Question

Kirkland's Inc.

1. Describe the core competencies of the organization, and explain how these are or are not different from their competitors.

2. Provide an overview of the financial situation. Describe the cost structure of the organization and compare it to its competitors. Select several strategically significant financial ratios for your organization. Explain specifically why each is of strategic relevance. To what extent will the financial situation of the organization help or hinder its ability to maintain what it is currently doing. What does the financial situation of the organization suggest about its capacity to undertake new strategies?

3. Identify and describe 5-8 of the major strengths of the organization. Identify and describe 5-8 of the major weaknesses of the organization.

Answer 1

Kirkland's Inc. was founded by Carl Kirkland in 1966. Head quarter is based at Nashville, TN.

Answer 1:

Core competencies of Kirkland's Inc.:

• Financial and assortment planning: Financial and assortment planning done by Kirkland's Inc. for their customers has given them added advantage.
• Conducting daily sales audit: Kirkland's Inc. has made it a ritual to spend time daily after closing to audit and analyse their sales of the day. This has helped them to develop competitive edge against their competitors.
• High Quality of products and services at affordable price: Kirkland's Inc. has developed a brand name for providing genuine and top quality commodities.
• Creation of inspirational environments: Kirkland's Inc. is the leader in creating inspirational environments within their store. This gives them an added advantage to generate sales by motivating consumer’s buying behaviour.

Some of these core competencies are similar to their competitors for example quality and financial planning. But daily sales auditing is something that their major competitors are not leveraging.

Answer 2:

Overview of financial situation of Kirkland’s Inc.:

• In third quarter of 2019 Net sales were determined to decrease by 6.2%.
• e-commerce revenue took a keel with 25.9%
• Loss per diluted share was identified to be of $1.61.
• The revenue of company witnessed a drop in comparison to the year 2018 when net sales were recorded as $630 Million.

Cost structure of Kirkland's Inc. has been recently modified in order to overcome the disruption caused by pandemic COVID 19.

Some of the highlights of their cost structure are as follows:

• $74.4M liabilities
• $153.0M of assets
• $35million revolving credit facility
• $34 million of cash on hand
• Lower interest cost on debt.
• Liquidity (short-term obligations) are low,

Comparing its cost structure to its competitors, it has been identified that the situation is very troublesome for even the competitors but with $34 million of cash on hand, Kirkland's Inc. is in better situation.

The financial situation of the organization will leverage its ability to maintain its position despite of current economic condition of the world.

The financial situation of the organization suggests that Kirkland's Inc. has capacity to undertake new strategies. They have recently published in their first quarter results that in order to evolve from current global economic conditions they have planned and implemented new strategies. The results of second quarter will soon display the impact of these strategies on their current financial condition.

Answer 3:

Some of the major strengths of Kirkland's Inc. are as follows:

• Brand Name: Kirkland's Inc. has developed their brand name since the business was started. Today consumer feels pride in purchasing home décor solution from Kirkland's Inc.
• Quality: Kirkland's Inc. sells top quality home décor solution and this attracts consumers to their stores.
• Store Locations: There are 432 stores in 37 states. These stores attract customers.
• Committed task force: Kirkland’s Inc. employees 8000 employees and they are totally committed towards achieving organizational goal.
• Wide range of products: Kirkland’s Inc. sells wide range of products (+14,000). These products are sold to customers through their digital & retails channels.

Some of the major weaknesses of Kirkland’s Inc. are as follows:

• High inventory days as compare to the competitors: This ad to the operational cost of the company.
• Poor R&D: with less investment in R&D, the company is failing to understand changing preferences of customers. Therefore they are unable to provide latest products as per changing consumer preferences,
• Failing to fight tough competition given by major competitors like Bed, Bath & Beyond, Cost plus World Market, etc.
• Falling financial conditions of company as well as limited resources outside core area.
• Inefficient financial planning and decrease in sales,