Sustainable Solutions Paper Walden University

Running head: SUSTAINABLE SOLUTIONS PAPER 1
Sustainable Solutions Paper
Consumer Products Incorporated, Corporation (CPI, Corp.)
Parts I, II, III and IV
Mariam M. Khan, MBA
DDBA 8160 - Business Strategy and Innovation
Final Paper
October 30, 2011

SUSTAINABLE SOLUTIONS PAPER 2
Abstract
In this 4 part paper on CPI, Corp. (Consumer Products Incorporated, Corporation), I offer the
following list of analyses supported with current research.
 Stakeholder Identification and Value Analysis
 General Force Analysis
 Porter’s Five-Forces Industry Analysis
 Detailed Value Chain Analysis
 Detailed SWOT Analysis
 Detailed SCOT Analysis
 Key Success Factors: Integrating the Analysis
 Analyzing the Company Strategy Type
 Analyzing the Company Strategy Moves
 Alignment & Goals Analysis
 Action Plan Analysis
 Fitness Landscape Translation Analysis
 Boid Analysis: Rules for your topic?
 Ray’s Simulation Translation & Fishing Simulation Translation: Industry Evolution
Modeling
 Life-cycle Assessment (LCA)
 Compliance to Innovation Analysis
 “Sustainable Value Framework” Synthesis: Detailed Driver Analysis

Sustainable Solutions Paper
CPI Corp. (Consumer Products Incorporated Corporation) owns several subsidiaries that
offer photography services to customers in family-oriented portrait studio environments in Wal-
Mart (Picture Me Portrait Studios), Sears (Sears Portrait Studios), Babies “R” Us (Kiddie
Kandids Portrait Studios), Buy Buy Baby (Shooting Starts Portrait Studios), and also offers on-
location event photography through Bella Photography. My company, CPI, Corp. is one that I
am managing at for almost 1 year and have been employed at for almost 2 years. As a researcher
examining this organization I will do my best to step back and be objective. I discuss the
following topics for this Sustainable Solutions Paper:
Part I
Stakeholder Identification and Value Analysis
“St. Louis-based CPI Corp. (NYSE: CPY), led by Chief Executive and President Renato
Cataldo, operates photography services in about 3,100 locations in the United States, Puerto
Rico, Canada and Mexico” (Volkmann, K., 2010, par. 7). A website called YCharts that displays
an interactive chart for CPI of the past 4 years from 2007-2011 announces that CPI Corporation
Shareholders Equity is -3.60M (2012). That’s negative 3.6 million dollars! This means that
shareholders of CPI have lost so much money invested as a result of steady decline in sales over
the past years that with a maximum earning of $17.22 million in April 2010, the average is only
7.31 million and is managing to keep CPI afloat of the market. The all time low in a fiscal year
was -6.59 million dollars in October 2009. This chart includes data after CPI acquired Kiddie
Kandids and Bella Photography as this was done by 2011. Stockholder information as of 2009
located on the internet at iStockAnalyst indicates that the largest stockholder of CPI is Ramius
group, specifically subsidiary company RCG Starboard Advisors, LLC, that owns
“approximately 23% of the Company's outstanding shares of Common Stock” (2009, par. 1).

However, it is also important to note that while company investors, shareholders, and
stockholders are stakeholders, so are management, employees, customers, governments when
they view themselves as such, and others that have a stake in the company’s well-being and
social good.
The enterprise-level strategy type for CPI is the classical enterprise strategy where CPI
“concerns itself only with economic performance” and “Decisions are made entirely on the basis
of the "bottom line"” (Carroll, Chrisman, and Meznar, 1990, p. 335). CPI’s stockholder strategy
is to maximize benefits to stockholders or "financial stakeholders" with benefits of lower
economic and social cost being defensively broad towards stakeholders with their policies and
attitudes. This is important because “Enterprise strategy is closely associated with the concept of
corporate social responsibility” (Carroll, Chrisman, and Meznar, 1990, p. 332). The 2
components of enterprise strategy are “the environment to which the firm adds value” or
stakeholders and “the types of value the firm adds” or benefits (Carroll, Chrisman, and Meznar,
1990, p.333-334). In other words the benefits must be provided to stakeholders (Carroll,
Chrisman, and Meznar, 1990, p. 334). Also important to sustainability where social
responsibility and profit are concerned…
“Socially responsive activities are not necessarily related to improved or superior
profitability. Rather, as strategic management theory suggests, superior performance
comes from successful implementation of a strategy that matches organizational skills
and resources with environmental opportunity in ways that create competitive advantage”
(Carroll, Chrisman, and Meznar, 1990, p. 332).
Put another way “…firms generate both economic costs…assessed against economic
revenues…and social costs…along with economic revenues and social goods…total value added
by a business to society can be interpreted as the difference between its total benefits (economic

revenue plus social goods) and total costs (economic costs plus social costs)” (Carroll, Chrisman,
and Meznar, 1990, p. 333).
Evidence that supports this view of CPI includes the lack of concern with customer or
employee dissatisfaction such that policies be changed or improved. Policies include those
concerning long shifts and short coverage of only one employee during slow periods or workload
on one employee. For example, CPI has a record of saving labor hours by scheduling only one
person to work when there are few appointments on the schedule not taking into account walk-
ins, pick-ups, emergencies, and other issues that can arise. Employees have complained of the
workload when working alone and customers have complained numerous times as well. As a
result, there is a high amount of turnover for both associate photographers and studio managers
who are the lowest level of management. CPI does not care and many times continues to
promote the person who can work the most hours at these locations to management to replace a
former manager or hire from outside of the company until that employee also quits or succumbs
to the pressure. Associate photographers are considered a dime a dozen since they are at the
bottom of CPI’s hierarchy however CPI should notice how hard it is to hire around Christmas
time which is the busiest retail season of the year. Photographers are asking for more pay and
cannot be hired by CPI at such a high hourly rate. They therefore do not get hired, creating even
more workload and the cycle continues. This is not a priority for CPI because the majority of the
year is made up of months that do not fall within CPI’s holiday season calendar and therefore in
CPI’s eyes, employee satisfaction is not an important concern. CPI feels that it addresses
employee satisfaction with its commission and bonus program based on sales earned. Clearly,
this is not enough as turnover continues.
When customers complain, they are given the standard 3 free sheets for the next visit to
appease them which never resolves the issue of not having enough employees scheduled.

Employees are told that the policy of how many appointments are on the schedule dictates how
many employees will work. Either way the issue never gets resolved and occurs again and again
because it is policy. The same customer will visit again and complain of the exact same thing and
receive the same incentive to return to a portrait studio. Many customers do not return but CPI
counts on those that do return to keep spending money. Therefore, economic concerns are a
priority for CPI and not social concerns. For all that to be continuing, CPI is not even increasing
profits despite the purchase of more subsidiaries and still CPI does not change its strategy.
Implications for my conclusion include the fact that unfortunately “clear definitions and
measurements of "social goods" and "social costs" have not yet been reached despite progress in
welfare economics and social accounting. This makes measurement of the firm's value to society
difficult” (Carroll, Chrisman, and Meznar, 1990, p. 333). However in CPI’s case where
sustainability or charity are concerned, there are no programs for either so there is no social good
within the company to measure since I have been an employee there or from any other time
period I have researched.
According to the chart of “Framework for Classifying Organizational Cultures” CPI’s
type is level 1: Compliance Culture where the value [is] preserved consistent with laws and
norms” (Colbert, Freeman, and Wheeler, 2003, p. 11). Level 1 does minimum harm but does not
do any good either at a maximum level (Colbert, Freeman, and Wheeler, 2003). There is not any
value created on a level 2 basis nor sustainable organization culture of level 3. At level 3 there
would be economic, social and ecological value maximization. These are not goals or priorities
for CPI. Other competitors yet to be discussed are partaking in socially responsible practices and
CPI has not followed suit.
In answer to the following 3 questions in the article Focusing on Value: Reconciling
Corporate Social Responsibility, Sustainability and Stakeholder Approach in a Network World, I

have analyzed CPI.
1) Is our value proposition feasible? Can it be done within the currently accepted societal
framework of how we treat each other? Does it operate at Level 1 (do minimum harm) or at
Level 3 (do maximum good)?
CPI’s value proposition can be interpreted through its mission to bring smiles to create
lasting memories and is only feasible for those customers for which it has done so largely due to
employee skill and manager attitudes that ensure customer satisfaction. It can be done, of course.
However, the problem with this value proposition is that it only operates at Level 1 and not at
Level 2 or 3. As far as a lack of social responsibility and sustainability concern with its policies
and actions, CPI has not done the global society, earth, or even local community any good at all
that has been able to be located at the time of this research.
2) Is there support for the proposition from those groups that are affected? Is there a process for
gaining stakeholder cooperation and support for the proposition? Is value created for each
stakeholder group in a synergistic way, avoiding excessive trade-offs?
CPI has not thought of short-term ecological sustainability much less long-term. There
are no goals in the short-term as such to work on in the long-term. There must be short-term
goals starting out with small value added to society to grow larger benefitting society on a larger
scale before CPI can think of ecological sustainability in the long-term. However, at this time,
CPI lacks care for any sustainability goals at all. There have not been any publications located at
this time indicating that the groups affected as customers or in the community have supported
proposition for sustainability to be advocated as one of CPI’s goals. There is not any value,
concerning sustainability, being created for each stakeholder group in any way.
3) Can the value that is created be sustained over time - economically, socially and
environmentally? As we have noted this is both a short term and long term issue and a culture

