Essay on Internal Analysis of Martha Stewart

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Essay on Internal Analysis of Martha Stewart

  1. Key Result Areas(Areas critical for the firms success).

The key result areas that profoundly appear in the case study. One of them is when Patrick helped Martha Stewart acquire control of her company from Time Inc. in 1997.  This  was a timely buy and it is what can be said to have led to the formation of Martha Stewart Living Omnimedia. Why this was timely is because it was done in the very midst of a shift in trend amongst retailers a shift that was impartial to individual items but particular to an entire category of good and what makes this all very critical is that Martha Stewart took advantage of this shift in the trade environment and to the benefit of her company she offered what the retailers needed at the time. The timely buy from Time Inc. is a key stepping stone to the success of Martha Stewart’s company.

Essay on Internal Analysis of Martha Stewart

Another success for Stewart was the economic gain brought about by Patrick’s negotiation with Kmart a top retailer store in the United States to sell at a country wide level Martha Stewart branded housewares and linens. This partnership generated big profits for MSO and left an undeniable mark on the merchandising. It left an undeniable mark on the whole industry as a whole. The economic gain that surmounted from this partnership was a key to many of the future ventures of MSO. It gave MSO the financial leverage it needed for future trade insights and investments. Financial growth for the MSO is a key pillar and cornerstone for its success then and all its future successes.

 

So as to put her business at a better competitive level Martha Stewart did one of the best marketing ideal, she set a TV show in which she had her own kitchen and cooked products from which she got from her garden. The perfectionist mentality that she had made it possible for customers to trust her brand. And as it is in the business world a trusted commodity will often times sell more than another commodity that has an even measure of quality and even quantity. And by doing this she became the nations face of the preeminent female brand name, she had built herself a name that could stand over time and even be compared to commodities such as Calvin Klein, Tommy Hilfiger and her quote and quote personal role model Ralp Lauren.

 

Another key result area in the firm was the image that Martha Stewart had made of herself the fan base she had accumulated through her endeavors, this is what made it possible for some of the part for her company to have such a large customer base, a customer base that ranged from state to state throughout the entire country. This is even seen at the point when the company prepares to go public and the thought of a single public figure in the company is discussed and there is set up a creative team to ensure that the company does not fall in the absence of the key character Martha Stewart.

 

A very profound weakness in the company’s ideals was the inability of the company to keep up with the upcoming trends and therefore it was overtaken by the newer companies that could keep trendy. The company did not appeal to the younger generation and therefore overtime they lost their customer base the inability of the company to come up with a website that could accommodate the changes that the society at the time started experiencing such as wedding advertisements this made the company overtime to lose what it had with the people the perceived ability to give the people everything that they wanted at the time and therefore this led the company to struggle overtime. Also as  a side-note the company based itself around a single person this cost the company when Martha Stewart was arrested for insider trading.

 

  1. Strategies.
  • Business level-essay on Internal Analysis of Martha Stewart

When it comes to strategy especially business level strategy, MSO was that it developed distinctive advantages to be associated with it. MSO made a product that was peculiarly unique only to them using the particularly unique method of cooking show which at the time was not common this made it possible for the brand to stand out amid other brands at the time her TV studio is said to have been an exact replica of her kitchen and  by doing this it must have lead the customers to have confidence in the products that they were being sold this in a way built heavily a customer base that they had and in turn profits that they ended up having.

 

Another key Business strategy that worked for MSO was that they co-ordinated unit activities in different departments with efficiency this is seen when Sharon Patrick a former McKinsley & Co. partner whom she met while climbing Mount Kilimanjaro wins several negotiations for the business. In a first key negotiation she negotiates to buy back the company from Time Inc. then later on she negotiates that MSO can now start selling through Kmart stores this moves Martha Stewart Omnimedia to a new level in that it now has a larger customer base and that it now can impact the whole of the United States. This strategic move by the co-ordinated management leads the company to whole new levels that previously where not thought possible.

 

  • Competitive Strategy-essay on Internal Analysis of Martha Stewart

The competitive strategies as seen by MSO include the fact that to deal with competition the company had to differentiate its products this appealed to the retailers that were at the present time seeking for at the time a shift from individual items to a category of items this method makes it possible for easier customer service and the time it really helped in the marketing of the commodities that the company had. From  single commodities to categories of commodities.

