|Table of contents | | | |Executive summary | |2 | |I.
Summary of the current position of Bunnings | |3 | | Financial Position | |3 | | Bunnings’ strategy | |3 | | Competitor focus | |4 | | Future potential | |5 | |II.
External Environment | |5 | | Current life-cycle position of the Australian hardware | |5 | |industry | | | | Remote environment | |6 | | Industry analysis: Five forces framework | |7 | | Industry value chain analysis | |9 | |III.
Internal analysis | |10 | | 5Qs-business strategy( Bunnings) | |10 | | Key stakeholders and strategy analysis | |11 | | Strategic capabilities analysis | |12 | | Measuring organizational performance | |14 | | Main competitor analysis | |15 | |IV. Gap analysis | 15 | | Gap 1 | |16 | | Option and recommendation for gap 1 | |17 | | Gap 2 | |17 | | Option and recommendation for gap 2 | |18 | | Gap 3 | |20 | | Option and recommendation for gap 3 | |21 | |V.
Implementation plans | |22 | |Reference | |24 | Executive Summary This report is to analyse Bunnings’ warehouse future strategic plan to fit in its’ existing strategy and supported by its existing strategic capabilities and resources.
We start our report from summarizing the current situation and performance of Bunnings. Bunnings ranks the first in hardware and home improvement market with large occupation of the market and presents quite good in the industry. On the basis of the past and current experience, Bunnings sets up its strategy to provide products with lowest prices and best service for customers.
In the process of external environment analysis, we find that the whole industry is going through continue growing with high future profitability in the next few years. However, ever Bunnings doing downstream vertical integration to maximize the profit, it will still be faced with low to medium level negative influence by remote environment.
In the internal analysis, we identify the leader strategy adopted by Bunnings through 5Qs methods, outline major interests and expectation for several key stakeholders, describe the low cost as its strategic capability by passing three tests, evaluate its’ performance on four perspectives by the Kaplan and Norton’s balanced scorecard approach, and distinguish the fierce competition from Mitre, Danks and Woolworths. As for the gap analysis part, three areas are targeted between Bunnings’ strategy and its existing performance analysed above. We also offer recommendations for each gap. In the last part, two strategic options, production development and market penetration, are chosen to apply Bunnings’ strategy into actual implementation stage.
In production development option, employee understanding, customer satisfaction and efficient communication channels are critical to operation level. In market penetration option, Bunnings can still apply its existing strategy complemented with effective performance management and reward systems. I. Summary of the current position of Bunnings Bunnings is Westfarmer Ltd’s wholly owned subsidiary operating in the retail hardware and home improvement sectors in Australia. Its primary markets are the small to medium-sized builders and owner-builders. It is a market leader, operating 177 warehouse stores, 56 small formats stores, 23 trade centres well as 7 frame and truss manufacturing sites in Australia.
This accounts for 14% of this market. It also operates internationally in the New Zealand market where it owns 17 Bunnings Warehouse Stores and 24 small format Bunnings stores (Westfarmers annual Report 2009, p24). Financial Position: According to Westfarmers’ 2009 annual report (2009, p24): Bunnings cash sales grew 13% and the total Sales revenue grew 16. 1% to $5. 8 billion in 2009. The EBIT grew by 15. 84% from 2008 to 2009 and Bunnings recorded a profit of $1. 535 billion. This accounted for 44 % of Wesfarmers’ net profit. They currently employ 28,000 team members. Bunnings recorded a strong result in all Australian states and across all product ranges.
This was mainly driven by good execution of merchandising and operational strategies. There are 10 new Bunnings warehouses and 10 trade centres opened with continued investment across the store network. Another 10 stores are under construction with 20 more sites being developed. Bunnings’ strategy: Their ambition is to provide their customers with the widest range of home improvement products at the lowest prices every day, backed with the best service. Their Team Members are the heart and soul of their business. Their team’s guiding principles are integrity, respect, teamwork, achievement and innovation. These guiding principles are the keys to their culture and to achieving their vision.
Sustainability is pursued within all their operations by striving to make them socially responsible, environmentally aware and economically viable. They engage with the communities in which they operate and live and they actively contribute to causes and organisations that benefit these communities. They seek to lessen their environmental impact in ways that are measurable including: achieving better and more efficient use of resources; ensuring their suppliers operate sustainable and ethically; interacting and educating customers about environmentally friendly alternatives; and focusing on the “reduce, re-use and recycle” waste management principles.
