JB Hi-Fi limited
JB Hi-Fi limited is a speciality discount retailer of branded home entertainment products. JB Hi-Fi has 194 stores across Australia and New Zealand. The products that the organisation deals in, fall in the category of consumer electronics, car sound systems, music, DVDs and white goods. The organisation has been known for continuously surviving the test of times by continuously changing the way they carry out their operations. In 2012 November, launched JB Hi-Fi HOME, a concept store retailing whitegoods, cooking and small appliances. The company had rebranded Clive Anthony stores as JB Hi-Fi HOME.
Also, recently in 2016 the company announced it had an agreement to acquire The Good Guys, a chain of consumer electronic retail stores for a total cash consideration of $870 million. The company does not produce or manufacture the goods it puts on its shelf, instead they provide a variety of products to the consumer by securing supply from their suppliers. The company carries out its operations in Australia and New Zealand and employs over 7800 staff throughout its operations. The organisation is also listed on the ASX and has its headquarter in Chadstone, Victoria (JB Hi-Fi, 2017).
Organisational Structure JB Hi-Fi has a charter that provides the summary of Board of Directors’ roles in the structure of the business and company’s operations. All the decisions regarding the growth and diversification and the company’s operation are taken by the board of directors and the CEO as a globally centralised structure is preferred by JB Hi-Fi so that they can have more control on the organisation through the decisions that the highest authorities pass. JB Hi-Fi follows a functional organisational structure so that can implement new strategies and plans throughout the organisation as a whole.
A hierarchy is maintained in the organisational structure of the company and as a result each individual store follows the commands and instructions given by top authorities instead of having autonomy in individual stores. Geographically there are two segments of JB Hi-Fi which are Australia and New Zealand and these segments are further divided under the category called Home consumer products. This structure allows the organisation to keep on changing according to the needs and requirements of the consumers.
Due to this the organisation, can easily shift their focus towards the dominating demands of the consumers. For e. g. In 2004 the dominant category was visual and software but in 2016 the dominant category has become large appliances such as smart TV and computers. As the demand of consumers changed, the organisation also changed their focus on prioritising the availability of large appliances on the store. Over the number of years, the company has consistently achieved growth in their sales figure and with the injection of funds that sales generate, debts have been reduced and allowed the company to grow.
This has not happened by chance but because of its structure that allows them to diversify and change continuously (JB Hi-Fi annual report, 2016). People Practices Employees are the essential asset of a company. Success and failure of the business depends on the performance and attitude of the employees. Likewise, JB Hi-Fi performance is based on its employees and to get 100% from the employees’ company needs to understand the needs and requirements of the employees. JB Hi-Fi has authorised its employees to do bargain on the prices of products and they pay base salary plus commission to their staff to increase their sale.
JB Hi-Fi has set “go price” which is decided by managers which is higher than the cost price including gross profit. If employee sells product on price tag or above the Go price, then she/he earns 10 percent commission on the difference between tag price and cost price and if the price is lower than the Go price but higher than cost price, then commission is 4 per cent (Murphy, 2016). Two years back, JB Hi-Fi has initiated a new partnership with fair work ombudsman to provide better workplace environment across all its stores.
JB Hi-Fi has given high priority to its workplace compliance by entering into a three years’ proactive compliance deed with fair work ombudsman which will eventually foster a strong relation and better communication between employers and employees (Inside retail, 2015). Furthermore, every year JB Hi-Fi takes employees crucial survey regarding the working environment and treatment they are getting on job (JB Hi-Fi, 2016). To look after the requirements of its customers JB Hi-Fi accordingly provides training to its employees.
JB Hi-Fi as an electronic retail giant is making attempts to boost the number of women workers in its workforce and have been successful in achieving their objective of having a gender diversified workforce so far. A system has been developed by JB Hi-Fi to start regular reporting and assessment of progress to implement the higher gender diversity objectives. Moreover, employee pay is reviewed regularly to see that whether there is any inequality in gender exists or not (JB Hi-Fi annual report, 2016). [pic 1]
Rise in number of female employees (JB Hi-Fi annual report, 2016) By getting more number of women in their superior positions, the company is trying send a message about gender equality which in turn will help the company in attracting more highly efficient workers and reducing the labour turnover rate. There are some moral principles of JB Hi-Fi as a company to respect its employees’ dignity, rights and freedom provides safe, challenging and rewarding environment and each employee gets recognition on their achievement.
JB Hi-Fi is creating team culture of giving by matching each employee’s donation dollar-for-dollar which is eventually doubling the boosting workplace giving. JB Hi-Fi developed a connection with the needs of their community. In result, they got positive increment in team loyalty, retention and recruitment (Redkite, 2016). Marketing Practices Marketing practices of JB Hi-Fi is increase brand awareness, put importance on price, and develop the product mix and chosen advertising.
