MYER's Department Store: Analysis of Business Risks and Strategies

This report provides a comprehensive analysis of the business risks faced by MYER, a major Australian department store. It explores the competitive landscape, internal weaknesses such as undefined target markets, and the impact on stakeholders. The report utilizes SWOT and PESTEL analyses to assess internal and external environments, identifying opportunities and threats. It examines MYER's risk management framework, highlighting its strengths and weaknesses, particularly the lack of a clearly defined target market. The analysis covers operational, reputational, compliance, and strategic risks, along with risk assessment methodologies like the fishbone model and risk registers. The report emphasizes the importance of risk management for organizational sustainability, the impact of various factors like competition, economic conditions, and government policies. The conclusion underscores the significance of proactive risk management for mitigating financial losses and ensuring business success. The report also includes a review of relevant academic sources.

Business risks 1
DEVELOPMENT OF A BUSINESS CASE.
Author Name(s)
Institution;
Author Note

Business risks 2
ABSTRACT
MYER’s is one of the largest departmental stores in Australia. Like any other
organization, it is faced by business risks, with the major one being competition from the other
largest departmental store in Australia. MYER's has also not clearly defined its target market and
this is a risk that has resulted in poor performance and profitability of some stores which have
then been closed down. This paper seeks to look at some of the strategies MYER has
implemented to deal with poor performance. Also, it shows the different types of business risks
that can affect a business and different ways of analyzing the levels of risks.

Business risks 3
INTRODUCTION
MYER is a departmental store chain located in Australia. It is a retail business that
mainly deals in the retail of a range of products and accessories; clothing, footwear, cosmetics,
electronics, video games, and stationery among others. MYER is one of the largest departmental
stores in Australia by revenue and the number of store count. Additionally, it has been in
existence for over a hundred years. The main challenge that MYER faces is competition from the
other largest department store, David Jones. In recent years MYER has closed several shops in
different locations, where its rival has later opened up stores. This is a predicament that the
management should tackle by implementing a project to improve their marketing strategies to
improve efficiency and profitability in the stores to prevent their closure as well as open other
stores in other countries.
MYER departmental stores have branded itself as a market place where Australians can
get to discover and brand themselves in local and international lifestyles. It has prided itself as
the shopping destination for all Australians. However, it has been performing poorly which has
led to the closure of several stores due to poor performance. Hence, the management has come
up with strategies to help improve profitability. These strategies that have been implemented are
Customer-led offers, wonderful experiences, omni-channel shopping, and a productivity step
change. Additionally, MYER’s main objective is to ensure customer loyalty and this has been
ensured by the credit cards they offer to customers.
Like any other organization, MYER’s organizational structure is composed of several
departments. A vital department is the finance department that measures the risks that MYER
would be involved in when implementing a project and making decisions. The financial
department of MYER has set in place adequate measures in improving its risk management

Business risks 4
policies as can be witnessed by the new strategies put in place to increase profitability. The risk
management principles followed by MYER have helped reduce the risks related to its objectives.
However, the risk gap that remains based on the risk management principles is that MYER has
not clearly defined its target market which makes it difficult to manage risks from the market.
Stakeholders.
A stakeholder is a party who has an interest in a company and can affect the company or
be affected by it. Internal stakeholders are the employees, managers, and owners. Any risk
suffered by a business will directly affect the internal shareholders (Beringer et al., 2013). The
reduced performance of MYER stores has largely affected its profits leading to the closure of
some stores. This move has affected employees in that, with reduced profits, they do not have a
basis for requesting salary increments.
On the other hand, external stakeholders are not part of the company part who have an interest
in the company and are affected by its performance (Seifi & Crowther, 2018). Some of the
external shareholders are; customers, investors, suppliers, and the government. The external
shareholders though not part of the organization are affected by the decisions that the
management takes. A decision such as closing down underperforming stores by MYER will
affect the customers who relied on that store. Additionally, the investment made by investors will
not return with the expected returns.
A major objective of MYER is to deliver strong growth in its operations to increase
profitability. This is an objective that would prompt MYER to expand its stores even into other
countries. Opening another store in a different country, though a good strategy to increase

