Explaining JB Hi-Fi's Reporting Decisions and Share Prices with Political Economy and Stakeholder Theories

ACCT20074 Final Assignment
Term 1, 2018
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Question 1: Use Classical Political Economy Theory to explain JB Hi-Fi’sdecision to release its profit downgrade
in the way it did. Make sure you explain what Institutional Theory is, and support your observations with evidence
from the case study.
Answer: As per the classical thinkers, the determinants of financial development are labour specialization, human expertise,
profitability changes, exchange and the market expansion. It was expected more markets = more exchange = more development =
rising tide lifts all boats. Regardless of whether this is valid or not will be not affirmed. The Classical political economy theory was first
coined by Karl Marx in the main version of Das Kapital, for depicting the British and Scottish financial analysts that tried to clarify the
'internal structure' of the "bourgeoise generation mode". The challenging conditions in the home appliance market are expected to
impact performance in the short term of the company, therefore the shares if the company dealing with retail has dropped $2.29
that is 9%( Mosco, 2014).The Institutional theory stresses on the deeper and more resilient aspects of social structure and considers
the processes by which structures, including schemes, rules, norms, and routines, become established as authoritative guidelines for
social behaviour. In the given case study the company in order to adapt with the social authoritative norms has taken the decisions.
The chief executive of the JB hifi along with the board is committed to conduct ethically according to the high standards of the
governance principle has considered the institutional theory and has taken the decision of downgrading the profits for the year(Cohn,
2016).
The traditional political economy hypothesis helps in the analysis of the generation, conveyance, and trade of items in advertise
market societies. Anyway on account of JB hifi the CEO has foreseen a fall in the profit for the year by 2.9%.With the assistance of the
classical economy political Theory one might say that the primary purpose behind the anticipation of downfall if the profit is rivalry
that has been occurring in the home apparatus industry in Australia (Gilpin, 2016). Moreover as per the institutional Theory that
Provides a clarification regarding why tend to take on similar characteristics and form that might be adopted in order to bring
legitimacy to the organisation –‘Organisations conform because they are rewarded for doing so through increased legitimacy,
resources and survival capabilities’. The company of JB hifi who had expected the profit to be $235 million and $240 million in
2017/18 has reduced the same to $230 million (Healey, 2017).
References:
Cohn, T. H. (2016). Global political economy: Theory and practice. Routledge.

Gilpin, R. (2016). The political economy of international relations. Princeton University Press.
Healey, P. (2017). Political Economy, Diversity and Pragmatism: Critical Essays in Planning Theory (Vol. 2). Routledge.
Mosco, V. (2014). Political Economy. In The Routledge Companion to Global Popular Culture (pp. 35-44). Routledge.
Marker’s Comments: The marker will provide feedback here. Mark (10):
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Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Demonstrates a balanced and very
high level of detailed knowledge of
core concepts by providing a very
high level of analysis. Utilises
current, appropriate and credible
sources.
Demonstrates a balanced and high
level of knowledge of core
concepts by providing a high level
of analysis. Utilises mostly current,
appropriate and credible sources.
Demonstrates a good level of
knowledge of some of the core
concepts by providing some level
of analysis. Utilises some current,
appropriate and credible sources.
Demonstrates limited knowledge of
core concepts by providing a
limited level of analysis. Utilises
few current, appropriate and
credible sources.
Demonstrates little, if any,
knowledge of the core concepts
with extremely limited, if any,
analysis. Utilises little, if any,
current, appropriate and credible
sources.
Quality of writing at a very high
standard. Paragraphs are
coherently connected to each
other. Correct grammar, spelling
and punctuation.
Quality of writing is of a high
standard. Paragraphs are mostly
well structured. Few grammar,
spelling and punctuation mistakes.
Quality of writing is of a good
standard. Few grammar, spelling
and punctuation mistakes.
Some problems with sentence
structure and presentation
Frequent grammar, punctuation
and spelling mistakes. Use of
inappropriate language.
Quality of writing is at a very poor
standard so barely
understandable. Many
spellingmistakes. Little or no
evidence of proof reading.
The assessment presents a
detailed and focused summary of
the ideas presented; drawing clear
and well thought-out conclusions.
The assessment presents a fairly
detailed and focused summary of
the ideas presented; drawing fairly
clear and well thought-out
conclusions.
The assessment presents a
somewhat detailed and focused
summary of the ideas presented;
providing some evidence of
conclusions.
The assessment provides limited
detail with no clear summary of the
ideas presented; drawing limited
conclusions.
The assessment fails to provide
any clear evidence of the ideas
presented; drawing no clear
conclusions.

Question 2: Use the Managerial branch of Stakeholder Theory to explain JB Hi-Fi’s reporting decisions. Make sure
you support your observations with evidence from the case study.
Answer: The Managerial branch of Stakeholder Theory represents the extent up to which the organisation believes to maintain and
manage the relationship in interests of the organisation. The theory can be tested with empirical observation unlike normative
ethical branch, it specifically considers the different stakeholder groups within the society and provides knowledge on how they
should managed in the most effective way, and it does not consider the society as a whole like Legitimacy Theory. The company of Jb
hifi considers the Managerial branch of Stakeholder Theory in this decision making process as the concentration is more on the
stakeholders of the company that includes the outsiders and the investors(Beaudoin, Cianci & Tsakumis, 2015). The share price of the
company for the accounting period fell down drastically by 9% due to this, as the various share holders were willing to sell off their
JB hifi shares anticipating a loss. The company with this decision making process warned the shareholders before hand in order to
avoid the loss. The managerial branch of stakeholder theory is based on the principle that an organization and its stakeholders are
interdependent upon one another for resources and managers are responsible for maintaining this exchange relationship for the
organization's survival (Robert Knechel, Vanstraelen, & Zerni, 2015). Jb hihi, therefore declared the loss anticipation for their
stakeholder’s survival. Here the Expectations of stakeholders considered to impact on operating and disclosure policies. In the given