Environmental Markets: Opportunities And Risks Analysis Of Bunnings Warehouse Essay.

Bunnings Warehouse Business Model

Discuss about the Environmental Markets for Opportunities and Risks.

Thesis Statement: Critical Analysis of Business Strategies and Risk Assessment of Bunnings Warehouse and the effective role-played out by the company management in developing company’s productivity.

This essay would take into account the factors related with Bunnings house, mainly focusing on the way it works, the model it follows in dealing with customers, the factors that has an impact on the regular business activities of Bunnings house. Certain risk factors are also analyzed that can have a negative impact on Bunnings if not assessed properly.

One of the leading household hardware chains in Australia, Bunnings Warehouse caters to the domestic needs of millions of customers in Australia. They have been leading the segment of home improvements retails and other outdoor home products. The home services that are being offered by the organization takes into account the innovative designs of kitchen, personalized splash backs. They are in the business of assisting customers with color consultancy, putting in of tailored air conditions along with the other installations of hot water. The organization has also assisted in installation of doors and accumulating of BBQ. This present assignment displays the organizational emergence along with portraying of the brunt of environmental forces within an organization. The risks that one can generally associate with Bunnings Warehouse have also been revealed along with other business rituals. The different functions of the business organization have also been included in this paper, adding to that is the Bunnings model of business.

As per Ashkenas et al., (2015), the structure of the organization that are being commonly used in business takes in the part of sole trader, organization, business partnership along with trust. Bunnings Warehouse is one of those private trading groups working in Australia and New Zealand, with formerly it being founded in partnership by two brothers that gradually grew up as private trading assembly.

The primary organizational partners take into account the business partners along with the other shareholders. Their main actions takes into consideration the modified bench tops, kitchen designs that are innovative in nature, along with adapted splash backs for its customers. They have been helping their customers with the installation of customized AC, installation of hot water and other installations like fancy door garden. Other main activities of the organization are assembling BBQ and consultation of color (bunnings.com.au , 2017).

According to Stewart, (2016), the important resources that Bunnings take into account is the human resources, employees and other staffs who have been working assiduously for the satisfaction of customers. Certain value proposition of the organization includes the satisfaction of their customers with the quality of service, creation of goodwill and trust of consumers. The innovation that it brings in along with the design modification as per the customer needs adds up to the factor of value proposition. Bunnings, over the years have been satisfying the needs of the customers with their service types and have been building positive customer relationship. Their dedication towards providing their customers with the best possible service is immense and their personal assistance has enabled them in maintaining strong relationships.

Factors Affecting Bunnings Warehouse

Bunnings considers service quality as determinant of satisfaction of customers, assuming that customers come into a service stumbling upon prior expectation that is being matched with real service knowledge in determining quality of service of Bunnings (Garcia, 2015). The customer is usually satisfied with the real service experience meeting expected service. Service quality has been predecessor to satisfaction of consumers.

Segmentation of customers specifies the target market that the organization has in its mind for its products and services. Their main or key customers take in the multi-sided platform, as their customers comprises of both the bigger enterprises and the frequent homemakers. Bunnings have been targeting every possible customer to have a larger base that would generate enough revenue.

The suppliers of Bunnings takes in the top-most and expert suppliers existing in Australia and New Zealand and as it has been working in different sectors having wide assortment of suppliers ranging in wide diversity. The company is in the process of making their customers aware of their products and services through different advertisements along with the word of mouth of loyal customers. Word-of-mouth advertisement plays a major part in advertising the product and service of the company as it spreads more than anything.

The environmental forces powerfully exaggerate every business organization, where it might be external and internal. Generally, the PESTLE analysis and Porter’s Five forces considers the external environment. The internal analysis of any business organization is being evaluated through McKinsey 7S framework and SWOT. For Bunnings, the varied environmental factors that have an important impact on the organization through PESTLE are political factors where Bunnings is hugely affected by the instability in politics occurring in Australia along with the alterations in the government regulations. Economically, the price increase and downturn in the market and the instability in the economy have huge impacts on the business of Bunnings in negative way (Chittoor, Kale, & Puranam, 2015). During times of economic instability, the habit of customers to shun away from purchasing stuffs determines the business condition.

Social factors have been changing the customers way of living, entry of new competitors, cost based competition playing an indispensable role in attracting the business of Bunnings. Their changes occurs when people might be needing installation of new ACs and tailored kitchen set up integrating a boost in the Bunnings business. In case of advancements in technology, it is significant the Bunnings need to upgrade their technological aspects and integrate design innovations and ways of installing their products (Aga & Francis, 2017). In case of lack in motivation Bunnings might lose out on important market share.

PESTLE Analysis and Porter's Five Forces for Bunnings Warehouse

The legal factor takes into account the framework of licensing and abidance to the country’s trading laws. There is general awareness related to green planet projects and the environment for which Bunnings need to ensure that it reduces the pollution level caused by wastes and chemicals.

