Williams Sonoma's Organizational Strategy and Capability

Introduction 

Williams Sonoma has been a leading brand in the sector of home furnishings for decades. Indeed, their work ethic, teamwork, and dedication have borne fruits, transforming it into a leading brand that has since become a household name and envy to many. Williams Sonoma was launched in 1956 in California (Laura, 2014) . However, it soon set up shop in San Francisco since the majority of its clients resided there. The company has taken advantage of data analysis and used it to locate its customers throughout the United States. Its continued growth made it acquire other stores such as Pottery Barn. Apart from its brick and mortar brand, it also ventured out into using mail order business and online shopping. Their significant market share has enabled to record staggering revenues of up to $5 billion. Approximately 4% of home-furnishings in the United States is made in one of the brands owned by Williams Sonoma (Laura, 2014). The revenue has transformed it into the 21 st largest online store in the U.S (Laura, 2014). 

Williams Sonoma has experienced widespread competition since its inception. However, they have realized that competition is regular in every business and the only thing that can give them an edge over their competitors is their products quality. The contemporary change has witnessed a scenario whereby enterprises have engaged in fierce competition with each other as they try to outdo one another. They have intensified competition among themselves as they scramble for customers, revenue, and market share. They have resorted to employing various tactics in line with their unique strategies. The leadership of every business venture has the sole responsibility for shaping the prerequisite strategies that will increase profitability. Not only are they tasked with shaping strategies but also putting them into action. 

The process by which a business employs way that enables it to increase its value and survive is called strategic capability. The process does not take keen consideration of the strategies that a venture applies. Instead, it emphasizes the businesses’ market position, resources, assets and the best way through which they will use future policy. Industry players have noted that no single method can be used to measure or determine strategic capability. 

Williams Sonoma has been able to apply strategic capability throughout the years in which it has been in operation to remain financially viable (Cambridge, 2016) . It has spiraled its annual growth and given them an edge over their competitors. Numerous business people have time and again tried to measure strategic capability and track it at the same time. Some of them include investors and venture capitalists who put their money into a venture expecting it to grow into something profitable in future. The strategic capability has also been used by employees who have developed the ability to see businesses that are likely to go under or cease their operations. Additionally, they have been able to identify enterprises that are about to lay off their staff. 

Porter’s Value Chain Structure 

Williams Sonoma can take advantage of Porter’s value chain to grow and increase its profitability. It is a strategic management tool that is used to analyze the performance of a business and make an analysis of its underlying levels of profitability. Williams Sonoma can take advantage of the strategy and increase their market share and presence while at the same time understanding the dynamics of profitability and comparative advantage. By doing so, the business will cement its share in home furnishing not only in the United States but the whole world. 

Porter’s Value Chain Structure Analysis and their Impact on Williams Sonoma 

The threat of New Entrants 

Williams Sonoma has experienced the threat of new entrants countless times since they started their operations. Any business worth its salt should brace itself for the threat of new entrants as they carry out their activities (Alnawaiseh, 2014) . However, new entrants have been seen to add more value to any market. They bring innovation and introduce new and better ways of conducting business. Subsequently, they have put more pressure on established entities such as Williams Sonoma on tight position by reducing costs and lowering their prices. As such, Williams Sonoma will have to efficiently manage such challenges to build better barriers and protect their competitive advantage. 

Ways Through Which Williams Sonoma can Tackle New Entrant Threats 

Firstly, Williams Sonoma can come up with new and improved goods and services. Doing so will attract new clients and also enable them to retain their old clients. Secondly, Williams Sonoma can build their economies of scale so that they can lower their fixed cost per unit. Lastly, they can spend more money on making their capacity which will assist them in conducting more research. 

Suppliers’ Bargaining Power 

Williams Sonoma can take advantage of their suppliers and establish a close relationship with them. By so doing, they will be able to negotiate effectively and strike reasonable prices. Most home furnishings companies buy their raw material from different suppliers. Those suppliers who are in dominant positions can decrease Williams Sonoma’s margins. They tend to use their influence to bargain for higher prices from those in the sector. The ripple effect of top supplier bargaining power is reduced profits on the retail stores. Williams Sonoma can solve this challenge by building efficient supply chain with its suppliers. Additionally, they can try making their products with different raw materials so that they can cushion themselves in case of a fluctuation in the prices of raw materials. 

Buyer’s Bargaining Power 

Most buyers are choosy when it comes to their buying habits. Majority of them want to buy high-quality products but pay the least prices. Such tendencies put Williams Sonoma’s profitability at stake over a prolonged period. A small customer base will want better discounts and other after-sales’ benefits. The company can tackle such a problem by building a large customer base since doing so will help them to streamline their sales and also reduce their bargaining power. 

Threats of Substitute Goods and Services 

Industry profitability suffers when new products that satisfy customers enter the market. Indeed, Williams Sonoma can bear the brunt of entry of new goods and services since they will experience an exodus of customers (Mechtcheriakova, 2015) . One of the ways through which the company can handle such challenges is by being service-oriented as opposed to being product oriented. Furthermore, they can take it upon themselves to understand the needs of the customers and know their desired outcomes. 

Rivalry Among Existing Competitors 

The intense competition has adverse effects on the industry since it drives down prices and makes the sector unprofitable. Williams Sonoma has suffered for quite some time due to this factor because it operates in an extremely competitive environment. They can alter the status quo and build sustainable differentiation. Apart from that, they can also collaborate with their rivals to expand the market since it is more profitable than competing for a smaller market. 

Internal Factor Analysis Table 

SWOT Analysis 

Williams Sonoma can improve its market performance by carrying out a SWOT analysis. Some of their strengths include premium and high-quality products that they provide, their multiple brands, robust infrastructure, brand strength and various sales platforms. Some of their weaknesses include a decline in success, leadership variations, and continuous low buyer-self-assurance. All these factors affect the overall profitability and long-term performance of Williams Sonoma. They can increase their profitability and performance by taking all of them into consideration. 

In conclusion, Williams Sonoma has been at the forefront of providing their customers with the best products since 1956 (College, 2018) . They have ensured satisfaction of their clients and have since established a strong clientele base. By adopting Porter’s Value Chain structure, they will acquire more clients and retain their present customers, a factor that will put them on the global map. 

References 

Alnawaiseh, M. (2014). The Extent of Applying Value Chain Analysis to Achieve and Sustain Competitive Advantage in Jordanian Manufacturing Companies. ResearchGate , 45-56. 

Cambridge, U. o. (2016). Porter's Value Chain. University of Cambridge , 123-134. 

College, B. (2018). Are Formal Leaders the Only Ones Benefitting From Leadership Training? Baker College , 50-67. 

Laura, A. (2014). Blending Instinct with Analysis. Harvard Business Review , 41-44. 

Mechtcheriakova, E. &. (2015). Design of Organizational Structures of Management According to Strategy of Development of the Enterprises. Elsevier , 102-112. 

Appendix 

Dollars and shares in thousands	Jan. 29, 2012	Jan. 30, 2011	Jan. 31, 2010
Net revenues	$3, 720, 895	$3, 504, 154	3, 704102,
Price of products	2, 251, 039	2, 130,299	1,999,467
Total margin	1,459,895	1,373,959	1,103,237
Expenses	1,078,124	1,058,445	981,775
Operation cost		323,414	121,442
Interest	98	354	1,153
Earnings minus taxes	381,830	323,060	120,289
Income taxes	144,899	122,833	42,849
Net earnings	236, 931	200,227	77,442
Earnings per share	2.27	1.87	0.73
Gains in every share	2.22	1.83	0.72
Shares used in the calculation
basic	104,352	106,956	105,763