David Jones Strategic Management: Business Environment Analysis

This report provides a strategic analysis of David Jones, an Australian department store chain, focusing on its business environment, market trends, financial performance, and corporate strategies. It examines the Australian retail industry, highlighting market size, growth, and key issues faced by David Jones, such as increasing online retailing and competition from companies like Aldi and Coles. The report evaluates David Jones' financial and corporate performance, including sales figures, profit margins, and diversity initiatives. Key issues affecting the organization's performance, such as limited brand presence and lower revenue, are identified. Furthermore, the report explores strategic options for David Jones, including growth strategies, diversification strategies, and stability strategies, to enhance its market position and financial outcomes. The report also contains an executive summary of Yum! Group.

Business Environment 1
Strategic Management

Business environment 2
Executive Summary
Strategic management is the tool which is used to ensure the planning on continuous basis,
evaluation of all the areas, monitoring of strategies, and required analysis. This tool is deemed as
most important tool in terms of achieving the goals and targets of the organization. This type of
management mainly ensures the implementation of the strategies framed by the organizations in
effective manner, and it also evaluate whether the chosen strategy is suitable for the organization
or not. In other words, it is considered as the initiative taken by the top management of the
organization in terms of meeting the goals defined by the owners. Strategic management based
on the resource evaluation and the analysis of the internal and external business environment in
which company operates its business.
This report is prepared in terms of the David Jones (Department stores in Australia, as structure
of the report mainly highlights the market size & trends, performance related to the financial
aspects and corporate aspects, strategic options, recommended strategy, final strategy
implementation, and monitoring and controlling of the future performance.

Business environment 3
Markets Trends & Analysis
Australian retail industry is deemed as biggest contributor of the nation’s economy and it is
classified in terms of different products such as food items, apparels, beauty products, etc. This
market is also classified in context of the retail stores and these stores mainly offers fashionable
and branded goods such as apparels, bags, footwear’s, etc. Retail market of Australia is deemed
as biggest employer of the Australia, and it gives number of career opportunities (Mordor
Intelligence, 2017.
David Jones department is the big departmental chain of Australia and also the oldest one, as this
store sells best and most exclusive goods to their customers. There are almost 35 stores in
Australia which are operated by the organization in terms of giving the best services to their
customers, and they also owned two warehouse outlets. David jones also initiate online offerings
to their customers, which means, they sell their products online to their customers and offer best
products across all the fashionable brands.
It is necessary to understand the actual market size and trends of the retail industry of Australia,
and in this context current data is stated below (IBIS World, 2018-
Profit Businesses Employment
Annual
data
$557.8bn 182145 1933977
Growth between the
period 12-2017
1.1% -2.1% -0.1%
Forecasted Growth for
the years 2017-2022
1.1% -0.4% 0.5%
David Jones mainly operates its functions in the clothing, footwear’s, and accessories section of
the retail industry. This area of the retail industry face different issues in last five years such as
customers spend in very cautious manner, purchasing power of the customers decreases, increase
in competition, and increase in the taxes. It must be noted that, annualized growth of the revenue
of the clothing industry is expected almost 2.0% in the next five years from the FY 2018-19,
which is equals to almost $16.7 billion. This growth is expected because of the expansion done
by the online sellers in the retail industry. It is necessary to understand that, David Jones works
in the environment which difficult for trading and the main reason behind that is the increasing
online retailing. Industry evaluation of the clothing and footwear retail market is stated below
(IBIS World, 2018-
Profits Growth from
the year 2014-
Employment Business

Business environment 4
2019
Clothing $ 17 billion 2.0% 109957 11380
Footwear $3 billion 1.8% 20926 1299 (IBIS
World, 2017
Department
stores
$ 18 billion -0.9% 87955 114 (IBIS World,
2018
Industry evaluation of the department stores is stated below (IBIS World, 2018-
Profits Growth from
the year 2013-
2018
Employment Business
Department
stores
$ 18bn -0.9% 87955 114
It is stated by Woolworths in January 2018 that are write down the value of the David Jones by
R6.9 billion, and in this context they admit that organization overpaid for the same. From the
beginning of the 2018, share price of the David Jones is down 18.6%. In 2014, CEO of
Woolworth, Ian Moir stated purchase of the David Jones would create benefits for the
organization in context of increased number of stores and concurrent fashion seasons. This is
deemed as big transformation for the Woolworths, because it allows the organization to take
market share from others such as in Africa and Australia (Crotty, 2018.
In terms of dealing with the challenges, DJ focuses on giving the best products to their customers
which are of fashionable brands. David Jones tries to give all these high quality brands to their
customers at the best prices. In this context, David Jones support their activities from the higher
level of direct sourcing, merchandise discipline improvement, and effective systems of planning.
For this purpose, David Jones can use the brand positioning, which further involves the different
types of strategies and projects used by the organization for communicating their brand to the
target market.
Competitive analysis
There are number of competitors of the David Jones, as main competitors of this organization are
the Wesfarmers, Aldi, and Coles. All these competitors hold the big market share of the
organization and give tough competition to the David jones. The biggest risk is imposed by the
Aldi who is fighting aggressively for the low and middle income customers, as David Jones still
only targeting the high income consumers. This is the reason, because of which Aldi and Coles
take away the market share from the David Jones. In other words, both the competitors of David