The impact of external environment is also dogged by the Five forces model of Porter.  Porter’s five forces takes in power of supplier where Bunnings offers varied range of services for which it has wide range of suppliers. Its supplier power has been very strong and it has some of the best suppliers of Australia and New Zealand supplying them with raw materials. Hence, much of Bunnings fate is dependent on the supplier power. In case of threat of substitutes, Bunnings does have threats from its substitutes as its customers might opt for something else if there is any possible slip-up from the Bunnings or increase in price (Oliver 2014). For, threat of new entrants, the Bunnings business has not been affected by the new entrants’ threat. Bunnings is considered the market leader in Australia for which it does not feel the heat of any sort of threat of new entrants. In case of competitor rivalry, Bunnings rivalry with other organizations along with the healthy competition that exists works as a motivation factor for the staffs of Bunnings in integrating modernizing in their services and products (Li & Rama, 2015).

The internal environment influences strengths that are low price, having around 250 stores spread across Australia, services that are customized in nature, product innovation and principal household hardware merchant. In case of weaknesses, requirement of online existence, service echelon is short and there is need of global existence as it maneuvers mostly in Australia and New Zealand.

For opportunities, introduction of e-commerce can be of bog boost to the company. It can think of expanding to other countries that provides it with better business opportunities. As per Fritsch & Changoluisa, (2017), for threats, Bunnings faces competition from similar sort of companies Bunnings faces competition from similar sort of companies, the economy’s instability might result in investment of lesser amounts by customers other than the usual amount, which might diminish sales.

In case of McKinsey 7S framework, Bunnings structure is effective one offering competent growth scope of the organization. Bunnings integrated the innovation strategy and customer customization like the personal choices of customers receiving significance and preference (Sengupta, Balaji & Krishnan, 2015). Bunnings staffs are stated to be very friendly and hard working having the skill to create innovative things, which enhances the business. Bunnings employees are highly skilled and have the intelligence power of innovating and installing thins in swift manner.

Internal Environment of Bunnings Warehouse

Their product and service have explicit style which the organization should follow as if its authorized signature should be associated with each product of its. Bunnings system takes into account the smooth flow of operation of the company with effective suppliers and logistics system along with the competent staffs (Valenzuela, 2013).

For any business, risk is a common factor, same with Bunnings too. Some of the risk that can be associated with Bunnings are poor supplier selection, where Bunnings might invite risk with poor selection of its suppliers. Bunnings is an organization that covers big areas of services and products, thereby contracting diversified needs of suppliers. Poor selection would result in poor business of Bunnings. In case of low reaction to economic changes, an organization should be able to counter to the economical changes within the country of its operations. Negligence of any sort would result in loss of productivity in business. For poor scrutinizing of competitors, Bunnings should be able to keep track of their rivals so that their competitors do not overtake them under any situation. Not having of regular monitoring would at times result in business loss for the company.

The organization and businesses performs an effective role in the development of Bunnings productivity. Ample power has been given to employees of Bunnings so that they are proficient in taking proficient decisions, as and when required. The power distribution is compulsory for the thriving and meticulous working of the employees. Bunnings possess of an effective information system that is necessary in providing access to each employees.  The system of information boasts of information related to the quantity and quality of the output present at workplace. The profitability and cost factor does get recorded in the information system of the company. Reward is an important segment in organization that motivates employees a great deal in putting their best efforts and helping them in working meticulously towards the attainment of organizational goals (Chittoor,  Kale & Puranam, 2015).

Conclusion:

Bunnings has huge customer base in Australia and it has been considered the biggest retailer of household hardware chains. PESTLE and Porter’s five forces took care of the organization’s external environment whereas SWOT and McKinsey 7S framework took in the internal environment. Certain risks have also been identified like poor supplier selection and incapacity to monitor competitors in effective manner. This paper has provided an overall business context and management of Bunnings.

Reference:

Aga, G., & Francis, D. (2017). As the market churns: productivity and firm exit in developing countries. Small Business Economics, 1-25.

Ashkenas, R., Ulrich, D., Jick, T., & Kerr, S. (2015). The boundaryless organization: Breaking the chains of organizational structure. John Wiley & Sons.

 Bunnings (2017). . Retrieved April 14, 2017, from https://www.bunnings.com.au

Chittoor, R., Kale, P., & Puranam, P. (2015). Business groups in developing capital markets: Towards a complementarity perspective. Strategic Management Journal, 36(9), 1277-1296.

Fritsch, M., & Changoluisa, J. (2017). New business formation and the productivity of manufacturing incumbents: Effects and mechanisms. Journal of Business Venturing.

Garcia, J. M. B. (2015). Farming in the European Union: from organic to sustainable (Doctoral dissertation, Lund University).

Lhannaoui, H., Kabbaj, M. I., & Bakkoury, Z. (2014, August). Analyzing risks in business process models using a deviational technique. In Software Engineering and Applications (ICSOFT-EA), 2014 9th International Conference on (pp. 189-194). IEEE.

Li, Y., & Rama, M. (2015). Firm Dynamics, Productivity Growth, and Job Creation in Developing Countries: The Role of Micro-and Small Enterprises. The World Bank Research Observer, 30(1), 3-38.

Oliver, R. L. (2014). Satisfaction: A behavioral perspective on the consumer. Routledge.

Sengupta, A. S., Balaji, M. S., & Krishnan, B. C. (2015). How customers cope with service failure? A study of brand reputation and customer satisfaction. Journal of Business Research, 68(3), 665-674.

Stewart, E. (2016). Environmental Markets: Opportunities and risks for business.

Valenzuela, F. (2013). Marketing: A Snapshot. Pearson Higher Education AU.