Williams Sonoma Strategic Audit

Dr. Guclu Atinc

MGT 527

Texas A& M University, Commerce, TX

Shernay Wormley

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Table of Contents

I. Introduction to The Organization……………………………………..1

History of the Company & Current Status –……………………………………………4-8

A. When, Why and By Whom Was The Organization Founded…………………………8

B. A Privately or Publicly Held Organization…......9

C. Top Executives, Experience, & Service Length………………………………………8- 13

D. Business Model……………………………………………………………………….13-14

E. Impact of Globalization on This Organization….....14

F. Other Information…...14

II. Identification of The Industry & The Competitors –…………………...14-15

III. Analysis of The Industry……………………………………………………….15

A. Strategic Groups in Which The Company Exists & Competitors In It…………………16

B. Intensity of Rivalry Among Existing Competitors……………………………................16

C .Threat of New Competitors Entering The Industry………………………………….......17

D. Threat of Substitute Products or Services………………………………………….........17

E. Bargaining Power of Buyers …………………………………………………………….17

F. Bargaining Power of Suppliers…………………………………………………………..18

G. Potential Profitability of The Industry ……………………………………………........18

H. Critical Success Factors for The Industry…………………………………………........19

IV. Analysis of The Macro-Environment………………………………......20

A. Political/Legal Forces Affecting The Industry………………………………….............20

B. Economic Forces Affecting The Industry……………………………………………….21

C. Social Forces Affecting The Industry…………………………………………………...21

D. Technological forces Affecting The Industry..................................................................23

E. Threats & Opportunities Facing The Organization...........................................................24

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V. The Organization’s Measurement & Control

System…………………………………………………………………….24

A. Current Financial

Position………………………………………………………………………………….25

B. Compare With Competitors & Standards…………………………………………….26

C. Financial Analysis…………………………………………………………………….26

D. The Organization’s Key Performance Indicators (KPI’s)…………………………….27

VI. Analysis of The Organization …………………………………………27

B. The Vision of The Organization………………………………………………………28

C. The Organizations Core Values & Operating Guidelines…………………………….28

D. The Organization’s Core Competencies………………………………………………29

E. The organization’s Broad & Specific Goals…………………………………………...30

VII. Analysis of The Organization/ Organization-Level and Business

Unit Strategies………………………………………………………………30

A. The Current Organization-Level Strategies…………………………………………..30

B. The Strategies Aligned With The Goals………………………………………………30

C. This Organization’s Strategies Compared With Those of Competitors……………….31

D. SWOT Analysis and Gap Analysis To Suggest Strategies……………………………31

E. Evaluate strategies ……………......................................................................................32

F. Key performance indicators (KPI’s)……………………………………………………33

VIII. Analysis of The Organization /Functional

Strategies…………………………………………………………………….33

A. Marketing – Finance – Operations – Purchasing – Human Resources –

Information Systems……………………………………………………………………34

B. Evaluating How Functional Strategies Aligned…………………………………………34

IX. Analyze Organization’s Improvement/

Change Initiatives…………………………………………………………… 35

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A. Previous & Current Impact/Success of Improvement Initiatives………………………...35

B. Alignment of Improvement Initiatives & Integration Into Strategic Management of The

Organization…………………………………………………………………………………35

C. Improvement Initiatives With Other Organizations Within & Outside The

Industry………………………………………………………………………………………36

X. Conclusion & Future

of Organization…………………………………………………………………………..36- 38

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I. Introduction to The Organization

History of the Company & Current Status

Williams-Sonoma Inc. (WSM) is a multi-channel premier specialty retailer that focuses

on home furnishings and gourmet cooking accessories in the United States. The company sells

hundreds of products through various market channels, such as retail stores, catalogs and the e-

commerce websites. The company has more than 250 stores nationwide and has globally

expanded company operations in: Canada, Puerto Rico, Australia, and the UK. The brand

operates through two segments: retail and direct-to-customer (DTC).

Williams Sonoma Inc.’s direct-mail business distributes millions of catalogs a year, and their

highly successful e –commerce website helps the company generate additional profit. . In 1956,

the company was established in Sonoma, California and they are currently headquartered in San

Francisco, California. Williams Sonoma has over 28,100 employees as of February

2, 2014. They have 20,300 part time employees and over 7, 800 full time employees.

In their financial fiscal year ending in January 2014, (FY2014), The company recorded revenues

of $4,387.9 million. Their sales were increased over 8.5% from FY2013 (Financial year in 2013)

in sales. Over 10.5% in FY2014 (Financial year in 2014) over FY2013. The net profit was

$278.9 million in FY2014. Currently the company’s operating profit is over $452.1 million.

In 1986, Williams-Sonoma acquired Pottery Barn, a retailer of casual home furnishings,

from The Gap. The following year, they launched the first Pottery Barn catalog.

In 1989, Williams Sonoma launched a mail-order merchandiser of linens, towels, robes, soaps

and accessories for the bed and bath called Chambers.

In 1990 they purchased California Closets, an operator of franchises who design and

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build custom closets. In 1994, Williams-Sonoma sold California Closets to a management

in addition, investor group. They also had a Gardener’s Eden catalog, which they later sold to

their business to retailer Brookstone in 1999.In addition to their first Pottery Barn; Williams-

Sonoma launched a special Pottery Barn catalog for children featuring linens and furniture. They

also began to start selling merchandise on their e- commerce site through its online websites:

wswedding.com bridal registry and through williams-sonoma.com.

In 2000, The first Pottery Barns Kids store was opened and a year later their website was

created In 2001, Williams Sonoma, established five new retail stores, including two Williams-

Sonoma stores, two Pottery Barn stores and one expansion store outside of the US, Pottery Barn

Kids in Toronto, Canada. In 2001, they launched their first Pottery Barn online gift registries.

