Tiffany & Co.

Business Strategy Analysis

Susan Tartara, Christina Caamano, Sara Birnbaum, Corinne White MBAe 2010-2

Agenda
Environmental Analysis Strategies Corporate Governance Organization Leadership Entrepreneurship S-Curve Discussion

Internal Environment
People, Philosophy, Personality
Customer Service Orientated

Greater than normal Training for sales representatives

Dedicated to the Tiffany Experience

Brand Loyalty is sustainable

Internal Environment
Competencies
Customer Service

Design and Innovation

Marketing and Brand Maintenance

Quality and Craftsmanship

Internal Environment
Resources
Sourcing Socially Responsible Materials

Access to excellent talent

Design

Marketing

SWOT Analysis
Weaknesses Strengths Brand Financials Quality Control Distribution Control Internet Shopping Embraced Mature in Industry Lifecycle Commodity Prices Recessions Reduced Discretionary Spending Opportunities New Target Markets Online Market Threats Rivalry Cheaper Products

Revamp Advertising Socially Responsible Mining Vertical Integration

Product Differentiation Innovation

Comparable Products
Online Retailers Low switching costs

Dependence on stores

Value Chain Analysis

Value Chain of Tiffany Co

In Bound Logistics- Warehousing of raw materials and the distribution to their manufactures Operations- transforming inputs into finished products Outbound Logistics- Warehousing for finished products Marketing and Sales- customer needs Service- Support after sale

Support for the Value Chain

Infrastructure of the firm- Organizational structure, company culture, control systems HR Management- Employee recruiting, compensation, training Technology Development- Value creating services

Procurement- Raw materials, equipment

Cost Advantage of the Value Chain

Economies of Scale Learning Capacity Utilization Linkages among activities Degree of Vertical Integration Timing of market entry Firms policy of cost or differentiation Geographic Locations

Competitors

Cartier BVLGARI Harry Winston Chopard Fred Leighton Michael Katz

Competitive Strategy

Differentiation strategy Brand loyalty Price sensitivity Value creating strategy

Competitive Strategy
Increased marketing Accelerated pace of store openings - 17 stores

New product expansion- Yellow diamonds, handbags and accessories Expansion of internet sales- launch of online business in continental Europe

Global Strategy
Tiffanys global locations:
Americas Asia Pacific Europe

Internet sales Business to Business (B2B) Wholesale Distribution

Tiffany Global Expansion

Opening of 17 new Company-operated stores (six in the Americas, eight in Asia-Pacific and three in Europe); The Company operated 220 TIFFANY & CO as of January 2010 91 in the Americas, 102 in Asia-Pacific and 27 in Europe vs. versus 206 locations a year ago (86 in the Americas, 96 in Asia-Pacific and 24 in Europe).

S - Curve Analysis
The specialty retail industry is currently in the mature stage of the industry life cycle From the 1970s to the 1990s, the specialty retail industry experienced a large growth with the increase in shopping malls in the United States A channel being used for many specialty retailers to grow is the internet. Companies of all sizes are able to offer their products online to a larger consumer base then previously possible

S-Curves

TIF

Finanical Snapshot
For the year, net sales dropped 5 % to $2.71bn. But net earnings from continuing operations rose to $265.7m from $232.2m on the back of aggressive cost-cutting. S G and A expenses rose 7 % in the quarter, as a result of higher incentive compensation for management. Balance sheet liquidity at January 31, 2010 included: cash and cash equivalents of $786 million (versus $160 million a year ago), and total short-term borrowings and long-term debt of $754 million (versus $709 million a year ago). In the Asia-Pacific region, sales rose 14% to $318.0 million in the fourth quarter due to strong growth in all countries except Japan

U.S. Retail vs Jewelry Sales

19

U.S. Specialty Jewelers Sales

20

Financial Snapshot Q1 2010

Net sales increased 17% to $981.4 million, compared with $837.6 million in last year's fourth quarter Tiffanys planned capital spending is jumping to $200m, from $75m last year

Key Strategies of Tiffany &Co.

To selectively expand its global distribution without compromising the value of the TIFFANY & CO. trademark (the Brand). To increase store productivity To achieve improved operating margins To enhance customer awareness To maintain an active product development program To provide superior customer service

QUESTIONS