Strategic Management of Norman Holdings Limited - Case Study Example

due: Strategic management Introduction Every organization has to be strategically managed to enhance productivity and thus obtaining maximum profit. Strategic management is the process by which an organization works towards achieving its long term objectives and goals by formulating, implementing and evaluating important policies and decisions (Gregory & Marilyn 270-79). This is a process that involves a company’s mission, vision, objectives, goals, plans, policies, ambitions, projects and programs. All these are put together and evaluated to see the performance of the organization. The process may involve tactics, approaches and it is well handled using the various strategic models and approaches (Indrawati Liauw 187-90). In this paper we are going to analyze Harvey Norman Holdings Limited strategic management model, the strengths, weaknesses, opportunities and threats that it could face as a leading organization. Strategic management is necessary for any organizations’ success in the business environment. Different organizations and companies have their own strategies of management and thus they keep them as a secret to counter their competitors. To effectively use the strategies of the company, the organization has to have its strategists with the expertise to ensure formulation, implementation and evaluation of the strategies. Singapore retail market The retail market of Singapore has expanded by 8.4% from 2004. Due to the high rate of the growth; the economy of Singapore has really improved. Although many retail businesses were hugely affected by the SARS (Severe Acute Respiratory Syndrome), many embarked on restructuring their businesses and most of them have succeeded. They have different strategies of management to revive their businesses and attract new clients. The strategies they have used include promotions, efficient product ranging, replenishment and forming alliances to come up within policies to boost their businesses (Gregory & Marilyn 270-79). Background information on Harvey Norman Harvey Norman is a leading household equipments distributer in Singapore. It has become a household name as it deals with electronics, furniture, computers and even bedding. It is an organization that performs it duty under Pertama Merchandising Pte Limited. They are both owned by Pertama Holdings Limited and operate about 264 stores in Australia. Pertama Holdings being an investment company has subsidiaries that operate retail and wholesale stores in Singapore and Malaysia. Harvey Norman is involved in sales and distribution of home and office products in: communications, computers, beddings, small appliances, lighting, furniture, carpets and flooring and services like home improvements. The Harvey Norman has stores in Singapore, Malaysia, Ireland, Slovenia, New Zealand and Australia. Its headquarters are situated in Australia at New South Wales where the organization has provided approximately 4,760 people with jobs (Michael & David 270-79). Most of its products like furniture come from USA, Italy, Australia and far beyond. The organization is aimed at providing the recent innovations to the market as they advance to leading brands. Its main objective is to professionally provide quality products and services to their customers. The company offers the best after sale and customer services to keep their customers coming back for more. These services include; extended warranty, provision of technical crew to handle repairs, replacements and fixing, provision of skilled and well qualified air-con technicians to offer professional air con services and other services like easy payments. Market share and stores Harvey market share has been faced by constant challenges as a result of problems of economy in Singapore. Due to the fall of shares the company got a $19.81 million loss.. The operating profit of Harvey Norman fell from 29.1per cent to $123.5million down from $174.1 million the previous year. The price of the market share was affected by the global recession. The shares fell from 3c to about $1.19 per share (Gregory & Marilyn 276-80). The government stimuli also played a part as it led to many customers spending more before the holiday and thus lacking to spend over the holiday. The company has 271 stores worldwide and 14 stores in Ireland. The stores are in Singapore, Malaysia, Ireland, Slovenia, New Zealand and Australia. Its headquarters are situated in Australia at New South Wales. The positioning of the stores is strategic as all these countries have common market and the clients have a close range in the products they purchase. To effectively analyze the strategic management of Harvey Norman Holdings Limited, we are going to use the SWOT model; Strengths, weaknesses, Opportunities and threats. Strengths of Harvey Norman Holdings Limited Harvey Norman being the leading household distributor in Australia has a lot of strong points that have contributed to its success. To start with, it has a good relationship with customers by providing efficient customer care service, quality products and professionally performed service. This has enhanced a very good relationship with the clients. Secondly, Harvey Holdings has set ups branches in other part of the world apart from Australia which has extended its market to a national level. This has lead to higher demand for their goods and services thus increasing the profit margins of the organization. The organization has constant suppliers of goods and services and hence efficiency in delivery of services to their customers as a result of punctual and effective suppliers. To add to that, strong financial base set up by the organizations’ high sales, repairs and maintenance is another strong point for the organization. Good management has also been another strong point for the success of Harvey Norman Holdings. Harvey Also holds the advantage that Singapore has exhibition centers where organizations go and display their goods and services and market them to the customers. The exhibition also has foreign exhibitors and clients and hence they boost their market to overseas. Another strong point of Harvey Norman is the growing economy of Singapore which continues to provide market for their products and services. Singapore is among the countries with the highest GDP per capita and hence the citizens have a high buying power. That puts Harvey Norman at forefront in their sales and services business (Indrawati Liauw 174-180). Weaknesses of Harvey Norman Holdings One of the weaknesses of the company is having a chief executive who cared less about the people was accused of comparing the potato famine of the Irish people to the economic problems facing Ireland. When confronted he refused to apologize stating that they did not have a sense of humor. The company lacks respect to other organization. For example, the chief Executive went on Australian television and underrated the company saying that should be turned down. Harvey Norman was also accused of misleading the clients about the tax benefits which were associated with the digital cameras and the Quicken QuickBooks. This lowered their credibility to the customers (Gregory & Marilyn 276-80). Opportunities of Harvey Norman The government of Singapore asked for integration of Casinos and resorts and hence they had to employ people, generate investments, boost tourism as well as improve the local businesses like Harvey Norma Holdings Limited as a leading supplier of household goods and supplier. The organization has many opportunities to expand its business as it well known in Australia having the most stores and providing quality products and services. The organizations sponsorships of New Zealand Breakers to participate in the National Basketball league, and Cronulla Sharks for National Rugby League, they opened their door for more businesses as they had the opportunity to market themselves to the Nation. Other opportunities the organization the company holds is the diversification of their products and services. As a result they are able to serve the whole community with whatever they need. By introducing new products and services into the industry would be a great way of maximizing their market. This will also be a way of countering their competitors. Threats Harvey Norman faces The organization faces threats such as competition from other organizations such as Flexirent an organization they believed perfumed fraudulent practices of using deceit and injustices to lender services to clients and customers. Moreover Harvey Norman has courts being a major principal competitor that are always willing to bring the organization down. For example in July 2002, Harvey Norman was issued with an employment court order. To deal with the problem of courts Harvey has its own lawyers who always work towards maintaining the name of Harvey Norman Holdings Limited. Harvey has also got other companies going to court to patronize them but they have always stood their ground. Another threat the company faces are controversies which are associated with the organization; for example, distribution of catalogues with errors and later selling incorrect accessories and packages to the consumers. This was a major setback to the organizations growth (Chwee 287-300). Misleading the consumers about the tax benefits associated with the sale of digital cameras and QuickBooks really lowered the credibility of the organization. High operational costs are also threat to Harvey Norman Holdings Limited. This is a result of the recovering economy however it is growing at high rate. Lack of enough labor is another threat to Harvey Norman. The demands for laborers are rising and the workers are asking for additional of wages. On the other hand, the skilled and trained workers do not seek employment from retail market because they believe they are low levels of employment. Discussion Due to the emerging trends in Singapore, Harvey Norman stands at a chance of fulltime success. Singapore has become exposed to foreign media and thus improving their living standards as well as their economy. Harvey Norman Holdings Limited being one of the leading Australian leading distributer in household equipments will have to strategically manage the company to enhance reaping full benefits from the organization. The organization has to come up with tactics to counter their competitors as well tactics to improve their relationship with their clients. Strategic management involves the use of policies, strategies, and tactics to run the organization and attain a company’s goal or objectives. The objective of Harvey is to provide high quality products and effective services to their customers. By providing effective customers services like warranty, after sale services, they are guaranteed to keep their customers for long as they come back for more and more products and services (Australian Stock Exchange 1995). A good relationship between any organization and its clients enhances its growth and development. Strategic management should be ongoing processes that helps in evaluating the progress of the organization and controls the activities the firm is involved in. Through strategic management, an organization is able to analyze the market and determine what is needed to be supplied as well as their competitors. Harvey Norman being suppliers of household goods, they have to monitor the market easily to know what is on demand and the amount to supply. It is also though management that a company is able to market its own goods and services to the client and prospective customers. Recommendations Harvey Norman Holdings limited is a well up organization that has been successful in its maneuvers in the world of business. It has suppliers and perspective partners who believe in quality and worthiness as a result they supply quality products and services to Harvey who sell them to the clients. To be on the better side, Harvey should know the strategies, business structure and the prospects of their competitors so as they are updated what they are up to. Another way for them to maintain their success in business, they should always get the latest company strategy management information, strategies and policies available. The organizations management needs to create a good relationship with its clients and consumers to enhance effective business transactions. According to Singapore International Chamber of Commerce (2004) Singapore’s economy is still growing and therefore, Harvey Normans Holdings Limited should not constraint themselves to the products and service they have due to the changes, the organization should work towards improving the quality of the products and services it offers as well as come up with new inventions. The income rate of the citizens of Singapore is growing at a very high rate too; this poses advantages to the businesses operating within Singapore. By strategically managing the organization, Harvey Norman might become the leading distributer of household goods and service globally and thus extend their market to other continents. The citizens of Singapore spent 22% of their household budget on housing; this is another advantage to Harvey Norman. The government of Singapore has come up with regulations like property and real estate management which are aimed at ensuring a healthy relationship between the estates owners and the tenants and among the owners themselves. Other regulations include the competition laws which will enhance effective transactions between the traders and consumers as well as the traders themselves. Works cited Australian Stock Exchange. Australias top 100, Australian Stock Exchange, 1995. Chwee, Huat.Tan. Financial services in Singapore, NUS Press, 2004. 265-369. Gregory G. Dess, Marilyn L. Taylor, Strategic Management: Creating Competitive Advantages, Mcgraw Hill Book Co, 2004. 257-287. Indrawati, Liauw. Market analysis for chilled ready meals in Singapore, Cornell University, 2002.160-200. Michael J. Stahl, David, W. Grigsby. Strategic management: total quality and global competition,Wiley-Blackwell, 1997. 278-300.. Paul, Joyce & Adrian, Woods. Strategic management: a fresh approach to developing skills, knowledge and creativity, Kogan Page Publishers, 2001.560-578. Singapore International Chamber of Commerce. The investors guide to Singapore, Singapore International Chamber of Commerce, 2004. Read More