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AcknowledgmentAcknowledgment

All praises are for almighty ALLAH whose mercies are unlimited upon us, and HE

who graced us with knowledge and wisdom. Who’s provided courage made us

ambitious to learn the management of us and all that us posses.

We are thankful to our teachers’ especially,

Mr. Javed Zafar who dedicatedly broadened our vision through his ample

experience and served as a lighthouse in this final project.

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Our customer relationships Our customer relationships transcend yesterday, transcend yesterday, today and tomorrow today and tomorrow just as the occasions. just as the occasions. They are They are celebrating…. with celebrating…. with jewelry from the zale jewelry from the zale family of brands.family of brands.

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Our History

In the 1920s, Morris (M.B.) and William Zale had a vision: to provide customers with quality

merchandise at the lowest possible price. This vision became a reality when the first Zales

Jewelers store opened in Wichita Falls, Texas, on March 29, 1924.With a credit plan of "a penny

down and a dollar a week," the Zale brothers launched a marketing strategy considered to be

revolutionary at the time, and thus made jewelry and other merchandise affordable to the average

working American. Friendly customer service, liberal credit policies, and dedicated employees

led to great success and expansion, with 12 stores in Oklahoma and Texas by 1941.

During World War II, Zales Jewelers responded to the limited production of consumer goods by

maintaining its current prices on jewelry, limiting expenses, and looking for growth

opportunities. These efforts were rewarded in 1944 with the acquisition of Corrigan's of

Houston, Zales' first "carriage trade" (fine jewelry) store, whose purchase eventually launched

the Bailey Banks & Biddle brand.

In 1946, Zales Jewelers moved its headquarters from Wichita Falls to Dallas. The corporate

offices were housed in the Mercantile Bank Building, the first of several locations. The company

continued to prosper and in 1952, a profit sharing plan was introduced to employees. Zales

Jewelers took major steps in 1957 to broaden its reach in the marketplace. The first shopping

center location was opened, marking a major shift from its strategy of operating only downtown

stores. The same year, Zales announced the initial public offering of its stock (ZLC) and then

began trading its public shares on the American Stock Exchange the following year.

The 1960s were a decade of diversity. The 119-store chain began branching out into other

markets - shoes, sporting goods, drug stores, and furniture and catalogue stores. In fact, the

shareholders decided to change the company name to Zale Corporation to reflect the diversity of

the business. The decade of the '70s brought continued expansion. Zale Corporation grew to

more than 1,700 stores and posted a single-day sales record of $10 million.

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In 1984, Zale Corporation unveiled its newest acquisition - the 890-carat "Incomparable

Diamond," the largest internally flawless diamond in the world. The next year, Zale moved its

world headquarters into a 430,000-square-foot complex in Irving, Texas, and its current location.

Peoples Jewelers of Canada and Swarovski International of Austria significantly altered the

company’s history with the 1986 leveraged buyout of Zale Corporation. Expansion continued,

however, with the purchase in 1989 of the Gordon's Jewelers chain of 469 stores.

The 1990s marked another critical turning point for the corporation when it filed for Chapter

11 bankruptcy protection in 1992. The following year, the company emerged from bankruptcy

after restructuring its debt. Five years later, 1998 became the "breakaway year" for Zale with

annual sales that topped $1.3 billion - up from $920 million in 1994 - and a 25 percent net

earnings growth (excluding unusual items). During its tremendous turnaround year, the

company showed profit in all four quarters for the first time since the reorganization. That same

year, Zales Outlet was launched, giving the corporation 13 locations in premier outlet centers in

the United States. Expansion again became the primary growth strategy with two major

acquisitions: Peoples Jewelers of Canada in 1999 and Piercing Pagoda, Inc. in 2000. In 2007,

Zale divested the Bailey Banks & Biddle brand to focus on the core business and increase returns

on capital. As a leading specialty retailer of fine jewelry, Zale now operates over 2,200 retail

locations throughout the United States, Canada, and Puerto Rico under the following brand

names: Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewelers, Mappins Jewelers,

Piercing Pagoda, Plumb Gold, and Silver & Gold Connection. Zale also operates online at

www.zales.com

www.gordonsjewelers.com.

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““The Mission of ZaleThe Mission of Zale Corporation is to be the bestCorporation is to be the best specialty retailer in Northspecialty retailer in North America. Our goal is toAmerica. Our goal is to develop and maximize thedevelop and maximize the finest collection of jewelryfinest collection of jewelry brands in order to buildbrands in order to build lasting customer relationshipslasting customer relationships that will generate solidthat will generate solid returns for our shareholders”returns for our shareholders”

Improved Mission Improved Mission statementstatement

““The mission of Zale The mission of Zale Corporation is to be the Corporation is to be the best specialty retailer in best specialty retailer in WorldWorld. Our goal is to . Our goal is to enhance our enhance our merchandise assortment merchandise assortment

to ensure that we offer styles that inspire and to ensure that we offer styles that inspire and reflect the lifestyles of our customersreflect the lifestyles of our customers ..

