Harvey Norman - business analysis PDF

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This proposal is designed to the Chief Executive Officer (CEO) of Harvey Norman, Katie Page to understand and identify the organization’s priority. Harvey Norman is one of the largest retail brands in Australia, which operates more than 250 stores across Australia and other countries such as New Zealand, Singapore, Malaysia, Ireland, Northern Ireland, Croatia and Slovenia. The company mainly focuses on 4 business lines, which are furniture, computers, electrical appliances and beddings ( Harvey Norman 2021). From a marketing perspective, Harvey Norman should attract existing and new customers through advertising as its priority based on the analysis of the data available. The priority will be supported by 5 questions, which are “what were the product sales revenue in 2020”, “What is the most popular product every month”, “How much for the monthly advertising fee and budget”, “How many advertised products are sold every day”, “What kind of advertisements are most attractive to customers”. Besides, the questions will be answered by the obtained data from different sources.

Introduction The proposal analyzes primarily that the Harvey Norman’s priority goal is to attract existing and new customers through appropriate channels from a marketing perspective. The selected priority will be supported by 5 questions in order to enable the CEO, Katie Page to better understand and plan for the company future. Each question is related to 3 levels of management decision making such as strategic, tactical and operational as well as is defined in 3 levels of information comprehension such as elementary, intermediate and overall. Moreover, the data and data sources are provided to support the answers to the questions, which further enhances the CEO’s understanding of the company’s priority.

Overview of Selected Key Priority Priority refers to something that is more important than other things and needs to be addressed or done with first. This is important for Harvey Norman to guide its future focus. Activities and resources can be easily distributed and managed due to the resource allocation process weighs the organization’s priorities. Hence, the organization is able to improve its existing profit (Understanding your business 2016). According to the 2020 annual report of Harvey Norman, it states that the increased competition has resulted a loss of market share and a decline of retail profits for the stores in Australia and overseas market (Harvey Norman n.d.). For instance, its franchising operations segment revenue had dropped to AUD$ 443.81 million in 2020 from AUD$ 468.64 million in 2019, which down by $24.82 million or 5.3%. This was mainly due to the adverse impact of a highly competitive and challenging retail environment, according to the 2020 annual report of Harvey Norman (Harvey Norman 2020). The main competitors include Woolworths and JB Hi-Fi (D&B business directory 2021). In 2020, the reported profit after tax of Harvey Norman was AUD $462.16 million, while AUD $1,209 million of Woolworths and AUD $317.7 million of JB Hi-Fi (Harvey Norman 2020 & Woolworths Group 2020 & JB Hi-Fi 2020). Hence, the priority of Harvey Norman is to attract existing and new customers through advertising.

5 Questions to be answered by dashboard The following 5 supportive questions are used to define the Harvey Norman’s priority and the answers are given to enable CEO, Katie Page to understand and plan for the priority. The questions include:

1. What were the product sales revenue in 2020?  This question enables the organization to understand the company’s profitability and thus consider the level of investment in advertising. If the revenue is low, then the organization can choose to invest more advertising to promote the products to attract customers. It can be solved by CEO at tactical level as it has a medium-term impact on the company, which the number of advertising can be changed based on sales revenue in every quarter. Besides, the question belong to overall level as it needs to be answered by the whole quarter of data.

2. What is the most popular advertising every month?  This question enables the organization to explore the most advertising product category and focus more attention on it. This can avoid wasting time and money on unpopular advertising to affect sales revenue. It can be also solved by CEO at tactical level as the decision of changing product from advertisement has medium-term impact. Customers will not be buying the same product in the long-term due to new products will replace the old one. Moreover, this question is belong to overall level as it requires one month of data, which belong to whole data set.

3. How much for the monthly advertising fee and budget?  This question enables the organization to understand the total fee of advertising so that it can budget and avoid unnecessary expenses in every month. If the advertising expenses are decreased, the company can get more profit. It can be solved by shareholders at strategic level due to it has a long-term impact on the company. A decrease in unnecessary expenses helps to keep the company’s profit up. Furthermore, this question belong to overall level as it requires the whole month data of advertising fee and budget.