One bridal registry and a Pottery Barn Kids online gift registry. In 2002, the company launched

another catalog, their West Elm catalog, offering a broad range of home furnishing categories,

including furniture, textiles, decorative accessories, lighting and tabletop items. After the

catalog’s success the West Elm e-commerce website and their first retail store was launched.

Williams Sonoma begin to increase their offerings even more with adding a PBteen catalog,

which featured items exclusive collections of home furnishings and decorative accessories,

specifically designed for teenagers. With the different acquisitions that the company acquired,

some adjustments were made to their previous companies. They discontinued many of their

catalogs and opted to market towards the internet instead. In 2004, the Chambers catalog was

discontinued and was replaced with Williams-Sonoma Home. Williams-Sonoma closed all its

Hold Everything retail stores and their e-commerce website in 2006. The Hold Everything

catalog was also discontinued and William Sonoma decided to launch www.wshome.com, an

online catalog for their Home brand.

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Williams-Sonoma also opened its first Home retail store in West Hollywood, California in

2005. After 2007, the company increased their business expansion with opening 28 new stores

and remodeled or expanded an additional 28 more stores in the same year.

Business continued to grow and Williams Sonoma launched its first outdoor collection and its

first Williams-Sonoma gourmet cookware store in Vancouver. A Pottery Barn outlet was also

added in Vancouver. In 2008, the company entered in a multi-year franchise agreement with

M.H. Alshaya Company, an international franchise operator that allowed them to launch the

company's portfolio of brands in the Middle East.

With the company’s major expansion, their fast growths begin to cause some problems and

some of their products were recalled.

In 2010, Williams Sonoma recalled several of their products due to safety concerns for

children. Around 11,000 Beaba Express steam bottle warmers were recalled because they posed

a risk of burns. Pottery Barn’s Madeline bunk beds had to be repaired due to entrapment hazard,

because of the end structure of how the bed was made.

The company also recalled about 5,900 PBteen Sleep and Study Loft Beds in 2010, because the

side rail on the bed, posed a fall and injury hazard to users.

Williams Sonoma received several reports on this bed being defective, and was informed on an

incident with a child injuring himself from climbing the ladder on the side of the bed.

These problems caused Williams Sonoma to evaluate their products more efficiently and

focus on providing better quality of their products and services to their clients.

In, 2011, 2012, 2013, the company expanded again locally and globally. They completed a

new acquisition of Rejuvenation, another US-based manufacturing company dealing with

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lighting, architectural hardware and house parts four of its stores. This acquisition helped them

reach their business target market in Portland, Oregon: Seattle Washington and Los Angeles

California., by selling products DTC through their catalog, or websites.

In 2012, Williams Sonoma leased a retail space that opened up its four stores including

Williams-Sonoma, Pottery Barn, Pottery Barn Kids, and West Elm, in Sydney, Australia.

This new direction in the company, begun its first expansion opportunity outside of North

America through company-owned stores. Since 2013, William Sonoma has launched several of

its Pottery Barn and West Elm stores globally. West Elm also signed two lease agreements to

open its stores in the UK and Australia. In addition to their global expansion, the company

announced plans to enter the Philippines market through a multi-year agreement with Stores

Specialists (a freestanding specialty retailer).William Sonoma’s Pottery Barn and Pottery Barn

Kids would be the first brands to open in the Philippines.

Williams Sonoma’s Global expansion strategy and it utilization of supportive marketing

channels continues to give the company a strong competitive advantage locally and globally.

In 2014, they have announced to launch its home furnishings brands to the Mexican

market through a franchise agreement with Distribuidora Liverpool. This agreement will be

another positive move for the company, which will give them access to both store, and e-

commerce rights in Mexico for the Williams-Sonoma, Williams-Sonoma Home,

Pottery Barn, Pottery Barn Kids, PBteen, and West Elm brands. These stores are scheduled to

open in 2015.

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A. When, Why and By Whom Was The Organization Founded

Charles E. Williams founded Williams Sonoma in 1956.His first William Sonoma store was

established in Sonoma, California. In 1972, The company began its DTC (Direct to consumer

business) by launching its flagship catalog “A Catalog for Cooks”. This catalog was marketed

under Williams-Sonoma brand and sold a small array of cookware imported from France.

B. A Privately or Publicly Held Organization

Williams Sonoma Inc. is a publicly held company since 1983. Their first Hold Everything

retail store opened in 1985.

C. Top Executives, Experience, & Service Length

The Williams Sonoma company is comprised of Board Directors, Senior Managers in

specialty areas, and Non Board Directors. The company has 14 top executives that are

specialized in operations throughout their top performing brands.

Their top executives are Laura J. Alber, Patrick J. Connolly, Charles E. Williams, Sandra

Stangl, Julie P. Whalen, Janet Hayes, John F. Strain, Dean A. Miller, Linda Lewis, David King,

Vicki D. Mcwilliams, Bud Cope, Marta Benson, and Ron Young.

Ms. Alber has been the President at Williams-Sonoma since 2006 and is the Chief

Executive Officer since 2010. Ms. Alber ‘s experience consists of serving as the President of

Pottery Barn Brands from 2002 to 2006 and as an Executive Vice President of Pottery Barn form

2000 to 2002. She was also the Senior Vice President of Pottery Barn Catalog and Pottery Barn

Kids Retail from 1999 to 2000. In addition to her high credentials, Ms. Alber has also been a

Director at RealD since 2013.

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Patrick J. Connolly is the current Executive Vice President and Chief Strategy and

Business Development Officer for William Sonoma since 2014. He started with the company

in1983 as a Director for the company. Mr. Connolly experience consists of being the Executive

Vice President and the Chief Marketing Officer at the company from 2000. Mr. Connolly also

was an Executive Vice President and the General Manager of Catalog from 1995 to 2000.

In addition to his different Senior Managements positions, Mr. Connolly has also been a

Director at CafePress.com since 2007.

