Conceptual and Methodological Foundations †Free Samples to Students

Question: Discuss about the Conceptual and Methodological Foundations. Answer: Introduction Retail market of consumer goods or items is one of the most promising and leading business sector in the present business scenario. More and more organizations are entering in this sector due to the high volume of sales and revenue involved with this sector (Baker 2014). In Australia, retail market of consumer products is one of the most intensely competitive markets with having several established competitors operating. Thus, the market scenario in the Australian region for the consumer goods is quite competitive and price sensitive sector. Organizations operating in this sector are coming up with newer strategies and business approaches in order to stay ahead in the competition. Harvey Norman is one of the leading retail chain based in Australia. They offers diversified product portfolio for their customers (Harvey Norman Holdings 2017). However, due to the recent entrant of various new competitors in the market, they are facing the heat of reduction in their sales revenue. This report will discuss about the effective business plan for Harvey Morgan which will help them to gain competitive advantage in the market. Moreover, the various aspects of them in their business operations will also be identified. Accordingly, the recommendations will be given to implement an effective business plan for them. Harvey Norman is an Australian Based retail firm founded in 1982 by Gerry Harvey and Ian Norman. They mainly cater to furniture, bedding, electrical items and computing accessories (Harvey Norman Holdings 2017). They operate in Australia and in the international market through franchisee business model. Currently they are listed in the Australian securities exchange limited and are operating as a public company. Harvey Norman is having other sub brand such as Domayne and Joyce Mayne to cater to different product category and customer segments. Currently they are operating in more than 166 stores around the world. The product portfolio of Harvey Norman includes electronic products such as television and gaming devices, mobile phones cameras. They also offer home appliances such as air conditioners and washing machines. Home dcor products including furniture is also being offered by them. To stay ahead in the competition and to cope up with the change in the taste and preference of the customers, they came up with their own online portal of online marketing and shopping. It is helping them in targeting more number of customers effectively (Luo, Ba and Zhang 2012). The mission statement of Harvey Norman states that they want to deliver their products to their customer at the most cost effective prices. They want to the market leader in the market by having the competitive advantage of cost effectiveness. The vision statement of Harvey Norman states that they want to be a truly global retail organization offering wide range of products to their customers and maintaining the market leadership position. Organizational Management of Harvey Norman Harvey Norman maintains a distinctive organizational structure compared to other contemporary retail organizations. All the stores of them are being operated on the basis of franchise system. However, the product category they are offering is being managed by the separate management (Mahmoudsalehi, Moradkhannejad and Safari 2012). Thus, if a store is offering five categories of products of Harvey Norman, then the five product category will be controlled by separate management responsible for the respective product category. Thus, the management and the sales of the particular product category are being controlled effectively. The stores outside the Australian regions are being owned and controlled by them. The international business is not being operated in the basis of the franchisee system. For the effective human resource management in their organization, employees are being motivated with the initiation of the reward system (Hendry 2012). According to this model, sales persons and other employees are being provided sales commission which further helps them in driving and enhancing the sales chart of the organization. Moreover, effective working environment in the organization is also being maintained. Being a publicly traded organization and being listed in the Australian stock exchange, Harvey Norman maintains an effective and accurate financial structure to comply with the global accounting principles and with the financial regulations (Badolato, Donelson and Ege 2014). They maintain a separate audit board that is responsible for managing the financial aspect of the organization. The audit board is being selected by the board of directors. The key objective of this board is to look after the financial reporting and policies being followed by the organization. Harvey Norman also maintains a separate finance department which is responsible for the allocation of resources for various activities in the organization. As of 2016, the earnings before interest and tax are estimated at $522 million and the profit after tax and interest stands at $248 million. Marketing analysis of Harvey Norman The customer segment of Harvey Norman is the people looking for electronic items and household items under one roof. They cater to diversified segment of customers due to the reason that economical classification of the customers for electronic appliances is not viable. Different brand are being offered by them to their customers in this sectors. Thus, customers depending on their purchasing power will buy the particular brand. Harvey Norman caters to the customers looking for household products by offering bedding and home decors. Thus, the customer segment of Harvey Norman is diversified in nature due to the offerings of different product category (Wedel and Kamakura 2012). Moreover, the product category of them is much diverse due to the reason that household products and electronic appliances are not in the similar product category. As discussed earlier, they cater to a vast and diverse customer segments. In addition, the customer segment for Harvey Norman is not niche rather than they are catering to the mass market. Thus, extensive use of electronic media and social media is being implemented by them in order to attract and reach out to more number of customers. Segmentation, targeting and positioning (STP) model will be the most effective strategy to effectively target the customer segment (Gbadamosi 2013). According to this model, the first step for the organization is to identify the customer segments where they will operate. Thus, the customer segment for Harvey Norman