4. How many views does the advertised products get per day?  This question enables Harvey Norman to know whether the advertisement is effective for the products. If the view volume of advertised product is low, then the organization does not need to spend too many advertising fee on it. This question can be solved by employees at operational level due to the product sales are calculated on a daily basis. Besides, it belong to elementary level as it only requires a single day of data.

5. What kind of advertisements are most attractive to customers?  This question enables the organization to determine the kind of advertisings that are most attractive to existing and new customers, which can help to increase the company’s profit. It can be solved by shareholders at strategic level due to advertising is the main role to influence the company profit in the long-term.

Moreover, it belong to overall level due to it needs whole month data to prove whether the advertisings are effective.

Data and Data Sources

Data item Data source Description a. Profit before tax https://static1.square This is an internal structured data as for the past 5 space.com/static/548 years

it is founded from Harvey Norman’s

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2020 annual report. This data source

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is able to support the question 1 as it

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compares

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between 2016 and 2020. According

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to the data, the organization can be

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more easily to determine its level of

the

company

profits

investment in advertising. o+website+v2.pdf https://static1.square This is an internal structured data due

b. Marketing expenses in 2020

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to it

is

founded from Harvey

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Norman’s 2020 annual report. The

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data source is used to support

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question 3 as it has mentioned that

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the amount of marketing expenses

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on the company’s products in 2020.

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Despite it does not show the monthly

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data, the organization can estimate it. Marketing expenses generally include promotions and advertising costs (Liu

c. Consumer

n.d.). https://www.marketin This is an internal structured data as

attitudes

to gcharts.com/industrie

it is already categorized as a bar

advertising

in s/media-and-

chart. This data source is found for

main forms

media entertainment-

the question 5 as it enables the

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organization to best understand the

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types

of

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are

more

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attractive to customers.

main-mediad. Proportion

may2017-up of https://www.adnews. This is an external structured data as

Harvey Norman’s com.au/news/where-

the analysis is done on internal

advertising

s-the-money-going-

structure data in the company from

spending

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outside. This data source is used to

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support question 2 and question 4 as it has determined that the most popular

advertising

Norman

based

spending.

Sample Dashboard Screenshot

on

in

Harvey

advertising



The first graph is a bar chart that it shows the Profit Before Tax (PBT) of Harvey Norman between 2016 and 2020. It allows the CEO to clearly understand the company’s profit level and thus make decision for the investment level in advertising. According to the chart, the PBT of the company was $AUD 661.29 million in 2020, which was the highest compared to $AUD 574.56 million in 2019, $AUD 530.17 million in 2018, $AUD 639.81 million In 2017 and $AUD $93.76 in 2016. The CEO can choose to spend the same amount of advertising investment as it achieved the highest profit in 2020 compared to 2019, 2018, 2017 and 2016 but also can choose to increase to achieve further profit.



The second graph is a bar chart that it shows the consumer attitudes to advertising in main media forms. It allows the CEO to decide the types of advertising to advertise its products based on the consumer preference. According to the chart, cinema had 37%, which was the highest compared to 33% of magazines and TV, 31% of billboards, 28% of newspapers, 27% of social media, 26% of online print as well as 24% of radio, online TV and online video. Hence, the CEO can choose to invest its advertising more in cinema than other types of media forms.



The third graph is pie chart that it shows the proportion of Harvey Norman’s advertising spending. It enables the CEO to understand the types of advertising they spend on and determine if the company profits are improved by them. According to the chart, the company’s largest spending on advertising was on regional TV and Metro Press. This indicates that these two types of advertising bring a significant profits to the company. However, the CEO could also invest the advertising in the cinema as the second chart shows that it is most popular with consumers.



