Project Report: Strategic Management

This report analyzes the strategic management of JB HI FI in the Australian retail industry using Porter's five forces model, industry life cycle, and strategic group analysis. It also provides recommendations for the company's future growth.

Running Head: Strategic Management
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Project Report: Strategic Management

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Executive summary:
Strategic management is an approach which focuses on the different factors and
aspects of a business to measure the overall performance and position of the business. It
identifies the financial and non financial aspects of the business to reach over a conclusion
about the performance of a business. Strategic management includes various tools such as
porter’s five forces model, company’s strategies, industry analysis, operations of the
company and the position of the company in the industry etc. In the report, JB HI FI has been
chosen to conduct the report on the strategic management.
Currently, the company is at leading level and thus the new entries are not offering
any threat to the business and the performance of the business is competitive. JB HI FI has
succeeded to manage various new policies and tactics which has helped the business to
maintain better performance in the market and attract more customers towards the business in
order to improve market share, profitability level and better strategically position in the
industry. The company is required to offer new products and services to the customers to
prevent the shift of the company and industry’s life cycle from maturity to decline level.
The current business strategies of the business are competitive enough and it is not
required for the business to make the changes into the existing strategies until and unless
some unwanted things take place in the business.

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Contents
Background.......................................................................................................................4
Industry analysis...............................................................................................................4
Porter’s 5 forces model.................................................................................................4
Industry life cycle.........................................................................................................8
Strategic group............................................................................................................10
Company description......................................................................................................10
Company’s strategy:.......................................................................................................12
Recommendation and Conclusion..................................................................................13
References.......................................................................................................................15

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Background:
The JB HI FI Company has been chosen for this report. JB HI FI is an Australian
company which is running its business and activities under the Australian retailing industry.
The company mainly retails the video games, Blu-rays, DVDs, Ultra Blu rays, electronic
products etc. the company has been founded 44 years back in 1974. Headquarter of the
company is in Melbourne, Australia.
The target market of the company is Australian and New Zealand people who wish to
have electronic products for their daily operations. There are numerous segments of the
company which targets the different age group of customers towards the company. Further,
the marketing strategies of the business are value propositions and the positioning statement.
The company has positioned itself in the market through setting a great brand image in the
market.
Industry analysis:
The JB HI FI is operating its business in the Australian retail industry. The Australian
retail study has seen great growth in the overall position of the business. The Australian
retail industry’s main products are the consumable products which are offered to the
Australian people. The industry is one of the highest growing Australian industries as the
growth rate of the industry is higher (Home, 2018). The overall contribution of Australian
retail industry is also highest in the retail industry. The improvements in the Australian retail
industry are directly improving the overall performance and position of the company. The
below graph brief better changes and improvements in the Australian retail industry which
are as follows:
(Atasu, Sarvary & Van Wassenhove, 2008)

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Porter’s 5 forces model:
Porter’s five forces model is a tool of strategic management which analyzes the
industry position and performance of a business in the industry. It identifies the competitive
forces of a business which is used to shape each of the industry and assist in order to
determine the weakness and strength of a business (Barney, 2011). The five forces model is
important tool and technique to evaluate the completion position and other factors of a
business in the industry. It assists the business to adjust the strategy which suits the
competitive advantages of the business as well as improve the potential profits of the
business. The study of porter’s five forces model on JB HI FI is as follows:
Rivalry among the existing players:
If the competition level is higher among the industry than it will impact on the price
level of the company and also reduce the profitability position of the industry. JB HI FI
operates in the Australian retail industry which is very competitive. The main competitors of
the company are Harvey Norman, radio rentals and many others. Both of the companies are
operating in the same industry and the market share and the market competition of all the
existing players are quite higher in the industry as JBH is holding around 29% share in the
market (Bell potter, 2016) (Chaffey, Ellis-Chadwick, Mayer & Johnston, 2009).
Further, the industry concentration of the company is huge. JB HI FI’s market share is
29% as well as great market goodwill has been maintained by the company in the market
which cannot be influenced because of few companies in the market. However, few changes
into the strategy would improve the performance of the business and make the business more
strong.
The main rivalry among the competitors is because of the prices. The prices have
been set by the companies according to their competitors and the technology which has been
used in the specific product. The JB HI FI is offering different products with various varieties
and segment along with the different prices (Dallas, 2011). The product quality and the
servicing of all the companies in the industry are better because of the huge competition and
the motto to grab more market.
Exit barriers of Australian retail industry are quite low. A firm can enter at any time in
the industry and can exit at any time. The obstacle often cost high to the firm which could
prohibit a firm to leave the market. The JB HI FI has invented huge amount in the firm and

