INFS8210 - Business Analytics for Managers: Michael Hill Case Study

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This report analyzes the business strategies of Michael Hill International Ltd, highlighting a decline in profitability between 2017 and 2018 and a significant $27.4 million financial difference, raising concerns about a potential financial crisis. The report identifies issues such as stagnant sales growth by product category, ineffective marketing strategies, and a failure to adapt to changing consumer demands, including the rise of online shopping. Solutions are explored through two choices: a theoretical approach involving data visualization, decision tree analysis, and sentiment analysis; and a practical approach focusing on addressing online shopping demands and evolving consumer preferences. The report concludes with recommendations for implementation, prioritizing actions, identifying dependencies, assigning responsibilities, and assessing capabilities to improve Michael Hill's business performance and market position. Desklib offers this report along with other solved assignments and past papers to aid students.
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BUSINESS ANALYTICS FOR MANAGERS
(A research on the business strategies of Michael Hill International Ltd)
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BUSINESS ANALYTICS FOR MANAGERS
Executive summary
The present report had described the issues of Michael Hill International Ltd. It had been
observed that the profitability rate of 2017 was much higher compared to 2018. It has been an
issue for the company as the organisation may face a financial crisis. In addition, due to the high
financial difference of $27.4 million, the possibility of the financial crisis of the organisation will
expand. The cash assets of Michael Hill International Ltd may decrease, and the competitors will
take advantage of the company. Moreover, the product category has failed to expand the sales
volume, which has reduced the growth of profit margin. It is vital that the sales growth expands
per year so the company can sustain its business position in the market.
The report had also shown some light on the business issues of the company, as it had been
unable to attract the audience due to its bad promotional power and ineffective marketing
strategy. The techniques to solve the problems are given along with it a critical understanding is
being evaluated properly. The two major issues had been appropriately related along with it
involve the heavy demand of the online shopping from the jewellery purchasers and the change
in demand of the consumers which should be addressed by the company in order to remain
profitable in its business activities.
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BUSINESS ANALYTICS FOR MANAGERS
Table of Contents
1. Findings.......................................................................................................................................3
1.1 Identification of the problem.................................................................................................3
1.2 Analysis of problems.............................................................................................................3
2. Discussion....................................................................................................................................6
2.1 Change in consumer’s demand of jewellery items................................................................6
2.2 Failure in targeting the audience............................................................................................6
2.3 Solutions to the problems......................................................................................................7
2.3.1 Choice A.........................................................................................................................7
2.3.2 Choice B.......................................................................................................................10
3. Conclusion.................................................................................................................................14
4. Recommendations......................................................................................................................16
5. Implementations........................................................................................................................18
5.1 Priorities...............................................................................................................................18
5.2 Dependencies.......................................................................................................................18
5.3 Responsibility......................................................................................................................18
5.4 Capability.............................................................................................................................19
Reference list.................................................................................................................................20
Appendix........................................................................................................................................23
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BUSINESS ANALYTICS FOR MANAGERS
1. Findings
1.1 Identification of the problem
It has been observed that during the research, the profitability of Michael Hill International Ltd
had been different in 2017. The profitability rate for 2017 was much higher compared to 2018. It
has been an issue for the company as the organisation may face a financial crisis. In addition, due
to the high financial difference of $27.4 million, the possibility of the financial crisis of the
organisation will expand in the future (Michael Hill 2019). The cash assets of Michael Hill
International Ltd may decrease, and the competitors will take advantage of the company.
Similarly, According to Ang et al. (2018), it has been observed that the sales volume growth of
the company by product category is performing negatively. In simple words, the product
category has failed to expand the sales volume, which has reduced the growth of profit margin. It
is crucial that the sales growth expands per year so the company can sustain its business position
in the market. However, as the organisation has failed to maintain proper management
operations, the sales volume has mitigated continuously in the company. Therefore, the
possibility of the financial crisis has expanded. It has been described that the main reason for the
difference in sales growth can be a change in consumers' preference. As the demand of the
customers' changes, the sales of a particular process mitigates in the company. On that note, the
financial crisis of Michael Hill International Ltd has expanded in the future.