Business risks 5
profitability will face the risk of high competition from competitors in that country and this may
drive the business to fail and suffer more losses.
SWOT Analysis
Internal risks are those that arise from the normal operations of the business and can be
forecasted (Girling, 2013). The SWOT analysis can be used to analyze some of the internal risks
that affect the business. The SWOT analysis measures the strengths and weaknesses of a
business. One of the strengths of MYER is the personnel who are devoted to the business;
however, the personnel poses operational challenges if they are dishonest or unable to work and
this can decrease their productivity. A weakness that faces my MYER is an inadequate
definition of their target market; this poses a risk that will affect sales and reduce productivity.
Additionally, the SWOT analysis is also used to access the external environment by
analyzing the opportunities and threats that a business can face. A major threat that MYER faces
is from its competition. MYER has been losing its customers to the competition which has led to
closure of some stores due to poor performance. On the other hand, the recent developments in
technology, have provided MYER with an opportunity to carry out an intensified marketing
program to reach their customers and meet their requirement needs.
PESTEL Analysis
The PESTEL analysis is a tool used to access the external environment and how it affects
the business (Perera, 2017). It asses the risk that the political environment, socio-cultural,
technological, environmental factors, economic, and legal environment pose towards a business.
Each of these environments poses a risk to the performance of the business. The political
environment accesses the degree to which the government can intervene in the economy and

Business risks 6
affect the operations of MYER’s. An increase in taxation by the government will reduces profits
of MYER’s. The economic environment has a significant impact on how the organization does
business and its profitability. Some of the economic factors are interest rates, inflation, economic
growth, and exchange rates.
Additionally, the socio-cultural environment accesses the shared beliefs of a population.
The analysis will help the business understand the target market. Also, the technological
environment is one that is constantly changing and requires the business to adapt to remain
relevant. The environmental factors have become increasing important in the recent years and are
meant to encourage businesses to conduct their practices ethically due to the increasing scarcity
of resources. The last environment in the PESTEL analysis is the legal environment that outlines
the legal requirements and practices a business should follow. The business has no control over
the external environment and can impact the business either positively or negatively.
Integrating risk management and developing a risk framework.
In a study by Giannakis & Papadopoulos (2016), found that for effective management of
risk, an organization should develop a framework that allows risk management techniques to be
integrated within the operations of the business. The current risk framework used by MYER of
integration, design, implementation, evaluation, and improvement is quite effective in the
mitigation of risk. However, the framework has a gap and that shows incomplete risk
management. MYER chain store has not identified its target market, hence, the risk of low sales
from the wrong target market is highly possible.
In a study by Vasile & Croitoru (2012), they found that risk management helps a business
achieve various milestones in its performance and is of great importance to a business. It helps

Business risks 7
an organization generate a strong internal control system that limits or eliminates the occurrence
of the risk. A good risk management framework ensures that the activities of the organization
continue even after the risk has occurred. Also, the potential sources of internal and external
risks are identified and monitored. Additionally, it ensures the organization's objectives and
goals are achieved.
Organizations today always face uncertainty in achieving their goals and objectives. The
factors that when an organization is exposed to may fail are known as business risks (Sadgrove,
2015). A major business risk that affects an organization is an operational risk; this is a risk that
results from an unexpected failure in the organization day to day operations. This risk can be
caused by several factors such as technical failure. Also, it could be categorized under the human
resource section if the operational risk is as a result of employees boycotting work demanding
better pay. Other forms of business risks would be reputational risks, compliance risks, credit
risks, financial risks, and strategic risk among others. The business risks affecting an
organization are categorized into several categories depending on the areas of the business the
risk will affect or has originated (Anderson, 2013).
Management will deal with risks depending on the level of the risk. Some risks are
tolerable while others are not. A risk criterion is used to determine the level in which risk is
acceptable, unacceptable, or need to be reduced to a reasonable level (Popov et al., 2016). After
identifying the level of risks, controls are implemented immediately for those with a high level of
occurrence; for the medium risk, the process goes on and a control plan is developed and
implemented, while those with a low level of occurrence are monitored regularly (Kern et al.,
2012). MYER organization uses the fishbone assessment model to identify the sources of risk

