1. 1.

Waterford Wedgwood PLC 2008 Case Analysis Anna May del Campo MBAAPEX, Strategic Management February 25, 2012
2. 2. Introduction Strategy Formulation Mission/Vision SWOT Matrix Internal
Assessment SPACE Matrix Business Organization Grand Strategy Matrix
Financial Ratio Analysis QSPM Marketing Strategy Recommendations Map
of Operations Strategy Implementation IFE Matrix Conclusion External
Assessment CPM EFE Matrix
3. 3. 13th Evidence of glassmaking has been found by Century archeologists in
Ireland 1783 Waterford Crystal was founded (over 225 years ago) on the quays of
the Irish port of Waterford by two prominent developers and businessmen,
brothers William and George Penrose 1851 However, the company ceased
operating after falling on hard times. 1947 Following World War II, glassmaking
once again commenced in Waterford 1967 Waterford became a listed company
on the London Stock Exchange 1986 Waterford acquires Josiah Wedgwood and
Sons, forming Waterford Wedgwood plc. Contains divisions producing products
ranging from the traditional crystal to linens and home wares as well as writing
instruments and ceramic flat waresHISTORY
4. 4. BACKGROUND
5. 5. Vision Mission To continue to be the worlds leading portfolio No vision
statement of luxury lifestyle brands with particular emphasis on tabletop, gifting,
and the home. Mission Statement EvaluationCustomers P&S Markets TechSurvival, Philosophy Self - Concern Concern nology Growth concept for Public for
Profitability image Employees No Yes No No Yes No No No No
6. 6. Proposed Vision StatementCreate the finest quality crystal and objects of
beauty for the home whichrepresents luxury, elegance, and hard work. Proposed
Mission Statement We offer our customers lavishness, innovation, and highquality, of theworlds greatest crystals and ceramics, and developing a style that
is ableto transcend global fashion boundaries to bring beauty into the lives ofour
customers.
7. 7. Business Organization Distribution of Revenues for the fiscal year ending
March 2007 per operating group 1 2007 Revenues Ceramicsa. Waterford Crystal
Group 68%b. Marquis by Waterfordc. Stuart Crystal Waterfordd. Cashs Mail Order
Crystal 27% W-C Designs and Spring 5% 2a. Wedgwoodb. Rosenthalc.d. Royal
Doulton Hutchenreuther 3e. Coalport a. W-C Designsf. Masons b. Springg.
Johnson Brothersh. Royal Alberti. Minton
8. 8. Financial Ratio Analysis FINANCIAL RATIO 2007 2006 2005 2004Liquidity
RatiosCurrent Ratio 2.19 2.01 1.86 2.42Quick Ratio 0.77 0.77 0.67 0.89Leverage
RatiosDebt-to-Total-Assets Ratio 1.16 1.25 1.17 0.98Debt-to-Equity Ratio -7.19
-5.07 -6.96 56.36Activity RatiosInventory Turnover 2.97 3.31 3.15Fixed Assets
Turnover 4.80 4.44 3.27Total Assets Turnover 1.11 1.13 1.00Profitability
RatiosGross Profit Margin 0.48 0.41 0.40Net Profit Margin -0.10 -0.24 -0.22Return
on Total Assets -0.11 -0.28 -0.22Return on Stockholders Equity (ROE) 0.66 1.13
1.29Growth RatiosSales -4.03% 10.42%Net Income -62.31% 24.85%
9. 9. In a state of balance sheetinsolvencyThe drastic decline of debt-to-equity ratio
was caused by thenegative value of the total equitystarting year 2005 to 2007
10. 10. The net profit margin and ROA were negative because of the negative net
income of the company. ROE may be positive, but both of its indicators were
negative (net income and stockholders equity)There was a 4 percent decrease in
salesfrom 2006 to 2007, while a 10% increasefrom 2005 to 2006.Growth in net
income/loss - a decrease inthe negative income was observed in2007 which was
from negative 188.9MEuros to 71.2M Euros. In 2006, anincrease in negative loss
was seen from151.3M Euros to 188.9M Euros

