3. 13th Evidence of glassmaking has been found by
Century archeologists in Ireland
1783 Waterford Crystal was founded (over 225 years
ago) on the quays of the Irish port of Waterford
by two prominent developers and
businessmen, brothers William and George
Penrose
1851 However, the company ceased operating after
falling on hard times.
1947 Following World War II, glassmaking once
again commenced in Waterford
1967 Waterford became a listed company on the
London Stock Exchange
1986 Waterford acquires Josiah Wedgwood and
Sons, forming Waterford Wedgwood plc.
Contains divisions producing products ranging
from the traditional crystal to linens and home
wares as well as writing instruments and
ceramic flat wares
HISTORY
5. Vision Mission
To continue to be the
world’s leading portfolio
No vision statement of luxury lifestyle brands
with particular emphasis
on tabletop, gifting, and
the home.
Mission Statement Evaluation
Customers P&S Markets Tech- Survival, Philosophy Self - Concern Concern
nology Growth concept for Public for
Profitability image Employees
No Yes No No Yes No No No No
6. Proposed Vision Statement
Create the finest quality crystal and objects of beauty for the home which
represents luxury, elegance, and hard work.
Proposed Mission Statement
We offer our customers lavishness, innovation, and high-quality, of the
world’s greatest crystals and ceramics, and developing a style that is able
to transcend global fashion boundaries to bring beauty into the lives of
our customers.
7. Business
Organization Distribution of Revenues for the fiscal year
ending March 2007 per operating group
1 2007 Revenues
Ceramics
a. Waterford Crystal Group
68%
b. Marquis by Waterford
c. Stuart Crystal
Waterford
d. Cash’s Mail Order Crystal
27% W-C Designs
and Spring
5%
2
a. Wedgwood
b. Rosenthal
c.
d.
Royal Doulton
Hutchenreuther
3
e. Coalport a. W-C Designs
f. Mason’s b. Spring
g. Johnson Brothers
h. Royal Albert
i. Minton
8. Financial Ratio Analysis
FINANCIAL RATIO 2007 2006 2005 2004
Liquidity Ratios
Current Ratio 2.19 2.01 1.86 2.42
Quick Ratio 0.77 0.77 0.67 0.89
Leverage Ratios
Debt-to-Total-Assets Ratio 1.16 1.25 1.17 0.98
Debt-to-Equity Ratio -7.19 -5.07 -6.96 56.36
Activity Ratios
Inventory Turnover 2.97 3.31 3.15
Fixed Assets Turnover 4.80 4.44 3.27
Total Assets Turnover 1.11 1.13 1.00
Profitability Ratios
Gross Profit Margin 0.48 0.41 0.40
Net Profit Margin -0.10 -0.24 -0.22
Return on Total Assets -0.11 -0.28 -0.22
Return on Stockholders’ Equity (ROE) 0.66 1.13 1.29
Growth Ratios
Sales -4.03% 10.42%
Net Income -62.31% 24.85%
9. In a state of balance sheet
insolvency
The drastic decline of debt-to-
equity ratio was caused by the
negative value of the total equity
starting year 2005 to 2007
10. The net profit margin and ROA
were negative because of the
negative net income of the
company.
ROE may be positive, but both of
its indicators were negative (net
income and stockholders’ equity)
There was a 4 percent decrease in sales
from 2006 to 2007, while a 10% increase
from 2005 to 2006.
Growth in net income/loss - a decrease in
the negative income was observed in
2007 which was from negative 188.9M
Euros to 71.2M Euros. In 2006, an
increase in negative loss was seen from
151.3M Euros to 188.9M Euros
11. Financial Data by Segment
Fiscal year ended
March 31
2006 2007
(euro in millions)
Revenue by segment:
Waterford Crystal 206.5 199.4
Ceramics Group 527.8 501.5
W-C Designs and Spring 38.3 40.6
772.6 741.5
Expenses by segment:
Waterford Crystal 224.6 188.2
Ceramics Group 626.9 520.6
W-C Designs and Spring 39.3 41.8
Unallocated costs 12.6 8.0
903.4 758.6
Operating profit/loss by
segment:
Waterford Crystal (18.1) 11.2
Ceramics Group (99.1) (19.1)
W-C Designs and Spring (1.0) (1.2)
Unallocated costs (12.6) (8.0)
(130.8) (17.1)
12. Marketing Strategy
Promotion
The Group’s various brands are generally not
marketed together as complementary products.
But each brand is marketed individually.