Business risks 8
and the possible causes. Depending on each category identified as a source of risk, the
management then brainstorms on how to deal with the risks identified.
Risk register.
As risks are identified, they are documented and the necessary action taken to respond to
the risk. The risk register helps in the successful management of the risks as they are logged as
they occur and collective action is taken. The main objective of MYER is to grow and become
the leading departmental store in Australia, however, this objective faces the risk of
sustainability. Will MYER be able to sustain the extra employees required as the store expands?
Also, with the extra growth, comes to a financial risk and the impact will be great losses if the
risk occurs and the expansion fails.
There are several reasons as to why business risks occur. In a study by Girotra &
Netessine (2014), they found that business risks are either caused by natural causes, human
causes, economic causes, or physical causes. Some of these business risks are caused by
increased levels of competition, that sees businesses cut down prices to attract more customers
and hence suffering financially. Additionally, the management may not be capable of effectively
running the business and hence cause a business risk. Other business risks include; change in
government policies, human causes, natural factors, and use of modern technology among others.
If these risks are not attended to, it will result in lawsuits if compliance risks are not managed. If
financial risks are not managed, it will result in catastrophic losses.
Conclusion.
As shown above, every organization has the possibility of being affected by business
risks. In a situation where a business risk occurs, it will affect both the internal and external

Business risks 9
shareholders. Additionally, business risks are assessed and managed depending on their level of
occurrence and the impact they would have on the business. In cases where these risks are not
managed or continually monitored, they will result in heavy financial losses. Each organization
has its ways in which it manages risks.

Business risks 10
References.
Anderson, E. J. (2013). Business Risk Management: Models and Analysis. John Wiley &
Sons.
Beringer, C., Jonas, D., & Kock, A. (2013). Behavior of internal stakeholders in project portfolio
management and its impact on success. International Journal of Project Management,
31(6), 830–846. https://doi.org/10.1016/j.ijproman.2012.11.006
Giannakis, M., & Papadopoulos, T. (2016). Supply chain sustainability: A risk management
approach. International Journal of Production Economics, 171, 455–470.
https://doi.org/10.1016/j.ijpe.2015.06.032
Girling, P. X. (2013). Operational Risk Management: A Complete Guide to a Successful
Operational Risk Framework. John Wiley & Sons.
Girotra, K., & Netessine, S. (2014). The Risk-Driven Business Model: Four Questions That Will
Define Your Company. Harvard Business Review Press.
Kern, D., Moser, R., Hartmann, E., & Moder, M. (2012). Supply risk management: Model
development and empirical analysis. International Journal of Physical Distribution &
Logistics Management, 42(1), 60–82. https://doi.org/10.1108/09600031211202472
Perera, R. (2017). The PESTLE Analysis. Nerdynaut.
Popov, G., Lyon, B. K., & Hollcroft, B. (2016). Risk Assessment: A Practical Guide to Assessing
Operational Risks. John Wiley & Sons.
Sadgrove, M. K. (2015). The Complete Guide to Business Risk Management. Gower Publishing,
Ltd.
Seifi, S., & Crowther, D. (2018). Stakeholders, Governance and Responsibility. Emerald Group
Publishing.

Business risks 11
Vasile, E., & Croitoru, I. (2012). Integrated Risk Management System – Key Factor of the
Management System of the Organization. Risk Management - Current Issues and
Challenges. https://doi.org/10.5772/47883