Staples company
- The company’s internal strengths and weaknesses
Strengths refers to something that is capable of implicating an organisation positively , in that it adds value and provide to an organisation a competitive advantage. It involve the tangible assets like the equipment, capital available, credit, loyal customers who are established, information systems and good channels of distribution. Weakness refers to those characteristics relating to a products or service or things in the organisation that affect its growth negatively or places the organisation at disadvantage when compared with their competitors (Hill, Charles, and Jones, 369). Staples strengths stems from a management team that is highly competent and experience in the supply business, which was gathered by the founding investor Stemberg. While creating the company, he turned to the managers he knew and who had risen through the ranks quickly in the retail business like Myra Hart from Jewel Corporation, who was later to become the Vice president of Merchandising, Henry Nasella from Star Market who later assumed the presidency of the company(Hill, Charles , and Jones,593. Stemberg understood this as the first strong because for the company to succeed in implementation of the established plans it needed experienced management. The training of the staff was also a stronghold for the company since they could give advice to the customers when asked. Another strength of the company was the plan to offer a broad variety of merchandise in the setting like that of a warehouse but whose prices were discounted deeply so that the small businesses that were generally overlooked by the manufactures, who also did the supply work, could be catered for (Hill, Charles, and Jones,593).
The company’s management team also decided to employ the used of the right information system which allowed a close tracking of sales and stock at individual item’s level and simultaneously provide the gross profit on each item that was sold and the adjustment of the merchandising mix appropriately. This differentiated the company from other existing retailers majority of whom lacked the means of calculating profit on every item sold but cold only do the calculation for the average gross profit for a range of products. This system was also useful for collection of customers’ data at the selling point which would provide a lot of assistance in market research and marketing efforts to customers. In addition is the adoption of an accounting system that would could , apart from calculating the average profit margin , it would ensure that inventory turnover would be for at the minimum of 12 times per year because this would enable Staples to reduce on the requirements of working capital (Hill, Charles , and Jones,595).
The strength of the company also stems from the establishment of the independent unit of business found within the company which handles the telephone or mail order together with delivery services. This establishment helped to serve the company’s already established customers owing small businesses and could also be useful in serving other clients. Through this establishment, the company was able to acquire various stationary firms and keep the owners of the business as their employees so as to utilize their vital relationship that they had established with key accounts with big firms like Ford (Hill, Charles, and Jones, 600). The company then established a stable brand image, product line, and accounting and computer systems for all the small stationery companies that it acquired. This serve as a major strength for the company. The efficient distribution network is also an important strength for the company which has helped in deal with the increase in the sales volume and thereby assisted in reducing the cost of operations through such a channel. The company also used a regional distribution network for the purpose of holding a stock of 15,000 SKUs for delivery in comparison with 8000 SKUs in a normal store (Hill, Charles, and Jones, 600). The inclusion of Staples.com to Staples Direct, which was web-based element added a lot of value to the organisation as seen in the case where the customers could access a lot of 130,000 SKUs of which large portion was delivered, with Staples playing the role of consolidator and intermediary, directly from the manufactures. This way this channel served as an internal strength of the company. Another internal strength came in the way of acquiring Quill Corporation which had differentiated itself through a thorough and outstanding customer service. The company thus decided to have Quill keep its original organization and thus it was set up as a separate division within the commercial and contract unit of the business (Hill, Charles, and Jones, 600).
An addition internal strength stemmed from the adoption of a new store design that had different design – Dover- from that of its rivals, OfficeMax and office Depot. This new design gave the customers a different experience while shopping since it was based on a customer centric philosophy referred to as “Easy”. It is meant to give the customers an easy shopping experience as much as possible through the store’s layout and design that emphasized a selling strategy that will make sure that the items are not out stock at any time by a greater in-store customer service. The strength comes arises from the fact that this layout allows the customer to move in and out of the stores as conveniently as possible (Hill, Charles, and Jones, 601). Moreover, the company has invested in an upgraded level of knowledge for its sales associates and improved the management process of its supply chain. The strength is thus obtained from the better information system, to have good connection between its suppliers and the extensive application of the cross-docking techniques at various centres of distribution. Due to these strengths the company has been able to increase its inventory turnover, has decreased its inventory holdings and has managed to improve its customer’s in-stock experience. These strengths were further enhanced by the decision of the new CEO, Ron Sargent, not to engage in further opening of new stores after they had reached 75 a year. The slowdown allowed the company to direct its focus and attention towards the efficiencies in internal operations. The rationalisation of the product lines within the stores further enabled the company to cut down on stock of those items with little margins like personal computers. These strengths were very instrumental in putting the company in a strong position that enabled it to face its competitors head on even while venturing in the international market like Canada and European countries (Hill, Charles, and Jones, 601).
The major weaknesses of the company stems from the stated need to improve on the supply chain process, which involves the better use of the information system in order to better connect the suppliers to the distribution centres. There is also the need to level of knowledge among the company’s sales associate. Another weakness is the exclusion of various expenses from the cost structure which the new CEO identified as needing to be brought on board (Hill, Charles, and Jones, 601).
- The nature of the external environment surrounding the company
The external environment refers to the factors that are outside an organization but which influence the ability of the firm to function effectively. These factors consist of the ones the efforts of the organization such as marketing can influence and others that are outside its control. The external environment of staples is quite dynamic as seen in the changing demographic trends, the customers’ needs and specifications, the changing status of the United States economy and the change in competition strategies. The dynamism is clearly shown in the market growth whose driving factor according to research was various demographic trends that were quite favourable. The economy of the United States is also dynamic since at the time the company was being created, it was recovering from the recession that hit the country in the early- 1980s and late-1970s and growth was very strong. Fast forward, the growth receded in the period of 2007-2008, which also so the company’s sales decline (Hill, Charles, and Jones, 592). The technological environment is also show as changing with the introduction of new personal computers, faxes, printers, small copiers, that was initially the driving force for the demand for office supplies but later the change in technology touched on the improvement of the information systems and the internal control systems (Hill, Charles, and Jones, 592).
The competition environment initially include small firms, wholesalers, retailers and the manufacturers who also did the work of supplying products to the final consumers. The competition later intensified with the emergence of other large scale stores such as Office Depot that later became the big rivals of Staples. The nature of the completion became stiff to the point of engaging in price wars, which had a detrimental effect on the performance on the rival firms involved profit wise. The expansion of the company was hindered by lack of available land for expansion which forced the company to result to taking defensive aspects through bidding for various prime sites to wade of competitors (Hill, Charles, and Jones, 592). The nature of financial market made it easier to access capital and credit.
Question 5
The first reason why the company was able to raise enough capital was the presentation of a business concept that was easily understood through a well thought and applicable business plan. The concept was quite straightforward and had ways of implementing it. The plan was aimed at providing a variety of merchandise in the setting of a warehouse that would give items at prices that were greatly discounted. This differentiated the company plan from the other retailers and this convinced the venture capitalist that the company had good prospect of entering the market strategically. Furthermore, a well carried out market research played a major role in convincing the potential financiers to buy the idea and offer the credit. The market research showed that the existing suppliers focused their attention on the larger consumer firms and largely ignored the small and medium consumers, which was enough proof that there was unsatisfied market. Moreover, a team of reputable and experienced management team convinced the financiers that the business plan was well thought out (Hill, Charles, and Jones, 601).
Works Cited
Hill, Charles W. L, and Gareth R. Jones. Strategic Management. Cengage Learning, 2012. 590-602
