What recommendations would you make to Tiffany & Co. management to strengthen the company’s competitive position and future strategic and financial performance?
Founded in 1837, Tiffany and Company emerged as a venerable American institution, its name synonymous with high-priced, high-class jewelry and related accessories. As with most such institutions, however, Tiffany and Company has not had the luxury of being able to rest on its laurels. History is replete with the collapse of venerable institutions, as was witnessed with the bankruptcy of Lehman Brothers, one of the world's largest and oldest (founded in 1850) financial services firms, in the midst of the 2008 financial crisis. The so-called "Big Three" American automobile manufacturers have come perilously close to having to shut down operations, with the Chrysler Corporation now having to be bailed out by the federal government twice in the past 30 years. Major American airlines like Pan American and Trans World Airlines (TWA) have ceased to exist, and Arthur Anderson, the once highly-trusted and very large public accounting firm still exists, but only as a minor shell of its former self following its involvement in the largest accounting scandal in U.S. history. In short, big companies fail, sometimes from poor management, sometimes from their complicity in a scandal, and sometimes from a simple inability to compete in an increasingly competitive environment. Whatever the reason, companies fail, and there is little reason to suppose that Tiffany and Company is any more invulnerable than the others.
The purpose of the above discussion is to place into context the precarious nature of the business world. No matter how large a company, and how respected, it will, under the right conditions, fail. Tiffany, as noted, was formed in 1837, but its age and reputation are not protection against competition from other, newer jewelry businesses. Among its main competitors are the old (Louis Vuitton, founded 1854) and the new (Christian Dior, founded 1946; Pandora A/S, founded 1982), and all have raised the stakes for Tiffany and Company. When contemplating measures to be adopted to strengthen the company's position both domestically and internationally, then, one has to examine the competitive environment in which Tiffany's operates. A company as old and well-established as Tiffany's has to change with the times to remain competitive. That does not mean lowering its standards; on the contrary, such a move would be devastating to the company's reputation and performance. It does, however, mean that Tiffany's has to carefully study and analyze existing trends in its industry while designing products that may, if successful, shift that industry in a different and profitable direction. In other words, it needs to set the tone, not merely be content to follow what others are doing.
Jewelry businesses like Tiffany's do not have to play to the lowest common denominator of American consumerism. They do not have to appeal to college students looking to pierce various body parts with $10,000 diamonds. They do, however, have to continue to appeal to young, successful entrepreneurs, such as those who launched the high-technology industry in places like Silicon Valley, as well as the older, more conservative consumers who comprise the upper echelons of New York's financial services industry. Those are two very disparate sets of consumers, but both groups need to be targeted. The key to such targeting, as is often the case, lies in marketing, in addition to innovative designs and a continued emphasis on the highest quality metals and precious stones. Marketing has to reflect the specific categories of consumers, with advertisements targeting different categories in trade publications and news and entertainment magazines read by those consumers. That is why one is more likely to see a Tiffany's ad in The Wall Street Journal than in US magazine; different types of people read different types of publications, and the more financially affluent read the Journal, and the New York Times, and Architectural Digest, and Golf Digest, and so on.
When making recommendations as to how to improve Tiffany and Company's position and financial condition, one has to focus on innovative thinking. People have to be drawn to Tiffany's not just because it's notoriously expensive and revered, but because they can find at Tiffany's products that they cannot find at Christian Dior and other competing businesses. And, Tiffany and Company has to be cautious in how it conducts its business, as the gold and diamonds it sells cannot be found to have been mined in some desperately poor and incredibly exploited less-developed nation in sub-Saharan Africa or Southeast Asia, lest its reputation take a hit among the liberal wealthy elites. Tiffany and Company has to continue to focus on marketing strategies that emphasize its history and reputation for quality while also introducing new designs that other companies will steal or adapt, rather than the other way around. This is how a high-end jewelry company remains in business.