Untitled Essay Research Paper Waterford Crystal a — страница 4

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work in Japan. In Japan, Wedgwood had a high quality image while Waterford Glass’ image in Japan was weak. Wedgwood’s base and quality image in Japan increased the image of Waterford’s crystal and in turn increased sales. In 1987, all of Japan’s major department stores carried Waterford crystal. Even with the difficulties surrounding Wedgwood’s sales in the United States, Waterford still changed its name to Waterford Wedgwood in 1989. The Wedgwood division consistently contributed operating profits year after year averaging 20 million punts in profits from the mid 1980’s to the early 1990’s. In addition, the operating expenses for the Wedgwood China division were far lower than the Waterford division. For example, an employee of Waterford Crystal division made three

times as much as an employee from Wedgwood. The Waterford division needs to coordinate some of their activities with the Wedgwood division to share knowledge on how to improve their profitability. A strong competitive advantage can be gained through the sharing of ideas across all of Waterford Wedgwood divisions. PRESENT CONDITIONS AT WATERFORD At their lowest peak, Waterford reported a one year loss of 21.3 million punts, reflecting high operating costs, unfavorable exchange rates (weak US dollar) and additional provisions relating to stocks and debtors in the United States. It was dreadfully obvious that Waterford Crystal had become over-dependent on the United States market. Also, the loss was caused by exceptional restructuring provisions of 18.4 million punts with the

separation of the Wedgwood porcelain product line. Around 1990, at the height of Waterford?s problems, the company was near the point of insolvency. Mr. O?Donoghue, now Waterford?s Chief Executive, was sent to the U.S. to restructure the company?s retail business. He spent just under a year in the U.S., which now accounts for about 70% of sales. Mr. O?Donoghue said that US sales are likely to continue to account for about 70% of company sales, but it will be a 70% slice of a bigger pie. In 1990, Fitzwilton, U.S. merchant bank Morgan Stanley, and an investment group headed by Dr. Tony O?Reilly invested 80 million punts for a 29.9% stake in Waterford Wedgwood – the holding company for Waterford Crystal and Wedgwood — as part of a financial restructuring. This restructuring

included 1990?s wage freezes and a new investment scheme that secured over 200 million punts to stabilize the company?s finances. Since the 1990 restructuring, the investment group has been steadily recovering from heavy losses. By the end of March 1995, profits have doubled to 22.6 million punts and the group paid dividends for the first time since 1988. Also, the group appears to be on target to increase profits by at least 20% for the full year. ENVIRONMENTAL AWARENESS Waterford Crystal was one of eight Irish environmental demonstration projects to receive a partial grant from the European LIFE fund. This partial grant was used by Waterford Crystal towards a 2.7 million punt project that seeks to develop and demonstrate an emission free process for glass manufacturing. The

company already meets the highest national and international standards. This move keeps Waterford in line with their strategic objective of being at the forefront of technological development within the industry. In an interim report that ended June 30, 1996, Waterford Wedgwood reported an increase of 28% in profit before taxes and sales rose by 8%. This performance was principally due to record sales in the United States and Ireland. Both markets saw increases of 17% and a further strong contribution from its Marquis brand, which equates for nearly 30% of Waterford?s sales. To date, the Marquis brand has not cannibalized sales from the Waterford brand, but sales in western Europe could be characterized as ?difficult conditions.” Today, Waterford Crystal employs 1500 people. It

has an estimated market value in Ireland worth 12 million punts and its export market value is 50 million punts. Not only has Waterford increased crystal sales in its key markets, it has also transformed the actual business of producing crystal into something of a tourist attraction. The company?s factory tours attracted 230,000 visitors last year making it the forth largest tourist destination in Ireland. This year Waterford estimates tourist numbers will rise to 250,000. Furthermore, in 1996, Waterford Crystal has highlighted a campaign where it will specifically target the Northern Ireland market. Currently, Waterford is a distant second to Tyrone Crystal that controls 65% of Northern Ireland. INDUSTRIAL ANALYSIS Threat of new Entrants: There is little threat of a new entrant