STRATEGIES OF MULTINATIONAL COMPANIES - Theseus

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GROWTH STRATEGIES OF MULTINATIONAL COMPANIES

Jewelry Retail Industry

Val?rie Haapalainen Nan Skog

Bachelor's Thesis February 2011

Degree Programme in International Business Business and Services Management

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Author(s) HAAPALAINEN, Val?rie SKOG, Nan

Type of publication Bachelor?s Thesis

Pages 107

Confidential

( ) Until

Title GROWTH STRATEGIES OF MULTINATIONAL COMPANIES Industry: Jewelry Retail Industry

Date 07022011

Language English

Permission for web publication ( x )

Degree Programme Degree Programme in International Business

Tutor(s) AKPINAR, Murat

Assigned by

Abstract

This thesis investigates business and growth strategies of 4 multinational companies within the jewelry retail industry. The main objective is to identify whether a company's performance is determined by its growth strategy or not.

The 4 formulated tasks for the research are (1) to understand what kind of business models and strategies global jewelry retailers pursue, (2) what growth strategies global jewelry retailers pursue and (3) if there is a link between a company's growth strategy and its profitability. Finally (4) the findings are reviewed on their transferability to other industries. Each task represents a research question to be answered.

To fulfill the tasks and reach the objective, the case companies' strategic business models and growth strategies are investigated in the first part of the thesis. For the investigation and analysis Porter's competitive analysis and generic strategies as well as the concepts of diversification and internationalization are applied and the first findings generated.

In the second part the generated findings are related to each company's revenue growth, operating profit margin and return on assets for the chosen time period 2005-2009 to assess each company's profitability and derive the findings to achieve the main objective.

The findings regarding the business models and growth strategies pursued are that all of them are based on Porter's generic strategies as well as internationalization and diversification but there is no specific preference given to any of the strategic elements. The main finding of the thesis is that growth strategies do to not have a significant positive or negative impact on the overall profitability. In the context of strategic management they can support in a positive or negative way the strategic decisions, but to assess a company's profitability a broader range of indicators has to be considered, as for example the business model and strategy as well as the market. This perception and approach is found to be valid for other industries and businesses.

Keywords Multiple Case Study, Cross Case Analysis, Retailing Industry, Diamond Jewelry, Retail Jewelry, Generic Strategies, Growth Strategies, Internationalization, Diversification, Competitive Analysis, Profitability, Strategic Management , M.E.Porter, I. Ansoff

Miscellaneous

1 TABLE OF CONTENT

1 INTRODUCTION

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1.1 INTRODUCTION TO JEWELRY RETAIL INDUSTRY

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1.2 RESEARCH QUESTIONS

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1.3 METHODOLOGY

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2 THEORETICAL BACKGROUND

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2.1 STRATEGIC MANAGEMENT

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2.1.1 PORTER'S GENERIC STRATEGIES

14

2.1.2 GENERIC STRATEGIES AND COMPETITIVE ANALYSIS

19

2.1.3 THE VALUE CHAIN CONCEPT

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2.1.4 COMPLEMENTARY STRATEGIC MANAGEMENT TOOLS

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2.2 GROWTH STRATEGIES

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2.2.1 DIVERSIFICATION

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2.2.2 INTERNATIONALIZATION

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2.2.3 DIVERSIFICATION VS. INTERNATIONALIZATION

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2.3 TOOLS USED FOR ANALYSIS

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3 MULTIPLE CASE STUDY

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3.1 JEWELRY RETAIL INDUSTRY

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3.2 JEWELRY RETAIL INDUSTRY VALUE CHAIN

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3.3 CASE COMPANIES

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3.3.1 TIFFANY & CO.

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3.3.2 ZALE CORPORATION

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3.3.3 BLUE NILE INC.

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3.3.4 SIGNET JEWELERS LIMITED

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3.4 CROSS-CASE ANALYSIS

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3.4.1 SUMMARY ON CASE COMPANIES STRATEGIES

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3.4.1.1 Tiffany & Co.

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3.4.1.2 Zale Corporation

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3.4.1.3 Blue Nile

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3.4.1.4 Signet Jewelers

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3.4.2 COMPANIES' KEY FINANCIAL RATIOS

67

3.4.3 LEVEL OF DIVERSIFICATION

70

3.4.4 LEVEL OF INTERNATIONALIZATION

73

3.4.5 ANALYSIS AND FINDINGS

77

4 DISCUSSION

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5 CONCLUSIONS

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REFERENCES

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BOOKS & PUBLICATIONS

93

ELECTRONIC SOURCES

94

APPENDICES

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APPENDIX 1. COMPANIES' KEY FINANCIALS

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APPENDIX 2. COMPANIES' AVERAGE KEY FINANCIAL RATIOS

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APPENDIX 3. COMPANIES STRATEGIC BUSINESS AREAS

103

APPENDIX 4. COMPANIES' DIVERSIFICATION 2005-2009 (MAIN SBA'S)

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APPENDIX 5. COMPANIES' FOREIGN SALES PERCENTAGE

105

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FIGURES

FIGURE 1. The Five Forces of the Competitive Analysis and their interrelation

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FIGURE 2. The Strategic Positioning Model

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FIGURE 3. Porter's Five Generic Strategies according to David

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FIGURE 4. Generic Strategies and Industry Forces

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FIGURE 5. Porter's Value Chain

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FIGURE 6. Ansoff Matrix

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FIGURE 7. Jewelry Retail Industry Value Chain

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FIGURE 8. Tiffany & Co.'s Foreign Sales Percentage 2005-2009

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FIGURE 9. Zale Corporation's Foreign Sales Percentage 2005-2009

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FIGURE 10. Blue Nile's Foreign Sales Percentage 2005-2009

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FIGURE 11. Tiffany & Co.'s Foreign Sales Percentage 2005-2009

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FIGURE 12. Profitability: Average RG vs. Number of SBA's

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FIGURE 13. Profitability: Average OPM vs. Number of SBA's

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FIGURE 14. Profitability: Average ROA vs. Number of SBA's

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FIGURE 15. Profitability: Average RG vs. Level of Internationalization 2005-2009 83

FIGURE 16. Profitability: Average OPM vs. Level of Internationalization 2005-2009 83

FIGURE 17. Profitability: Average ROA vs. Level of Internationalization 2005-2009 84

TABLES

TABLE 1. Key Financial Ratios of Tiffany & Co.

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TABLE 2. Key Financial Ratios of Zale Corporation

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TABLE 3. Key Financial Ratios of Blue Nile

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TABLE 4. Key Financial Ratios Signet Jewelers Ltd.

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TABLE 5. Case companies' product category: Item

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TABLE 6. Case companies' product category: Related Services

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TABLE 7. Case companies' product category: Unrelated Services

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TABLE 8. List of SBA's per case company

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TABLE 9. List of related SBA's per case company

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TABLE 10. Case companies' number of SBA's 2005-2009

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