They value their Team Members’ contributions, recognising and rewarding their efforts providing a fun, satisfying and safe workplace. By living their values and operating sustainably, they will continue to “build the best” and earn the right to serve their customers tomorrow and into the future (Bunnings Warehouse 2009) Competitor focus Competition for Bunnings has been relatively strong. It’s main competitors in this market are Mitre 10 and Danks Holding Limited (ACCC,2009). Most discount specialists, like Big W and K-Mart compete with Bunnings on a limited range of items, most often high volume, and low margin items but due to Bunnings’s wide range of products, they are able to compete strongly with these operators. Future potential
Bunnings continues to expand its operations with new Warehouses, Small Format Stores and Trade Centres throughout Australia & New Zealand focusing strongly on their values and vision for the future. II. External Environment Current life-cycle position of the Australian hardware industry The industry is at the growth stage of its life cycle. According to John Gillam, Bunnings managing director, over the past two decades, this market has grown slightly faster than GDP and this rate of growth is expected to continue. At the present, the hardware business industry is highly lucrative with a $24 billion annual value attached (Ferguson 2009). [pic] Remote environment The analysis of external influences on hardware industry is as follows: 1. Political ——positive and Low
Political barriers may exist in the hardware industry. The Australian government is usually willing to support the growth of Australian domestic hardware companies with a view to creating more jobs and encouraging technological improvement. At the time of economic downturn, unpredicted tariff may be imposed on imports including building or decorator products. 2. Economic—– negative and medium to High Global financial crisis has affected the economy of many countries. Because of the economic downturn, a decreasing disposal income of households around the world is inevitable effect which could impact greatly in the hardware retailing market.
In Australia, the hardware market has grown considerably over the last decade which is currently estimated to generate sales of around $ 22 billion per annum (Ferguson 2009). 3. Social——- positive and medium to high Australia’s per capital hardware consumption is seen to be one of the highest in the world as a result of “high levels of home ownership, large garden sizes, and dry weather conditions” (Durie 2009). It indicates that the demand of building products, home hardware or garden products could growth considerably in the next some years. 4. Technological——- positive and medium to high Technology is one of critical drivers for the hardware industry.
The development of new raw material can improve the building products’ quality as well as reduce the maintenance expense for using those products significantly. 5. Environmental——– negative and medium to high Environmental impact is also a critical issue to the hardware industry at the current stage. Although the industry does not generate much waste or pollution, the Australian government may issue more strict environmental schemes to deal with the increasing concern on environmental protection. Therefore, the hardware industry may be required to cut energy consumption, reduce carbon dioxide emissions, and improve recycling program (Wesfarmers 2008). For example, Bunnings, a major leader in the Australian home improvement market, commits to become “carbon neutral by 2015”.
In addition, the company was announced in early 2008 that “it would no longer supply plastic bags for customer use and would instead encourage the use of alternatives” (Bunnings 2009). 6. Legal——– negative and low to medium From a legal perspective, hardware industry is engaged in activities which are widely exposed to the regulations regarding the management of forest operations. Consequently, it is necessary for the industry participants have some policies to deal with the issue when trading their business activities. For example, in 2003, Bunnings established a timber and wood products purchasing policy that requires all wood and wood products to originate from legal and well managed forest operations (Bunnings 2009).
Overall conclusion: the external environment has negative impact at the level of low to medium to the growth of the hardware industry Industry analysis: Five forces framework 1. Threat of new entrants—-low There are several factors that are used to determine the threat of new entrants. Firstly, it is economies of scales. Bunnings is a specialist retailer of home, garden and building products. It plays a leading role in the home improvement market with 18% of market share (Durie 2009). Therefore, it can be seen that Bunnings has the ability to generate cost reduction through volume discounts from suppliers and efficient capacity utilization which cannot be achieved by new entrants with little market share.
Secondly, Bunnings operates throughout Australia under the “Bunnings” trade name. In addition, the company has been implemented its Bunnings Warehouse retail strategy which offers customers a large product range with low prices and high service levels (Bunnings 2009).. The strategy creates the differentiation between Bunnings and its competitors as well as makes it difficult for new companies to enter into the industry. In relation to distribution channels, Bunnings is a vertically integrated wholesaler who also operates retail stores. Furthermore, Mitre 10 and Danks, the second and third largest participants in the market also provide wholesale supplies to member stores and some other non-member retailers (ACCC 2009).