and capability issue.
Again, if CPI were interested in creating value, it would need to start out with small
impact and grow larger in the short-term before turning its focus to the long-term. I believe that
value created can be sustained economically with dollar upon dollar (or any other currency) put
back into profits and reused towards more sustainability. There are also social benefits to the
environment, job creation, employee and customer satisfaction, and indigenous populations in
less developed countries that will benefit. I will discuss detailed sustainability issues beyond
“going green” below in the Value Chain Analysis such as alternative energy, energy saving
equipment and practices, innovative technologies available that are beneficial to a photography
company, digitizing databases to hold otherwise paper filing systems, and sustainable policies
put into practice such as what materials to use in the entire portrait studio location in all countries
of operation. The culture at this time in many developed and developing countries around the
globe is that of extreme interest in preserving the environment and our culture completely
advocates sustainability and CPI is entirely capable of it such as other competitors have done
which will be discussed in greater detail under the Threats portion of the SWOT/SCOT Analysis.
The implications for my responses include that regardless of my findings, CPI may not
change one policy, procedure, or practice and continue to believe that it does not need to
implement these strategic changes into its operations to survive the next few years in competition
with other companies in the industry. When other companies’ practices has not set an example in
CPI’s eyes, my findings may fare little headway in making CPI budge to sustain itself.
General Force Analysis
“The essence of formulating competitive strategy…is relating a company to its
environment” (Strategy, 2005, p. 3). Looking at a company’s environment is the key to
evaluating the external factors affecting a company’s ability to meet their vision, mission, goals,

and performance. Upon examining factors in CPI.’s external analysis such as customers, pricing
constraints, competitors, technology, work-style trends, and major uncertainties, there are several
areas that have developed well to lead to profits. Regarding customers, CPI has a loyal customer
base and seeks to increase it at all times to acquire more lifelong customers. This is evidenced by
the fact that Sears Portrait Studio and all other subsidiary companies have a loyalty club referred
to as a smile saver or super saver membership that customers become a part of by receiving the
associated card to keep with them in their wallets that entitles them to benefits for the annual
membership. There is a onetime annual fee that is renewable for a small amount every year for a
lifetime even if a customer skips renewal one year. Currently, the goals for studios to sell the
membership are 20%. This is both to new customers and returning customers who do not already
have a membership. Goals are set for each studio to meet a percentage of targets that are the
standard for each day, week, period, and quarter. Studios have until the end of a period, generally
to make up for numbers that were not attained each day or week. A period is 4 fiscal weeks.
Pricing constraints include talking customers into taking something more than the “No
Purchase Necessary” option with a free item as there is also a free session fee. The session fee is
normally how employees get paid, however, when a studio has too many free items given out
with no purchases made, there is no profit and there are further payments to employees’ accounts
on payday hurting profits after labor expenses are paid out. CPI needs to be more careful when it
offers a special deal at a very low price, as the free offers are always there with no requirement
for a customer to buy anything. CPI does not price match and will instead offer customers a
coupon or deal of their own. There has to be a bottom line on what the minimum is that a
customer can be charged for a studio to meet its sales targets, however, with CPI’s offers, pricing
constraints seem to take a back seat to customer service. CPI wants no customer complaints but
then requires employees to meet certain sales guidelines, which often conflict with customer

service when employees are taking actions to increase sales. An example includes limiting how
many times a customer can use a certain coupon. The way CPI manages, complaints of poor
sales for a studio location are not discussed until it is time to evaluate those statistics in a report
that is generated and emailed to each studio location so that district managers can discuss it with
individual studio managers in the next monthly studio visit between the two managers who meet
face to face.
Competitors include JCPenney Portrait Studios and Target Portrait Studios owned by
Lifetouch, Inc. that also offers school, sport, and on-location photography for events. Therefore,
they are also a direct competitor to Bella Photography of CPI. I discuss the competitors in greater
detail below in the Threats portion of a SWOT/SCOT Analysis. Related to technology, it has
changed from film photography to digital and allows customers to view and print their portraits
the same day while also being able to view photos online for 6 months with the ability to view,
reorder, or share with family and friends via email, facebook, or a web link due to large off-site
photo storage server databases. Additional technology of being able to archive photos after 3
months in the studio database to an online server for 6 months to 2 years has made this
technological advance happen. As computers, data basing, software, and programming have
become advanced, so too has the ability of CPI to offer more services to customers that is
designed to increase sales. Customers can re-order and have those directly shipped to their
address and order products not offered in-store such as photo mugs, photo key chains, and photo
Christmas tree ornaments.
Work style trends in the photography industry revolve heavily around the seasons of the
year which bring with it different events for which families have their children photographed.
Holiday season preparation starts at the end of August but officially in October per the official
CPI calendar available on the intranet browser and paper training manuals along with numerous

emails. According to advertising and marketing trends, CPI ships out its seasonal signage and
fliers to distribute to customers. In August, the end of the summer props, backgrounds and
specials make for increased sales as children are out of school but by September there are
specials on back to school photos. This is evidenced by the numerous fliers and specials
advertising sales I personally received as I managed a studio location. October is Halloween
while November is Thanksgiving and both months are busy for fall season photos. The day after
Thanksgiving, Christmas photos start for December, which is the busiest season of the year
anywhere in retail sales, but especially for portrait studios. (There are also those customers who
take their Christmas photos early around the time of Thanksgiving). Sales amount to up to 90%
of the year’s profits as stated by corporate management in numerous emails to studio managers.
The Sears Portrait Studio Internet browser has numerous links to how to maximize sales and
customer service during this period. January is a slower period except that there are still New
Year photos, especially for those that missed Christmas photos. February is popular for
Valentine’s Day, especially amongst couples who are newly engaged or married and additional
signage is received into each studio while old signage is discarded. April is the beginning of
spring as Easter photos are the next big thing after Christmas and June is the start of summer.
Spring colored signage differs from summer and in slower studio locations the hours of operation
are changed to an early afternoon closing three days a week until fall. In very slow and low
volume studios, the studio closes one day a week but maintains regular hours of operation the
rest of the week. The period in summer is slow due to summer vacations and many families
travel. Many steps in advertising are taken with coupons, specials, deals, and incentives to get
parents to come in with their families. 4th of July is popular especially for military families and
an American flag background is ever popular. August puts us back at the end of the summer. CPI
tries partnering with different companies, depending on the time of the year, to increase profits.

Last Christmas, there was a Shutterfly gift card offer of $25 to each customer who purchased a
cd-rom. This summer there is a FotoNet offer of up to 90% savings for each customer who signs
up to provide their email. Finally, major uncertainties include not knowing when sales will dip
other than generalizations of slower periods caused by different seasons. The market, considering
the recession, is unpredictable than seasons in previous years.
Upon examining broader forces that can “affect entire industries… and that influence and
affect all businesses in an economy… such as religion, values, technology, demographics…”
CPI fares well but there is room for improvement (Hockin, 2011, p. 1-2). As far as religion, CPI
goes beyond considering sales to enact and follow anti-discriminatory policies within the
company and state guidelines. Any employee found to be in violation of these policies is the
recipient of swift action up to and including termination. As far as sales, CPI’s profitability
depends heavily on occasions for which customers choose to be photographed at numerous
portrait studios. Many occasions are determined by a customer's religion such as Christmas,
Easter, Hanukkah, Eid, and the list goes on. Many celebrations that customers choose to be
photographed for center on values such as respect for the military. On Fourth of July with the
offering of the traditional American flag background, many military families choose to use it to
be photographed. St. Patrick's Day is another less popular celebration, but many parents find it
suitable to have their children photographed in green or in front of a green background.
Leading to green, there are many technologies that have developed long enough ago that
competitors are using them related directly to “going green” impacting sustainability issues. CPI
is far behind the pack and does not seem to mind. Perhaps the single most used resource within a
photography companies such as CPI is paper. We know that paper is used to generate countless
reports but the main product of a photography company is a portrait. Portraits or pictures are
prints on photo paper and eventually even customers that purchase digital cd-rom images print

out their favorite pictures to display and give gifts to family. Currently, CPI offers prints on
studio glossy or lab delivered luster quality photo paper. Due to the way the ink pigments hit the
paper, recycling of the photo paper cannot be done as it is said by CPI. There have been
technological developments in recycled photo paper, photo paper that can further be recycled for
discarded prints, and environmentally friendly ink that enhances the many colors on a portrait
making it possible to view with appreciation. CPI, however, has chosen not to make good use of
such technological advancements and innovative products because switching over to this type of
product would cost more than the current photo paper that CPI is using. Again, CPI’s bottom line
is concerned with the economic or monetary factor. CPI does not see the long-term benefits
economically or environmentally with changing its main resource to a better alternative.
As far as demographics, CPI has studio locations where customers are concentrated in a
lower to middle class social strata and other locations where customers are concentrated in a
higher class willing to spend more money. Each of these areas has differing factors related to
crime making it less possible to take pictures, immigration affecting many first-generation
pictures in clothing appreciative of ethnic heritage, schools better or worse than other schools
affecting children's portraits and the associated quality by parents, and many other factors. CPI
does not target its marketing to specific demographics in order to reach a concentrated
population that would appeal to them to spend more money to earn more profits. Instead, CPI
chooses to use a one-catch-all approach to advertising the same offers to all customers. This has
been the subject of many studio manager complaints as customers in a lesser affluent area take
advantage of the free-no purchase necessary offers to do just that and buy nothing which drives
down sales. A better approach would be to offer large discounts ensuring that some profit is
earned.
Porter’s Five-Forces Industry Analysis