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thus if the firm would exit from the industry than a huge amount has to be paid by the
business. the exit barrier for the JBH is high.
Threat to new entrants:
If the thereat level from new entries are higher among the industry than it will impact
on the strategies, products and life cycle of the company and it would also impact on the
profitability position of the industry. JB HI FI operates in the Australian retail industry which
is very competitive. The main threat of the company could be different innovative products
and advanced technology of new entries in the industry. The company is required to plan and
implement such strategies that the new entry could not impact much on the market share and
the performance of the company could be managed.
In the Australian retail industry, the entry barriers are quite lower. A firm could enter
into the retail industry at any time without little documentation. The associated cost is also
lower. It directly makes huge threat in from of JB HI FI as any firm could enter at any time in
the industry. The potential and existing companies could innovate new services and products
to reduce the threat level (Cravens & Piercy, 2006). The new products would not only bring
new customers to the business but they will also give reasons to the existing customers to
become more loyal towards the company.
JB HI FI could also build economic of scale in order to lower the fixed cost per unit
and reduce the total cost of the product. The JB HI FI is an established player so the impact
level is quite lower in the industry and it would improve the performance of the company. It
explains that the threat level could be reduced by JB HI FI from new entries through making
few changes and the current threat is also lower.
Bargaining power of suppliers:
If the bargaining level from suppliers are higher among the industry than it will
impact on the cost of the company and it would also impact on the profitability position of
the industry. JB HI FI operates in the Australian retail industry which is very competitive and
the suppliers are also huge in numbers to provide the raw material to the companies. The
main threat of the company could be quality raw material and fixation in the raw material
prices (Leonidou, Leonidou, Fotiadis & Zeriti, 2013). The company is required to plan and
maintain better relations with the suppliers to manage the overall performance in the industry.

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There are numerous suppliers of JB HI FI which offers the different product to the
company to manufacture the quality products. In case of JB HI FI, the bargaining power of
suppliers is lower because an efficiency supply chain has been managed by the company with
multiple suppliers (Pearson, 2008). The company also experiment different product designs
by using different materials so that if the price of one raw material goes higher, the other
product could be used by the company to produce the product.
It explains that the strategies of the business help JB HI FI to maintain the better
position in the market along with less bargaining with the suppliers of the company. The
current report describe that JB HI FI is bargaining with the suppliers and forcing them to
reduce the raw material price.
Bargaining power of buyers:
If the bargaining level from buyers is higher among the industry then it will impact on
the overall profitability position of the industry. In the Australian retail industry, the numbers
of the buyers are quite higher as the company is offering its products to the end customers,
Australian government and the corporate (Pride, 2008). The main threat of the company
could be numerous competitors along with the substitute products and the competitive prices.
The company has maintained better policies in the market to manage the performance of the
business.
There are numerous customers of JB HI FI which demands for the electronic products
in the industry. In case of Australian retail industry and JB HI FI, the bargaining power of
buyers is quite higher because the firms are few and the customers are huge. However, JB HI
FI managed great policies and the products and services of the company are also impressive
which manages the performance of the business in better way (O'Neill & Mattila, 2010).
It explains that the strategies of the business help JB HI FI to maintain the better
position in the market along with less bargaining with the buyers of the company. The current
report describe that JB HI FI’s bargaining with the buyers are lower and it helps the business
to manage the performance in the market.
Threat from the substitute products:
If the thereat level from substitute products are higher among the industry than it will
impact on the financial and non financial factors of the business simultaneously. JB HI FI
operates in the Australian retail industry where various companies are operating their

