David Jones: Strategic Management

This assignment explores the strategic management of David Jones, including its historical background, PESTEL analysis, Porter's five forces, market trends, financial and corporate performance, and strategic recommendations. The study aims to provide insights into the business environment and competitive analysis of David Jones.

Running Head: David Jones
Strategic Management

Running Head: Report
Executive Summary
This assignment is based on the David Jones along with the historical background. This study
will explore PESTEL analysis and Porter's five force model to define the business environment
and competitive analysis of David Jones. This study will also explain market trends, size,
financial and corporate performance. A business strategy, corporate strategy, innovation and
monitoring strategy of David Jones will be included within in study for an improved learning
experience.
1

Running Head: Report
Contents
Introduction......................................................................................................................................3
Historical Background of the company...........................................................................................4
PESTLE analysis.............................................................................................................................4
Porter’s Five Forces Model.............................................................................................................7
Implementation of strategic decisions at David Jones...................................................................10
Market Size &Trends.....................................................................................................................10
Financial and Corporate Performance...........................................................................................11
SWOT and Competitive advantage...............................................................................................11
Strategic options and recommendations........................................................................................13
Monitoring and Control of Future Performance............................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16
Appendices....................................................................................................................................18
2

Running Head: Report
Introduction
David Jones is an Australian up-market department store. This branded company was founded in
1838 by David Jones. Including national and international brands in fashion, beauty, food,
technology, homewares etc. products are available in this department store. The main aim and
the mission of David were to sell the best and most exclusive products. The 180th anniversary of
David Jones was celebrated in 2018 (Otterbring & Lu, 2018). In this report, it will be described
the historical background of the mentioned company, market size and trends from the earlier to
now and the performance of the financial and corporate sector. The strategy in business,
corporate and in innovation are also elaborately will be explained accordingly the procedures of
monitoring and how to control the future performance of the company. Implementation of
strategic changes inside the workplace environment is essential for monitoring as well as control
the productivity rate of David Jones Limited.
3

Running Head: Report
Historical Background of the company
The background history of the company critically reflects that David Jones had successfully met
the expectations of both domestic and international consumers. In this manner, David Jones had
executed successful marketing strategies to draw the attention of international and national
consumers, for example, website marketing. According to Khan & Siddiqui (2019), David Jones,
a merchant who met a Hobart businessman named Charles Appleton and gradually they were
very close in friendly relation. As a result, they are started to establish a retail store department in
Australia in 1838. The partnership of David and Jones started the company with some product
related beauty, homewares, food, and scientific apparatus, etc. That time the brand name was
Appleton and Jones. After the dissolution of their partnership, in 1838, it became an individual
branded departmental store "David Jones Limited” (Bailey, 2017).
PESTLE analysis
To understand the Australian-retail market scenario understanding of business environmental
factors are essential in terms of better interaction with the local customer base, market expansion
and sustainable business growth policies (Sharma et al. 2018). Chief Executive Officer of David
Jones Limited, Mr John Dixon, referred that the organization wants to focus over the expansion
of their retail services to the overseas customer base (Bailey, 2017). To spread in the Australian
retail sector, David Jones Limited has to interpret the internal and external factors of the business
environment (Miller &Merrilees, 2016). PESTLE analysis in a useful tool for understanding the
best alternative to be implemented in the business framework.
4

Running Head: Report
Political factors
Australia includes a multi-party system as the first direct vote of the Federal Legislative Council
of Malaya in 1955 on a first past the situation basis. These factors are specific elements of a
political framework of a business. The political factor includes trade policy, business licenses
and taxation that impact the business growth. High corruption among political structure
profoundly affects the financial stability of an organization. Lastly, David Jones must create a
reliable connect with legislative leaders to expand the business without hazard.
Economic factors
These factors are beneficiary for expanding the business in a foreign business environment as
this help to interpret the determining factors of an economy. The unemployment rate, GDP per
capita and population are considered as important global economic factors (Xu, Gao&
Hammond, 2017). Currency value, inflation rate and GDP are the main factors of the economy of
a nation. In this manner, the management of David Jones needs to focus on the unemployment
rate with other statistics as followed below:
 GDP per capita $53,799.94 approx
 GDP growth of 2.1%
 Inflation (CPI) 0.6%
 Population 2.46 crores
 Labour force by occupation industry: (64.8%), services: (62.8 %)
 Unemployment 2.9%
5

