A Case Study for Harvey Norman Company in Australia

High School ・Business ・Harvard ・5 Sources

As an Australian-based company, Harvey Norman is one among the most important multi-national dealers of bedding, furniture, communications, computers and also consumer electrical products (Hennelly G. 2010, p. 20). Harvey Norman functions as a franchise with a corporation operated stores and therefore the main brand owned by Harvey Norman Holdings Limited, which is listed on the ASX. Recently, the company recorded increased growth rates as proved by about 280 (two hundred and eighty) company-owned and licensed stores in continents like Europe, South-East Asia also as in Australia (Hennelly G. 2010, p.21). All these companies operate under Domayne, Joyce Mayne and Harvey Norman brands in Australia but Harvey Norman brand is typically used by these companies overseas(Hannelly G. 2010, p.21). This paper will analyze Harvey Norman Company Limited based in Australia, highlighting fundamental concepts learnt in MARK2085 while using case studies to demonstrate or emphasize core principles.

Customer value and Lock-on Core Concepts

Many businesses fail to focus their ideas regarding innovation based on customer needs if they still utilize traditional business thinking (Lee I. & IGI Global 2017, p.17). They must switch to modern business thinking as it focuses on extracting value from services or products. The most competitive advantage aspect that any company could strive to attain is laying focus on obtaining value for customers as well as obtaining value from them. Also, proprietary lock-in, customer lock-in or vendor lock-in forces consumers to be dependent on specific vendors for services and products, incapable of using another vendor devoid of any substantial switching costs. Most often, lock-in-costs tend to develop or enhance barriers towards market entry that eventually results in antitrust deed against monopolies (Lee I. & IGI Global 2017, p.37).
Harvey Norman's businesses differentiate itself from its competitors through its unique company structure. In this regard, each departmental store is functioned or operated a management entity that is different from one another (Hannelly G. 2010, p.54). Consequently, numerous superstores are regarded to be a combination of about three (30 to (4) distinct businesses, which are managed independently contributing revenue or income to Harvey Norman Holding Company Limited through portions of sales or lease payments. In essence, it means that Harvey Norman stores add value to their customers by motivating employees through commissions that are used across all departments with the aim of promoting and improving service (Hannelly G. 2010, p.54).
It is imperative to note that class of lock-in is assumed to be potentially inevitable to individuals who are rational and not otherwise motivated through the creation of a prisoner’s dilemma (Lee I. & IGI Global 2017, p.47). The locally optimal choice is most frequently to join of the cost of resting is assumed to be higher than the value of joining. Such a barrier takes various organizations to cooperate to overcome them. The distributive property cannot be assumed to be a network effect alone for the absence of any positive feedback, nevertheless, the addition of instability per person such as through qualifiers as a network effect, switching costs or by distributing such instability to a collective as a whole (Lee I. & IGI Global 2017, p.76).

Role of Innovation in Business

Creativity and innovation have increasingly become vital skills for the process of achieving success in major developed economies such as Australia. More and more, Harvey Norman Company limited has felt the need for the creative problem and an increase in management problems necessitate creative thoughts that have enabled the company to identify suitable solutions. Innovation is typically enhanced by creativity, meaning that neither can be effective without the other. Creativity allows businesses to produce unique new ideas, which are implemented through innovation. The main driving force behind innovation is creativity as it enables individuals to view things from different perspectives including freedom of restrictions by unwritten and written rules (Lee I. & IGI Global 2017, p.76).
Innovation plays a critical role in creating a competitive advantage to businesses as evidenced by LEGO that becomes a global leader in the production of brick toys (Beyersdorfer D., Thomke S. & Rivkin J. 2012, p.98). The business consistently analyzed the marketplace around it and was able to detect changes in consumer preferences, advancement in technology as well as competitors such as Mattel, which was the world’s leading toymaker. The process of innovation forces companies to identify the most valuable method of implementing both innovative techniques as well as strategies. Active leadership whereby, employees can freely share their ideas or opinions enhances the process of change.
This is particularly true in today's ever-advancing worldwide knowledge economy where companies can develop best human resource strategies that are more likely to enable them access best capabilities and ideas in a highly competitive business environment. Tapping into best innovative ideas demonstrates real commercial advantage as opposed to limiting decision-making processes to management levels (Beyersdorfer D. et al. 2012, p.176). The main goal of initiating innovative strategies in any company is to attract the attention of consumers, who often view it something that is more likely to add value to a product or a company. Consequently, any fresh innovative and unique concepts typically act as catalysts towards business success as demonstrated by Harvey Norman Company Limited. Innovation enables businesses to stay ahead in a highly competitive marketing environment as evidenced by LEGO, which was listed among the most successful global toy companies 1992 (Beyersdorfer D. et al. 2012, p.178).

