Disucss about the Business Strategy and Marketing Tactics.
David Jones is a popular name in the Australian retail industry; the company has long tenure of experience and also has established goodwill among the stakeholders. Until recently the company was operating on a profit making platform, the first blow that the company had received was the unhealthy culture of corporate arrogance within the business this was followed by the sexual harassment case against the then CEO of the company Mark McInnes this was during 2010. Furthermore, during that time the international business environment had faced a major economic set back thus making the business in the industry not very attractive. There is another issue that the company was facing during the 2010s, the physical retail stores were facing tough competition from the online substitutes and because David Jones did not have their online presence established the company was facing major cut back from the profit due to the substitute.
Therefore when the new CEO joined the company with 29 years of experience, Paul Zahra, he brought with him a range of changes in the organisation. He realized that the image of the company had to be restored thus had taken several communication strategies to improve the brand image. Apart from this he had introduced several other management changes which would bring the company back at par with the competitors as well as gain certain advantage as well. He understood the industry well and knew that the retail industry is dynamic and the company has to keep up with the changes, as new does not remain new for a long period of time (Osiyevskyy & Dewald, 2015).
The major change that was introduced by Zahra can be explained with the help of the Kotter’s 8-step change model. The steps that are mentioned by Kotter in this model are discussed below in terms of the changes in business operation that was introduced by Zahra:
Create sense of urgency: The urgency of the change was most required when Zahra took the position of CEO of the company he knew that the company was not making profit and the image of the brand was also falling. There was also problem in the organisation culture and work culture among the employees therefore; strategic management decisions for change were most urgent (Mickahail, 2015).
Build a guiding coalition: Zahra wanted to launch stores in new format and also focus on the online sector of the business and thus he had to introduce new people to look after the change in the company. E-commerce is a separate section of the business which was introduced by the company which had a new team (Cameron & Green 2015).
Form strategic visions and initiatives: The Company with these changes wanted to initiate strategic management policies and decisions, focusing on the strengths and opportunities to overcome the weakness and threats.
Enlist volunteer army: The employees of the organisation, who are associated with the company for a long time, provided their insights in the strategic management decisions.
Enable action by removing barriers: the company introduced several communication strategies in order to eliminate the bad press that the company had faced because of the last CEO.
Generate short term wins: In this strategy the company wanted to bring about changes in a short time period. The changes were introduced in the operational process which would bring about results in the particular financial year.
Sustain acceleration: in order to keep up with the changes sustained in the company, the management decided to bring about changes in the culture of the organisation and build a motivated and healthy place to work for the employees (Small, Gist, Souza, Dalton, Magny-Normilus, David, 2016).
Institute change: The change that was imitated by the organization was informed to the employees in order to get support and maintain transparency in the organisation (Hornstein, 2015).
Do you agree with the changes being made in this current restructure of David Jones? If not, why? Can you suggest any other changes that the CEO should consider?
In order to understand the effectiveness of the restructure of David Jones it is important to analyze the trends of the industry (E. Dobbs, 2014). The decisions that are taken by the company are made based on the dynamics of the Industry as well as the resource of the company.
The reason that has been stated to imitate this change is because the company wanted to accelerate profit and revenue as the company’s profit rate was continuously decreasing since 2010. This is a target approach in increasing the sales rapidly and improving the revenue by, working with less store space and giving the customers exactly what the trend is and what they are looking for. This is a good strategy as the company has resources to back up the plan with internal environmental factors, apart from this one of the international retail store Zara also uses this strategy and the company refreshes the stock frequently which ensures lean production and higher sale. This strategy opened a new market for the company in specialized format, and also to focuses the service in this category (Proctor, 2014). If the Ansoff matrix is considered the company has the opportunity to venture in a new market with the same product with the smaller stores which is product and service development strategy and on the other hand the boutique is catering to a new market with a new line of product this is diversification strategy (Medarac Vignali, Vignali, 2016). Both of these are useful as this will help in engaging the attention of the customers as well as create intention to buy thus increasing the sales and revenue (Hussain, Khattak, Rizwan, Latif, 2013).
