Dick Smith Strategic Management: Environment and Strategy Analysis

This report provides a comprehensive strategic management analysis of Dick Smith, a retail chain in Australia. It begins with an overview of the company and its mission, followed by an in-depth examination of its internal and external environments. The internal environment is assessed using a SWOT analysis, highlighting strengths, weaknesses, opportunities, and threats. The external environment is analyzed through a PESTLE framework, considering political, economic, social, technological, legal, and environmental factors. An industry analysis is conducted, followed by a Porter's Five Forces analysis to evaluate the competitive dynamics. Competitor analysis provides insights into key rivals. The report then focuses on strategy formulation using the Ansoff Matrix and discusses the implementation of strategies. The analysis covers the Australian market, the company's financial challenges, and the competitive pressures from players like JB Hi-Fi and Aldi. The report concludes with recommendations for Dick Smith to improve its strategic position, including adapting its business model and considering market expansion.

Running head: STRATEGIC MANAGEMENT
Dick Smith
Strategic Management
5/15/2019

STRATEGIC MANAGEMENT 1
Table of Contents
Introduction................................................................................................................................2
Overview of Dick Smith........................................................................................................2
The mission of Dick Smith....................................................................................................2
Environment Analysis............................................................................................................3
Internal Environment Analysis..........................................................................................3
External Environment Analysis.........................................................................................5
Industry Analysis...................................................................................................................7
Porter Five Force Analysis.................................................................................................8
Competitor Analysis...............................................................................................................9
Strategy Formulation............................................................................................................10
Ansoff Matrix...................................................................................................................10
Implementation of Strategy..................................................................................................11
Conclusion................................................................................................................................13
References................................................................................................................................14

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Introduction
Strategic management in an organization can make or break a business. It has been observed
that without any strong strategy, a number of businesses failed in the market. Leaders in the
company with a strong vision and understanding of the business always have a strong hand in
comparison to competitors in the market. Establishing the goals of the business and aligning
them with the vision of the company is one of the most critical jobs while developing a
growth roadmap (David, 2011). When the business grow in the market, there is need to create
a strategic plan because it supports in attaining success. Hence, a strategic plan is considered
as the blueprint for achieving success in the market against competitors (Pamfilie, Petcu and
Draghici, 2012). The aim of this report is to discuss the business environment of Dick Smith
in which it operates. The analysis also highlights the industry and competitors analysis in
order to analyse what forces are influencing the operations of the company.
Overview of Dick Smith
Dick Smith is the retail chain of Australia that is involved in vending consumer electronics
goods, electronic projects kits, hobbyist electronic components, etc. The chain has
productively expanded its operations in the New Zealand market but has unsuccessful
operations in other nations. The business was established in 1968 in Sydney by Dick Smith.
The company has sold its 60% of the shares to Woolworths Limited (Dick Smith, 2019).
The mission of Dick Smith
The mission statement of Dick Smith is "Australian Made and Australian Owned". The
motive of the company is to market a variety of food and consumer electronic products with
best quality and taste. The company believes in offering increased employment opportunities

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to the young people, hence, it had planned to bring into a market number of jobs for people
especially in Australia (Dick Smith Food, 2019).
Environment Analysis
Internal Environment Analysis
SWOT Analysis
Strength
Experience – One of the major strength of Dick Smith is its vast experience in the Australian
market. Dick Smith has complete knowledge regarding the ups and downs that take place in
the market and the changing consumer behaviour and taste for any specific product or
technology. With this vast knowledge, the company is able to gain the trust of the customers
as well as other stakeholders.
Employee Policies – The Company is known in the market for implementing different
policies for the benefit of its employees as well as customers. Dick Smith is known as a
people savvy employer. Besides hiring a diverse group of employees, the company has been
always alert regarding confirming that all the employees hired are well trained and courteous.
In order to confirm the satisfaction of the employees, the company is also involved in
offering perks and bonuses to the employees.
Weaknesses
Financial Stability – Dick Smith is known in the market for dealing with various troubles in
the market as its investors and customers are leaving the floor and moving towards its
competitors. All the customers who purchased the gift cards during the Christmas in the year
2016 have become the unsecured creditors whereas investors of the company who purchased