Charles E. Williams is the founder of William Sonoma and served as Director from 1973

to 2003. He has acted as Director Emeritus since 2003.

Sandra Stangl holds the position as President of Pottery Barn, pottery barn kids and

PBteen. She has been with the company since 2002 and she oversees merchandising, product

development, inventory management, creative services, visual merchandising, brand finance, and

operations for all three brands. She graduated from the University of California, Los Angeles

with a Bachelor’s degree of Fine Arts.

Julie Whalen holds the position as Chief Financial Officer and Executive Vice President

for Williams-Sonoma, Inc. she has been with the company since 2001 and oversees all global

financial departments including controllership, corporate financial planning, analysis, tax,

treasury, investor relations, risk management, or internal audit. She has 19 years of financial

experience and she shares accountability of the brand finance functions. Ms. Whalen is a

Certified Public Accountant and has both a B.S. and a law degree from the Pepperdine

University.

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Janet Hayes holds the position as President of the Williams-Sonoma brand. She has been

with the company since 2007 and is responsible for merchandising, product development,

inventory management, creative services, visual merchandising, brand finances, as well as

operations. She has over 20 years of experience in the retail industry, working with numerous

high-profile consumer brands including Macy's, and American Eagle Outfitters.

Ms. Hayes graduated from California State University, Chico and has a bachelor's degree.

John Strain is the Executive Vice President and Chief Digital Technology Officer for

Williams-Sonoma, Inc. (WSI). He has been with the company since 2006 and he is responsible

for technology-solutions delivery. He also overseers operations support for all of William

Sonoma’s brands and functions including marketing, merchandising, stores, care centers,

distribution centers, e-commerce, inventory management, desktop in addition to data centers.

His previous experience included being the VP and CIO for Gap Inc.'s online division. He

graduated with a B.S. in Finance from Santa Clara University and is a graduate of the Retail

Management Institute. He participates in charitable organizations and currently sits on the board

of two charitable organizations.

Dean Miller is the Executive Vice President and Chief Operating Officer for Williams-

Sonoma, Inc. (WSI). He has been with the company since 2000 and oversees the company's

Distribution, Logistics, and Manufacturing functions, in addition to its Customer Care Centers.

He previously held the positions of Senior Vice President, Global Logistics and Sourcing, and

Chief Supply Chain Officer prior to ascending to his current role. Mr. Miller graduated from

Otterbein College in Westerville, Ohio and has bachelor’s degrees in Business Administration

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and Political Science. He also has a M.B.A. in Marketing and Operations/Logistics from Ohio

State University.

Linda Lewis is the Executive Vice President and Chief Talent Officer at

Williams-Sonoma, Inc. She has been with the company since 1995 and is responsible for

directing all human resources functions for all brands, stores, shared services, compensation, or

benefits. She has over 25 years with HR and management information systems. She specializes

in talent acquisition and talent development.

David King is the Senior Vice President, General Counsel at Williams-Sonoma, Inc. He

has been with the company since 2004, and is responsible for all of the company's corporate

governance, litigation, intellectual property, employment, regulatory, marketing, or contract

matters. King also in charge of managing the legal components of the company's global and

business-development growth initiatives. King graduated from Yale University with a bachelor’s

degree. He also has received his J.D from University of California Berkeley. In his experience,

he served as an editor for the California Law Review.

Vicki D. Mcwilliams is the Executive Vice President of Retail and Business Sales at

Williams-Sonoma, Inc. She has been with the company since 2007 and is responsible for the

leadership of the Pottery Barn, pottery barn kids, PBteen, west elm and Williams-Sonoma stores,

and the Business Sales team. McWilliams graduated from Washington State University with a

bachelor's degree in Clothing and Textiles with a minor in Finance.

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Bud Cope is the Senior Vice President of Store Development for Williams-Sonoma, Inc.

He has been with the company since 1987 and is responsible for the design and construction of

all WSI retail stores. He also overseers the store concepts for all brands across continents and he

started in the company as Construction Manager, and then later was promoted to his current role

in 2003.

Marta Benson is the Senior Vice President and General Manager of the Rejuvenation and

Mark and Graham brands at Williams-Sonoma, Inc. (WSI).She has been with the company since

2011, and has more than 25 years of experience in specialty retail and direct marketing. She was

the CEO of Gumps before coming to William Sonoma and her expertise is DTC marketing. She

graduated from Wesleyan University with a bachelor’s degree in Philosophy.

Ron Young is the Senior Vice President of Global for Williams–Sonoma, Inc. (WSI). He

has been with the company since 2014. He has over 20 years in working with global markets and

oversees the development and implementation of the company's global expansion. He graduated

from Oregon State University with a bachelor's degree in Business Administration.

D. Business Model

Williams Sonoma’s Business model focuses on the multi-channel marketing approach.

They use Omnichannel retailing, which allows them to use a variety of channels in a customer's

shopping experience including research before they make a purchase. Their omnichannel

execution has resulted in their strong sales and profitability growth. Most of their revenue comes

from their direct channels, such as DTC (Direct to Consumer) then that business helps provide

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business in their retail markets and their e – commerce sites help support those different

channels.

E. Impact of Globalization on This Organization

Williams Sonoma’s decision to “Go Global” and expand their business development

strategies is derived from their original business model. Their global expansion strategy makes

them more attractive to other countries and businesses that want to collaborate with the

company. Although this may be a great competitive advantage for Williams Sonoma locally and

globally, their global presence makes, them even more of a triple threat to known or unknown

competitors. Williams Sonoma’s global operations are in Australia, United Kingdom, Mexico,

Middle East, and now the Philippines. They have expanded their global business opportunities

by collaborating with different franchising partners. They have entered into the International

market with company-owned stores and fully enabled e-commerce and distribution capabilities.

Their other new business acquisitions, Rejuvenation and Mark and Graham, continue to develop,

and bring in new customers for the company.