Running Head: Report
Socio-cultural factors
The organization also celebrates Socio-cultural and Seasonal activities, for instance, Christmas
special gift sets and cards over online and offline platforms (Li, 2018). Cultural diversity can
create some hindrances in terms of liberal business processes (Price, 2016). In this manner, the
management of David Jones needs to consider the requirements of local people to achieve high
revenue. The culture of Australia includes traditional values that must be respected by David
Jones. Choice of garments, accessories and groceries critically reflect consumer’s traditional and
cultural values that must be adopted by David Jones to earn high profit.
Technological factors
The management of David Jones needs to focus on the technical element, including Research
and Development segment. With the help of effective R&D process, David Jones can offer
dispute-free products to their consumers for ultimate satisfaction. Along with that, technology
like social media marketing must be considered by David Jones to attract and retain the
consumer as much as possible (Cochoy, 2018). Moreover, online marketing is a crucial
contribution to the technological factor that can lead David Jones towards success.
Environmental factors
Environment safety business policies in terms of plastic usage, waste disposal policies, etc. need
to be implicated by the retail company for sustainable business growth. In this manner, the
management of David Jones must apply green initiative like 3Rs (Reuse, Reduce and Recycle)
for reducing the rate of environment pollution. Moreover, plastic bags must be prohibited
because it influences high pollution.
6

Running Head: Report
Legal factors
David Jones has to abide by the legislation and regulatory framework that is obeyed by the
Australian government (Potter, 2013). It can be understood that legal policies are essential for
opening several business outlets across the areas in Australia. The Fair Work Act is the primary
federal legislation which oversees workplace, and employment connections apply to most
Australian employers in Australia. The management of David Jones must follow the Fair Work
Act (2009) to expand the business legitimately.
Porter’s Five Forces Model
Porter's Five Forces Model is a useful framework for interpreting competition among rival
business organizations (Otterbring& Lu, 2018). David Jones Limited operates the up-market
departmental store chain across Australia. There exists enormous market competition in the
Australian retail sector with the small-mid level enterprises and other large multi-national
companies. Moreover, this local organization operates as a subsidiary business of the parent
company, Wesfarmers Company. To survive in the highly competitive business scenario
organizations need to compete for the same customer base.
The threat of new entrants
The risk of new business organizations in the Australian retail sector is quite high. As the multi-
national business organizations like Asda, Sainsbury’s, Amazon, Tesco etc. are slowly grabbing
the European and American customer base. As the threat of new entreats is directly related to the
rate of market expansion, David Jones Limited would face minimal competition in the shrinking
7

Running Head: Report
business environment with other local business enterprises. High operational charges can lower
sales and marketing expenditures (Selema & Makgosa, 2018).
Threat of substitutions
Business rivalry increases among the business organizations if they are offering their goods and
services inside the shrinking market scenario. Additionally, the availability of equivalent services
and products lowers the attractiveness and acceptance level in front of the customers of David
Jones Limited. Buyers of David Jones Limited generally opt for the brand that has a proficient
brand image and portfolio history. There are several retail British and American multi-national
organizations, for example, BP, Prudential and HSBC that are offering suitable and affordable
products in their retail stores. Customers are well acquainted with the brand image of reputed
global companies.
Bargaining power of the suppliers
To run the business proficiently, networking among the major stakeholders is very important for
rationalizing the business policies and effective operational performance. Suppliers are an
essential part of a retail chain as they supply the manufactured goods and products to the
retailers, and then the retailers sell those goods over the retail outlets. If David Jones Limited is
unable to establish a strong relationship with the suppliers' chain, the customers will face delay
and ineffective product delivery. In the event of restocking products, the management of David
Jones must rely on the suppliers. As a result, lack of product can be considered as a significant
risk that could be driven by reduced bargaining power with suppliers.
Bargaining power of the buyers
8

Running Head: Report
Buyers hold high power in terms of market expansion and sustainable growth in the competitive
market scenario (Selema & Makgosa, 2018). Buyers are generally responsible for offering
affordable yet quality products to the customer base. The business organization can easily switch
from another organization so that participative main work can be followed. This framework is
the speciality of David Jones in terms of innovation. In this manner, the management of David
Jones needs to provide discount offers to control the bargaining power of the consumers
regarding minimizing the risks.
Rivalry among the existing competitors
In terms of market rivalry, there are several retail companies, for instance, Woolworths Limited,
Lendlease, KPMG Australia, Temple and Webster (homewares), the Iconic (garments and
clothing apparel), Booktopia (books) etc. that can give massive competition to David Jones
Limited. The retail organizations are mainly dependent upon the cycle of low-priced and high-
priced merchandising policy. Myer Company is the primary competitive force among other
business organization in Australia. David Jones has to generate innovative strategies to gain an
advantage over its competitors. In this manner, Woolworth is one of the existing giant
competitors of David Jones in the retailer industry of Australia. The management must retain
customers from rival companies by providing high discounts and cash back facilities to
mitigating the risk.
9