Department store displays, word of mouth, and
the websites are the primary marketing tools
utilized by the company.
Involved with the creation of trophies for major
sporting events and with special projects such
as the Times Square New Year’s Eve Ball.
Introduces special pieces to commemorate
special events.
13. Marketing Strategy
Distribution Channels
Waterford Wedgwood distributes
its products through a multi-
channel distribution network:
(including wholesalers and
arrangements with retail and
department chains),
direct retail from company-owned
establishments (including the 2007 Revenues
Waterford Crystal Gallery at the
Europe United
Waterford, Ireland factory), (except UK) Kingdom
26% 17%
mail order, and
via regional internet retail websites.
Asia
10%
North
America Rest of the
41% World
6%
15. IFE Matrix
KEY INTERNAL FACTORS Weight Rating Wtd Score
STRENGTHS
1 Standard production procedures, high quality products being
0.06 4 0.24
offered
2 Hand-made, unique crystal pieces based on artisan processed
0.03 3 0.09
production by trained craftsmen
3 Code of corporate conduct reflects the company's concern for
investors, directors, and employees. Thus, fits into the criteria
0.03 3 0.09
for being socially responsible and has made this info available to
public and has established good public relations
4 Introduction of additional product lines to follow trends while
0.06 3 0.18
maintaining quality and tradition
5 Collaborative and cooperative relationships with famous
0.04 3 0.12
designers and internationally known chefs
6 Public’s ongoing positive perception of the Waterford
0.07 4 0.28
Wedgwood brands
7 Has the goodwill of Waterford that has beenin the market for
0.01 4 0.04
225 years
16. IFE Matrix continuation
Wtd
KEY INTERNAL FACTORS Weight Rating
Score
WEAKNESSES
1 Increasing trend in the negative net income from 2006 to 2007 (negative 270.8 million
0.1 1 0.1
euro net income for 2007)
2 Declining revenue from 772.6 million euro to 741.5 million euro; Struggled in maintaining
0.09 1 0.09
sales which have declined every year since 2000
3 In a state of balance sheet insolvency. A deficit in their equity account due to defined
0.08 1 0.08
benefit pension schemes in long-term liabilities
4 No vision statement 0.02 2 0.04
5 No special efforts made on advertising, in order to reinforce the image of their products
0.04 2 0.08
they will be needing a new advertising strategy
6 Significant problems with debt management 0.06 1 0.06
7 Centralized production for each of its products results in significant transportation costs,
0.05 2 0.1
given dispersion of sales around the world
8 Products are considered as heirloom that gives a brand perception of being old or
0.01 2 0.02
associated with prior generations, reducing sales
9 Multichannel distribution network including wholesalers and arrangements with select
0.06 1 0.06
retail and department chains
10 Diversified into other areas of household luxury products such as linens, flatware,
0.08 1 0.08
cookware
11 Various brands are not marketed together as complementary products but being
0.07 1 0.07
marketed individually
12 High labor costs which is much related to hand-crafting 0.04 1 0.04
TOTAL 1.00 1.86
17. Competition
A division of Corning Incorporated A French crystal company based in
based in Corning, New York. Levallois Perret, France.
Offers a full line of luxury glass Offers a wide-range of luxury glass
products including barware, stemware, items
vases, and decorative pieces. (jewelry, tableware, stemware, lightin
g, and decorative crystal)
Distributes its products through its
website and specialty retailers. Distributes its products through high-
end retailers throughout the world.
Sales was approximately $400 million.
Had sales of $187 million in 2006 and
net income of $10.9 million.
18. CPM Matrix
WATERFORD
WEDGWOOD, STEUBEN BACCARAT
CRITICAL SUCCESS FACTORS Weight PLC
Rating Score Rating Score Rating Score
1 Product Quality 0.1 4 0.4 3 0.3 3 0.3
2 Financial Position 0.25 1 0.25 3 0.75 3 0.75
3 Global Expansion 0.05 3 0.15 3 0.15 3 0.15
4 Market Share 0.2 4 0.8 3 0.6 2 0.4
5 Effectiveness of Sales
0.15 1 0.15 4 0.6 4 0.6
Distribution & Advertising
6 Production Capacity and
0.2 2 0.4 3 0.6 3 0.6
Efficiency
7 Technological Advantage and
0.05 4 0.2 4 0.2 4 0.2
E-Commerse Expertise
TOTAL 1.00 2.35 3.20 3.00
The company’s total weighted score in the CPM is 2.35 which is not exactly
satisfactory considering the high scores of Steuben and Baccarat.