 

MSO’s strategy though it might have in the end led to the failing of the company is that it built customer intimacy through the publicity gained by Martha the founder of MSO. The customer intimacy by MSO is based on its ability to provide the most quality of commodities and at the time relate with the customer at a level that the customer also can understand. MSO as it started was based upon Martha Stewart and the confidence the public had in her. This made it possible for the public to trust and use MSO’s products. This strategy really aided in the building of the multi million dollar business that MSO was becoming.

 

A key weakness in MSO’s competitive strategy is that MSO in-spite of its capacity to be able to be the low cost leader at times to ensure a larger and more steady customer base MSO chose to maintain its prices irregardless of the fact that it could have easily done this to maintain a larger customer base.

 

  • Cooperative level Essay on Internal Analysis of Martha Stewart

The most outstanding cooperative level strategy that MSO had was to grow in size to become larger in size to have a larger market cap as seen when Patrick negotiates for the store to distribute its commodities through Kmart. This really increases the revenue of the company and ensure that the company (MSO) steadies on. Its distribution through Kmart ensures the store has a country wide coverage. The size advantage made the company cooperatively bigger this was a cooperative strategy well employed by Patrick. Prior to this another cooperative strategy that was well implemented was that the company was bought from Time Inc. this a move that ensured the company’s free with its new owner that it could now grow under new management

 

A cooperative blunder that this company did was that it based its whole image on a single person. This as said by an analyst was not not right to base an entire company on a single name the question is to be how is the company broadened apart from that one entity. Though MSO promised its prospectus that it would promote a new generation of other Martha Stewart living experts. This was said but it later on not done and when Martha Stewart was arrested because of insider trading the company underwent a massive recession and nearly fell apart.

 

  • International strategy-essay on Internal Analysis of Martha Stewart

In terms of international strategy MSO was not really vested in going international its focus was mainly domestic and it is not considered that MSO really thought of expanding its market to an international level. This was in may ways a misstep as MSO would have garnered more ground had it moved its operations international instead of just focusing on the domestic market. Other markets such as Europe or Asia could have used the service that MSO provided.

 

  1. Core competencies.
  1. Resources.

 

Tangible.

  • Financial-essay on Internal Analysis of Martha Stewart

In terms of financial core competencies MSO tried to manage its revenue properly even though the major sources were through the Kmart stores MSO still tried to make more money through websites and Ads but it failed consistently Ad pages such as Martha Stewart living did not incur much revenue as expected at the time. The recession that had hit the company did not in any way seem to be solved by these methods. The company even tried to copy some of the ways in which other companies advertised but this all flopped leading to huge financial loses

 

  • Physical-essay on Internal Analysis of Martha Stewart

With regards to physical resources and even infrastructure. MSO did not consider buying permanent offices or even a permanent studio it relied on Martha Stewart’s  houses to perform in as a studio this undoubtedly set them behind a lot of money as they could have avoided such additional costs and made more profits by setting up or even having their own physical infrastructure. The skills of the people involved across board in the company if correctly done were to be reevaluated to procure required personnel.

 

  • Human-essay on Internal Analysis of Martha Stewart

In the organization there is a clear alignment of hierarchies. From the directors to the key personnel such as the directors this clear definition of hierarchies in MSO makes it possible for the company to run smoothly as seen and as it did run throughout the recession and the battles that enveloped between Martha and Patrick towards the year 2013. The chief creative officer Gael Towey served as a three man team when the company was experiencing hard times this enabled the company to run on despite the circumstances. The competent staff in the company enabled this in the end to be a foreseeable possibility. Though there was a contention about Stewart’s pay it was in the end amicably resolved. As her demands were very large and disproportionation to the received by the company at the moment. Such matters of contention in the end were agreed upon by the new sitting management.

 

  • Organizational-essay on Internal Analysis of Martha Stewart

The company shows its organizational competency when the competition stiffens. MSO was under pressure from online competition and shrinking audiences from daytime TV audiences. It had to put up to this pressure or be swept away by the pressure Martha Stewart imitators were starting lifestyle cable channels and programs. Even Oprah Winfrey a leading MSO competitor helped launch a competing celebrity chef Rachel Ray 30 minute meals appealed to time-pressed youngsters. As a combative measure Patrick promised to sell more multimedia packages, to develop new TV shows and reduce MSO’s heavy dependence on publishing.

