External and Internal Environmental Analysis
External and internal environmental analysis are important for a company to achieve its goals. The purpose of this paper is to complete the external environmental scan, and perform an internal competitive environmental scan for Designer Shoe Warehouse (DSW). This paper will identify and analyze the most important external environmental factor in the remote, industry, and external operating environments.
This paper will also identify and analyze the most internal strengths and weaknesses of DSW, include an assessment of the DSW’s resources, assess DSW’s competitive position and possibilities, and will analyze the structure of DSW and how this affects organizational performance. Designer Shoe Warehouse As of January 2010 the Designer Shoe Warehouse (DSW) had 305 operating stores in 39 states. In the United States DSW is the leading footwear specialty retailer. DSW caters to both men and women by offering a wide assortment of better-brand dress, casual, and athletic footwear, and accessories.
DSW focuses on its customers by offering them a vast assortment of seasonal styles with convenience and value desired by the customers (DSW, Inc.
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2009 Annual Report). DSW main focus is creating a distinctive shopping experience for its customers which satisfies the customer’s rational and emotional needs. External Environmental Factor in the Remote, Industry, and External Operating Environments DSW’s economic factor is part of DSW’s external environmental factor in the remote.
DSW’s competitive strength, distinctive store layout heart of their branded products, valued proposition offered to customers, and financial strength is the reason DSW is in a leading marketing position (DSW, Inc. 2009 Annual Report). Athletic footwear and shoes are purchased from over 400 foreign and domestic vendors by DSW. The large assortment of merchandise are sold in individual DSW stores and on the dsw. com website. The growth of DSW is attributed to its operating model and management’s ability to focus on store-level profitability and economic payback.
DSW’s net sale grew at a rate of 11% over a five year span, which ended in January 2010. As well as the 11% net sale growth DSW also generated positive cash flow and operating results. A level of cash and investment was generated by DSW in the amount of $289 million. This amount is believed to be a sufficient amount to maintain ongoing operations, support capital requirements for seasonal work, and to fund capital expenditures related to projected business growth (DSW, Inc. 2009 Annual Report). Internal Strengths and Weaknesses of DSW Strengths within DSW is what keeps customers purchasing items in store locations or on the DSW website.
DSW has implemented an easy free exchange or return system for its customers who are not satisfied with their purchase. This system is free, easy to use, and convenient for customers. The return system provides the customer with a 60 day grace period in which he or she has to return an item for a full refund. However, if the merchandise was received as a gift, refund request is after the 60 day grace period, or the customer does not have the receipt DSW will give the customer credit in the form of an e-gift card. Loyal customer who shop at DSW stores or on the DSW website are entered into the DSW loyalty program.
The DSW loyalty program permits loyal customers to earn reward certificates. Reward certificates provide loyal customers with discounts on purchases customers plan to make in the future (DSW, Inc. ). DSW also reward loyal customers with special offers and other certificates. The special offers and certificates are easily accessible to customers. Customers can retrieve the special offer codes and certificates via mail, email, or on the DSW website. Website purchases are the weakness within the DSW Company. Problems such as offered codes not properly working, the tracking of online orders, and the unavailability of certain DSW websites to customers are the cause for weakness in the DSW Company. Some codes are available through online purchases only and some codes are not valid at all for customer use. This can be very aggravating for customers. There are times when customers look up an order are placed online and they are unable to locate their order. They are then directed to another website to report the problem. The motion of tracking the order that should have been available for the customer can become frustrating. Accessing DSW’s website is also a weakness for the company.
Customers like an easy accessible website. To access DSW’s website to place an order customers have to download certain software provided by DSW. Although the software is provided free of charge customers believe that this is an unnecessary step for the customer. DSW should make accessibility easier for the customer. DSW’s Competitive Position and Possibilities Competitors as viewed by DSW are department stores, shoe stores in the mall, brand-oriented discounters, independent shoe retailers, online shoe retailers, single-brand specialty retailers, national chains, and multi-channel supply retailers.
Many of these competitors offer a limited assortment of higher priced footwear within a less convenient environment. DSW’s reward program also offers more rewards than its competitors. The competitors of DSW have tried to imitate DSW. However, the competitor offers a less brands that customers are familiar with and styles from previous seasons DSW offers styles that are in season and up to date (DSW, Inc. 2009 Annual Report). Down scaling the size of the DSW store is believed by DSW to yield a greater opportunity for the company. A majority of the DSW stores measure 25,000 square feet with a few averaging 40,000 square feet.
Although DSW is continuing to build other retail stores, the President of DSW, Peter Horvath, has realized that the current size of their store are limiting the location of future stores. To build future stores in sites that were not accessible to the company in the past Peter Horvath believes that the downsizing of the store format is the key. The interior design of future stores is also a change that Peter Horvath is planning to make. The current traditional design will be changed to a more loft like design with brick walls, wood floors, wider isles (aisles), softer lights, and a larger clearance isle (Retailing Today, 2001).
Conclusion DSW is a top leader in the shoe industry. By offering its customers a wide assortment of better-brand dress, casual, and athletic footwear, and accessories through a store location or online DSW has been able to stay ahead of its competitors. An external and internal environmental analysis has shown that DSW focus is on its ability to provide great service and a quality product to its customer. The analysis shows that while DSW is providing its guest with great service, a quality product, and a reward program for its loyal customers, DSW is also facing some weaknesses that could cause the company to lose customers.