External Analysis of JB Hi-Fi: A Management Perspective Report

This report offers a comprehensive external analysis of JB Hi-Fi, a major Australian retailer specializing in consumer goods. It examines various factors impacting the company, including the technological environment, highlighting the need for cybersecurity and adaptation to rapid technological advancements. The economic environment is assessed, considering employment rates and relevant legislation like the Age and Racial Discrimination Acts. The competitive landscape, including key players like Harvey Norman and Kogan, is analyzed, emphasizing JB Hi-Fi's low-cost strategy. The report also delves into the labor environment, emphasizing workplace conditions and compliance with the Fair Work Act 2009. Resource environment, customer environment, legal and regulatory obligations, and global influences are also discussed. The analysis covers the company's strengths and weaknesses, providing insights into the opportunities and threats it faces in the market. The report concludes by summarizing the key findings and their implications for JB Hi-Fi's strategic positioning and future success.

Management
4/12/2020
JB Hi-Fi

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Contents
Introduction......................................................................................................................................2
Overview of company..................................................................................................................2
External analysis..............................................................................................................................3
Technological environment.........................................................................................................3
Economic environment................................................................................................................4
Competitive environment............................................................................................................4
Labour environment.....................................................................................................................5
Resource environment.................................................................................................................6
Customer environment.................................................................................................................7
Legal and regulatory Environment..............................................................................................7
Global environment.....................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
External analysis is an vital tool whose objectives is to evaluate the changing world in which the
business is operating its operations so that they can contribute in determining the potential threats
as well as opportunities. The businesses are operating in the competitive environment for which
they analysis of entire outside market. There are different forces that can influence the working
in the positive and negative manner. The purpose of the report is to present the external analysis
of the JB Hi-Fi Company, a publicly listed Australian retailer who sell and also specialises in the
consumer goods.
Overview of company
JB Hi-Fi Company was established by Mr. John Barbuto (JB) in the year 1974 as a trading from
a single store in East Keilor, Victoria. The company has wide number of stores from where they
offer services to their customers. It is known as the world’s leading brands of the tablets,
computers, TVs, cameras, car sound, home theatre, and many others (JB Hi-Fi Company, 2020).
Furthermore, the company provides the largest range of the games, recorded music, DVD music
and many other related items.

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External analysis
The company wants to maintain the eye on the market which is possible with the help of the
analysis of the external analysis. The analysis of the factors makes the company to decide
whether they have to take the advantage of they need to fight against the threats that are faced by
the company as it can influence the working of the company (Rothaermel, 2016). The external
analysis of the JB Hi-Fi Company is presented below: -
Technological environment
The technological environment include the different factors that are required to be considered by
the company include the accelerated development of the new technologies, rapid product
obsolescence, high difficulty in safeguarding the intellectual property (Lasserre, 2017). JB Hi-Fi
Company and its information system are consists of the work systems, structures, technologies
and people. Most of the design works is performed by the managers as well as the IS
practitioners. In the research, this has been found that monitoring of the technological
environment is required to be considered by JB Hi-Fi business to get the success of the
management strategy. The company has the wide range of opportunity as improvement in the
technology will make the company to enhance the development capabilities of company. The
new discoveries in nanotechnology, architectures of communication and applicants will bring the
improvement in the strategy of business.
The global cyber security is equal to $71 billion (USD) and it is predicted to grow to $170 billion
by the end of year 2020 (Barry, 2020). The company abide by Cybersecurity Act 2020 whose
aim is to protect company from any kind of threat and security breach that affects the customers.
There are some of the biggest security threats which are faced by the business that include email

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phishing, account hijacking, Ramsomware, cloud based platforms (IAAS & SAAS) and many
other (Australia Government, 2020). The implementation of the cybersecurity act will help the
company to prevent from all these threats.
Economic environment
The economic factors are considered as one of the vital factor that can influence the working of
the business. The economic factors that are required to be considered by the company include
unpredictability of prices, costs, exchange rates, interest rates, business cycles and many others.
In the research, this has been found that an unemployment remains so high and labour market
has becomes slack (David and David, 2016). The rise in the unemployment rate in Australia
affects the ability of the JB Hi-Fi business to employ more personnel as well as make improved
sales. While considering the employment opportunities, the expansion of the business makes the
company to provide employment to maximum people in order to enhance their sales and revenue
across different areas. JB hi-Fi grabs this opportunity and for that they need to ensure Age
Discrimination Act 2004 and Racial Discrimination Act 1975. This has been found that Australia
includes community people due to which there is possibility of the discrimination by the JB Hi-
Fi while appointing the staff for the company. In addition to this JB Hi-Fi need to abide with the
act of the age discrimination at the workplace so that they don’t do the differentiation between
the youth and adult in terms of salary (Morden, 2016). In case, the company don’t follow the
regulations then they need to face the high penalty which is considered as threat for the business.
Competitive environment
The competitive environment is considered as one of the external factor which is required to be
considered by the companies. JB Hi-Fi Company has competitors in the market which include
Harvey Norman, Big W, Kmart, Kogan and many others (Richards, 2018). The company has the

