Strategy Project - Saffronart
2952 words 12 pagesExecutive Summary
The art market in which Saffronart operates is notoriously cyclical with booms followed by inevitable busts. The strategic issue it faces is the uncertainty of where the art market is heading. The problem is that Saffronart cannot extend its sources of competitive advantage to markets outside of India and modern schools of art. For this reason, Saffronart is recommended to vertically integrate in India by entering the primary market and competing with galleries and dealers. This solution is optimal and actionable in India if Saffronart uses its sources of competitive advantage.
Industry Analysis The fine art industry is profitable as most forces as buyer power, supplier power, threat of new entrants, threat of rivalry, …show more content…
Saffronart made an important trade-off when it decided to drop the Saffronastyle.com, and Saffronsoul.com. Dropping both of these divisions greatly reduced costs, which allowed Saffronart to invest in its bidding system that straddlers could not imitate, sustaining their competitive position. Moreover, Saffronart’s activities are reinforcing, which further increases sustainability. This is part of Porter’s Second-order fit. For example, Saffronart’s expensive R&D investments are reinforced by low employee wages/salaries expense since Saffronart only employs 26 employees (Khaire and Wadhwani, pg. 9).
Strategic Issue The most important strategic issue Saffronart faces is uncertainty of the future of the art market. Saffronart cannot extend all sources of competitive advantage to new segments. Namely, its superior sourcing system of 40 reputable art galleries and team of tech savvy individuals passionate about art cannot be extended. First, consider Saffronart’s superior sourcing system. If the market shifts to an expressionist Pakistani segment, this source becomes useless since the 40 art galleries mostly supply modern Indian art, not expressionist art specific to Pakistani regions. The case reveals that even if the market were to shift to traditional or post-colonial segments, “objects d’art would have to be sourced from an entirely different set of players.” (Khaire and