F. Others

Williams Sonoma has also been strategic on how they capitalize on consumer’s data.

This strategy is not very commonly used in the retail sector, but their data analytics infuse-and

enhance all areas of their business especially in decisions both big and small. In relation to

Williams Sonoma’s e –commerce business, each brand's website is designed to have

personalized content based on what the company knows about their customers visiting it:

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Current promotions and discounts are featured at the top of the home page, based on a

customer’s previous purchases. They utilize this data to provide customers with an enhanced

customer experience through their different marketing sales channels. Their goal is always to

enhance the customer experience and relevance is our guiding principle.

II. Identification of The Industry & The Competitors

Williams-Sonoma is a premium US-based specialty retailer of home furnishing and cooking

ware products. Their product offerings include the following:

Culinary or serving equipment (cookware, tools, electrics, cutlery, tabletop, bar, outdoor and

cookbooks), in addition to Home furnishings Furniture for all age groups. They also offer apparel

products for men and women as well as jewelry. Under the William Sonoma Brand ,the company

owns several other brands; Pottery Barn, Pottery Barn Kids, West Elm, PBteen, Rejuvenation ,

Williams-Sonoma Home, Mark and Graham. Williams Sonoma competes in the home

furnishings and exclusive cooking ware market. Their direct competitors are; Bed Bath &

Beyond Inc., Wal-Mart Stores, Inc., Kirkland's Inc., Ashley Furniture Industries, Inc., Pier 1

Imports, Inc., The Home Depot, Inc., Target Corporation, J.C. Penney Company, Inc., Kmart

Corporation, Ikea, Tuesday Morning Corporation, Lowe’s Companies, Inc. and Crate & Barrel.

These competitors sell similar products as William Sonoma or have product differentiations in

the same retail market.

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III. Analysis of the Industry

A. Strategic Groups in Which The Company Exists & Competitors In It

Williams Sonoma exists in the home goods retailer strategic group. This group is

emphasizes on the similar strategic dimensions that William Sonoma categorizes with. The

company specializes in home furnishings and high-end cooking ware and their products

complement this group. The other competitors in the same group are Target, Walmart, Crate &

Barrel, Pier 1, Bed Bath and Beyond and other companies that sell similar products.

B. Intensity of Rivalry Among Existing Competitors

The intensity between these different competitors against the Williams Sonoma company

changes how the market traditionally competes. Most of the competitors in the Home

Furnishings industry compete mainly through their physical locations or direct mail advertising.

With Williams Sonoma’s tiered business, strategy that uses multiple channels of selling in their

different is leading more home retail goods companies to adapt the same model. Pier 1 now

focuses on building their online presence as well as their store presence with consumers, because

of Williams Sonoma’s online success. More retailers are using the web not only as a supportive

media, but also as their main media, since consumer trends are leaning towards online shopping.

This is also very important during holidays, where retailers depend on creating marketing

campaigns that drive customer business for Black Friday and Holiday shopping. The competition

is highly intense during this time and most retailers increase their marketing initiatives, product

introduction, and budget during this time. Williams Sonoma and their competitors will focus

majority of their efforts on increasing people in their stores, online, their online gift registries and

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by their advertising catalogs. Intense rivalry could cause competitors to study each other more

closer than before , copy some of their sales strategies as a foundation for their own and even

worse corporate espionage.

C .Threat of New Competitors Entering The Industry

With the new launching of Ikea a corporation, that sells modern style home furnishings,

furniture, and cooking ware for a reasonable price has become a new threat to Williams Sonoma.

Ikea is a popular company that most single or married Gen X and Gen Y target audiences are

choosing to shop at for their home essentials. Ikea carries a variety of minimalist inspired

furniture pieces that fit perfectly in smaller spaces or dorm living that is cost efficient. Their

competitive advantage is their cost advantage strategy, to provide quality, trendy functional

products for a low price. This strategy distinguishes them from other competitors in this strategic

group including Williams Sonoma. With Ikea entering the market this, this challenges Williams

Sonoma to construct a competitor analysis to see how their goals compare with their new

competitor’s goals.

D. Threat of Substitute Products or Services

The threat of substitute products or services can harm Williams Sonoma’s competitive

structure. Their current structure is to use their multi-channel retail channel from direct sales

through their catalog to their E –commerce site. to provide customers with the best quality

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products for their home. Williams Sonoma produces products that are high end, in the price point

of 300.00 and up. The threat of substitute products will interfere with their constant revenue

growth through their different marketing channels and cause consumers to compare price over

quality. This is a risk factor for the company and can reduce the demand for their exclusive

products if a substitute is available.

E. Bargaining Power of Buyers

The bargaining power of the buyers in this industry is high. Williams Sonoma’s buying

power belongs to the customers and the corporation. The demand continues to grow due to an

increase product offering that meets the customer’s needs. This also continues to grow with the

companies, global expansion initiatives. Other factors that contribute to the bargaining power of

buyers are the current state of the economy. Buyers may prefer to purchase or use services of

necessity than out of luxury when the economy is down. When the economy is up then buying

power changes again for more quality products than cost effectiveness. With the current

economy state, businesses have been able to drive business to their products again and better

products that are more efficient for customers looking for the best product benefits.

F. Bargaining Power of Suppliers

Bargaining power of suppliers is also high. The bargaining power of suppliers of Williams

Sonoma is very powerful and poses a definite threat if there is forward integration. William

Sonoma’s produces most of their products in the U. S but also uses outsourcing to meet the needs

of their distribution channels globally. Suppliers in this industry are very valuable, because they

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are significant to the industries business. Williams Sonoma works with supplier who meets their

integrity and safety standards Exclusive product availability help companies like Williams Sonoma

serve many different customers more effectively. Their products are not easily to imitate, higher

quality materials are what Williams Sonoma, and other Home good retailers are centered on.

