Main Issues in Temple and Websters General Environment - Case Study Example

Temple and Webster Case Analysis [Author Name(s), First M. Last, Omit Titles and Degrees] [Institutional Affiliation(s)] Author Note 1.0. Introduction The Internet has eased a great part of our lives. Most particularly, the idea of online shopping has revolutionized commerce and trading activities around the globe. It has expanded boundaries for entrepreneurs, retailers and suppliers of products that would have otherwise gone unnoticed. Taking a look at Australia, one cannot help but notice Temple & Webster. The establishment is a members-only online shopping club, specifically offering products and services in terms of lifestyle products, home wares, art, furniture, gifts, and home deco r(Temple & Webster, 2015). It also avails to its club members; information on the designers’ background stories, sharing their inspirations and future aspirations. The firm’s success cannot be underestimated. It therefore makes a rather suitable choice for a case study on issues of strategic management. 2.0. External Analysis For a company to effectively compete and grow, it must formulate its strategies carefully to counter the impacts of competitor’s strategy as well as other external forces (Hitt, Duane &Hoskisson, 2012). There are many tools used to evaluate this environment, these include: porter five forces model, SWOT analysis, Space matrix, CPM etc. SWOT evaluates a firm’s internal strengths and weaknesses against the external opportunities and threats (Hutt & Speh, 2012)). 2.1. Main Issues in Temple & Webster’s general environment i) Privacy and Security Concerns With the onset of E-business, security became a major concern for organizations. In this case, e-business is defined as any commercial activity that utilizes internet technology to help businesses streamline processes, improve productivity and increase efficiencies (Hartman, Flinn, & Beznosov, 2002). The once peaceful mindset that we as human beings had placed in our thoughts has become increasingly vague, as threats rise on a daily basis. Businesses increasingly faced new demands from the challenges posed to their existence. Despite the precautions taken by the company, the challenges of setting up a secure package are evident. ii) Copyright Infringement Expansion of the global range of customers has yielded copyright cases worldwide. In the field of design, it is no surprise to find that many products and technologies have been patented in other countries. Therefore, exploration of foreign markets yields problems traversing a wide range of regulations. Furthermore, the company is experiencing a major problem from others institutions seeking to copy its business model. For instance, Harvey Norman’s Gerry Harvey, claimed in 2014 that the company was extremely similar to his(Hurley, 2013). iii) Limitation with the Business type As an online business, it becomes hard to virtually market all features of a product via virtual means. This is a problem inherent in most online businesses as companies try to become as close to their consumers as possible.(Hutt & Speh, 2012) Furthermore, there exist consumers who only comfortably purchase a product a product after viewing it in first person. 2.2. Industry analysis for Temple & Webster Currently, the company’s main competitors are IKEA and Ebay Australia(Hurley, 2013). However according to the Business Review Weekly Periodical, the number of visits to the company are on upward trend; already surpassing those of IKEA. 2.2.1. Bargaining power of suppliers Temple & Webster has a very high bargaining power in comparison to its suppliers. Currently, the company deals with over 300 suppliers. Its inventory management system has propelled it higher in that aspect, constantly changing its suppliers, and avoidance of overly large stocks to avoid overdependence on them(Mitchell, 2014). Suppliers are chosen in terms of their competitiveness. 2.2.2. Bargaining power of customers Through a personalized marketing strategy, Temple & Webster has managed to forge ties with consumers. In this case, it has gained a large number of loyal customers although not to the level of Ebay, one of its chief competitors. It has also initiated diversification strategies that will serve it better in gaining market share. Through personalized marketing strategies, the company is on its way towards securing a significant market share in its docket. Furthermore, routes for expansion are increasingly becoming clear as the research cites the business as one that can expand exponentially over the next decade (Hurley, 2013). 2.2.3. Threat of new entrants Temple & Webster can be massively affected by new entrants in the market. As of current, its main strategy to counter these new threats is investing in research, development, and diversification of their product lines. In terms of Brand loyalty, the company has over the years invested heavily in its marketing and advertisement campaign and managed to keep competitors at bay. A new competitor will struggle with these financial requirements thus making entrance very hard. 2.2.4. Competition from established rivals The online marketing industry has grown in size, with previously slumped companies rising above and dominating various market segments. Temple & Webster has a chief task of coming up with counter-strategies that will completely eliminate these rivals out of the race. The company focuses on the area of price competition, in which it has managed to garner a fair share of the market given their goods are affordable. In its current market niche, the company has exerted dominance. However, diversifying to other diversified European and US markets will see it face increased competition from other more sophisticated online marketing companies(Mitchell, 2014). Furthermore, there exists no probability of offline businesses being eliminated in the near future. 