Business environment 5
Jones enjoy competitive advantage over the David Jones by targeting the low and medium
income customers. It enables the competitors to grab big market share in Australia (Pash, 2016.
Financial & Corporate performance
Sales of the David Jones increase by 1.0% in the Australia in lieu of dollars, but the termination
of the electronic products of the Dick Smith cause impact on the growth by 1.0%. It must be
noted that, sales in the comparable stores mainly declined by the 0.7%, and this excludes the
Dick Smith. Market share has been grown, but sales growth in the second half reflects the falling
confidence of consumers and this resulted in the lower footfall.
David Jones gross profit margin is declined by almost 90 bps to 37.0%, and this was impacted by
the increased promotions and markdowns. This was partially offset improved by concession rates
and also by the expansion of the group private label brands. Costs in this context were well
controlled by the organization, but the costs are associated with the sale and lease back of Market
Street, and also the execution of the transformational projects. This mainly results in the
operating profit of A$127million for the year with the operating margin of 6.3%, inclusive of
profit from the financial services (WHL, 2017.
Corporate performance
David jones focus on developing the diversity and inclusion strategy for four years in terms of
seeking help for running such organization which values the diversity within an organization and
also ensures the practice of inclusion. In association with the Diversity Council of Australia, this
strategy framed by the organization mainly covers the flexibility at workplace, cultural and multi
faith diversity, diversity in gender, LGBTI inclusion of people, generational diversity, and it also
includes the people with the disabilities and indigenous reconciliation. Later, approach of this
organization goes beyond the role of their employer, and because of this, organization play
business and retail operator in the broader part of the community. This organization also focus on
the public commitments and try to redress the social injustice related to the inter-generational
which mainly occurred with the Islanders and Torres Islanders communities. Organization tries
to solve this by encouraging the strong relations between the indigenous and non-indigenous
Islanders and also by creating the opportunities for them (David Jones, 2018.
Key issues
Following are the key issues which are faced by the David Jones and these issues directly affect
the corporate performance of the organization-
 The biggest issue faced by the organization is the limited brand presence of the
organization as compared to market leaders and its competitors in context of market
share. As organization does not take any action to ensure its brand presence and this can

Business environment 6
be considered as the weakness of the organization and also the reason because of which
their corporate performance is affected in negative manner.
 Another issue faced by the organization is the lower revenue, and this happens because of
the restricted business of the organization in terms of global player. In other words, this
organization targets the limited customer segment, because of which its global presence
is less as compared to its competitors. All these things directly affect the financial
performance of the organization.
Strategic Options
Strategy in the corporations is defined as the biggest plan of the organization in terms of strategic
decisions, because this plan addresses all the relevant strategies framed for the organizations.
These strategies further defined the manners in which these strategies can be achieved by the
organizations. Corporate strategies are defined as the task of the top management level of the
organization, as it accompanied with the mission and vision of the organization. In other words,
Vision and mission of the organization must be related to the corporate strategy of the
organization. There are few techniques which are used by the organization management in terms
of developing these strategies such as PESTEL, SWOT, etc. Some of the corporate strategies
which can be used by the David Jones are defined below-
Growth Strategy- This strategy defines the methods through which organization can earn more
profits by selling its products and services to the relevant customers. Growth strategy is the
strategy which is mainly used by those organizations which stands on the leading positions of the
nation. These strategies are divided into two types of strategies that are horizontal strategies and
vertical strategies. Both vertical and horizontal strategies in terms of the growth strategies are
defined below-
 Vertical strategies are defined as those strategies which ensure the growth by exercise
control on different elements of the operations process. In other words this strategy
mainly focuses on the operation procedures of the organization.
 Horizontal strategies are defined as those strategies which identify the methods through
which organizations extend their business operations in terms of products and services to
the new geographic areas and the target markets.
Diversification Strategy- This is another strategy which mainly deals with the products and
service portfolio of the organization and in this context organization develops the strategy for
ensuring the successful marketing and sales. The most important diversification strategies are the
single business strategy and the dominant business strategy. Both the strategies are defined
below-
 Single business strategy imposes limitation on the number of products and services in
terms of the few people, but this limitation is not imposed on the single individuals.