“To provide customers with quality“To provide customers with quality merchandise at the merchandise at the lowest possible price”lowest possible price”

“To be a world class jewelry provider“To be a world class jewelry providerto all classes”to all classes”

Our Brands 6

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Zale Corporation offers customers an extensive selection of quality jewelry in a wide variety of price categories. Whether you are shopping for an addition to your personal jewelry wardrobe or you need a special gift, come to one of our stores for the best choices -- from fashion and contemporary styles to classic and traditional designs.

Zales Jewelers:

Nationally recognized authority on diamonds. Founded in 1924, "the Diamond Store" is the most recognizable name in fine jewelers.

Zales Outlet

Value-priced fine jewelry. A wide variety of jewelry is chosen for shoppers who prefer quality merchandise at less-than-retail prices.

Gordon's Jewelers

Classic to contemporary. Regional jeweler caters to local styles and tastes by offering unique designs in select markets.

Peoples Jewelers

The Diamond Store. The largest national jewelry retailer in Canada offers fine jewelry and brand name watches at affordable prices.

Mappins Jewelers

Fine Jewelers since 1935. Customers across Canada can shop for classic fine jewelry and watches of exceptional value in stylish mall locations.

Piercing Pagoda

Fashion-forward. For customers who appreciate quality jewelry at everyday low prices, the gold kiosk leader offers an extensive selection of gold chains, charms, bracelets, rings, earrings, body jewelry, as well as silver and stainless jewelry.

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ZLC Direct

Quick and easy. Consumers who prefer to shop on the Internet have direct access to

the online selection of quality merchandise from Zales Jewelers.

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INTERNAL ASSESSMENT

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INCOME STATEMENT

The income statement good financial position of Zale The income statement good financial position of Zale Corporation. In the year 2007 firm Net Income is Corporation. In the year 2007 firm Net Income is 59.252$ Million.$ Million.

2007

In $ Million

Sales 2437,075

Cost of Goods Sold 1194399

Gross Profit 1242676

Selling and Admin. Expenses 1070478

Other Expense 69071

Operating Income 103127

Interest Expense 18969

Earning Before Taxes 84158

Income Tax 24906

Net Income 59.252

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Balance Sheet

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LIABILITIES

ASSETS

14625681613946Total Liabilities & S.E

801249902573Total Equity

661319711373Total Liabilities

---69491Deferred long term charges

5537740118Other liabilities

202813227306Long-term debt

403129374458Total Current Liabilities

---29501Other current liabilities

403129344957Accounts payable

14625681613946Total Assets

---1305Deferred long term asset charges

1131635187Other Assets

96339100740Goodwill

283721304396Property plant and equipment

10492441172318Total Current Assets

103356113511Other current assets

9032941021164Inventory

4259437643Cash & cash equivalents

2006

In $ Thousand

2007

In $ Thousand

Ratio Analysis

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1.381.24Inventory Turnover

0.820.79Debt to Equity

1.671.51Asset Turnover

2.192.43%Net Profit Margin

0.450.44Debt Ratio

0.110.10Quick Ratio

0.110.10Cash Ratio

2.603.13Current Ratio

20062007

Market Positioning Map

The market-positioning mapThe market-positioning map

clearly shows that the Zaleclearly shows that the Zale

Corporation has a betterCorporation has a better

perception in the mind ofperception in the mind of

consumers because they areconsumers because they are

offering a high qualityoffering a high quality

product at lower prices.product at lower prices.

That is why there marketThat is why there market

standings are better thanstandings are better than

other companies. In theother companies. In the

above figure prices are measured on X-axis and quality on Y-axis,above figure prices are measured on X-axis and quality on Y-axis,

Where Zale Corporation is offering aWhere Zale Corporation is offering a

quality diamond Jewellery at lowerquality diamond Jewellery at lower

pricesprices

Revenue of Zale Corporation by Segments

This chart showing theThis chart showing the revenue of revenue of Zale CorporationZale Corporation by by segment. Which clearly showssegment. Which clearly shows that that Zales Zales is generating moreis generating more 14

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2.681.00Total

0.0820.03Advertisement

0.0820.04Not thinking Global

0.1020.05Longer repositioning time

0.0610.06Decrease in inventory turnover

0.0520.05Limited to North America

WEAKNESSES

0.1620.08Knowledge of diamond

0.3030.10Widely spread network of distribution

0.1420.07Moderate price jewelry across all store

0.2430.08Targeting all segments in market

0.2730.09Innovative and creative designs

0.2730.09Trained personals

0.4040.10Work experience

0.6040.13Brand Name

STRENGTHS

ScoreRatingWeightKey Factors

of their revenues from Zale segment. After that of their revenues from Zale segment. After that their Gordon’s jewellery segment is very strongtheir Gordon’s jewellery segment is very strong..

