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Swot Analysis Harvey Norman Essay

Therefore, HAVEN should further emphasis on its inventory management, in order to minimize inventory build up and overall expenses in the entity. 2. Increased Competition from online shopping Studies reveal that Australian consumers have embraced online shopping, recording a 23% growth in 2012 (Irvine, 2013). In order to combat the fierce competition in the online market, HAVEN introduced its ‘Omni-strategy,’ which focused on the enhancement of its digital store.

There is evidence of success from this strategy with he firm recently named as ‘The Best Multinational Retailer’ in the ARIA 2013 awards (Cannonading, 2013). Despite this acclaim, it is of paramount importance that HAVEN considers enhancing its distribution channels, especially its digital store through better pricing on delivery times for online purchases and a greater focus on personalized services for internet empowered consumers. This will sustain consumer expectations and ensure the firm captures a greater portion of its target market (Cannonading, 2013). . Threat from domestic competitors Despite being one of Australia’s retail giants, HAVEN in recent times has been battling it out in the domestic market due to growing competition. In 2012, HAVEN was labeled as the most expensive Australian electronic giant recording a severe slump in its pricing position

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in comparison to its counterparts such as Dick Smith Electronics and JOB HI-Fl Eager, 2013). The underlying reason for the slump was predominantly due to the high costs from SST and compliance laws (Morley, 2013).

Additionally, three of HVAC’s recently acquired subsidiaries failed during the 2011/2012 financial years. This proved to be a costly investment for the firm reduced its competitive position in the furniture and electrical goods industry (Cone, 2013). Furthermore, the entity poor pricing position detrimentally impacted the electronics giant’s sales (-4. 9%) and profitability (-2. 38%) (Harvey Norman, 2012). This suggests that HAVEN may have inventory build-up, excessive discounting and price deflation due to staggering consumer demand. 4.

Stagnating growth in the global retail industry Stagnating growth in the global retail industry has resulted in lower consumer demand and expenditure. A study from IBIS reveals that Australian appliance retailing has fallen by nearly two percent (Fishbowls, 2013). Additionally, declining consumer demand has influenced a fall in the Australian dollar (ADD), which has negatively impacted sales in HAVEN Australian and international stores such as New that the negative growth has inhibited a reduction of HVAC’s profitability, revenue and thus increasing the risk of obsolescence of inventory. 5.

Natural Disasters affecting Harvey Norman Stores Recent natural disasters have damaged many HAVEN Australian and New Zealand stores. For instance, a fire in the storage area of Harvey Norman in Purina New Zealand heavily damaged a HAVEN store earlier in June 2013 (New Zealand Herald, 2013). This has had detrimental impacts on HVAC’s sales revenue in its New Zealand market (Harvey Norman, 2012 p. 10). It is important to note that these disasters increase time wastage spent on rebuilding stores and increases the risk of overstatement of assets, as they may not have been properly removed off premises. . Misleading advertising It is of paramount importance that a company doesn’t engage in false and deceptive racketing; especially if the products fail to exist in the warehouse. HAVEN was recently fined through infringement notices worth $6,600 for advertising stock they did not hold in a bid to mislead customers. According to the AC, this act breached the Trade Practices Act in promoting material. Moreover, this has had financial and non- financial impacts for the company, specifically affecting future sales and brand image on reliability of the company’s stance to deliver with full efficiency.

This is also known as operational and compliance risk. . Threat of the geographical location of franchises According to the entity 2012 annual report, franchising is deemed to be HVAC’s predominant source of its revenue. Whilst, HAVEN has franchise locations globally, its New Zealand stores attract the highest level of sales revenue (Harvey Norman, 2012). Growth in sales have peaked in stores located around the mining districts such as Western Australia, Hunter Valley, but have dropped in performance in the capital cities such Sydney and Melbourne.

A financial risk of going on concern can be indicated from here as the need of consumers shift and with competition HAVEN may not be selling and trading as much in the cities leading to inventory overload and incremented liabilities affecting overall business performance. 8. Currency Fluctuations During the 2012 financial year, the ADD fluctuated a significant amount against the most popular currency for trade (USED) by about $0. 9544 to $1 . 1055 (ARAB 2012). A fluctuation of $0. 1511 combined with trades amounting in millions would potentially lead to a large discrepancy to HVAC’s Accounts receivable and payable accounts.

Additionally, a lower ADD reflects that HAVEN would have to increase the retail prices in order to achieve the same profit margin (Campbell Phillips 2013). Empirical evidence reveals that if the dollar drops to around $0. ADD compared to the USED, Australian consumers can expect an increase in prices of about 25% (Campbell Phillips 2013). This increase can be counteracted through hedging of the currencies, however volatility of the commodity market could potentially reduce HVAC’s sales. Specifically, if sales decreases the risk of inventory obsolesces and write downs through idol stock increases.

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