Business Report: Challenges and Solutions for Discount Superstores

This report analyzes the business challenges faced by Discount Superstores Holdings Australia, focusing on issues related to its strategic processes and customer satisfaction. The report identifies problems stemming from the application of the Pareto Principle in inventory management, leading to product stock variance and customer dissatisfaction. To address these challenges, the report proposes a new business model that re-evaluates the business model canvas, emphasizing the need for a broader product range and improved inventory management through a Just-in-time (JIT) approach. The feasibility of this new model is assessed, highlighting critical success factors such as efficient stock handling and supply chain management. The report concludes with recommendations for expanding product availability, enhancing customer satisfaction, and maintaining a competitive advantage in the retail market. The report also includes feedback on team member contributions and collaboration.

Business Report of
Discount Superstores Group
Assessment 2
Student Name: Student ID:
Unit Name: Think Big Unit Code: MGMT20143
Date Due: Professor Name:
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Executive Summary
Evaluating an entrepreneurial venture to identify its key challenges requires identifying problems
faced with its business or customers. In the current scope of evaluation Discount Superstores
Holdings Australia’s case is analysed. Though the business is fairly profitable, there have been
some challenges faced in its strategic processes applied. The business applies Pareto analysis for
maintaining stock of various products at its stores. This has generated customer dissatisfaction;
hence keeping a broader spectrum of products is the only way out of this challenge. In order to
establish the newly made business plan, components of its business model canvas need to be re-
evaluated and restated for better application of its business plan. A new business model has been
identified along with evaluation of its feasibility has been conducted effectively.
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Table of Contents
Executive Summary.........................................................................................................................2
1.0 Part A.........................................................................................................................................4
1.1 Introduction............................................................................................................................4
1.2 Problem Identification............................................................................................................4
1.3 Benefits Generated.................................................................................................................5
1.4 Proposed Business Model......................................................................................................6
1.5 Critical Success Factors.........................................................................................................7
1.6 Evaluation of Feasibility........................................................................................................8
1.7 Conclusion.............................................................................................................................8
2.0 Part B: Quality of Contribution and Collaboration of each team member..............................10
3.0 References Lists.......................................................................................................................11
4.0 Appendix..................................................................................................................................13
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1.0 Part A: Idea Generation
1.1 Introduction
A business idea is generated by brainstorming several ideas and then leveraging it in
accordance to skill set of its stakeholders (Kiel, 2014). An essential component of a business
model affects its influence on the business and determines its critical success factor. The scope of
this current analysis concerns Discount Superstores Group Holdings Australia Pty Ltd. The
Company came into being post liquidation of Retail Adventure Company that owned several
brands including Crazy Clark’s and Sam’s Warehouse. The Company is a privately held retail
Company based across 143 total locations. The Company had been operating on sustainable
profitability; hence the scope of analysis here develops factors that have led to its sustainable
growth (Obschonka, Silbereisen & Schmitt-Rodermund, 2011). Moreover, evaluation of current
challenges faced by its customers is analysed to arrive at reasons that the Company has
accommodated innovation. An idea related to innovation is generated along with feasibility of
that idea and its execution is entailed.
1.2 Problem Identification
Discount Superstore is an extremely profitable venture that caters to varied types of
products for tis customers. The brand within a short period of time had been able to extend its
profitability to become a well-renowned brand within the country (Demil et al., 2015). Brand
loyalty of the Company is also considerably high but it faces problems in catering to its
customers. Its Project Simplify is a long-term strategic plan that was inherited from Retail
Adventures. In this current strategic plan, the Company aims to focus at Pareto Principle for
retail business. Unlike other retail businesses where the focus is on sales per square meter or
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departmental performance, this retail business believes that 80% of their business will come from
20% of their merchandise range. This has made the business to focus on only on their core
merchandise range and on their seasonal demanded products only. This has led to variance in
the Company’s product stock around the country (Onetti et al, 2012). Each store has focused
their products on its individual capability, stock display and strategic planning. Meaning that if a
customer finds products available in one store and aims at purchasing similar product at a store
near their home, it is highly probable that the customer will not find the product. This factor has
led to high amount of customer dissatisfaction and decrease in overall sales of various products
from the brand (Smith, Binns & Tushman, 2010). Customer dependability on the brand is
significantly less compared to other retail brands that are present across the market.