Suppliers and supply chain management help increase sales volume for Williams Sonoma and

strengthen growth profit margin for their suppliers in addition to the company.

G. Potential Profitability of The Industry

The Home goods or Home furnishing industry is very profitable. It dominates the industry in a

major way. A company’s product offerings can influence its stock price and market share

Market share is what measures a company’s profitability. Product differentiation helps

companies such as Williams Sonoma charge a price premium and focus on creating quality

products to strengthen perceived value. This industry is also unique because it focuses on various

demographic segments and varied customer needs that provide a stronger competitive advantage.

This industry’s competitive advantage makes them very attractive to other buyers, investors, the

global economy, and franchise developments. Most business has a high success rate in this

industry and continues to sustain their growth, because consumer is high demand for home

goods.

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H. Critical Success Factors for The Industry

The critical success factors for this business is driving the business strategically, product

availability, innovation in technological advances, focusing on the companies competitive

advantages and strengthening multi-channel retail channels that provide customers with more

efficient, better quality , and price effective products. These success factors will be beneficial for

the customer, the supplier and in addition to the company. External factors play a major role in

how different companies are affected in this industry. These factors affect Williams Sonoma

directly and when there are changes in their market, the company has to adapt immediately to

remain successful.

IV. Analysis of the Macro-Environment

The home furnishings market is identified as sells through any retail channel, of

Furniture, carpets, other floor coverings along with household textiles and soft

Furnishings. The global market for this industry is considered to be the US, Europe, Asia-Pacific,

Canada, Argentina, Brazil, Chile, Colombia, Mexico, Venezuela, Algeria, Egypt, Israel, Saudi

Arabia and South Africa. It dominates the market with a share of 62.4%. In addition, The US

accounts for 21.6% of the global home furnishings market.

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While this may remain a very profitable market for William Sonoma, several external factors

influence this industry. Those factors include, political, legal, economic, social, and

technological that poses threats for home furnishing company’s macro environment.

A. Political/Legal Forces Affecting The Industry

The political and legal forces that highly affect the home furnishings industry are

Outsourcing laws, Privacy rights, business ethics, and health and safety issues.

With new social and environmental concerns, business ethics have become very important in

furnishing companies and to avoid ethical dilemmas, many businesses have aligned themselves

to be more ethically sound. Ethic dilemmas can occur with violation of privacy rights and

customer data confidentiality. The more a company depends on a customer’s data for generating

business strategies, the more privacy rights have to be protected. Also with price distribution

becoming another competitive strategy, companies have to abide by outsourcing laws globally

that they may not have needed to locally because of different international laws for

manufacturing. Health and Safety laws are extremely important for the home furnishings

industry, if a product is not reported safe then that can hurt effect the business and consumer

future purchases. When this happens, companies have to recall products, invest in more R&D to

fix the problem with a better and safer alternative to meet with Health and Safety compliances.

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B. Economic Forces Affecting The Industry

The downturn in the US economy throughout the last period caused many businesses to

merge with other business to build better sustainability, or become irrelevant in a competitive

market.

The Home furnishings market was actually able to sustain relatively strong levels of growth and

increase their earnings. Due to economic stressors and natural uncontrollable factors, many

consumers changed their purchasing behaviors. Instead of buying out of luxury, more consumers

started only buying out of necessity. The size of households are decreasing, due to the fact

people are getting married older instead of younger. In addition, the different shifts in the

economic market have caused many consumers to consider other home leasing options instead of

buying. .These factors strongly also increase economic threatening factors that can decrease

retail spending and purchasing of home furnishing products.

C. Social Forces Affecting The Industry

With larger competitors entering the market, this can affect those who are traditional

providers of home furnishing products. Consumers and potential consumers with open access to

several websites and other retailers have more options in shopping. They can shop online, shop

by apps or shop at a brick and mortar store. This causes a threat to traditional businesses, but new

opportunities for omnichannel retailers. Retailers will have to change how they compete in this

market if they still want to stay relevant in meeting customer’s needs and expectations.

In addition, the change of consumer attitudes, buying behavior, buyer’s age, earned income,

extra income and reach can be a social factor that strongly influences this industry. Buying trends

are changing and the primary target audience is changing for home furnishing products. The

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primary target was Baby Boomers with ages ranging from 49 to 68. Now with the advancement

of technology and more Generation X’s having families there has been an increase on home

furnishings in this group. In addition, majority of Millennials are now getting more stability in

their careers and are becoming furniture buyers.

D. Technological forces Affecting The Industry

New technology advancements have been an advantage as well as a disadvantage to most

companies. More and more companies are realizing the importance of websites and are changing

their sale methods to focus on their supply chain management strategies. Seeing that the internet

is a great marketing tool for greater reach to connect with consumers, more companies are now

adapting this channel into their business model. Most consumers prefer the shop online to

personal selling at brick and mortars. The internet allows consumers to multi task; research other

brands before purchasing decisions and make shopping convenient for their different needs. With

technological factors, companies also have to incorporate social media and other nontraditional

channels to build relationships with consumers who have made modern technology an essential

to their lifestyle. Innovation has become what differentiates a company’s capabilities of survival

from their competitors.

E. Threats & Opportunities Facing The Organization

With the different changes in the home furnishing industry, the value chain collaboration

is critical for ensuring the long-term profitability of suppliers and retailers. The different external

controllable or uncontrollable factors that Williams Sonoma faces are new larger competitors

entering the market, a shift of buying behavior in their primary target market, legal factors, and

more companies utilizing the internet to reach out to consumers. Furniture Brands are another

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threat to the Williams Sonoma and the home furnishings companies. Furniture manufactures

market across a broad spectrum of price categories and distributes its products through a system

of independently owned national, regional, and local retailers, similar to Williams Sonoma.