19. EFE Matrix
Weighted
KEY EXTERNAL FACTORS Weight Rating
Score
OPPORTUNITIES
1 Outsourcing of production to countries with lower labor
0.1 2 0.2
costs (Europe and Asia)
2 Opportunity exists for growth in the Asian region
0.09 3 0.27
(especially among brand-conscious Japanese)
3 Opportunity to innovate and expand product line to
0.05 3 0.15
cater to highly segmented markets
4
Collaborative branding agreements to increase product
lines as well as possible increase in distribution 0.04 4 0.16
channels
5 Presence of specialty markets and high-end retailers 0.04 3 0.12
20. EFE Matrix
Weighted
KEY EXTERNAL FACTORS Weight Rating
Score
THREATS
1 The dispersion of sales causes the company to be very
sensitive to exchange rates and other economic 0.35 1 0.35
fluctuations in each of its markets
2 Existing competitors have very efficient marketing and
0.1 1 0.1
product distribution
3 Presence of large competitors that also provide a full line
0.1 3 0.3
of luxury glass products
4 Competitors are offering a unique mix of products like
inclusion of fashion accessories, jewelries, lighting, etc. 0.07 3 0.21
with contemporary designs
5 Potential threat for competition from new
manufacturers in lower-cost countries in eastern Europe 0.09 1 0.09
and Asian countries
6 Competitors from Asia have the advantage of lower
labor costs, less stringent regulation, and a more limited 0.07 1 0.07
view of intellectual property
TOTAL 1.00 1.82
21. SWOT Matrix
SO Strategies WO Strategies
Focus on core products which are Extensive cost reduction to prevent further increase in net loss which
crystal and ceramics and be less contributed to the increase in a deficit in equity account
diversified. Stop acquiring companies
Efficiency in product distribution. Multi-channel distribution network is
with products that do not fit with the
costly. Focus to 2-3 channels only such as internet, wholesaler/ department
rest of the organization – have
chains, and through specialty markets. Stop distribution through retail
different markets, customers,
establishments.
workforce, values, needs
Transfer outsourced production nearer to headquarters to reduce lead
Integrated Marketing. Brands should time, lower transportation costs, and improve efficiency. Ceramics and W-C
be marketed together as Designs/Spring production in Indonesia is already very far considering the
complementary products not being low market share in Asia. Move somewhere to North Western Asia or
marketed individually Europe.
ST Strategies WT Strategies
Regroup through cost and asset Regroup through cost and asset reduction to reverse declining sales and
reduction to reverse declining sales profits. The organization is plagued by inefficiency and negative profitability,
and profits. Close marginal divisions, that major internal reorganization is needed. It failed to meet its goals and
prune product lines, automate objectives over time despite its competitive advantage. It is time to close
processes, and institute expense marginal divisions, prune product lines, automate processes, and institute
control systems among others. expense control systems among others.
Divest unprofitable brands especially those that require too much capital
and do not fit well with company’s core business (crystal and ceramics).
Negotiate for loan restructuring.
22. SPACE Matrix
INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION
Competitive Advantage Industry Strength
(-6 worst, -1 best) (1 worst, 6 best)
a. Market Share -3 a. Growth Potential 2
b. Product Quality -1 b. Profit Potential 1
c. Latest Technology -3 c. Financial Stability 1
d. Brand Recognition -2 d. Resource Utilization 2
e. Distribution Channels -4 e. Ease of Entry into Market 3
f. CSR Programs -2 f. Productivity, Capacity Utilization 3
Average Score -2.5 Average Score 2
Total X axis score -0.5
Financial Strengths Environmental Stability
(1 worst, 6 best) (-6 worst, -1 best)
a. ROI 1 a. Technological Changes -2
b. Leverage 1 b. Rate of Inflation -4
c. Liquidity 5 c. Demand Variability -1
d. Working Capital 2 d. Price Range of Competing Products -3
e. Cashflows 1 e. Competitive Pressure -3
f. Inventory Turnover 2 f. Price Elasticity of Demand -3
g. Growth Ratio 1
Average Score 1.857143 Average Score -2.66667
Total Y axis score -0.80952
Position: -0.5, -0.8
23. SPACE Matrix
The directional vector is
located in the lower-left or
0.9
0.8
defensive quadrant, which
Conservative 0.7
Aggressive
suggests that Waterford
0.6
0.5 Wedgwood PLC should focus
0.4
0.3
on rectifying internal
0.2
0.1
weaknesses and avoiding
-1.0 -0.9 -0.8 -0.7 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9
-0.1
external threats. Defensive
-0.2 strategies include:
-0.3
Defensive -0.4 Competitive
-0.5 Retrenchment
-0.6
-0.7
-0.8 Divestiture
-0.9
-1.0
Liquidation
Related diversification
24. Grand Strategy Matrix Organizations
under this situation
compete in slow-
growth industries
RAPID MARKET GROWTH
and have weak
competitive
positions.