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business and offering almost similar product to the customers. The main threat of the
company could be different innovative products and advanced technology to maintain the
market share. The company is required to plan and implement such strategies that the
substitute product could not impact much on the market share and the performance of the
company could be managed.
JB HI FI has succeeded to manage various innovative ideas and products which do
not force the customers to switch towards other brands of the company. It would help JB HI
FI to manage and improve the performance in the market (Quester et al, 2007).
On the basis of the porter’s five forces model, it has been found that the overall
industry level is quite competitive, JB HI FI has succeeded to manage various new policies
and tactics which has helped the business to maintain better performance in the market and
attract more customers towards the business in order to improve market share, profitability
level and better strategically position in the industry. It has helped JB HI FI to manage and
improve the performance in the market.
Industry life cycle:
Life cycle of an industry depict different stages of a firm in which they are operating
their business. Different firms in a particular industry could be at different stages of life cycle
at a single time. The main stages of industry life cycle are introduction, growth, maturity and
decline. All of this stage describes different time and different perspective regarding an
industry. Such as at the time of introduction, an industry just entered into the market and start
runs the business. At this stage, industry understands the market factors and start
implementing the business and strategies. Further, at the growth stage, the performance of the
market start growing, at this stage the profitability level, market share, GDP contribution,
economics of scale etc of an industry improves. After it, at the maturity stage, the peak of all
the factors comes, that is the maximum profit and contribution in GDP which could be
offered by an industry to the economy (Walker, Mullins, Boyd & Larreche, 2005). Lastly,
decline stage briefs the level where the performance and profits of an industry starts
declining.
In case of Australian retail industry, it has been found that the industry’s performance
is at maturity stage but various efforts are done by the industry such as different products,
innovations and advanced technology in order to maintain the industry at maturity level only

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and to decline the performance. The life cycle and the management of the industry make it
easier and simple for the companies, which are operating in the industry, to maintain the
performance and improve the overall position of the business (Channel news, 2018).
.(channel news, 2018)
It brief the better position of the industry and lead to the conclusion that there would
be no decline stage for the retail industry in the Australian market because it offers the

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essential and consumable products to the people and the innovation and new strategies such
as online retailing and other technologies also help it to manage the performance and other
factors in the market.
The main threat of the Australian retail industry could be financial crisis as in the
financial crisis, 2008, huge decline level has been seen in the industry and it has affected the
overall performance of the business at great level (Dean & Yunus, 2011). Entry of the foreign
companies and the changes into the industry could affect the performance of the business.
Strategic group:
JB HI FI s acquired the “Good guys” as a strategically group of the business. After
acquiring the “good guys” the performance of the business has been improved at great level.
After the acquisition, the overall profitability level and market level of the business has been
improved as well as the technology of the business has also been enhanced and attracted the
customers and the investors to invest more in the business. The two iconic Australian retail
brands have come together along with the acquisition and it lead to the business towards
achieving the common goal and objectives of the business (Brigden, 2009). The CEO
Michael ford of good guys has said into one of the conferences that the position and the track
record of good guys would be matched with the home appliances of JB HI FI and it would
lead to the Australian retail industry at different level.
Both of the brands has stand for the customer services, value and range and it has
always been better for the business and the industry to grab their respective market and
improve the overall performance in the market. after acquiring the good guys, the domestic
appliances sales of the business has been improved by $ 2 billion to $ 4.41 billion which has
lift to the performance of JB HI FI from one stage to other very efficiently (Tech Guide,
2018). The total store footprint at the Australian market has been improved from 179 stores to
280 stores across the Australian market.
The collective bargaining power and the performance of both the business has been
improved which lead to the performance of industry at different level as well. The CEO
Michael ford has said that the deal with JB HI FI has been accepted just because the strength
of the respective companies would be preserved and it would help both the businesses to
meet their objectives and the goals in no time. The bargaining power of buyers has also been
affected after the acquisition of good guys (Corporate customers, 2018).

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To conclude, the overall performance and the acquisition strategy of JB HI FI has
helped the business to improve the financial and non financial factors and meet the common
goals of the business. It has lead to the business at improved and different stage which would
lead better performance of the business.
Company description:
JB HI FI is an Australian company which is running its business and activities under
the retailing industry. The company mainly focuses on the video games, Blu-rays, DVDs,
Ultra Blu rays, electronic products etc. the company has been founded 44 years back in 1974.
Headquarter of the company is in Melbourne, Australia.
Currently, the company is running around 303 locations where 59 “JN HI FI Homes’
and 244 “JB HI FI” stores are running by the business. The company has expanded its
business in New Zealand market as well. The main subsidiary of the JB HI FI is “The good
guys”. In the year of 2017, company has generated the Australian dollar 4 billion. The
evaluation expresses that the various economical, financial and political factors have affected
the overall position of the company (Home, 2018).
In the last year, Australian regulations have affected the overall position of the
business. It has also been measured that the demand of the customers has helped the business
to enhance the turnover at great level continuously (Morningstar, 2018). The technological
advancement of the business helps the JB HI FI to improve the overall position and the
performance in the industry.
The main resources of a business are human resources, intangible assets and tangible
assets of the business which are as follows:
Tangible assets:
The tangible assets are those assets which has a physical form. It includes all the fixed
assets and current assets of the business such as machinery, buildings, inventory etc. The
tangible assets of the business are as follows:
Cash and cash equivalents 51884 72800 72000
Total cash 51884 72800 72000
Receivables 98073 196600 204700
Inventories 546437 859900 891100
Prepaid expenses 29800 31800

