Business Report: Factors Influencing Business Performance

This report provides a comprehensive comparative analysis of two Australian businesses: Coles Group Limited, a currently operating supermarket chain, and Dick Smith Holdings Limited, a previously operational electronics retailer. The analysis covers various dimensions including market penetration strategies, risk factors such as competition and financial distress, sales performance metrics, tax structures, and financing methods employed by both companies. The report highlights the factors that contributed to Dick Smith's eventual closure and contrasts them with Coles' successful operations, emphasizing the importance of effective strategies in inventory management, market expansion, and financial planning. The study also examines the impact of internal and external factors, such as competition and economic conditions, on the business outcomes. Furthermore, the report provides insights into the financing methods employed by both organizations, including debt and equity, and their implications on overall business performance.

Business
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INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Business term refer to provide the customers with decent services in order to earn money.
The decent company is only founded when the owner's aim is to "encourage people by giving
them the highest quality commodity" and get people to think, fulfil their selling demand. In order
to improve their productivity or performance they need to analyse factors otherwise it will
become the failure of business (Brennan, Canning and McDowell, 2020). In this report, two
different types of businesses selected such as who currently operated and another one which is
closed down. Dick Smith was a chain of retail stores which sold electronic items, equipment,
project kits, components etc. Another Australian organization which currently working in the
market and they offer food and groceries items through its retail chain. Both organizations are
Australian based company one is currently operated anther one was closed down. This
assessment covers the several dimensions such as risk factors, sales performance, penetration,
tax structure and financial methods.
MAIN BODY
Overview of organizations:
Dick Smith Holdings Limited is Australian based Electronics company and it is an
Australian retail chain which selling consumer products, hobby products and electronic project
packages. The chain eventually spread to New Zealand and to many other nations, unfortunately.
The business was established by Dick Smith in Sydney in 1968 and operated by him and his wife
until 1980; they sold 60 percent shares to Woolworths Limited and the other 40 percent two
years later. Four years on from its purchase by Anchorage Capital Partners, the company shut
down in 2016.
Coles Group Limited is an Australian public enterprise which operates multiple
supermarket chains. Its main operations concentrate on selling goods and food through its main
retail chain Coles and selling liquor and fuel through its Coles Liquor and Coles Express outlets.
Coles has developed to be Canada's second-largest retailer since its establishment in
Collingwood, Victoria, in 1914, behind its principal competitor Woolworths in terms of
revenues.
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As per given scenario there are various factors which affect the organization and it required
to consider because it will leads towards success or failure. Some of the aspect which required
analysing is as follow:
Penetration: Market Penetration technique typically doesn't impact an overall company
marketing plan but it always carries with it a high growth opportunity and an improvement in
revenue generation (Ćoćkalo and Bakator, 2018). Organization that is seeking to adopt market
expansion ideas must always continue to execute clear strategies and techniques to counter the
competition and raise sales figures. It should also be noted, however, that market penetration can
be a risky affair and therefore has some drawbacks. The fall of Dick Smith was triggered by
major failures in the inventory purchasing and a poorly designed that are costly expansion
strategy. Despite outstanding sales results, the publicly traded electronics giant collapsed, as top
management prioritized sales growth ahead of sustainable growth. On the other side, Coles
marketing and promotional campaign revolves around the cheaper prices the store provides. It
used tag lines like "Why Pay More" "Extra Value for You and Me" and "Cheap Groceries" to
illustrate the cheaper rates and the quality consumers get from Coles shopping. This strategy
helps the Coles to penetrate their products in the market or provide them success. Before
considering any strategy for the expansion of business operations, they need to evaluate its after
affects others it will become the reason of success as well as failure.