Running Head: Report
Implementation of strategic decisions at David Jones
This Australian-retail company offers clothing apparel, accessories, shoes and other grooming
products for men and women (Selema&Makgosa, 2018). Presently baby products like toys,
dresses, electronic gadgets, alcoholic drinks, home and cookware appliances are also served by
the organization. If the retail organization wants to expand its customer base, the implication of
online retailing activities would be helpful. Similarly, the management of David Jones needs to
develop Smartphone application compatible with Android, Apple and Windows for attracting the
consumers as much as possible. Besides that, website development is another strategic decision
that could be beneficial for David Jones in terms of online traffic control. In summary, mobile
application and website development both can be considered as the effective strategic decision of
David Jones.
Market Size &Trends
David Jones is structurally huge and operates in more than 45 stores across Australia. To survive
in the highly competitive market scenario, the company has to opt for some unique marketing
strategies. To retain its business in the Australian market during the decline period, they
employed local celebrities as the “Store Mascots”. Wesfarmers and Woolworths Limited are the
companies that are already offering services in regional and metropolitan areas. [Referred to
Appendix 1]
10

Running Head: Report
Financial and Corporate Performance
According to Xu et al. (2017), due to the lack of strategic changes, David Jones faced lowered
capital profits 39% to $66 Million in December 2018. The organizational heads interpreted the
significant issues behind the decline and started to merchandise new brands in the market, that
draws 30% growth of up to $77 Million. David Jones attained capital profits down by 38% to
$66 Million from the Australian market. The organization was able to gather the loss of $2
Million to $7 Million. But the online retail and e-commerce companies were making a better
profit than the offline retail companies. The organization need to spend more amounts for the
modification of the official website, online sales-marketing policies. [Referred to Appendix 2]
SWOT and Competitive advantage
In the case of a better interpretation of suitable business strategy in corporate framework,
creativity and innovation are essential (Watanabe, Ogawa& Ishiguro, 2018). With the help of
SWOT analysis, David Jones can identify internal strength and weakness, including external
components like threats and opportunities to sustain in a competitive business environment.
Strength
Strong understanding of environmental factors is essential for maintaining a significant market
share in the competitive Australian market. Availability of more than 200 retail outlets has
generated massive scope to the consumers as well as the suppliers to accomplish short term
business goals (Miller & Merrilees, 2016).
11

Running Head: Report
Weakness
David Jones Retail Company is mainly famous in the Australian customer base. Inclusion of
cultural diversity would enable the company to rectify the marketing barrier. Among other
hindrances, global penetration is another issue that lowered the acceptance level of the services
to the new organization.
In this manner, the lack of online promotional activities can be considered as a severe weakness
of David Jones. However, no existence in the digital platform of David Jones is a significant
weakness.
Opportunities
There are several market opportunities identified in the current retailer industry of Australia, for
example, home delivery and easy return policy. The management of David Jones must introduce
free home delivery and free return policy as an emerging business opportunity in the retailer
industry of Australia.
Threats
New entrants and start-up companies pose a significant danger to the Australian retail sector. But
lack of familiarizing with the company can lead the new customer base to the uncertainty
regarding the quality of the goods and services.
Moreover, big rivals like Big W, Woolworths and Myer are significant threats of David Jones,
which can reduce the profitability and impact the financial stability.
12

Running Head: Report
Strategic options and recommendations
Describing the strategic options and recommendations, it can be expressed that mainly the
importance of the company is depended on its market value and the nearest competitive business
ratio. After analyzing the report, strategic options are necessary to improve a company and also a
challengeable option for overcoming the present competitive market.
Business strategy- Discount and Offers
David Jones addressed how a customer could feel better and how one could get the best and most
exclusive products at a decent price. That is why the concept of discounts and offers may help to
achieve a successful business plan. Not only is that the opportunity of discounts and offers
gained goodwill comparatively around the local region. Discount and offers are also promoted to
the employees too. According to the local market value, when the people realized that the
products are available at the reasonable price and even that would be in for a limited time, then
they wanted to purchase that as soon as possible. The attraction of the offers and discounts may
help to achieve the goal of a business plan, and it can be made eligible to stand for towards the
competition in the local market.
Corporate strategy- Training and skill development program
Maintaining a large customer base, David Jones, the mastermind of business improver, offered
the customers many products as per their requirements. David Jones always believed in
customer's satisfaction and always thought about their demands. Skilful employees are essential
for communicating with customers. By gathering knowledge over technical and interpersonal
13