“The collective strength of these forces…determines the ultimate profit potential of an
industry” (Strategy, 2005, p. 14). The following 5 forces are analyzed for CPI here.
Jockeying for position among current competitors
CPI is currently among the top position of its competitors to provide quality customer
service, portrait products, customer loyalty, great value, and more. This information is based on
conversations with mid-level management while they discuss strategies developed by upper level
management to improve or maintain sales. Customer comments are also a factor in deciding that
CPI has turned many competitors’ customers into loyal CPI customers. There is always a lag
time in fiscal period, quarter, or year earnings being reported for comparison purposed with
competitors, however.
Threat of new entrants
The threat of new entrants is a limited risk to CPI as it has already entered the industry
and has developed while a new entrant would take time to become a competitor to CPI.
However, a competitor could buy or introduce a subsidiary similar to CPI with Kiddie Kandids
or Bella Photography. That would be a true threat and would take time to evaluate for factors of
customer loyalty and sales. Customers could become disloyal and sales could flow to the
competitor.
Threat of substitute products or services
CPI has some threats with its digital services if a large amount of competitors start
offering the expensive “green screen” technology which allows customers to be photographed in
front of a green background and then digitally be placed in front of any electronic background
selected in a database. At this time, however, this technology is so costly to implement in all
portrait studios of any competitor, that it is not a huge threat. Sometime in the near future when
the cost of this technology goes down, it will be more likely that competitors offer it and pose an

increased threat to CPI. The digital age has definitely taken over film photography but “green
screen” is not a preference for a majority of customers I have talked to as they state that they still
prefer actual backgrounds they can see without sitting at a computer to select. If on-location
photography services become so cheap that they would take over in-studio sessions, there could
be a threat of green screen service, however this is highly unlikely. For the future, however, CPI
needs to strongly consider implementing this technology in its portrait studio locations.
Bargaining power of customers
The bargaining power of customers has some limits by policy. For example, CPI allows a
maximum discount of 20% on sale or packaged prices and 40% on regular priced items, the only
exception being 50% discounts on color photo sheets only. For all other items, the 20-40% off is
the norm. The only way a customer can get 60% off is by purchasing a discount package already
including the 60% off in the price. Besides these policies, there is not much room left for
customers to bargain on prices as price matching is not allowed. The only further exceptions are
to those customers who have experienced bad customer service in the past and are causing CPI
the risk of losing customers, and hence, sales if they are not retained with an incentive. The
incentive is usually a letter or verbal offer from studio or district management of 3 free sheets in
color combinable with any other offer such as a coupon. This is good towards a future
appointment to have photos taken deducted from the overall purchase amount.
Bargaining power of suppliers
As of now, since CPI is offering the main service of photography and then the associated
portrait prints as portrait products, there is not much of a supplier list relevant to customers.
There are items such as office stationary and Dell computers for its equipment along with
Olympus cameras that are necessary for the efficient operation of studio locations that are
supplied through certain brands. These are stable suppliers though and are not a threat to the

functioning of CPI.
Detailed Value Chain Analysis
“The goal” of the Value Chain “Analysis is to assess both the likelihood and impact of
potential new entrants into the market and of substitute development and migration of customers
to substitute products or services” (Hockin, 2011, p. 3). “A differentiation advantage may be
achieved either by changing individual value chain activities to increase uniqueness in the final
product or by reconfiguring the value chain” (The Value Chain, 2010). CPI can achieve
differentiation albeit with more costs which would result in a trade-off between cost and
differentiation (The Value Chain). CPI can do this by forward integrating to perform functions
that were once performed by customers. It can also backward integrate giving itself more control
over inputs. It can also “implement new process technologies or utilize new distribution
channels… to be creative… to develop a novel value chain configuration that increases product
differentiation” (The Value Chain, 2010).
CPI’s skills include those of professional portrait training to its photographer associates
and many photographers come to CPI with education or previous experience in photography.
CPI also provides specific training on how to use the equipment and software to digitally edit
and manipulate digital images to make satisfactory portraits for customers. Skills include “to
photograph” but perhaps in the eyes of CPI management the most important skill is “to sell”.
Associates must be comfortable in a selling position from day one although they can obtain
photography training as they continue their employment.
CPI, like any retail business, wants customers to experience positive customer
satisfaction and ensures that all associate photographers understand this. CPI has digital single
lens reflex cameras on sturdy tripods in all of its studio locations with installed flashes, an array
of backgrounds, numerous props, seating props for various posing arrangements of subjects and

a computer network at each studio location. This network is used to upload and edit digital
images before seating customers at sales stations with further computers in the network on which
customers view and select their images.
CPI's capabilities include its great market location to the demographic of its customer
base. CPI portrait studios are located in many malls, shopping centers, and a few freestanding
buildings within larger department stores. Due to its convenient location, millions of customers
spend millions of dollars coming to CPI portrait studios for photography. With its technology
and skilled employees, CPI is capable of providing quality photography at its well-placed
locations. In addition, CPI is capable of offering affordable prints to its customers due to having
a personal lab with printing capabilities at a separate location from which all orders are shipped
back to individual studios for customer pickup. This helps keep costs to the customers low as
each individual portrait studio does not have costly printing equipment. This in turn saves CPI
money on expenses. All of the printing equipment is maintained at the central lab for each area.
When considering competitors in the market, there are many costs associated with
opening a portrait studio location ranging from installing the expensive equipment for the
portrait studio, setting up the point of sale computer system, to having a network of computers
with a server, sales stations and other computers used to upload and edit digital images while
overseeing the storage capabilities of the database. Due to this reason, there are not many
potential new entrants into the market as competitors of CPI. There are independent
photographers who may open one studio location competing with CPI, however their customer
base is so small due to having only one location that CPI is a giant photography company
compared to an independent photographer. With the recent economic recession, I have
personally talked to many independent photographers who have chosen to close their studios and
work strictly to shoot on-location events for customers thereby eliminating the costs of running a

studio set up. In my initial job search before obtaining employment for CPI, I called many
independent photographers listed in the phonebook at the start of the recession. At that time they
stated that they were not looking for new photographers to work under them. In fact they had let
many of their photographers go to save costs. Many were working as a one man or one woman
show and were therefore truly independent in every sense of the word. As far as large parent
companies with subsidiaries entering the market, again it would be difficult for a company to
open hundreds or thousands of studio locations to compete with CPI's 3000+ studio locations in
North America and Puerto Rico. The costs of the equipment and labor for set up would stagger
into millions of dollars. What is more likely is that a medium-sized or large company that
already exists would merge or acquire more subsidiary companies also already in existence.
Those companies could also place a bid to buy otherwise bankrupt portrait companies such as
CPI did when it bought Kiddie Kandids. The impact of such a potential new entrant into the
market would immediately affect CPI if the competitor advertised on a large scale and many
returning and potential customers heard of the ads.
One competitor, that used methods similar to those described above to expand its
subsidiaries acquiring more portrait companies under its corporate umbrella is Lifetouch,
Incorporated. Lifetouch is made up of JCPenney Portrait Studios, Target Portrait Studios, and
on-location photography services ranging from the traditional annual school photos, graduation,
children’s’ sports, church photos and all types of events. These other subsidiary companies
include Lifetouch Church Directories and Portraits Inc., Lifetouch Productions Inc., Lifetouch
National School Studios Inc. and Media Productions. “One of the largest US portrait
photographers, employee-owned Lifetouch runs about 700 photography studios in J. C. Penney
and Target stores nationwide and some 15 stand-alone FLASH! Digital Portraits locations in half
a dozen states” (Lifetouch, Inc., 2011). Lifetouch boast that, “As the world's largest employee-

owned photography company” its mission “is committed to building strong relationships, loyalty
that lasts a lifetime, and memories that last forever” (Lifetouch LinkedIN).” Lifetouch Inc.
Employee Stock Ownership Plan currently has over 14,600 active participants and over $1.6B in
plan assets” (Brightscope, 2011). Paul Harmel is the CEO and chairman. Lifetouch is a private
company operating in the United States and Canada, headquartered in Minnesota and employing
22,175 employees. The top competitors of Lifetouch are listed as Harris Connect, LLC,
Walsworth Publishing Company, Inc. and Cherry Hill Photo Enterprises, Inc. Oddly CPI is not
listed here as a top competitor. However, the reason may well be because in addition to studio
photography and event photography, Lifetouch also “offers multimedia production services”
(Lifetouch, Inc., 2011). The St. Louis Business Journal does list Lifetouch and Olan Mills as two
competitors of CPI, however. “Lifetouch Inc. of Eden Prairie, Minn., bought photo company
Olan Mills Inc. for an undisclosed amount, the Minneapolis/St. Paul Business Journal reports.
Both are competitors of St. Louis-based photo studio operator CPI Corp.” (Olan Mills sold to
photo competitor Lifetouch, 2011). “The company acquired smaller rival Olan Mills late 2011”
and also acquired Herff Jones, Inc., Photography Division earlier in 2011 (Lifetouch, Inc., 2011
and Bloomberg Businessweek).
Another competitor that is not a parent company with many subsidiary portrait companies
under a large corporate umbrella, but is nonetheless a competitor to CPI with its over 170
locations in the United States, is none other than Picture People. It is headquartered in Texas and
Picture People is a former subsidiary of Hallmark Cards, Inc. The company mission or focus is
“on creating memories” “By producing fun, creative portraits and one of a kind gifts that
highlight what make each family member unique”(Picture People LinkedIN). The company
profile on Bloomberg Businessweek lists 4 key executives as Sarah Gomez, Carl Couchman,
Vickie Fine and Brian Parks (2011). Information has not been reported and could not be located

