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Bunnings Warehouse Case Study: Analysing Different Strategies

Question

Task: Students individually need to analyse one of the following companies and write down a business report following the given format.

Details of task: Select any one of the following companies:

  1. Bunnings Warehouse
  2. National Australia Bank
  3. Atlassian

Answer

Introduction
The changes in the business environment have become profoundly evident in various industries and the increasing competitive rivalry also poses notable challenges for organizations. The following bunnings warehouse case study would provide a case study evaluation of Bunnings Warehouse that is a retailer of outdoor living and home improvement products in Australia and New Zealand. The evaluation presented in the bunnings warehouse case study would include information about the organization with references to list of major competitors in its industry as well as the notable changes observed recently in the industry where Bunnings Warehouse operates.

The other significant elements that would be included in this bunnings warehouse case study include external analysis and internal analysis that would help in analyzing the industry as well as the features of different strategies of the organization and a critical analysis of the crucial elements noted in its strategies. This bunnings warehouse case study would also reflect on the processes for strategy implementation and the concerns of triple bottom line performance through the strategy as well as the key challenges faced by the organization with recommendations for future strategic development in response to the analysis presented in the bunnings warehouse case study.

The organization:
The company that has been selected for analysis in this report is Bunnings Warehouse. It is a wholly owned subsidiary of Wesfarmers Ltd. and is functional in the domain of home improvement and retail hardware in Australia. The primary customer base of the company includes commercial businesses, owner-builders, small and medium sized builders as well as DIY enthusiasts and tradespersons (Bryson, 2018). According to recent estimates Bunnings Warehouse has been found to have a workforce comprising of 40,000 team members.

The presence of the organization could be identified in its operations across 253 warehouses, 33 trade centres, 77 small format stores and 3 frame and truss sites functional in New Zealand and Australia. The reputation of Bunnings in the Australian home improvement retailing sector could be clearly anticipated from its market share estimated at 35.2% (Francesguasta.files.wordpress.com, 2018). While it is evident that Bunnings occupies a major share of the market in hardware and building supplies industry, the other key players in the industry include True Value Hardware, Home Timer and Hardware and Mitre 10 which occupy 5% of the market share (Chittoor, Kale & Puranam, 2015).

The recent changes that have been noted in the Australian home improvement and hardware retail sector include the Australian property boom, lack of real competition and Australian consumers. The average growth of property prices since 2009 has been estimated at 59% and this implies continuous increase in demands for home improvement and renovations (Garcia, 2015).

The tie up between Home Timber and Hardware and Mitre 10 could also be considered as a notable change in the industry albeit with the ambiguities regarding their capabilities to pose notable challenge to Bunnings Warehouse. It is also essential to note that the preferences of customers are also a notable change observed in the industry recently with higher emphasis on DIY and loyalty to retailers and brands (Ghezzi, Cortimiglia & Frank, 2015).

External analysis:
The external analysis for Bunnings Warehouse would include macro environmental analysis as well as industry analysis using the Porter’s five forces model. It has been observed that the industry in which Bunnings operates is in the growth stage in its lifecycle and has depicted promising growth as compared to the GDP with possible expectations that the growth would continue further. The hardware business industry is considered as a highly lucrative industry with annual value of $24 billion (Hussain, Rigoni & Orij, 2018).

The macro environmental analysis for Bunnings Warehouse could be presented by using the PESTLE tool that would outline the implications of different factors in the external environment of the organization.

Political barriers could exist imperatively in the hardware industry and it has been observed in the profound instability of Australian politics as well as frequent changes in the government regulations. On the other hand, the support of the Australian government can also be observed explicitly for fostering Australian domestic hardware companies in order to improve the number of jobs as well as giving a boost to technological improvement (Iyer & Dutt, 2016). However, it is also essential to note that in cases of economic crisis the government could impose unwarranted tariff on imports that also include building and home improvement products.

