Internal Supply Chain Analysis Research Paper

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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).

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On the contrary, if it is unable to control these costs, they will put a direct impact on its financial performance by reducing profit margins and causing potential losses in the future. In order to achieve the cost leadership position in the industry, Harvey Norman can make purchases from manufacturers in bulk quantities. In this way, it can get the supplies at lower prices than its competitors (Swamidass 2000). Harvey Norman also aims to achieve this goal through automation and e-marketing. The online store contributes a great deal in the overall sales of the company. The company's website is also among the most cost effective mediums of promotion where customers can find all types of information about the company's product offerings (Harvey Norman, 2012).

3. Quality Management:

As a top retailer in the Australian market, Harvey Norman has always emphasized on meeting the customers' expectations through highest quality products and superior customer services. For Harvey Norman, quality not only relates to the value or reliability of the products; it is considered as the strongest tool for building long-term relationships with the customers. Therefore, it chooses the most reliable suppliers from the market that can provide it the original brands purchased direct from the manufacturers. In addition, the supply chain network of Harvey Norman has a direct link with the top manufacturer brands which place their products in its stores for promotional purposes. The quality of customer services is ensured by treating the customers in the most pleasant manner, answering their complaints and queries on immediate basis, and making every effort to develop a positive image of the company in their minds.

4. on-time Delivery:

On-time delivery of products is one of the most important competitive priorities for a retailer (Kotler, Brown, Burton, Deans, & Armstrong 2010). In order to become the most competitive and successful retailer in the Australian market, Harvey Norman has set this type of customer service as its top priority for both physical retail outlets and online store. For Harvey Norman, on-time delivery means the minimum gap between the time when a customer places an order and the time when he receives it. At physical retail stores, the sales staff makes sure that each incoming customer is given full attention. The staff is ever-ready to help him in every possible way and make his shopping experience enjoyable for him. Similarly, when a customer places an order on the company's website, the company tries to deliver it as soon as possible. Harvey Norman gives emphasis on-time delivery because it recognizes its significance in building strong relationships with the customers (Ferrell & Hartline 2011).

5. Variety:

As a large scale retail store, customers expect Harvey Norman to have a wide variety of every product category. Harvey Norman is a financially strong and operationally stable retail chain. Therefore, it can make bulk purchases of products from their manufacturers. Harvey Norman aims to make the wide variety of product lines as its competitive strength which can be used to compete with the other industry competitors in a more effective and tactful way (Harvey Norman, 2012). Variety in each product category gives a number of alternative choices to the consumers which ultimately make their purchase decision easier (Blythe & Megicks 2010).

EFFICIENCY ASPECTS

Harvey Norman ensures efficiency in its business operations through different efficiency aspects or indicators. However, the most commonly used efficiency aspects are quality of customer services, inventory management, and continuous growth of operations. These are now discussed below in detail:

1. Quality of Customer Services:

The most important efficiency indicator is the quality of customer services. Harvey Norman ensures that its customers are given the highest priority among all its key stakeholders. At Harvey Norman stores, customers are dealt in such a fashion that they return back fully satisfied with their purchase decision. The quality of customer services is also ensured while dealing at online store. The Harvey Norman staff responds to the customer requests, orders, queries, and complaints on immediate basis. The on-time delivery of products is also an important factor in customer service efficiency (Brassington & Pettitt 2006). For example, when a customer places an order for some product, the company ensures that he gets his ordered product with required quality and quantity within the given time. All this shows superior customer services at all the levels within the company.

2. Inventory Management:

Inventory management is a major efficiency factor in a retail business. It refers.....

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