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David Jones Company's threats and opportunities

In the growing era, SWOT Analysis is an important tool which helps them to develop an understanding of the internal factors of an organization, so that they can assist them to create efficiency in future performance of the organization. The strengths and weakness signify the internal factors of the organization whereas opportunities and threat signifies external factors of the organization. This analysis is performed by all types of organizations because it assists them in organizational goal setting planning process (Bull, et. al., 2016). The analysis is a forward as well as a backward looking process as it helps the company to get to know about the company's internal and external factors affecting the future innovation trends.

The David Jones Pty Ltd, colloquially known as DJ is an Australian company which is involved in departmental store business. The company is owned by the South African Retail shop and the group of Woolworths holding Limited. DJ was originated in the year 1838 by David Jones. The company is world's oldest continuously operating department store traded with the same name. The company currently holds 43 stores in Australian states and territories. David Jones is headquartered in Sydney, Australia. The company serves products like cosmetic, fashion, food, electrical etc. to its customers. The previous year the company earned revenue of A $ 2.2 billion, with which it shall be noted that the company is earning well in its industry despite having tough competitions. Further, there are more than 7200 employees in the organization, so it can be said that the company is growing with a good speed and is aiming high for future innovation plans as well. More details and activities of retail company David Jones are discussed below.

The report will cover the SWOT analysis of David Jones Ltd. with respect to future innovation trends. It also provides an overview of the company in relation to future innovative activities which the company is planning to implement. The details are discussed below:

Threats: threats refer to the penalties which can attract the company and reduce its growth. The threats of the David Jones Company are as follows:

  • Increasing competition in the external environment: the fact shall be noted that as there is tough competition in the market, resulting to which the growth of the company is hampered. Further, it shall be noted as there is a consistent entrance of new brands coming in the market industry due to which customers o the company shift to new and different brand prevailing in the market. This reasons act as a barrier to the growth of the organization (Hollensen 2015). Although the company has surplus amount with the aid of which DJ can make innovation and identify them in the market. But for the same, the company needs to implement a proper management, and in this case, the company lacks (refer appendices 1.1).
  • Limited Brand Loyalty provided by customers: DJ being a highly branded product provides adequate quality services to its customers, but apart from providing adequate quality along with quantity the company is unable to receive brand loyalty from its customers. Brand loyalty refers to the process in which the customers are sufficiently satisfied with the products and services provided by the organization, resulting to which in return they provide they provide their loyalty to the company by making a repetition of sales (Yuan 2013). Getting more and more customer does not initiate success for a company, instead of getting repeated sales by the same customers of the organization helps them in achieving success.
  • The easy entrance of new competitors: in the retail industry, as there are easy entrances of the suppliers of products and services in the market, thus the fact shall be considered that due to this the brand image which the old companies are willing to create is lost (Yu, et. al., 2015). Also, these new companies render services to the customers at low and cheap prices resulting to which the customers present in the market get attracted towards these company which loses the significance of such companies in the eyes of the customers as well as in the industry (refer appendices 1.2). Another threat to the company is that along with tough competitors present in the market, constant entry of other firms is also reflecting the growth of the company (Ngo, and O'cass 2013).

Opportunities: Opportunities refer to the chances which the company receives. If these chances have opted wisely then it can act as a speedy growth for the company (Carayannis, and Grigoroudis 2016). The details of the Company David Jones are explained below:

  • Entrance in pharmaceutical business: this is one of the fields in which the company has not and if they will then they can earn optimum return. Thus, company's activities to step into pharmaceutical field can help them to gain higher profit than expected. After the market, the management of the company also identified the fact that there is already few distributor and manufacturer of pharmaceutical products in the Australian market. Also, anther fact which shall be taken into concern is that the in this industry there is the restriction on entry and exit of firms (David Jones 2012). The company David Jones will easily receive entrance in this field because of having an oldest store in Australia and big one of the biggest departmental stores in Australia. Thus, it can act as an opportunity for the company and it can help them to earn well and generate good customer base in the global market (refer appendices 2.1).
  • The weakness of Australian Dollar acting as an opportunity for company: looking practically a the different economic aspects of the market the fact that came in consideration is that with decrease in value of Australian dollar in the international market, the power of local customers decreases to purchase products of international brand or products which are placed internationally (Huhtala, et. al., 2014). Thus, they need to return to the retail local stores present in their geographical boundaries. Due to this reason, the sale of the company increases and the old customers of the company also come back to the company only (refer appendices 2.2). Also, with this process, the company receives an opportunity to retain their old customers by providing them better services at good prices (Mitchell 2017).
  • Private Label Strategy: the best benefit a departmental company can receive is that they can apply private label strategy and earn optimum revenue for the company. It refers to the strategy in which the departmental store differentially price different brands and products on their own will. They have the opportunity to increase or decrease the price of a particular product to increase its sales. Thus, with this process the company can label increased price of the product which is highly demanded and reduce the prices on the label of products which are less demanded, this will increase the sale of these products as well and subsequently the revenue will also increase (Illawarra Mercury 2017).