Lastly, it has been seen that the demand for online shopping hurts the shopping experience of
customers. Due to the reduction of face-to-face interaction with the customers, the company is
facing difficulties in improving customers’ engagement activities. As a result, the company is
facing challenges in understanding customer potential. The improper customer engagement
activities have allowed the rival of Michael Hill International Ltd to attract its customers
(Almeida et al. 2015).
1.2 Analysis of problems
In relation to the main issue regarding the profitability rate of Michael Hill International Ltd, it
has been understood that the company faced audit risk. As the management of Michael Hill
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BUSINESS ANALYTICS FOR MANAGERS
International Ltd has not conducted appropriate internal audit analysis in the current year, the
possibility of bankruptcy has increased. Similarly, in the opinions of Mason and Harrison (2015),
it has been seen that the cash asset of Michael Hill International Ltd has hugely mitigated due to
the negative impact of audit risk. Furthermore, the possibility of third party access has been
recognised in the management as the internal auditors have failed to investigate the management
operations. Hence, the company may reduce its market share in future and fail to provide
satisfying service to investors and shareholders.
In the views of Fearn-Banks (2016), to address the current problem, the company can undertake
the Agency Theory. Agency Theory is based on audit analysis and its process in the
management. The theory has clearly described that the company can hire an external auditor for
evaluating and analysing the potential cost and benefits. It has been understood that the
organisation has failed to conduct a proper investigation on the employees for realising their
potential. On the other hand, hiring an external auditor will help in doing proper research on the
employees so that the number of frauds will be mitigated. Finally, a beneficial audit analysis will
assist in developing the value of stakeholders. As the potential cash losses are reduced, the
company can provide high returns to the shareholders and maintain effective business
performance per years. Finally, it has been seen that with the assistance of this theory, the
benefits of the agency will expand compared to its cost.
The issue regarding sales amount is clearly showing that the category of products hurts sales.
Products have failed to expand the sales growth of the company and increased the financial crisis
in a fast manner. In order to expand the sales of the company, the organisation needs to capture
the new demand of the customers (Griffiths 2016). It is necessary that the organisation undertake
marketing theory for developing the quality of product and services. On that basis, the business
organisation will provide a satisfying service to the customers. Based on that, the sales volume of
the company will expand, and the organisation will collect high profit in the forthcoming years.
The marketing theory helps in conducting customer segmentation in which the issues of the
customers will be evaluated. After gathering the information regarding customers’ questions,
proper actions will be taken by the senior executives for achieving business target.
Lastly, as the demand for online services of the customers has expanded in the international
market, the senior executives of Michael Hill International Ltd can focus on creating an online
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network for the organisation. With the assistance of online retailing service, the companies will
establish a connection with a high number of customers in the global arena (Knechel and Salterio
2016). In addition, the company can provide online feedback facilities for the customers so that
the issues regarding the product and services can be appropriately evaluated in the business.
Hence, the company attract a high number of international customers and gain a competitive
advantage in future.
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2. Discussion
2.1 Change in consumer’s demand of jewellery items
The sale of the jewellery items had not been at par due to the changing demand of them, as they
are more costly and that is why most of them are not trying to use it. Another reason is the rise of
several alternatives that had been rising due to the changing preferences in the minds of the
consumers. As a result, most amounts of people do not want to use the Michael hill Jewellery, as
there are fewer designs are available which could attract the customers (Michael Hill
2019).This had made the business very bad for the jewellery companies like Michael Hill
Jewellery International. It is seen that the tourism sector in Australia had been booming with
about 9.2 million visitors visiting the place from the foreign nations, but tourism could not
enhance the business operations in the Michael Hill Jewellery. The main problems that the
company had been facing are the rise in demands of the consumers. This had led to the
decrement in the profits difference in 27.4 million dollars between the years of 2017 and 2018
which clearly showed the fact that a decrease in the visitors clearly showed a decrease in
business sales.
2.2 Failure in targeting the audience
Michael hill Jewellery had not been able to target the global audience, and that is the reason why
it had been very unsuccessful in gathering the customers from across the world. The result of its
poor branding was that it had not been able to attract the people so that it could enhance the sales
of the jewellery items. The decrement in the 27.4 million dollars in the year 2018 clearly
reflected the fact that the company had not been available to design the items to meet the
demands of the consumers held in Australia (Michael Hill 2019). The huge events attracted
the tourists, but with no programmes in the nearby periods, the companies suffered a huge loss in
getting them. Moreover, the bad branding hurt the business of the Michael hill jewellery, and the
consequences were that there was a huge drop in the sales of the jewellery items. The employees
of that organisation were not executing their activities properly, leading to a huge dissatisfaction
for the customers. As a result, the company of Michael hill Jewellery could not be able to target
the audience.