The economic aspects in the external environment refer to unstable price increases, instability of economy and market crisis which could impose detrimental impacts on the operations of Bunnings. The global financial crisis which influenced the economy of many countries could be considered as a profound example of the impact of economic instability on a business. The crisis has led to the reduction of disposable income of families all over the world and could have a formidable impact on the hardware and home improvement retailing sector (Kumthekar, Burke & Arora, 2015). The impact can be observed in the reforms in consumer behaviour as they refrain from purchasing home improvement and hardware products and are directed towards purchasing products which are essential for survival.

In terms of social factor in the external environment, it can be clearly observed that the per capital hardware consumption in Australia is among the highest in the world due to large garden sizes, dry weather conditions and high levels of home ownership. The changes in way of living of Australian people have a considerable role in improving the demand for products and services of Bunnings Warehouse such as tailored kitchen setup and installation of new air conditioners (Li & Rama, 2015).

The anticipated growth in the demand for home hardware, garden products and building products could be considered as a formidable impetus from the social determinants to indicate favourable prospects for the business of Bunnings Warehouse.

Technology is perceived as a key aspect in the hardware industry. In the case of Bunnings the technological aspects were clearly anticipated in the approaches for design innovations as well as methods for installation of their products. Since the development of new materials is supported by technological advancements, the quality of building products could be improved substantially (Oliver, 2014). Technological advancements could also help in reduction of expenses on maintenance for utilization of the new products.

Environmental impact is considered as the most significant issue in the external environment for Bunnings Warehouse in the present scenario. The increasing concerns of the Australian government regarding environmental protection could lead to establishment of strict environmental regulations and schemes. Thus it would be essential for companies in the hardware and home improvement retailing sector to enhance recycling initiatives and reduce their carbon emissions as well as energy consumption.

The legal dimension of the hardware and home improvement industry is primarily associated with regulations pertaining to management of forest operations. Furthermore, organizations are also required to comply with the frameworks of licensing and compliance to the trading laws established in the country (Sengupta, Balaji & Krishnan, 2015). The example of Bunnings’ announcement regarding its commitment to accomplish carbon neutrality by the year 2015 could be considered as a validation of the need for organizations to comply with legal and environmental concerns in the macro environment for the organization.

The industry analysis of Bunnings Warehouse would be illustrated from the scope of Porter’s five forces model. The power of suppliers is considered as a strong force in the case of the home improvement and hardware retail sector. This is primarily because of the wide range of suppliers available in the industry for helping organizations to provide diverse services. The threat of substitutes is considerably moderate in the case of Bunnings as customers could prefer alternatives in case of errors on behalf of Bunnings or in cases of increase in pricing.

The threat of new entrants is a comparatively weaker force in the case of Bunnings since it has a remarkable reputation in the industry as well as with a substantial market share (Weber & Tarba, 2014). Furthermore, new companies in the industry would also face the concerns of developing brand value within a limited period of time. The power of customers is considerably higher in case of the industry of home improvement and hardware retailing since the demand for products and services of the industry are driven by customer preferences. Finally the force of competitive rivalry is found to be moderate in the case of Bunnings since it has a large market share in the industry. However, the company engages in healthy competition for motivating the workforce of the company for improving integration and modernization of products and services.

Internal analysis
The internal analysis for Bunnings Warehouse could be highlighted by referring to the company’s core competences that could be identified in the functional areas of distribution, marketing and human resources. The human resources competences of Bunnings Warehouse include recruitment of staff without any age barrier as well as commendable staff retention rates and provision of opportunities for competent training and development (Kumthekar, Burke & Arora, 2015). The core competences of the company in marketing could be identified in the marketing strategies that involve an integrated approach towards the targeted market segment and business level strategy.