for assets and net worth, stocks and which companies Picture People views as rivals to its
business.
Both competitors of CPI, Lifetouch and Picture People, have the same skills,
technologies and capabilities described for CPI in the value chain of activities above. The only
difference with Picture People is that it does not have an off-site printing lab from which to ship
customers prints. Picture People has printing capabilities at individual studio locations which
drive their costs up for the customers. Customers loyal to Picture People who are paying for what
they desire continue to return to them for photography, however.
The likelihood and impact of substitute development is high as digital photo technology
advances every minute of every day. The iPad applications (apps) to print personal pictures,
ever-evolving cell phone cameras, online printing sites, social networking sites now with the
ability to download high-resolution images to send to print, and other such digital innovations
have become a substitute for traditional studio portrait appointments for customers. As well,
many customers are still using film and one-time use cameras. “Because technology is employed
to some degree in every value creating activity, changes in technology can impact competitive
advantage by incrementally changing the activities themselves or by making possible new
configurations of the value chain” (The Value Chain, 2010). With the equipment available to
individuals for personal purchase making it possible to scan film prints and negatives to turn
these into digital images, some customers feel it is unnecessary to go into a portrait studio for
anything but formal pictures on special occasions. CPI has caught on to this customer mentality
and has introduced an offer with a partner company, FotoNet. Customers can now upload their
personal pictures to CPI's website to obtain prints at a much lower cost than prints from pictures
taken in the portrait studio. Customers can upload digital images of absolutely any type. On this
website there are price chart showing the comparisons between how much a studio print costs

and how much personal digital images cost in various sizes. Targeted ads are also aimed at the
demographic of recent customers and those providing their e-mail addresses to entice them to use
CPI’s printing services to obtain prints from their personal images at temporarily reduced sale
prices good only to these certain customers until a certain date.
The impact of substitute development is likely to increase. This was a threat to CPI until
they found a way to turn it into a company profit. They partnered with FotoNet to offer
customers printing deals. Ideally, as these offers just started in mid-2011, one should wait a year
before analyzing any differences in company profitability depending on this move CPI has made.
Newer technologies will continue to emerge within digital imaging and more expensive
technologies already on the market will continue to drop in price over time. CPI should
continually monitor this arena of sales in order to develop it and maintain it as profitable.
The likelihood and impact of migration of customers to substitute products or services is
marginal as there are many customers who come to CPI not only for formal portraits but also
with annual memberships very regularly for casual portraits any day with no occasion for
celebration. Many customers that have their own digital cameras still believe that professional
photography is just that, professional. Therefore they would trust the better judgment of CPI
photographers for portraits rather than their own judgment with point and shoot pocket-size
digital cameras for snapshots. Substitute services for photography include mall kiosks,
unmanned coin and bill inserted snapshot machines for a strip of pictures, and the traditional
photographer looking to earn a dollar at events snapping pictures with a Polaroid camera. In
these cases of substitution, most customers are willing to pay CPI more dollars for quality and
professionalism they expect as part of satisfactory customer service by a corporate portrait
company.
Based on this detailed Value Chain Analysis CPI fares with a score of five on a scale of 0

to 10 where CPI is as good as average in the industry. CPI is not offering much to its customers
that other competitors in the industry are not offering as well. The difference then is in prices
among competitors and customer satisfaction variance which can range for different experiences
customers have due to a variety of factors. For example, one customer may experience a good
experience at a CPI portrait studio due to a baby as a subject of the photograph being in a good
mood. The same customer may visit a competitor portrait studio on a different day when the
baby is in a bad mood and does not want to be photographed. The customer will be dissatisfied
that day with their particular experience. This is all too common in the portrait industry. Many
times customers are loyal to one studio over another competitor’s studio due to these types of
experiences, which many refer to as company luck. On a slow day, CPI associates and managers
are encouraged to, and manage to, sometimes steal a customer away from another competitor
studio and offer them great service plus an annual membership. This ensures that the customer
will return to CPI for their next photography needs.
Detailed SWOT Analysis
The Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis is majorly
used in the field of business to develop an understanding of a company’s internal aspects and
external forces. Each is described separately and often, strengths and opportunities may overlap,
as can weaknesses and threats. All are considered in their totality for a thorough analysis.
Strengths
CPI’s strengths are that it continues to acquire more business by buying companies
including those of previous competitors that go bankrupt, such as Kiddie Kandids. It frequently
ventures into investments while looking to expand its portrait base, such as when it bought the
multi-million dollar wedding photography company, Bella Photography. It is continuously
developing its marketing and advertising strategies such as with current ongoing summer

promotions to boost otherwise slow summer periods. It is also testing collection packages of
portraits, cds-rom, a one year membership card, and custom framed pieces, all in a one priced
deal. By doing so, it hopes to find what the best prices are to sell to customers so they can get the
most value and be loyal to the company as returning customers; not for a year, but for a lifetime.
Many customers will continue to come to the studios for 2 decades and when their children are
finally parents, they will bring their grandchildren. This increases CPI's overall brand loyalty,
profits and the potential for new profits.
Weaknesses
CPI’s strengths could one day become its weaknesses. CPI is so focused on expanding its
company that it may, in the future, wish to acquire more subsidiary companies. CPI should be
cautious of expanding too much without first increasing innovation to stay ahead of the digital
age. By spreading out too much effort in all directions, a company can lose its focus and not
realize when it is starting to slip in its mission and goals. This successful company is not
necessarily the one with the most subsidiaries; it can even be a single company that is still
wholly focused on its mission that it is successful in reaching it in obtaining it for its customers
and all other stakeholders. CPI has tested too many different priced collections or bundles in a
one year period and there is no guarantee of how long the finalized bundle will remain in effect
as a pricing package. CPI has literally tested half a dozen different priced packages to the
frustration of many customers, managers and associate photographers. Customers have literally
walked in one week asking about pricing and come back the next week to find that the pricing
has changed once they get to the sales table. This has happened on numerous occasions I have
witnessed. CPI should be careful not to adversely alienate customers by trying to come up with
pricing that will appeal to them. In this way CPI can continue to achieve its goal of building
loyalty.

CPI has a huge problem whether it chooses to acknowledge so or not. CPI’s studio
management is increasingly frustrated with corporate management within the company. This is
due to being unable to change policies many customers complained about such as labor usage.
Not having enough people to work is a constant problem at CPI portrait studios in the eyes of
numerous customers. Customers want to get quality attention but there are simply not enough
staff members to go around. However, then CPI makes it a requirement to give attention to
customers and penalizes managers that get low average scores on customer service feedback
surveys where one of the 15 questions is centered on receiving attention from the studio manager
or whoever completes the sale for that appointment. CPI has many such conflicting practices
versus policies when it comes to the scheduling of an appropriate number of staff members in
numerous studio locations. There will not be a last time to a customer complaint but after so
many of the same complaints most companies change their policies. This is not the case at CPI.
CPI is a company that focuses on the economic benefit to being in business as its bottom line. It
will not allow more staff members to be scheduled as long as it sees it as a setback to pay more
labor costs. CPI does not want to see the view that sometimes allowing more staff will increase
sales by leading to more customer satisfaction.
CPI's other weaknesses regarding sustainability include that in spite of so many
companies going green, this company continues to waste paper in large amounts for advertising
and marketing, photo prints, and documents. Every season, 4 times a year, the company sends
out new signs to be posted in various places in the studio to attract customer attention for its
holiday, spring, summer and fall seasons. The same signs from previous seasons are immediately
discarded and are not sent back to the company for further recycled use as CPI incurs shipping
and handling charges to FedEx or UPS them back to headquarters. CPI could use these signs
towards recycled card board shipping containers. In the very least, if CPI does not want to

benefit itself they can in turn the signage over to a company that will recycle and reuse it. It is up
to the studio managers to individually be involved in recycling if the main location participates
in recycling on a store-wide level. CPI has no interest. This is evident by their lack of policy,
procedures, and practices on any green concepts. If the store cleaning staff did not leave behind
cardboard to be sent to the cardboard bailer so that it could be recycled as is Sears Mainline
policy, then Sears Portrait Studio would not be forced to recycle that either.
As far as paper usage, marketing strategies are sent out via email and require further
printing. The strategies change frequently and codes for the ringing up of transactions change
just as frequently. Paper has to be discarded constantly especially when coupons are updated. All
previous expired coupons are discarded. Photo prints are offered to the customer at pickup in
addition to what they have already ordered and paid for. The photo prints are 5 bonus sheets
offered at a 75% discounted price and if they are not purchased, they are set aside in inventory
for 6 months. After that time, hundreds to thousands of prints at just one studio location are
discarded and have to be ripped up so that the faces of the individuals in the portraits cannot be
retrieved. Documents are printed every night for the closing procedures and have to be discarded
as well after the required minimum time period of approximately 6 months. All of this paper
amounts to excessive use of resources and while CPI may find that it is earning more in profits to
justify the cost of so much printing, including its waste, CPI is not accounting for the hundreds
of thousands of trees that are being destroyed and forests that are being leveled to supply so
much paper. There should be a way to recycle or reuse the advertising from season to season for
at least 2 years if not more if all CPI is going to do is replicate the same signs every season in the
next year. There should be a way to recycle coupons which amount to stacks and stacks of paper.
There should be a definite way to recycle portrait prints that remain un-purchased or are never
picked up. And finally, there should be a way to recycle documents after a few months of sitting

