Case | HBS Case Collection | December 1994 (Revised June 1995)
Tiffany & Co.--1993
by W. Carl Kester and Kendall Backstrand
The restructuring of Tiffany's retailing agreement with Mitsukoshi Ltd. in 1993 exposed Tiffany to substantial yen/dollar exchange rate volatility that it had not previously faced. This new exposure requires Tiffany to establish risk management policies and practices. Management must determine whether to hedge, what the objective of hedging ought to be, how much exposure to cover, and what instruments to use. Teaching Objective: To introduce students to the problems of risk management in a relatively uncomplicated administrative situation.
Keywords: Restructuring; Currency Exchange Rate; Management Practices and Processes; Risk Management; Agreements and Arrangements; Situation or Environment;
TIFFANY & CO. ANALYSIS 2 Tiffany & Co. aims to be the world’s most respected and successful designer, manufacturer and retailer of the finest jewelry (“Corporate Responsibility”, 2013). To implement this mission, the company’s objective is to maintain an ethical business that is qualitative and sustainable. Tiffany & Co. has four business strategies. The first is to focus on responsible mining that conforms to high standards of social and environmental responsibility. They also utilize their product’s pricing strategy to shape the brand’s perceived value, measure consumer demand, and gain a competitive advantage in the industry. Tiffany & Co. also has a strategy to expand globally in the Americas, Asia Pacific and European markets. Differentiation is the last major strategy that Tiffany’s is implementing. In addition to the classic jewelry and accessory collections that the brand offers, Tiffany & Co. is now looking to differentiate themselves from competitors by selling watches, and by placing even more attention on customer service. Tiffany & Co. operates under a divisional structure. They are run by a board of directors, head management team, and then broken down divisionally by product and service. One problem that the company is experiencing right now is a decline of business in the Asian market. One potential opportunity is re-launching their product line in the Asian market, and continuing their strategy to expand globally in the EU and Americas. Other strategies could be inventing a cosmetic line in the United States, or selling through distribution channels. Tiffany & Co. should continue to implement their strategy of global expansion, as this would increase their market share, increase consumer confidence in the sector, and help them to gain more of a global presence. Ultimately, Tiffany & Co. hopes to create long-term value for their customers and stakeholders by retaining their current business strategies, and by cond ucting new business abroad in a way is environmentally and socially just. . Existing Mission