It indicates that it may be quite hard for new competitors to distribute their products through established distribution channels as those have already been locked in by existing competitors. As a result, the threat of new entrants in the Australian hardware retail market could be low. 2. Substitutes It is quite hard to assess the impact of substitute to the hardware industry. This is because Bunnings and other market participants provide a large range of products to customers. 3. Power of Buyers—–low The Australian hardware retail market is dominated by a few companies but sells products to many customers, such as individual customers and business. In addition, they provide variety of products under their brand name which make it difficult for customers to change to an alternative.
For instance, Bunnings sells a large of product at low prices and under the “Bunnings” trade name. As a result, power of buyers in the industry could be low. 4. Power of suppliers——low Bunnings, Mitre 10 or Danks purchase their products not only from local manufactures, but also from oversea suppliers. Furthermore, in relation to timber and wood products purchasing policy, Bunnings buys all wood and wood products from only suppliers who are satisfied Bunnings’ policy. Therefore, it can conclude that power of suppliers in the industry is low. 5. Competitive rivalry—-low to medium The degree of competitiveness in the Australian hardware industry could be low to medium.
This is because at the current stage, the market is dominated by few competitors in which Bunnings is a major leader with 18% market shares. The other two market participants are Mitre 10 and Danks, which hold a small percentage of market shares. Overall conclusion: It can be concluded that the future profitability of the Australian hardware industry will continue to be high. Industry value chain analysis: In the whole home improvement industry value chain, Bunnings is a downstream vertically integrated. It covers wholesale suppliers, retailers and distribution channels. In the operation of wholesale supply and retailing, Bunnings operates almost 200 warehouse stores and 80 formats stores in Australia and New Zealand.
In these stores, there are thousands products on selves for customers. Before suppliers become partners with Bunnings, they are required to attend “Bunnings Supplier Representative Accreditation Training Course”. Under the well knowledge of Bunnings’s high quality standards and efficient ordering and supply management by suppliers, Bunnings secures its products with high quality and enough stock volume. Besides the wholesale and retail operation, Bunnings Trade Centres provide service dedicated to picking, packing and delivering customers’ orders in full and on time. It ties much closer relationship between customers and Bunnings retails. III. Internal analysis Qs – business strategy (Bunnings) 1. Does the company plan to grow (profitably)? – Bunnings: Merchandising and network expansion opportunities, enhancing service, lowering costs and improving operational effectiveness(p. 16 of Annual report) 2. What products/services will it provide? home and garden improvement products in Australia and New Zealand 3. In what markets will it operate? – Retailing home improvement and outdoor living products and servicing project builders, trades-people and the housing industry (Australian home improvement industry. (hardware (retailing) industry) Also groceries, clothes and petrol) 4. What generic strategy is adopted? Leader strategy (wide range of products (over 45,000 products) and low cost) We’re building the best … our team makes it happen Our ambition is to provide our customers with the widest range of home improvement products at the lowest prices everyday, backed with the best service (from Bunning’s website) 5. What position in the industry does the company plan to hold? Bunnings continues to develop and improve its store network through ongoing investment in existing outlets, remerchandising initiatives and new store openings. Bunnings is developing a network of trade centres to support major builder customers, in conjunction with a network of frame and truss manufacturing plants, to ensure a full service offer is provided. (p. 4 Annual report) Bunning: Merchandising and network expansion opportunities, enhancing service, lowering costs and improving operational effectiveness (p. 16 Annual report) Key stakeholders and strategy analysis 1. Shareholders of Wesfarmers As Bunnings is one of the segments of Wesfarmers Group, the performance of Bunnings is definitely a concern of the shareholders of Wesfarmers. The main vision of Wesfarmers is to achieve satisfactory return for the shareholders, therefore to contribute to the high return for shareholders must be the main strategic objective of Bunnings as well. 2. CEO of Wesfarmers Richard Goyder, CEO of Wesfarmers, may have short-term profits motive, and he has received a $1. million bonus for meeting financial performance targets during 2008-09 (The West Australian 2009) 3. Customers Customers are also very important stakeholders for Bunnings as the products and services provided have great impacts on sales. The customers’ objective is to purchase the products with high quality at a lowest price. This is emphasized in Bunnings vision as they state they provide “wide range of products with high quality and low price” to their customers. 4. Suppliers Suppliers play a significant role in the operation of Bunnings as providing wide range of product and in-time refill are important to customers. Suppliers’ objective is to secure their supplies to stores and to achieve high supplier margin.
