Martha Stewart


Martha Stewart is one of the most visible entrepreneurs in the United States and in many other Western countries. After nearly thirty years of building a home decor and publishing empire, Ms. Stewart served five months in prison for lying to investigators about a stock trade (Devaney 2005). This adversely affected both her personal image and Martha Stewart Omnimedia (MSO). However, since her release from prison, both Ms. Stewart's public image as reported in polls and the stock and other indicators regarding her company are on the upswing (Devaney 2005). This places the company in a place where evaluation of its strategic environment for the future and potential problems should be reviewed in consideration of possible strategies for the future.


Martha Stewart Omnimedia's strategic environment is complex. The PESTEL framework is a commonly used acronym to define the external influences that comprise the strategic environment, including social, political, economic, technological, environmental, and legal components (Johnson and Scholes 2002). Of these, the most important and potentially impactful for MSO are social and economic (her legal woes were personal, not related to the company). Since the brand is so strongly tied to Ms. Stewart's personal image, the social reaction to Ms. Stewart is a major influence on the brand's success (Anon 2004). So far, the reaction from most of Ms. Stewart's customers to her prison term does not seem to be negatively affecting sales. Her now-famous poncho, made for her by a fellow inmate and worn on her release became an overnight fashion item, reinforcing her potential for future popularity (Devaney 2005). She is also reported to be trying to project a more positive caring image, partially in response to stories published at the time of her trial that she was demanding and unkind to employees and others (Atkinson 2005). Finally, whilst magazine pages have reduced in many of her publications, sales have not declined for her various home products, indicating unlikely long-term social repercussions regarding her time in prison (Anon 2004).

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Economically, MSO stock tumbled significantly with her conviction. The company also made several moves away from the Martha Stewart name at that time; removing the name 'Martha Stewart' from MSO's Everyday Food magazine, for example, and downplaying her name on the Martha Stewart Living publication (Anon 2004). MSO has experienced recent financial revival, however. Stock prices have trebled since Ms. Stewart's conviction, and current concerns are that it is actually overvalued (Seglin 2005). The recent Kmart-Sears merger moves the Martha Stewart home lines into Sears outlets in addition to their traditional Kmart location, a potential windfall for MSO (Seglin 2005). However, one important element of the economic environment to consider is increased competition in many of MSO's primary product areas. Many celebrities in the US are introducing their own household product lines, whilst the number of home, food, and decorating publications expands yearly (Atkinson 2005).

Markides (2004) similarly outlines four main internal influences that impact the strategic environment: culture, structure, incentives, and people. Culture includes the organization's style and values, traditions, expectations, and norms, whilst structure includes the various processes related to responsilbity, communication, and responsibility (Alkhafaji 2004). Incentives includes the goals and returns of the organization, usually financial, whilst people includes the organization's employees, their ideas, and their potential for contribution (Alkhafaji 2004).

MSO's culture and structure are positive aspects of their environment. The company has rallied around Ms. Stewart, both during her prison time and since her release. Whilst Ms. Stewart is appealing her conviction, she went ahead and served her time anyway so as to get it out of the way (Seglin 2005). This stabilized the company, reassured her employees, customers, and partners, and lessened the impact of the situation (Seglin 2005). As Seglin (2005) contends, "Agreeing to serve time without delay was a sacrifice" and is seen by those in the company as their leader being willing to take one for the team (91). Internal financial incentives remain strong, as does the company's overall economic situation.

People, however, are a particularly improved area of MSO. Ms. Stewart relinquished a number of her responsilbities upon her conviction, and the company was able to bring in a number of highly talented, expererienced personnel who are expected to make significant contributions to the print publishing and television projects in particular (Seglin 2005). For example, MSO was able to bring in Susan Lyne, a top-notch CEO from ABC at a time when the MS brand is preparing an expansion of its television programmes to include a talk/how-to show, Martha, and an Apprentice spin off, based on the popular series by fellow entrepreneur Donald Trump (Seglin 2005).

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Some critics, however, contend that Ms. Stewart is still too dominant in the MSO structure and has not allowed enough other people to fully engage in planning and decision-making (Atkinson 2005). For example, Atkinson (2005) quotes Brian Terkelsen, the senior vice-president and director of entertainment at Media Vest USA as saying that whilst Ms. Stewart is likely to be successful in restoring her name and starting new ventures, she has still not surrounded herself with enough advisers nor empowered a large enough number of others to ensure success or stability for MSO (Atkinson 2005). This is a significant environmental factor for MSO relating to the people element.


MSO does face a number of potential problems, both in its short-term and long-term future. First, Ms. Stewart's recent issues have brought home the reality that she will eventually not be part of the company. She is currently in her sixties and in good health, but a time will come when she will not be available (Devaney 2005). As with any company that is built around a single person or image, this is an inherent danger to the entire MSO organization. Whilst this is a short-term problem now due to her legal and personal issues, it will be a major problem in the long-term when Ms. Stewart eventually passes away or is unable to continue as the image at the forefront of MSO. The company needs to consider now, therefore, ways it can begin moving from being Martha-centered to being more focused on the ideas and culture she presents to her audiences and customers. In addition, executives need to be further empowered to run the company without as much Martha. There is simply too much of MSO riding on one person for a healthy long-term future outlook.