William Sonoma may have to make sure their product offerings are current and not dated,

because of a shift in their age group. Different age groups level of demand can also force retail

companies such as Williams Sonoma to shorten product development cycles. Which may cause

product concerns. While the company may face these threats, it also has different opportunities

that they can target that will help strengthen their market penetration tactics. . Some of those

opportunities are price management, new sustainable product development, researching other

distribution channels for faster ROI, marketing through other nontraditional channels, and

targeting more European countries for global expansion , since Europe dominates 44% of the

home furnishings industry.

V. The Organization’s Measurement & Control System

A. Current Financial Position

Williams Sonoma’s financial report shows that for their 2nd quarter 2015 results, their

net revenues grew 8.5 percent to $1.127 billion versus $1.039 billion in Q2 14. Their comparable

brand revenue growth is 6.3 percent. In Q2 15, the company’s operating margin was 7.4 percent

versus 8.2 percent in Q2 14. Their Q2 15 diluted earnings per share (EPS") was $0.58 versus

$0.53 in Q2 14.

Stockholders cash returned totaled $104.5 million, comprising of $72.4 million in stock

repurchases and $32.1 million in stock dividends. Laura Alber, the President, and Chief

Executive Officer are pleased with William Sonoma’s performance to deliver another solid

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quarter. Williams Sonoma Inc. (WSM) remains financially solid and is trading at $67.30 per

stock. Their solid performance continues to demonstrate their competitive advantage from their

multi-brand, multi-channel, business model. As anticipated, Also during the Q2 15 quarter

incremental supply chain costs restored their in-stock inventory levels, allowing the company to

provide superior long-term customer service. Currently William Sonoma is focused on

disciplined execution against their strategic growth initiatives." Their E-commerce net revenues

in Q2 15 increased 9.1 percent compared to $570 million from their results of $523 million in Q2

14. Net revenues in E-commerce generated 51 percent of total company net revenues in Q2 15

for the company, compared to only 50 percent in Q2 14.

Williams Sonoma with their other strong portfolio brands brought in additional revenue

for the company. Pottery Barn generated 6.4 percent, 4.4 percent for Williams-Sonoma, 3.4

percent for West Elm, 16.7 for percent Pottery Barn Kids, 5.6 percent for PBteens. 3.9 percent

These filings for the company’s comparable brand revenue growth show a consistent sales

increase in their other brands as well. Manage effectiveness had 13.45 percent return on assets

and was at a 26.76 percent return on equity.

B. Compare With Competitors & Standards

With Pier 1 being one of William Sonoma’s top competitors, their Q2 15 results are as

follows; their total sales increased 5.3 percent this quarter relatively staying on a constant

currency basis of past results. Their company comparable sales rose 4.7 percent in comparison to

its 5.2 percent on a constant currency basis. Pier 1’s E-Commerce sales represented 11 percent of

their total sales; and they had a Gross profit of $749.7 million, or 40.2 percent of total sales;

Merchandise margin of $1.081 billion, or 58.0 percent of total sales. They also had a Net income

of $75.2 million: EBITDA of $176.3 million, or 9.5 percent of total sales. Operating income

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consisted of $127.3 million, or 6.8 percent of total sales. The stock share is sold at $6.36 per

stock, which is $ 60. 94 less than Williams Sonoma. Their performance shows areas of

inconsistency in sales and implies changes that are affecting the company. Their financial status

is not as sound as Williams Sonoma and their CEO is changing the company’s initiatives to

focus more on their online business. Alex W. Smith, President, and Chief Executive Officer was

not disappointed with the results and their current omnichannel and online strategies are in effect

to help with brand strength. in addition, customer-facing perspective we could not be more

pleased with the results. Pier 1 Imports is now focusing on their strengths of their Pier 1 Imports

brand and their investments for improving their profitability.

C. Financial Analysis

Penny Stock insiders show Williams Sonoma’s results for the second quarter of fiscal

2015 year as another factor that makes it one of the most attractive stocks. The company reported

its net revenues of US$874 million, which were up 7.3% from their US$815 million a year

earlier. Their diluted earnings per share continue to rise and their current percentage rose 16% to

US$0.43 in the latest quarter, compared to their US$0.37 per diluted share in the prior-year

quarter. At the end of Wednesday's stock trading, Williams Sonoma shares gained 11.64%. This

made a new 52-week high for the company of $89.38 per share. The company’s stock traded

7.82 million shares in the last trading session, which was well above its daily average of 1.22

million shares. The Williams Sonoma Inc. brand has an overall market capitalization of US$4.24

billion. With their stock staying constantly positive above other retailer stocks, stockholders

continue to see huge profits in this company.

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D. The Organization’s Key Performance Indicators (KPI’s)

Williams Sonoma’s summary reports that the company has rebounded strongly in 2015 with

sales trends improving their stock levels .Williams Sonoma’s growth strategies, consistent

execution, and operational discipline have put the company’s productivity on track to deliver

another record year. 2. The company believes that with innovations and product introductions in

collaborations in all brands it will increase its profitability. Williams Sonoma’s key provider

indicators are their supply chain initiatives, technology initiatives, and their multi-channel

strategy. These initiatives will improve customer order visibility, further differentiate service,

and continue to generate an increase of net revenue that lead to Williams Sonoma’s competitive

advantage. The company also continues to work on a better strategy for inventory optimization.

In 2015, Williams Sonoma is continuing to extend reach of their brands globally and consider

other merging opportunities. Making operational improvements, reducing costs, analyzing single

brand for multi retail channels are also components in seeing better margins for the company.

VI. Analysis of The Organization

A. Mission of the Organization

The Mission of Williams Sonoma is to enhance the quality of their customer’s lives at

home by putting the customer first. The customer is at the center of what the companies does

every day. Staying congruent to the company’s values guides the company’s actions and

decisions. The mission remains the same as the initial mission that the company was founded on

by Mr. Charles Williams in 1956.

