Staples

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Staples Inc.
Executive Summary
Staple Inc is world’s established firm that has outlets across the globe. It was founded in the United States by Leo Kahn and Thomas G. Stemberg in the developing Brighton, Massachusetts. The firm has had a significantly large market base and financial power since its establishment. The company was developed to enhance carrying of the excess inventories available in the construction sites. The firm grew efficiently and later become the main center with three excellent storage facilities. In 1985, it had only three stores that served to distribute commodities to diverse markets in the country. It has since grown to 353 stores in Canada, 1,575 stores in the United States and significant 362 stores in China, South America, Australia and in Europe. The company has fundamental objectives in the society that has seen it participate actively in growth and development. The organization and structure of organization also play crucial role in ensuring the development of the firm. The three business segments that form the Staples Inc are The International Operations, North America Delivery and North America Retail. In the previous financial period, it was recorded that business machines took a second greater portion of 30 percent whereas the revenue realized by the company consisted 50% of the office supplies and the remaining 20% accounting for office furniture and computers.
Background Information
Staples Inc. began the efficient marketing desire to create influence in the retail sector with the necessary aim to differentiate it from other retailers.

The firm targeted specific customers into its stores located in Massachusetts. The company later invested more funds on the three computer programmers and several minicomputers. The database became the initial step in the multiple marketing initiatives. The staples apparently enticed individuals to the retail outlets. The consumers developed the habit of visiting the retail shop thus boosting the sales. The Staples Inc. grew fast and thus expanded throughout Northeast. In 1988, Staples had already opened 16 stores. The revenues realized from the company grew significantly high within a short period. Staples introduced to the market the private label products; this was the great milestone to the efficiency and improvement in the sector.
The company growth and establishment in the country were when it sold stocks to the public in 1989. The company grew fast making sales worth $120 million. Staples had already made massive losses amounting to $14.1 million. The losses were as result of intense competition from the retail giants Ames and Kmart. However, the company further increased its earnings by opening many stores and countering the threats in the market. It set measures to counter the competition and increase productivity. The customer relationships grew, and the brand name got fat recognition across the country.
SWOT Analysis
Strengths
The Staples Inc is great firm that actively participates in production and distribution of retail goods. It carries out its activities in three crucial segments: Retail, delivery, and the international component. Its operations in Canada and US are in retail and distribution segments. The international segments have offices and carry out activities I more than 23 countries in the world. The company’s strength is the international segment since this actively forms 22% of the financial returns. The company was comparatively higher in revenue collection in sales growth than its competitors in OfficeMax and Office Depot. The purchase of the Corporate Express has facilitated the firm’s financial and market position greatly. The purchase enhanced the firm’s expansion to different places in the world. It has a great impact on improving the livelihood of people by increasing its market base.
Weaknesses
The debt of Staples has consistently increased by 27% as a result of numerous factors in the capital structure. The company has debt service and long-term debt of $500 million 7.75% notes that has never been settled since April 2011, $1.5 billion 9.75% notes due January 2014 and a significant amount of $325 million that could have been settled in October 2011. The debts have been the great challenge to the company. Several initiatives have failed to take off due to inadequate finances to facilitate the programs.
Opportunities
Staples is actively getting access to numerous opportunities in the Corporate Express delivery initiatives in business, even though they face economic challenges and is approximated to be $180 currently. The amount is a significant indication of improvement since it has moved up from the initial $160 from the time of purchase. Staples can make a significant amount of finances from the internet revenues. The web connections and its advanced system are capable of providing the company with huge profits. The small business initiatives and segments in US influence the North American retail stores and shops. The opportunities range from the small scale programs aimed to improve the welfare of the employees to the high-end retail deliveries. The profitability of the organization is the evident indication of financial sustenance and growth.
Threats
The company faces numerous threats in the economy. The challenges are as a result of the increasing needs to make profits and explore new business opportunities. The desire to sustain the living standards, there has been several companies and small scale organizations aimed to expand its operations. The desire to expand operations brings about numerous challenges to the established firms. The price changes are the greatest threat to the firm. The significant changes in prices affect the consumers greatly. Therefore, they tend to choose other affordable firms. The uncertainties associated with the price fluctuation are great dissatisfaction to the respective consumers. It threatens the mutual coexistence and continued customer relation with the company.
