THE HOUR GLASS CASE STUDY:

PRESENTED BY: MBA-IBM(2010-2011) ESC-Chambery

MISSION: To be the world leader in retailing, wholesaling and manufacturing of luxury and lifestyle products/services by providing legendary internal and external customer service and after sales service, while fostering a caring, sharing and supporting family culture with personal learning, commitment, communication, training and development.

THE SUCCESS OF THG: The success of THG mainly attributed to the following factors: Accurate timing Exact location Focussed in quality, fashion & trends , prospective consumers The time: The growing trend of elaborate use of watch as an accessory more than a necessity was identified and likewise, new stylish patterns were included in the outlet with major suppliers in the market. The location: The outlets were opened in the most attractive tourist centres and also industrial and business areas. Focussed: The smartness in pinpointing the growing trends in the society, fashion and trends and also ensuring quality in service and product was also a main success factor. Focus on the buying capacity of the wealthy consumers and tourist flocking to Singapore was also a notable strategy. (NB: Asia was a big market for expensive watches which made Singapore the most favourite place for shopping sprees of rich customers in neighbouring countries.)

One step ahead...... THG was the pioneer in catering to the elite society there by identifying and targeting customers . The forecasting ability of Mrs Tray, who saw a market even when it did not physically exist at the time of start up of this business, gave THG an early start and a unique monopolistic existence. Core competencies of company: According to Mrs Jannie Tay, managing a business was about people, relationship and feeling

Organisational policies i. Training and staff development ii. Extensive communication within management management). iii. Flat organisational structure iv. Empowerment through information sharing.

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(NB: At THG, everyone is encouraged to involve in decision-making to reach companys goal, to have increased self respect and self-confidence, to be incentive to stay long time with THG and to work happily together. However, THGs employees are improved by the training courses about techniques knowledge of the various products and brands, service skill of internal and external customers) Marketing Strategy Integrated marketing plan comprising of 4 major marketing strategies: Catering to a wide range of market segments. Boutiques are located in prime shopping locations Distinguished look for THG boutiques Launched targeted image advertising. (NB: Positioned as elegant watch boutique in a luxurious setting, association with premium brands, cultivate image as elegant watch boutique, displayed watches in gallery, trained professional sales people with product knowledge, high level service to suit customers lifestyle and personality, included more popular lines, word of mouth was one of the major tool for THG, informal means of advertising- cocktail parties, events, exhibitions, sponsored charity acts) Efficient Management Overseas expansion by establishing subsidiaries Corporate strategy Integration into wholesaling and manufacturing watches, Diversification into non watch-retailing sectors.

(NB: THG was into new ventures like properties, perfumes, restaurants, jewellery and much more. There were also new frontiers explored in overseas markets with joint ventures with foreign partners.)

Is THG`s Success related to Industry Investment & competitors

Yes,,,, THG is very much related to industry. It has integrated to manufacturing of its own , they were in market but family business, which was later developed and diversified. So initially investment was from family rather

than other sources of financing. Since it was an industry that did not require huge amount of capital it did not have long gestation periods for return on investment. Decisions were taken and cash flow from one business unit into another was not a big problem. Since the Industry was relatively new, THG was able to capture the market with No competition in the early days. (NB: Earlier there were no exclusive boutiques catering to select people, fashionable and this brand came as a status quo, later competition did enter.) Segmentation of the Industry Targeted customers were divided into 2 : Basic( necessity) and Elite( rich & trendy, as asset / collectors) Markets.

THG diversified into related segments like: Sports accessories, Jewellery. Perfumery Property / Real estate etc.. Backward Integration & Vertical Integration Corporate strategy & Diversification are key Contributors for THG`s Market share. (NB: Watches transformed into fashion accessories thus capturing the Elite Market. Starting from retailing, THG integrated backward into both wholesaling as well as making watches , giving it the unique distinction of being involved in all aspects of making and selling watches. Apart from this THG expanded through ventures and subsidiary branches....which are indications of industrial growth, CSR is maintained throughout in all aspects of the organisation.)

