Strategic Management Assignment: Case Analysis of Bunnings Warehouse

Question

Task

For this strategic management assignment, you will work through a series of exercises to develop and evaluate strategic options for your assigned company. This includes developing criteria to evaluate the options and selecting the strategic option(s) which will produce the highest level of future performance for the company. You will also be required to draw on your understanding of course concepts to answer questions, using your company to illustrate your understanding.

You are to use the strategy canvas to detail your evaluation and selection processes, and to answer the required questions. In brief, these will cover:

PART ONE:

Step 1: Dynamic SWOT: Generate at least 8 options

Step 2: Strategy Detail: Provide detail for at least 3 strategies, developed from your strategic options

Step 3: Evaluating Options: Evaluate the strategies using criteria that ensure Suitability, Acceptability & Feasibility

Step 4: Chosen Strategy: Draw on your analysis and evaluation to justify your selection

PART TWO: Please answer ALL the following questions:

Explain how the BCG matrix might help a company balance their portfolio, using Restaurant Brands NZ as an example.
Describe the four generic internationalisation strategies, using examples.
Using Mainfreight as an example,explain how a company might implement the idea of Shared Value Creation (Porter & Kramer, 2011).
Explain why a company might choose concentric over conglomerate diversification (or vice versa) in corporate level strategy.

Answer

Strategic Management Assignment Part 1

Case Company: Bunnings Warehouse

Step 1

Opportunities

Can introduce online purchasing portals and platforms
People are seeking for development of outdoor hangout positions in their homes
Growth in the number of house owners is a real opportunity for the company.

Threats

Increased market competition can be considered as real concern for Bunnings Warehouse.
Growth in the number of maintenance service providers will also affect the customer base of the company.
Challenging economic scenario due to COVID-19 has affected the purchasing power of people and it might hamper the business growth of Bunnings Warehouse.

Strengths

Strong and broad operation management network of 250 stores across Australia.
Effective loyalty programmes
Unique “Everyday Low Pricing” strategy
Free of cost training and advices for the customers
Highly trained and skilled consultants for doing specialised jobs in home
One of the largest hardware retail chains of Australia

SXO

Using broad operation management network to introduce online purchasing platforms
Use of loyalty programmes will attract growing number of house owners across Australia
Free of cost training will help the customers to use the online platforms adequately.
Being one of the largest hardware chains, the company should offer differentiated products through the online platforms.
Bunnings Warehouse should capitalise of the growing demands of online customers for outdoor hangout positions by introducing differentiated and economic priced products through online platforms.

Bunnings Warehouse should apply Unique “Everyday Low Pricing” strategy in online value-added services to attract more customers.

SXT

Effect of high market competition can be minimised through strong business extension by the help of broad operation network.
The use of value-added loyalty programmes can help in getting competitive advantages.
Everyday Low Price Strategy will assist the customers to buy necessary products in this situation of economic volatility.
Free of cost training for customers will also help in ensuring competitive advantages in this competitive environment.
Highly skilled consultants will help the company to reduce the threat from maintenance service providers.
The company should use strong brand image and unique advertising as largest hardware company to create more awareness and ensuring competitive advantages.

Weaknesses

Lack of online purchasing portals or platforms
People doing their tasks by themselves in a wrong way can create negative perception on brand image
People will generally associate this company with self-service company and the attitude of customers towards the brand can become negative.

WXO

Online presence will attract the tech-savvy millennial customers.
The social media users can be targeted through social media promotion
Online-app based training will satisfy the comfort zone of customers and it will reduce the possibilities of errors.
The company should start appointing new executives to offer manual and customised services to customers.
Negative brand image can be improved through quality marketing and online strategic approaches.
The company should capitalise the opportunity of growing number of house owners through direct selling and content marketing activities.