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B. The Vision of The Organization

Williams Sonoma’s Vision is to offer quality products and outstanding to their

consumers. The vision has carried with the company, since the first Williams Sonoma opened in

1956.This tradition shapes the company’s goals, initiatives and strategies this is the tradition of

Williams Sonoma, these are the core values the company builds on people first, customers,

quality, shareholders, integrity, corporate responsibility

C. The Organizations Core Values & Operating Guidelines

Williams Sonoma’s core values are to please the customers, higher staff that has high

performance that complement the company’s strategic goals, implement quality standards

throughout the company and in addition to creating the best shopping experience for consumers.

Premium pricing can conflict with the company’s core values and business ethics. The

company’s business presence puts them in the forefront for possible ethic issues, so the company

has to make sure the right business practices are being performed. Also pricing can cause another

conflict, and pricing factors can interfere with a companies continue revenue growth and their

produce offerings. Other competitor may offer a similar product as Williams Sonoma and

because the price is cheaper, consumers will go that retailer instead.

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D. The Organization’s Core Competencies

Williams Sonoma’s core competencies are its supply chain strategies, IT infrastructure,

and its business model as components for success of the company. They are unique because

their supply chain management strategies help the company to be effective in reducing costs,

reducing waste in inventory management, and elevating the consumer is shopping experience.

Their IT infrastructure works in correlation with its business model to help the brand expand

globally faster. With their omnichannel retail support system, the brand is able to profit from all

its other brands individually and collaboratively.

E. The organization’s Broad & Specific Goals

The company constantly works on achieving their business goals while improving

through social and environmental performance. Williams Sonoma “secret sauce” is how their

teams work together in remarkable alignment with each other to develop and execute strategic or

tactical priorities. Innovation is highly encouraged and the company blends art with science,

ideas with data, and instinct with analysis to achieve specific goals.

VII. Analysis of The Organization/ Organization-Level and

Business Strategies

A. The Current Organization-Level Strategies

Williams Sonoma’s process for their strategies is the same for nearly every decision that they

make, from brand introductions to ad buys, website and catalog design. This is also increasingly

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found in their supplier relationships. Their process is to use a creative idea, test it, prove that it

works, and then roll it out into the market. The company’s discipline has allowed them to build

the Williams-Sonoma brand as America’s preeminent home retailer. With their seven brands,

their annual revenue approaches $5 billion. The company also has a staff of board directors with

extensive senior management experience and specialty retail areas that enhance the company’s

performance. Their organization strategy of promoting within and utilizing employees past

related experiences and success rates to grow the business is another powerful strategy at

Williams Sonoma.

B. The Strategies Aligned With The Goals

Williams Sonoma’s strategies align with their goals, by providing enhanced shopping

experiences for their consumers and building integrated multi-channel platforms that drive

customer traffic. The company structure is their business around their consumer and meeting

their diverse home needs. Even though Williams Sonoma faces intense competition from local,

regional, and national retailers, there core values keep them as a top competitor against other

competitors.

C. This Organization’s Strategies Compared With Those of Competitors

Williams Sonoma depends on their total revenue to come from their different retail

channels, brands while their competitor Bed Bath, and Beyond focuses on one channel. Bed Bath

and Beyond depends primarily on in-store purchases and consumer’s online sales account to

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build their total revenue. Williams Sonoma strategy has been an effective alternative to increase

revenue for the company in different opportunities in case one of their brands does not perform

as they expected. Bed Bath and Beyond may not have the same advantage as Williams Sonoma

with this model, but the way they compete with their certain product lines creates a bigger

impact for the company. Williams Sonoma focuses more on Niche marketing of specialty items,

while Bed Bath and beyond has more of a broad approach.

D. SWOT Analysis and Gap Analysis To Suggest Strategies

Williams Sonoma’s strengths are their products offerings through their different

channels, retail stores, catalogs, and e-commerce sites. The company currently operates 581

retail doors, ships more than 260 million catalogs annually to its consumers, and has the most

top-ranked home furnishings and accessories websites online. The brand was ranked among

the top 25 e-retailers in the top 500 e-retailers in the US 2013. Their multi-channel approach

creates a strong competitive advantage for the company and exposes them to a large audience in

addition to enabling the company to cater to the varying diverse needs of customers. The

company’s strategy in their supply chain management is also another strength. Their supply

chain management allows them to optimize their inventory management and produce made to

order products for their consumers. This helps the company in being more efficient with

production.

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E. Evaluate Strategies

Williams Sonoma’s Global expansion strategy has been effective for helping the

company gain more access to other markets, but also still needs to be perfected to produce more

substantial results. With this strategy, the company also faces disadvantages of conducting

Concentration on a particular region. This could have a disappointing effect on the company's

revenues if the economy or the company's sales in that region do not grow as expected. The

company’s concentrated operations also can limit its reach to a larger potential customer base,

when compared to its competitors who have wider geographic presence. Excessive dependence

on the US can hinder the company's growth prospects in other countries. Multi retail channels

can continue to increase Williams Sonoma and decrease by too much saturation in the market.

Too much saturation may overwhelm the customer and work against the company instead of

support it correctly.

F. Key performance indicators (KPI’s)

Williams Sonoma’s key performance indicators are their web leadership and integration of

its catalog, online, and retail presence. Inputing their consumer’s data into these different

channels helps the company continue to benefit on consumer purchasing behaviours. These

behaviors have changed from consumers shopping at retail stores to consumers choosing to shop

online for convenience. Online channels are becoming greater tools to reach more consumers and

Williams Sonoma is creating marketing initiatives based on this.

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VIII. Analysis of The Organization/ Functional Strategies

A. Marketing – Finance – Operations – Purchasing – Human Resources – Information

Systems

Williams Sonoma has recently undergo some organizational changes with a new CEO of

Williams Sonoma, Laura Alber and new Chief Digital and Technology Officer,John Strain.

