Kinko\'s Case Study Situational Analysis -- Who

Kinko's Case Study

Situational analysis -- who what where when why Kinko's revenues have declined by three percent from 2002 to 2003. The major reason behind the decline is slow growth in its consumer market and local business segments. This is particularly problematic because these two segments account for eighty percent of this company's overall business. The sale of Kinko's to FedEx is currently under negotiation. Kinko's is considering two options to help boost revenue, either radically overhauling its retail business or focusing on the commercial business.

strength, weakness, opportunity, threats

Strengths: Kinko's is a large company with revenues of $2 billion and 1,200 stores in the U.S. And nine other countries. Although it is no longer able to differentiate itself from the competition in many of its market segments, the company believes it has a very competitive and feature-rich offering for the non-FM commercial sub-segment.

Weaknesses: Even though customers across Kinko's market segments have very unique needs and requirements, the company offers the same service to each one. Increasingly, Kinko's cannot differentiate itself from the competition. In its retail stores, the company has poor "ease of process" (poorly designed signage, poor staff allocation and confusing self-service). In general the commercial segments provides poor service to its customers and is inefficiently ran, the company is losing $25 million a year to factors it could control such as pricing and quality. Kinko's has a dramatically smaller presence and direct sales force than other competitors in the commercial segment. Kinko's offerings in the FM sub-segment do not current compare favorably to those of competitors such as Xerox and IKON.

Opportunities: There are a number of opportunities for Kinko's. Commercial solutions are expected to grow by almost 10% in 2004 and 2005. E-business products grew by over 40% between 2001 and 2002 and are expected to continue to do well. Kinko's should see growth through international expansion which is expected to grow by ten percent over the next two years.

Threats: Technology substitution, most notably printers, is eroding Kinko's business, particularly in the consumer and local business segments. The company is facing new competition from superstores.

III -- Market strategy -- product, price, promotion, place

Kinko's is a chain of stores that provide printing, copying, and binding services through 1,200 stores in the U.S. And nine other countries. Recently, the company is also engaging in e-business with digital document storage, printing, web-based order and e-mail. Thirty-percent of Kinko's business comes from the consumer segment, fifty percent comes from the local business market and the remainder is from the commercial solutions segment which consists of the FM and non-FM sub-segments. Kinko's is perceived to charge prices greater than the competition although the company actually has lower prices for high-volume jobs.

IV -- Recommendations

Kinko's priority should be to protect its retail business which impacts more than eighty percent of its sales. True, the commercial segment is poised for faster growth. However, Kinko's would have to make a considerable investment in technologies and a direct sales force to keep up with the competition. Further, companies such as Xerox and IKON sell machines and provide copy services as a lost leader to sell machines (Boyle, 2007). To compete, Kinko's could likely end up with low or negative margins.

While technology has displaced the need for many of Kinko's printing services in the consumer and local business markets, it also provides new opportunities and the company should do all it can to take advantage of digital growth opportunities such as electronic document delivery, Wi-FI Internet access and videoconferencing (Brewin, 2004). And, the company needs to build online services such as letting people design brochures, business cards, and other materials online and place an order to pick them up at a nearby retail store (Boochever, Park, and Weinberg).