Buffer Analysis: Market analysis was done based on PORTERs five forces, 1. Threat of new entrants in market 2. Threat for substitute products 3. Rivalry within industry

4. Power of suppliers 5. Bargaining power of customers

Fig:1 PORTERs MODEL OF FIVE FORCES

Depending on this , market was studied and contingency plan was made. Forfeiting of products was checked by company, competitive products was studied.. & THG made sure to be innovative rather than being a follower. Expansion was happening by acquisitions , ventures and establishment of subsidiary units, giving execution power to the units . Diversification or multi business is also supportive at adverse conditions. The business therefore witnessed a growth, i.e.30% of group turnover accounts for wholesaling alone.

(NB: Risk management was done depending on analysis done, status of other prospective companies that can be included for expansion was identified ,also the type of expansion ie acquisition/venture/ subsidiary that should be undertaken by the company which is part of buffer analysis, so that no mistake happens later ...................)

BCG Matrix and THG`s position in BCG : END RESULT CASH COW STATE OF THG THG has scaled enormous growth in the first two decades showing great track record in a very less time. So they had high market share in a fast-growing industry. In the Early Period, THG was definitely a STAR because of their swift rise to success. CASH COW Gradually THG diversified and took control of their cash. They entered the CASH COW phase which supplies funds for future growth of the Organisation. Due to the position of category Leader, THG was able to maintain its footing in the CASH COW phase. CONVERSION questions to stars ( ? to *) The Cash Flow from the cash cow phase was re-invested into many other diversified lines. The Product Line varied by a great extent. THG was into new ventures like properties, perfumes, restaurants, jewellery and much more. There were also new frontiers explored in overseas markets with joint ventures with foreign partners. Thus THG was successful in transforming QUESTION MARKS into STAR areas in the BCG Matrix.

Fig:2 Pattern of business

As seen in the figure a decline phase is there for all business enterprises but THG did not phase a tragic decline as they are diversified. ( NB: Since this business was taken over by Tay a new era was seen in the story of THG . Recovery of all the expense, i.e. return of investments was obtained and reached the cash cow stage at a commendable pace.) THG`s Competitive Advantage THG`s Competitive Advantage accounts to the success of the company: Quality -- product uniqueness, service efficiency Focussed marketingIdentifying Potential Markets and foreseeing future opportunities. Market Analysis Identifying the areas where watches can be sold Gifts/ accessories and fashion statements. Human Resources Effective and responsible Staff Marketing Strategy - Look and feel , Market segmentation and Customer satisfaction Diversification Different Product Lines introduced parallel Global Presence Overseas Markets and expansion through new ventures.... CSR Company with responsibility on all the members.

Diversification and Its Problems

Diversification The Strategy of spreading investments in different areas to penetrate more markets is called diversification. Parallel introduction of products in market simultaneously so that one can always have a steady flow of cash. Reasons to Diversify 1. Maintain Life cycle of company 2. Risk Management 3. Market Share & investments 4. New opportunities. Life Cycle In 20 years after starting THG gained enormous growth. It crossed all the three phases of Development, introduction, growth and maturity in a very short span. When THG was

matured in the watch industry, it has to diversify in order NOT to go into decline phase. So to maintain healthy life cycle of the company diversification was very essential. 2. Risk Management Diversification increases market scope and reduces the risk of total shut down in all areas. Even if one industry is performing badly, there are other industries that can help the company maintain its operating Profits. This also helps in cash flow from one business unit to another. 3. Market Share & Investments With more products , THG was able to obtain a significant market share of the goods. More markets were penetrated and newer opportunities were exploited. Problems in Diversification THG Diversified with the help of Joint Ventures. It joined hands with many foreign companies venturing into new markets. But there were unseen issues in the beginning. External Issues These were the economic and market issues faced by THG Depreciating value of Singapore currency leading to a loss of great amount of money. Joint ventures with companies not yielding expected results. Asian crisis bringing down all the economies of the target countries

Internal Issues Management was a big problem since the business units were getting bigger and the sector was getting broader. It was no longer watches, fashion but Lifestyle. So everything from resorts to perfumes came into this and the Marketing strategy was not able to focus on the customers. Management Issues Rivalry among staff (Same office native staff and staff from Singapore) Unspecific Marketing strategies Different Markets and Customer Behaviours.