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2.3 Solutions to the problems
The problems analysed in the above had been very instrumental in lowering the occupancy rates
of Michael hill Jewellery. The reduction for visits by the customers and its ineffective team of
call representatives in attracting the audience played a major part in decreasing the business
operations of the company. In order to stop these problems, a well-detailed analysis of the
techniques could be done through the two choices A and B. The first choice reflects a theoretical
understanding of the ten techniques and the second choice reflects the practical understanding of
the core concepts used to solve the problems for the Michael hill Jewellery.
2.3.1 Choice A
2.3.1.1 Data visualisation through the dashboard
Data visualisation helps to understand and analyse the trends in a clear way so that the
relationships between the various factors could be evaluated. Through the various numbers
obtained from the data, a dashboard could be created that is used to visualise the data in a proper
manner (Leon Urrutia et al. 2016). In this process, the information is plotted in several types like
in a graph, bar chart or in a demographic style so that it becomes easy for the reader to
understand the problems very easily. Through this, the reader could understand the problems
faced by the organisation in a broader prospect that reflects the issues in a detailed manner. The
dashboard could estimate the key insights and trends.
2.3.1.2 Decision tree analysis
The decision tree analysis is a schematic plan to create a tree with the branches reflecting the
different alternatives, which could be taken to perform a particular action. Through the decision
tree, several chance points could be created that would help the analyst to know the possible
outcomes for a selected action (Song and Ying 2015). Depending on the type of decision tree, a
reader can understand the actions that could be executed, which would give better outcomes. The
decision tree analysis had the flexibility to analyse the data properly so that the analyst could
know the consequences of a problem if a wrong step is done. This helps the company to mitigate
the risks in a better way.
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2.3.1.3 Sentiment analysis
Sentiment analysis helps to extract the important matters from the textual data through the help
of text mining so that the views of the customers could be analysed properly. It is essential for a
company to extract the textual information of the reviews posted online so that they could
understand the sentiments of the customers properly (Cambria 2016). This helps them to
understand the reactions of the customers and frame logical frameworks that help to get better
outcomes in their business operations. The algorithms could be used to analyse the text properly
so that the sensitive information in the texts could be analysed.
2.3.1.4 Clickstream analysis
The website of a company is essential as it guides the various things that it could provide to the
visitor. In order to analyse the visit rates of the customer, click stream analysis could be used that
helps to collect and analyse the visitors in an easy way. The clickstream analysis could be done
in two ways (Heim et al. 2018). The company could analyse the traffic of the website so that
they could be able to know the visit rates of the customers. The e-commerce platforms tend to
depend on the big data analytics instead of using the clickstream because they require a large set
of data to analyse the problems.
2.3.1.5 Social media analytics
Social media analytics is used to a scientific approach of collecting data from the social
networking platforms so that they could know the conversation of the consumers regarding a
particular product or a company (Batrinca and Treleaven 2015). As most of the consumers try to
visit the social media to get information about the exotic destinations, the use of social media
could help them to attract the users so that they could visit their places leading to higher sales,
thereby benefitting the business. Through proper analysis, a company could understand the
preferences of the customer regarding a particular service.
2.3.1.6 Analytic hierarchy process
Analytic hierarchy process is used to make a better decision while considering various
alternatives action that could be used to reduce the problems (Abdel-Basset et al. 2017). The
advantage of using the analytic hierarchy process is that better decisions could be taken to solve
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the problem, in the real time scenario. The decision-making becomes better as a critical
evaluation of the different techniques is done that helps the people to know whether a particular
action is feasible or not.
2.3.1.7 What if analysis
What if the analysis is a part of a sensitivity analysis that is used to investigate the various risks
that a company could face in its operations. The advantage of the process is that through it, a
company's financial resources are checked. This helps the company to take particular decisions
concerning a particular action (Revelli and Viviani 2015). As a result, the company gets less
affected by any losses that could affect the financial structure of the company. Through this
process, one can even predict the waiting lines of the consumers.
