charging at a higher premium and enhancing brand image.
Page 32 of 49
Bridal niche market: With reference to the bridal market boom over the recent years,
Tiffany can introduce specialty stores to cater to the bridal niche market, under the
brand extension Tiffany Romance. Its product offerings will cater beyond only
bridal jewellery, but also to gowns, dining ware, and various wedding arrangements.
7.4 Positioning Strategies
7.4.1 Current Problem

Tiffany positions itself as a brand of luxury and exclusivity but the affluent and mature
customers perceive Tiffany as a common and affordable brand.
There is a perception gap between what the management expects the brand to be and the
way customers see the brand.
7.4.2 Approach to Positioning A General Overview
The recommended approach is to maintain its current market position, instead of aiming
for a higher positioning but dense market to compete closer with Cartier, Bvlgari and De
Beers.
The Universalist approach and middle- to high-end target market is wide and allows
Tiffany to capture more potential market share.
Page 33 of 49
7.4.3 Positioning Strategies
Tiffany has to reinforce its high-end image in the fine jewellery market and reclaim its image
as the essence of luxury:
Constantly innovate its product line to remain as the pioneer of fashion-forward designs
Standardise retail store outlooks worldwide with Glass Palace themes to project a
consistent global brand image associated with romance, style, quality and luxury
Provide specialised products and services for the bridal niche market as a reminder that
this legendary brand introduced the worlds first engagement ring in 1886 and thus anchor
the brand recognition into this area of expertise
7.5 Product Scope
The following table suggests possible product-market segments matching for Tiffany. This
allows the development of strategic choices as to which product-markets are more lucrative
to target and serve.
Designer Diamond Engagement Sterling

Segments Watch Accessories
Collection Jewellery Rings Silver
Affluent Baby

Boomers
Gen X / Working
Adults/ Young
Professionals
Couples/Newly

Weds
Gen Y/ Students
Tiffanys wide product range caters to different consumer segments:

The more expensive range cater to the affluent baby boomers
The expensive and silver range suit the Gen X who can afford exclusive designs yet
may look for more affordable pieces from time to time.
Diamond rings, wedding bands and watches cater to the couples and newlyweds.
Page 34 of 49
There are lower-end silver jewelleries for the Gen Y as they are a big market with less
purchasing power.
7.6 Branding Strategies
As aforementioned, the main issue that Tiffany is facing now is that despite its efforts to
position itself as a luxury brand of prestige and exclusivity, it is only an affordable and
common jewellery brand in the minds of its consumers. Tiffany has carried and sold different
brands of jewellery from different designers over the span of time of its operations. This
serves as a problem for Tiffany as it does not sell only designs under its own name. The
luxury brand image has been diluted as Tiffany attempts to make the blue box accessible to
the middle income.
To overcome this feat, Tiffany has to reinforce its positioning in the consumers minds by
building on its brand image.
7.6.1 Product Differentiation Strategy
Exclusive merchandise will help not only in profitability, but also Tiffanys brand image
as nothing else is exactly like it, and the retailer is able to employ prestige pricingto
charge whatever the market can bear (Rice and Kretchmar, 1989).
Under the proposed product development strategy, Tiffany will design exclusive
jewellery collections catering to the Asia culture and taste. This unique product
differentiation incorporating Asian gems and precious metals with a global fine jewellery
brand will effectively set Tiffany apart from its competitors.
7.6.2 Aggressive advertising campaigns
As the main issue is to communicate to its affluent consumers that the Tiffany brand can
equal affordable luxury without diluting its elite image, the bulk of marketing and
advertising expenditures will be focused on the affluent customer.
Tiffany will employ the use of corporate image advertising which promote the following
brand attributes:
o A long-standing traditional American brand established since 1837.
Page 35 of 49
o High quality: Generated standards for silver, platinum, and gems both in America
and internationally.
o Active in Corporate Social Responsibility: Promotes responsible mining,
actively and publicly opposes inappropriate mine development and human rights
violation (Tiffany & Co., 2010).
Brand association
o It has to be established in its consumers minds that Tiffany offers only the best
quality, and has high standards for its materials. They should be able to associate
the brand with high quality fine jewellery.
o To leverage on the powerful image of its blue box to create an emotional
attachment with the customer that it signifies luxury, exclusivity, and romance.
o Tiffany Romance, a new bridal business segment will be introduced, to recapture
Tiffanys past glory as the jeweller who introduced the worlds first engagement
ring.
o The proposed new outlook for Tiffany stores worldwide to be portrayed as Glass
Palaces will convey the iconic brand as the worlds premier jewellery house.
o Celebrity endorsements in advertisements will also be used to contribute to this
brand association factor. Specifically in the Asia market, Asian celebrities will be
engaged.
Brand positioning
o Tiffany has to educate consumers about the superior quality used to fabricate its
fine jewellery, and that it is value for moneywhich is worth every cent that they
are paying.
o It has to be communicated to its consumers that its non-negotiable prestige pricing
is as such because of its nonpareil designs and its notable brand image.
Page 36 of 49
8 Evaluation of Strategic Options

