Strategic Management of Organization

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Strategic Management
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Executive Summary
JB HI-FI and Dick Smith are companies that deal with complementary products and thus exist in
the same industry. However, the two companies perform differently in the market. This report
analyzes the two companies and identifies the factors behind the diverse performance. The report
further recommends on the various strategies that can be adopted by the two companies to
enhance efficiency and improve performance.

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Table of Contents
Executive Summary.....................................................................................................................................2
Strategic Management................................................................................................................................4
1.0 Introduction...........................................................................................................................................4
2.0 Company Overview...............................................................................................................................4
2.1 JB Hi-Fi Limited..................................................................................................................................4
2.2 Dick Smith Holdings Limited..............................................................................................................5
3.0 Strategic Management....................................................................................................................5
3.1 Strategic Competitiveness.................................................................................................................5
3.2 Competitive advantage......................................................................................................................5
3.3 Business Environment.......................................................................................................................6
3.4 Business long-term growth................................................................................................................6
3.5 Value creating....................................................................................................................................7
3.6 Risk Management..............................................................................................................................7
3.7 Resources Management....................................................................................................................8
3.8 Company goals and objectives...........................................................................................................9
3.9 Competent Managers........................................................................................................................9
4.0 Conclusion...........................................................................................................................................10
References.................................................................................................................................................11

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Strategic Management
1.0 Introduction
This report is aimed at comparing and contrasting two companies, JB HI-FI and Dick Smith, on
the basis of strategic management to identify why some companies perform better than other
companies in the same industry. It further recommends the desired improvements that the
underperforming companies could undertake, that may increase their performances. Strategic
management, according to OCVIRK, (2018), entails such parameters as general company
development; long-term company success; creating the opportunity to succeed in the company;
both internal and external aspects of the company; and a superior perspective upon which
company decisions are based.
2.0 Company Overview
2.1 JB Hi-Fi Limited
This company was founded in 1994. Based in Gladstone, Queensland, Australia, it is a retailer
dealing in consumer electronics, video games and more. The company operates on a product
portfolio consisting of computers, speakers, portable audio, car sounds, DVD music, televisions,
recorded music, cameras, cooking products, kitchen accessories, Blu-ray disks and more
(Crunchbase.com, 2018). The company also offers consultation and information technology
services. It operates through three segments, that is, JB Hi-Fi Australia, JB Hi-Fi New Zealand
and The Good Guys, (Bloomberg.com, 2018). The company owns over 50 JB Hi-Fi Home
branded stores, with over four of the stores located in New Zealand. Approximately, the
company runs 190 physical stores. The company also provides different solutions, including
corporate, education and government sales of products and services and replacements of

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insurance. Also offered by the company are the JB Hi- Fi roll out and an approximate of 40 small
appliances stores (Reuters.com, 2018).
2.2 Dick Smith Holdings Limited
Dick Smith Holdings Limited is also a retailer dealing in consumer electronic products. Its range
of products is divided into four categories; entertainment, mobility, office and other products and
services. It also has two branches, Dick Smith Australia and Dick Smith New Zealand. It
operated four physical stores that cater for three distinct demographics of consumers. The
company runs approximately 393 stores across Australia and New Zealand, inclusive of 351
Dick Smith branded stores, an approximate28 David Jones Electronics Powered by Dick Smith
stores, approximate of four stores for MOVE by Dick Smith stores and an approximation of 10
MOVE stores. However, this company collapsed despite realizing high sales, owing to poor
corporate governance.
3.0 Strategic Management
3.1 Strategic Competitiveness
This is achieved when a firm successfully formulates and implements a value-creating strategy.
JB Hi-Fi’s management was smart enough to formulate and implement value creating strategies
that is one of the major contributors to its success in the consumer electronics retailing business.
For instance, the strategy to acquire Good Guys as one of its segments led to the expansion of its
market as well as its market share (Montgomey, 2013). On the other hand, Dick Smith’s
management was only concerned about the increase in sales without considering the long-term
survival of the firm.
3.2 Competitive advantage
Firms operate in the highly competitive environment. Stiff competition can lead to a firm’s
downfall, in case the firm cannot strategically deal with competition issues. One of the best ways