But as stated in Bunnings’s vision, they would offer the product with the lowest price to customers and has the objective to achieve high return; it is likely that the suppliers’ margin would be eroded. 5. Competitors— mainly Woolworths As we identified the issues about greater competition due to Woolworths’ entering into the market soon, it is necessary to consider the impacts on Bunnings’ strategy. It is clear that Woolworths want to expand its operation to hardware retailing market by acquisition of Bunnings’ competitor Danks Holdings. Its desire to increase the market share and achieve high return may result in changes to the current strategy of Bunnings to handle the future competition. The main issue would be that how to retain customers, market share and sustainable high return.
Strategic capabilities analysis We identified that Bunnings has two strategic capabilities which are national store network and the low product price. 1. National store network —– Not a strategic capability • Is it valued by the customer? Yes. Bunnings currently own 233 stores across metropolitan and regional Australia and New Zealand, and the company plans to open another 30 to 40 Bunnings Warehouse stores in Australia in the next three years. It ensures the easy access to the stores to the customers. • Is it better than the competitor? No. The main competitor in the industry Mitre 10 has around 500 stores nationally and employs more than 6000 people.
However, IBISWorld said Mitre 10’s store network had shrunk, as a result of “selling stores or from operators retiring and exiting the industry altogether”. • Is it difficult to replicate or imitate? Yes, because it requires high capital investments and experienced management. High capital input must be supported by reliable and solid financial sources; the company must have strong financial performance and capital to support the funding. In addition, managing the expanded network across the country also needs experienced administration skills in the industry which can not be replicated in a short time 2. Low price—- It is a strategic capability Is it valued by the customers? Yes. Customers always enjoy the low prices provided by the retailer.
As the home improvement is an essential part of the daily life, the stated “lowest price” is definitely attractive and valued by the customers. • Is it better than the competitor? Yes. We believe that Bunnings provides the hardware product with the lower price than its other main competitors as Bunnings promotes the slogan as “lowest prices are just the beginning”. • Is it difficult to replicate or imitate? Yes. Offering low price requires negotiation with suppliers and low operating expenditures. The suppliers accept the reasonable lower supplier margin by offering lower purchase price to Bunnings mainly because it has a high market share and strong brand which is very difficult to replicate. Measuring organizational performance
We apply the Kaplan and Norton’s balanced scorecard approach to evaluate the performance of Bunnings in this report. 1. Financial perspective —- strong performance According to the review of operation from Wesfarmers’ annual report, Bunnings achieved 13. 9% increase in trading EBIT, 13% increase in cash sales in year 2009. Significant increase in sales as well as in profit has a great contribution of 22% of the total EBIT to Wesfarmers group. 2. Customer perspective —- strong performance Bunnings experienced strong growth in the home improvement industry. Bunnings opened 10 new warehouse stores, three new smaller format stores and 10 new trade centers in 2009. The expansion of new stores and the significant ncrease in sales indicates that the organization is still the leader in the industry. 3. Internal business perspective —- strong performance This perspective considers the internal operating efficiency of an organization. The return on capital employed in the home improvement segment increase from 23. 3% in 2005 to 30. 2% in 2009 which indicates the high internal asset utilization. 4. Learning and growth perspective — strong performance The capital employed by Bunnings in the home improvement segment has increased from $1786 million in 2005 to $2185million in 2009. These investments in capital have been made to ensure future sustainable growth.
In addition, the return on capital employed also significantly increased by approximately 7% in the past four years which demonstrate enhancing operation efficiency. Main competitor analysis Who are the main competitors, what are their strengths and weaknesses, and how is the company placed to compete against these competitors? Even leading company Bunnings only take 18% market share, this industry is highly fragmented and thus there is a lot of segmentation opportunity. Mitre 10 Australia Limited (5. 9%) is the largest independently owned hardware chain in Australasia, with a local store within reach throughout the country. Danks Holding Limited (3. %) to be acquired by Woolworths and Lowe’s (potential competitors) has Differentiation (distribution system and wide variety of products) generic strategy, and its strengths include around 25,000 products are warehoused in the company’s national distribution centres located in Melbourne, Sydney and Perth and the products of over 600 different suppliers are available on a charge-back system – where stock is delivered direct to stores from suppliers and invoiced through Danks. The distribution systems help retailers to minimise stock levels while responding to the needs of their customers. According to Graeme Danks, Managing director of Danks Holding (Australian Broadcasting Corporation 2009), “With Danks and certainly with Woolworths, being the largest retailer in the country, there’s a lot of synergy there, with the distribution, logistics, supply chain organisation that the Danks group has. There’s a lot of synergy there as well. ” IV. Gap analysis Gap 1.
