Case Analysis

Case Analysis - Neha Shah Business Policy Case Analysis...

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Neha Shah Business Policy 9/30/11 Case Analysis Professor Zuzo Martha Stewart Living Omnimedia Martha Stewart is one of the most visible entrepreneurs in the United States and in many other Western countries. After nearly thirty years of building a home décor and publishing empire, Ms. Stewart served five months in prison for lying to investigators about a stock trade. This adversely affected both her personal image and Martha Stewart Living Omnimedia (MSO). However, since her release from prison, both Ms. Stewart’s public image as reported in polls and the stock and other indicators regarding her company are on the upswing. This places the company in a place where evaluation of its strategic environment for the future and potential problems should be reviewed in consideration of possible strategies for the future. Martha Stewart Omnimedia’s strategic environment is complex. The PESTEL framework is a commonly used acronym to define the external influences that comprise the strategic environment, including social, political, economic, technological, environmental, and legal components. Of these, the most important and potentially impactful for MSO are social and economic (her legal woes were personal, not related to the company). Since the brand is so strongly tied to Ms. Stewart’s personal image, the social reaction to Ms. Stewart is a major influence on the brand’s success. So far, the reaction from most of Ms. Stewart’s customers to her prison term does not seem to be negatively affecting sales. Her now-famous poncho, made for her by a fellow inmate and worn on her release became an overnight fashion item, reinforcing her potential for future popularity. She is also reported to be trying to project a more positive caring image, partially in response to stories published at the time of her trial that she was demanding and unkind to
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employees and others. Finally, whilst magazine pages have reduced in many of her publications, sales have not declined for her various home products, indicating unlikely long-term social repercussions regarding her time in prison. Economically, MSO stock tumbled significantly with her conviction. The company also made several moves away from the Martha Stewart name at that time; removing the name ‘Martha Stewart’ from MSO’s Everyday Food magazine, for example, and downplaying her name on the Martha Stewart Living publication. MSO has experienced recent financial revival, however. Stock prices have trebled since Ms. Stewart’s conviction, and current concerns are that it is actually overvalued. The recent Kmart-Sears merger moves the Martha Stewart home lines into Sears outlets in addition to their traditional Kmart location, a potential windfall for MSO. However, one important element of the economic environment to consider is increased competition in many of MSO’s primary product areas.
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This note was uploaded on 11/13/2011 for the course ECON 201 taught by Professor Bonistis during the Spring '11 term at NJIT.

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Case Analysis - Neha Shah Business Policy Case Analysis...

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