WXT

New online purchasing platforms will ensure time and cost effective operations.
The negative impact of global economic scenario can be overcome through improved customise services.
The company should also introduce maintenance service executives to limit market threat.
Bunnings warehouse should change the attitude of customers towards brand by effective feedback giving service to understand the views of customers.
Low-cost and differentiation approach in online platform will ensure competitive advantages.
Last but not the least; consideration of quality data management tolls will help in improving customer management.

Step 2

Strategy Name	Brief Explanation of Strategy	Mode (How)	Corporate Level	Business Level	International Level
Everyday Low Price	The low pricing strategy will be modified on daily basis	It will be done by evaluating the standard market rate of similar products	Profit-Maximisation Strategy	Cost-Leadership Strategy	Global Strategy
Online Purchasing	The products will be available through online e-commerce platforms	Popular e-commerce platforms will be approached by the company for selling products	Expansion Strategy	Differentiation Strategy	Multi-Domestic Strategy
Appointing Maintenance Service Executives	Now, the company will offer installation and maintenance services to customers	Both online and offline recruitment will be done	Diversification Strategy	Focused Differentiation Strategy	Transnational Strategy

Step 3

Criteria		Strategy (Everyday Low Price)/10	Strategy ( Online Purchasing)/10	Strategy (Appointing Maintenance Service Executives)/10	Notes
Suitability	Customer-Friendly	7	8	6
	Shared Value Creation	9	8	7
	Diversification	8	8	9
	Cost-Efficiency	7	5	6
	Improved Perception	6	9	6
Acceptability	Price Efficiency	9	7	8
	Operational Efficiency	7	6	9
	Brand Image	8	9	7
	Value Addition	6	5	5
	Quality Management	9	7	8
	Good After Service	7	9	7
Feasibility	Longevity	8	8	6
	Reputation	9	5	9
	Standard	6	7	10
	Ethics	8	9	8
	Sustainability	6	8	9

	Total	120	118	120	Everyday Low Pricing Strategy will be Important

Step 4
Everyday low pricing strategy will be considered as the most effective strategy for Bunnings Warehouse. Bunnings Warehouse should acknowledge that the number of households and home owners is significantly increasing across Australia. Therefore, it will be important to capitalise on the opportunities by attracting them significantly towards the brand. Attraction of those customers significantly depends on effective pricing strategy. The industry is highly competitive and number of potential players within the industry is significantly increasing. Therefore, it would be important for the company to improve competitive advantages. Effective low-pricing strategy on daily basis only can help the company to improve competitive advantages and develop a strong customer base.

In this recent time, entire Australian hardware industry is suffering from the negative impacts of pandemic COVID-19. Most importantly, COVID-19 pandemic is not only affecting the health of people, but also affecting the economic strength of the country. People are losing their jobs. The purchasing power of people is reducing gradually. As a result, the sales growth rate of the company is reducing significantly. In order to improve this situation and retain the customers successfully, the management should adopt a strong and bold decision regarding economic pricing. The companies should adopt a strong “Everyday Low Pricing” approach and it could be done through the application of cost-leadership business level strategy. The cost-leadership business level strategy will allow the management to reduce overall operation cost and allow the company to offer premium quality products at competitive economic price quite adequately.

Part 2

Question 1
BCG Matrix is an important portfolio planning tool, which is used to analyse and evaluate the portfolio of the business according to the growth of such products and relative market share. Basis on this BCG Matrix Model, a company can classify its products and business units in four different categories, such as Stars, Cash Cows, Sleeping Dogs, and Question Marks. Example of Burger Fuel is provided below, which is a popular fast food restaurant chain in New Zealand.

Stars
Hamburgers of Burger Fuel are considered as the star products because the growth potential of hamburgers in the New Zealand market is high. On the other hand, market share of the company is increasing significantly due to increased demands and increased sales growth of hamburgers. Hence, it is justified to claim hamburgers as the star products.

Cash Cows
Hamburgers made of Free Range Chicken can be considered as cash cows as market share of this kind of product is high but growth potentiality of this product is low as the company is operating in matured market with such product line. Hence, it is justified to claim that.