Bunnings is likely to lose market share because of new products to be introduced by Woolworths Woolworths will introduce some new hardware products which Bunnings do not have or the products are better in quality compared to the ones Bunnings currently offers. Therefore, Bunnings is likely to lose market share. The wide range of products provided to customers is a very important factor to retain customer loyalty to maintain Bunnings’s market share. However, Woolworths is planning to introduce some new hardware products that are not offered by Bunnings at the moment to the Australian hardware retailing market to increase the product range in the home-improvement retailing industry as well as their market share.
According to the statement from Mr Stallings (CEO of the Woolworths joint venture with Lowe’s), ”We actually believe … that there are products and services that are not currently offered in the Australian marketplace that we can bring, and there is no doubt that when we do it, we will actually grow the home-improvement marketplace. ” The introduction of new products in the marketplace will increase the competition because customers have more alternatives to choose from. It is likely that Woolworths will introduce some products that have been sold well in the US market to the Australian market to widen the product range in the hardware retailing market. It is also likely that Woolworths will do more marketing and promotion to introduce the new products to the public to attract the customers. In addition, Woolworths will use Lowe’s Global Sourcing unit to supply imported products to Danks’ retailers at lower cost to make Danks more competitive in the market place.
It is probably Bunnings will lose some market share due to increased competition as it is unlikely for Bunnings to provide the same imported products with lower prices without access to overseas suppliers. Option and recommendation for Gap 1: Focus further on product development (i. e. new product in existing market) in the areas such as DIY segment. One of Bunning’s strategies is to provide our customers with the widest range of home improvement products. However, as mentioned above, it is likely that Woolworths will introduce some new products that are not available in the Australian market in the near future. Therefore, developing new products to meet customer needs to maintain the market share is significantly important to Bunnings and consistent with its strategy.
Customer survey can be useful tools to be aware of their needs and make sure that the product being developed has enough demands. The data obtained from customer survey will become precious assets for Bunnings. People especially in younger generation may tend to focus on stylish design of hardware products rather than just its function. For example, young couple who wants to buy kitchen may not only focus on its function and price but also kitchen design. Product development team then should focus on designing of hardware products if those customers are looking for such stylish products. In addition, Bunnings also needs to study the possible change of customers’ preference in the marketplace.
As there is an increasing demand in the DIY segment, the development of the DIY series focusing on providing the whole sets of essential hardware to the family could be taken into consideration. Once customer needs are identified, then the company needs to analyse if it has sufficient capability to make the product. Gap 2. Woolworths will have more capabilities to easily expand hardware business to overseas since it can utilize Lowe’s capabilities to bargain with overseas suppliers. Both Bunnings and Woolworths are currently focusing on the local home-improvement retailing market, but it is likely that the business needs to expand its operation to overseas to gain the market share in other countries.
Regarding the capabilities to expand the hardware retailing stores to overseas, we believe that Woolworths will have advantages over Bunnings as it can enjoy the industry experience and wide network all around the world provided by its partner Lowe’s. Woolworths’ partner in the joint venture Lowe’s is the world’s second biggest home improvement retailer with an “extremely large” vendor base. It is potential advantage if Woolworths would like to expand its hardware retailing business to overseas areas. Lowe’s is an experienced hardware retailer in the US market which has well established relationship with suppliers all around the world. The broad global supplier network give Lowe’s the ability to compare the prices offered by different suppliers and have the power to negotiate to achieve a satisfactory low cost for their products through Lowe’s Global Sourcing unit.
