Entrepreneurship Report: A Business Plan for Harvey Norman's Success

This report presents a comprehensive business plan analysis for Harvey Norman, a leading Australian retail chain. It begins with an executive summary and an introduction to the retail market, emphasizing the competitive landscape. The report provides a company profile, detailing Harvey Norman's history and operations, followed by an analysis of its organizational management, financial strategies, and marketing approaches. Key aspects such as target market segmentation, competitive advantages, and marketing and sales strategies are discussed. A financial plan is presented, including cash flow projections. The report concludes with recommendations to enhance Harvey Norman's performance and a comprehensive reference list. The analysis highlights Harvey Norman's distinctive organizational structure, price leadership, and diversified product portfolio as key strengths, while also addressing challenges and opportunities in the consumer goods market.

Running head: ENTREPRENEURSHIP
Entrepreneurship
Name of the student
Named of the university
Author note

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Executive summary
The aim of this report is to discuss about the effective business plan for Harvey Morgan which
will help them to gain competitive advantage in the market. Having discussed the marketing and
organizational structure of Harvey Norman, it had been concluded that they are having
distinctive and effective approaches. These approaches are helping them in targeting their
customer segments more effectively. Thus, several recommendations are being provided in order
to fulfill these gaps and enhance their performance in the future.

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Table of Contents
Introduction......................................................................................................................................3
Company profile..............................................................................................................................3
Organizational Management of Harvey Norman............................................................................4
Financial management of Harvey Norman......................................................................................5
Marketing analysis of Harvey Norman............................................................................................6
Target market segment................................................................................................................6
Competitive advantage of Harvey Norman.....................................................................................7
Marketing and sales strategy...........................................................................................................8
Financial plan...................................................................................................................................8
Recommendations..........................................................................................................................10
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

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Introduction
Retail market of consumer goods or items is one of the most promising and leading
business sector in the present business scenario. More and more organizations are entering in this
sector due to the high volume of sales and revenue involved with this sector (Baker 2014). In
Australia, retail market of consumer products is one of the most intensely competitive markets
with having several established competitors operating. Thus, the market scenario in the
Australian region for the consumer goods is quite competitive and price sensitive sector.
Organizations operating in this sector are coming up with newer strategies and business
approaches in order to stay ahead in the competition.
Harvey Norman is one of the leading retail chain based in Australia. They offers
diversified product portfolio for their customers (Harvey Norman Holdings 2017). However, due
to the recent entrant of various new competitors in the market, they are facing the heat of
reduction in their sales revenue. This report will discuss about the effective business plan for
Harvey Morgan which will help them to gain competitive advantage in the market. Moreover,
the various aspects of them in their business operations will also be identified. Accordingly, the
recommendations will be given to implement an effective business plan for them.
Company profile
Harvey Norman is an Australian Based retail firm founded in 1982 by Gerry Harvey and
Ian Norman. They mainly cater to furniture, bedding, electrical items and computing accessories
(Harvey Norman Holdings 2017). They operate in Australia and in the international market
through franchisee business model. Currently they are listed in the Australian securities

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exchange limited and are operating as a public company. Harvey Norman is having other sub
brand such as Domayne and Joyce Mayne to cater to different product category and customer
segments. Currently they are operating in more than 166 stores around the world. The product
portfolio of Harvey Norman includes electronic products such as television and gaming devices,
mobile phones cameras. They also offer home appliances such as air conditioners and washing
machines. Home décor products including furniture is also being offered by them.
To stay ahead in the competition and to cope up with the change in the taste and
preference of the customers, they came up with their own online portal of online marketing and
shopping. It is helping them in targeting more number of customers effectively (Luo, Ba and
Zhang 2012). The mission statement of Harvey Norman states that they want to deliver their
products to their customer at the most cost effective prices. They want to the market leader in the
market by having the competitive advantage of cost effectiveness. The vision statement of
Harvey Norman states that they want to be a truly global retail organization offering wide range
of products to their customers and maintaining the market leadership position.
Organizational Management of Harvey Norman
Harvey Norman maintains a distinctive organizational structure compared to other
contemporary retail organizations. All the stores of them are being operated on the basis of
franchise system. However, the product category they are offering is being managed by the
separate management (Mahmoudsalehi, Moradkhannejad and Safari 2012). Thus, if a store is
offering five categories of products of Harvey Norman, then the five product category will be
controlled by separate management responsible for the respective product category. Thus, the
management and the sales of the particular product category are being controlled effectively. The