Sleeping Dogs
Experimental products like Hello Neon Blackout can be considered as sleeping dogs as market share of this kind of product is low and growth potentiality of this product is also low. Hence, it is justified to claim such.

Question Marks
Kids Ink Meals can be considered as question marks as the market share of this kind of product is low, but growth potential of this kind of product is high in the market. It is unsure whether this product portfolio will experience a boom in the industry in near future or not. Hence, it is justified to claim Kids Ink Meals as the question marks.

Question 2
There are four important generic internationalisation strategies, such as international, multi-domestic, global, and transnational.

Organisations do not bother about costs and do not adopt local cultural dimensions in international business in internationalisation strategy. Example of Harley Davidson can be considered in this assignment. When the company sells their motorcycles in the international markets, the company do not reduce the prices. On the other hand, the company does not adopt local cultural conditions of host country.

Organisations do not focus on cost or efficiency in multi-domestic strategy. However, the companies with multi-domestic strategy strongly focus on integration of local cultural dimensions in host country. Example of Netflix can be considered here. This video streaming company customises its products in different international markets according to the local cultural dimensions of host country.

Organisations with global strategy make slight adjustment in international business as per the demands of local cultural dimensions of host country. These companies do not bring huge changes in business strategies in different local markets in order to improve business efficiency and reduce business operation cost. Example of Microsoft can be considered here. Microsoft developed same software applications across the globe, but adjusts the language of the programs according to the local language orientation of host countries.

Organisations with transnational strategy consider a combined approach of global strategy and multi-domestic strategy. Example of KFC and McDonalds can be considered here. Both the companies rely on same menu and same brand name around the globe, but bring local taste in the products in different countries. For example, Big Mac Burger is the same and unchanged product line of McDonalds, but the company experiments with taste and ingredients of the burger in different countries as per the local cultural preference.

Question 3
Mainfreight Limited is a New Zealand based transport and logistics company, which is headquartered in Auckland. The company has significantly implemented the idea of shared value creation in the business operation activities. The company tries to create shared value in the business by valuing social benefits. During this pandemic COVID-19 situation, the companies maintain the safety protocol strongly. The company offers good and hygienic environment for employees. In addition, Mainfreight Limited also follows the protocols and guidelines imposed by local authorities and recommended by World Health Organisation.

Secondly, it is also important to mention that Mainfreight Limited integrated modern technological applications and advanced business solutions in business operation activities, which is integral to profit maximisation. For example, effective application of Mainchain Customer Portal has helped the company to offer a full overview of the detailed information of the supply chain network on the dashboard. Customised dashboard due to Mainchain Customer Portal allows the business clients to choose desired warehousing or transporting information through the personalised homepage. It ensures customer satisfaction, business competency, and profit maximisation. These are considered as important examples of effective use of Shared Value Creation in operation management activities by Mainfreight Limited.

Question 4
Business organisations generally choose concentric diversification over conglomerate diversification because concentric diversification helps businesses to achieve larger business goals with the application of smaller working resources. In addition, companies require limited financial cost to complete an operation management task in concentric diversification. A business enterprise with concentric diversification strategy can extend its supply chain and distribution network without taking additional burden of excessive business operation resources.

In addition, concentric diversification strategy helps the companies to improve market share and sales growth by enabling cross-selling activities. For example, a fast-food company can increase its market share growth by extending product lines from pizza to burger. This cross-selling activity can help the fast-food chain to increase the level of frequency of the customers in the business operation activities. This concentric integration not only helps in improving market share growth, but also helps in improving business synergy.

On the other hand, conglomerate diversification allows the companies to invest more capital in operation activities as it imposes extra layer in the management sections. It is a matter of high and increased financial cost compared to concentric diversification. In addition, intercultural clashes in business due to conglomerate diversification can hamper the values of the business. Looking into these disadvantages of conglomerate diversification, it will be essential for the companies to select concentric diversification in business for better cost efficiency and better value creation.

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