In your opinion, what are the four major external threats facing PetSmart and the four major opportunities? Realizing the importance of quantification in stating key factors, how could your factors be quantified? Identify specific estimates (numbers) for your factors.
PetSmart is a leading specialty provider of pet products and services in Northern America. The company operates 1,333 stores in USA, Canada, and Puerto Rico. The company offers products and services through its outlets and through online business as well.
The company poses threat from the potential decline in its market share because of the competitive nature of its market. PetSmart has to compete with supermarkets, mass, and general retail stores, warehouse clubs, which have greater resources than the PetSmart. Moreover, there are other specialized pet retailers, e-commerce retailers, and catalog retailers as well. The loss to competitors can cause the company to maintain its current strategy of the opening of new 50 stores in the coming year, resulting in dollar loss as well.
Another major threat can be the low consumption of the merchandise sales. Pet Smart 80% sales come from the merchandise sales. It includes consumables, hard goods, and pets. Any trend leading to lower consumption of merchandise sales can affect a major portion of sales, affecting loss in terms of revenue.
Any fluctuation in the Canadian dollar can result in a drastic loss for the PetSmart. PetSmart sales from Canada have been around $0.4 billion in the last three years. It gives us the scope of effect on the revenue of the company if the Canadian Dollar gets weakened against the US Dollar.
Another threat can be if its new expansion strategy gets failed. The new strategy of expansion through the penetration in new markets if went wrong can cost tied up of capital and loss of the invested capital.
Similarly, PetSmart can also capitalize on many opportunities as well. Like through getting the competitive edge in its products and service, it can open 50 new stores in the coming year and expand its business. Furthermore, it can work on expansion in new markets, capitalizing on the untapped markets worth millions of Dollars. It can also work on increasing its sales in Pets which has been 1.5% in 2013. Furthermore, PetSmart can work on tapping the 96 million cats and 83 million dogs owned by the American owners (Sec.gov, 2014).
Reference
Sec.gov. (2014). PetSmart, Inc. Annual Report 2014. Retrieved from https://www.sec.gov/Archives/edgar/data/863157/000086315714000040/petm-20140202x10k.htm
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