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Week 1

Sally Beauty has been listed as a publicly held trading company by Yahoo Finance. Vital financial statistics for Sally Beauty are shown below:

 

Competitors
Direct Competitor Comparison  

 

SBH CVS WAG WMT Industry
Market Cap: 4.20B 90.12B 70.67B 244.19B 2.00B
Employees: 12,620 130,000 173,000 2,200,000 12.00K
Qtrly Rev Growth 0.02 0.06 0.06 0.01 0.28
Revenue 3.68B 128.70B 75.28B 477.18B 676.17M
Gross Margin 0.50 0.19 0.28 0.25 0.48
EBITDA 593.42M 10.15B 5.04B 35.56B 101.75M
Operating Margin 0.14 0.06 0.05 0.06 0.08
Net Income 253.76M 4.78B 2.83B 15.68B N/A
EPS 1.49 3.93 2.84 4.84 0.21
P/E 17.36 19.56 26.05 15.64 19.29
PEG (5 yr expected): 1.65 1.23 1.45 1.81 1.40
P/S 1.13 0.69 0.93 0.51 2.31

 

CVS = CVS Caremark Corporation
WAG = Walgreen Co.
WMT = Wal-Mart Stores Inc.
Industry = Specialty Retail, Other

 

Source: Yahoo Finance

From the above figures, the competitive nature of Sally Beauty drives up the profitability of the company. Other factors that have apparently led to the growth in profitability include innovation, adequate resources and hence sustainable operational capital (Sally Beauty Holdings, 2014). Sally Beauty continuously creates value because of it strategy to capitalize on consumer trends, offering exclusive label products, and market fragmentation as well as integration of acquired businesses. The company is an industry leader and is growing its e-commerce and international business primarily in Brazil.

Week 2

When a business entity offers better value to consumers than other rivals, it results into a competitive strength. One of the ways of gaining competitive strength is through product differentiation.  In the customer, a business organization like Sally Beauty can also take advantage of a differentiated customer value. For instance, well educated employees, competitive pricing model, adequately stocked merchandise stores, wide selection of beauty products and various locations can indeed boost the market presence and competitive advantage of Sally Beauty. Its current string financial performance is also a major competitive advantage at marketplace as shown below:

Year Ended September 30,
Comparable Store Sales Growth: 2009 2010 2011 2012 2013
Sally Beauty Supply 2.4% 2.4% 3.8% 2.7% 5.7%
Beauty Systems Group 4.1% (0.6% ) 8.5% 4.6% 4.4%
Consolidated 2.8% 1.8% 4.6% 3.8% 5.5%

 

Week 3

I have employed Porter’s Five Forces to analyze Sally Beauty’s supply competitive advantage. According to Porter (2010), profits are extended by a company’s ability to strategize among the rival competitors, threat of substitute products, buyers’ power, suppliers’ power and threat of new entrants.

All the five key forces that depict the structure of an industry are as a result of rivalry. Sally Beauty has 3 main market rivals namely Ultra, CVS and Walmart. Hence, the company uses  a “fast fashion” strategy to counter its market rivals. Nonetheless, there is need for sally Beauty to devise myriads of strategies according to the changing times. The company should critically analyze its current strengths, weaknesses, opportunities and threats before taking any major step.

Week 4

Online markets have been a major focus for Sally Beauty Inc. since 2008. The customer demands from overseas are the major contributors in its e-line demand. As a consequence, the company has managed to gain a major market share internationally. New markets have also been opened in Asia and especially China owing to impressive sales recorded from overseas.

However, national sales are still below par. The company should focus on the US national sales and gear towards more service-based business which is the trending market. Perhaps the company could do a pilot store that offers salon services.

 

Week 5

Sally Beauty Holdings has gone global through its e-commerce platform. There are over 4000 stores that are operated by the company across the US alone. Other global distribution centers include Spain, Mexico, United Kingdom, Canada and Chile.

As a result of the global distribution, changes in consumer preferences should be anticipated by the company. Data on the purchase of its products should be captured across the board in order to meet the changing tastes and preferences of the targeted market. According to forbes.com (2014), the global platform offers a powerful marketing channel.

Week 6

When an immediate competitor who is operating within the same line of production is acquired, it results into a horizontal merger. The main purpose of such a merger is to lower the pace of competition from rival firms. On the other hand, a vertical merger occurs when a company acquires a business with the purpose of selling its products.  The latter assists in the growth of profits and efficiency of production.

Both strategies have been employed by Sally Beauty to sustain its competitive advantage. When the company acquired Schoeneman Beauty Supply way back in 2009, a horizontal integration took place. Schoeneman was a full service distributor of professional beauty (Sally Beauty Holdings, 2014). The company has been using acquisitions to gain leverage over competitors since the last 50 years.

Week 8 PA

Sally Beauty Supply runs two segments. These are Beauty Supply Group and Sally Beauty Supply stores. Exclusive distribution agreements are used at the level of the store. Hence, agreements are made with suppliers. Innovation is highly encouraged at the level of the store. Products that are availed to customers after innovation and adequate research increases the market power of the company (McKinsey Quarterly,1991).  An innovative environment is also encouraged at the distribution level. Besides, the company is in a position to push for bulk sales.

International expansion and creation of a vibrant market power are some of the attributes of innovation.  The existing market must be satisfied by Sally Beauty in order to surpass growth targets

 

 

References 

McKinsey Quarterly Staircases to growth. Retrieved from http://www.mckinsey.com/insights/growth/staircases_to_growth

Sally Beauty Holdings (2014). Retrieved from http://www.sallybeautyholdings.com/

Forbes.com. (2014) APVoice: Meet Your Consumer In 2015. Retrieved from

www.forbes.com/…/2014/04/13/meet-your-consumer-in-2015-infographi

Pitman, S. (2013). Sally Beauty acquires professional beauty products distributor. Retrieved from

http://www.cosmeticsdesign.com/Business-Financial/Sally-Beauty-acquires-professional-beauty-products-distributor

Newman, C. (2014). Managing strategy in the global marketplace (Vol. 1).

Porter, M.E. (2010). Porter’s five forces: A model for industry analysis. Retrieved from http://www.quickmba.com/strategy/porter.shtml

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