in inventory and archives.
There is so much electronic storage in databases of digital images that documents could
be stored the same way. A filing system could be implemented of paper for one month then
nightly scans can turn into a digital filing system for how many ever years necessary until
purged. Usually 6 months is the requirement. Paper could then be recycled after one month
rather than 6 months, instead digitally storing files and document for 6 months. This would
increase file cabinet space and lessen the desire to let inventory documents pileup for more than
six months as it would be easier to discard every month. One of CPI is main rivals, JCPenney,
does use a digital document filing system. As a result, JCPenney has very little paper archives in
its inventory. CPI looks at the costs of electronic storage and the need to purchase computers but
does not consider the environmental benefits in going more towards digital storage of all things
possible. CPI's actions are crucial for the future despite its attitude since, "Global sustainability is
so complex that it cannot be addressed by any single corporate action" (Kruschwitz, Laur,
Schley, et. al., 2008, p. 124). CPI can stand to take a lesson on environmentalism from DuPont
CEO Edgar Woolard as he stated environmentalism has been "the most empowering and
unifying initiative...in this company" (Kruschwitz, Laur, Schley, et. al., 2008, p. 125). CPI can
send unsold portrait sheets or sheets never picked up back to one central location for recycle and
reuse beneficial to itself by being used for further printing of portrait orders for future customers.
Alternatively CPI can recycle via the mainline provided recycling facilities in the building where
the studios are located. But in order for this alternative to be effective, it would have to be policy
in all CPI studio locations. CPI can provide its customers with a service, associated products,
AND create value for shareholders and stockholders by creating sustainable growth. There are
many customers who ask every day what happens to their pictures when they do not purchase
them and the answer could very well positively be "We recycle them." Many studio managers

have personally told customers that we do recycle them to avoid having to tell the truth of
trashing the loved ones’ photos but CPI cannot fool so many for long. In my practice, I honestly
told customers that photos would be trashed as the ink that sticks to the photo paper CPI uses
makes the photo paper unable to be recycled.
For now, individual managers such as me have taken the initiative to find locations for
recycling in the building where we are located and have encouraged employees to GO GREEN
by mentioning the importance of recycling so that employees will do so in the managers'
absence. As Albert Einstein said, "We can't solve problems by using the same kind of thinking
we used when we created them" (Kruschwitz, Laur, Schley, et. al., 2008, p. 10). I have been
successful in locating a paper recycling bin in the Human Resources area near the photo copier
machine and actively recycle all paper along with cardboard. The cardboard is required recycling
in the cardboard bailer machine but many unsuccessfully try to fold the box flat and add it to the
trash bags to be taken with the disposal rather than recycling. This is a waste of time as cleaning
staff will not take it. For plastic and aluminum bottles such as those from daily lunches, I have
located a recycling bin in the break room area where meals are eaten provided by Sears mainline.
I have also utilized this for the recycling of the plastic rolls leftover after receipt tapes are used
for both register machines. While there is still much plastic wrap and shipping materials that
could be recycled and is not, I believe I have drastically recycled 80-95% of all paper in my
studio in spite of the portrait prints that I cannot recycle because that paper does not get sent back
and has to be ripped up for the privacy of customers. Session tickets and closing paperwork filed
by month are the 2 main paper archives and I have recycled those as well continuously since
taking over my location. My District Manager is aware that I recycle as well. However, since it is
not required by CPI, it is not noteworthy in their eyes to do it but I believe it is an important step
in the right direction in this century to reduce waste, eliminate unnecessary use of paper, and

ensure reuse through recycling.
Other areas of sustainability that are a weakness for CPI because CPI has failed to
implement policies on them are alternative energy, energy saving equipment, recyclable photo
paper, energy saving practices such as turning lights off, digital backgrounds or green screen
technology, and corporate social responsibility. Corporate social responsibility includes social
issues that include feeding the world’s population of ever growing billions while considering the
natural resources, many agricultural, which have already been depleted. “Creating sustainable
agricultural models will require bringing parties together than normally do not cooperate”
(Kruschwitz, Laur, Schley, et. al., 2008, p. 50). CPI advocating towards the use of alternative
energy for its electricity would go a long way in the mainline stores of Sears, Wal-Mart, Babies
R Us, Buy Buy Baby and Bella locations or even at the malls where some of these locations
operate. “Locations not within Walmart, Sears or Babies "R" Us stores include 15 free-standing
SPS studio locations, 21 Kiddie Kandids mall locations, 19 Shooting Star locations (located
within Buy Buy Baby stores) and 18 Portrait Gallery locations” (10-Q: CPI CORP, 2011). CPI
could exert influence on these stores and make their intention to be a sustainable company
known even if the stores took no action on a larger scale at first. Many large store locations such
as IKEA have already posted large billboard advertisements to customers at ground-eye-level
notifying that solar panels for all energy are being installed. Construction has already
commenced. CPI could express its desire for other businesses to start similar sustainability
practices. CPI rents studio space from the mainline stores and leases it upon contract. The
decision to convert to alternative energy would have to be made by the mainline Corporation but
it is possible.
CPI needs to convert completely to energy saving equipment for its overhead store
lighting, track lighting, flash lighting and strobe lighting where necessary. This would simply

mean buying energy saving light bulbs. Turning lights off in a room when not in use is an easy
solution but many employees still do not do so. Other issues revolve around the fact that not all
studio locations have separate switches for separate lights that can be turned off when the portrait
studio is not in operation after all customers have left. There are other lights that can be turned
off once all employees have left. In some locations every single light in the studio remains on
until the mainline shuts off all building lights for the night. Store managers have asked portrait
studio managers to speak with the facilities manager to have separate switches and dimmers
installed so that life can be turned off after customers leave and after employees leave saving the
mainline store money. In my particular location, these installations have yet to be completed.
A huge room for improvement exists in the main product portrait studios sell. Photo
paper is bought in abundance and at this time, CPI's photo paper cannot be recycled. CPI can
invest in more expensive photo paper that is made to be recycled so that it can do so for its
unsold portrait prints or those prints that are never picked up by the customers. As well, CPI will
start to see profits roll over into more profits from purchasing this more expensive paper while
also using environmentally friendly resources that are beneficial to society and completely
sustainable. CPI can also research a type of ink to use with the better photo paper that will not
interfere in the composition breakdown of the paper. Ink and paper being sustainable has been
discussed. The huge use of posing props is ever popular in portrait studios. So far, employee
rumors that CPI would be phasing out the use of props have not resulted in any official word of
this being the case. Therefore, props could also be purchased made of natural materials and
completely sustainable to the earth. There are many such child friendly props that are not an
injury risk to children of any age.
CPI uses vinyl backgrounds for the majority of backgrounds that it offers to customers.
This is a huge expense to purchase and ship to every location. Many locations have doubles of

every single vinyl background as there are two camera rooms in high-volume studios. CPI could
invest in the expensive green screen technology to use digital backgrounds inserted into portraits
behind the subjects posed in the portrait with computer digital editing. CPI has enough net worth
to transition over to green screen steadily without being hurt by the expensive costs. Smaller
companies could not take such a risk as the costs would be too high for them to implement.
CPI operates in North America and Puerto Rico. There are many populations in the
countries of Canada, United States, Mexico and Puerto Rico, especially the latter two, which are
living in poverty, hunger, disease and other setbacks. “…development has led to the concerns of
anti-globalization protestors on issues like third world development, poverty, the environment and
employment being echoed by large numbers of ordinary citizens worldwide” (Colbert, Freeman, and
Wheeler, 2003, p. 2). Corporate social responsibility dictates that CPI can play a positive role in
the populations of these countries living in these dreadful situations. In these days of digital
technology and innovation, getting people to give to a cause is as simple as getting them to click
a button of a mouse on a computer by participating in Internet activities. Many sites do not
require monetary donations such as SocialVibe. Sponsors simply pledge to give a certain amount
of money to associated charities and nonprofits for every activity that millions of users complete.
Activities are fun and many are designed as games. CPI could set up such a website if it was
worried about incurring costs from being a sponsor when it is facing a decline in sales every
year. By setting up such a website, CPI would then have to find sponsors and bear the ultimate
responsibility of directing traffic to the website to participate in activities so that sponsors would
donate monetary contributions to worthy causes. CPI would, in this case incur the costs of setting
up this website.
Challenges in addressing all of these weaknesses are that CPI has such old equipment that
has been refurbished dozens of times and reused in different locations resulting in interruption in