The increasing external risks substantially threaten the company. The expansion to other countries that entail diverse cultures and way of living involves huge expenditures by the firm in setting up retail and delivery services appropriately. In some instances, lack of proper understanding of the new location threatens the firm to spend a significant amount of money on failed business ventures. The increasing costs of service are also a great threat to the company. The cost of all requirements has significantly risen unlike in the past that labor and necessary equipment were cheap. The lower profitability and the continuous increase in competition are the challenges to many firms. Staples Inc faces this challenge of lower profitability, and the competitors have devised various promotional activities in the market creating a great challenge to Staples profitability. The changing times have prompted the organization to look for means to counter the increasing costs, external risks and price changes threats.
Porter’s 5 Forces
It is suggested by several scholars in the economy that FTC involvement played the crucial role in stopping the merger between the Staples and Office Max. The political challenges have had great influence in the economy and market influence. The political instabilities have served to reduce the investors’ morale in the countries. The political involvement, therefore, offers a great challenge to the advancement of the firm. There have been numerous economic issues that have reduced the confidence of consumers in the economy. Socially, the society has adopted the use of internet in various platforms. The advertisements and markets are all available on the internet. These technological advancements have been equally relevant in the society although offer a great challenge to other firms. The porter’s five forces are significant since it provides inside and outward understanding of the firm daily.
The threat of new entrants: Porter’s Five forces show the constant rise in the threat of new entrants into the market. The new entrants bring with them new commodities and products that are specially produced to fit the desires and needs of the particular target group. The online purchasing of communities is viewed to be cheap, unlike the cases in which firm has to employ many workers to increase productivity in the organization. The analysis further outlines the critical challenge of Staples in which dependence on the customers and employees is exhibited.
The Threat of Substitutes: Staples face a significant challenge from the substitutes in the economy. The market has a varied set of groups with numerous products to offer to the public. The substitutes, in this case, are the cheap stationeries from the other retail outlets. The consumers rarely check the quality, so they tend to purchase cheap substandard products.
Bargaining power of buyers: This power is often associated with the consumer’s knowledge of the cost of commodities. They often pressurize the sellers to ensure they sell the products at their proposed prices. The Staples has not been significantly affected by the bargaining power of consumers since it sets prices at low cost compared to its competitors. The low cost is as result of the economies of scale in production.
Bargaining power of suppliers: This is the market for the critical inputs. Staples has always actively acted by the necessities in the economy. The suppliers in the retail outlets have various strengths in their channels of distribution. The solidarity of the employees in the economy has been a great contributor to the development of the economy. This form of bargaining has not been very influential in market decisions due to the extent of the differentiation of inputs.
Industry competition: The market has great competition amongst the companies. The healthy competition result from the effort put in place by the firm to ensure maximum profits is realized. Staples adopted the use of advertising to counter the competitors. The online branding and promotion substantially led to a great increase in revenues. The sales improved, and the brand name gained important recognition across the globe. The powerful cooperate strategy ensure the firm is attaining its objectives with minimal expenses. The consumer satisfaction is efficiently built and thus increased sales.
Internal Analysis
Based on the information from the company’s SWOT Analysis, it is evident that the firm is capable and plays a crucial role in office supplies business. It is also apparent that it has unique competencies in the multiple channels of retail business, distribution networks and efficiency in manufacturing. The company faces some key threats in the market such as new entrants to the market. The new entrants enter the market with several key techniques that often threaten the established firms in the industry. The unique means of marketing and consumer attraction is very critical steps undertaken by the new entrants. The online purchases are also the significant threat to the company. The advancement in technology has brought in diverse approaches to the market. The online purchasing tends to attract a huge number of consumers. It is therefore upon the stakeholders of established firms such as Staples to initiate programs aimed at introducing the technological innovation to the company. It is great to step towards countering the very sophisticated competitors. It is also prudent means of changing to fit with the current generation.