Looking at the above SWOT matrix the fact that shall be noted is that the company has a great scope to implement future innovation trends in their business. Also, they have optimum opportunity to increase the sales of the company and create them product differentiated company. This can also help the company in the creation of brand image in the market. With respect to future innovation David Jones is initiating to implement strategies which shall assist them in producing optimum returns for the company (refer appendices 2.3). Apart from these benefits which are enjoyed by the company, the threat of competitors is also present in the external environment of the organization. In order to reduce the same DJ shall implement innovative strategies for future which will help them in creating goodwill in the market (David Jones 2017).

David Jones Company's strengths and weakness

Strength: strength refers to the strong points of the company with the aid of which they survive in the competitive market. The strengths of the company David Jones are discussed below:

  • Oldest departmental store operating in Australia: David Jones as referred earlier is the oldest departmental retail store in Australia which gives an advantage to the company, that people prefer the product of the company by its name. Being the oldest store in Australia helps the company to generate greater loyalty among customers and the customers also believe in the services rendered by the company due to their prevalence in the market for a long time. The stores of David Jones were opened in the market when there was no other option for the customers, due to zero competition the company creates a brand image in the eyes of the customers resulting to which the company is enjoying maximum market share holding (David Jones 2017).
  • High-quality products: As the company is prevailing in the market from a very long time due to which brand image of the company is created in the eyes of customers. Thus, in order to maintain that goodwill, DJ needs to update their products according to the interest of the customers. High-quality products are being supplied by the company to fulfill the expectation of the customer. Also, the company has achieved a product differentiated image in the market by providing high-quality products at optimum prices, this process also reduced the competition prevailing in the market. High-quality products also provide greater satisfaction to customers due to which customer loyalty is maintained in the market. Thus, this is one of the strength which the company attains and enjoys the surplus coming to the organization's fund (Rice 2013).
  • Efficient supply chains of organization: supply chain is one of the most important factors which are responsible to increase the efficiency of an organization. supply chain refers to the chain by which the organization supplies goods and services to the customers of the organization. The company has an efficient supply chain which helps them to supply products to the customer at a speedy pace (refer appendices 3.1). There is less involvement of intermediaries resulting to which the product is available to customers without barriers and at a reasonable cost as well. Also, there is presence of Omni-channel like retail store, websites etc. due to which the customer can purchase the products of DJ from varied sources (Johnston, and Marshall 2016).

Weakness: it refers to the drawbacks faced by the organization in the market. It may be due to internal or external factors affecting the growth of the company. Further, the weaknesses of Company David Jones are discussed below:

  • Presence of international online retailers: with the increase in competitors, there has been an increase in international brands who are selling their products to customers through websites and social media. Due to this process, geographical boundation has reduced and customers have started focusing on outside brand rather than purchasing products from local brands. This has implied as a weakness for DJ.
  • Huge capital investment in renovation: recently the company has renovated the internal ambiance of the stores of the organization. This initiation has led to major capital investment in the activities of the organization. Resulting to which the company was unable to invest in various crucial business activities (refer appendices 5.1). This acted as a barrier to the growth of the organization. The company faced difficulty in maintaining cash balance with them, as they were left with flow cash flow statement (Cummings and Worley 2014).
  • Weak financial position: due to changing in the sentiments of the customers, and the company facing huge expenditure the company was unable to save reserves for them. Further competition in the global market and prevalence of other brands online reduced the sale of the company due to which the financial position of the company decline (refer appendices 3.2). Adding to it the company faced difficulty due to global financial crisis as well; there was constant change in the trading conditions which were hindering the growth of the organization (Eurich, Weiblen, and Breitenmoser 2014).

From the above-mentioned statement, the fact shall be taken into consideration is that the company David Jones have many strengths present in their organizational culture, they just need to optimally utilize these resources adequately and drive them in the direction of future innovation growth. With respect to innovation, the company has a chance to grow in the international market by originating their sales through online websites (refer appendices 3.3). This can help the company to reduce the effect of their weakness affect the growth of the organization (Li, et. al., 2013).

