Hsn, Inc.: Weathering the Retail Storm

Article excerpt

CASE DESCRIPTION

This case was developed through the use of secondary research material. The case has a difficulty level of five and is appropriate to be analyzed and discussed by advanced undergraduate and graduate students in a strategic management or accounting class.

The case allows the instructor the flexibility of concentrating on one strategic issue, or examining the entire strategic management process as well as complicated financial accounting reporting. The major focus within the strategic analysis as well as excellent stand alone modules is in the area of legal/political influence, economic, accounting, or the ability to survive in an unattractive industry. The instructor should allow approximately one class period for each element addressed. Using a cooperative learning method, student groups should require about two hours of outside research on each element researched. The case also provides an impetus to explore a once very successful company that existed as a member of a major conglomerate to an stand-alone operation facing significant start-up issues under the new arrangement.

CASE SYNOPSIS

This case is a library, popular press and internet case which examines HSNi- a broad-based retailer that owns and operates an interactive lifestyle network (HSN), a television network, print catalogs, as well as an internet site to support its business-to-consumer business model. The review of annual reports, trade journals, government documents and proposed and enacted regulations must be accomplished carefully. While most students have a general understanding of the home shopping industry, few have the current knowledge to compare this industry against more traditional operations. A review of these resources should lead students in determining the future of the company and the current CEO, Mindy Grossman.

INTRODUCTION

Mindy sat in her office suite overlooking the HSNi campus in beautiful Saint Petersburg while she previewed the soon to be released video detailing the company's Annual Report. She was quite pleased with the positive feel that the video had considering the year the company had just experienced. While she knew that those that understood the industry would agree with the upbeat nature of the presentation, she could not help but worry about the investor reaction - not that she had not already lived that reaction constantly over the last twelve months.

Many thoughts kept rolling through her mind - would the economy finally rebound from the lows experienced over the past 18 months; had the company secured the cable rights necessary to move the company forward; would there be any disruptions due to technological glitches no one could predict; was the government going to constantly interfere with an industry that hardly understood; was there any way to withstand the competition that had finally recognized the potential of the industry; would her studio stars still be icons to the viewing public this time next year; and a thousand other issues she cared not to recall. But mainly her mind kept returning to stockholders - how were they going to understand that on one day the company had an over two billion dollar asset on the next day they did not. Maybe it was time to put on a big smile and face those challenges head-on.

COMPANY HISTORY

HSNi was incorporated in May 2008 as a result of the "spin-off by IAC/InterActiveCorp ("IAC"). The predecessor company of HSNi initiated operations in St. Petersburg, Florida in 1981. By 1985 the company had established 24 hours a day, seven days a week broadcasting on a national network through a combination of cable satellite and broadcast systems.

Until 2008, the company was reaching approximately 91.9 million homes in the United States. In addition, LAC owned the Cornerstone Brands portfolio. This portfolio included numerous print catalogs and related websites. Both of these operations were a major part of the IAC Retail Group (IAC/InterActiveCorp). …