JB HI-FI

JB Hi-Fi

JB Hi-Fi

Background

JB Hi-Fi Limited provides a large range of consumer electronics and CDs and DVDs. In order to capture the value from its customers, JB is focus on three basic strategies: expansion of online sales, expansion of stores and development of its digital market. To achieve the primary objective of creating the best value for its shareholders, JB maintains low cost of doing business through bulk purchase and economies of scales (Earls, 2012).

JB HI-Fi's products particularly focus on consumer electronics, electrical goods and software including music, games and movies. The company primarily operates from stand-alone destination sites and shopping Centre locations in Australia and New Zealand. It has a positive impact in other countries in overseas which are bringing in foreign currency in to Australia (Hak, Kwang, Dong, Hyun, and Jessica, 2010).

Issues and Challenges facing online shopping

The company operates from stand-alone destination sites and shopping centre locations in Australia and New Zealand with 168 stores growing on average of 13-15 sites per year with an aim of 214 stores, has assets of $843M, revenue of $3,308M and EBIT of $178M for 2013 financial year.

The boom in online shopping has also had a knock on effect for the bottom line for JB Hi-fi. The strong Australian dollar has seen consumers turn to the internet to make their purchases, as these products are often cheaper and GST exempt (Khairul, and Maisarah, 2005).

JB Hi-fi is achieving a slow growth rate because the AUD has been dropping within the last 12 months added overseas purchasing pressure however will also reduce offshore competition (JB Hi-Fi HOME).

JB Hi-Fi has seen the reduction in which they would be expected to pay their creditors prior to being paid by their own customer e.g. 21.45 days from 2009 to 16.63 in 2012 (Anderson, & Hildenbrand, 2009). These facilities have assisted in funding the shortfall of 16.63 days meaning JB Hi-Fi would be expected to pay their creditors 16.63 day prior to being paid by their customers.

Ongoing technology and innovation may outdate the JB Hi-Fi NOW digital music platform (launched in 2011). Difficulty in increasing profit margin in the long run since the heavy discount/low price is an expected norm in the home entertainment sector (Dave, Richard, Kevin, and Fiona.2000). New store roll out - Opening new stores in high traffic locations (some with shorter term lease option) can help improve sale and improve buying power (David, and Nigel, 2006).

Strategic Plan

Over the 5 year period, JB Hi-Fi Revenue had grew over 71% and had some significant activities including in 2009 the repayment of loans to reduce financing costs but liabilities were still up due to lease incentives introduced handled as liabilities. New technology and entertainment released in 2009 and 2010 contributed to their strong revenue. Consequently JB Hi-Fi used this opportunity in 2010 and 2012 to make repayments on loans (INC, 2012).

JB Hi-Fi in 2008 depleted their cash in an effort to diversify their revenue through acquisitions and investment in other businesses while also paid back loans off ...