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.
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Running Head:David Jones Strategic Management
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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 ofDavid Jones Limited. 3
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Running Head: Report Historical Background of the company The background history of the company critically reflects thatDavid 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 toKhan & 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 thelocal customer base, market expansion and sustainable business growth policies(Sharmaet 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 andtaxationthatimpactthebusinessgrowth.Highcorruptionamongpoliticalstructure 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 capitaandpopulationareconsideredasimportantglobaleconomicfactors(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 ofDavid 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 ofDavid 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 marketingis a crucial contribution to the technological factor that can leadDavid 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
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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 ofDavidJones must follow theFair 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). DavidJones 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,WesfarmersCompany.Tosurviveinthehighlycompetitivebusinessscenario 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 advantageover itscompetitors.In thismanner, Woolworthisone of theexistinggiant competitors of David Jones in the retailer industry of Australia. The management must retain customers from rival companiesby providing high discounts and cash back facilitiesto mitigating the risk. 9
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Running Head: Report Implementation of strategic decisions at David Jones This Australian-retail company offersclothingapparel,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 toXuet 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, DavidJonescan 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
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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
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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).BuildingEffectiveCross-DepartmentalCommunicationinOrganizations. 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).SacramentalityandSacredNarrativeinDavidJones.TheHeythrop 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
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