WEAK STRONG
COMPETITIVE II I COMPETITIVE The company must
make some drastic
POSITION POSITION changes quickly to
avoid further
decline and possible
III IV liquidation.
Extensive cost and
asset reduction or
Waterford retrenchment
Wedgwood PLC should be pursued
first.
SLOW MARKET GROWTH
It should also
consider divesting
unprofitable
divisions/brands.
25. QSPM
Retrenchment Divestiture
KEY FACTORS Wt.
AS TAS AS TAS
OPPORTUNITIES
1 Outsourcing of production to countries with
0.1 3 0.3 3 0.3
lower labor costs (Europe and Asia)
2 Opportunity exists for growth in the Asian region
0.09 1 0.09 1 0.09
(especially among brand-conscious Japanese)
3 Opportunity to innovate and expand product line
0.05 1 0.05 1 0.05
to cater to highly segmented markets
4 Collaborative branding agreements to increase
product lines as well as possible increase in 0.04
- - - -
distribution channels
5 Presence of specialty markets and high-end
0.04
retailers - - - -
26. QSPM
Retrenchment Divestiture
KEY FACTORS Wt.
AS TAS AS TAS
THREATS
1 The dispersion of sales causes the company to be
very sensitive to exchange rates and other economic 0.35 4 1.4 3 1.05
fluctuations in each of its markets
2 Existing competitors have very efficient marketing
0.1 2 0.2 2 0.2
and product distribution
3 Presence of large competitors that also provide a full
0.1 2 0.2 1 0.1
line of luxury glass products
4 Competitors are offering a unique mix of products
like inclusion of fashion accessories, jewelries, 0.07 2 0.14 1 0.07
lighting, etc. with contemporary designs
5 Potential threat for competition from new
manufacturers in lower-cost countries in eastern 0.09 3 0.27 2 0.18
Europe and Asian countries
6 Competitors from Asia have the advantage of lower
labor costs, less stringent regulation, and a more 0.07 3 0.21 3 0.21
limited view of intellectual property
1.00
27. QSPM
Retrenchment Divestiture
KEY FACTORS Wt.
AS TAS AS TAS
STRENGTHS
1 Standard production procedures, high quality products
0.06
being offered - - - -
2 Hand-made, unique crystal pieces based on artisan
0.03 2 0.06 2 0.06
processed production by trained craftsmen
3 Code of corporate conduct reflects the company's
concern for investors, directors, and employees. Thus, fits
into the criteria for being socially responsible and has 0.03 1 0.03 2 0.06
made this info available to public and has established
good public relations
4 Introduction of additional product lines to follow trends
0.06 1 0.06 1 0.06
while maintaining quality and tradition
5 Collaborative and cooperative relationships with famous
0.04
designers and internationally known chefs - - - -
6 Public’s ongoing positive perception of the Waterford
0.07
Wedgwood brands - - - -
7 Has the goodwill of Waterford that has beenin the
0.01
market for 225 years - - - -
28. Retrenchment Divestiture
KEY FACTORS Wt.
