High Tower Department Stores: Imported Stuffed Animals Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

High Tower Department Stores: Imported Stuffed Animals Case Study Solution

INTRODUCTION:

High Power Department Store, is a departmental store in six major areas in eastern United States. The store is small but is earning a higher profit relative to its competitors. The company is enjoying its high reputation and brand image in respect of its good quality, large selection and high value. High Power Department Store earns a good net profit but it cannot fight with the power of inflation.

The toy department of the store is not much of a high earning department, but still contributes 9% of the revenue. Strategies developed by the management of department helps the store to compete at a higher level with its competitors and project better profit margins. These strategies suggest to buy imported toys that are not available at other stores and are sold at higher prices.

PROBLEM IDENTIFICATION:

The main problem of the store is the “Stock” problem which the store faces quite often. The problem for the store is related to its inventory.After placing a new order of the imported toys, sometimes either the toys get out of stock at the end of the year or any of the toys that are left are sold to the Fernstone at a markdown.

SITUATIONAL ANALYSIS:

The toys department is enjoying its high sales including the brand image of the company,as well as the unique imported material available in the store. Mainly the sales of the company in the months of November and December contributes for almost 50% of the year’s projected sales. In a given year, almost 15-20 animals were available, and are exhibited together in a single display. In Christmas season, the animals occupy up to 20 square feet of display. Imported animals are mainly kept in Christmas season, after Christmas, they are sold at 80% of inventory to a job lot retailer.During Christmas, high quality toys were sold out, and some remained at the store throughout the year.

To select and order the toys, a number of buyers go for a world trip in January, to make the order complete by the time of next Christmas. As the foreigners place the order, the order takes 6-8 months to be completed. The manager Julia Brown has a great experience of evaluating the items, decided their retail price and the volume of sales to be made. If the projections are clear, Brown would make the order at their place. But if the goods are riskier to sell, some testing items are purchased. Before buying any order, Brown herself, visit western Germany, to differentiate each item, available to the store at the last year collection. Quantitative judgments that are used to make the order is the projected sale price (with a 50% markup on lending cost) and the forecasted unit sales expected to be sold at Christmas.

Each year three new imported stuffed toys are purchased, with a small lot of 50 items, to make the sales test. The test purchases are also treated as other imported items, and are kept at the same place as other imported stuffed toys so that, test toys do not disturb the space available for the major toy inventory. A total of 20 animal stuffed toys have been tested and only two of them were not up to the mark, and were not chosen to be elected due to their poor sales. Otherwise, all 18 have been chosen for the next year, and, if once adopted, they are moved out to all the toys department stores at the same price.

The three items that were purchased for test this year, include a bear, a pig and a raccoon. However, the sales of raccoon went fantastic, the dog sales was also attractive but the sales of pig was not able to survive in the near future of the store.

COMPETITIVE ADVANTAGE:

The main competitive advantage that the company is enjoying is the unique and different toys that are imported from Germany. The new attractive stuffed toys is the reason of high attraction and value driven source from customers as well as the high quality products, large and unique selection of the store and high value given to customers help the company to be competitive in the industry.

SWOT ANALYSIS:

STRENGTH:

The management of the store is the main strength of the company. The management is very keen and enthusiastic to run the operations of the store. To expand the operations and revenues of the store, the management have developed various strategies which prove to be very critical and beneficial for the departmental store. Thus, management is the key resource for the company, on the other hand, the uniqueness of the company’s imported products differentiate them from the other departmental stores’ products and their loyal customers are the main strength of the company.

WEAKNESS:

The main weakness of the company is its financials. Although they are generating profits and earning good revenues, but due to instability in the economic environment and the recession period, the store will suffer a huge loss and will face much difficulty to operate....................

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