Jb Hi Fi Review

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Case Study

JB HI FI was founded in 1974 and consisted of one sole store in the suburbs of Melbourne, Victoria. Since this time JB HI FI has grown somewhat substantially, the company has spread its HI FI retail stores across the country and reportedly generated $2.8 billion in revenue in 2009 (Collins 2010). When observing the past 15 years of JB HI FI’s life, two significant organisational changes standout. The first of which is in July 2000 when the company was acquired by Macquarie bank and BancBoston in a deal estimated to be worth around $40 million (Dabkowski 2000). The second substantial change was the company becoming public in September 2005.

In July 2000 when Macquarie Bank and BancBoston acquired JB HI FI, the company was amid plans for substantial expansion of both stores and product ranges. The transaction involved the new owners investing an additional $20 million into JB HI FI and taking over its debting fund. Dabkowski explains that this was a precursor to the national expansion of JB HI FI. The new owners at this time had plans to expand the retailer Australia wide whilst also building up JB HI FI’s product range. Although the takeover saw some changes in senior management with the appointment of Richard Uechtritz as cheif executive, John Quintal director of BancBoston stated that “The local icon and format that has been so appealing will not change at store level, the only goal is to improve the shopping experience” (Dabkowski 2000).

September 2005 saw the next step in JB HI FI’s organisational change when the company floated onto the share market. On the 18th of September chairmen of the company addressed a letter commending the public to invest in the company. Although JB HI FI becoming a public company was a massive change it did not affect the organisational structure of the company, appendix one shows an organisational chart which is effectively similar to that design of that in 2000. Once again however, JB HI FI’s prospectus makes note of plans for further expansion of the company, including both increased store openings and increased product ranges. The prospectus explains “THe company plans to continue opening at least five new stores each year for the next three years.” It also addresses plans for current store growth and increase in home entertainment systems which are aimed to stimulate substantial growth in sales. Appendix two provides figures of forecasted growth rates from each of these stimulants (JB HI FI prospectus 2005).

In 2004, JB HI FI purchased 70% of Clive Anthonys for $24.2 million which equated to an extra five stores allowing JB HI Fi to move into the lucrative white goods market as well as allowing an avenue into regional centres.

CEO Richard Uechtritz commented that “When considering CA as a potential acquisition we firstly looked at the key financial indicators Sales Gross Margin, CODB [Cost of Doing Business] and Profit.....Once the price and the overall “deal” was agreed in principle JB auditors Delloite did the due diligence. IT was attractive that the CA management would stay on and to this end we agreed with the owners that we would purchase 70% of the business with an option on the remaining 30% in two years at a set multiple of earnings” (Thompson, Uechtritz, Kent, Interview with Richard Uechtritz, 2010).

JB allowed CA management to maintain control over the operations of the company and did not introduce any JB HI FI management to the organisation. JB Hi Fi did not purchase the remaining 30% of Clive Anthonys when the option arise in 2006 and Clive Anthony has not been the success that JB Hi Fi initial believed the investment would return.

Recently, JB HI FI expanded across the Tasman to New Zealand, acquiring Hill and Stewart, an electronics retail change located in New Zealand, to give them a solid base and infrastructure for expansion of the JB name into New Zealand. On the 16th April 2010, staff at the Wellington store...
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