Zale Case Study

Topics: Income statement, Fiscal year, Revenue Pages: 8 (2051 words) Published: July 30, 2010

Zale Corporation is the largest chain of specialty retail jewelry stores in the United States. It currently operates 2,349 stores in the United States, Puerto Rico, and Canada, employs about 16,900 employees, and operates in various segments serving different customer demands. Zale Corporation has been profitable throughout most of its history. However, Zale has recently encountered setbacks including unprofitable margins, unstable leadership, declining market share, and a 50 percent drop in 2006 net income to $53.6 million. Zale’s Revenues in 2007 declined slightly from 2006 to $2.4 billion.

Zale is now going back to its roots with a new strategy that focuses on Middle America, wide merchandise assortments, competitive pricing, great value, and a new CEO to execute this strategy, Mary Burton. Ms. Burton’s first full year as Zale’s new CEO was 2007.

Mission Statement
The Mission of Zale Corporation is to be the best specialty retailer in North America. Our goal is to develop and maximize the finest collection of jewelry brands in order to build lasting customer relationships that will generate solid returns for our shareholders. Internal Analysis And Internal Evaluation Matrix

The firm is performing above average.

External Analysis And External Evaluation Matrix

The firm is performing above average.
Competitive Analysis
Porter’s Five Forces Model:
1.Rivalry Among Competing Firms
a.Tiffany and Signet are the primary competitors of Zale. Both of these corporations have shown significant growth in the past few years. This poses a threat to Zale as in the future they may take market share away from Zale. The rivalry that is existent amongst these firms comes from the strategies that are implemented by one another. A new technique or strategy that is brought about by one firm will give that firm a strong advantage for a short period of time. When the other firms catch on and use the same techniques/ strategies the rivalry will only get stronger. 2.Potential Entry Of New Competitors

a.With so many startup businesses these days, it is the hope that one day they will grow large enough to put a dent in the market share of these larger companies. New corporations entering into a market that has been controlled by one or two companies for a long time can cause some tension. A rivalry will form on the spot. A good way to eliminate this would be for one of the larger companies already existing in the jewelry industry to buy out and acquire the smaller, new company. If this cannot be done, then the larger companies must monitor the smaller companies, and analyze their strategies so that they can match them in every way possible. 3.Potential Development Of Substitute Products

a.Firms mostly monitor the trends within the industry to track the strategies used by other firms. However, competition does not only arise within the similar industry but also in different industries. Companies in other industry offer products with similar features and functionality or even better act as substitute for the products. In the jewelry industry we can say that the developments of outlet stores are a substitute to traditional store. 4.Bargaining Powers Of Suppliers

a.Suppliers and producers relation always matter especially in the jewelry industry. Suppliers have an important role in production of goods and services. The better the raw material the better the final product. However, this gives suppliers a significant bargaining power when dealing with companies such as Zale. The bargaining power of suppliers effect the intensity of competition especially if there are a large number of suppliers with less availability of raw materials. The cost of switching suppliers and/or raw material is high. These points in the jewelry industry give power and the upper hand to the supplier to enforce terms and conditions on manufacturers and charge high cost of raw material. 5.Bargaining...

Cited: 1)
3) Fred R. David. Strategic Management:Concepts and Cases.12th. Ed.,Prentice-Hall. 2009
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