Who’s past experiences as CIO of the Gap Online division has contributed to the companies

new attributes. Their current success with its functional strategies in digital integration has

accounted for its increase in net revenues. Also internally, the company has kept the same

Talent manager, Executive Finance officer, and Construction that helps with development

throughout all the companies’ brands. Continuing bringing brand awareness is another

functional strategy that the focuses its efforts on to keep offline influence on consumer’s

minds.

B. Evaluating How Functional Strategies Aligned

The functional strategies are aligned well according to the needs of the company and the

consumer’s needs. They stay flexible because of the constant changes that may occur in

management or consumer shopping trends. For instance, when retail profitability began to be

influenced more by digital presence, or e – commerce sites, Williams Sonoma reacted to this

shift with more websites to compliment their brands.

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IX. Analyze Organization’s Improvement/Change Initiatives

A. Previous & Current Impact/Success Of Improvement Initiatives

Williams Sonoma improvement initiatives have slightly changed from its original

design, but it still aligns with the company’s mission. Their focus strategies are not only in

creating exclusive products for their customer’s needs but their product offerings have

increase. Williams Sonoma carries an array of products from home furnishings for adults and

children to apparel for women as well as men.Their focus strategies have changed to

incorporate more of an online presence than just their DTC catalog business. More demand

in product offerings, has positioned the company to operate with more high performance

work teams. Create more retail locations in the U.S in addition to Global ventures.

B. Alignment of Improvement Initiatives & Integration into Strategic Management of The

Organization

The company’s initiative strategies align with Williams Sonoma’s long-term goals to be

one of the top providers of home furnishing and cooking ware products. With their global

expansion and franchise developments, Williams Sonoma’s reputation is becoming a well-

recognized name in households. Integrating new additional strategies, such as a factory-to-

customer model enables the company to offer handcrafted, high quality, made-to-order

upholstered furniture at exceptional value to their consumer or potential consumers. These new

initiative strategies are resulting in potential growth opportunities, which allow them to hire more

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employees and create more departments internally for a stronger competitive structure. The

company also plans to distribute support personnel in all three of their facilities to increase

(TQM) Total Quality Management. Their Total Quality Management strategy now includes

hiring Senior managers over specialty areas of the company , instead of managers that handle the

business operations as a whole.

C. Improvement Initiatives with Other Organizations Within & Outside The Industry

Williams Sonoma standard of integrity and people first is carried inside the organization culture

and externally with its suppliers or franchises. Their differentiated features are integrated in the

company’s products, their several owned brands such as West Elm and Pottery Barn.

Everything the company does is centered around it‘s commitment to people’s needs if product

doesn’t meet that goal, its removed, improved and tested before it hits the market.

X. Conclusion & Future of Organization

Williams Sonoma being one of the top retail providers in home furnishings industry has

been a top seller in home furnishing and exclusive cooking ware product. The company has been

established since 1956 and they have been able to sustain their growth in ever changing market

and unpredictable economy. Many external factors have been crucial components of the

company’s business developments, but their quick responsive strategies have shown their strong

competitive advantages. Williams Sonoma’s’ core competencies which consists of strong

leadership, a strong supportive organizational culture, a profitable business model, a strong

marketing mix, global expansion strategies and innovation strategies that meet their target

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market better keep them above their competitors. The organizations critical success depend on

staying in tune with sales trends of their consumers and continuation development of better ways

to manage supply chain management, maximizing their different brand’s potentials and product

differentiation. With the widespread of direct competitors using the same business model

approach to multi sell to their consumers or reach out to potential consumers this is now

becoming a concern for Williams Sonoma. To strengthen their brand presence in a dominating

market the brand will have to stay innovative and unique in their approaches to reach consumers,

collect data as well as build brand loyalty. Some of those approaches for reaching their different

demographics are using nontraditional marketing channels, such as collaborating with nonprofit

organizations that support national causes. This approach is becoming very popular with

companies and it shows their compassion for people and how they want to make a difference in

the community. Williams Sonoma can use this direction to help promote their brand and increase

their exposure between their different brands to meet the needs of their consumer or potential

consumer better. An example for the company is they could collaborate with Habitat for

Humanity and provide décor for people’s home through contest or chosen registration forms. The

company can invest more into R& D with their different brands and provide more product

offerings based on demand and safety. Staying in compliance with health and safety regulations

for their product design is very crucial for Williams Sonoma’s business. The company should

make sure all their products meet those health and safety requirements required by various laws

in addition to strengthen their quality control and Other research methods can be conducted

besides online data collection, such as surveys, test marketing, sampling, and mobile marketing

with a consumers consent. Providing a more innovative IT infrastructure for their catalogs and E-

commerce sites in other languages for reaching out to their local and global customers. The last

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suggestion for external factors are for the company to create an even more personal but modern

shopping experience for consumers, with virtual catalogs that show the quality of the product

before the consumer buys it. Creating a shopping experience customizable to the consumer

would also give Williams Sonoma another advantage above their competitors. For internal

factors, Williams Sonoma could diversify their organizational culture with hiring more diverse

employees in culture, ethnicity, and age.

Most of their employees range from the age 45 and up, which is good for targeting

consumers in their age group, but not for the younger generation. The company should consider

employing younger employees, Gen Y and Millennials who can connect to various target

markets, who use the products and provide innovation strategies for better market penetration. In

addition to hiring younger employees, also hiring more employees who have an educational

background in culinary, textiles, retail management, marketing, computer design, interior design,

and many other creative degrees that will complement the company’s strategic goals. Even

though the organization has been very successful with their current initiatives, incorporating

these strategies and implementing more diversity in the company can help them achieve more

sustainable growth. They can achieve their short term as well as long-term goals by building onto

their initiatives, making improvement to areas that require it, and strengthening their perceived

value while remaining profitable.

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