Can Information Systems Restore Profitability To Restoration Hardware?

1. Evaluate Restoration Hardware using the value chain and competitive forces models. How is the company responding to the forces that influence it?

Potential Entrants: Threat of new entrants is high because there are already many in the industry so it is obviously easy to enter.

Industry Competitors: Rivalry among existing firms is high. Pottery Barn, Pier 1, and Williams Sonoma are a few. Competitors have greater financial, marketing, and operational resources.

Substitutes: Threat of substitute products or service is high. Same types of products can be found in specialty stores, traditional furniture stores, and department stores.

Suppliers: Bargaining power of suppliers is extremely high. Two vendors were the source of nearly one-quarter of all merchandise purchases.

Buyers: Bargaining power of buyers is high.

As a whole, Restoration Hardware’s value chain is very weak. There is no integration of the data, and it does not allow management to get a clear view and accurate view of the required information in order to make informed decisions.

2. What is Restoration Hardware’s business strategy? How well do the company’s information systems support that strategy?

Restoration’s business strategy put the company in a unique sector of the marketplace. They focused on merchandise that honored classic America. The company’s information systems did very little to support their strategy. Although they focused on their merchandising strategy, they could not live up to their promise to the customer. In recent years, the company invested in several technology investments (iPhrase, Scene7 eCatalog). Despite these investments the company posted net losses. Analysts contend that Restoration Hardware is failing to control a number of complex variables to the best of its ability. Among the greatest concern is their ability to keep inventory in line with customer demand.

3. What management, organization, and technology factors are responsible for the problems Restoration Hardware is encountering?

Management вЂ" the main management issue that contributed to Restoration Hardware’s problem is that management is not able to control all of the variables that are driving their costs up and profits down. Management is made up of individuals with merchandising backgrounds - they may be weak in understanding a complex business environment that is vulnerable to a host of trends, restrictions, and abnormalities.

Organization вЂ" due to the large number of customers, suppliers, and inventory product line, management must be committed to getting the same data to everyone at the same time. The biggest issue appears to be accurate and reliable data as it pertains to inventory levels, products in demand products, delivery times, etc.

Technology вЂ" the technical issues consist of designing a CRM system that can integrate all of the processes into one seamless system. Their reposition strategy did not address improvements to the company’s aging information technology infrastructure. This technology must be updated in order to realize benefits of a CRM system.

4. What role does supply chain management play at Restoration Hardware?

Supply chain management would play a vital role at Restoration

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