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to emerge the market leader in a highly competitive market is to create a competitive advantage
(Porter, 2009).
Good corporate governance of a firm, an element of strategic management, in itself alone is a
source of competitive advantage. When a firm can place itself in such a position as to be
considered the best or the market leader in its industry, it leads to success. Considering JB Hi- Fi,
its management, like in Dick Smith, does not rely on the mistakes of the former or past
management as an excuse to blame the challenges it faces. While Dick Smith’s management
team, when giving reasons for its collapse, placed blames on the company’s former management
mistakes.
3.3 Business Environment
Business environment constitutes both internal and external factors that affect the business.
Internal business environment factors include; business plan, its management, and employees,
whereas the external environment constitutes such factors as suppliers, customers (Ahmed, &
Absar, 2017). Dick Smith’s reliance on suppliers to create liquidity for the firm at some point
indicated that the firm had not properly planned on how to ensure continuous liquidity of the
firm. This led to customers lacking trust in the company’s long-term survival hence reduction in
sales. JB HI -FI on the other hand didn’t rely on suppliers to create liquidity. It had a high
liquidity ratio. JB HI -FI utilized the benefits of sweep accounts in its operations. This made it to
perform better than the Dick Smith company.
3.4 Business long-term growth
Ensuring business short-term and long-term growth is one of the key elements of strategic
management in the firm. This is seen through business expansion, for instance, through
increasing the number of the stores. A firm should ensure that it can sustain the growth in its

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business in the long run (Barwise, & Meehan, 2011). Dick Smith, despite having twice as much
as the number of stores possessed by JB Hi-Fi, could not survive in the highly competitive
market. And despite making the huge sales, it still did not survive. Then what did JB Hi- Fi do
that Dick Smith failed to do?
It could be that Dick Smith may have expanded its stores to a level beyond its sustainability. This
is owing to poor business planning as a result of poor management. The company was only
interested in the short-term growth of the business. Thus it lacked strategic management skills.
3.5 Value creating
The company’s management had a responsibility to ensure that they create value in the firm,
from the capital invested in the firm. This is realized through a continuous or persistent increase
in sales measures through marginal sales figures and the return on investment figures (Mahajan,
2016). Dick Smith collapsed at the point when its marginal sales began to decrease and
continued to decrease drastically. At this point, it required the management to intervene and
maybe restructure their business plan and process. But they instead continued to operate the
business despite the alarms created by decreasing marginal sales figures. On the other hand, B HI
-FI invested its larger capital in supply chain process. This led to the increment in customer and
consequently an increase in marginal sales.
3.6 Risk Management
A company faces a number of risks in the course of its business operations that poses threats to
the company. Therefore, a risk assessment strategy should be developed by the firm managers to
timely identification of risks or possible threats in any company undertaking. The risk
assessment strategy should be developed in such a way that the company becomes risk aversive

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and aware. Proper risk assessment strategy will enable the company not only to identify short-
term risks but also the long-term ones (Lam, 2014).
Moreover, proper risk assessment and management strategy also enable s the firm to be able to
diversify its risks, maybe through a favorable portfolio and line of products.
Through proper management of the company’s risks, JB Hi-Fi Limited can analyze any of its
business transactions and investment plans before actually implementing them. This allows it to
choose the best investments to undertake. For instance, the firm engaging in a government sale
of products and insurance replacements, besides its electronics line of business.
Unlike Dick Smith Holdings Limited that could not properly assess the risk of faster market
penetration versus the company’s survival, thus leading to its collapse. If only the company’s
managers had strategic management skills, they would have been able to identify and diversify
the risks before they failed.
3.7 Resources Management
A firm has various resources that it uses to achieve its company goals. These resources include
human resources, materials, technology, and financial resources. The success of a firm wholly
depends on its ability to coordinate all these resources adequately, and through proper resource
management, work towards meeting the company objectives (Machado & Melo, 2014).
Resource management is the role of the company’s management. As a company grows, its
resources base also increases. For instance, an expansion in company product line causes a
respective increase in its human resource recruitment, technology, material and financial
resources. With this increase, there is a need for proper resources management, especially the
financial resources, since it is the resource that is most vulnerable to misuse or mismanagement.

