1-1. QVC McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Chapter 5 Strategies in Action

Chapter 5 Strategies in Action

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1-1

QVC McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

1-3 QVC Icebreaker Question Have you ever shopped at QVC? Or at the Home Shopping Network? If so, what did you think of it? What kind of items would you buy on QVC? Why? Why not others?

1-4 QVC 1.How did QVC become the industry leader?

1-5 QVC 2.What strategy did QVC use?  How did it support its strategy?

1-6 QVC 3.What challenges does QVC face?  How has it confronted them?

1-7 Q1. Strategy Formulation  Joseph Segel saw opening because of Home Shopping Network’s poor programming and downmarket products  Pursued growth strategy through:  Acquisitions  Vertical integration  Merchandising quality  Developing a vendor network  Focusing on customer service

1-8 Q2. QVC’s Strategy  Differentiation  24/7 virtual shopping mall  Theme-based programs with celebrities  Infrastructure – 7000 phone lines, 48-hour shipping  30-day money back guarantee  Quality control  National brands to attract customers

1-9 Q3. Challenges  Lower operating income in 2004 (13.36% vs % in 2002).  Difficulty in selling higher margin items.  Success in selling electronics and home appliances  Less success in selling beauty products, apparel, cooking items  Foreign expansion successful, but effect not felt on bottom line  iQVC complements QVC but has not increased profits