11. 11. Financial Data by Segment Fiscal year ended March 31 2006 2007 (euro in
millions) Revenue by segment: Waterford Crystal 206.5 199.4 Ceramics Group
527.8 501.5 W-C Designs and Spring 38.3 40.6 772.6 741.5 Expenses by
segment: Waterford Crystal 224.6 188.2 Ceramics Group 626.9 520.6 W-C
Designs and Spring 39.3 41.8 Unallocated costs 12.6 8.0 903.4 758.6 Operating
profit/loss by segment: Waterford Crystal (18.1) 11.2 Ceramics Group (99.1)
(19.1) W-C Designs and Spring (1.0) (1.2) Unallocated costs (12.6) (8.0) (130.8)
(17.1)
12. 12. Marketing Strategy Promotion The Groups various brands are generally not
marketed together as complementary products. But each brand is marketed
individually. Department store displays, word of mouth, and the websites are the
primary marketing tools utilized by the company. Involved with the creation of
trophies for major sporting events and with special projects such as the Times
Square New Years Eve Ball. Introduces special pieces to commemorate special
events.
13. 13. Marketing StrategyDistribution ChannelsWaterford Wedgwood distributesits
products through a multi-channel distribution network: (including wholesalers
and arrangements with retail and department chains), direct retail from
company-owned establishments (including the 2007 Revenues Waterford Crystal
Gallery at the Europe United Waterford, Ireland factory), (except UK) Kingdom
26% 17% mail order, and via regional internet retail websites. Asia 10% North
America Rest of the 41% World 6%
14. 14. Map of Operations 17% 26%41% 10% 6%
15. 15. IFE Matrix KEY INTERNAL FACTORS Weight Rating Wtd Score STRENGTHS1
Standard production procedures, high quality products being 0.06 4 0.24 offered2
Hand-made, unique crystal pieces based on artisan processed 0.03 3 0.09
production by trained craftsmen3 Code of corporate conduct reflects the
companys concern for investors, directors, and employees. Thus, fits into the
criteria 0.03 3 0.09 for being socially responsible and has made this info available
to public and has established good public relations4 Introduction of additional
product lines to follow trends while 0.06 3 0.18 maintaining quality and tradition5
Collaborative and cooperative relationships with famous 0.04 3 0.12 designers
and internationally known chefs6 Publics ongoing positive perception of the
Waterford 0.07 4 0.28 Wedgwood brands7 Has the goodwill of Waterford that has
beenin the market for 0.01 4 0.04 225 years
16. 16. IFE Matrix continuation Wtd KEY INTERNAL FACTORS Weight Rating Score
WEAKNESSES 1 Increasing trend in the negative net income from 2006 to 2007
(negative 270.8 million 0.1 1 0.1 euro net income for 2007) 2 Declining revenue
from 772.6 million euro to 741.5 million euro; Struggled in maintaining 0.09 1
0.09 sales which have declined every year since 2000 3 In a state of balance
sheet insolvency. A deficit in their equity account due to defined 0.08 1 0.08
benefit pension schemes in long-term liabilities 4 No vision statement 0.02 2 0.04
5 No special efforts made on advertising, in order to reinforce the image of their
products 0.04 2 0.08 they will be needing a new advertising strategy 6
Significant problems with debt management 0.06 1 0.06 7 Centralized production
for each of its products results in significant transportation costs, 0.05 2 0.1
given dispersion of sales around the world 8 Products are considered as heirloom
that gives a brand perception of being old or 0.01 2 0.02 associated with prior
generations, reducing sales 9 Multichannel distribution network including
wholesalers and arrangements with select 0.06 1 0.06 retail and department
chains10 Diversified into other areas of household luxury products such as linens,
flatware, 0.08 1 0.08 cookware11 Various brands are not marketed together as

