Strategic information system can be defined as those systems where information service resources are applied to strategic business opportunities. The development of such systems is in response to corporate business initiative. The operations are mechanized by such systems for better control, efficiency and effectiveness. Strategic information systems are responsible for linking the business and computer strategies (Galliers and Leidner, 2014).
This report focuses on Harvey Norman along with the analysis of its internal and external environment. This report also proposes an information system solution for Harvey Norman the implementation of which can meet the needs of the company in an effective manner.
Harvey Norman is a large multi- national retailer of Australia that operates in furniture, computers, bedding, consumer electrical products and communications. The operations of the company are mainly in the form of franchising with the main brand and all the company owned stores owned by Harvey Norman Holdings Limited. There are approximately 280 franchised and company- owned stores in Australia, South- East Asia, Europe and New Zealand that operates under Harvey Norman, Joyce Mayne and Domayne brands in Australia along with under the Harvey Norman brand overseas (Harvey Norman, 2018).
Since the company is engaged in the retailing of large range of products such as furniture, bedding, computer etc., the industry of its operations are also diverse. However, overall the company belongs to the retail industry. The retail industry of Australia performs the function of selling the consumer goods and services to the consumers with the help of multiple distribution channels for the purpose of earning profits. Social and economic developments have completely transformed the retail industry of Australia. The market is also very flexible and the purchasing power of the customers has also increased leading towards a number of opportunities for the retailers.
Economic- the economic conditions of Australia are not favorable. The dollar rates are increasing at rapid pace as a result of which the monetary transactions are being impacted. The online trading the organizations are also being impacted due to the high inflation rates. The effect of the European economic crisis is also severe. All these economic condition are having a severe effect on the profitability of Harvey Norman (Baker, Merkert and Kamruzzaman, 2015).
Physical- these days, the customers are emphasizing the organization to perform social responsibilities. This has led Harvey Norman to focus on the areas of environmental protection and sustainable practices. They are also aiming at the reduction of wastes and are emphasizing on green business practices.
Socio- cultural- with the passage of time, there has been a drastic change in the attitudes, behaviors and preferences of the people in Australia. They demand quality products at lower prices. This has affected the sales of Harvey Norman as they have to lower their prices and has to bring various offers and discounts in order to attract the customers.
Global- Harvey Norman is already operating in Australia, South- East Asia, Europe and New Zealand and is further planning its operating in rest of the parts of the world. Its operations in different countries also require it to abide by the law and legislations of such places which sometimes also results in difficulties.
Technological- Australia has witnessed a greater degree of technological advancements over the past few years. Harvey Norman is also making the effective use of technology in its operations and stock keeping. Such technology has also assisted Harvey Norman in the adoption of innovative marketing strategies for attracting the customers. The social media technology is increasingly being used for this purpose. Online marketing has also been adopted by the company for increasing its customer base.
Political/ Legal- Some legislative amendments made in Australia recently have created an immense impact on the business operations of Harvey Norman. International trade laws and political instability have often led to difficulties of the organization. Moreover, the increasing taxes for the corporates are reducing the profitability of the business (Roberts, 2016).
Demographic- the population structure of Australia have changed to a great extent as a result of the immigration policy. The population is mostly consisted of ethnic and religious groups. The composition of older adults is also increasing in the population as a result of adoption of healthier lifestyle. This also has an impact on the sales of Harvey Norman.
Bargaining Power of Buyers- the increase in the purchasing power of the customers have also made them very demanding. Now they demand value for their money. In this way, Harvey Norman is pressurized for fulfilling the demands of the customers in order to maintain its profitability. Therefore, the high bargaining power of the customers has also increased their ability of seeking increasing offers and discounts.
Bargaining Power of Suppliers- the margins earned by Harvey Norman Holdings Limited are decreased to a great extent due to the existence of dominant position of suppliers. The suppliers are in the dominant position in the retailing industry. This powerful position can also lead the suppliers to extract higher prices from Harvey Norman and can lower its profitability.
Threats of New Entrants- the retailing industry of Australia is governed by innovation. The consumer goods are required to lower down their prices in order to survive in the market for a longer period of time. The new entrants are coming up with low price strategies due to which Harvey Norman is also required to lower its prices. The company has to build effective barriers in order to safeguard its competitive edge.
