The success of a company relies heavily on how well an organisation capitalises on its strengths, addresses its weaknesses, maximises its opportunities, and minimise their threats. The purpose of this report is to analyse the external opportunities and threats, and the internal strengths and weaknesses of Clive Peeters and how changes in strategies and processes could be used to salvage the company from voluntary administration. Firstly, this report will briefly discuss Clive Peeters' structure, strategy, the industry, and macro-environment. Secondly, the current issues and challenges, namely market share and internal fraud, will be analysed. Thirdly, this report will examine theories and concepts such as Porter's competitive forces and strategies, theories on innovation and change, sharing information, and internal control strategies. Although Clive Peeters are now in voluntary receivership, the focus of this report will only discuss the decline in market share and internal fraud committed. Subsequently, it will be argued that Clive Peeters will need to adopt a differentiation strategy to combat declining market share, and wide-spread sharing of information to diminish chances of internal fraud being committed in the future.
Overview of the Organisation
Clive Peeters is an electrical appliances retailer, with stores located in Victoria, Queensland and Western Australia. It chiefly operates from large stand-alone retailing sites and sells a vast range of electrical appliances. Clive Peeters has operated in Melbourne since 1993 and in Brisbane since 2001. It listed on the ASX on 22 September 2005. In connection with its listing, Clive Peeters acquired the Rick Hart Group based in Western Australia and the Micahel King Store based in Melbourne, Victoria. The company has established a strong brand image in Victoria, Queensland and Western Australia. Clive Peeters has strong buying power, through its membership of NARTA, the largest independent electrical buying group in Australia. The company's major competitors fall into three distinct segments: premium, medium and budget operators. Retailers with the largest market share include The Good Guys, Harvey Norman and Retravision.
Clive Peeters has a functional organisational structure with six board of directors, with Brian Pollock as chairman, and Greg Smith as managing director. Clive Peeters trades in a saturated market, with many direct competitors employing a very broad and old strategy with no differentiation or focus. The company adopts a low-cost strategy while offering premium products and striving to achieve retail giant status. This has been quite challenging for Clive Peeters as unstable economic conditions during 2008 and 2009 have significantly decreased sales and overall floor traffic in stores nationwide; thus reducing their market share significantly. In addition to their ailing market share, a major misappropriation of funds occurred in 2009 by an employee to the amount of $20 million. With a combination of these factors, Clive Peeters are now in voluntary receivership.
Issues and Challenges
Market Share
The challenges in terms of decreased market share for Clive Peeters are related to the external competitive forces within the electrical goods retail industry, and strategies employed by the company. Market share is defined as the proportion of the market the firm is able to capture relative to competitors (Daft, 2010, p. 76). Clive Peeters currently competes in a saturated and mature market with nine other major electrical goods retailers including cost leaders such as The Good Guys and JB Hi Fi, as well as contending with retail giant, Harvey Norman, boasting an 18.39 percent in market share (Aegis Equities Research Pty Ltd, 2010). Additionally, Clive Peeters also competes with online retailers such as EBay and Amazon.com giving power to buyers who are able to purchase goods at a, more than often, reduced price. Consequently, this has led to a decrease in market share as Clive Peeters struggle to be more profitable and less vulnerable. In order for Clive Peeters to regain market share, Porter (1996; 2008) suggests that an understanding of the forces in the industry environment will lead to better formulation of strategies in order to achieve organisational goals.
Internal Fraud
Another issue that some corporations face today are fraudulent activities originating from within the company. Davia, Coggins, Wideman, & Kastantin (2000, p. 40) defines fraud as "always involving one or more persons who, with intent, act secretly to deprive another of something of value, for their own enrichment". Also, Bologna & Lindquist (1995, p. 18) state that "internal and external fraud is distinguished if the fraud committed is based on whether the perpetrator is internal or external to the victim company". Additionally, Jans, Lybaert, & Vanhoof (2009, p. 3) classify internal fraud as either transaction versus statement fraud; the former intending to embezzle or steal organisational assets. Indeed, this was the major cause for the collapse of Clive Peeters, which the payroll manager siphoned $20 million in company funds to purchase more than 40 properties in 18 months. Although Clive Peeters employed external auditors, detection of the fraudulent activities was not discovered until an accountant uncovered an initial $2 million discrepancy. Bologna & Lindquist (1995, p. 183) argue that prevention should take precedence over detection, and fraud is only detected by means of tip-offs or by accident. Further, Jans, Lybaert, & Vanhoof (2009, p. 7) suggest that "the more control measures a company puts in place, the more incidents of fraud will be uncovered".
Theories relating to market share
For an organisation to achieve its purpose and goals within its competitive environment, specific strategy and design options need to be employed in order to achieve the organisation's strategic intent. A strategy is a detailed and systematic plan to achieve organisational goals by how the competitive environment is interacted with (Daft, 2010). Porter (1996) suggests the best way to devise a strategy is to consider whether the organisation will execute different activities than its competitors or perform comparable activities more efficiently that its competitors do. Porter (1980) also suggests, a competitive edge can be achieved if a company adopts either a differentiation, low-cost leadership, or focus strategy. Although Porter's (1980; 1996; 2008) framework is considered an effective and popular model for formulating strategy, Miles and Snow (1978) suggest managers seek to formulate strategies that will be harmonious with the external environment. The authors suggest that organisations strive for a synchronisation among internal organisation characteristics, strategy, and the external environment and not solely on the analysis of external opportunities and threats, but also an analysis of the company's strengths and weaknesses and how to capitalise or improve internal operations.
Furthermore, organisations must continually adapt to changes taking place in the external environment to enable innovation - not only to prosper, but strive in a world of unexpected change and progressively more unyielding competition. Kotter (1996) suggests a number of environmental forces drive this need for major organisational change, such as international economic integration and the maturing of domestic markets that influence every business generating more threats as well as more opportunities. McCann (1991) also argues that changes in product and services are usually used to increase market share or to develop new markets, customers, or clients. Additionally, market control can also be utilised to evaluate the output and productivity of an organisation or its major departments and divisions when price competition is used (Williamson, 1975).
Theories relating to internal fraud
Conclusion
Recommendations