complementary products but being 0.07 1 0.07 marketed individually12 High

labor costs which is much related to hand-crafting 0.04 1 0.04 TOTAL 1.00 1.86
17. 17. Competition A division of Corning Incorporated A French crystal company
based in based in Corning, New York. Levallois Perret, France. Offers a full line of
luxury glass Offers a wide-range of luxury glass products including barware,
stemware, items vases, and decorative pieces. (jewelry, tableware, stemware,
lightin g, and decorative crystal) Distributes its products through its website and
specialty retailers. Distributes its products through high- end retailers
throughout the world. Sales was approximately $400 million. Had sales of
$187 million in 2006 and net income of $10.9 million.
18. 18. CPM Matrix WATERFORD WEDGWOOD, STEUBEN BACCARAT CRITICAL
SUCCESS FACTORS Weight PLC Rating Score Rating Score Rating Score 1 Product
Quality 0.1 4 0.4 3 0.3 3 0.3 2 Financial Position 0.25 1 0.25 3 0.75 3 0.75 3
Global Expansion 0.05 3 0.15 3 0.15 3 0.15 4 Market Share 0.2 4 0.8 3 0.6 2 0.4 5
Effectiveness of Sales 0.15 1 0.15 4 0.6 4 0.6 Distribution & Advertising 6
Production Capacity and 0.2 2 0.4 3 0.6 3 0.6 Efficiency 7 Technological
Advantage and 0.05 4 0.2 4 0.2 4 0.2 E-Commerse Expertise TOTAL 1.00 2.35
3.20 3.00The companys total weighted score in the CPM is 2.35 which is not
exactlysatisfactory considering the high scores of Steuben and Baccarat.
19. 19. EFE Matrix Weighted KEY EXTERNAL FACTORS Weight Rating Score
OPPORTUNITIES1 Outsourcing of production to countries with lower labor 0.1 2
0.2 costs (Europe and Asia)2 Opportunity exists for growth in the Asian region
0.09 3 0.27 (especially among brand-conscious Japanese)3 Opportunity to
innovate and expand product line to 0.05 3 0.15 cater to highly segmented
markets4 Collaborative branding agreements to increase product lines as well as
possible increase in distribution 0.04 4 0.16 channels5 Presence of specialty
markets and high-end retailers 0.04 3 0.12
20. 20. EFE Matrix Weighted KEY EXTERNAL FACTORS Weight Rating Score THREATS1
The dispersion of sales causes the company to be very sensitive to exchange
rates and other economic 0.35 1 0.35 fluctuations in each of its markets2
Existing competitors have very efficient marketing and 0.1 1 0.1 product
distribution3 Presence of large competitors that also provide a full line 0.1 3 0.3
of luxury glass products4 Competitors are offering a unique mix of products like
inclusion of fashion accessories, jewelries, lighting, etc. 0.07 3 0.21 with
contemporary designs5 Potential threat for competition from new manufacturers
in lower-cost countries in eastern Europe 0.09 1 0.09 and Asian countries6
Competitors from Asia have the advantage of lower labor costs, less stringent
regulation, and a more limited 0.07 1 0.07 view of intellectual property TOTAL
1.00 1.82
21. 21. SWOT Matrix SO Strategies WO StrategiesFocus on core products which are
Extensive cost reduction to prevent further increase in net loss whichcrystal and
ceramics and be less contributed to the increase in a deficit in equity
accountdiversified. Stop acquiring companies Efficiency in product distribution.
Multi-channel distribution network iswith products that do not fit with the costly.
Focus to 2-3 channels only such as internet, wholesaler/ departmentrest of the
organization have chains, and through specialty markets. Stop distribution
through retaildifferent markets, customers, establishments.workforce, values,
needs Transfer outsourced production nearer to headquarters to reduce
leadIntegrated Marketing. Brands should time, lower transportation costs, and
improve efficiency. Ceramics and W-Cbe marketed together as Designs/Spring
production in Indonesia is already very far considering thecomplementary
products not being low market share in Asia. Move somewhere to North Western

