External Environment Analysis
Company Background
JB HI- FI I the consumer goods retailer of Australia that specializes in blu- rays, ultra HD blu- rays, video games, CDs, DVDs, electrical home appliances, hardware/ electronics, mobile phones and various other Telstra services. The headquarters of JB HI- FI is situated in Melbourne. The company is listed on Australian Stock Exchange (ASX) and also expanded its operations in New Zealand in 2006- 07. In 1974, John Barbuto established the company in Melbourne. JB HI- FI is famous for its low prices and large variety of products offered by it from the biggest brands. It has planned its stores in the convenient locations and provides genuine personal service with the help of experienced specialist staff. With the passage of time, JB HI- FI became the largest and the fastest growing retailer of home entertainment in Australasia (JB HI-FI, 2018).
Industry
JB HI- FI belongs to the retail industry of Australia. The Australian retail industry is known for maintaining its momentum and is driven by social and economic developments. Robust economic growth rising purchasing power and rising population comprise the key factors in the growth of the Australian retail industry. The market of Australia is considered to be a flexible market. Sudden downfall and sudden rise in the retail sector of Australia are also very common. The increase in the purchasing power of the customers is the result of low interest rates which, in turn, marked a growth in the retail industry.
General Environment Analysis
Economic- the inflation rates in Australia are high due to which the online trading by the organization is significantly affected. Moreover, the monetary transactions are also being impacted by the high dollar rates. The internal market of Australia has also been affected as a result of European economic crisis. These economic conditions are having an adverse effect on the sales of JB HI- FI (Manalo, Perera and Rees, 2015).
Physical- the consumers want the companies to perform their responsibility towards the society. This has required JB HI- FI to focus on areas relating to environmental preservation and recovery such areas include bulk packaging, waste disposal, noise reduction and disposal worn- outs.
Sociocultural- there is inclination of the customers towards electronics equipment associated with entertainment. The focus of the customers is on service availability and perceived quality. The customers demand large variety of products from different brands at different prices. Moreover, the perceptions, and attitudes of the customers have changed over a period of time which also affects the sales of JB HI- FI (Heaselgrave and Simmons, 2016).
Global- in the year 2006- 07, the company expanded its operations in New Zealand. With its success in Australia and New Zealand, it can further plan its operations. Therefore, the rules and legislations of different countries of the world will affect the operations of JB HI-FI (Scott, 2017).
Technological- Australian market has developed a number of technologies over a period of time. With the emergence of social media technology, JB HI- FI has become capable of undertaking innovative marketing strategies for the purpose of attracting the customers. The advanced internet accessibility has also bought improvements in the gaming market and online marketing.
Political/ Legal- the business decisions of JB HI- FI have significantly affected as the legislative amendments made as a result of global requirements in Australia. Greater challenges are faced by trade due to political instability and international trade laws (Flew, Harrington, Swift and McNair, 2017). Taxation is also creating hurdles in the expansion of the business of JB HI-FI.
Demographic- there has been a great change in the population structure of Australia due to its immigration policy. There are different religious and ethnic groups which constitute the population of Australia. Their needs and demands are also different which significantly impact the sales of JB HI- FI.
The Industry Environment
Bargaining Power of Buyers- the demands of the buyers have increased as they want to purchase best offering at the minimum prices. The profitability of JB HI-FI is under pressure due to these circumstances. The high bargaining power of the buyers has also increased their ability to demand offers and discounts and therefore affect JB HI- FI.
Bargaining Power of Suppliers- there are numerous suppliers in the retailing industry which provide raw materials to the companies. The potential margins of JB HI-FI can be substantially reduced as a result of dominant position possessed by the suppliers. Suppliers utilize their negotiating power for extracting high prices from companies. This high bargaining power of the suppliers impacts by way of lowering the profitability of retail industry.
Threats of New Entrants- Innovative strategies and products along with new ways of doing things are brought by the new entrants in the industry. JB HI- FI is under pressure from such new entrants as they have introduced lower pricing strategy and are providing new value propositions to the customers. These challenges are required to be managed by JB HI- FI along with building effective barriers for the purpose of safeguarding its competitive edge. There is high threat of new entrants.
Rivalry among Existing Firms- the retailing industry of Australia is extremely competitive. The survival of JB HI- FI in such a competitive industry has significantly impacted its profitability as well. JB HI- FI is planning to maintain sustainable differentiation in order to service in the competitive retaining industry of Australia (Hussain, Shah and Akhtar, 2016).
Threat of Substitutes- Industry profitability is suffered when a new product is capable of serving the needs of the customers in a variety of ways. There is high threat of substitutes as there are number of companies that are making constant attempts for providing latest technological equipment for entertainment to the customers. JB HI – FI is therefore, required to maintain its competitive edge in the market.