Rivalry among Existing Firms- the retail industry is very competitive. The rivalry among the firms in an industry has an immediate impact on the profitability of an organization. The competitive strategies of the competitors have affected the sales of Harvey Norman.
Threat of Substitutes- the profitability of the entire industry suffers when a substitute product or service is introduced in the market. There is high threat of substitute in the retail industry due to the existence of number of companies that are also engaged in the business of furniture, bedding and computer retailing business. Competitive strategies are required to be undertaken by Harvey Norman for ensuring its survival in the market.
There are a number of competitors of Harvey Norman; however, the most important of them are JB HI- FI and IKEA. These form the part of the strategic group of the company. JB HI- FI has greater number of employees as compared to Harvey Norman which allows it to better perform tasks. IKEA is also a very big brand which adopts competitive strategies for becoming leader of the market. These brands also offer competitive offers and discounts from time to time for the purpose of attracting the customers. Their brand identity acts as their capability and also assists in increasing their sales in the marketplace.
However, Harvey Norman is also a recognized brand in a number of places such as Kosovo, Russian Federation, Croatia and Montenegro along with the place of its origin, i.e. Australia. Its international marketing capabilities also provide it a competitive advantage. The company is also competent enough to perform well in the market and is able to maintain its profitability despite of severe competition (Turner, Fiske and Hodge, 2016).
Opportunities- These days, customers do not mind paying extra for getting high quality products. However, if high quality products are available at lowest possible price, such offer cannot be ignored by the customers. This can be used as a tactic by Harvey Norman by offering high quality products to the customers in order to attract them. The company can also plan the expansion of its products into the lifestyle segment by way of leveraging on the brand name. Harvey Norman can also aim at capitalizing on the technological transformation in the industry which will also ensure its competitive position in the marketplace. Technological advancements can lead the organization to new heights.
Threats- The competition in the Australian retail industry is very intense. A number of new firms are coming up in the market with innovative offers and strategies due to which the profitability of Harvey Norman is under pressure. Moreover, there are changes in the attitudes and perspectives of the customers as well which also have a significant impact in the sales of Harvey Norman.
The effectiveness of the resources of the organization provides it a competitive edge over the competitors. The most important resources possessed by Harvey Norman are its physical and human resources. The physical resources of the company are in the form of vehicles used for its operations in transportation of products, laptops and computers for employees, etc. Moreover, it is the human resources that are responsible for maintaining and managing the operations of the company. The employees of Harvey Norman act as its complex resource because they require considerations, feedback and appreciation for the purpose of maintaining and increasing productivity.
The connections maintained by Harvey Norman with the outside partners i.e. the suppliers, investors, etc. are also the resource of the organization. The maintenance of smooth relations with such parties has resulted in its smooth operations. The prosperity of Harvey Norman also depends on its client list. The investors and partners are also attracted as a result of the network and connections established by the organization.
The capabilities of any organization play an important role in the execution of the business strategies. With the help of capabilities, an organization is able to manage its resources such as employees in an effective manner for the purpose of gaining competitive advantage over the competitors. The success of Harvey Norman is also the result of its capabilities. The biggest resource of any organization i.e. the employees are required to be managed in an appropriate manner with the help of suitable strategies and practices. This is done by the top level management of Harvey Norman by effectively managing the employees and guiding them towards the attainment of organizational objectives.
Another capability possessed by Harvey Noman is that it has employed talented workforce for fulfilling its tasks. It is the employees who are ultimately responsible for driving the organization towards success. The workforce dedicates their time, energies and talent for achieving the objectives of Harvey Norman. Harvey Norman has shown its capability in attracting, retaining and motivating committed and competent employees.
The last and the most important capability of Harvey Norman is that this organization has coherent brand identity and a shared mind- set. Harvey Norman ensures that the customers and the employees have consistent and positive experiences with the organization and have a positive image as well. The organization considers every member working with them as a part of their team and therefore has been able to ensure a shared mind set. This, in turn, allows them to effectively communicate their goals to everyone and can ensure its accomplishment. This has also led the organization to attain brand reputation in the market.
