Strategic Analysis

Executive Summary

This report gives an analysis of Myer organization and how it undertook its business operation. It gives an analysis of the various factors in the Australian that may have affected the performance of the organization. The report also covers an analysis of the resources and competencies of Myer Company and the benefits they brought to the company. It covers a close view of the various strategies that the organization undertook to overcome its rivals. It gives solutions to strategies that the organization may have implemented in order to overcome the factors. The report helps learn that slow economic growth slows the level of growth of organizations. Therefore in order for organizations to survive and grow effectively, they need to set effective strategies.

Background information of the organization

Myer is an organization in Australia which has a broad range of products. Some of the products it deals with include clothing, footwear, electrical accessories, stationeries and much more. The first Myer store was opened in 1900 by Sidney Myer and his brother Elcon Myer. In 1908, they opened a new store after the first one had become successful. The purchase of an old and already established business of Robertson and Moffat and Steven and sons helped Myer grow. The success of the business was even noted when the company was listed on the Melbourne stock exchange.

The company had a private ownership. This made it easy for quick decision making and quick response to any issue that may have affected the activities of the organization. This organization was sold by Coles Myer to the Westfarmers to Newbridge Capital. An increase of 6.8 % in the profits was recorded in March 2007. This remarkable success was recorded because the management of the business was effective.

This organization had many stores all over Australia. This helped it to reach a wide range of customers. By opening many stores especially in the city was a strategy to getting new customers hence more profit was made. This was hence a competitive advantage of it. This organization had a very wide range of products that it dealt with. This gave it an advantage because most consumer’s needs, taste, and preference were met.

Macro-environment analysis

A macro-environment analysis helps an organization to determine the external factors that may affect its activities. The analysis helps to identify the various factors and how they may hinder the organization from growing. The Myer organization is exposed to many external environment factors. Identifying these factors through the analysis helps to set strategies that can be set to overcome these factors which may be barriers to the operations of the business. The external environment consists of factors that may even affect the decision making of the organization.

The Australian market is exposed to many of the factors that may hinder Myer Organization from its performance. Therefore, this analysis would have been so useful to the organization in order to determine these factors and make it easy to set various strategies that would help it make its operations efficient and undertake effective decision making. Myer operates in all the Australian states and oneself governing territory and therefore it is exposed to many external environment factors (Fahey, & Narayanan, 1986).

The following are the factors that the organization is exposed to; political, environmental, social, technological, legal and economic.

Technological

There were rapid changes in the technological environment in Australia and the organization had to adapt to it. The organization has various external technological factors affecting it. Several international online retailers had increased in Australia and offered free delivery. This had become a major threat to the Myer organization because of the high competition. The organization must adapt to new and effective measures to use in order to be better than the other rivals (Nobre, Walker, & Harris, 2012). 

Legal

There were several legal factors that Myer organization faced. There are several laws that the environment of the organization is in. The consumer protection policies and complying with standards is mandatory and must be met. These regulations may restrict the company from the full exploitation of abilities. Myer organization would not fully give its abilities as far as products are concerned due to the policies. However, the laws ensured that the products were of good quality for human use.

Economical

External economic environment factors faced by the organization include the changes in government policies and instability of the Australian Dollar. These factors affected the rate of level of growth of the organization. Inflation affected consumers because they reduced the rate by which they bought products. This directly affected Myer organization negatively because when there was a reduction in the flow of money, then people would prefer to cater for the basic necessities only. The recorded rates of unemployment in Australia made it difficult determine the target market.

Social

The social environment also affected the organization. The aging population has affected the lifestyle of the customers. (Any statistics to support?) As time goes by, the taste and preferences of consumers change and this affected Myer organization because, at times, it was difficult to understand what the customer preferred.

Environment

The external environment consisted of competitors like foreign players. Foreign players brought about healthy competition which affects the profitability of a business. This helped the Myer organization to come up with strategies to help them make profits and get more customers in the competitive market. The company came up with better quality products and the use of the internet which is cheaper (North, 1997).

Political

The political factor that the organization faced in Australia is tax regulations. Myer organization was directly affected by the availability of sales tax in Melbourne. This tax affected the profitability of organization high levels of taxation may even affect the morale and willingness or an organization to undertake its activities. Stabilization of the organization was difficult and this hindered and slowed growth and its expansion.

Conclusion

In conclusion, I can suggest that the organization can achieve its goals and increase profitability through the use of technology. Some of the external factors in the environment play a big role in ensuring that the market is competitive and leads to increase in the quality of products and services provided the organization. Therefore, external factors of any business should be noted. This helps to build various strategies to overcome threats.

Competitive analysis of an industry

Competitive analysis plays a major role in helping an organization to establish itself to the competitive market. This analysis helps the organization ways of how to make its products unique in order to compete effectively in the market. Through this analysis, one can understand the strengths and also weaknesses of their competitor. Porter’s 5 model shows a framework by which the five forces; a threat of new entrants, industry rivalry, a threat of new substitutes, bargaining power of suppliers and bargaining power of buyers affect a business negatively and positively. Environmental analysis plays a role in identifying the various factors that bring the forces (Čechurová, 2015).

