BUSINESS STRATEGIES AND PROSPECTS

Group Project task description
Your work in the consulting team has been presented to the client firm’s executives. The
company’s executives are very interested in your external analysis and would like to get
further information on the potential strategy that they could adopt to win in the
recommended market.
Examining the same company and situation discussed in your presentation, write a report for
your client firm’s executives which addresses the following:
1. Briefly describe the firm’s current operations and its prospects in the chosen
market discussed in your presentation;
2. Summarise relevant opportunities and threats in the firm’s external environment
(e.g. economic, political/legal, socio-cultural, technological and environmental
aspects, industry attractiveness etc.) in that market;
3. In the context of matters discussed in (1) and (2), identify the firm’s strategy and
discuss what competitive advantage(s) the firm has in its current operation; and
4. Propose two potential recommendations on how the firm could expand into the
chosen market successfully; evaluate these two recommendations and decide
which one you would put forward to the client. (Make sure you justify your
decision, and keep in mind that the recommended course of action should enable
the firm to sustain its competitive advantage in the potential market.)

The Group Project task is worth 25% of your final grade and is due no later than 10:00AM on
4 November 2019. The report should not exceed 2500 words in length. Everything in your
report is counted for the permitted length, including executive summary and reference list. It
is recommended that the executive summary should be no more than 50 words, the
introduction around 200 words, and conclusion around 200 words. Furthermore, students
should devote no more than 400 words of the remaining space to a discussion of background
information (points 1 – 2), and the balance to the rest of the task (points 3 – 4) as described
above – this is the main task of this assignment. Your report must contain a reference list,
which is also included in the word count. The report must be submitted in .doc or .docx
format. For further guidance see the template on Canvas and consider reading some business
intelligence reports.

Support your analysis with additional research from other reliable English language sources,
including academic journal articles, corporate information databases (e.g., IBISWorld,
Passport, etc.), industry publications, official statistics, and so on. You can find the Library’s
suggested market intelligence sources here.
The report must be properly referenced in accordance with the American Psychological
Association (APA) 6th edition style. Details are available on the Library website. The report
must adhere to the University’s Academic Honesty in Coursework Policy 2015, and other
relevant University policies.

Each group should arrange one student within the group to submit the final report to Turnitin
directly before their presentation. Your filename must take the format:
GroupCode_BUSS5020_2019S2_Presentation_SecurityCode.docx, where GroupCode is your
Group’s code and SecurityCode is the firm’s ASX security code, e.g. for group M09A_01
investigating Telstra (TLS) the filename would be given by:
M09A_01_BUSS5020_2019S2_TLS.docx

The University has authorised and mandated the use of text-based similarity detecting
software for all text-based written assignments. The task must therefore be submitted
through Turnitin on Canvas. One student within the group must take responsibility for
submitting the assignment. You may resubmit the report until the due date/time, after which
no further resubmissions will be accepted. You are responsible for ensuring the correct
document (not a draft) is submitted. The document in Turnitin at the deadline is the
document that will be marked, and no discussion will be entered to the contrary nor any
special pleading entertained.
Grading
Group Projects will be graded against the following criteria:
• conforming with instructions;
• depth of analysis;
• problem solving;
• research; and
• presentation and communication.

Please see the rubric on Canvas for a more detailed explanation and additional resources.
Standard Business School penalties apply for papers submitted late and/or over the word limit.
It is your responsibility to ensure you are acquainted with these policies.
Late penalties
Assessments which are submitted after the assessment deadline will incur a late penalty of
5% per day or part thereof. This penalty is deducted from the total possible marks for the
assessment, up to a maximum of 50% until the closing date. Since submission is electronic,
for the purpose of calculating penalties, weekends, public holidays, and ordinary working days
ALL count as days.
Word limit
A penalty is applied to papers which exceed the word limit. Where a student exceeds the
word limit, the student will lose 10% of the total marks when the submission is 10% above
the word limit and 10% for each 10% over-limit thereafter. Note that the word limit includes
the executive summary, in-text referencing, and the reference list at the end of the document.
Any text in tables, images, etc., is also included. Since the stated word limit for this assessment
is 2500 words, this means students can write up to 2750 words without incurring a word limit
penalty.
About team-based work and peer evaluation
Groups may contain between 3 – 5 members, though a group of 4 is preferred. As well as the
application of business knowledge, team-based work requires interpersonal cooperation and
coordination. Team discussions and workload allocations may involve disagreements and
compromises. This is not unexpected. However, it is students’ responsibility to organise and
coordinate their group works.