Business environment 7
Organizations use this strategy for becoming the leader of the niche market, which
means, in this organization enhance the number of products and services offered to the
customers.
 On the other hand, dominant business diversification strategy focus on the main products
and services offered by the organization, which means,
Stability strategy- This is another strategy which is sued by the organization in terms of
achieving the optimal market share goals. For achieving the large portion in the market, leaders
can choose the stability strategy, because this strategy ensures the existing success at the existing
situations in lieu of maintaining the share in the market. Through this strategy, organization
ensures the more efficiency in the process of the organization. As this efficiency ensure the
reduction of cost by using the automatic technique in the operation process and other processes,
and management for this cut down the cost in all the relevant areas where it is possible to cut
down the cost and make relevant savings. Under this strategy, organization also needs to focus
on the customer’s retention. The most appropriate time to use this strategy is the time when
economic period of the country are adverse in nature (Leonard, 2018.
Final recommended strategy
The final recommended strategy which can be used by the David Jones is the growth strategy,
because currently these stores can be considered as the leaders of the market in terms of their
profitability and market share. In other words, leaders for capturing the big share of market in the
retail industry can use this strategy. Some of the advantages which can be used by the David
Jones in terms of this strategy are stated below-
 David Jones will be able to develop the competitive advantage related to the operational
process and functions of the organization. In other words, operational process of the
organization holds the capability to reduce the cost and this ultimately results in the
profitability.
 Usually, this strategy is adopted by the organization leaders and this happen because
stage of stability is already achieved by these peoples in the market. After achieving the
stage of stability, growth is required by these organizations (David Jones, no date.
This strategy can be implemented by the David Jones in following manner-
 Market penetration is the first stage through which David Jones can enhance the sales of
the current products and services in the target market of the organization. This comp of
the growth strategy allows the organization in grabbing more shares in the market. With
the help of growth strategy, organization can ensure the reliable growth and attract new
customers.
 Market development is another component through which growth strategy of the
organization can be implemented by the organization. In this those markets are targeted

Business environment 8
by the organization in lieu of selling the products and services which are not explored by
the organization at the previous stage. This strategy mainly includes the way through
which existing products and services are sold o the newly targeted market (Guth, 1980).
Implementation of the recommended strategy
As numbers of ways are defined below through which David Jones can implement the growth
strategy-
 David Jones required focusing on the creation of the value proposition for the purpose of
ensuring long business growth in the organization. In other words, organization must
develop the elements which ultimately results in the high value for the company. For
ensuring this, organization can develop the reasons because of which customers chose
their products and ensure loyalty with the organization.
 Potential customers must be identified by the David Jones for implementing the growth
strategy in effective manner. In other words, those customers are identified by the
organization which is ideal to sell the current products and services.
 Development of the policy is the most important and required stage of the growth
strategy, because it is not possible to implement any strategy without any plan. This
strategy mainly develops the internal and external requirements of the organization in lieu
of implementing these strategies.
Monitoring & Control of future performance
Monitoring and controlling are the two important functions of the strategic management, as it is
necessary for the organization to monitor and control their future performance. Strategies need to
be developed in this context, as it includes the evaluation of both external and internal
environment in which business operates. There are number of challenges which are imposed by
both external and internal environment of the business, and these challenges hold the capability
to make negative effects on the future performance of the organization. In terms of dealing with
all these challenges, organization needs to develop the following strategies-
 Organization need to develop the control measures for the purpose of controlling the
future performance of the organization such as, control management team can be
developed by the organization.
 Another measure which can be develop by the organization is the focus on control policy,
because thorough this policy organization ensures the effective watch on the future
elements.
 Control measures can be implemented by the David jones by using different tools and
also by outsourcing this service to the experts organizations.

Business environment 9
Reference
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https://www.businesslive.co.za/bd/companies/retail-and-consumer/2018-07-19-david-jones-
impairment-to-send-woolworths-into-the-red/. Accessed on 10th October 2018.
David Jones, (2018). Our Departments. Available at https://www.davidjones.com/careers/our-
departments. Accessed on 10th October 2018.
David Jones. Our approach. Available at https://www.davidjones.com/gbj/diversity. Accessed on
10th October 2018.
Guth,W. (1980) "Corporate Growth Strategies", Journal of Business Strategy, 1(2), 56-62.
IBIS World, (2017). Footwear Retailing - Australia Market Research Report. Available at
https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/other-store-
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https://smallbusiness.chron.com/types-corporate-level-strategy-60147.html. Accessed on 10th
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Pash, C. (2016. Why David Jones' 'less price sensitive' customers are a threat to Woolworths and
Coles. Available at https://www.businessinsider.com.au/why-david-jones-less-price-sensitive-
customers-are-a-threat-to-woolworths-and-coles-2016-9. Accessed on 10th October 2018.
WHL, (2017). Annual Financial Statements. Available at
https://www.woolworthsholdings.co.za/wp-content/uploads/2017/12/WHL_Annual_Financial_St
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