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
5
1.2 RESEARCH QUESTIONS
6
1.3 METHODOLOGY
6
2 THEORETICAL BACKGROUND
7
2.1 STRATEGIC MANAGEMENT
7
2.1.1 PORTER'S GENERIC STRATEGIES
14
2.1.2 GENERIC STRATEGIES AND COMPETITIVE ANALYSIS
19
2.1.3 THE VALUE CHAIN CONCEPT
21
2.1.4 COMPLEMENTARY STRATEGIC MANAGEMENT TOOLS
23
2.2 GROWTH STRATEGIES
24
2.2.1 DIVERSIFICATION
24
2.2.2 INTERNATIONALIZATION
26
2.2.3 DIVERSIFICATION VS. INTERNATIONALIZATION
30
2.3 TOOLS USED FOR ANALYSIS
31
3 MULTIPLE CASE STUDY
32
3.1 JEWELRY RETAIL INDUSTRY
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3.2 JEWELRY RETAIL INDUSTRY VALUE CHAIN
33
3.3 CASE COMPANIES
37
3.3.1 TIFFANY & CO.
37
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
53
3.4 CROSS-CASE ANALYSIS
58
3.4.1 SUMMARY ON CASE COMPANIES STRATEGIES
58
3.4.1.1 Tiffany & Co.
58
3.4.1.2 Zale Corporation
61
3.4.1.3 Blue Nile
62
3.4.1.4 Signet Jewelers
65
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
85
5 CONCLUSIONS
90
REFERENCES
93
2
BOOKS & PUBLICATIONS
93
ELECTRONIC SOURCES
94
APPENDICES
101
APPENDIX 1. COMPANIES' KEY FINANCIALS
101
APPENDIX 2. COMPANIES' AVERAGE KEY FINANCIAL RATIOS
102
APPENDIX 3. COMPANIES STRATEGIC BUSINESS AREAS
103
APPENDIX 4. COMPANIES' DIVERSIFICATION 2005-2009 (MAIN SBA'S)
104
APPENDIX 5. COMPANIES' FOREIGN SALES PERCENTAGE
105
3
FIGURES
FIGURE 1. The Five Forces of the Competitive Analysis and their interrelation
12
FIGURE 2. The Strategic Positioning Model
15
FIGURE 3. Porter's Five Generic Strategies according to David
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FIGURE 4. Generic Strategies and Industry Forces
20
FIGURE 5. Porter's Value Chain
21
FIGURE 6. Ansoff Matrix
25
FIGURE 7. Jewelry Retail Industry Value Chain
34
FIGURE 8. Tiffany & Co.'s Foreign Sales Percentage 2005-2009
74
FIGURE 9. Zale Corporation's Foreign Sales Percentage 2005-2009
75
FIGURE 10. Blue Nile's Foreign Sales Percentage 2005-2009
76
FIGURE 11. Tiffany & Co.'s Foreign Sales Percentage 2005-2009
77
FIGURE 12. Profitability: Average RG vs. Number of SBA's
79
FIGURE 13. Profitability: Average OPM vs. Number of SBA's
80
FIGURE 14. Profitability: Average ROA vs. Number of SBA's
81
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
72
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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