Office Depot Inc Case Study Case Study

Excerpt from Case Study :

The other competitors of the company are Corporate Express, Inc.,IKON Office Solutions, Inc., Wal-Mart Stores, Inc. And United Stationers Inc.

3. Analysis of potential new entrants

Threat of new entrants (Source: Datamonitor,2007)

The threats of new entrants into new entrants in this industry are noted to be very string. This is because most of the supplies are in the form of commoditized products that never benefit greatly from the brand loyalty. This when coupled with the low end-user switching costs as well as easy access to the suppliers and distribution channels makes it very conducive for new players to come into the market. The market is however very stagnant at the moment and this reduces its attractiveness to the potential new players.

4. Analysis of substitute products

Substitute products (Datmonitor,2007)

An analysis of threat of substitutes within this sector is moderate. This is because most of the modern companies are involved in strategies that minimize cost as well as reduce environmental impact of their operations. The strategy they mostly adopt is paperless office. The switching costs are not too much since most of the companies have already put in place appropriate information technology (IT) systems. The revenue generated from paper-based office products is threatened by this shift in operational strategies.

5. Analysis of suppliers

The firms within the office equipment supplies & services sector deal in a diverse variety of products and services and this means that they must source their materials from various suppliers. The main materials that are used in the manufacture of office supplies are plastic resins, pulp and paper and metals. The general lack of raw material differentiation leads to a detraction from the supplier power. The importance of the quality of raw materials as well as cost when coupled with the lack of a targeted and specific importance of the office services and supplies industry to the suppliers adds to the already existing supplier power. The key suppliers are paper mills. These integrate forwards for the purpose of providing paper-based office supplies. The supplier power within this industry is therefore moderate. The supplier power of technology-based solutions and equipment such as printers is also moderate.

6. Analysis of buyers

An analysis of the buyer power in the office supplies and services market segment reveals that it is moderate. This is because the office supplies and services market sector serves a very diverse number of clients in the business community. This effectively limits the buying power of individual clients. There is however low customer switching costs as well as low customer loyalty which helps in providing the customer with degree of choice that therefore enhances the buyer power. The degree of buyer power in this market segment is however dependent on the size of the customer. Most office supplies firms require tendering for contracts with large organizations and businesses that can result in high purchasing power. Smaller businesses also practice group purchasing of office supplies in order for them to realize discounts associated with bulk purchasing.

Buyer power (Datamonitor,2007).

7. Summary of industry opportunities and threats

The industry opportunities include engaging in products that are eco-friendly such as paper-less office equipment. This trend can be captured by this industry by investing in marketing strategies to support eco-friendliness. The benefits of cost reduction and efficiency associated with paper-less office must also be promoted by these companies as it is the current trend on office technologies.

The threats that the traditional office supplies and services industry faces is associated with technology. The paperless technology is both a threat and an opportunity in this market segment. This is because it posses a threat to the traditional office supplies and services industry while offering a future in the same market segment.

8. Implications for strategy development

This therefore has implications in the formulation of current and future strategies. The company must come up with ways of marketing its traditional products while offering a smooth transition towards paper-less technologies and office automation.

c. Firm

1. Objectives and constraints

Office Depot has several objectives and constraints. The company has sales and marketing objectives, training objectives as well as customer service objectives.

Sales objectives

In regards to sales, the company aims at having all of its transactions processed in a timely an orderly manner. This is important because a smooth interaction between the sales function and the finance function is crucial in all companies since a communication breakdown between the company and its customers in regard to payments would result in an unpleasant experience. The company's financial department must be asked for the customer's credit rating in order to evaluate their credit worthiness (will they pay for their products and service?).Items must also be prepared according to the preferences of the customer. The aims are to manage all sales in a manner which is customer-friendly, to increase the transaction's success rate, and to use compatible methods of payment. The objective would be to increase sales by 8% within 6 months.

In regard to training objectives, the company aims to make their customer service more efficient, training employees who are sufficient as well as train them in high standards. The objective is tom have them all trained within 6 months and come up with a system that interacts with the company's recruitment arm on a daily basis.

In regard to the customer service objectives, the company aims at monitoring its sales function and then use customer service in driving up sales. The customer service function is crucial for the customers, sales as well as marketing function to work well. The aim of the customer function is to increase the number of recurring and happy customers, to help the customers to solve their problems in a quick manner and to ensure a friendly and professional experience for all customers. The objectives of the sales function are to give unsatisfied customers about 500 vouchers on a daily basis, to have an average of 3 calls per problem within the 6 coming months as to run customer satisfaction surveys every month.

2. Financial conditions

The Company recorded total revenue of about $12,144.5 million in 2009. This was noted be a reduction of 16.2% as compared to the one for 2008 (Research and Markets,2010).The company had an operating loss of $265 million in the 2009 Financial year. The 2008 Financial year loss was however $1,545 million. The $12.1 billion revenue that the company made in 2009 was a 16% decline from the one it made in 2008. Office Depot attributed this decline in revenue generated to the tough and unpredictable economic conditions in the U.S. In 2009.

3. Management philosophy

Office Depot's management philosophy is guided by the mandate to have customer satisfaction being inherent in all that it deals in (Cisco,2001). The management does this by fostering an environment in which recognition, communication, innovation as well as the employee entrepreneurial spirit are encouraged and handsomely rewarded. The management is committed strongly to ethical leadership.

4. Organizational structure

Organizational structure is defined by Mullins (1993) as well as Mabey, Salaman & Storey (2001) as the patterns of relationships that exists between the roles in a given organization as well as its various parts, The purpose of organization structure is to help in the allocation of work as well as responsibilities so as to effectively direct the activities and achieve the goals of an organization. Organizational structure enables the management in the planning, directing, organizing and controlling all of the activities within the given organization.

The Office Depots organizational structure is as follows;

The organization structure at Office Depot has bee subjected to change continually over the yeas. This change in the organizational structure has been inspired by the dynamic forces of their operating environment. The last time Office Depot conducted a major change in its organizational structure was in 2003 when it made several changes. These changes were as follows;

The company created a totally new position of President, North America. This role has been responsible for the consolidation of the North American operations. Another position called Executive Vice President, Delivery Sales was also created with the responsibility of overseeing all the delivery sales in the North American region. Executive Vice President, supply chain was also created to be responsible for all the warehouses, replenishment and crossdocks activity. Also created was the position of Executive Vice President, Delivery Sales.

Recently, the changes in Office Depot's management targeted its e-commerce function (Brohan,2011). The current organizational structure is depicted in figure 7 (See Appendix).

5. Organizational culture

The organizational culture at Office Depot is guided by a commitment to professionalism and diversity. The company is guided by corporate ethics and this is evident in their recruitment as well as retention practice the community while reflecting on its progress. The organization culture at Office Depot incorporates a level of mutual respect that is rarely seen in other organizations. Acceptance as…

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