Although Bunnings stated that they have business partners with over 1000 Australian and international suppliers, its preference is still focusing on the “locally based and Australian made products wherever possible”. It is welcomed by the local community in Australia but meanwhile it limited the acceptance of the other suppliers in other countries. And it also reduced that bargaining power with overseas suppliers compared to Lowe’s. Option and recommendation for Gap 2: Focus on market expansion in some areas where there are not many Bunnings retail stores and Woolworths does not have capability to enter into the market. In Australia (source: Bunnings website http://www. bunnings. com. au/default. spx) | |Warehouse Stores |Bunnings Stores | |ACT |3 |0 | |NSW |51 |16 | |NT |2 |0 | |QLD |29 |5 | |SA |9 |3 | |TAS |2 |1 | |VIC |43 |0 | |WA |22 |7 | In New Zealand (source: Bunnings website http://www. bunnings. co. z/) | |Warehouse Stores |Bunnings Stores | |Upper North Island |5 |6 | |Central North Island |5 |12 | |Lower North Island |3 |7 | |South Island |4 |0 | There are two formats of stores, namely, Bunnings and Bunnings Warehouse. The main difference between two formats is the range of hardware. Bunnings stores stock a relatively limited range of hardware, meanwhile Bunnings Warehouses are larger than Bunnings stores and a more comprehensive hardware range and often garden supplies including plants are available. It has been a trend that the number of smaller-format Bunnings stores has been decreasing.
Currently Bunnings already own Warehouse Stores in all of the states in Australia. In the same way, there are some Warehouse Stores all over the New Zealand. Therefore, there is limited opportunity to expand its hardware business in Australia and New Zealand. Parent company, Wesfarmers, owns subsidiaries in other countries than Australia and New Zealand such as Bangladesh, New Caledonia and United Kingdam. For example, Boylan & James Limited is an insurance company in the UK. Gault Armstrong SARL deals with insurance in New Caledonia. However, the businesses are not related to hardware selling. Therefore, it can be quite risky for Bunnings to expand its hardware selling business into those countries.
It is likely for Woolworths can reduce hardware product prices by importing products from overseas suppliers such as the United States and Canada where Lowe’s is originally operating their business. Lowe’s has bargaining power in those countries in order to reduce price of products from local suppliers in Canada and the United States. Currently, Australian dollar is relatively strong compared to American dollar. If this trend continues, it will contribute further cost reduction because importing goods from the United States has been getting cheaper. However, it is not good idea for Bunnings to enter the United States or Canadian hardware industry and open new retail stores by themselves in order to compete with Woolworths since it does not have local knowledge.
Lowe’s has not expanded its business into New Zealand yet, so it is probably hard for Woolworths to enter into hardware industry in New Zealand even though Woolworth operates in New Zealand since it has no previous experience in selling hardware there. Bunnings could possibly tie up with overseas hardware stores which have local knowledge and thus could give Bunnings a capability to expand in an overseas market. For example, Bunnings could form joint venture with the Home Depot, Inc. which is the largest home-improvement retailer in the United States. Home Depot has not expended its home-improvement retailing business in Australia and/or New Zealand yet. Therefore, it can be beneficial for both companies to expand their businesses (i. e.
Bunnings into the United States and Home Depot into Australia and/or New Zealand). However, joint venture can be quite risky without careful extensive research for the viability before going ahead. Therefore, it may be more suitable for Bunnings to first focus on market penetration in existing Australia and New Zealand markets before considering market expansion. Gap 3: Both suppliers and customers will have choice between Woolworths and Bunnings, and thus suppliers’ and customers’ power will increase. Woolworths’ entering into the hardware retailing industry will result in higher competition in this market. Wider range of products provided may lead to change of preference of brands of customers.
The public will have more products and more hardware retailing stores to choose from. As a result, the customers’ power will increase as to satisfy their needs. This becomes much more important to the business. Otherwise the market share will be eroded by the competitors. Not only the customers’ power but also the suppliers’ power is likely to increase in the future as the new entrant into the market indicates more business opportunities for suppliers. With more retailer options, the suppliers can choose the business partner which can bring higher supplier margin to the business. Option and recommendation for Gap 3: Focus on market penetration.
Bunnings need to maintain customer loyalty by improving services, reducing costs, more advertising, community service, making donation etc. There are a number of possible ways to maintain or enhance customer loyalty. Offering membership card to customer can be one option to attract customer. For example, customers can join the membership with low or no annual fees and they can accumulate points when they purchase some goods at Bunnings, then they can use the points later to purchase other Bunnings products. Because those customers who own membership cards can only use the cards at Bunnings not Woolworths’ hardware retail store, they are likely to become regular customers for Bunnings. Reducing further costs can be effective way to differentiate Bunnings from Woolworths.