Competitive Environment
The biggest competitors of JB HI- FI include Harvey Norman and Target Australia and form the part of the strategic group. Harvey Norman is a company founded in the year 2011 in New South Wales and operates in the retail distributors industry. The number of employees possessed by Harvey Norman is fewer in comparison to JB HI- FI. Harvey Norman maintains a large range of home appliance at the stores. The profits of the company are also similar to that of JB HI- FI which requires JB HI- FI to perform better in order to maintain the competitive edge. The products of Harvey Norman are also exported to Kosovo, Croatia, Russian Federation and Montenegro. It is recognized brand in these places as well and is its major capability.
Target is also an iconic retailer of Australia which dedicates is business to making style, fashion and quality affordable for the entire family. They are using a number of customer engagement tool in order compete in the market. Its marketing strategies are also very competitive. Social media is also being used by Target Australia in order to maintain better relations with the customers (Ryan, 2015). Therefore, there is intense rivalry among the competitors. However, JB HI- FI maintains its position without being severely affected by the competitors as it has its own efficient manufacturing system which has made JB HI- FI a renowned brand all across Australia. JB HI- FI is also aiming towards bringing a significant increase in the customer reach so that its relative profitability can also improve. The products offered by JB HI- FI at lower prices in comparison to the competitors allow it to become the market leader.
Opportunities and Threats
Opportunities- the increase in the demand for electronics in the Australian market has emerged as the biggest opportunity for JB HI- FI. The growth in the demand for the consumer electronics is the result of the innovation and introduction of competitive and exciting products by the global companies in the market. There are a number of emerging markets in Australia which, in turn, provides opportunity to JB HI- FI for beaching out in such markets. The company can also capitalize on technological transformation in the shopping industry in order to gain a sustainable competitive advantage. In case of JB HI- FI, technology is both a potential threat and an opportunity (Graham, Brinsmead and Hatfield-Dodds, 2015).
Threats- the customer behavior can significantly change due to the changes taking place in the economic climate. Also products sold by JB HI- FI are mostly imported products which can be affected as a result of exchange rate considerations. In the e- commerce space, the competition is increasing at a rapid pace due to the strategies of worldwide juggernauts like amazon. The existing political position of Australia can also result in increasing competition and can reduce the profitability of JB HI- FI. As a consequence of rapid technological developments, the landscape of physical stores has completely changed.
Internal Analysis and Proposal
Tangible and Intangible Resources of Firm
The tangible and intangible resources of JB HI- FI form the basis of its success in the Australia market. It has employed around 12,200 employees in Australia who devotes their efforts for the achievement of organizational objectives. The employees are the biggest resource of JB HI- FI. Their talent has helped JB HI- FI in reaching new heights. The brand JB HI-FI has also attained a reputation in the market which is also an intangible resource as it forms the basis of its increasing sales in the market. The resources also include the innovative strategies adopted by company which assists it in leading the market. Moreover, the availability of physical resources along with the assistance of superior management has acted as the resource in the success of company (Kidd, Kemp, Kashima and Quinn, 2016).
Capabilities Identification
Resources need the assistance of capabilities for providing success to the company.
JB HI-FI is said to have the strongest corporate reputation in Australia. It has been able to gain the confidence of Australian consumers in terms of high quality products and has become a good corporate citizen that treats its employees well. It has also resulted in increased sales and profitability of the company.
The distribution system of JB HI- FI is also very effective with the help of which it is able to maintain adequate stock in the stores across Australia. This capability of the company allows the customers to fulfill their requirements by visiting the stores. All of this has been possible only due to the competent top level management of the organization. Their strategies, experience and efforts have led the organization to this position in the market. All these capabilities have contributed towards the success of the organization (Addis, 2016).
Core Competency Analysis
Resources- physical resources and the human resources of the company are the biggest resource of JB HI- FI. These have played a major role in the success of JB HI- FI over a period of time. The human resource devote their efforts for taking the organization towards new heights.
Capabilities- the brand reputation possessed by the organization along with its effective distribution system constitute its immense capabilities that have also led to the increase in profitability and sales of JB HI-FI. Adequacy of stock in stores leads to the fulfillment of customer demands on time (O’Connor, 2017).
Competitive Advantage- the innovative and competitive strategies of JB HI- FI have provided it the reputation of strongest corporate in Australia. Such strategies have helped the company in becoming the market leader of the industry. Customers also prefer an organization where there is all-time availability of all the needed products (Pantano, 2014).
Strategies- the top management have the capability of formulating competitive strategies for JB HI-FI. The implementation of such strategies in business have attracted the customers towards the organization and has played a major role in its success in Australian industry.
