Harvey Norman Summary
Chapter 1: Management and Change.
Changes faced by Harvey Norman since 2007:
1. There are now 195 franchised stores in total, in 2008 10 new stores were opened and 9 (3 HVN) were closed.
* The company looked at every location and given the economic conditions closed the underperforming stores. New locations such as Gympie were selected.
2. The company continued to open some new stores in NZ (3) and in Ireland (2).
* International expansion has certainly been slowed given the economic conditions.
3. In February 2009 less than 12 months after opening, the 5 new OFIS stores were closed.
* The economic conditions made it extremely difficult to sell stationary and office supplies. This business model could not be sustained.
4. In late 2006 Harvey Norman sold its stake in retailer Rebel Sport to Archer Capital in a deal worth $143 million.
* Rebel Sports was a valued acquisition during the Olympics and Soccer/Rugby World Cups. It was a good time to boost liquidity given the increase in interest rates at the time.
5. JB Hi- Fi Ltd emerged as the major competitor in the Australian market, their shares rose to $20.75 in October 2009.
* JB Hi- Fi is a well run organization that is lean and focuses on products consumed by generation Y and Z. Harvey Norman needs to boost liquidity to exert market pressure on supply companies.
6. Global Economic Crisis and resulting increase in unemployment which was predicted to rise to 10% in 2010.
* The company examined all its assets and non performing stores. Some of these were sold. The Government Stimulus package proved an excellent marketing pitch as many items were packaged at around $1000.
7. The Australian currency in 2009 appreciated from 65 cents to 93 cents an increase of 23%.
* The appreciation had a boost to the company given this reduces the cost of imported products.
Harvey Norman’s change and there effects.