Essay on Swot: Strategic Management and David Jones Limited

2. Analyse and evaluate internal factors affecting the development of strategic plans, including organisation skills and resources, and formulating objectives in order to gain a sustained completive advantage;

3. Analyse the internal and external environment with a SWOT analysis;

4. Describe and analyse the nature, scope and process of strategic management.

5. Critically discuss and evaluate issues relating to strategic management, innovation, leadership and sustainability;

6. Evaluate and analyse corporate strategic choices;

7. Assess strategic plan implementation and performance in a completive landscape
 

The David Jones is famous as they sell the products, which are imported, unique and handmade. They also reminisce the old items.

Prices:

The prices of these products are adequate. Customer feels that the products are worthy at the same time they also feel that the products are not cheap. This company maintains the balance between profit and affordability (Hair et al., 2012).

Place:

This company is presented as brick-and-mortar store. This company is placed next to the cashier and books.

Promotion:

This company emphasizes on personal selling. To increase sell and to strengthen the brand, many promotional activities are performed. The David Jones provides extra mile service while purchasing books (Evans et al., 2012).

There is intense competition among the competitors, like Myer, Harvey Norman. These companies also serve for the same customers without switching cost or little cost. In intense marketing rivalry, these shrinking industry revenues force to go for share market off others. At the top most command, A few companies share leaving the rest to compete for few low customers. Competition is emphasized on differentiation. The costs are very high to operate those stores. Thus, companies have to depend on economical effect of scale to drive profitability. Besides, the stores also maintain fashionable inventories which must be sold fast to fetch a good price. 

Internal analysis using current up-to-date information about the company:

During 1980, The Adelaide Steamship Company leaded by John Spalvins showed substantial interest on David Jones. They wanted the complete takeover of the company as for the first time in the history this hand over was done. Through 1980s and 1990s these two companies involved completely into a complex structure. They both owned half-half of this company. This company was financed by borrowing from the other companies. It gained the portfolio of other company (Ireland et al., 2012). Pen folds Tooth and CoPetersville Sleigh included Adelaide Steamship and many others made these acquisitions. Due to the recession in the 1990s, the nervous lenders demanded their assets back. This incident leads those companies into bankruptcy as the liquidation of the portfolio was forced at “fire-sale" prices. The worthless Adelaide Steamship Company delisted from this by renaming as "Residual Assco Ltd". Then the David Jones Limited was renamed as "DJL". Through various public floats, like Woolworths, National Foods, many valuable assets were sold off gradually. The other departmental assets of DJL were floated as "David Jones Limited". David Jones announced a public float of $800 million on the retail operation of John Martin and David Jones in 1995. The new David Jones Limited was listed with a new ASX code of DJS on the Australian Stock Exchange (Eden & Ackermann, 2013). In 1995, the public float and the separation of the department store assets resulted in cultural and structural changes. This showed high turnover of staffs and periods of stagnancy. In the late 1990, the management saw the changes in DJs falter. The shares, which were initially offered at A$2, had lowered to A$0.90.

In 2003, through a strategic review it is observed those two unprofitable stores: gourmet food retail stores and David Jones Online web-based business had closed down completely. Due to this incident, the other stores including the flagship Market Street and Elizabeth Street stores were revitalized in Sydney. In this period, the profit growth and sales growth are were not increasing continuously despite of securing the exclusive deals and a consumer spending boom with international and Australian brands. The share price at that time became volatile by reaching a high of over A$4.50. In the first half of 2009, the global downturn affected David Jones by reporting a decline in the sales of 6.4% to $1,061.2m (Swayne et al., 2012). After resigning of the CEO, Mark McInnes, Paul Zahra, McInnes' successor restructured the company significantly until October 2013 by expanding the online retail presence. 

