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Strategy Project - Saffronart

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Executive 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…

This is true since Saffronart worked “patiently to build trust” by “partnering with galleries that the founders already had relationships with” in India. Minal and Dinesh may not have these same relationships with contemporary-specific galleries in new regions like Pakistan. Thus, a shift in the art market threatens Saffronart’s sourcing system. Second, Saffronart’s team cannot extend their knowledge and experiences in modern Indian art to new segments. Exhibit 3 reveals that of the 5 team members, only one—Yamini Telkar—has a degree in Fine Arts. The others received degrees in Mathematics, Electronics, Commerce and Marketing. Thus, if the market shifts to contemporary Pakistani segments, all but Yamini may not be able to adjust to the shift. The threats associated with the strategic issue intensify when considering imitators such as Christie’s and Sothbey’s. These imitators have aggressively improved their sourcing tactics, diversified into multiple segments, and built barriers to protect against competitors in the expanding secondary market. For one, their relationship with galleries and consignors is so strong that it has forced Saffronart to lower commissions that they charge to consignors (Khaire and Wadhwani , pg. 10). There is nothing stopping these international players from doing the same in emerging markets since they possess the economies of scale and have

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