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stores outside the Australian regions are being owned and controlled by them. The international
business is not being operated in the basis of the franchisee system.
For the effective human resource management in their organization, employees are being
motivated with the initiation of the reward system (Hendry 2012). According to this model, sales
persons and other employees are being provided sales commission which further helps them in
driving and enhancing the sales chart of the organization. Moreover, effective working
environment in the organization is also being maintained.
Financial management of Harvey Norman
Being a publicly traded organization and being listed in the Australian stock exchange,
Harvey Norman maintains an effective and accurate financial structure to comply with the global
accounting principles and with the financial regulations (Badolato, Donelson and Ege 2014).
They maintain a separate audit board that is responsible for managing the financial aspect of the
organization. The audit board is being selected by the board of directors. The key objective of
this board is to look after the financial reporting and policies being followed by the organization.
Harvey Norman also maintains a separate finance department which is responsible for the
allocation of resources for various activities in the organization. As of 2016, the earnings before
interest and tax are estimated at $522 million and the profit after tax and interest stands at $248
million.

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Marketing analysis of Harvey Norman
Target market segment
The customer segment of Harvey Norman is the people looking for electronic items and
household items under one roof. They cater to diversified segment of customers due to the reason
that economical classification of the customers for electronic appliances is not viable. Different
brand are being offered by them to their customers in this sectors. Thus, customers depending on
their purchasing power will buy the particular brand. Harvey Norman caters to the customers
looking for household products by offering bedding and home decors. Thus, the customer
segment of Harvey Norman is diversified in nature due to the offerings of different product
category (Wedel and Kamakura 2012). Moreover, the product category of them is much diverse
due to the reason that household products and electronic appliances are not in the similar product
category.
As discussed earlier, they cater to a vast and diverse customer segments. In addition, the
customer segment for Harvey Norman is not niche rather than they are catering to the mass
market. Thus, extensive use of electronic media and social media is being implemented by them
in order to attract and reach out to more number of customers. Segmentation, targeting and
positioning (STP) model will be the most effective strategy to effectively target the customer
segment (Gbadamosi 2013). According to this model, the first step for the organization is to
identify the customer segments where they will operate. Thus, the customer segment for Harvey
Norman is the mass market having the purchasing power and demand for electronic items. The
demographic segments for them are diverse in nature due to the reason that majority of the
computing goods will attract the young generation and majority of the household goods will

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attract the female customers. On the other hand, the customer segment for the electronic
appliances will have both the male and female customers.
The next step in this model is targeting the customer segment. Harvey Norman initiates
various marketing activities such as promoting their products in the mass media channels which
will attract their target customer segments (Prager, Rosenberg and Farber 2013). In addition, the
seasonal discount offers are also been provide to the customers, which will attract more to their
stores. Harvey Norman is much effective in determining the current market trend and offers their
product accordingly. The product portfolio is being updated periodically to cater to the change in
the taste and preference pattern of the customers. The marketing and promotional activities are
being designed according to the requirement and expectation of the mass market customers.
The last aspect of the STP model is the positioning strategy of the organization. Being a
mass market retailer, Harvey Norman positioned itself as retail chain offering consumer goods at
the lowest price possible. Thus, the brand image of them among the customers is the cost
effective retail store offering wide array of products (Hassan and Craft 2012). This will help
them in further market penetration in the existing market and development of new market in the
global scenario.
Competitive advantage of Harvey Norman
The key competitive advantage for Harvey Norman is their price leadership strategy in
the market. More customers are being attracted due to their low offering of price (Wagner III and
Hollenbeck 2014). Another competitive advantage for them is their offerings of diversified
product portfolio. This helps them in targeting vast segments of customers. Majority of their
competitors are operating in a single product line or in similar product line. However, Harvey

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Norman is operating in diversified portfolio of product line ranging from household products to
electronic items. The initiation of Omni channel marketing is also enhancing their market
performance (Frazer and Stienhler 2014). Online presence is enabling them to reach out to more
number of customers effectively. In addition, the customer awareness drive and the global brand
identity is further is getting enhanced due to their presence in the online market.
Marketing and sales strategy
Harvey Norman maintains effective marketing and sales strategy in order to reach out to
more number of customers and increase the market share. The sales for Harvey Norman are
being initiated through their franchisee stores in the Australian regions and owned stores in rest
part of the world (Dada, Watson and Kirby 2012). Marketing activities of them involves all types
of marketing media to reach out to varied customer segments. They also maintain customization
option for their marketing and promotional activities. This helps them in effective catering to the
customers in other parts of the world. Customers around the world are being targeted according
to their taste and preference pattern and according to their cultural and social backgrounds. This
helps the customers in making effective connection with the brand. In the recent years, the sales
of Harvey Norman are being promoted through their online channel. It helps them to target the
global customers with their entire range of product portfolio.
Financial plan
Year 1 Year 2 Year 3 Year 4 Year 5
Starting Cash Position
Inflow (Source of Fund)
$
50,000.00
$
75,000.00
$
80,000.00
$
85,000.00
$
90,000.00
Cash Sales
$
10,000.00
$
15,000.00
$
20,000.00
$
30,000.00
$
40,000.00