Risk factor: During the business process, there are several factors which affect the
organization and its growth. In context of Coles, indirect competition from convenience shops is
the risk factor where farmer markets, specialty grocery stores and more is a very high danger to
substitution. Data shows that convenience stores have seen their products grow significantly, and
can contend directly with supermarkets like Coles (Fazzini, 2018). Farmer markets are seen as a
possible challenge to Coles because they offer organic goods and may limit Coles 'selling of
organic food. Company which expands very rapidly and suffers financial distress, as Dick Smith
may have done, indicates an extreme failure. Dick Smith has many rivals for other product lines
including JB Hi-Fi, Harvey Norman, even Workplace Runs, Bunnings and Aldi. Dick Smith was
also unable to produce the bumper Christmas sales it anticipated, following deep discounting
long before Christmas. Yet it seems like Dick Smith not anticipated huge increases in revenues-
looking at his prospectus in 2011 it still had sales of $ 1.28 billion and projected revenue of $
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1.226 billion by 2014. Other than these complainants, there are various internal or external
factors which affect the business, high competition or competitors are one of them.
Internal factors include people, technological and material all cause the company's
internal hazards and mitigate them. Human factors may include employees, suppliers and clients.
Technical considerations include machines, IT and business processes that focus on technology
to remain productive and value-effective (Fjeldstad and Snow, 2018). Physical considerations
can include defects of the machinery, downtimes and eventual obsolescence. Retail companies
also face maintenance-related threats and business losses due to slides, falls or any other
incidents. In general, internal factors are the ones they can anticipate, prepare for, and monitor.
On the other side, outside cultural, environmental, and political influences are the ones that have
little or no influence over. As a result, the risks raised by these factors can have a significant
effect on company. At the other side, external factors are mostly not industry-specific and if an
external factor affects your market, it will more certainly affect the competition as well. The
approach to reducing potential risks is to track their clients, the economy, pending legislation and
the rivals on a daily basis. A contingency plan will minimize risks posed by a fire, flood or
tornado. These factors cause several risk for both companies such as Dick Smith and Coles
Group Limited.
Sales performance: It is one of the specify measurement that is used by the leaders to
evaluate their business performance in terms of revenue or sales (James, 2018). But there are
several other metrics, such as time spent per customer or the amount of repeat business they
produce. Going to trade as a public corporation, Dick Smith's underlying net income rose 3.1 per
cent to $ 43.4 million in 2015, excluding $5.5 million in termination fees. Total revenues for the
full year ended June 30, boosted 7.5 per cent to $ 1.3 billion, while sales volumes for the
electronics store were stable, increasing one per cent. Sales in Australia rose 10 per cent year
after year, with comparable sales growth of 2.4 per cent in Australia. New Zealand sales fell 6.9
percent, affected by intense pricing in competition and a decline in consumer sentiment,
particularly in the first half.
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Above mention data represent that financial performance of Dick Smith from 2013 to
2015 period. Every year revenue increases but due to increase in the cost of sales does not make
much difference in gross profit. At the end, pre tax profit margin was 17.5 %, 2.3 % and 4.1 %
for the period of 2013, 2014 or 2015 respectively.
In context of Coles Group Limited, Coles has recorded its highest quarterly sales
performance in years, a month until its parent Wesfarmers demerges. This is also Wesfarmers
'last trading statement on Coles, subject to shareholder approval, until the retail chain gets a new
listing on the ASX on November 21 (Kumar, Lahiri and Dogan, 2018). Coles 'gross revenue
rose by 5 percent to $9.84 billion in the three months ended September 2018. Coles 'retail sales
increased 5.8 per cent, contributing much of the group's overall revenue. Revenues from Coles
convenience stores increases by 2.5 % and from convenience stores by 2.1 % followed. Below
mention table represent the total sales of 2018 and 2019.
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From the above analysis, it has been evaluated that total sales of 2018 was $ 9.34 billion
and in 2019, it was $ 9.84 billion. Around 5 % growth recorded in the sales which is profitable
for the organization. It was also represent that, company’s performance increases during the
years.
Tax structure: Tax structure of every country is different from others and government
provide different tax rate according to the income of individual or commercial bodies (Vom
Brocke and Mendling, 2018). Companies which are Australian citizens are subject to Australian
income tax on the global income. Non-resident businesses are usually only subject to Australian
income tax on Australian-sourced revenue. However, if a firm resides in a nation in which
Australia has signed a Double Taxation Arrangement (DTA), Australia's ability to tax business
income is usually limited to income attributed to Australia's permanent establishment (PE).