Groups where disagreement has become a significant barrier to progress or a peaceable
conduct of group work, should arrange to meet with their lecturers as soon as possible to
rectify the situation. Groups should diligently document minutes of all meetings/discussions
about team work so that, in the event of a disagreement needing staff intervention,
appropriate documentary evidence is available. Students will have an opportunity in the final

week of semester to make a statement on the record about whether or not their team-based
work experience proceeded acceptably. The possibility exists for students who are unable to
demonstrate that they made a substantive contribution to the task to receive a grade of zero.

After the group project due date, you will be asked to complete a peer evaluation of each
your team members’ individual contributions to your team work throughout the semester.
Your individual evaluations of each of your team members will be kept confidential, although
aggregate feedback will be provided to each team member in the form of their overall peer
evaluation mark.
Feedback
The final mark will be made available to students via Canvas when available. Written feedback
will be available on Turnitin. The student who is responsible for submitting the assignment
should share the written feedback within the group once it is made available.

 

BUSINESS STRATEGIES AND PROSPECTS
The following factors are considered important in understanding the strategy of the Group and the main opportunities and threats
that may have a significant effect on its results and its prospects for future years. These factors are listed regardless of whether
they were significant in FY2019.
Business risks
There are a number of factors, both specific to the Group and of a general nature, which may threaten both the future operating
and financial performance of the Group and the outcome of an investment in the Group. There can be no guarantee that the
Group will achieve its stated objectives or that forward looking statements will be realised. The operating and financial performance
of the Group is influenced by a variety of general economic and business conditions, including levels of consumer spending,
inflation, interest and exchange rates, access to debt and capital markets, and government fiscal, monetary and regulatory policies.
A prolonged deterioration in general economic conditions, including an increase in interest rates or a decrease in consumer and
business demand, may have an adverse impact on the Group’s business or financial condition. The specific material business risks
faced by the Group, and how the Group manages these risks, are set out below.
• Competition – the markets in which the Group operates remain highly competitive and any increased competition from new
and existing competitors may lead to price defl ation and a decline in sales and profi tability. As the #1 player in a fragmented
Australian market, the Group’s scale allows it to maintain focus on market share and absorb margin pressure during periods of
heightened market price activity and consolidation. The Group also believes that its competitive advantages and the plans for
growth set out below will allow it to maintain its market leading position.
• A loss or erosion of reputation – both the JB Hi-Fi business and The Good Guys business enjoy a high level of loyalty and
trust with customers. The JB Hi-Fi business has been consistently ranked among Australia’s most reputable companies in
the Corporate Reputation Index released by the Reputation Institute and AMR (1st in 2014 and 2016 and 3rd in 2012,
2013, 2015, 2017 and 2019). The JB Hi-Fi business was also awarded the Roy Morgan Customer Satisfaction Award for
Furniture/Electrical store of the year for 2017 and 2019, whilst The Good Guys business won the same award for 2011,
2012, 2013, 2014 and 2016 and fi nished second in 2019. Additionally, The Good Guys Business won the Canstar Blue Most
Satisfi ed Customers Electronic Retailers Award from 2011 to 2018 with JB Hi-Fi fi nishing second in 2018. A decline in this high
level of loyalty and trust could compromise the market leading positions of the JB Hi-Fi business and The Good Guys business
and adversely affect the Group’s operating and fi nancial performance. This could occur as a result of a wide range of factors or
events, including:
• a loss or erosion of the reputation of the JB Hi-Fi and The Good Guys businesses for price leadership and high levels
of customer service. The Group seeks to mitigate this risk through careful monitoring of its competitors’ pricing and
market share data, senior management monitoring of customer complaints, and use of customer service and
engagement analytics;
• a major information security breach of the Group’s IT systems. The Group seeks to mitigate this risk through investment
in IT security measures, including incident response planning and testing;
• a major workplace health and safety incident or customer injury. The Group seeks to mitigate this risk through having
appropriate occupational health and safety procedures and staff training in place for all of its sites; or
• a signifi cant breach of regulatory or legislative requirements. The Group seeks to mitigate this risk through appropriate
staff training on key regulatory and legislative requirements relevant to its business, as well as making legal and regulatory
compliance a key focus of the management team.
• Consumer discretionary spending and changes in consumer demands – the Group is exposed to consumer spending cycles
and changes in consumer demands. A reduction in consumer spending and demand may lead to a decline in the Group’s
sales and profi tability. The Group maintains its relevance using its strong market position supported by its everyday low price
proposition. The Group’s stores, which are both in convenient and high traffi c locations, seek to maximise both destination and
impulse sales, refl ected in the Group’s high sales per square metre of fl oor space. The Group also closely monitors changes in
the economic environment, consumer demand and new products, and is able to respond quickly to such changes.
OPERATING AND FINANCIAL REVIEW (continued)

