3-2 Case Study: Can Wayfair Get Out of Its Own Way And Finally Become Profitable?

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Business Finance

Description

Module Three:

Wayfair Case Introduction

Founded in 2002 in Boston, Massachusetts, Wayfa

ir Inc. (NYSE:W) engages in

e

-

commerce business in

the United States, Europe, and internationally. The company leverages over 10,000 suppliers to offer

approximately 10 million products for the home sector under various brands, including wayfair.com,

Joss & Main, AllModern, DwellStud

io, and Birchlane. The company operates in Ireland, the British Virgin

Is

lands, Australia, the United Kingdom, the United States,

and Germany, which represents about 13% of

gross revenues.

Wayfair had a highly successful IPO in 2014 on the New York Stock

Exchange and its market

c

apitalization continues to rise

,

as investors have driven share values from $36 to $149 from 2016 to Q3

2018.

Wayfair has aggressively focused its corporate strategic policy on growing its customer base and

product line breadth,

i

ncreasing revenue nearly 40 percent between 2017 and 2016 (Forbes, 2018)

.

However, to achieve that growth the company has incurred protracted losses and negative cash flow.

Presently, Wayfair is experiencing intensifying competitive attention from online a

nd offline rivals with

equally unique business models and distinctive competencies along the global industry value chain, such

as Ikea, Amazon, Walmart,

Overstock.com, Ethan Allen, and others.

Some analysts are beginning to wonder how long any business mo

del or firm should be allowed to

operate without being profitable. “

Wayfair's rise to prominence is indicative of the

newer crop of tech

companies

it still loses money every year, yet it has achieved its massive valuation largely because

investors currentl

y value growth over profitability” (Bizjournals.com, 2018)

In your case analysis preparation

,

determine just how competitive Wayfair’s strategic policy and

competencies are within the industry at the domestic and global levels. Where should their resource

s

and competencies be further developed along the industry value chain to achieve profitability? Can

Wayfair get out of its own way to become profitable? How? Case Study Guidelines and Rubric

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Running head: WAYFAIR CASE STUDY – IMPROVING THE COMPANY’S
MANAGEMENT

Wayfair Case Study – Improving the Company’s Management
Name
Course
Date

1

WAYFAIR CASE STUDY – IMPROVING THE COMPANY’S MANAGEMENT

2

Wayfair Case Study – Improving the Company’s Management
Executive summary
The current case study analyzes the financial and competitive situation of one of the
biggest retailers both at the domestic and international level: Wayfair. The analysis illustrates
how companies can receive an excellent credit rating from investors even though the company
has repeatedly shown a negative cash flow since its foundation.
Most importantly, the analysis focuses on the challenges and risks of choosing an
inappropriate business strategy (Blevins et al., 2017). In this regard, by describing the issues
experienced by Wayfair regarding its low profitability resulting from the inability to control the
costs and the company's aggressive expansion, the proposed analysis demonstrates the
advantages and disadvantages of the different business management strategies. The study carried
out thus critically evaluates the company's plan, the financial results, and the competitiveness in
the market, using this information to propose the optimal corporate plan for the future. As
illustrated, the company has still the possibility of changing the corporate strategy and, by
limiting its growth and focusing at the effective cost management, increase its profitability,
ensuring that the company will survive to the following decades.
Situation and findings
The present case study illustrates one of the most common problems found in business
management: a company has based its strategy in the continuous expansion, and the development
is limiting the company's economic growth and resulting in constant losses. In this regard, the
company Wayfair had aggressively focused its corporate strategy in the massive expansion of the
company. The primary goal of such a policy was thus of getting the most significant possible
portion of the ma...


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Really useful study material!

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