The evaluation of strategic options for Tiffany & Co. considers the following:
8.1 Affordability versus Exclusivity
Tiffany now faces the difficulty of maintaining its elite image while trying to draw a wider
array of customers (Bongiorno, 1996), focusing on finding the balance between an image of
ready accessibility and elegant affluence (Rosen, Tunick, & Samuels, 2004). As it is
proposed that Tiffany can maintain its current market position to have a large customer base,
it needs to focus on strategies that can reinforce the luxury brand image.
Market development along with market penetration will be the major focus of the immediate
market strategies for the next 24 months, starting from August 2010. The reasons are:
Specializing in the bridal niche market will enhance customers perception by anchoring
the brand area into this area of expertise. Moreover, jewellery purchases are highest during
the bridal age range of 25-34 (Rosen et al, 2004) thus allowing Tiffany to draw more
revenue from this lucrative niche customer base and increase sales for its existing
products.
In order to improve the effectiveness of the market development strategy, market

penetration will take place concurrently because Tiffanys impressive 50 percent gain in
the Asia-Pacific market indicates customers are ready to buy they just need more
outlets (Dishman, 2010). Furthermore, indirect but emerging competitors are fast
penetrating the China market with their expanding number and size of stores. Tiffany
could lose its foothold if it doesnt expand fast enough.
Page 37 of 49
Once market development and market penetration are stabilised, Tiffany can turn its focus to
product development from August 2012 onwards:
Phased over a period of five years, Tiffany will conduct market research to understand the
culture, tradition, tastes and preferences of Asian consumers. In collaboration with Asian
designers, Tiffany can develop exclusive collections and bridal jewellery sets which
incorporate Asian elements like jade, pearls and gold. This product adaptation is part of a
transnational strategy that will improve Tiffanys competitiveness in the international
environment.
Thus the focus of our strategies would be:
MD
MP PD
Aug 2010 2011 2012 2013 2014 Aug 2015
Page 38 of 49
9 Implementation
Budget
Projected Costs for Proposed Strategies (S$)

Phase 1 Phase 2 Total Estimated Cost
(Dec 2010) (Dec 2011)
Standardisation of store
outlooks to resemble Glass 80 million 140 million 220 million
Palaces:
Commitment to Asia
Expansion: 40 million 80 million 120 million
Product Adaptation and

Development: 20 million 30 million 50 million
Market Research: 1.5 million 3.5 million 5 million
Marketing Promotion 4 million 6 million 10 million

Activities:
Total: 405 llion
Page 39 of 49
10. Evaluation and Control

10.1 Evaluation
A successful business plan needs to be both achievable and sustainable with evaluation of
current resources, core competencies and capabilities through the development of both short
term and long term commitments. In cooperation of the analysis of macro-environment and
micro-environment, evaluation and controls are to be accomplished to ensure Tiffany and
Cos future competitive advantage, they are as follows:
1) Refresh and redirect Tiffanys Vision and Mission in all regional outlets every 1-2 years
to ensure that the company is following the ever changing economy and consumers
preference.
2) Monitor accounts, financial and material inventory to ensure maximization of profit and
minimization of loses.
3) Constant review on advertising and marketing campaigns effectiveness to ensure the

positive movement from current to the desired brand position.
4) Engaged specialized economic and market analysts to research on current and future
direction of both Tiffany and competitors.
5) Conduct market surveys in every quadrant of the year e.g., customer satisfaction, market
perceptions, superiority on Tiffanys products to enhance customers relationships
management, customer loyalty and value.
10.2 Control
10.2.1 Balance Scorecard
The balance scorecard approach below aims to view Tiffanys overall strategies from four
key perspectives namely, a) Financial Perspective, b) Customer perspective, c) Internal, d)
Innovation and learning perspective to access and to ensure sustainable future profitability
through implementing strategies that strengthens Tiffanys positioning and achieving
competitive advantage over rivals.
Page 40 of 49
Focus Strategic Objectives Strategic Controls