29

• Online competition taking sales from the Group’s stores – the Group seeks to provide customers with a quality online offer,
while leveraging the benefi ts of its physical stores. The Group continues to innovate both in-store and online in order to give
customers the choice as to how to transact with the JB Hi-Fi and The Good Guys businesses. The Group’s market leadership
and scale gives it global relevance with suppliers and drives signifi cant buying power which enables the Group to compete
successfully with online players, as does its low cost of doing business. The Group also believes that the existence of its store
networks will continue to provide confi dence in after-sales service and support to its online customers, whilst also enabling fast
online fulfi lment via delivery from stores and click & collect.
• Digitisation of physical software leading to a fall in traditional software sales beyond expectations – the JB Hi-Fi business will
maintain a software presence in store while the category is still providing solid returns, whilst adjusting inventory, range and
in-store space allocated to the category as appropriate.
• Ineffective inventory management – a failure to maintain suffi cient inventory (or holding excessive inventory) may adversely affect
the Group’s operating and fi nancial performance. The Group mitigates this risk through regular monitoring of inventory quality
and stock levels.
• Failure to maintain key supplier relationships – the Group has strong partnerships with all major suppliers, with its dual brand
retail approach providing ranging and merchandising optionality and facilitating the execution of strategic initiatives at scale.
The Group’s store locations and high traffi c websites provide suppliers with high visibility for their products. However, a failure
to maintain key supplier relationships could adversely impact on the Group’s operating and fi nancial performance. The Group
has signifi cant supplier management processes to mitigate this risk and, whilst at any one time certain products and suppliers
are more important than others, the large and diverse range of products stocked by the businesses means that reliance on any
one supplier or product is less than for some smaller competitors. In addition, the JB Hi-Fi and The Good Guys businesses
have proven records of expansion into new product categories and introducing new brands, rather than remaining reliant on
those products and brands which were successful in previous years.
• Acquisition of The Good Guys business – the acquisition of The Good Guys business does not deliver the expected outcomes
for the Group. For example, The Good Guys business does not, itself, perform as expected or the acquisition has an adverse
effect on the performance of the JB Hi-Fi business due to, for example, management being preoccupied with The Good Guys
business.
• Growth of JB Hi-Fi Solutions and The Good Guys Commercial – the JB Hi-Fi Solutions and The Good Guys Commercial
businesses do not deliver the expected growth outcomes for the Group. The Group continues to invest in these businesses to
support their continued growth.
• JB Hi-Fi New Zealand business – if the performance of the JB Hi-Fi New Zealand business does not improve as expected, this
may have an adverse impact on the Group’s operating and fi nancial performance. The Group is in the process of implementing
a turnaround strategy to improve performance in the JB Hi-Fi New Zealand business.
• Increasing cost of doing business – certain costs of doing business are outside of the Group’s control. For example, the
Group’s cost of doing business is impacted by the annual Fair Work Award wage reviews (which have resulted in increases
totalling 15% over the past 5 years to 30 June 2019), and rising energy costs. However, the increasing scale of the Group’s
operations continues to deliver cost reductions which mean that higher wage costs can be offset to some extent by cost
reductions in other areas.
• Leasing arrangements – the ability to identify suitable sites and negotiate suitable leasing terms for new and existing stores is
key to the Group’s ongoing growth and profi tability. The Group believes that it will continue to be able to do this as it has done
successfully to date.
• Loss of, or inability to attract and retain, key staff – the Group’s ability to attract and retain talented staff is critical to its
operating and fi nancial performance. In recognition of this, succession planning and executive/senior management team
composition is a key focus for the Board and Group executive team.
• IT systems – the Group’s increasing reliance on IT systems means that outages, disruptions and security breaches could have
a detrimental impact on its operating and fi nancial performance, and any failure to maintain and upgrade its IT systems over
time has the potential to inhibit the achievement of the Group’s business initiatives. To mitigate these risks, the Group has
documented disaster recovery processes (including off-site IT back-up infrastructure) and invests in IT security measures.
The Group also continues to invest and develop its IT resources and capabilities to support the Group’s strategic objectives.

