Global Strategy and Leadership

Contents

Introduction.

Quadrant 1- Where is Myer today?.

1.1. SWOT analysis.

1.2. Porter’s Original Generic Strategies.

Where are we going and When?.

2.1 Ocean Blue Strategy.

2.2 Ansoff’s product market

How are we going to get there?.

3.1. Rumelt’s Criteria.

3.2. Kotter’s 7 questions.

How do we implement the strategy?.

4.1. Kotter’s 8 Step Change Model

4.2. Schein (1985) people-and culture issues.

Reference.

Introduction to Myer Half-Year Profit Tumbles on Virus Impact

Myer is an Australian departmental store chain, providing service in all the states and territories. It retails a large variety of clothing, footwear and accessories for men’s, women’s and kids. Apart from clothing, they also deals in home furnishing, cosmetics, fragrances, toys, books, food and beverages, stationary and many other things. Myer has come a long way since its establishment in 1900. The store expanded throughout the country and also selling through its online through its online market launched in 2017 (Carey, 2017).

This report will be discussing about the present condition of the company Myer. Many media reports and annual reports of Myer from 2015 to 2020 have been viewed to investigate the status and performance of Myer. The analysis models such as SWOT analysis, Porter’s Original Generic Strategies, Ocean Blue Strategy, Ansoff’s Product Market,

1. Quadrant 1- Where is Myer Today?

The journey of Myer in last 5 years was full with ups and downs. Every time the company faced a downfall, they came back with a new strategy. In 2015, Myer’s operating gross profit margin was 40.4% (Myer Annual report, 2015), which was less as compare to the past years. This was because of famous brand jumping down and reducing staff (Harper, 2015). This problem was overcome by adding more staff and replacing staff to demonstrate transformation. However, the degradation continuous and Myer closed many stores throughout the country. In 2019, the operating gross profit margin continuous to reduce to 38.9% (Myer Annual Report, 2019). The sales of Myer reduced by 3.5% in 2019 due to retail recession caused by reduction in wage growth and increment in domestic debt (Butler, 2019). Regardless of fall in sales, the company made a comeback in the end of July and declares a profit of $25.5 million after tax (Butler, 2019).

The financial year 2020 proved to hit harder on the retail sales on Myer by 26.9% drop in statutory net profit making it $24.4 million after tax in first half year (Blake, 2020). This major cause behind this downfall is said to be the bushfire and coronavirus. The rest of the year is expected to go through even worse scenario. In March 2020, the shipment container were behind schedule for four to six weeks says (Bartholomeusz, 2020). However, the impact of pandemic situation seems to be moderate on gross profit. A fall of 2.3% only recorded while gross margin improved to 39.14% (Myer Half Year Result, 2020). The net profit after taxes was $41.5 million after tax, in the first half year of 2020 (Myer Half Year Result, 2020).

The above mentioned facts and figures is further analysed to evaluate the current scenario of Myer, using two models; SWOT analysis and Porter’s Original Generic Strategies.

1.1. SWOT Analysis

Strength

  • Myer is an Australian chain of departmental store from mid to high range.
  • Myer has its stores in every states and capital territory of Australia.
  • A broad variety of brands and affordable price range attracts customers.
  • Strong reputation and presence of brand in Australia.
  • Presence in online retail market.

Weakness

  • Distribution channel is underdeveloped which make it limited to some locations in Australia.
  • Inadequate usage of showroom and sales staff.
  • Myer customers are present in Australia, no global presence.
  • Myer closed many stores due to insufficient sales.

Opportunities

  • Myer can tie up with foreign brands who are dominating retail sector.
  • Myer’s promotional strategy always helped it in re-establishing in the market. New strategies can be explored.
  • On-going global pandemic coivd-19 may help in upgrading online retail sales.

Threats

  • The sales base is shrinking every year and one of reason described is the withdrawal of Apple and Country Road Group from Myer’s store. Coivd1-19 reduced sales from store due to economic recession (Bartholomeusz, 2020).
  • Customers are changing lifestyle preferences at a rapid speed.

