One Good Place To Begin To Ponder This Assignment Is To Ask The Question, "What Business Is Rh In?" Each Of Our Harvard Case Studies Will Center On The Performance Of a Particular Company And a Key Marketing Question And Its Implications.
Amazon It Is Whether a Company Who Is Creating a New Ecosystem Of Products And Services To Build a New Type Of Competitive Advantage, Spreading Itself Too Thin (Are They Changing The Landscape For Defining Competition?
What Would You Need To Know To Better Make a Decision On a Case Involving Rh. Are There Certain Financial Scenarios Worth Probing?
This short piece of report provides comprehensive insight about the strategic marketing approaches of the organisation called Restoration Hardware. Restoration Hardware in America sells merchandise products for home furnishing; however, the brand stepped in to build restaurant and wine bars for a better customer experience. The market environment has become dynamic in nature which implies a radical shift in consumers’ taste and preferences. Thus, the brand is possibility diversifying its offering to meet the changing demands of consumers today. This research report establishes a critical analysis on whether the brand Restoration Hardware diversifies its products and offering to create competitive advantages because its focus is shifted from home furnishing to construction.
Given the case study on Restoration Hardware is shifting its strategic focus from home furnishing to mild construction. According to Kim, Hoskisson and Lee (2015) brands or businesses choose diversification for couple of reasons like reducing risk factor, to tap more markets, to increase service offering, to gain more technological capabilities. However, it is worth stating that when a business is already being criticized for its existing offering in the market may face the difficulties in establishing the new offering. Dau (2013) stated that strategy of diversification is usually applied when the brand is supposed to launch new products in a completely new market but this strategy is often loaded with series of hurdles as it certainly requires large investment and manpower as well as supervision of top management. Therefore, it can be mentioned that Restoration Hardware’s initiative to build restaurants and wine bars is a question of investment that the business must have to make to full its strategic goals.
Considering the case of diversification of RH’s into construction, two strategic objectives goes significantly and parallelly with approach. The first objective is to acquire the new markets with the purpose of increasing market share, and the second objective is to reduce the possible risks associated with the existing offering (Hair, Sarstedt, Pieper and Ringle 2012). This means if the brand observes the market threats –such as criticism, there may be enormous financial loss and to minimize or prevent the loss the Restoration Hardware needs to diversify its focus into a segment which has high market demands but limited players. Restaurants and wine bar establishing sector is significantly associated with cultural trends that never fade. Therefore, the selection for diversified warrant a stable revenue stream to the brand.
As put forward by Benito-Osorio, Ángel Guerras-Martín and Ángel Zuñiga-Vicente (2012), because of diversification strategy, and the launch of new products completely in a new products, brand’s reliance on one single product item or single market is minimized. As the result, the business is most likely to gain advantages of more products as well as more markets to depend on. The probability of overall risk can be reduced. Likewise, as per the first objective, it can be mentioned that Restoration Hardware can enhance its market reach as it has increasing line of products and thereby, it certainly needs more or better markets to sell the offering. This means new products and new markets are always equal to diversification approach. According to Chen and Yu (2012), when the brand has more markets, it is able to increase its distributional channels. Consequently, the overall turnover also increases. Molina-Azorin (2012) stated that although the entering markets and penetrating the new market includes high cost and expenditure but once it is done, the new markets are most likely to bring profits on a regular basis and this should be the eventual goal of business oriented firm. Therefore, it can be stated that diversification approach is significant and relevant market penetration approach. However, it is worth mentioning that stepping into a new category is always a dicey matter to resolve, as the business must have to make large investment.
On the basis of the discussion and analysis above, it can be mentioned that even though Restoration Hardware made some changes its strategic marketing approach but the chosen field is highly competitive and existing large construction players are in the queue to address the growing needs of construction. Moreover, the existing brands already have developed effective brand image in the market. Moreover, Restoration Hardware cannot be an effective case study because its strategic approaches are not in line with the market scope. The business lacks financial insight in relation to diversification.
Benito-Osorio, D., Ángel Guerras-Martín, L. and Ángel Zuñiga-Vicente, J., 2012. Four decades of research on product diversification: A literature review. Management Decision, 50(2), pp.325-344.
Chen, C.J. and Yu, C.M.J., 2012. Managerial ownership, diversification, and firm performance: Evidence from an emerging market. International Business Review, 21(3), pp.518-534.
Dau, L.A., 2013. Learning across geographic space: Pro-market reforms, multinationalization strategy, and profitability. Journal of International Business Studies, 44(3), pp.235-262.
Hair, J.F., Sarstedt, M., Pieper, T.M. and Ringle, C.M., 2012. The use of partial least squares structural equation modeling in strategic management research: a review of past practices and recommendations for future applications. Long range planning, 45(5-6), pp.320-340.
Kim, H., Hoskisson, R. E., & Lee, S. H. (2015). Why strategic factor markets matter:“New” multinationals' geographic diversification and firm profitability. Strategic Management Journal, 36(4), 518-536.
Molina-Azorin, J.F., 2012. Mixed methods research in strategic management: Impact and applications. Organizational Research Methods, 15(1), pp.33-56.