Key Protagonists

The key protagonist or decision-maker at Harvey Norman is Gerry Harvey, who is the chairman and also the co-founder of the company (Hannelly G. 2010, p.76). Additionally, there are about eleven (11) board members within Harvey Norman's organization, who are present at every meeting to make critical decisions regarding business growth development as well as issues that the organization faces depending on the current business scenario. Harvey uses financial information in the processes involving decision-making. In any business environment, business accounting functions involve measuring and communicating existing economic data and information that has been evaluated (Hannelly G. 2010, p.98). This communication plays a critical role in the development and implementation of strategic and vital decisions by the organizational management's prospects. As a standard business language, financial data and information provide the control of Harvey Norman Company with an overall idea regarding the performance of the business based on operational, functional and financial activities (Hannelly G. 2010, p.69).
In the context of an international marketplace, Harvey Norman's business accounting's brand has already been established in more than 230 stores in various countries such as Slovenia, Malaysia, New Zealand, Ireland as well as Singapore (Hannelly G. 2010, p.39). Depending on the statistical evaluation, all launched online stores by the company usually are independently operated by franchisees. For instance, in 2013, the company was able to provide impacts in relations to technology that made it easier for consumers to compare different products and thereby, make quick decisions of making purchases from several online stores established by Harvey Norman Company Limited.

Decisions to be made and their ensuing Challenges

Critical decisions regarding the company's brand recognition are of high importance coupled with customer segmentation. These are some of the most viable areas that are more likely to address the issue of tough competition. During the decision-making process, the company experienced challenges such as the Federal Budget, which is a challenging to the retail business environment (Hannelly G. 2010, p.99). Despite such challenges, Harvey Norman Company has continued to develop its own Omni Channel Strategy coupled with reasonable improvement to consumer sentiment that often fuels successive quarterly growth in franchisee operating in Australian business environment such as sales.

Reasons why Decisions are Important

Harvey Norman Company Limited made critical decisions of operating or functioning under a franchised system while still delivering offerings exceptional offerings to customers. Other critical decisions involve widening product range, embracing advancement in technology as well as creating strategies that enable the company to be a market leader has contributed towards business success significantly (Hannelly G. 2010, p.87). Also, while it was seen as a risky move, Harvey Norman decided against granting franchises to various operators of independent businesses under brands such as Domayne, Harvey Norman including Joyce Mayne. All these franchises have the responsibility of engaging in core business practices such as selling products to varying categories such as small electrical goods, appliances, bedding, flooring, computerized communication, carpets and furniture (Hannelly G. 2010, p 76). As a multifaceted culture, it becomes difficult to describe Harvey Norman's present culture accurately, mainly as a result franchise system's orientation. However, it is worth to note as part of the company's social responsibility; it spends a particular proportion of the franchise earnings including revenues in the local communities.

Harvey Norman’s Competitors

Based on financial information report of 2013, it was estimated that Australia's retail market was more competitive than ever before such as the entrance of The Good Guys Stores. Therefore competitive advantage is amongst the most critical element to be discussed with the aim of addressing the issue of increase in competition as a result of an increase in new market entrants as well as similar businesses targeting the same market (Hannelly G. 2010, 128). Therefore, the company is forced to develop viable strategic and appropriate decisions that are more likely to spur considerable growth and development in a highly competitive environment. In this case, it is worth to note that business accounting information is a highly communicative tool that makes the company realize that it is facing fierce competition in the business environment (Hannelly G. 2010, p. 98).

Action Plan

Harvey Norman's current property portfolio offers the company an efficient support system for the company's franchising and retail operations, differentiating the company from other competitors thereby offering unrivalled financial stability. These unique qualities have enabled the company double its net assets in the last few years. Currently, conservative gearing levels will possibly position Harvey Norman strategically and thus, will take advantage of growth opportunities.
Also, the management of Harvey Norman needs to rely on west group Accounts as well as Investment Advisers who are financial experts in critically investigating business reports, issues as well as economic evaluations coupled with ratio analysis of the company. This way, they can make accurate recommendations required to make critical decisions such as investment decisions in the company as communicated by the present financial scenario, business accounting as well as the company's positioning in a highly competitive marketing environment.


Baldwin E. & Yoffie D. (2015). Apple Inc. in 2015. Harvard Business School.
Beyersdorfer D., Thomke S. & Rivkin J. 2012. LEGO. Harvard Business School. 9-613-004.
Hannelly, G. 2010. Harvey Norman: HSC Business Studies case study. Seven Hills, NSW: Five Senses Education Pty Ltd.
Lee, I., & IGI Global. 2017. The internet of things in the modern business environment.
Manu, A. 2010. Disruptive business: desire, innovation and the re-design of business. Farnham: Gower.

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