Myer faced a threat of new entrants due to the competition from foreign players. The poor strategies by Australian retailers attracted overseas entrants. Topshop, H&M, Zara and Uniqlo were new retailers who had gained entry into the market. This is one of the key players in the external environment. This analysis was important because it helped measure the strengths and weaknesses of these players. The competitors had an advantage because it sold its products online and offered free delivery which attracted many customers. Therefore, the organization was able to set various strategies that would help it overcome the forces from this competitor.

The entry of foreigners in the Australian market came hand in hand the threat of new substitutes. This was a major threat to Myer because the people were likely to get an option which can work better than the already existing products. Therefore, these substitutes can lead to a reduction in profitability of the organization. Myer and David Jones were based on traditional expectations and therefore the competitors were able to easily dominate the market. Zara had products that were going hand in hand with the people’s lifestyle and therefore they attracted many people (Kandula, 2013). 

The organization also faces much competition from rivals. Zara had come up with better strategies and it kept updated about the trend of people’s lifestyle (l, N. & Richter, 2007). This was a threat to Myer because it had to ensure that it researched more about what was trendy to avoid losing customers. Most competitors have adopted the use of technology and therefore this being an advantage over Myer. Through this analysis, the organization was able to set strategies to overcome this. The company introduced online shopping which helped reduced attract more consumers.

The bargaining power of suppliers was increased by the companies who provided free delivery. These companies were able to have many buyers in the country compared to the Myer. Due to the regulations that were set in Australia about consumer satisfaction regulations, the bargaining power of buyers increased. They required to be provided with quality products and therefore the organization had to ensure that it achieved this.

Conclusion

The analysis of the external environment helps in identification of the various factors that lead to the forces in the market. The five forces can be prevented by ensuring that various effective strategies are set earlier. They help to create a healthy competition which leads to achieving quality products. The analysis of the forces helps to set strategies by which a company can use in order to withstand the external and internal factors in the environment.

Resources and competencies of an organization

An organization requires resources and competencies in order for it to have a competitive advantage over the other businesses. These resources and competencies can be analyzed based on their value to the organization, rareness, easiness or hardness of being imitated and determination of them being substituted. The analysis below shows the resources’ and competencies of Myer organization based on the factors.

Valuable

Myer used unique resources such as master card and visa credit for purchasing of products. This cards were rare in the market and helped to attract customers to the being members of the organization. These cards were to increase the loyalty of the customer to the organization (it, 1999). 

The organization had reward programs. These reward systems were into four categories which included standard, silver, gold, and platinum. These attracted more customers hence making the company be in a better competitive position. This reward system was favorable since it favored all types of customers in that each reward level was reliable on the customer’s spending for the product. This ensured that customers were able to note the value of their after purchasing the products. This was achieved since over 20,000 customers had gold status, and they had spent over $7,500 P.A. This reward program increased the sale of the Myer organization. (any reference of statistics?)

The organization introduced a rebrand in the marketing strategies which was thought to bring value to their products. They used the actress Tilda to help in the marketing strategy. The strategy was to focus on young people. This campaign was a way of communicating to the customer that they understood what they needed in terms of quality. They also had an online website. Some of these websites images could be printed. They also introduced a new logo of the organization. This increased the number of customers since they had confidence on the products from Myer organization.

Inimitable

Myer organization launched online shopping where their customers are able to order and see the available products from their homes. This gave them a competitive advantage since it helped to create confidence in potential customers about the reliability of the organization. Online shopping ensures a success in the promotion of online gifts which was rarely used in the market. This helped to attract more customers. The organization’s reward program was very affordable to their customers at all levels. These programs were hard to be imitated by other organizations.

Rareness

The organization placed a store which had various shopper demographics. It showed the various brands and services offered through these demographics. This was rare to be done by such organizations and therefore had advantages because it could easily attract customers. These resources and competencies can be regarded as strategic since they are of great value to the customers and some are rarely practiced in the market. The organization opened stores in the Lonsdale Street which was advantageous over the other organization because it was rare to find an opportunity to set organization in such places due to the demand.

Non-substitutable

Myer organization had a wide range of products which included general merchandise, handbags and accessories, footwear, toys, electrical goods, homewares, fragrance and cosmetics, children’s wear, miss shop, and menswear. The customers stick loyally to the products of the company because they get a variety of products, and hence they are restricted from changing to brands of other company’s’ (Myers, Hulks, & Wiggins, 2012). 

The purchase of Wright and Neil by Myer organization made an increase in their purchase. The business was already established and therefore attracting customers was easy. This gave them a competitive advantage to other companies that offered the same products like them. They further purchased adjoining properties named as Myer Emporium. This led the organization to expand into new markets hence a growth was marked.

Conclusion

Myer organization has come up with better strategies that may bring an increase in the level of customers. Macroeconomic analysis of the Australian market helped Myer to discover the various factor in the external environment that may have affected its operational efficiency. Through the competitive analysis of the industry, Myer was able to determine its strengths and weaknesses and those of the competitors. Therefore, setting strategies for overcoming these forces was easy. The organization has adopted technology in order to fit in the technological environment that Australia is in. The resources and competencies of the organization have been identified and an analysis of how they gave the organization an advantage over the competitors.

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