The core competences of Bunnings in distribution could be clearly identified in its main freight delivery system which facilitates improved efficiency of deliveries owing to the abundance of suppliers. The description of the key features of the strategies of Bunnings could be identified from two distinct perspectives that refer to the business strategy of cost leadership and corporate level strategy aligned with a single business strategy (Ghezzi, Cortimiglia & Frank, 2015). The company relies on a functional strategy that encompasses the dimensions of financial, HRM, distribution, marketing and information technology with an explicit feature implying towards outlining the main drivers in each of the functional areas. For example, the major driver in the functional area of distribution is efficiency while that in the case of information technology is innovation and in case of HRM it is achieving quality.

The strategic approach of Bunnings in cost leadership is profoundly reflective of the elements of providing guarantee of lowest prices, matching the prices of competitors and offer 10% lesser pricing if competitors provide cheaper products. The organization’s strategy is also inclined towards accomplishing core position in the market as well as competitive advantage on the basis of extensive range of products provided at low cost (Garcia, 2015). The corporate level strategy of the organization is also another key aspect to be noted in the case of strategic approaches of Bunnings Warehouse. The specific features that are noted in this case include cognizable references to market penetration, market development, domestic formulation and implementation of industry focuses.

The acquisition of different organizations as well as stores of competitors such as Mitre 10 in 2013 could also be noted as a comprehensive facet in the strategy of Bunnings Warehouse. The internal analysis should also be supported by an evaluation of the key elements of the strategies followed by Bunnings and it has been found that the three main elements include intensive service, diverse and wide product range and competitive pricing. The corporate strategy of Bunnings directed towards market penetration could be aptly supported through the establishment of new warehouses.

The geographic expansion of Bunnings is evident alongside the organization’s measures for strengthening of its position in existing markets of operation (Oliver, 2014). The intensive service provided by Bunnings is primarily driven by the tangible resources of the organization which imply towards the productive assets in all the functional areas. The reputation of Bunnings as the market leader in Australian home improvement and hardware retail sector is a promising intangible resource that could drive the organization’s key strategic aspects such as competitive pricing and facility of a wide range of products and services.

Strategy implementation and Triple-bottom-line performance:
In order to understand the implementation of Bunnings’ strategy it is essential to observe the measures that are followed for different functional areas of the strategy. The evaluation of the strategy’s implementation could be conducted from the perspective of triple bottom line approach that broadens the focus of a business on finance by including social and environmental considerations (Sengupta, Balaji & Krishnan, 2015). The financial dimension of the strategy is driven by efficiency and is realized by provision of store cards having appropriate credit payment options.

In order to understand the implementation of Bunnings’ strategy it is essential to observe the measures that are followed for different functional areas of the strategy. The evaluation of the strategy’s implementation could be conducted from the perspective of triple bottom line approach that broadens the focus of a business on finance by including social and environmental considerations (Sengupta, Balaji & Krishnan, 2015). The financial dimension of the strategy is driven by efficiency and is realized by provision of store cards having appropriate credit payment options.

These techniques are implemented by collaborating with the Academy of Sport, Health and Education (ASHE) and the programs help in improving the opportunities for the Aboriginal youth to participate in different education and training programs. Other implications that are identified in the case of the strategy implementation for HRM function include the provision of mentoring programs, daily support and practical retail skills. The implementation of the strategy of Bunnings in the functional area of information technology could be found as a reasonable contributor to the environmental dimension in the triple bottom line. This can be validated on the grounds of limited waste related to the lack of any form of physical documentation on paper with the introduction of technological developments such as Trade Intranet and Internet store process.

Key challenges:
Based on the analysis of the organization’s existing business environment, many challenges could be derived as reasonable inputs for future strategic developments. First of all, the external environment analysis focuses on the challenges posed by economic factors in terms of price instability. It is also observed that the social factors also pose a specific challenge to Bunnings since customers could prefer different alternatives based on their lifestyle.

