Toyota Case Analysis

Tom Stemberg started company in 1996

Supermarket selling most office supplies

Would cater to small businesses

Hired experienced management

Focused on achieving efficiencies

Provided good customer service, offered Rewards Card

Created Staples Direct

Industry has never fully recovered from recession – buyer behavior has changed

Tried to merge with Office Max and the FDA stopped it

Looking for new opportunities internationally and online

Company has now gone private

INDUSTRY ANALYSIS: This is a consolidated industry

Threat of potential competition – moderate: No great barriers to entry, but the industry has consolidated and it would be difficult to break in and effectively compete.

Existing rivalry – high: There was Staples, Office Max and Office Depot, all trying to serve the same markets. They were involved in price wars at one time. You also have Amazon.com in the picture.

Bargaining power of supplies – low: Most items found at office supply stores have more than one supplier. Suppliers are happy to work with a company of this size!

Bargaining power of buyers – high: There are industrial buyers who will demand service, discounts, etc.

Substitute products – high: Most items could be substituted for if the price became too high.

CORPORATE-LEVEL STRATEGY: (What business(es) are they in?)

Retail office supply business. Has acquired other businesses, particularly in an effort to grow Staples Direct, which is an order/delivery business. Staples.com also has Staples National Advantage and Staples Business Advantage

BUSINESS-LEVEL STRATEGY: (How do they DO business?)

Cost leader strategy from beginning – has been working to bring cost structure down in order to charge lower prices.

Has differentiated – “That was Easy” concept

Has entered international markets

Decision to enter small towns

Delivery service offered

Closed stores in 2014

STRUCTURE AND CONTROL:

Staples Direct grew through acquisitions – kept owners on because of long-established relationship with key accounts

Distribution network

Experienced management hired

Stemberg – Sargent

Task force to look for way to remove excess from cost structure.

Controls:

Compensation system – changes to align incentives – Staples and Staple Direct

Membership cards - Customer database kept

Information system

6-digit lookup code

Distribution center

Strengths:

Brand recognition

Variety of merchandise

Inventory turnover

Reduced inventory holdings

“That was easy” tag line

Firmly established

Focused on supplying small businesses

Locations

Distribution centers

Staples Direct

Name “Staples”

Move into Chicago

Customer service

Membership card

Rewards program

Information system

Bar codes

Has achieved economies of scale (distribution, financial, marketing)

Social Responsibility programs – donates to non-profit organizations

Weaknesses:

Initial strategy – Did not locate in smaller towns

Assumed that a store would serve customers with a 10-15 minute drive.

Initially did not want to work with mail order or delivery

Has had to downsize

Sales down

Stock price down

Proposed merger with Office Max is out

Opportunities:

Emerging markets in developing countries

New technology – new needs

Delivery market if fragmented and very large

Potential for growth in Europe

Online market

Now that they are private, they take more risks and try new things

Threats:

Competition

FTC – Vetoed the merger with Office Max

Changes in technology - Some office supplies no longer needed

Customers have changed their buying habits since recession

Threats that go with global expansion.