Davuud jones case study strategic management

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BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) David Jones Case Study Introduction David Jones is an Australian Company that specializes in selling branded merchandise The company has established itself as a department store and fashion leader over the decades with a significant market share The concept of department store is well received in Australia Australians are brand-conscious and many strive to strike an affluent look David Jones is very specific on its target market Its focus is on women of all ages, whose population has increased significantly over the years apart from being a population those values to dress well and having the willingness to spend on purchasing designer clothes regularly Analyzing the External Environment Demographic In 2006, the Australian population stood slightly above the 37 million mark The population is basically concentrated in urban areas such as Sydney, Perth, Queensland and Victoria There are various people from different racial, religious and cultural backgrounds, but there exists the element of modernity among the population Economic Approximately 90 percent of Australians see themselves as belonging to the middle -class A good proportion of the population is in higher income categories The gross income per week at upper boundary of quintiles is estimated at $ 319 for the lowest quintile, $ 524 for the second quintile, $ 750 for the third quintile, and $ 1096 for the fourth quintile The majority of the population with spending capacity stays in cities such as Sydney, Victoria, Perth and Queensland Quite generally, the economic situation of Australia makes it favorable for business as the country is rated among the developed countries globally While the general economic situation is favorable, there is much business competition for David Jones The economic dynamics of the country makes the business Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) environment favorable and these results in competition However, David Jones has managed to survive through creative strategies even in bad economic conditions Socio-cultural Australia is a multicultural and cosmopolitan country The society can be described as modern with a keen eye on fashion Australians have been described to generally incline towards fashion and fashionable things While the culture exhibits a more modern trend, Australians also seem to have made their own contribution in establishing their own Australian identity especially with regard to fashion and trends Political-legal Generally, Australian political attitude can be described as liberal democratic Having largely a western background, the country has derived much from western democratic ideals with liberty at the center of virtually every political discourse While the country has also attempted to structure its own laws according to what is deemed relevant for the majority, it is largely derived from Common Law This is basically because the nation was once a colony of Britain and much of the political-legal systems are modeled under the British system Such laws govern the conduct of business and general relationship among people It is within this political and legal structure that companies like David Jones operate Global David Jones is basically focused on the domestic market even though it is also influenced by global trends like any business The company has been modeled after the European-style department stores Besides this apparent “borrowing” from outside, the company also keeps up with global best practices in order to keep up the competition In this regard, the company, while basically domestic, is in constant touch with the global trends that are critical in determining what is to sell especially with regard to the kind of business that the company is engaged in Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) Technology Like most companies, David Jones has pursued online strategy in their business The company moved into electronic trading by launching David Jones online Their attempt at embracing technology was basically focused on revitalizing the firm using the brand-supplier relationship in order to sell goods at a higher margin (David Jones Case Study, p.3) Additionally, the company has also invested in the mainstream media by promoting their products and the company itself through television advertisement The company thus recognized the role played by modern technology in transforming the business and increasing sales Further, it invested in hydraulic lift in its premise for efficiency Conclusion While there are significant threats to David Jones particularly from competitors, Australia still presents viable opportunities for the company The identified target market for the company is likely to sustain profits for an extended period of time when backed with good strategy An assessment of the external environment reveals a system and a population that is supportive of business efforts and it is the responsibility of the company to come up with creative and innovative ways to stay ahead of its competitors As it stands, the company is in a good position to continue being a leader in the fashion industry based on the fact that Australians are not only brand conscious but also consider that they trendy and affluent Additionally, Australian society is well suited for the kind of business venture that David Jones is involved in apart from the fact that the company has much to gain from the numbers in terms of income category, the population is also brand conscious and this is a good combination for a successful venture Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) Industry analysis Exhibit shows that there are a lot of Australian individual in the high-income categories And there is slightly more than 90 percent of Australians think that they are in the middle-income bracket David Jones focuses on well-paid brand-conscious professionals that were successful And David Jones has a successful experience to run this business So David Jones should be content with the reasonable division of market share Analyzing the porter five forces model for David Jones Barriers to entry are low: they already had good city locations and working out a good supply chain Substitutes include Myer, Kmart, Big W, and Target The products are same, which every store can sell the products that the customer wants to, especially in Myer So it is a high threat Buyers: have minor switching costs to go to substitutes There may be some merchandise conflict that would lead to some lower sales This factor therefore represents a threat as well Supplier: there is no obvious supply chain for all merchandise But David Jones continued with the 'home of designer brands' strategy during the McInnes era and signed up a few of designers to improve their range of fashion brand So it is low threat Rivalry is high threat Myer is considered as high