intranet services, browser loss, servers powering down, malfunctions, and even equipment
ordered to replace defective equipment and reaching the destination dead on arrival meaning that
it would not even power on. CPI needs to invest in better equipment in order to make any
changes to digitize its archives and inventory.
Opportunities
Kiddie Kandids was a threat, however, CPI bought them after they declared bankruptcy,
adding to its subsidiary companies and earning the profits of customers loyal to Kiddie Kandids.
I personally witnessed customers come in to Sears Portrait Studio for photography after the
bankruptcy and after CPI purchased Kiddie Kandids. They also offered the jobs back to those
who had been left jobless as I worked with a recently hired employee at Sears Portrait Studio
who lost her job when Kiddie Kandids went bankrupt. She found employment at Sears Portrait
Studio until getting a job at Kiddie Kandids after the company was bought by CPI. CPI made
good of this opportunity to purchase yet another company that would add to its corporate profits.
In a March 2010 an article in St. Louis Business Journal of Missouri, titled “CPI plans to buy
Kiddie Kandids studios for $2.6M” it was stated that “CPI Corp. plans to buy the assets of
Kiddie Kandids after submitting a high bid of $2.6 million at an auction last week as part of
Kiddie Kandids’ Chapter 7 bankruptcy” (Volkmann, K., 2010, par. 1). Further, “Prior to filing
bankruptcy, Naperville, Ill.-based Kiddie Kandids operated 184 studios in the United States,
which included 134 in Babies “R” Us stores and 50 stores located in malls” (Volkmann, K.,
2010, par. 3). The article goes on to say that CPI plans to operate Kiddie Kandids in all locations
where there was previous operation. CPI may have well made this decision because “Kiddie
Kandids generated sales of about $59.5 million in its fiscal year ended Dec. 26, 2009”
(Volkmann, K., 2010, par. 4). As Hamel and Prahalad discuss in their article relevant to CPI’s
competitors, it is particularly important to practice strategies and tactics to maintain a

competitive edge through innovation (without which an advantage over a competitor is not
possible regardless of following the other tactics) (2005, p. 150). They state that, “focusing the
organization's attention on the essence of winning, motivating people by communicating the
value of the target, leaving room for individual and team contributions, sustaining enthusiasm by
providing new operational definitions as circumstances change, and using intent consistently to
guide resource allocations” (Hamel and Prahalad, 2005, p. 150).
Another opportunity employees read about earlier this year that CPI pounced on was that
of entering the million dollar market of the wedding industry by purchasing the exclusive and
popular Bella Photography for wedding and event photos. Prior to this, CPI had attempted to
gain access to customers willing to spend hundreds of dollars on one event by introducing a
service for on-location photography, GoPortraits. CPI quickly took the opportunity to purchase
Bella Photography less than a year later and increase its profits. By doing so, it lessened the
impact of the 20% decrease in profits for studio photography due to the economic recession. At
the end of this fiscal year, there will be a chance to see if purchasing Bella increased CPI.’s
overall revenue or affected shares.
For CPI, there exists a huge opportunity to become a green, sustainable company that
uses natural, environmentally friendly resources to distribute its products to customers in order to
turn a profit. This is wholly possible if CPI's intent were there to do so. Plans could be made to
become this type of company and a goal could be set with an overall time limit of when to
implement the change. Separate teams would need to be set up at the corporate level to first
discuss how to go about implementing this type of companywide change before giving them time
blocks for one to accomplish individual goals. After a certain time their supervisors would have
to oversee their accomplishments. This would have to be done before the next large meeting to
see where everybody had gotten. In this way goals could continue to be reached at time intervals

and before CPI knows it, it could be another sustainable company. I estimate that two years for
this to happen overall would be a likely goal.
Threats
Threats to CPI include business to its main rival, JCPenney Portrait Studios, who
customers have personally declared to me, has slightly lower coupon prices. Picture
People is another threat as customers personally state to me that they offer more shots in
the camera room and have more background selection, however less of a threat since
many locations closed down.
CPI Corp.’s profitability within the industry of photography is a threat to the other
businesses in the industry. This is so because CPI is a main developed company within
the industry of portrait studio photography and has acquired more subsidiary companies
as other companies have filed for bankruptcy. CPI has purchased those companies and all
of the studio space and resources along with the rights to use the former name shortly
after bankruptcy was filed. That being said, CPI is still making approximately 15% - 20%
less than it was in the previous year, however it is said in the company that this is due to
the current economic recession as per conversations with district managers. Other
companies are suffering slight losses as well and compared to those companies, CPI is
still very competitive. However, it must be noted that CPI acquiring more subsidiary
companies does not necessarily mean that it will definitely earn more profits as there are
more costs to consider that considerably take away from profits after all expenses are
deducted. Threats to CPI’s sustainability include a competitor utilizing more
sustainability practices before CPI can do so and customers hearing of it flocking to the
competitor. At first, in the coming sustainable, any company incurs more expenses with
the transition before smoother sustainable practices begin. CPI would incur such costs

and possibly view it as a setback but it is important to note that it would be overall beneficial for
the
company in the long run.
Brief description of differences in SWOT versus SCOT Analysis
The advantage of a SCOT Analysis over a SWOT Analysis is that a SWOT Analysis is
considered “more vague and un-precise” (Hockins, 2011, p. 5). The SWOT Analysis categories
have been analyzed above but I will reword where necessary and analyze the SCOT Analysis
here thoroughly for CPI, Corp.
SCOT Analysis
Skills
CPI’s skills include those of professional portrait training to its photographer associates
and many photographers come to CPI with education or previous experience in photography.
CPI also provides specific training on how to use the equipment and software to digitally edit
and manipulate digital images to make satisfactory portraits for customers. Skills include “to
photograph” but perhaps in the eyes of CPI management the most important skill is “to sell”.
Associates must be comfortable in a selling position from day one although they can obtain
photography training as they continue their employment.
Capabilities
CPI, like any retail business, wants customers to experience positive customer
satisfaction and ensures that all associate photographers understand this. CPI has equipment in its
physical resources that is a capability. CPI has digital single lens reflex cameras on sturdy tripods
in all of its studio locations with installed flashes, an array of backgrounds, numerous props,
seating props for various posing arrangements of subjects and a computer network at each studio
location. This network is used to upload and edit digital images before seating customers at sales

stations with further computers in the network on which customers view and select their images.
CPI's capabilities include its great market location to the demographic of its customer
base. CPI portrait studios are located in many malls, shopping centers, and a few freestanding
buildings within larger department stores. Due to its convenient location, millions of customers
spend millions of dollars coming to CPI portrait studios for photography. With its technology
and skilled employees, CPI is capable of providing quality photography at its well-placed
locations. In addition, CPI is capable of offering affordable prints to its customers due to having
a personal lab with printing capabilities at a separate location from which all orders are shipped
back to individual studios for customer pickup. This helps keep costs to the customers low as
each individual portrait studio does not have costly printing equipment. This in turn saves CPI
money on expenses. All of the printing equipment is maintained at the central lab for each area.
When considering competitors in the market, there are many costs associated with
opening a portrait studio location ranging from installing the expensive equipment for the
portrait studio, setting up the point of sale computer system, to having a network of computers
with a server, sales stations and other computers used to upload and edit digital images while
overseeing the storage capabilities of the database. Due to this reason, there are not many
potential new entrants into the market as competitors of CPI. There are independent
photographers who may open one studio location competing with CPI, however their customer
base is so small due to having only one location that CPI is a giant photography company
compared to an independent photographer. With the recent economic recession, I have
personally talked to many independent photographers who have chosen to close their studios and
work strictly to shoot on-location events for customers thereby eliminating the costs of running a
studio set up. In my initial job search before obtaining employment for CPI, I called many
independent photographers listed in the phonebook at the start of the recession. At that time they

stated that they were not looking for new photographers to work under them. In fact they had let
many of their photographers go to save costs. Many were working as a one man or one woman
show and were therefore truly independent in every sense of the word. As far as large parent
companies with subsidiaries entering the market, again it would be difficult for a company to
open hundreds or thousands of studio locations to compete with CPI's 3000+ studio locations in
North America and Puerto Rico. The costs of the equipment and labor for set up would stagger
into millions of dollars. What is more likely is that a medium-sized or large company that
already exists would merge or acquire more subsidiary companies also already in existence.
Those companies could also place a bid to buy otherwise bankrupt portrait companies such as
CPI did when it bought Kiddie Kandids. The impact of such a potential new entrant into the
market would immediately affect CPI if the competitor advertised on a large scale and many
returning and potential customers heard of the ads. Currently, the setup CPI has with so much
equipment is a capability, although a majority of the equipment needs to be replaced instead of
the ever popular solution of refurbishing it as an over haul. Even a piece of equipment has a
lifetime and then it cannot operate anymore.
Opportunities
The likelihood and impact of substitute development is high as digital photo technology
advances every minute of every day. The iPad applications (apps) to print personal pictures,
ever-evolving cell phone cameras, online printing sites, social networking sites now with the
ability to download high-resolution images to send to print, and other such digital innovations
have become a substitute for traditional studio portrait appointments for customers. As well,
many customers are still using film and one-time use cameras. “Because technology is employed
to some degree in every value creating activity, changes in technology can impact competitive
advantage by incrementally changing the activities themselves or by making possible new