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low CODB (Cost of doing business) and it is maintained through the continuous emphasis on the
production, reducing the unnecessary expenditure and also leveraging the scale. The company
has the ability to compete effective with the traditional competitors. In the competitive
environment, this has been found that Harvey Norman and JB Hi-Fi Company have the strong
financial health ratings (JB Hi-Fi Company, 2020). The strategy of the company is to operate
with the low gross margin and also to ensure the ultra-competitive which is considered as first
lines of the defence against the Amazon Company. The company also put pressure on their
competitors like Harvey Norman Company who refuse to compare like or like sales. At the
Harvey Norman, there is considered as the most profitable area of the business is bedding as well
as furniture not consume appliances and electronics (Amato, 2016). This shows that the threat of
the competitive market is less as company has the strong strategy through which they can deal in
the market effectively.
Labour environment
The labour environment is one of the major external environments which are required to be
considered by the company. The analysis of labour environment consists of growing scarcity of
skilled personnel, employee less loyal, benefits to the customers and many others. This has been
witnessed that the JB Hi-Fi Company needs to provide the better workplace condition so that
they can attract the labour. The market of labour is competitive in Australia as the employees
easily switch to the companies who provide them better wages and workplace environment
(Inside Small Business, 2018).
In the research, this has been found that when the company provide the employment to the
people then they need to abide with few regulations which include Fair Work Act 2009
(Employ Sure, 2020). This act is primary piece of the legislation that is governing the

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workplaces of Australia. This act is considered as the basis of the standards and regulations for
the employment and something from which the employers need to be familiar. The wages are
provided by the JB Hi-Fi Company as per the needs of the employees performing the operations.
Resource environment
The external analysis include the resources environment which include factors like rise in
specialisation of resources, sources of supply, resource scarcity and many others. This has been
witnessed that the core competencies are considered as vital element for the business firms like
JB Hi-Fi who make use of the resources so that they can offer the services to the customers in the
market (Ethiraj, Gambardella and Helfat, 2018). In the research, this has been determined that
the company is equipped with the highly skilled workforce who is possible with the effective
successful training as well as the learning programs. The company is making the investing huge
resources in training as well as development of the personnel which helps them in improving the
skills which will be used for the productivity. Furthermore, the company has the strong
distribution network which shows that they can easily rely in order to meet the growing needs of
customer and providing them timely services. In terms of the financial resource, JB Hi-Fi
Company has the strong free cash flows that offer the resources in hand to expand the new
projects. The company has the wide opportunities in the market in terms of the resources.
However, the fact can’t be denied that they have to abide by the financial act which is
Corporations Act 2001 (Cth). The company need to follow the financial act as this is the only
way through which they can perform the operations in right manner. In case, the company is not
able to abide by the financial act that there is possibility of high threat of the financial risk which
affects the working of the business.

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Customer environment
The customers of the company are considered as the key towards the success as it is essential to
meet the demands of the customers. The factors that might influence the working of JB Hi-Fi
Company include more demanding as well as complex customers, segmented customer and
many others. This has been determined that JB Hi-Fi Company targets the wide market
customers which include Australia and New Zealand due to which they have the high growth
opportunities in terms of the operations. The company has their wide customer range due to
which the demand of the customers keep changing which affects the operations of the business
which means that they have to bring the change in their operations and products as per customer
needs (JB Hi-Fi Company, 2020). Thus, this reflects that they have the opportunity as well as
threats because change in customer needs is not easy to be attained by company. JB Hi-Fi
Company needs to follow Competition and Consumer Act 2010 which helps them in provide the
safety and quality products to the customer by maintaining the healthy competition. Act needs to
be followed by company as it promotes healthy competition and fair trade opportunities to
customers. In case, the company don’t follow then there is high chances of the threats for
customer right safety in the market.
Legal and regulatory Environment
In the environment, the company need to consider the legal and regulatory obligations which are
related to the regulations related to business and also related to the environment. JB Hi-Fi
Company need to abide by the legal regulations of the Income tax assessment Act 1997 as they
need to pay the tax on the about earned by them (Jones, 2018). The tax payment is one of the
legal obligation which needs to be fulfilled otherwise the government of the Australia can take
the strict actions against the company. However, there is possibility of the changes in the tax