Obtaining overseas suppliers can be one way to reduce the costs when Australian dollar is strong. Existing Bunnings’ services such as Adult D. I. Y. Workshops, Kids D. I. Y. Workshops and Ladies D. I. Y. Nights offered to the public for free are attractive for D. I. Y. beginners This free services are definitely attractive and beneficial for beginners and thus they can be more widely advertised by TV commercial, the Internet as well as advertising catalog.? Staff education is important in providing quality services to customers. Friendly, kind, helpful and knowledgeable staffs will surely provide customer satisfaction and lead to wonderful customer experience. The number of staffs in a store is important as well.
If there is understaffing situation, customers have to wait in a long queue to just go through cashier, and they do not have access to any staff when they need some help, ending up with frustration. Ongoing career development and training is essential. Sustainability is long-term strategy which Bunnings has been already tackling with. For example, Bunnings (2009) has installed rainwater harvesting equipment at 50 Australian mainland stores last year. Since water shortage has been chronic and serious issues in Australia, and this kind of initiative led by Bunning will be accepted by local communities and thus enhance its social status which ultimately leads to attracting more environment-friendly customers and suppliers.
Growth also could be achieved through further industry rationalisation and acquisition. As what we have already done, several Mitre 10 stores have been acquired. V. Implementation plans Based on the above analysis, we can see that, there are two strategic options to fit our gaps; production development and market penetration. We should let Bunnings’ staff have a comprehensive understanding of our new strategies that is essentially important, because they are the persons who are closet to our customers and who operate processes that create vales. When we talking about production development, Customer survey can be useful tools to be aware of their needs and make sure that the product being developed has enough demands.
This could be achieved by consulting professional organizations to perform it. During this process, the communication between our staff and the professional consulting company is essentially important. There should be a comprehensive understanding between them. For example, what kind of customer survey we want, what the survey result means for our company. Furthermore, the purchasing department, which is one of the department in our company is critical to this strategy as well, they are the persons who negotiate with suppliers to get the quality and low price products. Bunnings’ current strategies are low prices and high level service, which are the key factors when talking about market penetration.
They are matching with our current strategies. However, we should aware of the performance management and reward systems when we implement our strategies. References: 1. Australian Broadcasting Corporation 2009, ABC, Woolworths announces hardware sector assault, viewed 30 Oct 2009, 2. Australian Competition and Consumer Commission, Statement of issues-Woolworths Limited/Lowes’ Companies, Inc. -proposed acquisition of Danks Holding Limited, viewed 25 October 2009, 3. Bunnings 2009, Bunnings, Perth, viewed 30 Oct 2009, < http://www. bunnings. com. au/contact-us_bunnings-sustainability. aspx> 4. Bunnings 2009, Price Guarantee, Bunnings, viewed 29 Oct 2009, 5.
Bunnings warehouse 2009, Bunnings, Perth, viewed 30 Oct 2009, < http://www. bunnings. com. au/contact-us_who-we-are. aspx> 6. Durie, J 2009, “Woolworths buy of Danks designed to take on Bunnings”, The Australian, 25 August, viewed 26 October 2009, http://www. theaustralian. news. com. au/business/story/0,28124,25978244-5013408,00. html 7. Ferguson, A 2009, “Bring it on, Bunnings says”, The Sydney Morning Herald, 25 August viewed 25 October 2009, < http://www. smh. com. au/business/bring-it-on-bunnings-says-20090825-exm9. html&g t; 8. The West Australian 2009, Wesfarmers chief earns $8. 1 million in 2009, The West Australian, viewed 28 Oct 2009, < http://au. news. yahoo. om/thewest/business/a/-/wa/6100897/wesfarmers-chief-earns-8 -1-million-in-2009/> 9. Wesfarmers 2009, The Annual Report, Wesfarmers, viewed 26 Oct 2009, < http://ir. wesfarmers. com. au/phoenix. zhtml? c=144042&p=irol-reportsannual> 10. Wesfarmers 2009, Wesfarmers, viewed 25 October 2009, < www. wesfarmers. com. au> ———————– Bunnings trade centre Bunnings warehouse stores End customers Distribution Retailers Wholesale suppliers Manufacturers ‘*+Z]^yz•–? °EEa? c12MN}~€¦§? AAii-FGHIwxs›¬®? °±?? AAiiuy? y* + , – : ; ; = j k ? ‡ ? nc? OIAOIAIAIAIAIAOIAIAIAI? IAIAOIAIAIAI? IAIAIAOI? IAI? IAIAI? IAI? IAI? IAIAOIASupplier Representative Accreditation Training
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