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Evaluation of the industry

Discuss about the Case of Study Retailing Market of Australia.

Change has been a significant part of any organization, especially within the changing political, economic, social and technological climate. In return, the changes lead the organizations to meet greater demands, opportunities and challenges in terms of developing the retail sector. The fundamental dynamics of changes in the retail sector of Australia has already generated more interest for the researchers, as the big Australian retailers have already implemented several changes and the small ones are now taking innovative and bold steps against the global competitors (Hayes 2014). This also requires reshaping their existing strategies to gain the competitive advantage in the market place and attract more customers. Retailing in Australia has been successful for the small businesses so far. In the last financial year, the retail market of Australia has shown to have increased by around 3%, however in terms of the previous year’s growth rate; it has shown a slower rate (Cameron and Gree 2015). However, the change management is very much required, especially for the grocery retailers, as this sector of retailing has seen the highest growth in the last few years. This report will study the retailing market of Australia in terms of a small grocery retailer, Thomas Grocer in Sydney. The organization is a comparatively small grocery store which has started planning for a change in order to attract more customers on the domestic level. However, due to this change the employees of the organization were not being able to cope up with the situation. I have been working with this organization for last two months as a part-time sales person, therefore in this report I will evaluate the industry and the internal and external contexts for prescribing the change initiatives. The models and theories will be discussed to support the proposed change initiative. Recommendations will be made for the possible issues due to the change within the organization.

According to Varley (2014) the grocery industry of Australia is mostly dominated by two big players, Woolworths and Coles. Both these organizations hold around eighty per cent of the entire market share. However, there are several independent retailers and wholesalers in the market along with different specialty retailers. Other than the two big players in the market, there are few international grocery organizations such as Aldi. Moreover, both the Woolworths and Coles have a significant impact on the price control of the Australian grocery market. However the Australian market is an established competitive market which has set the prices in a relative way according to the buying behavior of the customers within the market. In the recent times, the most dominating characteristics of the retail market is that the organization are utilizing the advancements of technology as an effective method for luring the potential customers. This has effectually increased the amount of buying materials within the industry. The organizations have also implemented the loyal program cards which have been very much effective in retaining the customers. However, Fernie and Sparks (2014) has indicated that there are few barriers within the industry which may hinder the growth of the industry to a great extent. Several organizations are not being able to entry in the market or to expand due to the lack of sites as the desired ones are already taken by the big players of the industry. Moreover, the entire industry had become monopoly due to the bigger players in the industry. Roth (2016) also reveal that the there has been a hike in the market prices even though there has not been any changes in the quality of the product. However, all the findings regarding the industry indicate that there is a workable competition in the market along with the existence of the monopolistic power. Moreover, the small organizations in the market need to deal with this competition strategically as the competition is quite tough here.

Organizational culture and structure

Thomas Grocer is a small grocery retail shop in Sydney with two outlets in the city. The organizational structure of the organization mostly determines the business activities of the company. The structure of Thomas Grocer also enforces few limitations on the way of addressing problems Thomas Grocer has a functional hierarchical organizational structure. There dominant features of the structures are definitions on the basis of functions and hierarchy. The hierarchy relates to the vertical command lines and authoritative throughout the structure. For instance, other than the Managing director of the company, all the employees have a superior employee. The directions mostly come from the higher levels of the management and implemented by the middle management. The job definitions on the basis of functions involves different group of employees for different job definitions. Fior instance, there are different departments in the organization such as, marketing and sales department, human resources department, finance department, customer service department etc. The people who are capable of working in such department are only put in such teams.

The organizational culture of Thomas Grocer has few primary components. These components are utilized in guiding the organizational behavior of the employees. The components are:

  • Providing best service to the customers
  • Respecting every individual
  • Doing the actions with adequate integrity

            In case of providing service to the customers, Thomas Grocer prioritizes the clients most in the operation chain. However, the organization also identifies the contributions and efforts of the employees for making the business successful. Along with that, the organization also strives for excellence within the individual performances, respective teams, and the organization. In addition to that, the organization promotes the values of fairness, honesty and impartiality within the decision making procedure. However, the organization requires applying its beliefs and core values in the operational chain.

The primary strength of Thomas Grocer is that the organization has excellent employee who have strong knowledge regarding the existing products. The organization also has good relationship with its customers in the neighborhood. In addition to that, the employees also have a good internal connection with the management and they have always maintained the hierarchy (Cullen et al. 2013). Two of the stores of Thomas Grocer are located in a good position in Sydney; therefore even if there is higher competition in the market along with monopoly, the organization manages to pull the crowd. This is also because the successful marketing strategies that the organization has applied. The organization has constant presence in social media, magazines and news paper. The organization is also reputed for innovation in the market.