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the shares of the company at $ 2.2 per share in the same year lost all their invested money
(The Conversation, 2016).
Weak Strategies – Apart from weak financial performance, the strategies of the company are
also weak, which are not able to produce best results for the company. Like other retailers JB
Hi-Fi, Bunnings, Harvey Norman, and Aldi, Dick Smith also introduced different discounting
offering, however, it failed in attracting a large number of customers.
Opportunities
Change in Business Model – In order to have successful operations in the market, it is viable
for Dick Smith to change its business model and adopt a business canvas model through
which it will be able to concentrate on nine different elements of the business.
Market Expansion and Market Development – Dick Smith can plan to grow its business
activities in the Asian market in order to offer its services, because in the Australian market,
the organization is dealing with intense competition, due to which it is unable to survive in
the market successfully. In addition to this, the company can focus on advanced household
electrical devices.
Threats
Global Financial Crisis – One of the major threats for Dick Smith is the global financial
crisis. The ongoing global financial crisis has majorly impacted the financial position of the
organization due to which it is not able to pay off its debts as well as other liabilities, which is
resulting in the raising number of questions over the image and capability of the company.
Competition – The key competitors of Dick Smith in the Australian market are JB-Hi-Fi,
Aldi, Bunnings, and Harvey Norman. All these players are raising number of threats in the
direction of the company through their cost leadership and focus strategies. To deal with

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these issues, it is suggested that company must plan to adapt focus strategy such that it can
work on focusing on its key operations and offering the best services to the customers.
External Environment Analysis
PESTLE Analysis
Political Forces
The political environment of Australia is stable and offers a number of business opportunities
to different businesses both domestic and international business. The stable political
condition of the country results in the introduction of a number of policies for the
development and growth of the people as well as business. There are a number of government
policies that have a major influence on the retail business (Frue, 2018). These regulations of
the government also impact the buying behaviour of the customers, trade laws, and the
economy of the country. However, Dick Smith presently does not face any challenges from
the political condition of the country.
Economic Forces
Australia possesses 13th position in the list of the largest worldwide economy. In the year
2017, the economy grew to around 2% (Frue, 2018). But, the ongoing financial crisis at the
global level has majorly impacted the number of business operating their activities across the
world. Same like other companies, Dick Smith has also experienced the financial crisis due to
which it was unable to pay its debts (Financial Review, 2016). In the year 2016, Dick Smith
was unable to pay the returns to its investors during Christmas, which had a major impact on
the company's position in the market and decreasing trust of the customers.
Social Forces

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Preference of the customers is the major influencing factor that has impacted the retail
industry. For example, people like to purchase products in bulk in the Australian market, due
to which different retail business offer number of discount offers to the customers on bulk
purchases. In addition to this, the activities and actions of the business also impact the
perception of society towards business. Today, people like to purchase a product from those
businesses that are responsible for society and meeting their corporate social responsibilities.
In case of Dick Smith, it has been analysed that company has gained 36% as its CSR rating
which highlights that the company is presently not effectively being part of society and
meeting its responsibilities towards the community (CSR Hub, 2019). In order to improve
this, the company has to get involved in different social causes and show its contribution to
the development of the community.
Technological Forces
Australia is known across the world for its technological innovations. It has adopted different
innovative technologies more often in comparison to other nations. The acquisition of
technology in the Australian market is anticipated to touch around $65 billion. Even in the
country, there are various laws passes by the native government in relation to encryption. The
government of the country has allowed a contentious law which allows security agencies and
police to have access to anyone's encrypted messages. Encryption is introduced for hiding the
information; however, the motive of the government is security for introducing this law
(Dodgson, Hughes and Metcalfe, 2011).
Similarly, the retail industry of Australia is benefited with the internet, as it has allowed
offering their services through online medium.
Legal Forces

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The retail industry in Australia is obliged to encounter judicial conditions before initiating the
business operation in the market. The legal conditions comprise enduring by taxation laws,
labor laws, etc. The legal factors become very tough when a business thinks of expanding the
operations in the foreign market (Adamkasi, 2016). In addition to this, the recruitment and
human resource management law is the portion of the general retail industry framework. Dick
Smith does follow all the legal requirement of the country by offering quality products to the
customers and offering employment opportunities to the people of Australia.
Environmental Forces
The environmental force of the retail industry is imitated in the form of utilization of the
business practices that are environmentally friendly and contributing to the activities that are
focused towards reducing the harm to the environment (Hahn and Kühnen, 2013). Dick
Smith is successfully involved in the environment-friendly operations by focusing on
reducing its carbon emission and negative impact on the environment. In addition to this, it is
also focused on the residual use of natural resources like water and decreasing the wastage in
the environment due to the operations of the business.
Industry Analysis
Retailing in the Australian market has highlighted the subdued performance in the year 2018.
However, the retailing market of Australia is very competitive and challenging which is
increasing the pressure for both small and large businesses. Besides this, the suitability factor,
events of seasonal sales have performed a major role in inspiring the customers of the
Australian market to get involved in online shopping in the present years (Euromonitor,
2019).

