Business Analysis of JB Hi-Fi

This article provides a detailed analysis of JB Hi-Fi, a major retailer of consumer goods in Australia. It covers the company's history, products, strengths, opportunities, and threats. The article also includes a financial statement of JB Hi-Fi and discusses the issue of earnings manipulation.

Running head: BUSINESS ANALYSIS OF JB HI-FI
Business Analysis of JB HIFI
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1BUSINESS ANALYSIS OF JB HI-FI
JB Hi-Fi is a retailer dealing with consumer goods in Australia that specializes in
selling of the video games, blu-rays, DVDs, hardware, mobile phone, electrical home
appliance and that of Telstra services 1. With the declining popularity of the vinyl records JB
Hi- FI cleared the stock of that of records and started to offer Exclusive CD. JB HIFI has
embarked on a path of diversification of the business. The main products of the industry
where JB Hi- Fi is working includes that of VCR, entertainment system, think pad line of the
laptop, I- Pad and Kindle. Video cassette recorder is still popular and it can help in saving
favourite programs of the television that can be played later on. The entertainment system
helped in the establishment of indelible interface along with game design ideas. Think pad
line of laptop acted like a revolution in the domain of personal computing industry and the
navigation device is extremely popular. The I-pad helped in replacing the laptop and it acted
like a personal computer. Previously it used to sell only music CD’s but it has now veered
towards the selling of consumer electronics that includes Plasma, digital camera photography,
in-car entertainment, gaming accessories, gaming consoles, white goods, gadgets and that of
information technology. JB HIFI sells certain accessories within that of certain stores like CB
radios, surveillance camera system, guitars, ukuleles and various DJ equipment like that of
CD mixer and microphones.
JB HIFI will prosper in the short term as well as in the long run owing to the rising
popularity of the entertainment industry. The popularity of the brand JB HIFI can be seen
from the fact that the company has opened 112 stores that combine that of VIC, ACT, TAS
and that of NSW. The industry pertaining to video games, DVD’s, mobile phone and that of
electrical home appliances will continue to grow in the present age because of the rising
demand of these in the current market. Video games, DVD’s and mobile phones are very
popular among the urban class in the modern age. In the bygone era, people used to look for
1 "JB Hi-Fi | JB Hi-Fi - Australia's Largest Home Entertainment Retailer". 2018. Jbhifi.Com.Au.
http://www.jbhifi.com.au/

2BUSINESS ANALYSIS OF JB HI-FI
pleasure outside the confines of their home. The essence of playground has lost its
importance in the present age and the youth of the present age find entertainment by taking
recourse to video games, home appliances and that of the mobile phones. It can hence be said
that the prospects in relation to this industry will continue to flourish in the coming years.
The main players in the industry comprise of CVE Technology, Cornwall Electrical
Wholesalers Limited and Lastar. CVE Technology has been responsible for delivering
unsurpassed quality in relation to the products 2.
JB Hi-Fi was set up in the Melbourne suburb of that of Keilor East. Jihn Barbuto was
responsible for opening the company in the year 1974. Barbuto was responsible for selling
the business in 1983 to that of Richard Bouris, Peter Caserta and David Rodd. They were
responsible for expanding the JB Hi-Fi in the ten different stores within Melbourne along
with that of Sydney. It was able to turn over a revenue of over $ 150 million by the end of the
year 2000. A majority of the holding of JB HI-FI was sold to that of private equity. It was
consequently floated within Australian Stock Exchange in the month of October in the year
2003. In the beginning, the company used to specialize only in Hi-FI equipment. Later on,
they started offering CD’s and became a major Australian retailer.
The competitive advantage of the company has been provided by the fact that it is the
sole retail chain within Australia that is instrumental in the selling of Dell Computer
Hardware within that of the retail stores. The revenue of JB Hi-Fi is very positive and it is
growing. The competitive advantage of JB Hi-Fi is provided by the fact that it is a major
2 Bogers, Marcel, Ronen Hadar, and Arne Bilberg. "Additive manufacturing for consumer-centric business
models: Implications for supply chains in consumer goods manufacturing." Technological Forecasting and
Social Change102 (2016): 225-239.

