Introduction and Overview
Discuss About The Competitive Environment Tourist Destination?
The company operates in the direction of growth and expansion with the help of multi channel distribution process in order to extend its reach out to the target market in every possible way. The Dick smith has three categories of product: entertainment, office and mobile.
The company in order to fulfill the distribution requirement has set up four formats of operation like Dick Smith, David Jones Electronics powered by Dick Smith, Move and Move by Dick Smith. One of these formats is also located in the airport so that the travelers can also get the facility of reaching out to the company and the products that they have to offer. There are around 390 physical stores spread across Australia and New Zealand, mobile application, click and collect as well as e-commerce stores.
The company keeps expanding the line of products in these three categories and grows with the needs and requirements of the customers(Wheelen et al. 2017).
The company has been over the years surviving by taking necessary strategic management steps like amalgamation and diversification. The company was established in 1968 and since then it has come a long way, in 2013 the company got listed in ASX(Wheelen et al. 2017).
If you were new CEO of Dick Smith (Mr Ruslan Kogan) what strategies would you use moving forward?
These are the strategies that the CEO could have taken before the company was acquired by kogan.com.
As the company is Australian more attention is given by the management to the stores that are situated in Australia but it is also important to pay attention to the new Zealand stores as they have reportedly not doing so well. The management should appoint someone capable of handling such situations in the country.
Focus should be paid on the stores which are not sustainable as it is a bad debt for the company if they have to shut down stores, the company has to ensure that before the store location is selected proper market research and survey is conducted in order to understand the reach and the demand of the target market in the area of preference. Another important factor are the in-store managers and leaders of these failing projects should be encouraged and motivated by the higher management so that they can in turn keep their team motivated as well(Gambleand Thompson2014)..
The company should focus on their e-commerce and m-commerce business and should invest in the logistics behind this strategy. Building physical stores need more capital investment and if the store does not work in the long-run it has to be shut which makes it difficult for the company to recover. Hence the mobile application should be made more user friendly and should be promoted more along with the e-commerce website (Gambleand Thompson2014).
Imagine you are part of management team of a company wishing to buy Dick Smith as a goingconcern. How would you make the decision to buy or not to buy?
Strategies for a new CEO of Dick Smith
I would buy the company as the organisation has a prominent brand name and is popular among the loyal customers; the company needs strategic management support with the help of which there are prospects for the business. One of the biggest assets of the company is the customers and the employees with change of management and changes in HR policies the employees can be retained. The company owes money worth $250 million to the creditors. But at the same time this can be handled by the organisation that will buy the company. Dick Smith will not be rebranded but some of the old strategies will be organized and promoted as a modern brand with traditional values (Bettis et al. 2014).
What are some of the key learning’s from this business case? What could be some of the reasons for failure of a business?
The organisation was established in 1968 and the company has followed some of the old strategies throughout. The focus of the company was the growth and expansion of the business with the view of reaching out to the public which made the company lose focus form some of the other important aspects of a business like after sales service, promotion activities, pricing strategies, strategically using the scope and opportunities in the business environment like technology and innovation, focusing on the development and performance of the employees etc (Bettis et al. 2014).
Every business company operates under internal and external environment factors. The organisations must change their strategies and policies according to the changing dynamics of the industry in order to recover from the weaknesses of the internal environment and the threats that are generating in the external environment(Hill et al. 2014).
It is important to maintain a strong and valuable relations hip with the suppliers, Dick Smith had prioritized the suppliers and this is essential for a retail business.
It is important to have competitive advantage of the company in the long run; as Dick Smith was one of the largest electronic retail stores in Australia the company had the capability of lowering the transportation cost and delivery cost.
The company has introduced several changes in the process of the business operation keeping the base and the foundation of the business intact.
It is important to keep a unified amount of focuses on the business where the operations of the business is available oversees. The company had lost it focus of the stores in New Zealand which in turn had resulted in shouting down of many stores in the country. The company had to invest in a lot of capital in developing business model in New Zealand which did not succeed due to the lack of strategic management of this department. On the other hand the company also focused on the financial growth of the business without having a sustainable business model, the employees were unhappy and the business model of the company was also flawed.
The product diversification was not made in terms of what the customers needed rather it focused on the line of product that the company already had. The company did not invest in building a value relationship with the customers.
How to decide whether to buy Dick Smith as a going concern
The company had brought about changes but these changes were made without proper speculation or market research, the company had opened new formats and brought new product lines like clothing and fashion accessories and all of this was made keeping in mind the growth of the company and the way the company decided to grow financially, they did not make plans to cater to the needs of the customers (Bettis et al. 2014).
Threat of new entry: There are no legal obstructions in Australia regarding an organisation that want to invest in the retail industry; the Australian government motives business with their rules and regulations. The prospect of business in this industry is profitable hence the industry has the potential to get new investors interested. Large capital is one of the most important drawbacks in this format.
Intensity of the competition: the retail market has a stiff competition from the online market in the present time the, there is also heavy competition offline stores such as BIG W, Caltex Australia and David Jones (Cheng2013).
Power of the supplier: the power of the suppliers is significantly high as the industry is dependent on the suppliers who are wishing to list their products and services with the retail chain (Dobbs 2014).
Power of the buyer: The switching cost of the buyers are high as there is intense competition, the company offers products and services that are also available in other places. Apart from exclusive availability the buyers can easily switch from one place to another.
Threat of substitute: there is considerable threat of substitute as well, the online e-commerce giant Amazon can be one of the global competitors of the company as they are popular for their stock of electronics listed at a discounted price also in Australian market the company has competitors in the e-commerce sector like kogan and JB Hi-Fi etc(Greenspan 2015).
Therefore it can be concluded that the industry is prosperous as it has easy entry and high profit margins but at the same time the companies operating in this industry have to invest in brand development and creating a separate unique image of its own in order to be differentiated in the market (Dobrivojevic 2013).
|
Price |
Quality |
After Sales service |
Number of Stores |
|
|
Dick Smith |
Low |
Moderate |
Average |
390 |
|
JB Hi-Fi |
moderate |
High |
Good |
194 |
|
Harvey Norman |
Moderate |
High |
Good |
280 |
There is a lot of difference in the operation process of a physical store to an e-commerce channel the company should ensure that the logistics that are involved in the change of the business model is well sorted out and organized in order to make the change process of the company smooth and also profitable the company can dispose the assets of the physical store that will not be required in the e-commerce model and invest the capital in this form. Warehousing, suppliers, delivery centers and third parties etc are some of the important aspects of an e-commerce model that the company has to focus upon(Laudonand Traver2013).
Reference list:
Bettis, R., Gambardella, A., Helfat, C. and Mitchell, W., 2014. Quantitative empirical analysis in strategic management. Strategic Management Journal, 35(7), pp.949-953.
Cheng, D.S., 2013. Analyze the hotel industry in porter five competitive forces. Journal of Global Business Management, 9(3), p.52.
Dobrivojevic, G., 2013. Analysis of the competitive environment of tourist destinations aiming at attracting FDI by applying Porter’s Five Forces Model. British Journal of Economics, Management & Trade, 3(4), pp.359-371.
Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Gamble, J. and Thompson, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-Hill.
Greenspan, R., 2015. Walmart: Five forces analysis (Porter’s model). Panamore Institute.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Laudon, K.C. and Traver, C.G., 2013. E-commerce. Pearson.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.
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