Both businesses such as Coles and Dick Smith are entitled to a 30 per cent statutory tax
rate on the taxable income, except for 'small business' firms, which are subject to a 27.5 per cent
reduced tax rate up to and including the 2019/20 financial year (Quinlan and et.al., 2019). The
lower tax rate occurs only to certain companies that fall below the compiled turnover level of
AUD 50 million (AUD 25 million for the 2017/18 financial year) along with other 'linked'
organizations. The 27.5 percent threshold for 'small business' organizations would eventually be
reduced to 26 percent for financial year 2020/21 and 25 percent for financial years 2021/22 and
afterwards. Dick Smith Company close down in 2016 due to business failed when its cash
resources proved inadequate to meet present and future commitments and in January 2016 a
director was appointed as the business reached voluntary management just a few years after its
launch. On the other side, Coles Group Limited follows Australian tax structure and paid tax
accordingly. In 2018, Coles paid income tax expenses around $ 456.1 million and $ 347 million
in 2019.
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Financing methods: There are several ways of financing which is used by the organizations
such as equity, debt, angel inventors, business loans, savings, own capital etc. Debt is a mortgage
or credit line that supplies them with a fixed sum of money to be paid for an amount of time.
Some loans are protected by resources which ensure that if you don't pay the lender will take
away the assets (Su and Tan, 2018). A debt can be unprotected, without the loan being backed by
any specific collateral. Equity sells a part of the company (referred to as the sale of an equity
interest). In this situation, you typically do not have to pay back that money, even though the
new equity investor gets all the rewards, voting rights and liquidity aligned with that equity
interest. In context of Coles, debt amount was $ 1,460 million on 30th June 2019 and around 50
% of the financing are from equity sources
In context of Dick and Smith, finance a more reasonable sum of working capital, the
company is expected to bring on $ 71 million in debt. As the gain of previous accounting
measures taper-off, margins collapse and in the latest trading update the business records a
volatile mix of declining same-store revenue and declining gross margins. Ryan's comment was
made a day after Dick Smith reported a reduction in earnings and the stock fell to 0.77 percent
(Suselo, 2018). Basically, it is concluded that debt and equity are the major source of financing
and bank loan was a good option for both organization. Currently Dick smith is closed due to
lack of cash liquidity.
CONCLUSION
From the above observation, it has been evaluated that success or failure of any business is
depends only upon their activities. There are several factors which affect the organization, so
management need to identify potential risk which can influence the productivity, profitability as
well as performance. It further impacts upon sales performance and net profit of the business. In
addition, there is several method of financing that used to improve operational activating and
invest for the expansion of operations. Both organizations follow Australian tax structure and
paid tax expenses according to their turnover.
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REFERENCES
Books & Journals
Brennan, R., Canning, L., & McDowell, R. (2020). Business-to-business marketing. SAGE
Publications Limited.
Ćoćkalo, D., & Bakator, M. (2018). Improving Business Performance With Iso 9001: а Review
Of Literature аnd Business Practice. The European Journal of Applied Economics. 15(1).
83-93.
Fazzini, M. (2018). Business valuation: theory and practice. Springer.
Fjeldstad, Ø. D., & Snow, C. C. (2018). Business models and organization design. Long Range
Planning. 51(1). 32-39.
James, L. (2018). Making cyber-security a strategic business priority. Network Security. 2018(5).
6-8.
Kumar, V., Lahiri, A., & Dogan, O. B. (2018). A strategic framework for a profitable business
model in the sharing economy. Industrial Marketing Management. 69. 147-160.
Quinlan, C. & et.al., (2019). Business research methods. South Western Cengage.
Su, W., & Tan, D. (2018). Business groups and tax havens. Journal of Business Ethics. 153(4).
1067-1081.
Suselo, D. (2018). Business and Religiosity: Review of Business Ethics Mayangkara
Group. Jurnal Pendidikan Ekonomi Dan Bisnis (JPEB). 6(2). 82-92.
Vom Brocke, J., & Mendling, J. (2018). Business process management cases. Digital Innovation
and Business Transformation in Practice. Berlin et al.: Springer.
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