Political Factors
Harvey Norman Holdings is an Australian retail icon which specialises in a huge variety of home as well as office goods. the organisation functions like a franchisor as well as grant franchises to the independent business which trades as an element of a Harvey Norman Complex. The franchises sell goods across a range of categories that includes electrical, little appliances, bedding and Manchester, computers and communications, home development, lightening as well as caret and flooring (Asadi, Vafi&Karimzadeh,2018). the organisation functions as a publicly listed enterprise and it is governed by its head office in Homebush, West, New South Wales. The following paper will critically analyse the external environmental forces, industry’s forces, strategies along with the capabilities and competencies of Harvey Norman Holdings.
Political Factors- Harvey Norman Holdingscarries out operations in retailing in many nations and therefore, it exposes itself to diverse kind of political environment as well as political system risks. The organisation gets success in such a vibrant industry across dissimilar nation through diversifying the risk of the political environment.
Economic factors- few macro environment factors such as the rate of inflation, interest, foreign exchange as well as cycle of economy determine overall demand as well as investment in an economy. While the micro environment factors like norms of competition influences the firm’s competitive advantage. Harvey Norman Holdings can make use of the economic factors like rate of growth, inflation and indicators of industry’s economy for forecasting the trajectory of growth (Losada, et al., 2019). Some of the economic factors are- infrastructure quality, labour costs., economic growth rate and business cycle stage.
Social factors- the attitudes along with the shared population beliefs plays a crucial role in the way marketers at Harvey Norman Holdings will know the customers of a particular market (Dannenberg, et al., 2019).Some of the social factors which should be considered are- education level, leisure interest, culture as well as attitudes.
Technological factors- Harvey Norman Holdings should carry out technological analysis of the industry along with the speed at which the industry is disrupted through the technology. Some of the technological factors which should be considered are- the effect technology on offering of product, rate of technology diffusion and impact on the structure of cost.
Environmental factors- Before entering into a new market or initiating a new business in an present market, the organisation should cautiously analyse the standards of environment which are needed for operating in those markets (Tan& Foo, 2018).Some of the environmental elements which should be considered are- change of climate, recycling, endangered species as well as waste management.
Legal factors- Harvey Norman Holdings should analyse some of the legal factors like discrimination laws, health and safety laws, customer protection and e-commerce as well as data protection.
Threat of new entrant- Ne entrants in the industry of retail brings new methods of performing things, innovation and puts strain on Harvey Norman Holdings by lower strategy of pricing, low costs, offering the customers with new value propositions. the company has to take care of the management of all the problem and develop effectual barriers for securing its competitive edge.
Economic factors
Bargaining power of the suppliers- Majority of the retail firms purchase their raw materials through different suppliers. The suppliers in a dominant place have the power of decreasing the margins which Harvey Norman Holdings could earn in market. The aggregate impact of the higher bargaining power of the supplier is that it decreases the aggregate profitability of retailing.
Bargaining power of buyers- the buyers need to purchase the best contributions which are obtainable through giving the least amount that is feasible. This puts pressure on the productivity of the company in long run. The minor and more influential the organisation’s base of the customer is, the higher is the bargaining power of the customers and higher the potential of getting increasing offer and discounts.
Threats of substitute products or services- when a product convenes a same need of customers in various ways, productivity of industry endure. The danger of the substitute product or service is high if it provides a value proportion which is very different from the current contributions of the industry (Park, 2018).
Rivalry among the existing competitors- if there is a powerful rivalry among the present competitors then it will decrease the price along with the aggregate industry’s profitability. Harvey Norman Holdings functions in a very competitive industry of retail. the competition does not take a toll on the aggregate long term organisation’s productivity.
Cost leadership- In the cost leadership, Harvey Norman Holdings can set out in becoming the low-costproducer. Harvey Norman Holdings can access pursuit of the economies of scale, options of supply chain management, supplier’s diversification, proprietary technology, preferential access to the raw materials along with certain other factors.
Differentiation- Harvey Norman Holdings can offer a value proposition which is cherished by the customers. the company can select one or more attributes with respect to the products as well as services that customers value the most. the main aim is to seek premium price due to differentiation as well as uniqueness of the offerings.
Each of the flagship stores of the company is designed for offering an unrivalled experience of customer with respect to the design of store, customer service as well as premium offering of the product. the main strategy is to attribute a franchised flagship complex or a flagship store in each nation that the company functions in all across the world, making a physical space which sets the tome of the brand for that area wit respect to aspiration as well as achievement (Lesher Taylor, 2020).A franchised flagship complex or a flagship store should make a representation of the pinnacle of attainment for a brand and at the same time situating the course for the future. The company sees an excellent future for themselves and their flagship strategy is a chance to provide the shareholders of the organisation a glimpse of the future.
The main aim of carrying out a value chain analysis is helping the business in creating a competitive advantage. the value chain analysis of Harvey Norman Holdings can provide different advantages:
- Identify the sources of competitive advantage- the organisation is a collection of various activities which share relatedness to certain limit. Harvey Norman Holdings will not be able to trade all the activities in the external market (UzelliY?lmaz, et al, 2022). the approach of value chain suggests that an organisation should take into consideration of these activities as economic rent sources.
- Identification of complicated inter-relationships as well as interdependencies- Harvey Norman Holdings can find out different internal as well as external linkages among the activities by the lens of value chain. The internal linkages are the interrelationships in between activities in the similar units of organisation along with peripheral connections are between the units of the business in the same or different organisations (Lim, et al., 2020). Analysing these interrelationships can help an organisation to take benefit through coordination as well as joint optimisation.
- Improved flow of materials, information as well as finances- the utilisation of the analysis of value chain can help in the optimisation of finances, products as well as flow of information. the enhanced flow of information can help the organisation in the identifications well as exploitation of the new opportunities along with decreasing the external threats. the continuous evaluation of the value chain can help in timely filling significant gaps which might impact the productivity of the firm.
- The modern customers place huge significance to the rapid responses as well as convenient access to the significant product related information (Chavan, et al., 2022). the unexpected interruption in the flow of information can impact the relationship of the customer and supplier.
- Formulation of effective firm specific strategies- the analysis of value chain can be used by Harvey Norman Holdings in the procedure of competitive strategic decision making. but, selecting the correct competitive strategy needs a knowledge of own as well a rival’s structure of cost.
Conclusion
The biggest challenge for Harvey Norman Holdings along with the other retailers in Australia is the overseas retailers who sell same commodities online. there is an exemption of import duties as well as GST on the purchases under $1,000 for the overseas retailers. this activity of the overseas retailer will affect the sales as well as revenue of Harvey Norman Holdings. From the above paper, it can be concluded that the business model of Harvey Norman Holdings is very simple yet effective. the main thing which differentiates Harvey Norman Holdings from other organisations is their franchise set up.
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