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rates charged by the government as per the conditions of the economy which will lead to the
impact on the revenue earned by the company.
Along with this, the company need to abide by Environment Protection and Biodiversity
Conservation Act 1999 which helps the company to ensure that they are able to protect
environment and biodiversity. There should be no harm to the environment because of the any
activity of the operations as this might leads to the heavy penalty on the company.
Global environment
Global environment is one of the major influencer of operations of company. The major factor
required to be considered include real-time communication, production, and also distribution. In
the global market, the company is able to manage the successful track record of the integrating
the complimentary companies with the help of the mergers and acquisition. JB Hi-Fi Company
has the wide range of the opportunities through which they can acquire the technology
companies who will provide the help in streamlining the supply chain of the company (Fern Fort
University, 2020). JB Hi-Fi Company have also entered successfully in the new markets and
attaining revenue. However, sometimes the company find the threat of lack of production in
some markets which affects the supply in the other areas of the world.

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Conclusion
At the end, this can be summarised that the external analysis of the market is essential for JB Hi-
Fi Company as it helps in understanding the opportunities that are required to be grab by the
company. However, this has been found that the external environment include the different rules
and legal obligations which are followed by company. The discussions of the different Acts that
are followed or required to be followed by the company are discussed. JB Hi-Fi Company should
deal with the threats by bringing proper strategies as it helps in dealing in external market.

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References
Amato, E.D. (2016) JB Hi-Fi vs Harvey Norman – which one should you buy? [Online].
Available from: https://www.afr.com/wealth/investing/which-household-consumer-goods-
company-should-you-buy-jb-hifi-or-harvey-norman-20161021-gs7kd1 [Accessed on 11th April
2020]
Australia Government (2020) Australia’s 2020 Cyber Security Strategy [Online]. Available
from: https://www.homeaffairs.gov.au/reports-and-publications/submissions-and-discussion-
papers/cyber-security-strategy-2020 [Accessed on 11th April 2020]
Barry, J. (2020) Cyber Security in 2018 [Online]. Available from:
https://solutions.jbhifi.com.au/project/cyber-security/ [Accessed on 11th April 2020]
David, F. and David, F.R. (2016) Strategic management: A competitive advantage approach,
concepts and cases. Pearson–Prentice Hall.
Employ Sure (2020) What is the Fair Work Act? [Online]. Available from:
https://employsure.com.au/guides/fair-work-australia/what-is-the-fair-work-act/ [Accessed on
11th April 2020]
Ethiraj, S.K., Gambardella, A. and Helfat, C.E. (2018) Theory in strategic
management. Strategic Management Journal, 39(6), pp.1529-1529.
Fern Fort University (2020) Jb Hi-Fi Limited SWOT Analysis / Matrix [Online]. Available from:
http://fernfortuniversity.com/term-papers/swot/nyse/6096-jb-hi-fi-limited.php [Accessed on 11th
April 2020]

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Inside Small Business (2018) JB Hi-Fi acts to improve workplace practices [Online]. Available
from: https://insidesmallbusiness.com.au/planning-management/jb-hi-fi-acts-to-improve-
workplace-practices [Accessed on 11th April 2020]
JB Hi-Fi Company (2020) About Us [Online]. Available from:
https://www.jbhifi.com.au/pages/about-us [Accessed on 11th April 2020]
JB Hi-Fi Company (2020) FY19 Results Presentation [Online]. Available from:
https://investors.jbhifi.com.au/wp-content/uploads/2019/08/Result_Presentation_FY19.pdf
[Accessed on 11th April 2020]
Jones, D. (2018) Complexity of tax residency attracts review. Taxation in Australia, 53(6),
p.296.
Lasserre, P. (2017) Global strategic management. Macmillan International Higher Education.
Morden, T. (2016) Principles of strategic management. Routledge.
Richards, D. (2018) Comment: Why JB Hi Fi Is The Best Retail Group In Australia [Online].
Available from: https://www.channelnews.com.au/comment-why-jb-hi-fi-is-the-best-retail-
group-in-australia/ [Accessed on 11th April 2020]
Rothaermel, F.T. (2016) Strategic management: concepts (Vol. 2). McGraw-Hill Education.