External and Internal Environments Business
External and Internal Environments
By Sarah Bruce
Professor Ira Poladeen
Business Capstone
April 28, 2015
An organization’s environment includes factors that it can easily change as well as factors that it cannot easily change. The factors that it cannot easily change are said to be the general environment (Faye, T. 2011). It is this environment that I will discuss as it relates to a struggling, once thriving industry: office-supply stores. Office supply retailers are finding themselves in quite a conundrum as they fight increased competition and technological shifts that are reducing demand for traditional supplies such as pens, paper clips, and paper. Because of the tremendous strides in technology, profitability among office supply, stationery and gift retailers are on the decline. Office supply companies are typically one of the least profitable retail industries anyway, but in 2013 they saw overhead expenses and costs of goods sold increase relative to sales. The large online presence from Amazon and Staples.com is also making it difficult for other office retailers to find market share. Office supply, stationary and gift retailers operated with a net loss, on average, of 1.2% of sales in 2013, compared with a net profit margin of 3.7% in 2012, according to Sageworks’ industry data (Crawford, M. 2015). The margin of earnings before interest, taxes, depreciation and amortization was 0.2% of sales, on average, in 2013, compared with 5.1% in 2012. Gross profit margin, meanwhile, decreased to 41.8% from around 44% to 45% from 2009 to 2012 as costs of the goods sold increased (Crawford, M. 2015). The biggest U.S. office-supply chains are also trying to contain costs. They report customers are buying fewer binders and software as more workers distribute reports via tablet computers and the internet rather than hard copies. Plus all office supply stores are facing intense competition from a variety
By Sarah Bruce
Professor Ira Poladeen
Business Capstone
April 28, 2015
An organization’s environment includes factors that it can easily change as well as factors that it cannot easily change. The factors that it cannot easily change are said to be the general environment (Faye, T. 2011). It is this environment that I will discuss as it relates to a struggling, once thriving industry: office-supply stores. Office supply retailers are finding themselves in quite a conundrum as they fight increased competition and technological shifts that are reducing demand for traditional supplies such as pens, paper clips, and paper. Because of the tremendous strides in technology, profitability among office supply, stationery and gift retailers are on the decline. Office supply companies are typically one of the least profitable retail industries anyway, but in 2013 they saw overhead expenses and costs of goods sold increase relative to sales. The large online presence from Amazon and Staples.com is also making it difficult for other office retailers to find market share. Office supply, stationary and gift retailers operated with a net loss, on average, of 1.2% of sales in 2013, compared with a net profit margin of 3.7% in 2012, according to Sageworks’ industry data (Crawford, M. 2015). The margin of earnings before interest, taxes, depreciation and amortization was 0.2% of sales, on average, in 2013, compared with 5.1% in 2012. Gross profit margin, meanwhile, decreased to 41.8% from around 44% to 45% from 2009 to 2012 as costs of the goods sold increased (Crawford, M. 2015). The biggest U.S. office-supply chains are also trying to contain costs. They report customers are buying fewer binders and software as more workers distribute reports via tablet computers and the internet rather than hard copies. Plus all office supply stores are facing intense competition from a variety