2.2.5. Competition from substitutes Results: The threat of new entrants - medium pressure The intensity of competitive Rivalry- medium pressure Threat of Substitute products- medium to high pressure Buyers’ bargaining power- low pressure Suppliers’ bargaining power- low pressure 3.0. Internal Analysis The strength, weaknesses, opportunities and threats is one of the strategic management tools used to evaluate a firm’s internal strength and weaknesses against the opportunities and threats presented by the external environment (Cullen & Parboteeah, 2014)The SWOT analysis for Temple & Webster is shown below Strengths 1.leading online store in Australia 2.Financial stability 3.E-commerce reduces cost of product 4. Market leader in low prices 5. Good service delivery to customers 6. Very efficient supply, production and distribution channels 7. Direct sales to customers reduces costs and enables them respond to customer wants 8. Ability to develop new technology fast 9. Visionary and experienced leaders 10.Good inventory control 11 Adequate corporate social responsibility and community involvement 12. Recognized brand 13. Ability to produce customized product Weaknesses 1. Lack of employee focus 2. Very limited product range 3. Very few inventions, innovations and patents 4. Products and services are not differentiated from those of other competitors 5. Reliance on extensively wide range of from other countries 7. Does not invest heavily on research and development as compared to competitors Opportunities 1.Large global market for the company’s products and services 2. Ability to reach more customers through the internet 3. Online commerce is expected to increase Threats 1.Change in consumer demand from online to offline preferences 2. Very high competition from the main players and other small firms 3.Declining/ stagnating market 4. Ability of other companies to substitute their services 5. Rival technology and innovations from competitors Using the Resources model, it is evident that the firm possesses tangible and intangible resources.- i) Tangible Resources a) Financial Resources The company makes a turnover of about $100,000 daily this trend has significantly raised its debt to equity ratio, credit rating and the fraction of net cash in capital expenses b) Physical Resources The company has a main strength of having established itself in an environment that has accommodated its gradual growth. This is seen in the high value of its assets and operations as a whole ii) Intangible Resources a) Technological Resources The firm has excelled in pioneering online marketing technology in Australia. Its technological resources are up to the required standards. However, the company is still prone to competition emanating from competitors such as IKEA and E-bay. It therefore engages its staff in intensive research and development to keep itself updates with technological developments. b) Human Resources The company boasts highly qualified personnel; having over 50 employees at the firm. However, future expansion may cause the company to suffer due to lack of innovative staff in the industry. c) Reputation On doing a thorough internet search, the company turned out to be devoid of any scandals. The company therefore has a clean record thus highly reputed in the Australia market. 4.0. Strategic Analysis From a strategic perspective, the company has established a number of strategic objectives to follow over the next years. An analysis of the strategies is as follows: a) Diversification On July, 30, 2015, T & W acquired the Australian branch of Wayfair, a Northern American company headquartered in the US. Temple & Webster has focused on strategies that involves product and service improvement among, investing in research and development, price reduction, technological advancement, customer satisfaction and use of E-commerce to boost their market position. This strategy will also see the company expand into Europe and North American markets, It postulated that this move will see it yield additional profits and gradual dominance. b) Focus on innovation With the market environment rapidly changing, many of Temple & Webster’s competitors are busy round the clock looking for means to come up with new technological innovations. T & W’s strategy is usually to recreate and reengineer sales and marketing. If T & W would well focus of research and development activities, it may be able to produce and introduce products into the market, having the first mover advantage. iii) Revive Differentiation Advantage This approach calls upon the company to go back to the basis. This means that it should revisit and use the concepts of differentiation that it started with during its establishment (Sowell, 2006). A number of improvements can be made. These include; a) Design of new marketing campaigns b) Expansion of turn-key solutions c) Critical selection of suppliers d) Enhancement of customer service c) Additional strategies i) Employee training and empowerment: The Company trains employee on major competence areas. They look for qualified teams that can develop new technologies ii) Invest in rese*arch and development (R&D): to develop new products, a company must invest heavily on R&D iii) Diversify products: the company should venture into the other markets 5.0. Recommendation It is suggested that the final alternative, in which T & W reinvigorates its differentiation strategy, be implemented. With this strategy, the company can be able to focus a large percentage of its resources on a venture that will ensure that it actually attains a distinctive competitive advantage internationally. 6.0. Conclusion The online marketing industry has been growing at an alarmingly rapid rate. There has been the experience of clienteles come and go, classy and cheap, and request provisioning or decommissioning. To succeed in successful management, it is paramount to consider the key drivers of cost without further increasing complexity. The report recommends that T & W apply a Revival Differentiation Advantage strategy to attain a competitive advantage in the competition filled prospective market. This would involve the process of specializing on its core product, in this case the furniture, improving customer services to surpass those of competitors, using other methods of payment to open up access to developing areas and finally decrease the gap existing between the intended value and perceived value in its products.   References Akhoundi, M., & Nezakati, H. (2013). Globalization and Consumer Behavior: Global Marketing Strategies implication Homogeneity and Heterogeneity (Preliminary Study). .Journal of Social and Development Sciences, 4(1), 1-5. Cullen, J., & Parboteeah, K. (2014). Multinational management: A strategic approach (6th ed.). Mason, OH: South-Western. DyReyes, J. (2008). Strategic Project Management:Aligning Strategic Business Objectives with Project Management Strategy. Portland,: University of Oregon. Fairholm, M. R. (2009). Leadership and Organizational Strategy. The Innovation Journal: The Public Sector Innovation Journal,, 14(1). Hartman, B., Flinn, D. 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