Hi5019 : Strategic Information Assignment Answers

1. Business background
2. What industry is it?
3. General environment analysis (economic, physical, sociocultural, global, technological, political/legal and demographic – and work out what the important facts are).
4. The industry environment ((i.e., supplier power, buyer power, potential entrants, substitute products and rivalry among competitors) and explain briefly what is significant for each).
5. Competitive environment (Is there a strategic group that you need to take account of? What is the rivalry like in this group? What capabilities do the relevant firms have? What strategies do they follow? What threats do they represent?)
6. Opportunities and threats

 

1. The firm’s resources, tangible and intangible
2. Capabilities identification (explain the capabilities carefully to indicate what the firmreally does.)
3. Core competency analysis (For each capability, indicate which of the four tests for acore competency it meets).
4. Propose a suitable information system solution that meets the chosen companyneeds.
5. Evaluate the proposed system and provide your recommendations 

Introduction:

Strategic information systems are a set of procedures that support businesses in planning and arranging its strategies as per the prevailing norms. The key goal of integrating strategic information system is that allows businesspersons to evaluate the changed in the environment and use it in a useful manner (Grant, Hackney, and Edgar, 2010). Having an efficient strategic information system helps in defining whether the business will deal with the failure of success. Besides this, it helps in recognizing the opportunities to utilize information systems for strategic goals (Xu and Quaddus, 2013). In order to identify how a strategic information system supports the business to survive for a longer duration, this report is being prepared. For this, it is important to recognize different aspects of the market such as the influence of the external environment and the internal environment of the business. The report will highlight all these aspects and will suggest one of the suitable strategic information systems support business in overcoming these issues.   

Part 1

External Environment

Background of Big W

Big W is the discount department stores chain of Australia, established in 1964, at local New South Wales. The business is the part of Woolworths Limited. As of 2015, it operated 186 stores, with approx. 22,000 workers all around Asia and Australia (Woolworths Group, 2018). Big W was developed by Woolworths Limited to offer the shoppers of Australia a wide variety of common merchandise products in a devoted one-stop-shop. The chain of Big W rose out of the original Variety stores of Woolworths, which supported a small variety of common merchandise products (Big W, 2018).

Overview of Industry

Big W belongs to the discount department store industry of Australia that has performed well in a stimulating environment of retailing in the last five years. Operators of the industry have attained a superior market share of the overall retail dollar at the cost of their up-market and mid-tier competitors. Weak customer assurance has encouraged various households to reduce their expenditure on optional purchases. Customers that are conscious of the value have progressively chosen to buy inexpensive substitute products provided by discount department stores. The revenue of the industry is predicted to increase annually by 2.2% over the five years 2017-18, in order to attain $10.7 billion (IBIS World, 2018).

PESTLE Analysis of Big W

PESTLE Analysis is a tool used by the business to evaluate and monitor the macro-environmental factors that have an influence on the business (Perera, 2017).

Political Factors

The political factors talk about the level of government interference in the economy. This can comprise instability in the market, policies of the government, or political stability, tax policy, environmental lax, foreign trade policy, and labor law. Political factors perform an essential part in the long-term profitability of Big W in the market. The government of Australia frames different policies for preventing the profitability of small retailers in the market (Fern Fort University, 2018).

Economic Factors

Economic factors have a major influence on how the company operates its business and how cost-effective they are in the market. The factors of Macro-environment like interest rate, inflation rate, foreign exchange rate, savings rate, and economic cycle regulate the aggregate investment and demand in an economy (Fern Fort University, 2018). The decline of the Australian market economic situations has affected the profitability of the Big W.

Social factors

Social Factors are also called socio-cultural factors that comprise the attitude and shared belief of the population (Fern Fort University, 2018). These factors comprise age distribution, career attitudes, population growth, and health consciousness, etc. The discount retail industry is being influenced by the social factors in the Australian market as Big W is performing its functions at around 186 locations, which imposes it to gain greater community and communal development.  

Technological Factors

In today’s scenario, the landscape of the technology is changing at a fast pace due to which it influences the performance of the business in the market. The technological factors are significantly affecting the retail industry of Australia (Fern Fort University, 2018). Therefore, it is very essential for Big W to work on its technology updating in the market such as it lacks in major online presence due to which its competitor like Kmart is gaining the market share.

Legal Factors

Legal factors comprise equal opportunities, consumer rights, health and safety, product safety, and product labeling (Fern Fort University, 2018). It is very essential for a business to comply with all the rules and regulations framed by the government in the retail sector. Woolworths Limited the parent company of Big W is famous for obeying the legal regulations such as implementation of carbon tax, different employment policies.