1.2. Porter’s Original Generic Strategies

1.2.1. Cost leadership

  • This is the main strategy that Myer is using in consumer market.
  • The main motive behind using this strategy is to preserve the market domination through competent chain management.
  • Myer focuses on accessibility and affordability of its product, which makes enhance its brand awareness and affects its sales growth.
  • Myer offers discounts and coupons to achieve higher sales target and give tough competition to the rivals. This also increases brand popularity and sales.

1.2.2. Differentiation

  • The secondary generic strategy of Myer is differentiation.
  • Myer expands the customer base by focusing on the unique features of products.
  • The main objective behind using this strategy is to differentiate by involving the innovation and address the growing health issues of the customers.
  • Myer is one of the oldest brand (120 years old) and have strong presence which helps in company’s marketing and communication strategies.
  • Brand logo is used to establish differentiation basis. It has created a strong brand image on customer’s mind. The brand had gone through many ups and downs, but the essence has remained the same.

1.2.3. Cost focus

  • Myer focuses on product quality, revising branding strategies and changing product packaging and designing, they satisfies customers’ expectation and making the product value for money.

2. Where Are We Going and When?

2.1 Ocean Blue Strategy

This strategy refers to a market where there is no or very less competition for a product. The idea is to search for a business which is done by very few companies and there is no pressure of pricing. This strategy could be adopted by the Myer to dominate the market once again during this hard time of global pandemic. The Myer’s online business represents 10.2% of the total sales. In spite of regular website with limited inventory, compared with the top class online retailers, Myer’s online sales elevated by 25.2% to $168.2 million (Bartholomeusz, 2020). This strategy can be applied to the online retailing of the Myer to elevate the total sales and create dominance in the market.

The Myer in their half-year report 2020 declared rebuilding women’s wear business and to redesign and uplift the quality of ranges. This could be a great opportunity for the company to launch an exclusive range of clothing, footwear and accessories especially for women at reasonable price. But, the real dominance will be created only when this range comes with unmatchable design and quality at a reasonable price.

Furthermore, Myer is planning to outsource management and IT support and removing administrative and management duties in support office. It will help them cut cost of staffing and have the potential to turn Myer into an international brand.

2.2 Ansoff’s Product Market

2.2.1. Market penetration

The Myer is aiming increase sales by to expanding its range of national brands, MEB and offers and discount. In addition to this, they are planning to initiate new clearance cycle, which focuses on selling stock quicker.

2.2.3. Product development

Myer are planning to edit underperforming brands. They are also launching redesigned and new range of women’s wear with enhanced quality and affordable price.

2.2.4. Market development

Myer has launched 135 new brands since 2019 including Pixie Mood, Raging Bull, DKNY, Forever New and Lorna Jane. They will be expanding bigger brand to the new market such as French connection, Rodd & Gunn, Polo Ralph Lauren and Seed.

2.2.5. Diversification

Myer is not planning to introduce any new product in the market although, they are planning to introduce new techniques and management system such as outsourcing management and IT support, new delivery system and improved checkout system and navigation.

3. How Are We Going to Get There?

3.1. Rumelt’s Criteria

3.1.1. Consistency

Consistency in a company depends upon the communication between all the departments and coordination between them. In order to achieve more productive work force, Myer is planning to remove extra staff and replace the incompetent employees with more skilled ones.

3.1.2. Adaptability

Business must learn to adapt the changes in the market as well as the competitions. Myer needs to recognise the demand of its new generation of customers and launch new products according to it. The exiting of Apple was a huge pull back for Myer as Apple’s product are ruling the digital market currently.

3.1.3. Competitive advantage

Myer is facing tough competition and struggling to survive. The one advantage that Myer have over its competitors is market reputation and customer’s trust. In 2018, Myer’s suffered net statuary loss of $486 million, however, their stock raised up to 57% that week (Blake, 2018). The customer wants big brands at affordable range be it online or through retail shop, and Myer is giving them. Although, Myer can learn some other managerial strategies from its competitors to balance its current situation.

3.1.4. Feasibility

Myer needs a lot of investment and workforce to execute innovative strategy. They should evaluate about their human resource and financial resources before executing any strategy so that the failure could be avoided.