1.3 Benefits Generated
The Company needs to focus its business similar to other retail stores by having multiple
products from varied brand names. It needs to expand its current branded products and keep
varied types of products available. The business need to develop a strategic plan which will
encompass brands from several companies and products from all available types (Hitt et al,
2011). The Company needs to establish a steady distribution chain across its stores. It needs to
streamline its strategic value chain to get maximum benefits from various products. Then it can
refocus new strategic drive to be departmental performance. By aligning of strategic value chain,
it will be able to make products of various brands available and then gain significant cost
advantage. Making tie-up with key-partners for getting a steady supply of various products will
allow sustainable cost advantages that can further add to its profitability. Spreading its product
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range across various products will enhance its cost benefit approach and reduce downside risks
associated with undertaking single basket of products (Kuratko & Audretsch, 2009). In case of
earlier Pareto strategy, the Company had focused its business model on very few categorical
products, thereby significantly increasing risks component. In case amongst these few products,
one product’s demand ceases then the Company’s business might suffer losses. Therefore,
spreading business risks across multiple products enhances chances of sustainability for the
current business and its products as well.
1.4 Proposed Business Model
A business model allows development of strategic management layout for a proposed
business idea (Hong & Fauvel, 2013). Discount Superstores has to change its existing strategic
plan to accommodate new strategic motive. In its past strategic layout its primary focus was on
driving sales of particular products in particular stores. But in the current strategic proposal there
is a focus on increasing products available across the market to make them available in all its
stores. Therefore, its critical business canvas model has to be redesigned to accommodate more
features and functionalities that can deliver value to the business. Components of the business
model as Key Activities, Key Resources, Partner Networks, Value Propositions, Customers,
Channels, Customer Relationships, Finances, and Revenue Streams need to be ascertained
(Doganova & Eyquem-Renault, 2009). Attached in Appendix 1 is a depicted business canvas
model for the newly proposed idea that has been suggested for the business.
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1.5 Critical Success Factors
Innovating and applying a business idea might not be as tedious as identification of its
critical success factor. The Company will be performing on a greater sustainability and
profitability mode if it is able to change its strategic planning methods altogether (Hitt & Duane
Ireland, 2017). Moreover, changing a strategic operational method might not be an easy task as it
incorporates changing of the entire business model that has been operational. There have been
several risks factors identified in the current developed business model, one of which is
inventory management. Expanding product ranges across to include a number of products might
pose a challenge in maintenance of an appropriate inventory. While Discount Superstore has its
own inventory but it does not have large capacity to include varied type of products. Moreover,
the supply chain management of the Company is efficient in handling of limited number of
products and showcasing them in the store. While accommodating versatile range of products,
there is bound to be challenge faced in placing them across multiple store locations as well.
Meaning the entire supply chain with inventory and stacking facility of the store needs to be
refurbished. The critical success factor here is to determine appropriate amounts of stock that
need to be maintained at stores and then placing an order before they run out. The Company need
to adopt Just-in-time (JIT) ordering technique to deal with its current situation faced.
Maintaining an appropriate level of stock will be the key success factor for this Company.
Therefore, the Company posts application of the strategy need to devise a plan such that it is able
to handle risks of running out of certain products in an efficient manner. This will allow the
company to become profitable in the market.
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1.6 Evaluation of Feasibility
Evaluating feasibility of any idea prior to applying them is critical for understanding their
viability and success. In the current scope of strategic plan development and business model
evaluation, it has been understood that maintaining of stock possesses the gravest of challenge
(Teece, 2010). In order to enhance feasibility of the currently proposed business model a stock
handling procedure need to be determined. A stock handling technique of Just in time will allow
ordering quantities of items that have been finished and not maintaining large quantities in the
inventory. This will significantly help reducing inventory costs for the company. The Company
does not need to maintain high amounts of inventory for any of its product; rather it needs to
have a dynamic value chain that is responsive in nature. This attribute will help increase
feasibility of the proposed business model and allow applicability for the same. Once the
proposed business model has been established there will be significantly economies of scale and
cost advantages generated from keeping large number and variety of stocks for every product.