External Analysis
Political Factors: The Staples political factors are often is known by a large number of persons. The political aspect has actively influenced the returns from the firm in some ways. It should be recognized that the firm has numerous firms across countries. The political temperatures in China had in the past affected the returns of the retail firm. The increasing costs of fuel affect the profitability and prices to the customers. The differences and dissatisfaction between the firm and customers pose great risk to the individuals. In the UK, the students utilize the Staples products by continuously purchasing the office materials such as laptops. However, price fixation by the large firms in the country has greatly hampered the development and increase in the commodity market. The firm has thereby provided incentives to increase the customer satisfaction. The incentives are aimed at improving the consumer satisfaction.
Social Factors: Staples appears as the key firm that has a great interest in the developments in the society. It aims to improve the commitment of individuals to conserving the environment. The environment negative impacts are greatly reduced by initiatives set by Staples to use post-consumer materials that can be recycled easily. The promotion of such product has been the great initiative by the firm. The participation of other programs such as the renewable power plans and energy conservation is great steps undertaken by the Staples. There are numerous plans set up by the Staples to benefit consumers; for instance, Staples ink recycling plants in Canada, UK and US. The implementation of these plans has greatly helped students get more knowledge on the safety in the environment. Staples has been able to donate greatly to the environmental setup platform.
Technological Factor: Staples has substantially adapted to the advancements in the society. It plays crucial in enhancing the spread of the technological knowledge. The Staple’s customers have been able to access the firm by use of Radio Frequency Identification Device. These devices enable the chain of supply is great in society. The firm has already solved the queue problems. The introduction of the use of self-checkout machines tends to increase efficiency and reduction of the problem of long queues in the organization. The firm adopts the practice of using available and compatible brands that are of high quality.
Legal Factor: Staples adheres to the government requirements on the use of knives, glues, scissors that are in the market in society. Staples strictly follow the requirements of the key subjects in society. The basic requirement to observe high ethical standards is great objective that has since led to its improvement in the society. There are reduced tussles between the police and Staples. The management of the organization greatly recognizes the need for efficient communication in the society.
Business Level Strategy
The company is employing numerous business tactics to enhance its expansion. The firm is carrying out massive product promotion and expansion online. The firm has actively improved access to its online sales platform. The active step towards online sales ahs since saw it make significant 10% increase in online sales compared to the worsening physical store’s sales. The strategy entails expansion of the Staples.com products for sale site. The strategy further entails the introduction of new categories for the company, such as the retail stores, household items and commodities for the restaurants. The firm has further made significant changes in the brand names and logo. The change aims at transforming the image of the company and creating attention of the consumers worldwide. The firm has further taken very bold and decisive move to close stores in areas such as North America to facilitate the online shopping. The detailed analysis of the company has substantially identified that the physical stores in North America were not making great profits. It had been adversely challenged by the competition from Wal-Mart and Amazon. The business level strategy, therefore, helps improve its efficiency in the economy.
Corporate Level Strategy
The corporate strategy is a result of the rationalization of the effective cost-leadership strategy. It is critically based on the necessary need to avoid wastage of the organization’s resources on programs that add no value to the organization. The strategy aims at ensuring maximum utilization of resources and efficient value creation to the consumers. The activities that add no value or very minimal value to the consumer needs are immediately avoided. The strategy is founded by the economies of scale philosophy. It is prudent to understand that economies of scale provide the benefits of large-scale production. The items are produced at the lowest possible cost compared to all the other competitors in the economy. The expected profits from the activity are high since expenses used in the implementation is low. There is the high learning curve in this case. The learning curve results from the company’s decision to ensure an increase in the volume of products produced with little costs.
The corporate strategy thereby increases the customer base because of the relatively small cost of the commodities. The company gains access to the necessary inputs in the facility, labor, components and raw materials. This strategy is very relevant and suitable for Staples because of several reasons. Staples has numerous capabilities such as the sustained availability and presence of the cost- productive capital, good and certain supervision of labor in the company, efficient engineering systems, its tight cost control and the primary quantitative targets in the economy. The costs are always kept at the lowest points to create room for efficient and comprehensive initiatives of expansion.
Staples ought to implement the corporate strategy by categorically executing functional strategies. It is very fundamental to use functional strategies since Staples is facing great competition from other established firms. The fact that the company is already created and has acquired a large share in the market, it should stay focus and implement the corporate strategy of cost leadership in the company.