4. How Do We Implement the Strategy?

4.1. Kotter’s 8 Step Change Model

4.1.1. Creating sense of urgency

Myer’s performance during last five years was unsatisfactory. They need to recognise the urgency of re-establishing themselves in the outgrowing market before the competitors remove them permanently. By analysing potential threats and opportunities this can be done.

4.1.2. Forming powerful coalition

Big brands and Myer always walked hand in hand. Although the company is introducing many new brands and expanding big ones, Myer needs to ensure their permanency.

4.1.3. Creating a vision

With change in generation and failure of old strategies, Myer needs to review its vision and strategies to accomplish it.

4.1.4. Communicate the vision

Myer needs to announce its new vision to its workforce and the customer base in such a fashion that is easy to understand and creates an impact.

4.1.5. Remove obstacle

Barriers and obstacles must be examined and recognised. Myer is struggling with department stores, they are not producing as much profit as expected from on-floor sales. Therefore, this challenge can be dealt with lowering on-floor expenditure and expanding online sales.

4.1.6. Creating short-term victory

Myer can set short term wins which are easy to achieve. Such wins are really helpful in motivating the company. Myer can start doing by focusing in online retailing which reported a jump of 25.2% in March, 2020 (Myer, 2020). This is a good news for the company’s sales and they must focus on improving this area.

4.1.7. Build on the change

Whatever the change is adapted by the company, it should be sustainable. Projects often fails due to lack of long-term sustenance of the change. Therefore, Myer must adopt changes keeping in mind about the possible outcomes in next few years.

4.1.8. Anchor the change

Finally to establish change, it should be involved in the core of the organisation. The support of employees and satisfaction of customer is must for that.

5. Reference for Myer Half-Year Profit Tumbles on Virus Impact

Bartholomeusz, S. (2020). Myer’s seemingly ugly result is history now the coronavirus is here. The Sydney Morning Herald. Retrieved on 5 March, 2020 from https://www.smh.com.au/business/companies/myer-s-seemingly-ugly-result-is-history-now-the-coronavirus-is-here-20200305-p54759.html

Blake, D. (2018). King details Myer’s turnaround plan. Inside Retail Australia. Retrieved on 14 September, 2018 from https://insideretail.com.au/news/king-details-myers-turnaround-plan-201809

Blake, D. (2020). Myer half-year profit tumbles on virus impact. Inside Retail Australia. Retrieved on 5 March, 2020 from https://insideretail.com.au/news/myer-half-year-profit-tumbles-on-virus-impact-202003

Butler, B, (2019). Myer to continue closing stores after sales fall 3.5% over past year. The Guardian. Retrieved on 5 September, 2019 from https://www.theguardian.com/business/2019/sep/05/myer-to-continue-closing-stores-after-sales-fall-35-over-past-year

Carey, A. (2017). Myer has revealed its latest retail weapon — but will it be enough to keep up with Amazon? New.com.au. Retrieved on 6 December, 2017 from https://www.news.com.au/finance/business/retail/myer-has-revealed-its-latest-retail-weapon-but-will-it-be-enough-to-keep-up-with-amazon/news-story/8c34fa59a29f27ee75e53ec49f40ec88

Half year 2020 result. (2020). Myer. Retrieved from http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/file/MYR_HY2020_Results_Presentation.pdf

Harper, J 2015, ‘Myer’s poor sales results could mean stores will be forced to close’, The Daily Telegraph, 19 March, retrieved 20 September 2016, http://www.dailytelegraph.com.au/business/myers-poor-sales-results-could-mean-stores-will-be-forced-to-close/news-story/7f073397781e4940cc335da27f1b741a

Myer 2015, Myer annual report 2015, retrieved 19 September 2016, http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/file/Myer_Annual_Report-2015.pdf

Myer 2019, Myer Annual Report 2019. Retrieved from http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/file/Myer_Annual_Report_2019.pdf

Myer, R. (2020). The amazing, shrinking ‘My Store Myer’ is looking for a space to make money. The New Daily. Retrieved on 6 March, 2020 from https://thenewdaily.com.au/finance/finance-news/2020/03/05/the-amazing-shrinking-myer/

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