Suitable Information System for the Company
Management information system is proposed as the suitable information system solution for JB HI- FI. Management information system can be defined as the database which is computerized and is responsible for organizing and programming the financial information of the organization in a manner so as to produce reports for every level of management. The adoption of this information system solution by JB HI- FI will enhance the internal operations of the company. This will be done with the help of receiving the needed feedback regarding the performance which can be used by the top management in an effective manner for the ensuring and monitoring the proper implementation of decisions. Accordingly, steps can be taken for bringing improvement in accordance with the reports. When all the levels of management and different departments will be mindful of profitability, activities and the requirement of each other, effective decision making will be facilitated in the organization. In case, system breakdown is suffered by the organization, the copy of data will remain secure with other departments (Gray, Issa, Pye and Troshani, 2016).
At different intervals of time, the routine reports will be pre- programmed. The built- in display function off the system will also be visible to the managers which will allow them to check the status of the queries through the computer network that links them with the management information system. The monitoring of the stock will become easy for JB HI- FI through the adoption of this system solution.
Evaluation of Proposed System and Recommendations
The evaluation of management information system in the given context provides that the business necessities of JB HI- FI for surviving in the competitive environment can be adequately met through this system solution. The internal operations of any company are required to be smoothened with the help of ensuring security of its data and effective decision making. Therefore, it is recommended that JB HI-FI should make the use of management information system such that every level of management can be efficiently integrated with the help of this system solution. The strategies for competing in the market can also be effectively framed along with the monitoring of the activities of each level of management (Pearlson, Saunders and Galletta, 2016).
Conclusion:
Therefore, it can be concluded that the information systems that are capable of grabbing opportunities are known as strategic information systems. The focus of this report was on the organization JB HI- FI along with its internal and external environment analysis. At the end of this report, a suitable information system solution has been proposed for JB HI- FI for meeting its needs. Management information system is the proposed information system solution for JB HI- FI.
Information systems are built for the purpose of resolving problems and grabbing new opportunities. However, a number of difficulties are faced by an organization in creating such opportunities. For finding opportunities, creativity and intense amount of vision is needed by an organization which also allows to seize such opportunities. The information systems that are capable of grabbing opportunities are known as strategic information systems. It offers a number of advantages to the organization such as reduction in costs, providing competitive advantage along with increasing its market share (Galliers and Leidner, 2014).
The focus of this report is on the organization JB HI- FI along with its internal and external environment analysis. At the end of this report, a suitable information system solution has been proposed for JB HI- FI for meeting its needs.
References:
Addis, J., 2016. Retail sector wrap: One opportunity and plenty of worry. Equity, 30(3), p.6.
Flew, T., Harrington, S., Swift, A. and McNair, B., 2017. Politics, Media and Democracy in Australia: Public and Producer Perceptions of the Political Public Sphere. Routledge.
Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.
Graham, P.W., Brinsmead, T. and Hatfield-Dodds, S., 2015. Australian retail electricity prices: Can we avoid repeating the rising trend of the past?. Energy Policy, 86, pp.456-469.
Gray, H., Issa, T., Pye, G. and Troshani, I., 2016. Management Information Systems, 1st Australasian Edition. John Wiley & Sons.
Heaselgrave, F. and Simmons, P., 2016. Culture, competency and policy: Why social media dialogue is limited in Australian local government. Journal of Communication Management, 20(2), pp.133-147.
Hussain, J., Shah, F.A. and Akhtar, C.S., 2016. Market Orientation and Organizational performance in small and medium sized enterprises. A conceptual approach. City University Journal, 6(01), pp.166-180.
Kidd, E., Kemp, N., Kashima, E.S. and Quinn, S., 2016. Language, Culture, and Group Membership: An Investigation Into the Social Effects of Colloquial Australian English. Journal of Cross-Cultural Psychology, 47(5), pp.713-733.
Manalo, J., Perera, D. and Rees, D.M., 2015. Exchange rate movements and the Australian economy. Economic Modelling, 47, pp.53-62.
O’Connor, T., 2017. Retail response. MHD Supply Chain Solutions, 47(4), p.38.
Pantano, E., 2014. Innovation drivers in retail industry. International Journal of Information Management, 34(3), pp.344-350.
Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2016. Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Ryan, S, 2015. Target Australia blocks registration of marks seeking to parody ‘TAR-JAY’—Lessons for brand owners and parodists. Journal of Intellectual Property Law & Practice, 11(2), pp.83-85.
Scott, P., 2017. Geography and retailing. Routledge.
JB HI-FI. 2018. About US, [Online]. Available at : https://www.jbhifi.com.au/General/Corporate/Consumer-Matters/About-Us/ [Accessed on: 12 September 2018].
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