The internal challenges include restriction of employee and organization fit in event of the lack of any profound criteria for age of employees (Kumthekar, Burke & Arora, 2015). For example, the lack of any barrier of age in the recruitment process would make it difficult for the employee as well as the HRD department to ensure that the employee would be able to make a viable connection with the organization’s values and beliefs underlying operations. Another key challenge for Bunnings Warehouse is the accommodation of Aboriginal youth in its human resources and preparation of suitable events and programs to improve the involvement of aboriginal youth in training and development within an organization (Ghezzi, Cortimiglia & Frank, 2015).

Recommendations:
The recommendations for Bunnings Warehouse on the grounds of the analysis that is conducted in this report include profound references to action plans for sales growth, opening more warehouses, vertical and horizontal diversification as well as community involvement. The community involvement aspect realized through charity events and local school events would bring the Aboriginal youth in acceptance of strategy of Bunnings.

The vertical diversification should be realized through acquisition of construction businesses and could be implemented over the long term for selecting a credible organization for acquisition. The horizontal diversification of Bunnings could be realized through takeover of existing players in the industry and has to be prioritized in order to suppress the threat that the competitors could pose for Bunnings. The sales growth initiatives recommended in this report should be implemented through creating inventory system, training, and identification of service levels, stock levels and category development. These recommendations for sales growth should be implemented immediately throughout the different locations of Bunnings’ operations.

Conclusion:
This bunnings warehouse case study presented a strategic analysis for the case study of Bunnings Warehouse which is a leading home improvement and hardware retailer in Australia. The outcome of this bunnings warehouse case study could be noted in the presentation of recommendations on the basis of inferences derived from external analysis, internal analysis and the key challenges for the organization. This bunnings warehouse case study also focused on the approach for implementation of the organization’s strategy and its contribution to the triple bottom line of the business. Bunnings warehouse case study assignments are being prepared by our management assignment help experts from top universities which let us to provide you a reliable best assignment help in australia service.

References
Bryson, J.M., 2018. Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. John Wiley & Sons.

Chittoor, R., Kale, P., & Puranam, P. 2015. Business groups in developing capital markets: Towards a complementarity perspective. Strategic Management Journal, 36(9), 1277-1296.

Francesguasta.files.wordpress.com. 2018. Bunnings Warehouse Communications Strategy Analysis. [online] Available at: https://francesguasta.files.wordpress.com/2018/06/bpc-bunnings-report.pdf [Accessed 5 Oct. 2018].

Garcia, J. M. B. 2015. Farming in the European Union: from organic to sustainable (Doctoral dissertation, Lund University).

Ghezzi, A., Cortimiglia, M.N. and Frank, A.G., 2015. Strategy and business model design in dynamic telecommunications industries: A study on Italian mobile network operators. Technological Forecasting and Social Change, 90, pp.346-354.

Hussain, N., Rigoni, U. and Orij, R.P., 2018. Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of Business Ethics, 149(2), pp.411-432.

Iyer, K.N. and Dutt, G., 2016. The Impact of Product Disposal Strategies on Triple Bottom-Line Performance in Supply Chains: The Role of Relational Resources. In Celebrating America’s Pastimes: Baseball, Hot Dogs, Apple Pie and Marketing? (pp. 723-724). Springer, Cham.

Kumthekar, N., Burke, G. and Arora, A., 2015. An Integrated Index for Triple Bottom Line Performance of the Big Three Firms in Logistics and Shipping Services Industry.

Li, Y., & Rama, M. 2015. Firm Dynamics, Productivity Growth, and Job Creation in Developing Countries: The Role of Micro-and Small Enterprises. The World Bank Research Observer, 30(1), 3-38.

Oliver, R. L. 2014. Satisfaction: A behavioral perspective on the consumer. Routledge

Sengupta, A. S., Balaji, M. S., & Krishnan, B. C. 2015. How customers cope with service failure? A study of brand reputation and customer satisfaction. Journal of Business Research, 68(3), 665-674.

Weber, Y. and Tarba, S.Y., 2014. Strategic Agility: A State of the Art Introduction to the Special Section on Strategic Agility. California Management Review, 56(3), pp.5-12.

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