 

 

 

 

 

Intangible-essay on Internal Analysis of Martha Stewart

 

  • Resources for innovation

The resources used in innovation and the development of the company, the revenue-generated from partnerships by MSO and from selling Martha Stewart housewares and from selling linens made it possible for the expansion of the company to new levels the success tasteful designs to low-cost consumer goods this are the intangible resources that made it possible for the company to grow

 

  • Reputation

The reputation of MSO was clearly solely based on a single individual. From the very beginning from her cook show the company MSO was based on Martha Stewart. The company’s reputation grew as a result of Her maniacal devotion to detail and perfection on the show. Her maniacal devotion to detail and perfection instilled trust in her brand this made the reputation of the company to grow. By late 1990’s, Stewart had become the nations preeminent female brand name, inspiring comparisons to Calvin Klein, Tommy Hilfiger and her very own personal role model Ralph Lauren

 

  • Brand Loyalty Essay on Internal Analysis of Martha Stewart

To grow the loyalty to the brand the company found ways in which to make the customer trust in the commodities that the company was producing. In a report of what she told a news reporter: “ I wash the sheets myself I even count the stitches, we care that we’re not disappointing anybody” this are statement that could be said to trigger the trust of the customers to the brand that they were producing. This loyalty is developed overtime but in the case that it is earned it factors for a high resource volume.

 

  1. Capabilities-essay on Internal Analysis of Martha Stewart

Value Chain

  • Operations

The Business operations especially through the years 2000-2010 were at all time low the business was experiencing losses and through the great recession the business had to maintain its standing and struggle all through the recession to be profitable once again. The restructuring of the company. The 12 percent of the company’s 600 employees were laid of. Most of the TV production was stopped but to become profitable once again the company had to really struggle through the year 2000’s .

  • Marketing and sales

In the marketing and sales the business at the beginning really tried to cope but after the generation went by the company just could not cope with the competition that came up from rivals such Oprah Winfrey and even Rachel Ray. This made it very difficult for the company to cope. It in turn tried to  also be trendy and cope with the current generation but it was well past time the fan base that they once had was being faced away and with this it was not possible to recover even up to the latter 2000.

  • Service-essay on Internal Analysis of Martha Stewart

In the beginning the service provided by MSO was a one of a kind service. Martha Stewart’s committed at the very beginning was notably exceptional. This was what really made the company to flourish in the beginning but overtime hit with financial storms, scandals MSO still tried to maintain its customer service to the best that could be possibly given. This made it maintain a fraction of the market in the years of non-profitability to the time when it became profitable again.

  • HR

The Human Resource department in MSO was most of all active since it ensured that the customers were satisfied and the customer base was well maintained even into the recession. The customer base was well managed and the Human resource department dealt with the satisfaction of the customer.

 

  • Technology-essay on Internal Analysis of Martha Stewart

With regard to technology the company was slow in assimilating to the newer methods that came up over time. This was in fact the problem that lead the company to lack in profitability over time as it did not assimilate to the changes that occurred over time a more trendy wedding show came up an Internet startup bringing into themselves a market the market that previously MSO had enjoyed this changes as the company does not assimilate in itself technological change.

 

  1. Suitable Competitive Advantage.Essay on Internal Analysis of Martha Stewart

In terms of competition MSO after the partnership with Kmart MSO became so competitively viable that it took the whole country by storm this is to be said about the MSO at the beginning. The MSO garnered so much revenue over the deal that it enabled MSO to expand and to take on board new programs. MSO now had the capacity to have a TV show this was mainly geared to positively affect marketing. Marketing is seen as the greater strategy that leads to the success of MSO.

 

  1. Structure and Control-essay on Internal Analysis of Martha Stewart

 

The structure and control of the company was clearly at first in the hands of Martha Stewart who was the 90 percent shareholder but over time Patrick overruled her decisions especially when she was in jail for insider trading. The company was managed by a number of directors towards the end of year 2000 but before that the creative director is the one who managed the company. To maintain the company’s structure to the running of the company.

 

F.