SWOT analysis: Strength

Recently the organization has faced struggles with meeting the deadlines as the work force is not sufficient for managing the entire increased work load. As the locations of both the store outlets are in a good position, the organization has to bear the higher rental costs. There are also cash flow issues. The organization does not keep its records in a proper way. Therefore it does not even have any loyalty program which can be helpful in retaining the customers (Gallino. and Moreno 2014). The organization also does not provide the opportunity of online shopping to the customers. Sometimes, they have to hold larger stock as well.

The organization has a good reputation in the market; therefore the organization is reliable for the customers. There is also a strong customer base in the market; however, the organization needs to expand it. The demand in the neighborhood has also increased in past financial years.

The strong competitors and the major key players in the retail sector are the main threats for the business. Most of the customers are now interested in doing online shopping; however, the organization still does not provide this opportunity for the customers. Also the depression in the economical situation has also affected the business in the last few years.

Kotter’s Change Management Theory is one of the most popular theories around the world. A professor at Harvard Business School, John P. Kotter has derived this theory where he has divided the change management process in eight stages, such as,

  • Increase urgency – This stage includes the creation of a urgency sense among people for motivating them towards the desired objectives (Neumeier 2013).
  • Build the team – This stage indicates to get suitable people in the team mixing their knowledge, skills and management.
  • Get the correct vision – This step is related to the creation of the right vision with the strategy along with objectives, emotional contacts and creativity (Burke 2017).
  • Communicate- This is a major stage where the communication with people takes place about the change and the need for it.
  • Get things done- For empowering the things or the required actions, it is necessary to get adequate support, remove the obstacles and implement necessary feedbacks.
  • Focusing on the short-term goals- Focusing on the short term goals will enhance the way of achieving the success.
  • Not giving up- Being persistent is the ultimate key for success; therefore one should not give up at any stage (Hayes 2014).
  • Incorporate the change- Other than managing the change in an effective way, it is significant to incorporate it and make it a major part of everyday work culture.

This theory has described the entire change management process in a step by step way, therefore it is easier for the organization for following and incorporating it in the system. However, this model is quite time-consuming as all the steps have to be followed.  

This model had been developed by the consultants of McKinsey & Company. There are seven stages in this model, such as:

  • Strategy: The strategy indicates to the plan which has been created for reaching the goals. This stage also involves a step wise future plan (Mitchell, Fredendall and Cantrell 2015).
  • Structure: This is the stage of this model which can be related to the method to follow to reach the goal.
  • Systems: For getting a job done, the system is the way which elaborates the regular day activities.
  • Shared values: This refer to the primary or the core values of the respective organization.
  • Style: This is way which the change is implemented and the leaders of the organization adopted (Alshaher 2013).
  • Staff: This refers to the employees and their capabilities of working the change out.
  • Skills: This refers to the competencies and the knowledge of the employees who are the existing workforce of the organization.

This model refers to the methods in a transparent way with a profound insight in the way of reinforcing it. This also considers all the necessary components for implementing the change and offers a directional factor for the organizational change (Alshaher 2013). However, all the sections in the model are co-related, therefore if one stage fails, it is highly possible that the other ones starts failing too.

In this internet era, it is necessary to have a successful online presence for any organization, especially in the fast growing countries like Australia. The penetration of internet shows that there are several identifiable changes in the buying behavior of the Australian grocery and retail customers. Alshaher (2013) indicates that most of the customers are now more comfortable in shopping their groceries online as it saves time. There are several stores which also offer convenient deals for using the banking transactions while shopping. Therefore, Thomas Grocer will offer its customers the opportunity of shopping online along with the customer loyalty cards. These cards will offer the customers an added benefit such as flyer points while using. This will increase the numbers of purchase as the customers will want to gain more flyer points. The store can also start a rewards program which will let the customers have more benefits such as more discounts on the next shopping or on the shopping of any related store. Therefore the organization will be able to increase the demand of the customers to a great extent by offering them the online shopping and loyalty programs. This will also help Thomas grocer to gain a competitive edge amongst the small retailers in the Australian grocery market. The organization should also adhere to its strategy as mentioned in the previous models and ensure that they have a actual plan for materializing.

Weakness

Recent researches on the implementation of the online shopping system indicates that the customers are mostly impatient, therefore they get easily dissatisfied if there is any issue with the website or the application and move to another retailer. Therefore, while implementing the changes in the online shopping and loyalty program in Thomas grocer, the management has to ensure they provide unique experience to each of the customers. This will help them not only in retaining the old customers, but also attracting the new ones. The following recommendations are made for the organization which may help them to enhance their chain management procedure.