Environmental Factors

Diverse market possesses diverse regulations or standards of environment, which could influence the organization profitability in those markets. These factors are also affecting the performance of Big W in the retail segment. The parent company of Big W i.e. Woolworths is being affected by these factors because the petrol and winemaking business is increasing adverse effects on the environment.  

Porter 5 Force Analysis of Big W

Porter 5 force framework helps in recognizing and evaluating five different competitive forces that create every industry, and support in defining the strengths and weaknesses of the industry (Omsa, Abdullah and Jamali, 2017).

The degree of rivalry

The major players in the market like Kmart are raising high challenges in front of Big W to increase its market share. Kmart is one of the strong players that offer its services through retail stores and online websites, which is the weak point of Big W because it does not have its strong presence in the online market (Lambert, 2017).  

Supplier’s bargaining power

The Australia market comprises the bargaining power of suppliers from moderate to high because there are different suppliers present in the market that offer a similar type of services to their clients (Fern Fort University, 2018).

Customer’s bargaining power

The discount retail market of Australia includes different discount retail stores and supermarkets that provide common products to the customers, which significantly enhance the power of bargaining of the customers. As consumers have a wide variety, options that eventually increase their bargaining power (Fern Fort University, 2018).

Threat of Substitute

The daily consumption products are very important in the market, however, they do not have any alternative that could provide the similar kind of satisfaction to the consumers, which eventually diminish the substitute threat (Fern Fort University, 2018).

New Entrants Threat

In regards to the new entrants, it is considered to possess low threat because the large businesses have created barriers for new players to offer their services.

Competitive Environment

The retail sector of Australia is going through interesting time, with some businesses vigorously changing to cope up with the challenges of new entrants in the market or altering spending habits of the customer. While the stakeholders might be observing the altering competitive environment with the purpose that yet there are opportunities in this segment of the market.

Strategic Group is said to be the concept utilized in strategic management that groups business in the industry that possesses the same type of business models or same type of strategies (MBA Skool, 2018). The Australian retail industry is comprised of different players in the market that offer a similar type of services such as David Jones, Myer, JB-HI-FI, Kmart, Big W, Target, etc. The top players in the industry i.e. David Jones, Mayer, and JB-HI-FI create a strategic group in the industry. The competition among this strategic group is high because all of them deal with the same kind of products with somewhat similar strategies to gain the maximum market share.

David Jones is one of the top players in the retail industry of Australia offering high-quality products to the customers. The branding of Myer offers a strategic competitive advantage to the company over its competitors. It makes use of modern presentation, advertising strategies, and modern layouts to promote its services steadily to its target customers (Robertson, 2016). JB-HI-FI another player in the strategic group offers attractive home appliances in the market, which makes its core capability of the company. All these companies raise huge threats in the market for Big W because they possess strong processes and capabilities that affect the profitability and market share of the company.

Opportunities and Threats

Opportunities of Big W

There are huge opportunities present in the market for Big W to increase its revenue such as enhancing the online store system because its competitors in the market have a strong online presence. Besides this, it could introduce a new product or service in the market to increase the customer base. Big W can start its small stores in the rural area to target local communities (S&P, 2017).

Threats of Big W

As it is known that the Australia retail segment is dealing with the economic downturn, which is negatively influencing the performance of the company due to this, its sales are also getting down. Moreover, lack of online presence it raising another threat in form of Big W that must be considered by the management of the company (S&P, 2017).

Part 2

Internal Analysis

Resources of Big W

Woolworths is the parent company of Big W, which possesses experienced as well as skilled staff members. Moreover, Big W has 22,000 employees across Asia and Australia with 186 stores (Big W, 2018). This could be seen that both tangible and intangible resources of the company are very strong. The company offers a variety of services or products with organized logistic management and brand image in the market.

Capability Identification

Capabilities are the skills of the business in managing its resources and allocating them to the appropriate place to enhance productivity. The successful survival of Big W in this competitive market reflects that it is capable enough to place its resources and human resource at the correct place and have a thorough knowledge of the market.  

Core Competencies 

Brand Reputation – The reputation of the brand i.e. Big W as the discounted department store has been created over several years. This was attained by the operative experience of the consumers by providing products (Woolworths Group, 2018).

Top Management – Regardless of increasing pressures and increasing inflation rates, Big W is still the competence to achieve growth at a higher rate. This is being said because the company has skilled and experienced top management that could support in changing the look of the business.

Supply chain – The effective distribution network of Big W is competent and an asset of the inbound logistics. The tangible and intangible assets such as supplier relationship are highly valuable.

Innovation – Big W also offers different and innovative products to the customers in the market such as private labeled products.  