Running Head: Report
skills, employees of David Jones would offer active service to the customers. As a result, it had
helped provide value-added services to customers.
Innovation strategy- Job satisfaction and employee motivation
The management of David Jones needs to introduce Smartphone application as an innovative
strategy to increase profit and financial strength. In this manner, the management of David Jones
needs to arrange a practical training session to enhance technical knowledge and accountability
for boosting employee motivation, including job satisfaction. With the help of a sufficient
amount of training, the employees of David Jones can able meet all expectations of the
consumers that would automatically generate a high profit for David Jones.
Monitoring and Control of Future Performance
The management of David Jones needs to adopt advanced technology regarding monitoring the
activities of the employees within the stores and workshops, for example, CCTV. With the help
of advanced monitoring technology like CCTV installation, David Jones can rectify the strengths
and weakness of the employees that would be helpful in future performance through interactive
training sessions (Price, 2016).
14

Running Head: Report
Conclusion
In conclusion, it can be understood that David Jones limited has faced several hindrances in
terms of spreading its business in the Australian market. But the business organization inculcated
strategic changes after interpreting the business environment of the Australian retail sector. It can
be understood that low price strategy, availability of discounts and offers would attract several
consumers to the retail stores. Moreover, understanding of the internal and external factors
would be helpful for the organization to motivate its employees and attain organizational targets.
15

Running Head: Report
References
Bailey, M., (2017). Absorptive capacity, international business knowledge transfer, and local
adaptation: establishing discount department stores in Australia. Australian Economic
History Review, 57(2), 194-216.
Cochoy, F., (2018). From the main street to the mall: The rise and fall of the American
department store.
Khan, F., & Siddiqui, D. A., (2019). Impact of Inventory Management on a firm's efficiency–A
quantitative research study on departmental stores operating in Karachi. Social Science
and Humanities Journal, 964-980.
Li, C., (2018). Building Effective Cross-Departmental Communication in Organizations.
Powerful Relationships in Leadership: A Collection of Modern Leadership Insights, 91.
Miller, D., &Merrilees, B., (2016). Department store innovation: David Jones Ltd., Australia,
1876-1915. Journal of Historical Research in Marketing, 8(3), 396-415.
Otterbring, T., & Lu, C., (2018). Clothes, condoms, and customer satisfaction: The effect of
employee mere presence on customer satisfaction depends on the shopping situation.
Psychology & Marketing, 35(6), 454-462.
Potter, M., (2013). Sacramentality and Sacred Narrative in David Jones. The Heythrop
Journal, 54(6), 926-931. doi: 10.1111/heyj.12044
Price, R., (2016). Controlling routine front line service workers: An Australian retail supermarket
case. Work, employment and society, 30(6), 915-931.
16

Running Head: Report
Price, R., (2016). Controlling routine front line service workers: An Australian retail supermarket
case. Work, employment and society, 30(6), 915-931.
Selema, D., &Makgosa, R., (2018). Store attributes as drivers of store choice and loyalty: the
female grocery shopper in Botswana. The Retail and Marketing Review, 14(1), 31-44.
Sharma, K., Mondal, K., Govt, J., Reddy, V., & Rajiv, A. I. (2018). Department of Computer
Science and Engineering. Rungta College of Engineering and Technology, Kohka Road,
Kurud, Bhilai, India.
Verma, A., (2018). The competitive dynamics of MNE market entry on host country incumbents:
word/action responses to Amazon’s retail entry into the Australian retail sector (Doctoral
dissertation, Auckland University of Technology).
Watanabe, M., Ogawa, K., & Ishiguro, H. (2018). At the Department Store—Can Androids Be a
Social Entity in the Real World?. Geminoid Studies: Science and Technologies for
Humanlike Teleoperated Androids, 423-427.
Xu, J., Gao, X., & Hammond, J. (2017). E-tailing in Australia: A preliminary analysis of David
Jones. The International Technology Management Review, 6(4), 149-157.
17

Running Head: Report
Appendices
Appendix 1: Current market trend of Australian retailer industry
18

Running Head: Report
Appendix 2: Competitive analysis between Myer and David Jones
19