3BUSINESS ANALYSIS OF JB HI-FI
discount retailer that offers low prices on every day basis 3. The stores have high sale in
relation to per square metre as compared to local competitors. It enjoys a lot of loyalty along
with trust from the consumers. It has successfully established an online platform and the sales
are growing at a rapid pace.
The strength of the company is provided by the fact that it offers great amount of
discounts for the consumer products. The loyalty along with trust that it enjoys from
competitors acts as the strengths of JB Hi-Fi. The opportunities are provided by the highly
qualified employees who are associated with that of the company. The ever growing demand
of the electrical appliances within that of the Australian market makes it a favourite among
the consumers. The deficiencies in that of online offerings like long time in relation to
delivery and the poor quality pertaining to the products can be made use of by JB Hi-fi in
order to increase its hold in the market. The telescopic mobile phone accessory of that of JB
Hi- Fi has made it very popular in the Australian market 4. Ability of leveraging high traffic
location, low price pertaining to the different categories and focus on the aspect of online can
ensure maximisation of sales pertaining to the company. The threats have been provided by
the other consumer goods company namely CVE Technology, Cornwall Electrical
Wholesalers Limited and that of Lastar.
The acquisitions helps in highlighting that the surging popularity of JB Hi-Fi. In the
year 2004 it was responsible for buying 70 % of that of Clive Anthony’s chain within
3 Cohen, Boyd, and Jan Kietzmann. "Ride on! Mobility business models for the sharing
economy." Organization & Environment27, no. 3 (2014): 279-296.
4 Crevoisier, Olivier. "The economic value of knowledge: Embodied in goods or embedded in
cultures?." Regional Studies 50, no. 2 (2016): 189-201.

4BUSINESS ANALYSIS OF JB HI-FI
Queensland. It also acquired that of hill and Stewart Chain relating to 11 electronics stores. It
was responsible for opening Sydney Branch within the suburb of Castle Hill 5. Clive
Antony’s is responsible for specializing in the field of the white goods and it can help in
expanding the business of JB Hi-Fi. Future trading will prove to be more difficult for JB Hi-
Fi with the emergence of online market share. JB Hi- Fi wants to increase sales by around 21
% and earn around $ 6.8 billion in this year on account of the expansion of consumer
electronic group. It has been able to gain more synergy by acquiring of Good Guys. The
annual report of the year 2017 suggests that five new stores will be opened and it would
monitor the opportunities pertaining to Good Guys. It bought the Good Guys in the month of
November in return of $ 870 million 6. Investment in the arena of store network and online
offering can help in increasing the prospects of JB Hi-Fi. The strong promotional plan
launched by the JB Hi-Fi will help it to reach a strong position and augment growth in the
year 2018. Large variety of range coupled with the low prices will act as the drivers of
success of the company. The support offered by the enthusiastic team will help JB Hi- Fi in
gaining a prominent position in the market.
5 Drucker, Peter F. The Theory of the Business (Harvard Business Review Classics). Harvard Business Press,
2017.
6 McDonald, Malcolm, and Hugh Wilson. Marketing Plans: How to prepare them, how to profit from them.
John Wiley & Sons, 2016.

5BUSINESS ANALYSIS OF JB HI-FI
The online offering of the company had a boost in the beginning of the year 2013 and
the online sales has increased by around 40.3 percent as compared to that of prior
corresponding period that was $ 37.2 million 7. It has been found that online sale is
responsible for around 2 percent of the overall sales of JB Hi-Fi. JB Hi- Fi is currently trading
with an amount of $ 20.50 and has a valuation above that of $ 17 FY15 valuation 8. The
normalised return on that of equity has been conceived to be 48 % below that of the average
of last five years that was 75 %. Higher historical NROE is reflective of the strong sales
momentum from rollout of home entertainment 9.
The revenue gathered at the end of the year 2015 was 3652 $, in the year 2014 it was
3954 $ and in the year 2017 it was 5628 $. It shows that the company is making profits on
yearly basis. The free cash flow of JB Hi- Fi was 137 AUD in the year 2015, it was 133 in the
year 2016 and it was 142 AUD in the year 2017 10. The expenditure of the company in the
year 2015 was 1101 AUD, 1187 AUD in 2016 and it was 1716 AUD in the year 2017. The
7 "JB Hi-Fi | JB Hi-Fi - Australia's Largest Home Entertainment Retailer". 2018. Jbhifi.Com.Au.
http://www.jbhifi.com.au/.
8 Kathan, Wolfgang, Kurt Matzler, and Viktoria Veider. "The sharing economy: Your business model's friend or
foe?." Business Horizons 59, no. 6 (2016): 663-672.
9 Hair Jr, Joe F., Mary Celsi, Arthur Money, Phillip Samouel, and Michael J. Page. The essentials of business
research methods. Routledge, 2015.
10 van Weelden, Eline, Ruth Mugge, and Conny Bakker. "Paving the way towards circular consumption:
exploring consumer acceptance of refurbished mobile phones in the Dutch market." Journal of Cleaner
Production 113 (2016): 743-754.

