Can Information Systems Restore Profitability to Restoration Hardware?
1. Evaluate Restoration Hardware using the value chain and competitive forces models. How is the company responding to the forces that influence it?
Potential Entrants: Threat of new entrants is high because there are already many in the industry so it is obviously easy to enter.
Industry Competitors: Rivalry among existing firms is high. Pottery Barn, Pier 1, and Williams Sonoma are a few. Competitors have greater financial, marketing, and operational resources.
Substitutes: Threat of substitute products or service is high. Same types of products can be found in specialty stores, traditional furniture stores, and department stores.
Suppliers: Bargaining power of suppliers is extremely high. Two vendors were the source of nearly one-quarter of all merchandise purchases.
Buyers: Bargaining power of buyers is high.
As a whole, Restoration Hardware’s value chain is very weak. There is no integration of the data, and it does not allow management to get a clear view and accurate view of the required information in order to make informed decisions.
2. What is Restoration Hardware’s business strategy? How well do the company’s information systems support that strategy?
Restoration’s business strategy put the company in a unique sector of the marketplace. They focused on merchandise that honored classic America. The company’s information systems did very little to support their strategy. Although they focused on their merchandising strategy, they could not live up to their promise to the customer. In recent years, the company invested in several technology investments (iPhrase, Scene7 eCatalog). Despite these investments the company posted net losses. Analysts contend that Restoration Hardware is failing to control a number of complex variables to the best of its ability. Among the greatest concern is their ability to keep inventory in line with customer demand.
3. What management, organization, and technology factors are
Potential Entrants: Threat of new entrants is high because there are already many in the industry so it is obviously easy to enter.
Industry Competitors: Rivalry among existing firms is high. Pottery Barn, Pier 1, and Williams Sonoma are a few. Competitors have greater financial, marketing, and operational resources.
Substitutes: Threat of substitute products or service is high. Same types of products can be found in specialty stores, traditional furniture stores, and department stores.
Suppliers: Bargaining power of suppliers is extremely high. Two vendors were the source of nearly one-quarter of all merchandise purchases.
Buyers: Bargaining power of buyers is high.
As a whole, Restoration Hardware’s value chain is very weak. There is no integration of the data, and it does not allow management to get a clear view and accurate view of the required information in order to make informed decisions.
2. What is Restoration Hardware’s business strategy? How well do the company’s information systems support that strategy?
Restoration’s business strategy put the company in a unique sector of the marketplace. They focused on merchandise that honored classic America. The company’s information systems did very little to support their strategy. Although they focused on their merchandising strategy, they could not live up to their promise to the customer. In recent years, the company invested in several technology investments (iPhrase, Scene7 eCatalog). Despite these investments the company posted net losses. Analysts contend that Restoration Hardware is failing to control a number of complex variables to the best of its ability. Among the greatest concern is their ability to keep inventory in line with customer demand.
3. What management, organization, and technology factors are