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Porter Five Force Analysis
Threat of New Entrants
New entrant threat in the Australian retail industry is high, as there are a number of players
who are taking an entry or planning to take entry in the market. Particularly, the new entrants
that are entering the market are from the foreign market. However, for the existing big
players of the industry, the new entrant threat in the Australian market is moderate
(Management Study Guide, 2019).
Substitute Product Threat
The substitute product threat in the Australian retail industry is also high because there are a
limited number of businesses dealing with consumer electronic products.
Competition from Existing Players
The Australian retail market is very competitive which reflects that the competition power is
high. The competitors of Dick Smith in the Australia market like Aldi, JB Hi-Fi, etc who are
the leading players of the market and planning to raise a number of barriers and challenges
for different small and medium range players (Richards, Bjørkhaug and Hickman, 2013).
Customers Power
The customer bargaining power in the Australian retail industry is high because the available
number of players offers a similar type of products. The switching cost for the customer in
the retail market is low, due to which customer can switch from one retailer to another in
order to get a better product at low prices (Management Study Guide, 2019).
Suppliers Power
The suppliers bargaining power in the retail industry is low because they do not have a high
scope for differentiation between diverse retailers. The buying habits of the customer are
dynamic and they can select a retail store depending on the complex parameters such as

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promotional offers and proximity of the store. In the retail industry, only brand conscious
customers can give advantages to a specific supplier.
Competitor Analysis
The competitive analysis enables a business to perform a detailed assessment of the strength
and weaknesses of the competitors. This study signifies the desirable adjunct for directing an
examination regarding the current circumstances of the industry (Upson, Ketchen and Ranft,
2012). The analysis provides a comprehensive examination of the present competitors of the
company and the adopted strategies for attaining success in the industry. This competitor
analysis is providing the evaluation of Dick Smith and JB Hi-Fi.
Basis of Analysis Dick Smith JB Hi-Fi
Overview Dick Smith is the retail chain
of Australia that is involved
in vending consumer
electronics goods, electronic
projects kits, hobbyist
electronic components, etc.
JB Hi-Fi is the Australian
retailer which is involved in
selling consumer goods (JB
Hi-Fi, 2019).
Strength The key strength of Dick
Smith is its experience in the
retailing industry of
Australia. The company has
detailed knowledge regarding
consumer behaviour (Dick
Smith, 2019).
The strength of JB Hi-Fi is
the availability of a number
of outlets in almost every
state which is supported by a
strong distribution network.
Weaknesses Dick Smith is known in the JB Hi-Fi is presently not

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market for dealing with
various troubles in the
market as its investors and
customers are leaving the
floor and moving towards its
competitors.
majorly involved in the
research and development of
innovative products, which is
resulting in impacting its
image in the market.
Marketing Focus Dick Smith is focused on
Australia and New Zealand
Market.
JB Hi-Fi is majorly focusing
on Australian and New
Zealand market.
Market Position The present poor marketing
strategies of the company are
impacting its financial
position as well as its
reputation in the market.
JB Hi-Fi is the leading
organization that is offering
consumer electronic products
to the customers. It is
presently one of the desirable
brands that are demanded by
the customer in the
Australian and New Zealand
Market.
From the market analysis of Dick Smith, it has been analysed that company’s promotional
strategies and distribution channel is not effective which is resulting in losing competitive
advantage in the market. On the other hand, the key competitors of Dick Smith like Aldi, JB
Hi-Fi have attained the competitive advantage in the market by offering low cost products
through their effective distribution channel. Whereas, the low cost strategy of Dick smith

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failed because it was unable to offer the promised benefits to the customer and is unable to
pay off its debts.
Strategy Formulation
Ansoff Matrix
The Ansoff Matrix is the strategic planning framework that offers an outline to support the
senior managers, marketers, as well as executives in devising the strategies for the future
growth of the business. The Ansoff Matrix is comprised of four different strategies that are
Market Penetration, Marketing Development, Product Development, and Diversification
(Kipley, Lewis and Jeng, 2012).
Market Penetration
Under this strategy, the business plans to grow by making use of its current offering in the
present market. For this, the business exerts maximum efforts to augment its share in the
market considering the present condition of the market (Arkolakis, 2010). This comprises
increasing the share of the market in the present market sections. This could be achieved buy
selling more services and products to the existing target audience and by finding new
customer segment in the existing markets. Here, the business tries to increase its sales for its
initial offering in the current market with the help of more aggressive distribution channel
and promotion strategies.
In order to again cover the Australian and other markets, Dick Smith must get involve in
adopting market penetration strategy under which it will re-design its distribution channel and
introduce different aggressive advertisement that could support it in enticing customers. For
the promotion, the company can plan to promote its business through online as well as the
offline medium. In terms of changing its distribution channel, it can contact different