  • Profitability Ratios.Essay on Internal Analysis of Martha Stewart

 

Gross Profit Margin     = Sales – Cost of goods sold
Sales

 

 

Sales from Widgets $112,500
Cost of Goods Sold (COGS) $ 85,040
Gross Margin $ 27,460

 

 

 

Gross Profit Margin = Sales – Cost of goods sold
Sales
$112,500 – $ 85,040
$112,500
    0.24

 

 

 

Net Profit Margin           = Net income after taxes
Sales

 

 

FROM THE BALANCE SHEET FROM THEINCOME STATEMENT
ASSETS:
Current Assets:    
Cash $ 2,550 Sales from Widgets $112,500
Marketable securities $ 2,000 Cost of Goods Sold $ 85,040
Account Receivable (Net) $16,675 Gross Margin $ 27,460
Inventories $26,470  
Total Current Assets $47,695 Operating Expenses $ 18,950
 
Fixed Assets:   Net Income Before Taxes $ 8,510
Plant & Equipment $41,000  
Less: Accumulated Depreciation $ 11,000 Less: Income Taxes $ 4,163
Net Plant & Equipment $30,000    
    Net Income After Taxes $ 4,347
TOTAL ASSETS $77,695  

 

Return on Total Assets = Net income after taxes
Total assets
= $ 4,347
$77,695
      = 0.06

 

  • Liquidity Ratios-essay on Internal Analysis of Martha Stewart

 

Current Ratio = Current Assets
Current Liabilities

 

 

ASSETS:     LIABILITIES:
Current Assets:     Current Liabilities:
Cash $ 2,550   Accounts Payable $ 9,500
Marketable securities $ 2,000   Short-term Bank Loan $11,375
Account Receivable (Net) $16,675   Total Current Liabilities $20,875
Inventories $26,470    
Total Current Assets $47,695  

 

 

Current Ratio = Current Assets
Current Liabilities
= $47,695
$20,875
      = 2.28

 

 

Quick Ratio = Current Assets – Inventories
Current Liabilities

 

 

  • Leverage Ratios-essay on Internal Analysis of Martha Stewart

 

Debt Ratio = Total Debt
Total Assets
= $44,875
$77,695
      = 0.58

 

 

ASSETS:     LIABILITIES:
Current Assets:     Current Liabilities:
Cash $ 2,550   Accounts Payable $ 9,500
Marketable securities $ 2,000   Short-term Bank Loan $11,375
Account Receivable (Net) $16,675   Total Current Liabilities $20,875
Inventories $26,470    
Total Current Assets $47,695   Total Long Term Debt $24,000
 
      TOTAL LIABILITIES $44,875
Fixed Assets:
Plant & Equipment $41,000    
Less: Accumulated Depreciation $11,000  
Net Plant & Equipment $30,000  
     
TOTAL ASSETS $77,695  

 

 

Debt Ratio = Total Debt
Total Assets
= $44,875
$77,695
      = 0.58

 

 

  • Activity Ratios-essay on Internal Analysis of Martha Stewart

 

Average Collection Period = Accounts Receivable X 360 days
Sales

 

 

 

From Balance Sheet   From Income Statement
CURRENT ASSETS:     REVENUE:
 
Cash $ 2,550   Sales $112,500
Marketable securities $ 2,000   Cost of Goods Sold(COGS) $ 85,040
Account Receivable (Net) $16,675   Gross Margin $ 27,460
Inventories $26,470    
Total Current Assets $47,695

 

 

 

Average Collection Period = Accounts Receivable X 360 days
Sales
  = $16,675X 360
$112,500
  = 53.36 or 54 days (rounded up to the nearest day)

 

 

  • Strategic Leadership-essay on Internal Analysis of Martha Stewart

In terms of leadership the company leadership focused on the welfare of the company. The company’s growth was the very thing that was at the heart of the directors that were appointed to replace Martha Stewart this has made it possible for the survival of the company because of the strategic leadership of the company.

 

  • Strategic Entrepreneurship-essay on Internal Analysis of Martha Stewart

This is entrepreneurship that focuses on the future gain of the company. The kind of entrepreneurship that was seen at the inception of the company. The important negotiation skills that Patrick had as an Entrepreneur she did what was expected of her. Strategic entrepreneurship was key to the growth of the company at the inception