Introduction
Martha Stewart Living Omnimedia (MSO) uses a combination of various corporate-level strategies as well as business level strategies because of its diverse products. It uses diversification as the main corporate level strategy. MSO diversifies its product offerings through acquisitions and alliances with other companies. The business-level strategies of the company include focused differentiation and the integrated strategy. The portfolio of the company is too big to be effectively managed and therefore should be reduced.
Analysis
Even though the business level strategies and corporate strategies of differentiation and diversification were efficient at the beginning when the company went public, the company was unable to continuously strategize to retain its competitive advantage in the wake of increasing competition. In the beginning, MSO was successful because the company was focused on publishing and merchandising. Also, the company offered good quality, and therefore it developed a reputation for the Martha Stewart Living in collaboration with Time Incorporation. However, the company failed to foresee the competition and the growth of online marketing. Therefore, the high competition brought by other companies in publishing such as O, The Magazine and others lead to reduced growth. The reduced growth was because the competitors imitated MSO and therefore, MSO’s publications seized to be different anymore. Also, MSO had poor portfolio management.
After the company decided to diversify further to increase the sources of revenue and reduce dependence on publishing, the management still made poor decisions concerning the investment portfolio of the company. MSO acquired unprofitable investments and businesses that were not in line with the goals of the company. The management did not do enough research before acquiring some investments. For example, MarthaStewart.com was meant to boost the profits of the company but ended up losing money instead. Also, the company’s flagship magazine Martha Stewart Living failed to catch up with the growing trends in the industry and failed to impress the youths as the competitors did. The company diversification also failed because despite increasing the offerings of the company, all were built around the brand “Martha Stewart,” a person. The focus on one talent rather than diversification to several talents put the business at risk in case anything happened to the person whose name was the brand. The promotion of “Martha Stewart” as a brand also meant that there was no continuity and therefore, the company growth was not sustainable because the chief company talent did not groom other people to continue the brand after they live. Therefore, the aging of Martha also meant the aging of the brand.
Recommendation
Even though diversification is important to ensure that the company survives, the investment portfolio of the company should be enhanced based on the goals of the enterprise. The portfolio should be made narrower by reducing aspects that dilute the brand. For instance, the company should write off investments such as the ones involving cleaning fluids and dog poop bags. Also, the company should groom young talent to ensure continuity of the brand because Martha Stewart is growing old. The company should also implement integrated business level strategy based on market changes. MSO should take the online platform more seriously and employ people with experience concerning online marketing to ensure that the company benefits more from the website. The prices of marketing should be the best for their quality t ensure that the company gains competitive advantage. The company should hire directors based on their performance rather than their relations with Stewart to ensure proper decision making. Also, the move will limit Martha’s influence on the board and therefore ensure that the company’s expenditure is in line with the income of the company.
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