Asia ormarketed individually Europe. ST Strategies WT StrategiesRegroup

through cost and asset Regroup through cost and asset reduction to reverse
declining sales andreduction to reverse declining sales profits. The organization is
plagued by inefficiency and negative profitability,and profits. Close marginal
divisions, that major internal reorganization is needed. It failed to meet its goals
andprune product lines, automate objectives over time despite its competitive
advantage. It is time to closeprocesses, and institute expense marginal divisions,
prune product lines, automate processes, and institutecontrol systems among
others. expense control systems among others. Divest unprofitable brands
especially those that require too much capital and do not fit well with companys
core business (crystal and ceramics). Negotiate for loan restructuring.
22. 22. SPACE Matrix INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC
POSITION Competitive Advantage Industry Strength (-6 worst, -1 best) (1 worst, 6
best)a. Market Share -3 a. Growth Potential 2b. Product Quality -1 b. Profit
Potential 1c. Latest Technology -3 c. Financial Stability 1d. Brand Recognition -2 d.
Resource Utilization 2e. Distribution Channels -4 e. Ease of Entry into Market 3f.
CSR Programs -2 f. Productivity, Capacity Utilization 3Average Score -2.5 Average
Score 2Total X axis score -0.5 Financial Strengths Environmental Stability (1
worst, 6 best) (-6 worst, -1 best)a. ROI 1 a. Technological Changes -2b. Leverage
1 b. Rate of Inflation -4c. Liquidity 5 c. Demand Variability -1d. Working Capital 2
d. Price Range of Competing Products -3e. Cashflows 1 e. Competitive Pressure
-3f. Inventory Turnover 2 f. Price Elasticity of Demand -3g. Growth Ratio 1Average
Score 1.857143 Average Score -2.66667Total Y axis score -0.80952Position: -0.5,
-0.8
23. 23. SPACE Matrix The directional vector is located in the lower-left or 0.9 0.8
defensive quadrant, which Conservative 0.7 Aggressive suggests that Waterford
0.6 0.5 Wedgwood PLC should focus 0.4 0.3 on rectifying internal 0.2 0.1
weaknesses and avoiding -1.0 -0.9 -0.8 -0.7 -0.6 -0.5 -0.4 -0.3 -0.2 -0.1 0.0 0.1
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 -0.1 external threats. Defensive -0.2 strategies
include: -0.3 Defensive -0.4 Competitive -0.5 Retrenchment -0.6 -0.7 -0.8
Divestiture -0.9 -1.0 Liquidation Related diversification
24. 24. Grand Strategy Matrix Organizations under this situation compete in slowgrowth industries RAPID MARKET GROWTH and have weak competitive positions.
WEAK STRONGCOMPETITIVE II I COMPETITIVE The company must make some
drastic POSITION POSITION changes quickly to avoid further decline and possible
III IV liquidation. Extensive cost and asset reduction or Waterford retrenchment
Wedgwood PLC should be pursued first. SLOW MARKET GROWTH It should also
consider divesting unprofitable divisions/brands.
25. 25. QSPM Retrenchment Divestiture KEY FACTORS Wt. AS TAS AS TAS
OPPORTUNITIES1 Outsourcing of production to countries with 0.1 3 0.3 3 0.3
lower labor costs (Europe and Asia)2 Opportunity exists for growth in the Asian
region 0.09 1 0.09 1 0.09 (especially among brand-conscious Japanese)3
Opportunity to innovate and expand product line 0.05 1 0.05 1 0.05 to cater to
highly segmented markets4 Collaborative branding agreements to increase
product lines as well as possible increase in 0.04 - - - - distribution channels5
Presence of specialty markets and high-end 0.04 retailers - - - 26. 26. QSPM Retrenchment Divestiture KEY FACTORS Wt. AS TAS AS TAS THREATS1
The dispersion of sales causes the company to be very sensitive to exchange
rates and other economic 0.35 4 1.4 3 1.05 fluctuations in each of its markets2
Existing competitors have very efficient marketing 0.1 2 0.2 2 0.2 and product
distribution3 Presence of large competitors that also provide a full 0.1 2 0.2 1 0.1
line of luxury glass products4 Competitors are offering a unique mix of products

like inclusion of fashion accessories, jewelries, 0.07 2 0.14 1 0.07 lighting, etc.
with contemporary designs5 Potential threat for competition from new
manufacturers in lower-cost countries in eastern 0.09 3 0.27 2 0.18 Europe and
Asian countries6 Competitors from Asia have the advantage of lower labor costs,
less stringent regulation, and a more 0.07 3 0.21 3 0.21 limited view of
intellectual property 1.00
27. 27. QSPM Retrenchment Divestiture KEY FACTORS Wt. AS TAS AS TAS
STRENGTHS1 Standard production procedures, high quality products 0.06 being
offered - - - -2 Hand-made, unique crystal pieces based on artisan 0.03 2 0.06 2
0.06 processed production by trained craftsmen3 Code of corporate conduct
reflects the companys concern for investors, directors, and employees. Thus, fits
into the criteria for being socially responsible and has 0.03 1 0.03 2 0.06 made
this info available to public and has established good public relations4
Introduction of additional product lines to follow trends 0.06 1 0.06 1 0.06 while
maintaining quality and tradition5 Collaborative and cooperative relationships
with famous 0.04 designers and internationally known chefs - - - -6 Publics
ongoing positive perception of the Waterford 0.07 Wedgwood brands - - - -7 Has
the goodwill of Waterford that has beenin the 0.01 market for 225 years - - - 28. 28. Retrenchment Divestiture KEY FACTORS Wt. AS TAS AS TAS WEAKNESSES 1
Increasing trend in the negative net income from 2006 to 2007 (negative 270.8
0.1 4 0.4 4 0.4 million euro net income for 2007) 2 Declining revenue from 772.6
million euro to 741.5 million euro; Struggled in 0.09 4 0.36 4 0.36 maintaining
sales which have declined every year since 2000 3 In a state of balance sheet
insolvency. A deficit in their equity account due to 0.08 4 0.32 4 0.32 defined
benefit pension schemes in long-term liabilities 4 0.02 No vision statement - - - 5 No special efforts made on advertising, in order to reinforce the image of their
0.04 products they will be needing a new advertising strategy - - - - 6 Significant
problems with debt management 0.06 4 0.24 4 0.24 7 Centralized production for
each of its products results in significant transportation 0.05 3 0.15 4 0.2 costs,
given dispersion of sales around the world 8 Products are considered as heirloom
that gives a brand perception of being old or 0.01 associated with prior
generations, reducing sales - - - - 9 Multichannel distribution network including
wholesalers and arrangements with 0.06 3 0.18 4 0.24 select retail and
department chains10 Diversified into other areas of household luxury products
such as linens, flatware, 0.08 3 0.24 4 0.32 cookware11 Various brands are not
marketed together as complementary products but being 0.07 marketed
individually - - - -12 0.04 High labor costs which is much related to hand-crafting - - - TOTAL 1.00 4.9 4.51
29. 29. Recommendations1. The first thing that Waterford Wedgwood has to do is to
extensive cost reduction program in order to stabilize its financial situation:
prevent further increase in net loss which contributed to the increase in a deficit
in equity account2. Pursue retrenchment or regrouping through cost and asset
reduction to reverse declining sales and profits. Transfer outsourced production
nearer to headquarters to reduce lead time, lower transportation costs, and
improve efficiency. Ceramics and W-C Designs/Spring production in Indonesia is
already very far considering the low market share in Asia. Move somewhere to
North Western Asia or Europe.3. Integrate Marketing. Brands should be marketed
together as complementary products not being marketed individually.
30. 30. Recommendations4. Make product distribution efficient. Multi-channel
distribution network is costly. Focus to 2-3 channels only such as internet,
wholesaler/ department chains, and through specialty markets. Stop distribution
through retail establishments.5. Focus on core products which are crystal and

