Harvey Norman Business Analysis

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Contents

Executive Summary3
Introduction4
Current Strategic Position4
Figure One: Financial Analysis for Harvey Norman5
External Factors6
PESTLE Analysis6
Economic Forces6
Technological Forces6
Political-Legal Forces6
Ecological/Environmental forces7
Socio-cultural forces7
Porters Five Forces7
Figure Two: Porters Five Forces7
Figure Three: External Factor Analysis Summary8
Internal Analysis8
Figure Four: Internal Factor Analysis Summary9
Recommendations10
Conclusion11

Executive Summary

Harvey Norman Holding Pty Ltd (HNH) in June 2012 delivered a net profit of $227.41 million, a decrease of 39.2% from the previous year (HNH Annual Report 2012). Clearly the company was not meeting the ever increasing demand of the retail consumers, that were becoming increasingly savvy and expecting more specification through on-line shopping and a getting in-store experience (Baird & Kilcourse 2011).

Slow off the mark, HNH finally recognised the power of online platforms and its influence as a sales channel it invested heavily in the fiscal year of 2012 to develop an integrated retail, franchise, property and digital operations with its release of the Omni-Channel Strategy. Online sales have been low as initially predicted, within HNH announcing it has been established for future gain (HNH Annual Report 2012). However, the retail industry would argue that HNH has not only been slow in changing the with retail environment, it has also failed to recognise that its new strategy will only address some of its business concerns, labelled with a poor customer focus and in store service (Reidy 2013).

Using Porters Five Forces analysis HNH faces high threats from rivals within the market, competing with well-known brands like Myer and savvy businesses that have embraced change like JB HiFi whom integrated its online experience five years ago (Reidy 2013; Wheelen & Hunger 2012). HNH also faces threats from consolidation of suppliers and the infinite possibilities online providing the consumer with greater knowledge and expectations (Wheelen & Hunger 2012).

Whilst both its internal and external factor analysis have indicated that HNH is rated below average, it has the ability to pull itself out of this business rut, as a result of its strong branding position and asset base. To again be competitive within the market place it is recommended that HNH not only embraces its online technology, but also looks to update its strategic vision, purpose and values in line with Omni-Channel Strategy, along with undertaking ongoing consumer reviews, looking to improve its lean practices within its supply chain, improve its marketing and advertising strategies and look at exploring new market opportunities.

Introduction

HNH Holding (HNH) is one of the largest retailers in Australia and operates through a combination of company operated stores and franchise operated stores. It currently has 213 franchised stores in Australia and 76 company-operated stores HNH owns a third of its stores which it leases to franchisees and provides them services in return for a percentage of sales (HNH Annual Report 2012).

In fiscal year of 2012, HNH approved a new strategic approach to integrate its retail, franchise, property and digital operations into an “Omni-Channel” Strategy (HNH Annual Report 2012), which promises customers a seamless on and off line shopping experience and has seen many of the top retail brands diversify for a ‘competitive advantage’ (Baird & Kilcourse 2011).

This report will provide an internal and external analysis into HNH’s change in strategic approach, its current positioning and recommendations for future strategic growth.

Current Strategic Position

HNH’s decision to adopt an Omni-Channel strategy in 2012 came out of a need to mitigate some of the damaging past business decisions and to adapt to the changing retail landscape. Sales dropped...
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