configurations of the value chain” (The Value Chain, 2010). With the equipment available to
individuals for personal purchase making it possible to scan film prints and negatives to turn
these into digital images, some customers feel it is unnecessary to go into a portrait studio for
anything but formal pictures on special occasions. CPI has caught on to this customer mentality
and has introduced an offer with a partner company, FotoNet. Customers can now upload their
personal pictures to CPI's website to obtain prints at a much lower cost than prints from pictures
taken in the portrait studio. Customers can upload digital images of absolutely any type. On this
website there are price chart showing the comparisons between how much a studio print costs
and how much personal digital images cost in various sizes. Targeted ads are also aimed at the
demographic of recent customers and those providing their e-mail addresses to entice them to use
CPI’s printing services to obtain prints from their personal images at temporarily reduced sale
prices good only to these certain customers until a certain date.
The impact of substitute development is likely to increase. This was a threat to CPI until
they found a way to turn it into a company profit. They partnered with FotoNet to offer
customers printing deals. Ideally, as these offers just started in mid-2011, one should wait a year
before analyzing any differences in company profitability depending on this move CPI has made.
Newer technologies will continue to emerge within digital imaging and more expensive
technologies already on the market will continue to drop in price over time. CPI should
continually monitor this arena of sales in order to develop it and maintain it as profitable.
Upon examining factors in CPI.’s external analysis specific to customers, there are
several areas that have developed well to lead to profits. Regarding customers, CPI has a loyal
customer base and seeks to increase it at all times to acquire more lifelong customers. This is
evidenced by the fact that Sears Portrait Studio and all other subsidiary companies have a loyalty
club referred to as a smile saver or super saver membership that customers become a part of by

receiving the associated card to keep with them in their wallets that entitles them to benefits for
the annual membership. There is a onetime annual fee that is renewable for a small amount every
year for a lifetime even if a customer skips renewal one year. Currently, the goals for studios to
sell the membership are 20%. This is both to new customers and returning customers who do not
already have a membership. As far as technology concerns, as computers, data basing, software,
and programming have become advanced, so too has the ability of CPI to offer more services to
customers that is designed to increase sales.
Threats
The likelihood and impact of migration of customers to substitute products or services is
marginal as there are many customers who come to CPI not only for formal portraits but also
with annual memberships very regularly for casual portraits any day with no occasion for
celebration. Many customers that have their own digital cameras still believe that professional
photography is just that, professional. Therefore they would trust the better judgment of CPI
photographers for portraits rather than their own judgment with point and shoot pocket-size
digital cameras for snapshots. Substitute services for photography include mall kiosks,
unmanned coin and bill inserted snapshot machines for a strip of pictures, and the traditional
photographer looking to earn a dollar at events snapping pictures with a Polaroid camera. In
these cases of substitution, most customers are willing to pay CPI more dollars for quality and
professionalism they expect as part of satisfactory customer service by a corporate portrait
company.
Competitors include JCPenney Portrait Studios and Target Portrait Studios owned by
Lifetouch, Inc. that also offers school, sport, and on-location photography for events. Therefore,
they are also a direct competitor to Bella Photography of CPI. To reduce the risk of competitor
rivalry CPI does not target its marketing to specific demographics in order to reach a

concentrated population that would appeal to them to spend more money to earn more profits.
Instead, CPI chooses to use a one-catch-all approach to advertising the same offers to all
customers. This has been the subject of many studio manager complaints as customers in a lesser
affluent area take advantage of the free-no purchase necessary offers to do just that and buy
nothing which drives down sales. A better approach would be to offer large discounts ensuring
that some profit is earned.
A competitor could buy or introduce a subsidiary similar to CPI with Kiddie Kandids or
Bella Photography. That would be a true threat and would take time to evaluate for factors of
customer loyalty and sales. Customers could become disloyal and sales could flow to the
competitor.
Key Success Factors: Integrating the Analysis
Table 1
Key Success Factor Tables
Importance
Scale
6
Success Factor:
professional
portrait
training of
employees to
photograph
potentially important for strategic competitiveness
7
Success Factor:
to be able to sell
as an employee
very important/strategically important for
competitiveness now and in the future
10
Success Factor:
ensure great
market location
for studios
8
Success Factor:
keep central
printing lab to
keep costs low
for customer

Fit Rating Score
3
Success Factor:
substitute
development -
digital photo
technology
advances
Fit is ok, but look at context
6
Success Factor:
CPI retaining
its loyal
customer base
Distinctive competitive advantage possible to leverage
8
Success Factor:
competitor
rivalry
Distinctive competitive advantage possible to leverage
Part II
Analyzing the Company Strategy Type
The general strategic type that CPI is pursuing given my understanding of the
competitive environment is the low-cost strategy in which CPI is delivering “the customers
expected level of value at a cost that assures an adequate level of profitability” (Strategy: Create
and Implement the Best Strategy for Your Business, 2005, p. 31). With its advertising and
marketing efforts, CPI sends many very low price coupons or free coupon items for products and
services to millions of customers it reaches via e-mail, postal mail, text message and directly in
the studio. CPI is constantly developing its image as the convenient, affordable portrait studio for
millions of customers from all social classes. All employees must honor unexpired coupons
regardless of how far they are from their daily sales goal. Many coupons are advertised as being
acceptable as long as they are verbally mentioned by the customer to the photographer in the
portrait studio. These are temporary specials that every studio manager and associate must be
familiar with so that they know what the customer is talking about when the customer mentions
the offer without having to bring in a printout copy.

CPI seems to be moving toward a customer relationship strategy that
 Simplifies customers’ lives or work - CPI has moved toward allowing customers to
upload their personal photos to obtain prints at a largely discounted price in comparison
to prints obtained from its studio photography.
 Ongoing benefits - CPI has partnered with FotoNet to add massive amounts of customer
e-mails to its databases in order to extend ongoing benefits to these customers with
updates of each sale or special available in studio, online reorder special, and deals
targeted at specific customers only.
 Personal contact - CPI has required surveys in which studio managers must personally
contact all customers visiting between certain dates to get answers to questions to
improve customer service. This feedback is then used by the individual studio manager to
improve customer service at this particular studio location.
CPI has done a good job of moving from low-cost strategy to a customer relationship
strategy because “A strategy based on customer relationships can produce powerful results and
strong customer loyalty” (Strategy: Create and Implement the Best Strategy for Your Business,
2005, p. 42). One pitfall that CPI must beware of however is that while many people say they
hold true to personal customer service, many will sacrifice it to save costs for larger purchases
and go to a cheaper location.
Analyzing the Company Strategy Moves
The future strategy move of CPI should be applying judo strategy. CPI has already
bought its way in with strategic acquisitions of two subsidiaries, Babies R Us Kiddie Kandids
Portrait Studios and Bella photography. With judo strategy, CPI will have to focus on three
principles: movement, balance and leverage. With movement, CPI will have to keep away from
acts that directly challenge more powerful competitors so that they will not attack. To achieve

this, CPI must remember that a direct confrontation may boost the ego in the short run but in the
long run success will show. With balance, CPI will eventually have to face off with a larger
competitor but should be wise enough to not directly attack nor be attacked. CPI should not risk
a brief win in a battle but end up losing the war by being attacked. Many successful business
strategies have been based on strategic warfare. CPI will have to use “… the attacker's own
strength to advance” their “position” (Strategy: Create and Implement the Best Strategy for Your
Business, 2005, p. 53). With leverage, CPI will have to turn the competitors strengths to
weaknesses. To achieve this, CPI will have to do an analysis or several analyses of the
competitive company to gauge which strengths and weaknesses the company has. Then CPI will
have to come up with ideas on strengths to turn into weaknesses and how. For itself, CPI will at
that time need to analyze its weaknesses to turn into strengths.
Alignment & Goals Analysis
Table 2
Alignment Checklist
Yes No
People Our people have the necessary
skills to make the strategy work
They support the strategy
Their attitudes are aligned with the
strategy
They have the resources they need
to be successful
X
X
X employees
complain of many
strategic policies
needing change
X employees do not
support the strategy
therefore it must be
changed
Incentives Our reward system is
aligned with the
X commission
program has too many

strategy
Everyone has
performance goals
aligned with the
strategy
X
stipulations which
must be reduced
Structure Units are optimally
organized to support
the strategy
X units need to be
reorganized
Supportive activities The many things we
do around here-
pricing, the way we
handle customers,
fulfill orders, etc.-
support the strategy
X many employees
have complained of
too many test prices,
fulfilling customers’
demands, and better
ways of dealing with
order error to ensure
timeliness
Culture Our culture and
strategy are well
matched
X there are too many
discrepancies leading
to negative attitudes
of employees toward
CPI causing employee
dissatisfaction which
must be resolved
Table 3
Unit Goals, Metrics and Action Plans
CPI Strategic Goals
Customer service Company culture Sustainability
^
Ask for feedback
^
Increase employee
satisfaction
^
Unit goals
^
Resolve issues
^
Resolve issues, changing
policies if necessary
^
Performance measures
^
Ensure customer satisfaction
^
Address employee concerns
^
Action plans
Action Plan Analysis

The above table shows what one action plan for CPI should be. Sustainability is a crucial
part of any company's success in this age. I have outlined CPI's numerous weaknesses in relation
to sustainability in a SWOT Analysis previously. If CPI does not see the necessity of being more
sustainable, it will sooner or later suffer losses. Customers care very much about sustainability
issues and this thought process will eventually move to the photography industry. I have
included a sample action plan for CPI below in order to reach sustainability.
Action plans. Develop long-term sustainability categories dependent on resources
consisting of materials and supplies, natural resources, effective use of technology and exhibiting
corporate social responsibility.
 Put ideas in writing within one month at numerous corporate board meetings.
 Finalize list of long-term sustainability categories to work towards within three months.
 Make separate teams to address each category allowing for six months coming up with
practical plan to become sustainable in this category.
Performance measures. Come up with performance measures to evaluate if sustainability
will be reached following these plans.
 By eighth month, finalize performance measures.
 Make last-minute adjustments in ninth month and choose test area for studio locations to
implement sustainability practices decided upon.
 In 10th month begin sustainability practices visiting often in person and taking notes to
share at future meetings on what adjustments need to be made.
Unit goals. Within 11th month finalize how unit goals will be reached leaving some room for
improvement along the way.
 Year 1: Test previous two months sustainability practices in small test locations and
decide it ready to expand to larger demographic area of studio locations.