There is further concern whether Ms. Stewart will be able to continue to carry the brand, even if she remains on board. Ms. Stewart's recent legal woes brought to light a number of personal issues, where she was reportedly unkind and even abusive to employees (Atkinson 2005). This lessens her appeal to customers. MSO is launching a television programme, Martha, in which Ms. Stewart will star (MSO 2005). In addition to offering the various kinds of 'how-to' projects and information common in the company's other programmes and publications, this programme will be recorded in front of a live audience, giving Ms. Stewart "the opportunity to meet and interact with those who share our dedication to better living" (MSO 2005). She is also slated to visit viewers at home, listen to their concerns, and assist them with their various decorating, organizational, and similar problems (MSO 2005). The plan is that this will not only create a profitable and popular television show where Ms. Stewart can additionally promote her many product lines, but will serve to restore and recast her image as a wholesome, caring person who wants to help America live better lives (Atkinson 2005, MSO 2005).

Product dilution is a potential problem that may result from the company's current strategic plans. MSO is reported to be shifting its focus from home decorating and food, areas in which it has long been dominant, to health categories (Anon 2004). For example, the company recently acquired Body & Soul Magazine, and the Self Healing Newsletter promoted by Dr. Andrew Weil (Anon 2004). This could be a potentially beneficial situation, expanding the brand's reach and diversifying products in the face of increased competition in the home and food categories. However, such moves could also present a problem long-term; as customers then develop a less-clear image of what the Martha Stewart brand stands for, lessening its competitiveness.

Another potential problem already mentioned is increased competition in the home, decorating, and food categories (Anon 2004). Cable television shows based on decorating and food are growing rapidly, with many hosts of such programmes in addition to various celebrities developing their own lines of household products or decorative items (Atkinson 2005). For example, hosts of US cable show Trading Places and ABC's Extreme Home makeover have both launched interior design collections based on their popularity as show hosts (Devaney 2005). Such launches tend to be in the general, lower-end market where celebrity name recognition is of increased draw (Atkinson 2005). Increased competition, particularly in the lower-end product area in which MSO is so successful, is likely to lead to price cuts by all those in the market. As more and more products become available, reducing prices is one of the most often employed strategies to remain competitive and increase market share (Styles and Goddard 2004). Unfortunately, this could translate into lower profit margins for MSO, whilst the competition itself could lead to a reduction in sales. This scenario could be equally applied to the print publishing arm of the company, which has seen a substantial reduction in pages and advertising over the past two years, due in part to Ms. Stewart's personal issues but more significantly to increased competition in the genre (Atkinson 2005).

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One integral part of the strategic plan for the company should be to begin developing new spokespeople to represent MSO in the event Ms. Stewart becomes no longer available. The company is doing a bit of this with its move into radio; MSO will launch a twenty-four hour radio channel on the Sirius Satellite Radio network (Devaney 2005). As such, it will have a number of non-Stewart representatives offering a variety of home, food, and health programming, and has been guaranteed pounds sixteen million over the next four years by Sirius, with also possible revenue-sharing based on subscriptions (Devaney 2005). This does not address the very visible Ms. Stewart on magazines and television, but it is a start. The company needs to begin grooming a few able representatives who could take over various areas of the Martha Stewart brand and possibly even develop brands based on their own names or on some type of label that can be continued without concern of losing its spokesperson. The company also needs to further develop its administrative players to rely less on Ms. Stewart in this arena.

Another component of corporate strategy should be to increase the use of the many different vehicles and components of MSO to promote each other. Ms. Stewart has paint lines, decor lines, books, magazines, television and now radio programmes. Whilst making publications and programmes blatant advertisements for MSO products is undoubtedly a turn-off for many potential customers, there are certainly subtle and tasteful ways of cross-promotion that could be undertaken in greater emphasis. This is particularly important in the face of increased competition, and a way to differentiate the MSO product lines from their many and increasing competitors.


Martha Stewart is a formidable and extremely successful entrepreneur, who has built an entire product and media empire around her own image. Whilst she has been undoubtedly successful in her various pursuits, recent events bring to the forefront the need for the company to make significant strategic changes. These include moving away from one-person centered product lines and an organization built around personal image, to one that embodies the ideals Ms. Stewart represents, and to recasting the company's image in light of these changes so as to make it more competitive in the long-term.




Alkhafaji, A., 2003. Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. Haworth Press, Oxford.

Anon, 2004. Martha Stewart Omnimedia's Next Move. Folio: The Magazine for Magazine Management, vol. 33, issue 20, October 2004, p. 15.

Atkinson, C., 2005. Mixed on Martha. Advertising Age, vol. 76, issue 30, July 25, 2005, p. 4.

Devaney, P., 2005. Some stars fall, others bounce back – but who else loses out? Marketing Week (UK), vol. 28, issue 21, May 26, 2005, pp. 32-33.

Johnson, G., and Scholes, K., 2002. Exploring Corporate Strategy (6th Edition). Pearson Education, London.

Markides, C., 2004. "What is strategy and how do you know if you have one?" Business Strategy Review, vol. 15, issue 2, Summer 2004, pp. 5-12.

MSO, 2005. Martha Stewart. MSO Company website. Available at, accessed 14 August 2005.

Seglin, J.L., 2005. Because she took one for the team. Inc., vol. 27, issue 4, April 2005, p. 91.

Styles, C., and Goddard J., 2004. "Spinning the wheel of strategic innovation." Business Strategy Review, vol. 15, issue 2, Summer 2004, pp. 63-72.