SWOT Analysis / TOWS Matrix for JB Hi-Fi (Australia)
Based on various researches at Oak Spring University , JB Hi-Fi is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, geopolitical disruptions, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google,
wage bills are increasing, increasing commodity prices, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that JB Hi-Fi can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the JB Hi-Fi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which JB Hi-Fi operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of JB Hi-Fi can be done for the following purposes –
1. Strategic planning of JB Hi-Fi
2. Improving business portfolio management of JB Hi-Fi
3. Assessing feasibility of the new initiative in Australia
4. Making a Retail (Technology) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of JB Hi-Fi
Strengths of JB Hi-Fi | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of JB Hi-Fi are -
Ability to recruit top talent
– JB Hi-Fi is one of the leading players in the Retail (Technology) industry in Australia. It is in a position to attract the best talent available in Australia. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– JB Hi-Fi is present in almost all the verticals within the Retail (Technology) industry. This has provided JB Hi-Fi a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Retail (Technology) industry
– JB Hi-Fi has clearly differentiated products in the market place. This has enabled JB Hi-Fi to fetch slight price premium compare to the competitors in the Retail (Technology) industry. The sustainable margins have also helped JB Hi-Fi to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that JB Hi-Fi has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of JB Hi-Fi
– The covid-19 pandemic has put organizational resilience at the centre of everthing JB Hi-Fi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Retail (Technology)
– JB Hi-Fi is one of the leading players in the Retail (Technology) industry in Australia. Over the years it has not only transformed the business landscape in the Retail (Technology) industry in Australia but also across the existing markets. The ability to lead change has enabled JB Hi-Fi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– JB Hi-Fi has one of the best training and development program in Services industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Digital Transformation in Retail (Technology) industry
- digital transformation varies from industry to industry. For JB Hi-Fi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. JB Hi-Fi has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Learning organization
- JB Hi-Fi is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at JB Hi-Fi is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at JB Hi-Fi emphasize – knowledge, initiative, and innovation.
High brand equity
– JB Hi-Fi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled JB Hi-Fi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– JB Hi-Fi has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – JB Hi-Fi staying ahead in the Retail (Technology) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– JB Hi-Fi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. JB Hi-Fi has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses of JB Hi-Fi | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of JB Hi-Fi are -
Interest costs
– Compare to the competition, JB Hi-Fi has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of JB Hi-Fi is dominated by functional specialists. It is not different from other players in the Retail (Technology) industry, but JB Hi-Fi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help JB Hi-Fi to focus more on services in the Retail (Technology) industry rather than just following the product oriented approach.
High dependence on JB Hi-Fi ‘s star products
– The top 2 products and services of JB Hi-Fi still accounts for major business revenue. This dependence on star products in Retail (Technology) industry has resulted into insufficient focus on developing new products, even though JB Hi-Fi has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee of JB Hi-Fi is just above the Retail (Technology) industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Lack of clear differentiation of JB Hi-Fi products
– To increase the profitability and margins on the products, JB Hi-Fi needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though JB Hi-Fi has some of the most successful models in the Retail (Technology) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. JB Hi-Fi should strive to include more intangible value offerings along with its core products and services.
Employees’ less understanding of JB Hi-Fi strategy
– From the outside it seems that the employees of JB Hi-Fi don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative at JB Hi-Fi, in the dynamic environment of Retail (Technology) industry it has struggled to respond to the nimble upstart competition. JB Hi-Fi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– JB Hi-Fi has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Low market penetration in new markets
– Outside its home market of Australia, JB Hi-Fi needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, JB Hi-Fi has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Retail (Technology) industry over the last five years. JB Hi-Fi even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
JB Hi-Fi Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of JB Hi-Fi are -
Creating value in data economy
– The success of analytics program of JB Hi-Fi has opened avenues for new revenue streams for the organization in Retail (Technology) industry. This can help JB Hi-Fi to build a more holistic ecosystem for JB Hi-Fi products in the Retail (Technology) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– JB Hi-Fi can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects JB Hi-Fi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help JB Hi-Fi to increase its market reach. JB Hi-Fi will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, JB Hi-Fi can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, JB Hi-Fi can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help JB Hi-Fi to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions in Retail (Technology) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for JB Hi-Fi in the Retail (Technology) industry. Now JB Hi-Fi can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– JB Hi-Fi can develop new processes and procedures in Retail (Technology) industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for JB Hi-Fi to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for JB Hi-Fi to hire the very best people irrespective of their geographical location.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help JB Hi-Fi to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Technology) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. JB Hi-Fi can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. JB Hi-Fi can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Using analytics as competitive advantage
– JB Hi-Fi has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Technology) sector. This continuous investment in analytics has enabled JB Hi-Fi to build a competitive advantage using analytics. The analytics driven competitive advantage can help JB Hi-Fi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, JB Hi-Fi is facing challenges because of the dominance of functional experts in the organization. JB Hi-Fi can utilize new technology in the field of Retail (Technology) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats JB Hi-Fi External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of JB Hi-Fi are -
Environmental challenges
– JB Hi-Fi needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. JB Hi-Fi can take advantage of this fund but it will also bring new competitors in the Retail (Technology) industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. JB Hi-Fi needs to understand the core reasons impacting the Retail (Technology) industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– JB Hi-Fi has witnessed rapid integration of technology during Covid-19 in the Retail (Technology) industry. As one of the leading players in the industry, JB Hi-Fi needs to keep up with the evolution of technology in the Retail (Technology) sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Regulatory challenges
– JB Hi-Fi needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Retail (Technology) industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Retail (Technology) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. JB Hi-Fi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, JB Hi-Fi can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate JB Hi-Fi prominent markets.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of JB Hi-Fi.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. JB Hi-Fi will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Stagnating economy with rate increase
– JB Hi-Fi can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Retail (Technology) industry.
High dependence on third party suppliers
– JB Hi-Fi high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing wage structure of JB Hi-Fi
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of JB Hi-Fi.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Technology) industry are lowering. It can presents JB Hi-Fi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Technology) sector.
Weighted SWOT Analysis of JB Hi-Fi Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at JB Hi-Fi needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of JB Hi-Fi is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of JB Hi-Fi is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of JB Hi-Fi to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that JB Hi-Fi needs to make to build a sustainable competitive advantage.