Tiffany & CO.

Case 4 – Tiffany & Company

BAM 479 Strategic Management
Siena Heights University
Dan Kreitzer
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Vision Statement 

“To be the world's most respected and successful designer, manufacturer and retailer of the finest

jewelry.” (Tiffany Culture 2020)

Mission Statement 

Tiffany & Co. objective is to maintain an ethical business that is qualitative and

sustainable. The company strives to protect the interests of stockholders by making responsible

decisions that show the brand's righteousness. Its goal is to improve the communities where the

company operates and sells its goods. Also, Tiffany & Co. understands how important is to

enhance the environmental performance of the company. It continuously works with the

employees, supply chain, stockholders, local communities and civil society to build up the

company's social impact and diminish its environmental impact (Tiffany 2020).

Milestones
At Tiffany and Company, we strive for quality products and good customer service. We enjoy
our work as much as our company enjoys seeing our satisfied customers.
1. At Tiffany, we believe a diverse workforce makes a difference. Equal Opportunity

Employer (Tiffany Culture 2020).

2. High quality products.

3. High quality customer service.

4. A great experience for all people to come to our store or shop online.

5. Absolutely no discrimination of ethnic background or social class from our company.

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IFE

Key Internal Factors Weight Rating Weighted

Score
Strengths
1. Quality Control 0.05 2 0.1
2. Brand Recognition 0.10 3 0.3
3. Trademark Licensing 0.02 3 0.06
4. Strong Marketing 0.02 3 0.06
5. Wide Distribution Network 0.02 3 0.06
6. Customer Loyalty 0.08 2 0.16
7. Cash Equivalent 0.01 3 0.03
8. Customization Opportunities 0.08 4 0.30
9. Market Shares in America 0.06 2 0.12
10. Owners Group (HOG) 0.10 3 0.3
Weaknesses
1. Limited Market 0.10 2 0.2
2. High Debt 0.02 1 0.02
3. Poor Credit Rating 0.02 1 0.02
4. Market Shares Globally 0.10 2 0.2
5. Unfunded Employee Retirement 0.02 2 0.01
Benefits
6. Retention of Quality Employees 0.10 1 0.1
7. Price Point of Product 0.02 2 0.04
8. Diversified Board of Directors 0.01 2 0.02
9. Declining Financial Performance 0.04 1 0.04
10. Low Market Share among Women 0.03 2 0.01
TOTAL 1.00 2.13

The IFE matrix above suggests that Tiffany and Company has higher strengths than

weakness. Tiffany provides many customizable options for their customers with different bands,

jewels etc. This is a huge plus in a massive market, this is because when people pay premium

prices, they except high quality goods. Tiffany and Company provides these high-quality goods

that keeps their customers coming back for more products.

SWOT/Conclusion

Tiffany and Company has many strengths such as customization options and having a

well-recognized name. However, like every company out there they could improve on certain

things in order to make themselves more successful. For example, Tiffany and Co. needs to
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improve on sales in order to make more money. This is because they have had a slight decrease

in financial performance over the last 3 years.

Industry Analysis

Porter Five Forces Analysis

Porter’s five forces analysis, developed by Michael Porter, details a framework of

competitive forces which analyze how the different industry factors affect a company's strategy.

These factors are rivalry among competing firms, potential entry of new competitors, potential

development of substitute products, bargaining power of suppliers, and bargaining power of

consumers.

Rivalry Among Competing Firms

Tiffany and Co’s top competitors are Blue Nile, Pandora and Swarovski. These

competitors are behind Tiffany and Company however, they are also very successful. Tiffany is

the top luxury jewelry company among their competitors.

Potential Entry of New Competitors

While Tiffany has excelled in the luxury jewelry market, they have built a well-known

name. This market is not easy to tap into because Tiffany and their competitors have developed a

reputation among a certain cliental. This type of cliental wants top of the line jewelry and a brand

they can trust. The likelihood of a new competitor for Tiffany to arise is not likely within the

next twenty years.

Potential Development of Substitute Products

Tiffany faces threats of substitute products from counterfeiters that produce products that

look similar. These products have close to the same look as Tiffany’s real products. This poses a
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threat because they are a quarter of the price and most people cannot tell the difference in the

products. These counterfeiters supply consumers with knock off products and they take business

away from Tiffany. A luxury brand like Tiffany is bound to face the problem of substitute

products and cheaper alternatives that look alike.

