Cold Water Creek Comprehensive Case

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Table of Contents

Strengths
Weakness
Opportunities
Threats
Value Drivers in the Company
Conclusion
Works Cited

Strengths

Wide market segment

One of the greatest strength of Cold Water Creek Inc. is having a wide retail outlet. The company retails its merchandise through merchandise clearance outlet and premium retail stores (Coldwater Creek Inc. 3). In addition, the company is able to reach its customer indirectly through e-commerce, mail, and phones.

The company has continued to grow its retail outlet in order to catalyze growth. In 2010 for instance, the company had 373 premium retail stores after opening an extra 19 of them (Coldwater Creek Inc. 16). Company anticipated that with good economic times it would continue to grow its businesses.

Strong Brand Name

The company enjoys a popular brand image because of operating in a wide segment of the market. Customers are loyal to the brand because they can get information about the brand and are involved in the design of the product. In addition, after sales services like accepting return of sale regardless of where customer bought a product is effective in establishing brand loyalty (Coldwater Creek Inc. 3).

Employees’ loyalty

The company enjoys a wide range of employee with full-time employee running to 2,832 and employs on short-term basis during the peak seasons. No employees are covered under the collective bargain agreements, which is an indication of trust in the company. That means they have confidence with the employer (Coldwater Creek Inc. 6). The company is also proud to have loyal executive team serving it.

Weakness

Operating at a loss

The company greatest weakness is making business losses because this is limiting the effectiveness of its growth strategy. It is making the company fail to expand its retail outlets because of concurrent losses. For instance, the company anticipated that in 2011 it would close about eight or twelve of its stores due to losses (Coldwater Creek Inc. 16).

It also intended to limit its opening of new ones to five stores due to decreased profitability. In addition, making profits in the year among other factors like availability of space in good location, were anticipated to determine whether the new ones would be opened.

Inflexibility in business

The company has some two stockholders who have huge control of its capital and as a result may control major decisions to invest. This may adversely affect its business and profitability. On the other hand, provision in their charter document hinders any merger or acquisition strategy even when such a move would be beneficial to the company (Coldwater Creek Inc. 15).

Opportunities

Seasonality of Demand

In the women apparel business, demand keeps on fluctuating on depending with seasons. In holidays such as Valentine, Easter, thanksgiving, Mother’s day and Christmas for instance shift the demand frequently (Coldwater Creek Inc. 6). Therefore, with careful financial planning, company can be able to increase its sales during these seasons. They can also be able to provide merchandise that meets customers’ needs to be able to be profitable.

Product differentiation

The Spa concept provides an excellent option for the company to engage in product differentiation. Their core business is in women apparel, jewelry, accessories, and gifts (Coldwater Creek Inc. 3). Their day spas provide a new way of differentiating the company’s products by bringing a new line of business. Currently the company lacks ways of expanding this line (Coldwater Creek Inc. 4).

Threats

Changing customer preferences

One of the greatest threats to the company is the changing trends in customer’s preferences that go with seasonality and their location in space. In addition, the company does not have powers to respond quickly to these changes because it depends on outsourcing of apparel, done some time before the production begins.

Economic recessions

Global economic trend influence customers’ purchasing powers and company has little control over it. Purchasing powers are affected by increased unemployment rate, lack of credit, and higher oil and food prices among other factors. Continued fall in demand influences the company profitability and operation (Coldwater Creek Inc. 9).

Competition

The company faces stiff competition in the women apparel business from other retail businesses such as Chico’s, Christopher & banks, Talbots and Ann Taylor. They also get competition fro m other small business that operate e-commerce business in their merchandise as well as other small retailers companies (Coldwater Creek Inc. 6).

Value Drivers in the Company

Strong Market Share

Cold Water Creek Inc. targets to improve its productivity and profitability by embracing an expansion strategy. The company operated 373 premium retails at the beginning of the 2011 fiscal year, after beginning just like a catalog business in 1984. The strategy is associated with an increase in the net sale for 2009 from that of 2008.

That is $31.1 million rise in the net sales. This is increase in the net sales is related to an increase of eight premium retail stores as well as an addition of merchandise outlet by two in the same year. Merchandise outlet registered in the same period an increase of $6.7 million increase in net sales (Coldwater Creek Inc. 29).

Market defensibility

Apart from expanding their business, Cold Water Creek Inc. also invest on improving its catalog to ensure that they have the latest changes in the customer preferences. To improve the company’s profitability database has been built on the changing trends, which reveals what the customer needs. Customers for instance, are sensitive to color depending with the season, bold prints that traditionally appeared in the apparel, and finally management consider product diversification important to customer (Coldwater Creek Inc. 24).

Loyal Employees

The company considers retention and attraction of new employee important because it offers an opportunity to improve the products. The company has hired new top management official and promoted several others as a strategy to ensure that their product assortment continues to be develop in a way that meets the customers changing needs. For instance, Jerome Jessup promotion to the chief Executive and the President has been helpful to the company to bring new talents (Coldwater Creek Inc. 24).

Conclusion

Cold Water Creek Inc. has been selling a variety of women products to age group of 35 years and above since 1984. Due to the changing trends in business, the company employs multiple strategies to retain customers and register profitability. These include expansion of their business operations, maintaining and attracting a talented workforce and employing efficient marketing strategies to reach out the customers.

However, in the recent period it has registered substantial financial losses due to changing customer demand resulting from economic hardships and changes in tastes. Unpredictable economic trends in the future also threaten their choice of value addition strategies, because the company must cut its operation cost for profitability.

Cutting cost is an important tool in any organization for profit maximization. Moreover, due to the seasonality in demand, coupled with decreasing customers’ purchasing powers, the future is difficult to predict.

Works Cited

Coldwater Creek Inc. 10-K Annual report pursuant to section 13 and 15 (d). Thomson Reuters, 3 Mar. 2011: 1-110.

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