2.3.1.8 Scenario analysis
Scenario analysis is used as per the situations in the business. This helps to make better decisions
in a dynamic environment (Dash 2016). It helps the companies to create different scenarios so
that they could understand that for a particular situation, what steps could be taken to mitigate
the problem. As a result, the company could be able to bring certain changes to the business so
that it could deliver better results to the consumers. This could help in enhancing the business
activities of a company.
2.3.1.9 Big data analytics
Sometimes the data collected through the websites become huge, and it cannot be examined
properly by simple tools. Such a set of data falls under the big data, and for them to analyse,
certain tools could be used to understand the data. The tools like the Hadoop and stream
analytics could be used to examine the data properly (Chiang et al. 2018). The stream analytics
could be used to analyse the data in real time so that the operator could understand the problems
in a better manner. Hadoop is a tool under the Apache name that helps to analyse the problems
by collecting big data from different channels so that the issues could be understood in a better
manner.
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2.3.10 Location-based analytics
Location-based analytics is used to analyse the data of the consumers on a particular location so
that the companies could know the preferences of the consumers in that area. The information is
accessed through the geographic information data through which the demand of the consumers
on a particular place could be analysed and depending on that, and certain business strategies
could be framed (Skibiski et al. 2015). Another tool like the location analysis system could be
used to analyse the demand of the location that helps to boost the business activities. It comes
under business intelligence.
2.3.2 Choice B
The five techniques with a practical implementation could be highlighted under the following
heads –
2.3.2.1 Data visualisation through the dashboard
The data obtained from the various sources could be used to visualise with the help of a
dashboard. Through the dashboard, the Michael hill Jewellery could understand the places in
which the demand of the jewellery products is more. Depending on that, better marketing
strategy could be created so that the sales could be maximised. Through the technique, the
visualisation through it could help to find the difference between the expenditure on the
luxurious and expensive items. This would increase the business of the company (Tarmazdi et al.
2015). The dashboard technique helps to collect the essential data in particular regions so that the
company and it is founded that the people belonging to the age group of 35 to 49 years old are
likely to buy the jewellery items.
The dashboard technique helps the company to find that the online stores are more attractive than
the traditional ones. This helps the company to organise the business operations in such a manner
so that there is better business activities with a minimal investment. The data collected through
the dashboard would help the company to target the potential customers in a specific region and
could even retain the old customers so that the business remains at an optimised level. From the
dashboard analytics, it is seen that the people belonging to the areas of NSW, VIC and SA made
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the most online purchases and about 83% of the people prefer the online purchases as compared
to the 41% of them who uses the brick and mortar stores to buy the items.
2.3.2.2 Social media analytics
Social media analytics is used to a scientific approach of collecting data from the social
networking platforms so that they could know the conversation of the consumers regarding a
particular product or a company. The company could be able to bolster the business operations in
social media platforms like Facebook and other tools. The company could adequately interact
with the customers so that it could understand the problems in a better manner and could frame
the strategy to enhance the business operations.
It is seen that most of the backpackers try to use the Instagram platform to get better jewellery
services (Stieglitz et al. 2018). The company had its page in it and could use it to enhance the
business activities by targeting the audience after collecting the data through different analytics
tools available to them. The social media page should be useful in giving information about
special discounts on the jewellery items sold in the Boxing Day, black day and Christmas Day. It
is seen that most of the consumers of the jewellery items try to shop from the online shopping
and that is why, the company should try to perform the business. As a result, the promotional
activities of the company could become better.
2.3.2.3 Clickstream analysis
In order to analyse the visit rates of the customer, click stream analysis could be used that helps
to collect and analyse the visitors in a natural way. The online platform of MICHAEL HILL
JEWELLERY helps to understand the target customers of the organisation. It helps to know
what amount of customers is visiting the site and how they are accessing the information.
Everything could be obtained by using the clickstream analysis (Grover et al. 2016). The
preferences of the tourists could be accessed, and the demographics of them could be understood.
The data obtained through international visitors could be used to enhance the number of
bookings of the backpackers. This would try to reduce one of the problems in the jewellery
services in the MICHAEL HILL JEWELLERY.
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