Identification of core competencies and their value to the customer:

Myer, the rival of David Jones, in October 2013 had approached David Jones with an indicative, non-binding and conditional proposal for a potential merging of the two companies. According to Myer, the combined group would have originated pro forma earnings and sales before tax and interest of approximately $364 million and $5.0 billion respectively in 2013 (Slack, 2015). Myer in addition also thought that more than $85 million of ongoing annual cost synergies could be achieved by the merging and this process will be driven by structural efficiencies. However, in November 2013, the board of David Jones rejected this proposal. Myer again expressed the proposal of buying David Jones at market value in February 2014. At that point the market capitalization of Davis Jones was $1.7 billion. Myer also stated that chief executive Bernie Brookes would be reappointed to manage the combined entity after merging. David Jones showed acknowledgement by considering the proposal of the shareholders, but no comments were made further.

In April 2004, David Jones announced that it had entered into Scheme Implementation Deed through a recommendation of $4.00 cash per share proposal in association with South African-based retail group Woolworths (Hesterly & Barney, 2015). After listening to this, Myer withdrew the proposal. A market capitalization of $2.15 billion was implied in this proposal. In July 2014, Federal Court of Australia approved this takeover bid.

The Wellington made an announcement of purchasing Kirkcaldie & Stains, a department store of New Zealand in July 2015. Therefore, in 2016, the existing Wellington store will shut down and again it will reopen in New Zealand, as the first David Jones' store (Apenko, 2014).

The value chain and its impact on the company:

The company also takes a strategic review on its operation in a process called value chain analysis to get the sections that is lagging behind the value delivery chain. One of the most strategic moves, that target has heightened use of the new media to search the customers because of its strategic reviews. The company's online store stands out as the most efficient and innovative means of delivering value to customers due to speed of dispatch and processing ease (Rothaermel, 2015). It also has an elaborate product after sale service criteria making it one of the best in the industry. The company uses its online store to fetch the markets beyond regions where the company has a physical presence. The company is able to pass the low cost benefit to its customers due to its low cost online presentation. In addition, the company delivers messages about new products to its customers fast enough before most of its competitor.

SWOT analysis:

To understand the operations and the business of a company, it is necessary to perform SWOT analysis. Therefore, the SWOT profile o David Jones Limited will present an in-depth strategic analysis. Global Data had compiled all the data related to SWOT analysis to present an unbiased and clear view of the company’s weakness, strengths, threats and potential opportunities. The SWOT analysis of David Jones Limited is presented below:

Strengths:

• Strong domestic touch is present in their product, like, food products, electricity and fashion in the Australian market.
• Wide range of products is offered.
• Stores are located in high value and low risk factors.
• In Luxembourg and France, 200 retail stores are present.
• This company is also famous for its unique bookmarks, which are made up of fallen leaves. These leaves are imported from foreign countries (Bettis et al., 2015). Then they are processed and laminated. These bookmarks are provided with the delivery of the books.

Weakness:

• High brand switching and low brand loyalty is observed due to many available options.
• Global penetration is limited here.

Opportunities:

• They have a chance to enter into the pharmaceutical business.
• Leveraging on brand name David Jones can enter into extension of other product line. 

Threats:

• High brand switching of the company gives rise to limites brand loyalty.
• As the new brands are coming in the markets, then the domestic competition is increasing gradually.

A critical evaluation of the current strategy:

David Jones delivers the high-end market as opposed to the mid-market segment served by Target. DJ has the ability to sell its products at a higher price than its counterparts do. It has worked on customer service to fetch and retain he customers even in its falling time. This company meets the offers in the industry due to its brand range and as one stop shop. In 2003, DJ made the strategic change by scaling down its online store. DJ is one of the most recognizable brands in the country thanks to its strong positioning aimed at imprinting its image onto the minds of the customer. As a result, it has heavily invested in customer service to attract and retain customers that sustain it even in times of falling demand. Besides, the company has an elaborate brand range that is one of the largest in the industry meat to offer its customers variety in a convenient one-stop shop. Its huge presence in up-market locations points to its appetite for the top end market (Stead & Stead, 2013). This was a failure of management foresight as a decade later; companies with an online distribution outlet continue to enjoy unsurpassed benefits. Among these benefits, include ease of access to large customer pools, lower inventory levels as products are stocked only on demand, a widened regional reach and higher margins on sales due to lower operational costs. Target operates at the middle level market. It has several stores in the countryside pointing to its appetite for the medium to low income segment market. Using a low cost model, the store aims at passing the benefits to the customers in form of low prices. 