The core competency of the company is to be the market leader in fashion retail store industry which supports Australian designers. The commitment to the local designers will help in elevating the image of the company and it also provided the company to get exclusive deals with the designers ensuring exclusivity and uniqueness in the products (Oh Cho, Kim, 2015). A part of this strategy includes a refurbishing some of the stores to provide a complete and premium experience of shopping. Furthermore the company has used celebrities to endorse the brand, which will improve the media coverage in a positive way. This is also a good strategy that the company has established as it will help the company to support local designers as well as provide the customers with trendy fashion as well as premium quality product and customized service. The strategy will also help the company establish the fact that David Jones is a premier department store (Holahan, Sullivan, Markham, 2014).
David Jones has been a company who is among the last to venture in this market the company had shut down the last online store in 2003 and not until Zahra joined the group this market remained untapped. In order to keep the sales and the popularity of the company improving (Laseter & Rabinovich, 2016). Most of the physical retail stores chains in the industry have made their online presence strong thus making it a trend in the industry. This made it a big opportunity for the company to venture in a new market keeping the products same. This is a market development strategy ensuring a wider range of customers and higher sales margin (Wu & Wu 2015).
How would you describe the management style of the CEO? What are the potential advantages and disadvantages of this style for the type of change being implemented at David Jones?
The style of leadership that can be described in the company after the new CEO joined is transformational in nature (Engelen, Gupta, Strenger, Brettel, 2015). This is because Zahra knew the position of the business before he joined the company and he had a mind set of initiating changes as soon as he had taken the position (Eisenbeiß & Boerner, 2013).
The style of leadership is transformational in nature as Zahra accepted the trends in the industry as well as initiated change where the company had gaps (Carter, Armenakis, Feild, Mossholder, 2013).
Zahra is far-sighted with his approach of change ensuring that the strategies that the management has taken bares results in the short run as well as in the long run (Noruzy, Dalfard, Azhdari, Nazari-Shirkouhi, Rezazadeh, 2013).
The transformational leadership style ensures that the business is constantly innovating and improving the process of business in order to grow, expand and develop in the future (Choudhary, Akhtar, Zaheer, 2013). Innovation plays an important role in this leadership style as the CEO is observed to be not afraid of taking risks in the management style (McCleskey, 2014).
The advantage of this style in the organisation is that the company in order to keep up with the trends of the industry needs a continuous change structure (Avolio & Yammarino, 2013).
With the help of a leader who encourages change and development it will be easier for the company to incorporate change (Braun, Peus, Weisweiler, Frey, 2013).
The disadvantage of this style of leadership in the organization is that the company has a tradition of its own which is a large part of the brand image and reputation with constant changes in the process of business it may lead to loosing this identity (Tourish, 2013).
Reference list:
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Braun, S., Peus, C., Weisweiler, S., & Frey, D. 2013. Transformational leadership, job satisfaction, and team performance: A multilevel mediation model of trust. The Leadership Quarterly, 24(1), 270-283.
Cameron, E., & Green, M. 2015. Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.
Carter, M. Z., Armenakis, A. A., Feild, H. S., & Mossholder, K. W. 2013. Transformational leadership, relationship quality, and employee performance during continuous incremental organizational change. Journal of Organizational Behavior, 34(7), 942-958.
Choudhary, A. I., Akhtar, S. A., & Zaheer, A. 2013. Impact of transformational and servant leadership on organizational performance: A comparative analysis. Journal of Business Ethics, 116(2), 433-440.
Eisenbeiß, S. A., & Boerner, S. 2013. A double?edged sword: Transformational leadership and individual creativity. British Journal of Management, 24(1), 54-68.
Engelen, A., Gupta, V., Strenger, L., & Brettel, M. 2015. Entrepreneurial orientation, firm performance, and the moderating role of transformational leadership behaviors. Journal of Management, 41(4), 1069-1097.
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