Financial (F) F1: To achieve 10% increase Measure ROCE and gross
in worldwide sales and 15% profit to sales
increase in Asia region sales Cash flow
st
annually (1 result to be Net margin
obtained by December 2010) Volume growth rate
versus other direct and
F2: To obtain 30% market indirect competitors
share in the Asia fine Improve overall sales by
jewellery market by August offering one stop
2011. products and services for
weddings/anniversary in
bridal niche market.
Customer (C) C1: Continually improve Define share of segment
products value and product in targeted key markets
awareness by closing the Analyze shoppers
brand equity gap between the shopping pattern
customer perceived value and Standardization of retail
market value. stores outlook and
advance e-commerce to
C2: Improve customer create value
relationship management Generate interest and
(CRM) to gain value and gain favour from
trust especially in Gen X, consumers by engaging
young professionals. Asian celebrities to
endorse Tiffanys range
of fine jewellery and
C3: Product differentiation
brand name.
and innovation to achieve
Enhance brand equity and
market attention in the
generate trust through
engagement rings bridal
Brand standardization
market.
Page 41 of 49
C4: Product adaptation to and flagship stores.

attract Asian consumers with
With positioning
culturally adapted product
strategies,
offerings and marketing
Tiffany has to shift its
communications.
position to a higher
perceived value and
targeting a larger market
without eliminating
existing target market
Internal (I) I1: To remain as the global Inventory Management
market leader in the fine and compared to plan &
jewellery industry. output rate.
Assimilate the culture of
I2: Marketing to Asia market
the Asian countries using
I3: Improve and maintain product innovation and
product quality differentiation, yet retain
I4: Brand standardization its image through brand
standardisation.
Improve quality in
craftsmanship and overall
sales performance
Collaborate with various
renowned Asian
designers to create
products suitable for the
Asian market.
Learning & Growth (L) L1: Refresh Tiffanys vision Conduct employee
and mission every 2 years survey
L2: Restructure Tiffanys Product Development in
core competencies and skills Bridal niche market by
L3: Identify and improvise introducing specialty
Page 42 of 49
Bridal niche market stores
Identify potential of
consumer spending
power, via GDP per
capita and business
environment, to attain
sustainable growth in
primary target markets
China, Hong Kong,
Taiwan.
Expansion of its markets
through opening of
flagship stores of at least
20 international stores
annually.
Page 43 of 49
Appendices
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Appendix ii:
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What is the report about?

What is the report about?

What external factors are analyzed?

What external factors are analyzed?

BUS317 Strategic Management

BUS317 STRATEGIC MANAGEMENT

Group Case Study Report

Lecturer: Frankie Yee

Lecture day: Wednesday PM class

Due Date: 21 July 2010

3.1 Current Performance Assessment

3.2 Past Performance Assessment

Highlights of Tiffany & Co.s past performance:

1867: Tiffanys first international recognition at the Paris Exposition Universelle.

3.3 Past financial performance assessment:

Ratios Industry Average Calculation

4.1 PESTEL Factors

1. Cyanide contamination affects

2) Pressure from Government on Environment: With the recent concerns over

2) Increased consumer spending: As a result of the aforementioned factor, there is an

4) Economic integration (Globalisation): The reduction in trade barriers and

2) Evolving demographic markets: According to the Population Reference Bureau (2010),

1) Environmental and social impact of mining industry: Cyanide contamination affects

1) Predominance of opportunities: Tiffany can leverage on its core competencies and

4.2 Industry Analysis

4.2.1 Industry Overview

Value Market worth $70 billion.

Worldwide jewellery sales of $185 billion.

(Source: Gem and Jewellery Export

4.2.2 Porters 5 Forces

fine jewellery industrys competitive intensity and profit potential.

Bargaining Power of Buyers (Low):

Largely fragmented across geographical locations e.g. US,

Threat of Substitutes Bargaining Power of Suppliers

Threats of New Entrants (Low):

New entrants faced:

(i) Bargaining Power of Buyers (Low)

to switch to other products easily thus lower bargaining power.

(ii) Bargaining Power of Suppliers (Moderate)

jewellery industry is strong due to the importance of diamonds as raw materials. As

profitability by raising prices.

(iii) Threat of New Entrants (Low)

of scale and compete cost effectively.

Limited Distribution Channels: As Tiffany has access to extensive distribution channels,

Product Differentiation: Product differentiation plays an essential role in reducing

strong brand heritage and unique trademarked design collections.

(iv) Threat of Substitutes (Moderate - High)

resultant low brand loyalty increases the threat of substitutes.

General Consumer Goods: In times of economic downturn, consumers might substitute

Counterfeit Goods: Counterfeit goods are imitation designs sold at a fraction of

caused Tiffany to lose millions of dollars each year.

(v) Rivalry among competitors (High)

product differentiation and vertical integration.

amongst the direct competitors in the industry.

operations to reduce its dependency on a supplier.

threat of substitutes in three ways strengthening its brand positioning relative to

substitutes, building customer loyalty and raising switching costs of buyers.

4.3 Competitive Analysis

4.3.1 Current Situation