Organization Behavior
Internal Supply Chain Management
ABOUT HARVEY NORMAN
Harvey Norman is a large scale retail chain owned and operated by Harvey Norman Holdings Ltd. It is one of the most successful retailers in the Australian region. It promotes and sells all kinds of consumer products of world's top quality brands. The major product lines include personal computers, cameras, gaming, mobile phones, audio and video players, home appliances, furniture & bedding, gifts, home decoration and interior designing, fitness machines, leisure, etc. Headquartered in New South Wales, New Zealand, Harvey Norman operates with more than 230 stores in Australia, New Zealand, Ireland, Malaysia, Croatia, Singapore, Slovenia, and Northern Ireland. It was established in 1982 by Gerry Harvey and Ian Norman. The holding company, Harvey Norman Holdings Ltd. has also franchised a number of retail chains in Australia; including Space Furniture, Joyce Mayne, Ariston Appliances, Domayne, etc.
Harvey Norman has a wide range of product lines; each of them is operated by a separate franchisee firm. The franchising arrangements are made either on the basis of ratio from the sales revenues or a fixed payment after a specific period of time. In addition to a large number of franchised retail outlets in different cities and towns, Harvey Norman also operates through an online store. This web incarnation allows the customers to search for their favorite brands, check their availability, compare prices with other brands, and add chosen products to their shopping cartels (Harvey Norman 2012).
Harvey Norman has a large supply chain network spread all over the country. The most important supply chain members are the suppliers of consumer goods. The supplier network consists of manufacturers of top quality brands that sell their products to Harvey Norman at wholesale prices. These products are placed at high, medium, or low shelves in Harvey Norman stores according to their demand, popularity, and pricing. The second most important member of Harvey Norman's supply chain is the distributors. Harvey Norman has taken the services of numerous well-recognized distributors from the local markets that are responsible to deliver the new supplies of products to the company's retail outlets all over the country. The marketing and promotional agencies are also an integral part of the company's value chain (Hackman & Wageman 1995). These agencies and firms promote the branded and unbranded products offered by Harvey Norman to the potential target markets (Harvey Norman 2012).
COMPETITIVE PRIORITIES
With the help of its vast supply chain network, Harvey Norman aims to achieve some competitive priorities which cannot only help it in beating the competitors in the short run, but also enable it to accomplish its strategic objectives in the long run. These competitive priorities include product strategies, cost and pricing strategies, quality management, and customer services efficiency. These priorities are discussed in the following section in detail:
1. Product Strategies:
Harvey Norman sells and promotes a wide range of branded and non-branded products for the customers from all age groups and income levels. Therefore, it enjoys a large customer base and high sales volume throughout the year. The brands in the same product line are categorized according to their quality and demand. For example, the most demanded products are placed in the high shelves so that they are more noticeable to every incoming customer. On the other hand, the brands with low promotional priorities are placed in low shelves.
2. Cost and Pricing Strategies:
The very first thing which Harvey Norman thinks of while developing its operational strategy is the cost and pricing of its products. The major costs involved in this business include transportation and distribution expenses, marketing and promotional costs, and salary and administrative costs (Samsona & Terziovskib 1999). Harvey Norman purchases all the consumer products from their manufacturers at wholesale price which allows it to earn a good profit margin by selling them at their final consumer price. Despite having a retail chain of more than 230 stores, Harvey Norman has not yet reached the cost leadership position in its industry. The main reason is the intensity of competition which deprives Harvey Norman from charging a low price from its customers and keeping its profit margins at their lowest level. The other costs of operations are also very high in the Australian market which also puts a heavy burden on its profitability (Hill 2005).
Harvey Norman can achieve cost leadership by cutting down extra expenses which are incurred on unnecessary advertisements and controlling its operational costs which make the least contribution to its sales revenues (Boyer & Verma 2009). On the contrary, if it is unable to control these costs,...
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