AS TAS AS TAS
WEAKNESSES
1 Increasing trend in the negative net income from 2006 to 2007 (negative 270.8
0.1 4 0.4 4 0.4
million euro net income for 2007)
2 Declining revenue from 772.6 million euro to 741.5 million euro; Struggled in
0.09 4 0.36 4 0.36
maintaining sales which have declined every year since 2000
3 In a state of balance sheet insolvency. A deficit in their equity account due to
0.08 4 0.32 4 0.32
defined benefit pension schemes in long-term liabilities
4
0.02
No vision statement - - - -
5 No special efforts made on advertising, in order to reinforce the image of their
0.04
products they will be needing a new advertising strategy - - - -
6 Significant problems with debt management 0.06 4 0.24 4 0.24
7 Centralized production for each of its products results in significant transportation
0.05 3 0.15 4 0.2
costs, given dispersion of sales around the world
8 Products are considered as heirloom that gives a brand perception of being old or
0.01
associated with prior generations, reducing sales - - - -
9 Multichannel distribution network including wholesalers and arrangements with
0.06 3 0.18 4 0.24
select retail and department chains
10 Diversified into other areas of household luxury products such as linens, flatware,
0.08 3 0.24 4 0.32
cookware
11 Various brands are not marketed together as complementary products but being
0.07
marketed individually - - - -
12
0.04
High labor costs which is much related to hand-crafting - - - -
TOTAL 1.00 4.9 4.51
29. Recommendations
1. The first thing that Waterford Wedgwood has to do is to extensive
cost reduction program in order to stabilize its financial situation:
prevent further increase in net loss which contributed to the
increase in a deficit in equity account
2. Pursue retrenchment or regrouping through cost and asset
reduction to reverse declining sales and profits. Transfer
outsourced production nearer to headquarters to reduce lead
time, lower transportation costs, and improve efficiency. Ceramics
and W-C Designs/Spring production in Indonesia is already very
far considering the low market share in Asia. Move somewhere to
North Western Asia or Europe.
3. Integrate Marketing. Brands should be marketed together as
complementary products not being marketed individually.
30. Recommendations
4. Make product distribution efficient. Multi-channel distribution
network is costly. Focus to 2-3 channels only such as internet,
wholesaler/ department chains, and through specialty markets. Stop
distribution through retail establishments.
5. Focus on core products which are crystal and ceramics and be less
diversified. Stop acquiring companies with products that do not fit with
the rest of the organization – have different markets, customers,
workforce, values, needs
6. Divest unprofitable brands especially those that require too much
capital and do not fit well with company’s core business (crystal and
ceramics).
7. Negotiate for loan restructuring.
32. Implementation Plan
STRATEGIES ACTIVITIES YR 1 YR 2 YR 3
1. Have debts Negotiate for loan restructuring
restructured
2. Retrenchment Transfer outsourced production nearer to headquarters to reduce lead
time, lower transportation costs, and improve efficiency. Ceramics and
W-C Designs/Spring production in Indonesia is already very far
considering the low market share in Asia. Move somewhere to North
Western Asia or Europe.
Pursue major internal reorganization – close unprofitable
divisions/brands and prune product lines, automate processes, and
institute expense control systems among others
3. Make product Multi-channel distribution network is costly. Focus to 2-3 channels
distribution only such as internet, wholesaler/ department chains, and through
efficient specialty markets. Stop distribution through retail establishments.
4. Integrated Brands should be marketed together as complementary products not
Marketing being marketed individually
5. Focus on core Stop acquiring companies with products that do not fit with the rest of
products (crystal the organization – have different markets, customers, workforce,
and ceramics) values, needs
and be less
diversified
5. Divestiture Divest unprofitable brands especially those that require too much
capital and do not fit well with company’s core business (crystal and
ceramics)
33. Conclusion
Waterford Wedgwood PLC has grown so large through a number of
company acquisitions and mergers.
Unfortunately, strategic managers of the company have failed to
capitalize on external opportunities, minimize external threats, take
advantage of internal strengths, and overcome internal weaknesses
overtime.
Thus, the organization is now afflicted with inefficiencies resulting to
negative profitability, deficit in equity account, and declining sales.
It failed to meet its goals and objectives over time despite of its
competitive advantage. Thus, major internal reorganization must be
implemented.
It is time to close unprofitable divisions/brands and prune product
lines, automate processes, and institute expense control systems
among others.
34. Conclusion
The recommended strategies based on the facts of the case
are very different from the company’s plan for the future
which includes:
Attempt to more effectively mange labor costs, as well as continue
to introduce new and contemporary product lines to complement
its existing offerings.
Continue to introduce additional product lines to follow trends
while maintaining quality and tradition.
Increase the number of distribution channels through which their
products are sold.
Expand into additional markets (like Asia).
35. Conclusion
Further, based on the 2007 financial report, only the group of
Waterford Crystal (27% of revenue) had positive net income. The
ceramics group which has the biggest operation together with D-C
Designs & Spring were responsible for the organization’s poor
performance.
The company had too much diversification and expansion of line items
which are misfit with its core business like linens and cookware.
The company has to refocus to its core products and consider divesting
divisions which require more resources to be competitive than the
company can provide.
Furthermore, the company has to work on a more efficient product
distribution to provide better service at a lower cost and integrated
marketing.