The fourth graph is a bar chart that it shows the amount of marketing expenses and product sales. It allows the CEO to know if the advertising expenses are efficient in selling the products. According to the chart, it shows that Harvey Norman spent $3.80 billion on advertising and generated $22.94 billion in sales in 2020, while $3.91 billion on advertising and generated $22.34 billion in sales in 2019. This shows that the company might not spend on the appropriate advertising to attract new and existing customers since the advertising spending in 2020 was higher but the product sales were lower than in 2019. Hence, the CEO can choose to reduce unnecessary advertising expenses and spend more on appropriate one, such as cinema.

Potential challenges and issue with building the dashboard There are two potential issues in building the dashboard, which are data inflexibility and data quality. In terms of data inflexibility, it refers to the data cannot capture the product sales or advertising expenses for a particular month or day due to it provides a fixed information for a particular year. For example, the graph 4 shows the amount of marketing expenses and product sales in a yearly form but the question 3 mentions that the data should be in a monthly format. This might result in the organization do not have a clear understanding of the actual monthly figures and thus affect profits due to it fails to provide the right strategy for each month. In terms of data quality, it refers to the data may have errors or inconsistencies. For example, the proportion of Harvey Norman’s advertising spending in the third graph does not show a specific time period, which the CEO may provide wrong decision on advertising spending in the future.

Conclusion In conclusion, the CEO of Harvey Norman, Katie Page should invest more advertising in cinema as it is the most popular advertising viewing medium for consumers. However, there are two potential issues in building the dashboard, which are data inflexibility and data quality. For data inflexibility, the graph 4 shows the amount of marketing expenses and product sales in a yearly form but the question 3 states that the data should be in a monthly form. For data quality, the third graph does not show the proportion of Harvey Norman’s advertising spending in a specific time period, which the CEO might make the wrong decision on advertising spending in the future.

References

D&B business directory 2021, Dun & Bradstreet, viewed 31 March 2020, < https://www.dnb.com/business-directory/companyprofiles.woolworths_group_limited.a03dcfd23ee5f3f495d0cde8b82b0296.html>.

Harvey Norman 2020, 2020 annual report, Harvey Norman, viewed 31 March 2021, < https://static1.squarespace.com/static/54803162e4b08e1b8a472201/t/5f7548b27a7dba1ef 4c5bfb9/1601521983870/HVN+2020+Annual+Report++FINAL+for+upload+to+website+v2.pdf>.

Harvey Norman Holdings Ltd- Premium company report Australia 2021, IBIS World, viewed 31 March 2021, <

https://www.ibisworld.com/au/company/harvey-norman-holdings-

ltd/3662/>.

Here are the advertising types that consumers say they tolerate the most 2017, Marketing Charts, viewed 31 March 2021, < https://www.marketingcharts.com/industries/media-andentertainment-76930>.

JB Hi-Fi 2020, Half-year financial report for the half-year 31 December 2020 , JB Hi-Fi Limited, viewed 31 March 2021, < https://investors.jbhifi.com.au/wp-content/uploads/2021/02/4DHY21.pdf>.

Liu, I n.d., What is a marketing expenses?, Chron, viewed 31 March 2021, < https://smallbusiness.chron.com/tax-deductions-advertising-promotion-costs-22449.html>.

Understanding your business’s profile priorities is more important than understanding its capabilities

2016,

Harvard

Business

School,

viewed

1

April

2021,

<

https://www.hbs.edu/forum-for-growth-and-innovation/blog/post/Understanding-yourbusinesss-priorities>.

Woolworths Group 2020, 2020 annual report, Woolworths Group, viewed 31 March 2021, < https://www.woolworthsgroup.com.au/icms_docs/195794_annual-report-2020.pdf>.

Where’s the money going? Exclusive ad spend trends report 2016, Ad News, viewed 31 March 2021, < https://www.adnews.com.au/news/where-s-the-money-going-exclusive-adspend-trends-report>....