Suggestion of a new strategic approach:

The growing departmental store David Jones has revealed its ambitious strategy to carve up the fast-growing $44 billion especially in retail sector by reposting its merchandise, staff and stores. This strategy has arrived after targeting 1.3 million “dormant customers’’ and many more customers from rival Myer, who are interested in affordable fashion but not interested to shop at the stores. Initiative is also taken by focusing on Asian customers. It will be done by introducing credit card and loyalty program, recruiting new staffs including restructured incentive schemes. During administrative duties, these will influence the sales manager to spend less time bogged down and more time in sales (Rothaermel, 2015). The fully owned Country Road business is present in much greater way within David Jones, associated with Witchery, Trenery and Mimco fashion brands. These four key fashion brands will be lifted the total sales of Country Road Group to $1bn by 2018. This will be achieved by replacing the existed David Jones private label product and growing Country Road’s brand portfolio. They also can display their new ranges of products through relocated and expanded installations across 362 new David Jones stores. South Africa’s Woolworths Holdings provided an updates strategy to analysts and investors. In southern hemisphere, it became the biggest apparel retailer by paying $213m to mop up minorities in Country Road and $2.1bn for David Jones last year. It directly threatens the listed rival, like Myer and Wesfarmers-owned Target. Their specialties are dominating in the competitive market. According to David Jones, the customers prefer in “ bridge, luxury and better brands’’, with the “bridge’’ and “better’ segments making up 70 per cent of its business (Gamble & Thompson, 2014). David Jones can address the upcoming challenges via three-point strategy. This strategy involves growing the store network, strengthening the core business and transforming this company into an Omni Channel Retailer. This strategy will enable the company to make a strong business model. The company will be well placed from this model to provide year-to-year sustainable PAT growth. To generate PAT growth and sales, this strategy will provide enormous leverage after improving macroeconomic environment.

Under the new business plan and combining the private label sales, in next five years, David Jones will grow from 3.5 per cent to 20 per cent (Stead & Stead, 2013). David Jones can also enter into Asian markets. David Jones can also implement new strategies to transform its customer experience and customer service by introducing new staffing structure with redesigned sales manager role. 

Conclusion:

This strategic analysis concludes that David Jones heels to weather the storm. This occurred as the consumers sentiments are deteriorating due to decreasing degree of operating advantage. It also should have the ability to know its customers and cultivate mismatched brand loyalty. On the other side, targets stores are vulnerable to rising costs and falling sales and inability to resonate it with consumers. However, the online stores are standing out in a well-aligned sales strategy to fulfill the consumers fast. 

References:

Apenko, S. N. (2014). Leadership of human resources and project teams in the management of strategic changes in the organization. Strategic Management, 19(1), 28-34.

Bettis, R. A., Gambardella, A., Helfat, C., & Mitchell, W. (2015). Qualitative empirical research in strategic management. Strategic Management Journal,36(5), 637-639.

Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.

Evans, N., Stonehouse, G., & Campbell, D. (2012). Strategic management for travel and tourism. Taylor & Francis.

Gamble, J. E., & Thompson Jr, A. A. (2014). Essentials of strategic management. Irwin Mcgraw-Hill.

Hair, J. F., Sarstedt, M., Pieper, T. M., & Ringle, C. M. (2012). The use of partial least squares structural equation modeling in strategic management research: a review of past practices and recommendations for future applications. Long range planning, 45(5), 320-340.

Hesterly, W., & Barney, J. B. (2015). Strategic Management and Competitive Advantage Concepts and Cases. Pearson Higher Ed.

Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

Hitt, M., Ireland, R. D., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

Mellahi, K., & Frynas, G. (2015). Global strategic management. Oxford University Press.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill.

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

Stead, J. G., & Stead, W. E. (2013). Sustainable strategic management. ME Sharpe.

Swayne, L. E., Duncan, W. J., & Ginter, P. M. (2012). Strategic management of health care organizations. John Wiley & Sons.