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In the company, every manager should be fully responsible for any mismanagement or resources
under his or her department.
JB Hi-Fi Limited exhibits proper resource management thus leading to its growth. Unlike in the
case of Dick Smith Holdings Limited, an increase in the company sales, causing an increase in
cash available in the business, could not be sustained for long before the sales started to decrease,
indicating poor management of financial resources. Moreover, the company failed to keep its
liquidity, thus leading to its downfall.
3.8 Company goals and objectives
A company’s success also depends on and is measured by its goals and objectives. The firm’s
management should be in a position to set realistic company goals and objectives that can be
attained within a given time frame. Goals act as mirrors that guide the company to remain within
its set bounds, that is, the ultra vires doctrine (Kambayashi, 2015).
For successful companies like JB Hi-Fi Limited, the management must have been able to set
realistic goals and gear all its resources towards achieving the company goals. Unlike, in Dick
Smith Holding Limited case, whereby the company’s collapse could be associated with the
management not being focused to attain the company goals, or the company having set
unrealistic goals.
3.9 Competent Managers
Management’s competency determines the ability of the managers to handle different situations
that may face the company and to provide suitable solutions to all the problems facing the
company. It takes a competent manager to provide a competent solution. Therefore, only
incompetent managers will give excuses for the failures of past managers to justify their

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challenges, like in the case of Dick Smith Holdings Limited. The managers could not provide
solutions or reasonable answers to the collapse of the business.
Thus, successful companies like JB Hi-Fi Limited, the company must have involved the services
of competent managers.
4.0 Conclusion
It requires a firm to be smart, not only in its business operations but also in its management to
survive in the long- run. The main reason why some firms succeed while others fail in the same
industry is management skills. Strategic firm management ensures the long-term survival of the
firm. It is the role of the management to continuously assess the firm to ensure that every aspect
of the firm is working perfectly and is geared toward the long-term survival. Strategic
management enables firms to ensure this by identifying areas that pose alarms and taking the
necessary corrective measures before it is too late (Hitt, Ireland, & Hoskisson, 2017). Therefore,
each firm should embrace strategic management for long-term growth and survival in the
industry.

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References
Ahmed, F. A., Absar, M., (2017) Business environment: Indian and global perspectives. [S.I.],
Prentice- Hall of India.
Barwise, P., & Meehan, S. (2011) Beyond the familiar: long-term growth through customer
focus and innovation. Hoboken, N.J., Jossey- Bass/ Willey.
Bloomberg.com, (2018) Market; stocks (online). Available at [Accessed 8th May 2018]
Channticleer, (2016) Dick Smith collapse; A case study in electronics retailing (online).
Available at [Accessed 8th May 2018]
Crunchbase.com, (2018) JB HI-FI (online). Available at [Accessed 8th May 2018]
Hitt, M. A., Ireland, R.D., & Hoskisson, R.E. (2017) Strategic Management: Competitiveness
&globalization. SAGE.
Kambayashi, N. (2015) Japanese management in change: the impact of globalization and
market principles. Retrieved 8th May 2018 from
Lam, J. (2014). Enterprise Risk Management: From Incentives to Controls. John Willey & Sons.
Machado, C., & Melo, P. (2014) Effective human resources management in small and medium
enterprises: global perspectives. Pearson
Mahajan, G. (2016) Value creation the definitive guide for business leaders. Los Angeles,
SAGE.
Montgomey, B., (2013) Dick Smith vs. JB HI-FI (online). Available at [Accessed 8th May 2018]

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OCVIRK, G. (2018) Strategic Management of Market Niches: A Model Framework. Retrieved
8th May 2018 from http://dx.doi.org/10.1007/978-3-658-20364-1
Porter, M. E. (2009) Competitive Advantage: Creating and Sustaining Superior Performance.
Simon and Schuster.
Reuters.com, (2018) Finance; Stocks; Company-profile (online). Available at [Accessed 8th May
2018]
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