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Collection from Accounts
Receivable
$
10,000.00
$
20,000.00
$
30,000.00
$
40,000.00
$
50,000.00
Other Cash Receipts
$
20,000.00
$
22,000.00
$
25,000.00
$
30,000.00
$
35,000.00
Total Cash Inflow
$
90,000.00
$
132,000.00
$
155,000.00
$
185,000.00
$
215,000.00
Outflow (Use of Fund)
Fixed Cost
$
60,000.00
$
60,000.00
$
60,000.00
$
60,000.00
$
60,000.00
Administration
$
5,000.00
$
5,500.00
$
6,000.00
$
6,500.00
$
7,000.00
Marketing
$
20,000.00
$
20,000.00
$
20,000.00
$
30,000.00
$
30,000.00
Operations
$
10,000.00
$
10,000.00
$
10,000.00
$
8,000.00
$
8,000.00
Variable Cost
Administration
$
35,000.00
$
35,000.00
$
35,000.00
$
35,000.00
$
35,000.00
Marketing
$
20,000.00
$
20,000.00
$
25,000.00
$
25,000.00
$
30,000.00
Operations
$
40,000.00
$
55,000.00
$
60,000.00
$
75,000.00
$
80,000.00
Total Cash Outflow
$
190,000.00
$
205,500.00
$
216,000.00
$
239,500.00
$
250,000.00
Closing Cash Position
$
(100,000.00)
$
(73,500.00)
$
(61,000.00)
$
(54,500.00)
$
(35,000.00)
Analysis: From the above financial plan, it can be said that the first year of Harvey
Norman is more in the five year plan. It is due to the reason that the initial investment always
stay on the higher side. This financial plan is also showing that the closing cash flow is
decreasing gradually in the following years.

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Recommendations
 Initiation of social media marketing will help to connect with the customers more
effectively. It will further help the organization in having the feedback from the
customers.
 Effective implementation of the five year financial plan will help to allocate the resources
more effectively.
 Opening of more company owned stores in the global market will further help to fortify
their position over their competitors.
 Initiation of product for the niche market will help to target the higher end customers
also. It will help them to target the niche market along with the existing mass market.
Thus, the market area will get increased.
Conclusion
Having discussed the marketing and organizational structure of Harvey Norman, it can be
concluded that they are having distinctive and effective approaches. These approaches are
helping them in targeting their customer segments more effectively. Moreover, the diverse
product portfolio is helping them to target varied customer requirements. However, one of the
gaps being identified is the absence of social media marketing which is quite important in current
scenario. Thus, several recommendations are being provided in order to fulfill these gaps and
enhance their performance in the future.

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Reference
Badolato, P.G., Donelson, D.C. and Ege, M., 2014. Audit committee financial expertise and
earnings management: The role of status. Journal of Accounting and Economics, 58(2), pp.208-
230.
Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan.
Dada, O., Watson, A. and Kirby, D.A., 2012. Toward a model of franchisee
entrepreneurship. International Small Business Journal, 30(5), pp.559-583.
Frazer, M. and Stiehler, B.E., 2014, January. Omnichannel retailing: The merging of the online
and off-line environment. In Global Conference on Business & Finance Proceedings (Vol. 9, No.
1, p. 655). Institute for Business & Finance Research.
Gbadamosi, A., 2013. Principles of marketing: A value-based approach. Palgrave Macmillan.
Harvey Norman Holdings. (2017). Company Overview. [online] Available at:
http://www.harveynormanholdings.com.au/company/ [Accessed 19 Aug. 2017].
Hassan, S.S. and Craft, S., 2012. Examining world market segmentation and brand positioning
strategies. Journal of Consumer marketing, 29(5), pp.344-356.
Hendry, C., 2012. Human resource management. Routledge.
Luo, J., Ba, S. and Zhang, H., 2012. The effectiveness of online shopping characteristics and
well-designed websites on satisfaction.