The Company can in this way re-invest its profitability into making of private label branded
products as well. Private label branded products of Discount Superstores will help retain
profitability for the stores entirely further increasing idea viability and business sustainability.
1.7 Conclusion
Discount Superstores in Australia has been functioning as a profitable venture. It has
several brands available across its retail stores that attract sizable amounts of customers.
However, due to its problem identification of Pareto analysis, there has been customer
dissatisfaction across its stores. Emerging number of retail companies and presence of a large
number of multinationals have led to shrinking business of the Company. Therefore, the
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Company needs to expand its product availability and provide more benefits to its customers to
attain high levels in customer satisfaction rates. Accommodating in a varied number of brands
and products will help attract more local consumers and allow the company to maintain its
competing advantages.
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2.0 Part B: Quality of Contribution and Collaboration
Team Member 1 Feedback: Score of 7.5 within 10
Team Member 2 Feedback: Score of 8 within 10
2.1 Contribution to the team
Team Member 1 Feedback: I want to give a score of 7.5 within 10 to this team member. He
had been very critical in his analysis and included various relevant details. However, he had been
able to include key components of business model canvas. He had positively contributed towards
brainstorming of ideas to reach at a suitable solution.
Team Member 2 Feedback: I have given a score of 8 within 10 to this team member as he had
contributed the most within the team. He had generated the idea of analysing problem according
to business model canvas. He was the one who had generated problem solving technique of Just
in time, which I found to be very innovative.
2.2 Achieving Group Consensus
Team Member 1 Feedback: He had given his consensus in case of diagnosing the challenge
and then arriving at a suitable solution for the same. His consensus was very much needed to be
able to effectively arrive at a feasible solution to the problem.
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Team Member 2 Feedback: He not only helped in diagnosing the problem faced. Rather he had
come out with suitable solution that was feasible and could help in creating sustainability for the
business.
2.3 Portfolio of Materials
Team Member 1 Feedback: He was effective in collecting portfolio of material that we could
use for our next assignment. He was an effective person who had collected varied types of data
and information from the internet and other sources necessary.
Team Member 2 Feedback: He had not only collected data from the internet but also looked
through several journals and books. This allowed him to develop in-depth idea regarding the
problem caused. He was able to devise strategies for the future such as Just in time approach to
overcome challenge faced by the organization related to the same.
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3.0 References Lists
Demil, B., Lecocq, X., Ricart, J. E., & Zott, C. (2015). Introduction to the SEJ special issue on
business models: business models within the domain of strategic
entrepreneurship. Strategic Entrepreneurship Journal, 9(1), 1-11.
Doganova, L., & Eyquem-Renault, M. (2009). What do business models do?: Innovation devices
in technology entrepreneurship. Research Policy, 38(10), 1559-1570.
Hitt, M., & Duane Ireland, R. (2017). The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, 45-63.
Hitt, M. A., Ireland, R. D., Sirmon, D. G., & Trahms, C. A. (2011). Strategic entrepreneurship:
creating value for individuals, organizations, and society. The Academy of Management
Perspectives, 25(2), 57-75.
Hong, Y. C., & Fauvel, C. (2013). Criticisms, variations and experiences with business model
canvas.
Kiel, I. H. (2014). Entrepreneurial marketing.
Kuratko, D. F., & Audretsch, D. B. (2009). Strategic entrepreneurship: exploring different
perspectives of an emerging concept. Entrepreneurship Theory and Practice, 33(1), 1-17.
Obschonka, M., Silbereisen, R. K., & Schmitt-Rodermund, E. (2011). Successful
entrepreneurship as developmental outcome: A path model from a lifespan perspective of
human development. European Psychologist, 16(3), 174.
Onetti, A., Zucchella, A., Jones, M. V., & McDougall-Covin, P. P. (2012). Internationalization,
innovation and entrepreneurship: business models for new technology-based
firms. Journal of Management & Governance, 16(3), 337-368.
Smith, W. K., Binns, A., & Tushman, M. L. (2010). Complex business models: Managing
strategic paradoxes simultaneously. Long range planning, 43(2-3), 448-461.
Teece, D. J. (2010). Business models, business strategy and innovation. Long range
planning, 43(2-3), 172-194.
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