Tiffany & Co.

Susan Tartara, Christina Caamano, Sara Birnbaum, Corinne WhiteMBAe 2010-2

Business StrategyAnalysis

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

People, Philosophy, Personality

Internal Environment

• Customer Service Orientated

• Greater than normal Training for sales representatives

• Dedicated to the “Tiffany Experience”

• Brand Loyalty is sustainable

Competencies

Internal Environment

• Customer Service

• Design and Innovation

• Marketing and Brand Maintenance

• Quality and Craftsmanship

Resources

Internal Environment

• Sourcing Socially Responsible Materials

• Access to excellent talent

• Design

• Marketing

SWOT Analysis

Strengths

Brand

Financials

Quality Control

Distribution Control

Internet Shopping Embraced

Weaknesses

Mature in Industry Lifecycle

Commodity Prices

Recessions

Reduced Discretionary

Spending

Dependence on stores

Opportunities

New Target Markets

Online Market

Revamp Advertising

Socially Responsible

Mining

Vertical Integration

Product Differentiatio

n

Innovation

Threats

Rivalry

Cheaper Products

Comparable Products

Online Retailers

Low switching

costs

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

Tiffany’s global locations:• America’s• Asia Pacific• Europe

Internet salesBusiness 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 1970’s to the 1990’s, 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

• Tiffany’s 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