6BUSINESS ANALYSIS OF JB HI-FI
stellar performance in relation to JB Hi-Fi shows that the companies that can manage
themselves well can capitalise on the weak point of others in order to grow successfully.
The management often feels the pressure for manipulating the accounting practices of the
company so that they can meet the financial expectations pertaining to the company 11. There
are many executives who get bonus on the basis of the performance of the earnings. The
managers do not get any incentives in relation to manipulation of the earnings so that the
policies of the company can stay transparent 12. Policies like this can have merit on the short
term but it will never yield any positive result in the long run.
A large part of the executive compensation can help in attaining the perfect target. There are
different non-GAAP metrics that helps the CEO’s in meeting the targets. The managers get
bonuses on the occasion of failing to meet the target. The bonuses of the managers get cut on
the event of missing the targets in relation to metrics like revenue. Incentives are kept
allocated for the managers so that it can encourage them in meeting the target.
11 Tomczak, Torsten, Sven Reinecke, and Alfred Kuss. "Introduction." In Strategic Marketing, pp. 1-18.
Springer Gabler, Wiesbaden, 2018.
12 Witell, Lars, Anders Gustafsson, and Michael D. Johnson. "The effect of customer information during new
product development on profits from goods and services." European Journal of Marketing 48, no. 9/10 (2014):
1709-1730.

7BUSINESS ANALYSIS OF JB HI-FI
Figure: Financial Statement of JB Hi-Fi
There is no evidence of earnings manipulation in that of the financial statement and as can be
seen that the income and the expenditure tally with that of each other. It shows that the
management has not played any part in that of the manipulation of the earnings 13. The
policies of the company are visible with the help of the financial settlement and there is no
discrepancy between income, cash flow and the expenditure that accounts for the reliability
of the customers towards the company.
13 Yang, Cheng-Hu, Hai-bo Liu, Ping Ji, and Xin Ma. "Optimal acquisition and remanufacturing policies for
multi-product remanufacturing systems." Journal of Cleaner Production 135 (2016): 1571-1579.

8BUSINESS ANALYSIS OF JB HI-FI
References:
"JB Hi-Fi | JB Hi-Fi - Australia's Largest Home Entertainment Retailer".
2018. Jbhifi.Com.Au. http://www.jbhifi.com.au/.
Bogers, Marcel, Ronen Hadar, and Arne Bilberg. "Additive manufacturing for consumer-
centric business models: Implications for supply chains in consumer goods
manufacturing." Technological Forecasting and Social Change102 (2016): 225-239.
Cohen, Boyd, and Jan Kietzmann. "Ride on! Mobility business models for the sharing
economy." Organization & Environment27, no. 3 (2014): 279-296.
Crevoisier, Olivier. "The economic value of knowledge: Embodied in goods or embedded in
cultures?." Regional Studies 50, no. 2 (2016): 189-201.
Drucker, Peter F. The Theory of the Business (Harvard Business Review Classics). Harvard
Business Press, 2017.
Hair Jr, Joe F., Mary Celsi, Arthur Money, Phillip Samouel, and Michael J. Page. The
essentials of business research methods. Routledge, 2015.
Kathan, Wolfgang, Kurt Matzler, and Viktoria Veider. "The sharing economy: Your business
model's friend or foe?." Business Horizons 59, no. 6 (2016): 663-672.
McDonald, Malcolm, and Hugh Wilson. Marketing Plans: How to prepare them, how to
profit from them. John Wiley & Sons, 2016.
Tomczak, Torsten, Sven Reinecke, and Alfred Kuss. "Introduction." In Strategic Marketing,
pp. 1-18. Springer Gabler, Wiesbaden, 2018.

9BUSINESS ANALYSIS OF JB HI-FI
van Weelden, Eline, Ruth Mugge, and Conny Bakker. "Paving the way towards circular
consumption: exploring consumer acceptance of refurbished mobile phones in the Dutch
market." Journal of Cleaner Production 113 (2016): 743-754.
Witell, Lars, Anders Gustafsson, and Michael D. Johnson. "The effect of customer
information during new product development on profits from goods and services." European
Journal of Marketing 48, no. 9/10 (2014): 1709-1730.
Yang, Cheng-Hu, Hai-bo Liu, Ping Ji, and Xin Ma. "Optimal acquisition and
remanufacturing policies for multi-product remanufacturing systems." Journal of Cleaner
Production 135 (2016): 1571-1579.