 Year 2: Be operating sustainability practices in all studio locations of CPI talking often to
employees, studio management and customers to gauge the feedback on what is working
and what needs to be improved.
 Year 3: Be fully operating with sustainability practices at all studio locations of CPI
requiring very little change to remain steady and thorough in the eyes of employees,
studio management and customers.
Part III
Fitness Landscape Translation Analysis
A fitness landscape is “a concept” the theorist “Kauffman has used to give insights into
the evolutionary process” (Stacey, 2007, p. 198). CPI's fitness landscape over the past
approximate 20-60 years has had a shape determined by one company in number founded in
1942 starting with the name “Rembrandt Studio” in present-day headquarters in St. Louis,
Missouri (CPI Corp.). In 1965, color portraits became available. In 1968, Chromalloy American
purchased the business changing its name to CPI. In 1970, CPI expanded its Sears Portrait
Studios to Canada. By 1973 CPI was the exclusive portrait photographer operating in Sears
which had become the leading retailer in the world. Five years later in 1979 an executive group
purchased CPI making it a public company in 1982. In 1984 CPI entered the photofinishing
business and in 1988, the quick printing business. Profits dropped from $34 million in 1990 to
$23 million in 1992 as CPI went down a valley. In the mid 1990s, CPI started introducing digital
technology. In 1997, CPI divests itself of most non-portrait photography business lines (CPI
Corp.). In 1999, a private company withdrew its bid to purchase CPI, leaving it to remain a
public company. By 2000, CPI was at its peak when it reported record company earnings higher
than in any year since the 1990s. In 2010 CPI started an on-location digital photography service
under the business name GoPortraits, going back to its original roots, albeit with current digital

technology. CPI also purchased the bankrupt Kiddie Kandids. In 2011, CPI acquired Bella
photography changing Go Portraits to Bella.
Boid Analysis: Rules for your topic?
The basic or fundamental rules that seem to guide behavior for CPI in the photography
industry are
1. Acquiring equipment for the latest photographic technology and implementing it in the
long term to use in all of CPI's locations.
2. Keeping an eye on competitors and readily acquiring them in the event that they get close
to bankruptcy.
3. Keep a majority share vested in the company so as not to become a target for acquisition
itself from a competitor.
These are the most fundamental rules because CPI has followed them in the most recent decades
to get to where it is now. It switched over from film to digital photography. It has added two
subsidiary companies to its parent company by acquiring them. It has avoided the same threat to
itself of being acquired by buying up more shares in the company to keep a majority.
These rules differ from those in other industries such that many other industries do not
rely on digital photographic technology, current digital editing software, upload processes, and
digital databases. The implications of these findings are that as technology continues to develop
at a very fast pace, at times at lightning speed, these technologies may become outdated or a
trend may develop to use the latest digital technology making current use unpopular. However,
this would likely only be among a small population of customers in the demographic.
Ray’s Simulation Translation & Fishing Simulation Translation: Industry Evolution
Modeling
CPI, after its initial market entry, adapted and learned how to survive in its market

environment and many of its segments, or subsidiaries were sold off as CPI made the decision to
focus on its photography and photo imaging. And it made the decision to focus on its
photography and sold off its photo imaging subsidiaries as well. Many competitors could not
mimic what CPI was doing because they were not in a similar market position. CPI changed how
it operated from time to time, never operating the same way for over a decade. I believe this
made it more adaptable and less susceptible to competitor replication. Any competitor that
wanted to beat CPI would have to by first developing its own strategy on its own territory. This
is evidenced by the information I gave above in the Fitness Landscape Translation Analysis
showing company decisions over the past 20 to 60 years and how certain patterns repeated in
CPI's actions.
The patterns of both competition and cooperation that have led to the evolution of the
industry include switching over from film photography to digital photography by acquiring
emerging technologies as they became more affordable. Cooperation was necessary on the part
of the parent company and its subsidiaries. Cooperation was necessary on another level with the
digital suppliers of equipment. Another pattern of competition was CPI's 1994 “Portrait Preview
System, a digital imaging system that let customers see what their pictures would look like
before they were snapped” or even, printed (CPI Corp.).
The implications of the current industry behaviors for future success are that CPI is not
concerned with sustainability, employee satisfaction, turnover, labor complaints, customer
complaints short of offering a three-free-sheet incentive and practicing corporate social
responsibility. By not being concerned with sustainability, CPI is setting itself up for future
losses financially and in the eyes of customers affecting its reputation and company image. By
not being concerned with employee satisfaction CPI is sending the message to employees that
they are not appreciated, their frustrations are not worthy of being resolved and they can be

easily replaced with other cheaper labor or from outside of the company for slightly higher labor
costs. An employee incentive plan to earn commission with many stipulations has not stopped
employee frustrations and complaints. Scheduling too few staff members has been a large area of
complaint by both employees and customers. Offering customers something free on their next
visit is not the solution as most customers do not want to return when the situation they are
walking into will be the same. The solution is to schedule more people. Finally, CPI needs to
jump on the ball as have thousands of other companies to practice corporate social responsibility
in areas of global poverty, hunger, natural resource depletion, among other concerns. CPI
operates in North America and Puerto Rico, after all, and can afford to be concerned with global
issues.
Part IV
Life-cycle Assessment (LCA)
My diagram 4 has been submitted as a Microsoft Excel spreadsheet drawing. Please see
that file titled APP7KhanM part IV diagram.
Some larger strategic questions that CPI has long avoided relating to the previous SWOT
Analysis portion for Weaknesses regarding sustainability issues are:
1. What happens to the source of all of our document and photographic paper?
2. How does this affect the company, global community, customers, stakeholders and
others?
3. Is it possible to use alternative sources of energy (eg. electricity) when leasing space
from other department stores in charge of those decisions? What can CPI do to
implement this beneficial change?

4. How can CPI give back to the environment for all the trees it uses, recycle its paper
usage, and sustain itself not to use more of what can be reused when it comes to
recycled paper?
5. What other categories can CPI become sustainable with in addition to energy and
paper?
6. How can CPI keep its waste from accumulating?
7. How can CPI keep its natural resources being used from being depleted?
8. What are some of CPI’s non-regenerative resources and can these become
sustainable? In what way? What technologies would need research for this to become
possible?
Compliance to Innovation Analysis
CPI fits in the compliance-innovation scale at the proactive point of step 4: integrated
strategy. At this stage, CPI has business opportunities and needs to fully use risk management
(Kruschwitz, Laur, Schley, et. al., 2008, p. 115). CPI got past non-compliance when it entered
the market close to 60 years ago. It passed stage 2 by complying with regulatory demands or
enforcement and public pressure in its early years. It went beyond compliance with its regulatory
threats in the next couple of decades of its existence and its PR crisis close to the 1990s. Once
CPI follows the solutions in this Sustainable Solutions Paper, it will be at stage 5 and aligned
with its core values. This relates to the previous analysis of Fitness Landscape Translation as the
company history is fully described to show the company’s actions over the decades.
“Sustainable Value Framework” Synthesis: Detailed Driver Analysis
Starting with the lower left quadrant, CPI can change its internal activities to reduce or
eliminate waste, consumption, and emissions from operations by first altering its company
mindset on its use of resources, the most important being paper. Paper is the number one

resource a portrait company uses. Investing in recycled paper and then further recycling it for
secondary use will get CPI close to eliminating waste. CPI uses a lot of electrical energy to
operate its studio locations that depend on a high amount of digital equipment. Gone are the days
of battery operated film cameras. Energy saving technology needs to be implemented at a higher
level as the earth’s resources are depleting at a higher rate due to over population and other
factors. Finally, emissions from operations include some level of pollution from waste that is not
recycled but instead discarded to be incinerated or pile-up in landfills. This can simply be
avoided by reusing so many items throughout operations. The potential for cost reductions is
great after an initial cost increase to implement the necessary changes. The potential for time
reductions is marginal as care needs to be taken to separate the items to be recycled or reused and
effort needs to be put into saving energy. Finally, the potential for risk reduction is great as so
many problems will start to be resolved if CPI implements these changes. Customers may not
protest as could happen one day in the near future and employees would be less frustrated as
well.
Moving to the lower right quadrant, some relevant issues with respect to how CPI
interacts with the larger stakeholder base include not agreeing with their suggested plan to have
more say with their opinions on CPI matters by creating positions for 1 of their employees to be
on the board. Instead, CPI suggested its own design of board members with 2 independent
members. CPI could change to enhance its perceived legitimacy in the stakeholder system by
more cooperation rather than buying up shares or stocks to maintain a majority control. CPI can
become more transparent and connected to the larger sphere of interests by joining or allowing
an already created environmental organization or non-profit to give CPI suggestions on how to
become sustainable. This would benefit the global community that CPI is a part of.
Moving to the upper left quadrant, CPI’s relevant technology challenges that exist within

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