From the above SWOT Analysis, the future growth strategy of the company David Jones is that the company is firstly aiming to overcome their weakness by implementing the following activities:

  • Transformation of the company: under this process, the company initiated to transform the management into Omni channel retailer. Further, the company focused on strengthening the customer service and engagement activities, this process will help the come to look at the issue of the customers of the company as well (refer appendices 4.1). Another transformation which the company implemented is that they managed to harmonize the global cost price by transaction with suppliers at an agreeable price of the product. The company also planned to invest more in the technological changes so as to flourish their market in online market as well. Lastly, the innovative transformation which company aimed to change is that they realigned the management skills and capabilities to the new future strategic direction of the organization DJ (Rothaermel 2015).
  • Growing the network of stores: under this aspect, the company initiated to open six new departments of David Jones so as to provide better assistance to the customer present in different locations of the company. The full line department stores were placed in high locations; this initiated an efficient supply chain of the products and services of the company (refer appendices 5.2). Also with this effect, the customer gained greater satisfaction from the company due to efficient delivery and cost effective product differentiation as well.
  • Apart from this, DJ also initiated to introduce various small scale stores in attractive location so that the products get more identified in the local market. The main of the company through process is that they wanted to create brand loyalty with local customers of the company (Goffin, and Mitchell 2016).
  • Strengthening the core business activity: the core business activity of David Jones Company is that they want to offer best products at optimum prices to satisfy the needs of the customers. Also, they aimed to restore the gross profit of the company at an optimum long term sustainable level. Further DJ also implemented to open five new high-value stores for the purpose of refurbishment (refer appendices 4.2). This initiated in creating a high value of the company as well. Lastly, they implemented the cost of doing business reduction projects which reduced the cost of production and some other needless expenses.

Thus in this way the company initiated to implement sustainable growth for the company for the upcoming ten years (Autio, et. al., 2014).

Conclusion

Thus in the limelight of above-mentioned events, the fact that shall be noted is that the company David Jones is the oldest company in Australia due to which it has a benefit to flourish the market and gain market capitalization. But due to competition prevailing in the market, the growth of the company started depleting. For that purpose the company implemented various activities like furnishing infrastructure, online websites etc. to sustain the innovative growth of the business. Thus, these changes will definitely affect the growth of the company in a positive manner.

References

Autio, E., Kenney, M., Mustar, P., Siegel, D. and Wright, M., 2014. Entrepreneurial innovation: The importance of context. Research Policy, 43(7), pp.1097-1108.

Bull, J.W., Jobstvogt, N., Böhnke-Henrichs, A., Mascarenhas, A., Sitas, N., Baulcomb, C., Lambini, C.K., Rawlins, M., Baral, H., Zähringer, J. and Carter-Silk, E., 2016. Strengths, weaknesses, opportunities and threats: A SWOT analysis of the ecosystem services framework. Ecosystem services, 17, pp.99-111.

Carayannis, E. and Grigoroudis, E., 2016. Quadruple Innovation Helix and smart specialization: knowledge production and national competitiveness.

Cummings, T.G. and Worley, C.G., 2014. Organization development and change. Cengage learning.

David Jones., 2012. David Jones Future Strategic Direction. Viewed on September 12, 2017 from < https://www.davidjones.com.au/~/media/David-Jones/Corporate/Presentations/2012/Mar_12_Future_Strategic_Presentation.ashx>

David Jones., 2017. About David Jones. Viewed on September 12, 2017 from < https://www.davidjones.com.au/About-David-Jones>

David Jones., 2017. Our Journey. Viewed on September 12, 2017 from < https://www.davidjones.com.au/gbj>

Eurich, M., Weiblen, T. and Breitenmoser, P., 2014. A six-step approach to business model innovation. International journal of entrepreneurship and innovation management, 18(4), pp.330-348.

Goffin, K. and Mitchell, R., 2016. Innovation Management: Effective Strategy and Implementation. Palgrave Macmillan.

Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

Huhtala, J.P., Sihvonen, A., Frösén, J., Jaakkola, M. and Tikkanen, H., 2014. Market orientation, innovation capability and business performance: Insights from the global financial crisis. Baltic Journal of Management, 9(2), pp.134-152.

Illawarra Mercury., 2017. What the future (and fashion) of David Jones looks like. Viewed on September 12, 2017 from < https://www.illawarramercury.com.au/story/2215172/what-the-future-and-fashion-of-david-jones-looks-like/>

Johnston, M.W. and Marshall, G.W., 2016. Sales force management: Leadership, innovation, technology. Routledge.

Li, Q., Maggitti, P.G., Smith, K.G., Tesluk, P.E. and Katila, R., 2013. Top management attention to innovation: The role of search selection and intensity in new product introductions. Academy of Management Journal, 56(3), pp.893-916.

Mitchell, S., 2017. David Jones future lies food and fashion. Viewed on September 12, 2017 from https://www.afr.com/business/retail/david-jones-future-lies-in-food-and-fashion-20170620-gwuk77#

Ngo, L.V. and O'cass, A., 2013. Innovation and business success: The mediating role of customer participation. Journal of Business Research, 66(8), pp.1134-1142.

Rice, A.K. ed., 2013. Productivity and social organization: The Ahmedabad experiment: Technical innovation, work organization and management. Routledge.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Yu, T.W., Javed, A.A., Lam, T.I., Shen, Q. and Sun, M., 2015. Integrating sustainability into value management process-a SWOT analysis approach.

Yuan, H., 2013. A SWOT analysis of successful construction waste management. Journal of Cleaner Production, 39, pp.1-8.

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