Over the last five years, the disposable income per capita and customer confidence have increased. Consumers have been spending more at jewelry stores. Unfortunately, according to a report by Ibis World (2017), despite the increase, there has been an influx of competition from external industries and steep declines in the price of gold and silver, which has stifled the growth causing revenue to accelerate at a slower rate. According to forecasters, the industry will most likely continue posting nominal growth for the next five years as the price of gold continues to drop. Nonetheless, despite the challenges projected to face the jewelry industry, ABC Jewelry Store has an extensive number of strengths. Part of their strengths includes a solid brand image, top market share, excellent cash flow, and an extremely low long-term debt to equity ratio. Along with that, the company is renown, and has attracted and retains a talented workforce in the industry. The company’s approach to marketing is also excellent and cannot compare to its competitors. Thus, consistent with the current trends in the jewelry industry, the GE/McKinsey Matrix, and considering the strengths of the ABC Jewelry Store, the most appropriate strategy is to pursue a “grow” (a more aggressive) strategy.
Opportunities and Threats in the ABC Jewelry Store Industry
Currently, according to Ibis World (2017), the Jewelry Industry is facing fluctuations in the price of gold, silver, diamonds, and platinum. The price decline has had both positive and negative impact on the jewelry industry. Additionally, competition within the industry has increased, as well as loss of consumer dollars to other competing industries. However, despite the current threat, the U.S. economy has significantly grown and has the ability to support the industry demand.
The GE/McKinsey Matrix is a nine-cell multi-factor portfolio matrix designed to offer a systematic approach to organizations to enable them to prioritize their investment among other business units (Phadtare, 2011). According to the Matrix on the grand Strategy Selection Matrices.ppt, a company that competes in a highly attractive market with as many strengths as ABC Jewelry Store should consider a growing strategy similar to the star quadrant in the BCG Matrix.
Model of Grand Strategy Clusters Applied to the Jewelry Industry
Grand strategies provide businesses with a primary direction for strategic actions and provide the foundation in which companies need to coordinate and sustain efforts geared towards achieving lasting business goals (Phadtare, 2011). As further noted, a grand strategy is a general approach that is used to guide a company’s actions to achieve long-lasting goals. Consistent with the ABC Jewelry Store the company falls under quadrant 1 on the model of grand strategy cluster of the PowerPoint presentation. The company is in a rapid and high growth market, with more strengths than weaknesses. In light of this, the company should consider pursuing a product development, where they will make substantial modifications to their existing products to offer to their current consumers.
Despite the current threats facing the jewelry industry in the United States, there is a wide range of opportunities that Jewelry businesses could exploit. ABC has an extensive number of strengths, which places them in a better position within the market. Based on the GE/McKinsey Matrix, the company competes in a highly attractive and should consider a “grow,” which is a more aggressive strategy as compared to a “hold.” Consequently, since the company’s strengths surpass their weaknesses, they should consider focusing on product development, where they modify their existing products to give their clients a wide range of products to choose.
Ibis World. (2017). Jewelry stores – US market research report. Retrieved from: https://www.ibisworld.com/industry-trends/market-research-reports/retail-trade/clothing-accessories-stores/jewelry-stores.html
Phadtare, M. T. (2011). Strategic management: Concepts and cases. New Delhi, India: PHI Learning.
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