David Jones Case
DAVID JONES CASE STUDY 5
Problem Facing David Jones
Problem Facing David Jones
David Jones had experienced growth in profits and revenue over the years. However, in the recent times, the company has suffered from extreme losses of revenue and sales (David Jones, 2012). The major issue facing David Jones is the changing retail environment. The retail environment has changed dramatically since the world has entered a generation that is dominated by the use of smartphones. Today, customers prefer to do shopping online using their smartphone. This has affected the operations of the company. In order for the company to overcome this problem, it needs to do some changes. Nevertheless, organisational changes can lead to resistance.
Causes of the problem
The reputation of David Jones also has suffered a lot due to management hitches as well as unhealthy corporate culture. This was evident when the former CEO Mark McInnes was accused of sexual harassment. Although the case was over after an out-of-court settlement, the company suffered damage of its reputation. In addition, another cause of problems facing the company is poor management skills (David Jones, 2012). This is evident in its decision to eliminate its online store. This has alienated its key target audience, the New Economic Order, who enjoy doing shopping online and they make up 24 per cent of the entire Australian population. Also, David Jones in the past had a very strong customer service. This however has diminished over the years which have led to reduced amount of yearly profits (ABC News, 2012).
One external factor that causes the problem to David Jones is intense competition. The revenue of the departmental store has experienced a huge fall due to other retail shop fronts that are in competition with it (ABC News, 2012). In addition to the physical retail stores, David Jones faces competition from online retailers who ship their products to Australia. Competition in the retail sector is very intense with huge number of players.
Another factor that has led to challenges facing David Jones is economic and technological changes. The global financial crisis affected the global economy. However, due to the strength of the Australian economy, the country has not been affected much. This is due to strong mining sector among other reasons. However, technological advancement in the country has led to the growth of online shopping. Online shopping has given extra ability to the consumers to shop globally using their phones and in the comfort of their homes. This has affected the physical retail outlets such as David Jones. Having eliminated its online store, the company has suffered from online competitors (Michell, 2012).
Possible Resistance to Change
Many factors trigger the need for change in an organisation. Organisational change entails change of strategies, operations and structures for the purpose of boosting organisational effectiveness. In order to eliminate and manage the problems facing the company, David Jones has decided to undergo strategy and operation changes. These changes however can cause resistance.
The changes made by David Jones may lead to uncertainty of the unknown that can create fear and uncertainty among the employees (Michell, 2012). In addition, employee resistance can be due to a perceived threat to status quo within the organisation. Other sources of resistance are unconsciously recognised and may develop when an employee convinces himself that he is not part of a particular change. For example, even though the employee may support the change process of David Jones, they may be afraid of losing workplace relationships or may be nervous of failure involving the new responsibilities. Due to this, the employee may apply physical and mental resistance to the particular change. In this specific case, there might be no open opposition but just an ‘immunity to change’ (Kegan, and Lahey, 2009).
Resistance may occur on organisational level. Situations taking place in the organisation at a particular time of the change process may decrease the ability of the firm to transform (Kegan, and Lahey, 2009). For instance, if the managers do not create a positive attitude among the employees towards the change; the success of the company is limited. The change plan of David Jones requires the change of the entire structure of the company. However, due to unavoidable reasons such as lack of enough capital and manpower, it may prove to be difficult. This can be characterized as organisation structure resistance.
ABC News. (2012). David Jones forecasts 40cp profit drop, 2012. Accessed 8th August 2016, http://www.abc.net.au/news/2012-03-21/davin-jones-profits-slide/3903172
David Jones. (2012). David Jones 4Q12 Sales Announcement, ASX and Media Release, Accessed 8th August 2016, http://ww.davidjones.com.au/images/For-Investors/ASX-and-Media-Releases/2012/ASX-Reslease-4Q12-Sales-23Aug12
Kegan, R. & Lahey, L. (2009). Immunity to change : how to overcome it and unlock potential in yourself and your organization. Boston, Mass: Harvard Business Press.
S. Michell, (2012). Retail Rescue Plan for David Jones’, Financial Review, 2011, Accessed 8th August 2016 http://afr.com/p/retail_rescue_plan_for_david_jones_6mmF37Ah5Kmibr7w4idXpL