Internal Factor Evaluation Matrix

In the table below we have done the internal evaluation of theIn the table below we have done the internal evaluation of the firm by taking some major factors as Strength and Weakness offirm by taking some major factors as Strength and Weakness of the firm. After identifying the strength and weakness wethe firm. After identifying the strength and weakness we assigned weight to them according to their importance. In ratingassigned weight to them according to their importance. In rating column we assigned rate to each factor in this 1= Majorcolumn we assigned rate to each factor in this 1= Major

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Weakness, 2= Minor Weakness, 3= Minor Strength and 4=Weakness, 2= Minor Weakness, 3= Minor Strength and 4= Major Strength. Then we multiplied the weight with rating andMajor Strength. Then we multiplied the weight with rating and took the sum of score, which is 2.68, which shows that the firm istook the sum of score, which is 2.68, which shows that the firm is performing above average.performing above average.

..

External Assessment

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Zale’s Competitors1. blue Nile

2. SIGNET

3. Tiffany’s

4. JC Penney

5. HELZBERG DIAMONDS

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Tiffany SignetZale

Competitive Profile Matrix

In the competitive profile matrix we compare the firm withIn the competitive profile matrix we compare the firm with

its competitors by identifying critical success factors. Afterits competitors by identifying critical success factors. After

identifying these factors we assign weight and rate them.identifying these factors we assign weight and rate them.

Then we multiply the rate with the weight. Then we takeThen we multiply the rate with the weight. Then we take

sum of all the score then we compare the score in thesum of all the score then we compare the score in the

given table Zale’s score is 2 which is below average andgiven table Zale’s score is 2 which is below average and

shows a weaker position than competitors.shows a weaker position than competitors.

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0.2420.2420.2420.12Customer Loyalty

2.812.672.731.00Total Score

0.1620.2430.1620.08Price Competitiveness

0.1010.2020.1010.10Global Expansion

0.2620.1310.3930.13Technology

0.6630.2220.3330.11Management

0.1010.3030.2020.10Market Share

0.1820.1820.1820.09Advertising

0.4530.3020.4530.15Financial Position

0.6630.8840.6630.22Quality

Score

Rating

Score

Rating

Score

Ratings

Weight

Factors

External Factor Evaluation Matrix

In the given table we have done the external evaluation of theIn the given table we have done the external evaluation of the

firm by identifying some factors as opportunities and threats offirm by identifying some factors as opportunities and threats of

the firm. After identifying the opportunities and threats wethe firm. After identifying the opportunities and threats we

assigned weight to them according to their importance. In ratingassigned weight to them according to their importance. In rating

column we assigned rate to each factor in this 1=Response iscolumn we assigned rate to each factor in this 1=Response is

poor, 2= Response is average, 3= Response is above averagepoor, 2= Response is average, 3= Response is above average

and 4= response is superior. Then we multiplied the weight withand 4= response is superior. Then we multiplied the weight with

rating and took the sum of score, which is 2.72, which shows thatrating and took the sum of score, which is 2.72, which shows that

the firm is performing above average.the firm is performing above average.

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0.1020.05Natural resources

0.1620.08Losing market share to JC penny

0.2730.07Global recession

0.2430.06Political situation

0.1820.05Suppliers

0.1620.08Strong competitors

2.721.00Total Score

THREATS

0.1620.08Synthetic diamond

0.1620.08Backward integration

0.1830.09Diversification

0.4440.11Innovative design to high-income group

0.3930.13Open a Zale outlet in Europe

OPPORTUNITES

ScoreRatingWeightsFactors

BCG Matrix

The BCG matrix is use to The BCG matrix is use to to rank the to rank the business units (or products) on the basis business units (or products) on the basis of their relative market shares and of their relative market shares and growth rates. Pilgrims pride lies in Cash growth rates. Pilgrims pride lies in Cash Cows because they have low growth rate Cows because they have low growth rate but their market share is very high.but their market share is very high.

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Recommendations

They should Start business in Europe to capture a marketThey should Start business in Europe to capture a market opportunity, because competitors of Zale are doing opportunity, because competitors of Zale are doing business globally, SIGNET is doing business in London, business globally, SIGNET is doing business in London, Tiffany in Japan and earning profit their market share is Tiffany in Japan and earning profit their market share is more than Zale.more than Zale.

Zale should do Zale should do Backward integration because it is not Backward integration because it is not manufacturing jewellery by itself, they purchase finished manufacturing jewellery by itself, they purchase finished good from Italy, due to problem in external factor of Italy good from Italy, due to problem in external factor of Italy Zale also suffers in shape of late delivery of Goods.Zale also suffers in shape of late delivery of Goods.Zale Zale should should Target high-income group, they are currently Target high-income group, they are currently targeting mainly Middle- class, but they can earn a lot targeting mainly Middle- class, but they can earn a lot from high-income group because Zale have more from high-income group because Zale have more innovative styles in Jewelry.innovative styles in Jewelry.Zale should do diversification Zale should do diversification in Bridal dresses, as they are specially known for Bridal in Bridal dresses, as they are specially known for Bridal jewelry so they have an opportunity to diversify I that jewelry so they have an opportunity to diversify I that business.business.

CONCLUSION

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Zale should consider the recommendation to Zale should consider the recommendation to start a business in European Market and also start a business in European Market and also should Target high Income group.should Target high Income group.

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