ceramics and be less diversified. Stop acquiring companies with products that do
not fit with the rest of the organization have different markets, customers,
workforce, values, needs6. Divest unprofitable brands especially those that
require too much capital and do not fit well with companys core business (crystal
and ceramics).7. Negotiate for loan restructuring.
31. 31. Recommended scope of operation
32. 32. Implementation PlanSTRATEGIES ACTIVITIES YR 1 YR 2 YR 31. Have debts
Negotiate for loan restructuring restructured2. Retrenchment Transfer outsourced
production nearer to headquarters to reduce lead time, lower transportation
costs, and improve efficiency. Ceramics and W-C Designs/Spring production in
Indonesia is already very far considering the low market share in Asia. Move
somewhere to North Western Asia or Europe. Pursue major internal
reorganization close unprofitable divisions/brands and prune product lines,
automate processes, and institute expense control systems among others3. Make
product Multi-channel distribution network is costly. Focus to 2-3 channels
distribution only such as internet, wholesaler/ department chains, and through
efficient specialty markets. Stop distribution through retail establishments.4.
Integrated Brands should be marketed together as complementary products not
Marketing being marketed individually5. Focus on core Stop acquiring companies
with products that do not fit with the rest of products (crystal the organization
have different markets, customers, workforce, and ceramics) values, needs and
be less diversified5. Divestiture Divest unprofitable brands especially those that
require too much capital and do not fit well with companys core business (crystal
and ceramics)
33. 33. Conclusion Waterford Wedgwood PLC has grown so large through a number
of company acquisitions and mergers. Unfortunately, strategic managers of the
company have failed to capitalize on external opportunities, minimize external
threats, take advantage of internal strengths, and overcome internal weaknesses
overtime. Thus, the organization is now afflicted with inefficiencies resulting to
negative profitability, deficit in equity account, and declining sales. It failed to
meet its goals and objectives over time despite of its competitive advantage.
Thus, major internal reorganization must be implemented. It is time to close
unprofitable divisions/brands and prune product lines, automate processes, and
institute expense control systems among others.
34. 34. Conclusion The recommended strategies based on the facts of the case are
very different from the companys plan for the future which includes: Attempt
to more effectively mange labor costs, as well as continue to introduce new and
contemporary product lines to complement its existing offerings. Continue to
introduce additional product lines to follow trends while maintaining quality and
tradition. Increase the number of distribution channels through which their
products are sold. Expand into additional markets (like Asia).
35. 35. Conclusion Further, based on the 2007 financial report, only the group of
Waterford Crystal (27% of revenue) had positive net income. The ceramics group
which has the biggest operation together with D-C Designs & Spring were
responsible for the organizations poor performance. The company had too
much diversification and expansion of line items which are misfit with its core
business like linens and cookware. The company has to refocus to its core
products and consider divesting divisions which require more resources to be
competitive than the company can provide. Furthermore, the company has to
work on a more efficient product distribution to provide better service at a lower
cost and integrated marketing.

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