threat Target and Big W is moderate And Kmart is low threat Industry conclusion The customers easily switch stores to buy what they want, or find some available substitutes form other shops However, with David Jones 'owned' Australian fashion and the home of designer brands department stores, David Jones still could keep many Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) customers from high-income individual Competitor analysis Myer is a strong player in the retailing industry Target, Big W and Kmart is also competitors The Myer family started Myer, which is a Melbourne icon with a long history Bernie Brookers became the CEO in December 2008, who has a retailing and marking background and had worked at Woolworths in the past Myer has 65stores and a forecast on sales of $ 3.27 billion in 2009, from Exhibit that Myer store had big part of sale in the high-income segment (27%) and medium-income segments (29%) and, David Jones stores are extremely well located for the high-income segment (44%)and medium-income segment (35%) Myer could catch many customers from the highincome and medium-income cohorts as they can get So the Myer is a powerful competitor in the retailing industry Kmart, Big W and Target are also located within reach of high-income and mediumincome, but not quite much From the exhibit2, if Target does some activities for attract high-income people; Target may have an opportunity to expand higher-income areas, it would be a threat for David Jones Internal Analysis Analysing the Internal Environment David Jones would be having a good operating environment, as they did not face employment problems There might be little unsuitable decision that was made by the CEO during that time Tangible resources Intangible resources High shareholder equity that provided by Investor n buyers trust the branding of investors during 1995, which was the David Jones Investors trust David Jones public float of $800 million Great due to that it had a long history in opportunity for David Jones as large Australia since 1838 and have a good amount of investment to help the reputation Buyers entrust that the Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) company funding merchandise that David Jones sell Most of David Jones’s stores are still David Jones are able to have designers standing which mean the tangible fashion merchandise in their store which resources are good is one of their main target Middle and high-class income individual is the target After David Jones became a public David Jones would have good human company, store expansion started During resources to operate large department mid-1980s David Jones stores had stores expended to most major city in Australia except for Perth David Jones joins with other companies The McInnes era was a huge change to to expand its stores Taking over and re- the company as it was the new CEO branding Buckley & Nunn in Melbourne, Mark McInnes who used his strategy to entering Perth via acquisition of Aherns rise up from problems and losses that After David Jones takeover John Martin’s David Jones is facing department store chain in order to have all its store around Australia David Jones had set up a factory to manufacture their clothing within Australia In 1906, the company became a public company Capabilities The brand of fashion department stores that have the ability to set a high reputation to the market of Australia Designer brand that establish in David Jones department stores Well build European style department stores CEO of David Jones that lead the company Exceptional innovation to create new ways for David Jones to improve its profit Core competencies Rare – and are considered rare as David Jones is the only brand and the have it own style of European Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) Valuable and Costly to imitate – All of the capabilities above are very valuable to the company, as they need all to let the company operate They are also expensive to lose for the company Non-substitute – Only is substitutable for David Jones as there would a lot of other individual would want to the job of CEO in David Jones Weakness The CEO of David Jones had been an issue, as most of them would like change the concept of David Jones For example, adding food chain, moving toward a down chain market, some of these example show that the CEO of David Jones have ideas that does not match the concept of David Jones Current strategies • Cut all the things that made us not who we are • Own two businesses, a department store and a financial services business • Home of designer brands strategy • Used in stylish television ads • Focus on well-paid brand-conscious professionals Future Strategies David Jones should not compete with other companies and stay with the current strategies as they have still have a good amount of the market share and should strengthen their concept of high designer branding They should target back the original target class that is high-income and middleincome class individual This would not reduce the reputation of the brand that they had Control the funding to prevent any changes from the current concept that would lead to a loss for the company Staying within Australia would be a right choice for the company as if David Jones move internationally it would need a large amount of funding and will need to buy up the branding due to that it is not an international brand Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) Expanding the number of store would be a good investment, as it would increase the sales from place that does not have David Jones stores But this process must be made is very caution as if a David Jones store build in an area with little population it would bring a loss to the company Concluding Remarks David Jones is a well establishes fashion department stores in Australia Fashion industry in Australia have accepted the concept of David Jones this have resulted the company to be successful There might some situation where the company is facing some problems that lead them to a financial straggle but with the help of motivated leader they are able to overcome the straggle and continue with the business David Jones would need to continue with their concept of targeting middle-income and highincome consumer to not lower down their brand reputation Page ... shops However, with David Jones 'owned' Australian fashion and the home of designer brands department stores, David Jones still could keep many Page BMA 302 Strategic Management Chong Litt Sun,... Page BMA 302 Strategic Management Chong Litt Sun, Jacob (082433) Long Yao, Vincent (150008) Ng Ka Man, Carmen (076756) company funding merchandise that David Jones sell Most of David Jones s stores... middle-income bracket David Jones focuses on well-paid brand-conscious professionals that were successful And David Jones has a successful experience to run this business So David Jones should be content
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