is the mass market having the purchasing power and demand for electronic items. The demographic segments for them are diverse in nature due to the reason that majority of the computing goods will attract the young generation and majority of the household goods will attract the female customers. On the other hand, the customer segment for the electronic appliances will have both the male and female customers. The next step in this model is targeting the customer segment. Harvey Norman initiates various marketing activities such as promoting their products in the mass media channels which will attract their target customer segments (Prager, Rosenberg and Farber 2013). In addition, the seasonal discount offers are also been provide to the customers, which will attract more to their stores. Harvey Norman is much effective in determining the current market trend and offers their product accordingly. The product portfolio is being updated periodically to cater to the change in the taste and preference pattern of the customers. The marketing and promotional activities are being designed according to the requirement and expectation of the mass market customers. The last aspect of the STP model is the positioning strategy of the organization. Being a mass market retailer, Harvey Norman positioned itself as retail chain offering consumer goods at the lowest price possible. Thus, the brand image of them among the customers is the cost effective retail store offering wide array of products (Hassan and Craft 2012). This will help them in further market penetration in the existing market and development of new market in the global scenario. Competitive advantage of Harvey Norman The key competitive advantage for Harvey Norman is their price leadership strategy in the market. More customers are being attracted due to their low offering of price (Wagner III and Hollenbeck 2014). Another competitive advantage for them is their offerings of diversified product portfolio. This helps them in targeting vast segments of customers. Majority of their competitors are operating in a single product line or in similar product line. However, Harvey Norman is operating in diversified portfolio of product line ranging from household products to electronic items. The initiation of Omni channel marketing is also enhancing their market performance (Frazer and Stienhler 2014). Online presence is enabling them to reach out to more number of customers effectively. In addition, the customer awareness drive and the global brand identity is further is getting enhanced due to their presence in the online market. Harvey Norman maintains effective marketing and sales strategy in order to reach out to more number of customers and increase the market share. The sales for Harvey Norman are being initiated through their franchisee stores in the Australian regions and owned stores in rest part of the world (Dada, Watson and Kirby 2012). Marketing activities of them involves all types of marketing media to reach out to varied customer segments. They also maintain customization option for their marketing and promotional activities. This helps them in effective catering to the customers in other parts of the world. Customers around the world are being targeted according to their taste and preference pattern and according to their cultural and social backgrounds. This helps the customers in making effective connection with the brand. In the recent years, the sales of Harvey Norman are being promoted through their online channel. It helps them to target the global customers with their entire range of pr oduct portfolio. Financial plan Year 1 Year 2 Year 3 Year 4 Year 5 Starting Cash Position Inflow (Source of Fund) $ 50,000.00 $ 75,000.00 $ 80,000.00 $ 85,000.00 $ 90,000.00 Cash Sales $ 10,000.00 $ 15,000.00 $ 20,000.00 $ 30,000.00 $ 40,000.00 Collection from Accounts Receivable $ 10,000.00 $ 20,000.00 $ 30,000.00 $ 40,000.00 $ 50,000.00 Other Cash Receipts $ 20,000.00 $ 22,000.00 $ 25,000.00 $ 30,000.00 $ 35,000.00 Total Cash Inflow $ 90,000.00 $ 132,000.00 $ 155,000.00 $ 185,000.00 $ 215,000.00 Outflow (Use of Fund) Fixed Cost $ 60,000.00 $ 60,000.00 $ 60,000.00 $ 60,000.00 $ 60,000.00 Administration $ 5,000.00 $ 5,500.00 $ 6,000.00 $ 6,500.00 $ 7,000.00 Marketing $ 20,000.00 $ 20,000.00 $ 20,000.00 $ 30,000.00 $ 30,000.00 Operations $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 8,000.00 $ 8,000.00 Variable Cost Administration $ 35,000.00 $ 35,000.00 $ 35,000.00 $ 35,000.00 $ 35,000.00 Marketing $ 20,000.00 $ 20,000.00 $ 25,000.00 $ 25,000.00 $ 30,000.00 Operations $ 40,000.00 $ 55,000.00 $ 60,000.00 $ 75,000.00 $ 80,000.00 Total Cash Outflow $ 190,000.00 $ 205,500.00 $ 216,000.00 $ 239,500.00 $ 250,000.00 Closing Cash Position $ (100,000.00) $ (73,500.00) $ (61,000.00) $ (54,500.00) $ (35,000.00) Analysis: From the above financial plan, it can be said that the first year of Harvey Norman is more in the five year plan. It is due to the reason that the initial investment always stay on the higher side. This financial plan is also showing that the closing cash flow is decreasing gradually in the following years. Recommendations Initiation of social media marketing will help to connect with the customers more effectively. It will further help the organization in having the feedback from the customers. Effective implementation of the five year financial plan will help to allocate the resources more effectively. Opening of more company owned stores in the global market will further help to fortify their position over their competitors. Initiation of product for the niche market will help to target the higher end customers also. It will help them to target the niche market along with the existing mass market. Thus, the market area will get increased. Conclusion Having discussed the marketing and organizational structure of Harvey Norman, it can be concluded that they are having distinctive and effective approaches. These approaches are helping them in targeting their customer segments more effectively. Moreover, the diverse product portfolio is helping them to target varied customer requirements. However, one of the gaps being identified is the absence of social media marketing which is quite important in current scenario. Thus, several recommendations are being provided in order to fulfill these gaps and enhance their performance in the future. Reference Badolato, P.G., Donelson, D.C. and Ege, M., 2014. Audit committee financial expertise and earnings management: The role of status.Journal of Accounting and Economics,58(2), pp.208-230. Baker, M.J., 2014.Marketing strategy and management. Palgrave Macmillan. Dada, O., Watson, A. and Kirby, D.A., 2012. 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