Bargaining Power of Suppliers

The bargaining power of suppliers refers to pressure exerted upon businesses by suppliers

in the forms of increasing their prices, providing a poorer quality product or service, and/or

making their products and services harder to acquire, therefore throwing off the balance of

supply and demand. Tiffany is in control of their suppliers and are not at risk of selling inferior

products that are supplied. Tiffany has a supplier code of conduct contract with their suppliers.

(Tiffany and Co.) They have this in order to ensure product quality and consistent prices.

Bargaining Power of Consumers

The bargaining power of consumers refers to pressure exerted upon businesses by

consumers. When there is a large group of consumers, this pressure can significantly change the

decisions made by a business, in an attempt to gain the customer’s business. Tiffany and Co have

higher input costs to their customers base because it is a luxury brand. Tiffany’s customers can

buy jewelry from other brands however they will not get the high brand name that comes with it

or the quality.
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Grand Strategy Matrix

Quadrant II. Quadrant I.

1. Market development 1. Market development

2. Market penetration 2. Market penetration
3. Product development 3. Product development
4. Horizontal integration 4. Forward integration
5. Divestiture 5. Backward integration
6. Liquidation 6. Horizontal integration
7. Related diversification

Quadrant III. Quadrant IV.

1. Retrenchment 1. Related diversification

2. Related diversification 2. Unrelated diversification
3. Unrelated diversification 3. Joint ventures
4. Divestiture
5. Liquidation

Grand Strategy Matrix Analysis

Tiffany and Company is a well-known brand that has proved they are a power house in

the jewelry market. The products they produce are high quality and come with a sense of high

class. Tiffany’s product lines are diverse they sell rings, necklaces, clothing, ect. All of these

options give different customers options to pick what they like. Tiffany and Co. is placed in

quadrant one with a great marketing strategy.

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Financial Analysis

Tiffany and Company is financially strong when it comes to sales they have increased

however; they have decreased in net income (Tiffany & Co). Tiffany has weak liquidity in their

company (Tiffany & Co). Tiffany’s Quick Ratio is 0.85 this shows that they struggle to gain

short term capital. Even though Tiffany struggles to gain short term capital and lacks with

liquidity stockholders net worth has increased by 4.05% (TIF Tiffany & Co). Tiffany is able to

raise long-term capital through debt and equity as they have done before. Working capital is an

issue for Tiffany they have increased into the red over the last few years and could stand for

some changes.

Capital budgeting is an important process for companies when they want people to invest.

This is because capital budgeting is essentially an investment appraisal that could make or break

a potential investor. This allows investors to get to know a company rather quickly and gives

them an inside look on what’s going on within the company. Such as where they are doing good

and where they are lacking in depth. Tiffany’s capital budgeting procedures are effective and

create many investors for the company.

In 2010 Tiffany had released a change to dividend policy increasing it to 18% and re-

opening the Tiffany market after a temporary shutdown (Quarterly). The new dividend policy

Tiffany has set in place is more than reasonable for all of their investors. This dividend policy

creates good relations with all of Tiffany’s investors and stockholders. It will also incise others to

invest in Tiffany & CO. Tiffany prides themselves on the quality of training they give their

financial manager during the first nine months of work at their company. This is a good thing to
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ensure the future of the company is in good hands and will continue to be successful. Quality

training is very important when it comes to being a financial manager.

Strategy Selection

Setting an objective in anything provides a sense of direction and allows workers to work

towards a common goal. The same goes for Tiffany & Co; they could use long-term objectives

that will guide them into the right position for their company. Tiffany needs to be setting goal to

work towards their weaknesses while also setting goals to maintain the things they are doing

good in. Tiffany needs a long-term goal of improving net sales by 3%, this would allow them to

pay more debt off and would increase their number of customers overall. This would fall under

the functional level of strategies including financing and marketing (David, 2016) Marketing

would need an upgrade in order to obtain the goal of earning 3% more in net sales for Tiffany.

Implementation Plan

First Tiffany should create a less expensive product for lower income families to buy.

This will allow them to gain business of the middle class and create more opportunities for the

company. Tiffany making more affordable products will result in more customers and more cash

flow. Then The company should invest in more social media and internet marketing

advertisements to create more business within the company. In 2018 Tiffany invested 394.1

million dollars into advertising which was a significant increase from 2017 at 314.9 million

dollars (Tiffany & CO. Official). Tiffany has seen the positive effects that advertising can do

with an increase in sales from year to year. Tiffany Investing another 50 million dollars into

social media advertising would allow them to reach out to more people that are interested in their

products. This will also make it so potential new customers can see that Tiffany has created a
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more affordable product. Lastly Tiffany should make their products more accessible to the global

market. This would create much more business for the company and create more of a

recognizable name through-out other countries.