Analysis of Core competencies

Core Competencies Model

The core competency model focuses on the combination of precise applied knowledge, attitude, skills, and collaborative skills. According to Hamel and Prahalad, the strategic purposes should not be framed to fight with the competitors but on creating a new competitive space (Hefley and Loesche, 2010).

                                           Source [https://www.toolshero.com/strategy/core-competence-model/]

Fill in the blanks – This test talks about what competencies can be used in the existing market. Big W can make use of its strong supply chain so that all the products can be delivered on time to the end user.

White Spaces – Here, the company should remain close to its major offering otherwise with the aim of offering diversified products business could lose its market share. Here, the skills of top management are required such that they can make clear targets for the business.

Premier Plus ten – The aim of the policy is to organize fresh capabilities in the current market in ten years. Big W could innovate something to offer something different from the competitors that could be offered in the market for a longer duration.

Mega Opportunities – This phase of the model talks about having high potential because the company is moving towards new territory that is unfamiliar. Therefore, Big W could make use of its brand reputation to establish its brand in a different country and market.

Suitable Information System

Big W is an Australian retail store that provides innovative retail and consumer products and services to the customers. It has been analyzed from the various studies that Big W can use ERP system to fulfill needs and requirements of the customers across the world. ERP is an effective and unique process which helps in gaining competitive benefits in the international market (Ifinedo, 2011). By using ERP system, Big W eliminates the repetitive processes and minimizes the need to manually enter facts and information. Furthermore, the top management and managers can maintain a unique and strong relationship with customers across the world. Aside from this, ERP is easier and significant to provide excellent quality customer service in the competitive market. It is stated that ERP system can also use to reduce the extra cost of the products and services, which are being provided by Big W. In this way, it is noted that ERP system can be suitable for overcoming the competitors in the global market (Whitehouse, 2018).

Evaluation and Recommendation

ERP system can be evaluated by providing training and development coaching to the workers at the workplace. Aside from this, the company needs to evaluate the various option that is available within the organization before implementing the ERP system (Schiff, 2014). For evaluating the ERP system, the company needs to provide ample resources and time for training and development. The top management should read the ERP software reviews and feedbacks before implementing it in the company. It is recommended that the firm should appoint expert or professionals who have good knowledge about ERP system. These experts will help to provide right and suitable information related to the products and services for the customers. Effective and dynamic HRM needs to be considered for expanding the business widely. Leadership styles shall be used for guiding the followers towards the attainment of objectives and goals within the organization. Apart from this, top management and managers must keep an eye on the performance, plans, and approaches of the rivalries to stand out against them internationally. They should invest huge amount on the promotional and advertisement strategies to promote the products in the global market. Effective and unique system for handling the customer grievances and complaints shall be implemented by the company at the workplace. This system will also help to increase and enhance the level of satisfaction of the customers.

Conclusion:

From the above analysis, it could be said the Big W is dealing with huge competition in the market that is affecting its performance as well as market share in the industry. Therefore, it could be recommended that the company needs to increase its online presence to effectively compete with its competitor i.e. Kmart. Besides this, it needs to adopt an information system that is Enterprise Resource planning to reduce the time and cost comprised of planning and offering products in the store. Moreover, an ERP system will support business in managing all the departments of the business.

References:

Big W (2018) Offerings [online]. Available from https://www.bigw.com.au/ [accessed 21 September 2018]

Fern Fort University (2018) Woolworths Limited PESTEL & Environment Analysis [online]. Available from https://fernfortuniversity.com/term-papers/pestel/nyse4/4816-Woolworths-limited.php [accessed 21 September 2018]

Fern Fort University (2018) Woolworths Limited Porter Five Forces Analysis [online]. Available from https://fernfortuniversity.com/term-papers/porter5/asx/627-woolworths-limited.php [accessed 21 September 2018]

Grant, K., Hackney, R., and Edgar, D. (2010) Strategic Information Systems Management 2^nd ed. U.S: Cengage Learning EMEA.

Hefley, B., and Loesche, E.A. (2010) eSourcing Capability Model for Client Organizations - eSCM-CL 1^st ed. Van Haren.

Lambert, O. (2017) Big W deemed ‘work in progress’ by Woolworths Group CEO [online]. Available from https://www.news.com.au/finance/business/retail/big-w-deemed-work-in-progress-by-woolworths-group-ceo/news-story/e9483197291eb970b7f6a30e4074ab9e [accessed 21 September 2018]

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Robertson, A. (2016) Myer and David Jones have been marking time for years, do they have a future? [online]. Available from https://www.abc.net.au/news/2016-09-23/myer-and-david-jones-mark-time/7873144 [accessed 21 September 2018]

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