Firstly, the organization needs to chalk out the plan for the required change. This will eventually let the company find out the gap in their system thoroughly. The management should analyze their entire business process and understand why they require implementing the change. After the analysis, they need to validate the improvements which can be reinforced in the system through the change initiatives. At this stage, the organization needs to have a profound understanding that what is happening within the market place. This will help them in planning a strategy which can include the significant changes.

Secondly, the organization will also require identifying the key Performance Indicators for tracking the outcomes of the change initiative. This will ensure that the organization can easily measure the success of the proposed change initiatives.

Thirdly, Thomas Grocer will also require structuring the entire plan of changing the shopping platform for the customers. The plan can only be structured when the organization has fixed goals. The change management procedure will only be successful when the entire process contains the naturally occurred disruption and resistance. Therefore the more the organization focuses on its goals, the more they can accomplish the desired goal. According to McKinsey 7S Model, this stage is very important as it defines the ways of accomplishing the goal.

Fourthly, the organization needs to take of the technological issues strategically. While opening an online shopping website and application, it is very important to choose a right domain which is catchy and easy to remember for the customers. They should also avoid any kind of similarities with any other existing names of the domain. It is better to choose the same name as the store.

Fifthly, the online store should be set up following a right catalog. The online stores do not really have sales persons, therefore thee visuals and product descriptions should be effective enough to make sure the online visitor ends up being a customer.

Opportunity

Sixthly, the organization should also train and develop their employees so that they do not face any kind of trouble with the change management.

Conclusion  

In conclusion, it can be said that, in the retail industry it is very important to bring more innovative procedures and changes in their regular processes. The effective changes in structuring, technology, policies and strategies can help the organizations to sustain in this global market environment. In this essay, the change management process in a small grocery retail business has been suggested. However, the organization also needs to remember that they can have several change initiatives, but it is the employees who can make the entire change management procedure possible. The possible recommendations for managing the change have been suggested in this essay as well.

References

Abouali, A., Harraz, N. and Fors, M.N., 2015. Optimizing Inventory Replenishment and Shelf Space Management in Retail Stores.

Alshaher, A.A.F., 2013. The McKinsey 7S model framework for e-learning system readiness assessment. International Journal of Advances in Engineering & Technology, 6(5), p.1948.

Bátiz-Lazo, B., 2017. Between Novelty and Fashion: Risk Management and the Adoption of Computers in Retail Banking. In Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century(pp. 189-207). Springer International Publishing.

Bhushan, A., Zanwar, A., Jain, N. and Rao, P.H., 2017. Technological Integration and Sustainable Initiatives to bring in Efficiency in Supply Chain in Indian Multi-Brand Retail. Journal of Supply Chain Management Systems Volume, 6(1).

Burke, W.W., 2017. Organization change: Theory and practice. Sage Publications.

Cameron, E. and Green, M., 2015. Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.

Cao, L. and Li, L., 2015. The impact of cross-channel integration on retailers’ sales growth. Journal of Retailing, 91(2), pp.198-216.

Chakraborty, R., Lee, J., Bagchi-Sen, S., Upadhyaya, S. and Rao, H.R., 2016. Online shopping intention in the context of data breach in online retail stores: An examination of older and younger adults. Decision Support Systems, 83, pp.47-56.

Chou, Y.C., Chuang, H.H.C. and Shao, B.B., 2016. The impact of e-retail characteristics on initiating mobile retail services: A modular innovation perspective. Information & Management, 53(4), pp.481-492.

Cullen, J., Tsamenyi, M., Bernon, M. and Gorst, J., 2013. Reverse logistics in the UK retail sector: A case study of the role of management accounting in driving organisational change. Management Accounting Research, 24(3), pp.212-227.

Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.

Gallino, S. and Moreno, A., 2014. Integration of online and offline channels in retail: The impact of sharing reliable inventory availability information. Management Science, 60(6), pp.1434-1451.

Gao, F. and Su, X., 2016. Omnichannel retail operations with buy-online-and-pick-up-in-store. Management Science.

Hayes, J., 2014. The theory and practice of change management. Palgrave Macmillan.

Insley, V. and Nunan, D., 2014. Gamification and the online retail experience. International Journal of Retail & Distribution Management, 42(5), pp.340-351.

Mitchell, B.C., Fredendall, L.D. and Cantrell, R.S., 2015. Using McKinsey’s 7 S Model to Empirically Examine Organizational Effectiveness among the NBA Teams. International Journal of Management and Human Resources, 3(1), pp.69-86.

Neumeier, M., 2013. Using Kotter's Change Management Theory and Innovation Diffusion Theory In Implementing an Electronic Medical Record. Canadian Journal of Nursing Informatics, 8(1-2).

Roth, L.J., 2016. Successful Business Process Management in Retail.

Varley, R., 2014. Retail product management: buying and merchandising. Routledge.

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