30
• Changes in regulatory environment – changes in the regulatory environment in which the Group operates may increase
compliance costs, and even (in extreme cases) affect the ability of the Group to sell certain types of products and services or
conduct certain activities. Whilst such changes are outside the control of the Group, the Group monitors proposed changes
in the regulatory environment so that it can assess the impact of such changes and develop appropriate response strategies
where possible.
• Finance – a breach of the Group’s debt covenants or inability to access fi nancing facilities would adversely affect the Group’s
operating and fi nancial performance. The Group has signifi cant headroom in both its debt facilities and covenants. Additionally,
cash fl ow forecasts and debt capacity are closely monitored by management. Details of the Group’s fi nancing facilities are set
out on page 26.
• Fraud and corruption – the Group has no history of material fraud or corruption, and seeks to minimise the risk of loss arising
from fraud and corruption through appropriate policies, procedures and controls.
• Changes to Australian Accounting Standards – the Australian Accounting Standards are set by the Australian Accounting
Standards Board (“AASB”). Changes to the Australian Accounting Standards issued by AASB could adversely affect the
fi nancial performance and position reported in the Group’s fi nancial statements.
• Litigation/breach of legal or regulatory requirements – legal proceedings and claims may arise from time to time in the
ordinary course of the Group’s businesses and may result in high legal costs, adverse monetary judgements and/or damage
to the Group’s businesses which could have an adverse impact on the Group’s fi nancial position and fi nancial performance.
Additionally, a signifi cant breach of regulatory requirements or laws could adversely impact the Group’s ability to carry on its
business. The Group seeks to mitigate this risk through appropriate staff training on key regulatory and legislative requirements
relevant to its business, as well as making legal and regulatory compliance a key focus of the management team.
Business Strategies
The Group believes that the following strategies/factors will continue to drive growth in sales and earnings:
• proactive management of store portfolio with continuation of the Group’s disciplined approach to selecting new stores based
on high foot traffi c and closure of underperforming or sub-scale existing stores;
• continued focus on customer service and in-store experience;
• continued growth opportunities in many categories and in market share, both in physical stores and online;
• continued technological innovation and the launch of new products and updated models which will continue to drive new and
replacement sales;
• realisation of effi ciencies from the acquisition of The Good Guys and leveraging the scale of the Group;
• continued development of the Group’s websites and online offering, aimed at enhancing the user experience across multiple
platforms (e.g. computer, tablet & phone) to drive continued growth in online sales;
• expansion of the online product range and depth beyond that which is practical in store;
• signifi cant opportunities to grow JB Hi-Fi Solutions and The Good Guys Commercial and expand into new markets;
• ongoing focus on the Group merchandise function to provide strategic guidance and oversight of the Group’s buying, identify
Group buying opportunities and strengthen supplier relationships;
• design and implementation of an expanded services offering for the JB Hi-Fi Australia business;
• continued execution of the Group’s strategy to improve the performance of the JB Hi-Fi New Zealand business;
• personalisation of marketing and customer experiences;
• improved supply chain and logistics systems to support the Group’s expansion; and
• continued mitigation of the business risks faced by the Group detailed on pages 28 to 30.