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Other current assets 6124 11600 10900
Total current assets 702518 1170700 1210500
Non-current assets
Property, plant and equipment
Fixtures and equipment 259013 310600 336400
Other properties 160365 173900 188100
Property and equipment, at cost 419378 484500 524500
Property, plant and equipment,
net 183570 208200 198000
(Morningstar, 2018)
Intangible assets:
The intangible assets are those assets which does not have physical form. It includes
all the non physical assets of the business such as patent, goodwill etc. The intangible assets
of the business are as follows:
Goodwill 36566 736300 747000
Intangible
assets 49024 290300 290300
Human assets:
Human assets are the employees which work for the company to achieve the goal of
the business. The human assets are managed by the company at great level to manage the
overall position of the company (Dotson & Hyatt, 2005). Various new tactics and policies are
continuously made by a business to retain the right talent in the company.
Capabilities:
JB HI FI has been made various strategies to maintain and manage all the factors and
capabilities of the business. The corporate management strategies of the business have helps
the business to acquire good guys and enhance the overall share in the industry. As well, the
marketing policies of the company are enough competitive to grab the market share and make
more customers.
The supply chain and logistics management has helped the business to bargain with
the suppliers and improve the performance and reduce the cost of the business. The other
capabilities of the business are also higher which helps the business to maintain the
performance.

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Core competencies:
The main core competencies of the business are the technology advancement and the
innovative products which make a competitive advantage for the business and help the
business to improve the overall performance level (Elmuti & Kathawala, 2011).
It leads to the conclusion that JB HI FI has managed various strategies and policies in
an efficient manner to achieve the goals and objectives of the business.
Company’s strategy:
Business level strategy:
The business level strategy briefs the competitive advantage of the business. In case
of JB HI FI, it has been found that the cost leadership (because the company is offering the
product in lower price) is the main sources of competitive advantage of JB HI FI. The JB HI
FI’s core competencies are to focus on the needs and preferences of the customers and satisfy
them in order to achieve the great returns from the market. All of these have been managed
by the business through business level strategies. It offers value to customers and gain
competitive advantage from the market through exploring the core competencies in
individual, specific and service markets of the business (Gaughan, 2010).
The main business level strategy of JB HI FI is cost leadership. It explains an
organization to set a price which is based on the internal efficiency (the management and
working capability of the internal stakeholder of the business) in order to have enough
margins to sustain the average return in the market and offer such cost which could attract
customers to buy the product (Jain & Haley, 2009). The company has gained the cost
advantages through determining and controlling over the cost and make the changes into the
value chain of the business.
Corporate strategy:
The company is in retaining business. It is a single business company though it offer
numerous products in the industry with different characteristics and uses but all the products
are related to the retail industry only. Such as, JB HI FI is offering video games, Blu-rays,
DVDs, Ultra Blu rays, electronic products etc. the company is involving into offering the
quality and different product to the customers to set a better value propositions in the market

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(Fournier & Lee, 2009). It believes in offering the product with lower margin so that the long
term profitability level of the business could be managed.
The business has diversified its market into vertical (where company offers the new
product into market for the different market) market. The acquisition and the diversification
of the product are done by the business vertically to grab more market share and manage the
performance in the market.
Recommendation and Conclusion:
On the basis of the study, the Australian retail industry is at maturity stage and it
would lead to the decline stage if the required changes would not be done by the business
timely. The company is required to offer new products and services to the customers as well
as the company is also required to focus on the business model to improve the overall level of
the business to prevent the shift from maturity to decline level. Currently, the company is at
leading level and thus the new entries are not offering any threat to the business and the
performance of the business is competitive. The substitute products are offering huge
competition to the business which is overcome by the business through launching new
products timely. The industry’s performance is attractive which also lead to the performance
of JB HI FI at next stage.
The current business strategies of the business are competitive enough and it is not
required for the business to make the changes into the existing strategies until and unless
some unwanted things take place in the business. The corporate strategies of the business is to
set value propositions in the business which is enough competitive. The company is just
required to diversify the market at new foreign markets which required new land and building
to start the store of the business. The patent and copyright must also be focused by the
business.
It leads to the conclusion that the strategic performance of JB HI FI is enough
attractive and the company is enough capable to manage all the activities and performance at
better level.

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