Brand awareness is important because it is the only way through which business can be recognised in the market and eminent from its rivals. (Bovee & Thill, 2013). The significant element of the brand awareness is what message company delivers to the customers. ‘Cheap prices’ and ‘big range’ are terms which are used by JB Hi-Fi to promote itself. Once brand is settled down in the market, it is easy for the company to gain new customer base. JB Hi-Fi has strong branding which helped it to attract more new customers.
Moreover, JB Hi-Fi works continually to improve its brand name in the dynamic market (Thomson, 2017). Price is the vital element of the JB Hi-Fi’s marketing strategies. On the other hand, price plays same important role in costumers buying decisions. JB Hi-Fi places itself in the market by emphasising on the commitment to price competitiveness with slogan like ‘always cheapest prices’. Pricing strategies such as Penetration pricing (selling products on the lower price than the cost price) and ongoing discount pricing are the two main strategies followed by JB Hi-Fi.
Advertising is a crucial part of promotional strategy. JB Hi-Fi concentrates on two advertising media. First, it delivers catalogue on state and website basis. As JB Hi-Fi has its own website with featured products, it helps them to promote itself in the competitive market. Product mix is the mixture of diverse brands and products. There are three elements of product mix which are line (group of same products), breadth (group of different products) and depth (different items in a line).
JB HI-FI has its own promotional brochure along with its website which gives a thorough knowledge about the product mix. JB Hi-Fi has implemented relationship marketing with their customers by sending marketing campaigns regularly (Barrile, 2010). [pic 2] Elements of product mix (Barrile, 2010). Since 2010, JB Hi-Fi collects the used mobile phone from customers and started recycling it which reduces the impact on the environment by decreasing the number of mobile phone going into landfill.
JB Hi-Fi has also tie up with NSW and Victorian government which educates their employees on which product to recommend to its customers about energy effectiveness of products (JB Hi-Fi annual report, 2016) Financial Practices JB Hi-Fi has shown tremendous growth even during the times when the economy wasn’t performing well and the market for electronic retailers wasn’t looking good enough. The main reason for this growth is the large amount of revenues they generate from their sales. In electronic retailing, new technologies arrive every day and they become obsolete very soon too.
JB Hi-Fi has to make sure that a product does not remain in their shelf for too long. The products should move in and out of their stores very quickly and so they keep in mind that they do not over spend on inventories. If they spend too much on their inventories in the times when technology changes at a fast rate, then their stocks will start becoming obsolete, they wouldn’t be sold fast enough and will not generate cash flows and thus block the money which was invested in buying the inventories and thus they will not be able to buy new products and services which the consumers demand from them.
They have to avoid what Dick Smith did. Dick Smith ended up with a lot of old stock on hand (Murphy, 2016). Things nobody wanted to buy cluttered the stores and as a result reduced sales, blocked capital and thus led to their downfall. Cash flow management is very important aspect of sound financial practices, and cash flow management at JB Hi-Fi involves making appropriate use of cash for activities such as buying inventories and carrying out regular business operations.
A large amount of cash is generated via sales and the company has been continuously reducing its borrowings and paying off its debt with the cash flow it generates and another substantial amount of revenue of JB Hi-Fi is spent in paying its suppliers (JB Hi-Fi annual report, 2016). Integration Another important aspect which affects the success and the profitability of the organisation is its supply chain management. Their organisational structure helps them in exercising complete control in their supply chain process throughout all the stores at all the locations.
The supply chain network operates at more efficient and quicker speed that makes the product available on time and thus reduces the overall cost incurred on logistic management. They don’t have a warehouse network and the associated costs such as rent and insurance. using the high sales model, they order stock from suppliers, have it arrive one day and sell it the next (Bartholomeusz, 2016). In an industry were consumer behaviour changes so quickly, it is the ability of the business to adjust to this.
The organisation aims in getting an advantage through price over its competitors. Price competitiveness increases customer base and that results in higher margins across the business through the increase in sales volume despite lower margins on each individual sale. The business model of JB Hi-Fi allows them to carry out their business at a lower rate and it has achieved that competitive edge through its strategies that include reducing the support staff for senior managers and having no layers of investor relations or media communications staff (Slade, 2010).
The organisation focuses on diversification and growth, and its recent takeover of The Good Guys matches its strategy. With the acquisition of The Good Guys organisation will not only widen its reach, they will also enter into a new segment of home appliances which earlier was not there in their catalogue. This has impact on all the practices of the business. It resulted in the share prices of the organisation going up and gaining a big advantage over its competitors.
The organisation continues to execute its brand and range extensions seamlessly. They are opening new stores at many new locations and bringing the small appliance strategy in many stores and the acquisition of The Good Guys, they are expanding at a fast rate. JB Hi-Fi has been consistent of its brand positioning and not just its resilience, but also willing to extend its reach to new categories. It has been ready to let go some earnings occasionally to defend its sales base and its brand amid what have been turbulent times (Pash, 2016).