Resources- The talented workforce is the most valuable resource of Harvey Norman. This resource makes the use of other resources for providing competitive advantage to the organization. The brand reputation attained by the company is also with the help of the dedicated efforts of the workforce.
Capabilities- the brand identity of Harvey Norman and the effective working of the workforce and top level management are the most valuable capabilities. The brand identity has resulted in increased sales and profitability of the business. The efforts of workforce ensures that the organizational objectives are attained on timely basis.
Competitive Advantage- The innovative strategies adopted by the management has provided it a strong brand identity in the marketplace. The transportation of goods on timely basis ensures adequacy of the needed stock in stores. In this way, the demands of the customers are fulfilled on timely basis.
Strategies- The exceptional capabilities of the top authorities to effectively manage the entire organization along with the human resources of the organization have led towards the success of the organization. It is the strategies of the top management which has provided competitive advantage to the organization (Sutton- Brady, Kamvounias and Taylor, 2015).
Taking into consideration the operations of Harvey Norman, decision support system is proposed as the suitable information system solution. A decision support system can be defined as the information system with the help of which the business or organizational decision making is supported. Different levels of the organization including operations, planning and management are served by the decision support system by supporting them to make decisions regarding a variety of problems i.e. semi- structured or unstructured decision problems (Camacho- Collados and Liberatore, 2015). Harvey Norman can choose the adoption of decision support system to be either human powered or computerized.
The implementation of decision support system in the business operations of Harvey Norman will assist the organization in gathering and presenting information regarding comparative sales figures of two different period, projected revenue figures on the basis of product sales assumptions and the inventories of information assets. The decision made by the top management after considering the information presented by the decision support system will lead Harvey Norman to new heights.
The evaluation of decision support system in the form of proposed information system solution for Harvey Norman assists in coming to a conclusion that the company can attain a competitive edge through the adoption of this system. The business environment of Harvey Norman is very competitive due to which the top management needs to make decisions regarding the adoption of competitive strategies from time to time. The framing of such decisions will be based on the information provided by the decision support system. Therefore, the adoption of this system by Harvey Norman will prove to be beneficial for the company
(Gottschlich and Hinz, 2014). It is recommended that the company should adopt this system and frame decision taking into consideration the sales, revenue and assets of the organization.
Conclusion
Therefore, it can be concluded that a strategic information system is a system which ensures the application of information services resources to strategic business opportunities. This report focused on the internal and external environment analysis of Harvey Norman which specified details regarding its general environment, industry environment, competitive environment, opportunities and threats along with its resources, capabilities and core competency analysis. At the end, decision support system is proposed as the suitable information system solution for Harvey Norman for bringing efficiency in its approaches and operations.
References
Baker, D., Merkert, R. and Kamruzzaman, M., 2015. Regional aviation and economic growth: cointegration and causality analysis in Australia. Journal of Transport Geography, 43, pp.140-150.
Camacho-Collados, M. and Liberatore, F., 2015. A decision support system for predictive police patrolling. Decision Support Systems, 75, pp.25-37.
Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.
Gottschlich, J. and Hinz, O., 2014. A decision support system for stock investment recommendations using collective wisdom. Decision support systems, 59, pp.52-62.
Harvey Norman. 2018. About Harvey Norman, [Online]. Available at : https://www.harveynorman.ie/corporate-information/about-us.html [Accessed on: 12 September 2018].
Roberts, D., 2016. Political transition in Cambodia 1991-99: Power, elitism and democracy. Routledge.
Sutton-Brady, C., Kamvounias, P. and Taylor, T., 2015. A model of supplier–retailer power asymmetry in the Australian retail industry. Industrial marketing management, 51, pp.122-130.
Turner, G., Fiske, J. and Hodge, B., 2016. Myths of Oz: reading Australian popular culture. Routledge.
https://www.empowerwomen.org/en/ilearn/my-courses/business-development/business-model/business-model-key-resources
https://www.researchgate.net/publication/308786506_Strategic_Information_System_A_source_of_Competitive_Advantage
https://www.applianceretailer.com.au/2017/09/harvey-norman-says-flagship-strategy-future/
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