Internal analysis of Hudson’s Bay Company
Introduction
The internal analysis of a firm enables the understanding of the internal factors that has contributed to the position that the firm is currently in. It involves the analysis of the resources of the firm and the attributes such as inbound logistics, operations, marketing, human resources management, development of technology that adds value to the organisation. The core competency analysis enables the understanding of the expertise, skills and abilities it has to maintain a competitive position in the industry. Internal analysis also enables the finding of the key success factors that are contributing to the competitive advantage of the firm. In this report the internal analysis of Hudson Bay Company (HBC) is the retail giant of Canada .
Tangible Resources
Staff and location - Hudson Bay has over 66,000 employees and 460 stores. It has its operations in Canada, Germany, Belgium and the United States.
Experience and Qualification - the staff of Hudson Bay needs to have customer service sales experience. The experience and qualification requirement is different for various job roles. A sales associate at Hudson Bay needs to have excellent communication skills and 2-5 years of retail experience.
Turnover rate - Hudson Bay experienced high turnover rate in the past year.
Training and education - the staff of Hudson Bay are trained to give excellent customer services and they follow a step by step training process to enhance the building of the required skills and qualifications with job promotions.
Financial
Data gathered and calculated from Wall Street Journal, (2016)
Liquidity - Can be stated as the availability of liquid assets in a company. The impact of having liquid assets and cash for a company is, it can pay debts and be in a solvent position having spare liquidity.
An increasing current ratio for the financial year 2013 to 2015 is a positive indicator and shows that the company over the years has secured more current assets than its current liabilities. It shows that the company is solvent. The value is 1.04 in the year 2013 it increased to 1.15 in 2014 and 1.32 in 2015 which is a positive trend showing that the company is liquid.
In the year 2014 the cash ratio was high which suggests that the company had more liquid assets in the year 2014 than the year 2015. As this is the ratio of liquid assets to the current liabilities of a company. This means in the year 2015, the liquidity of the company decreased and it was in a more efficient position in the year 2014 to pay its short term debt.
Profitability - Being in a profitable position signifies that the firm can earn profits. This means it has positive returns left after paying all its expenses which can be used for revenue generation. Being in a profitable position implies that the firm can meet the production requirement and conduct its business operations feasibly.
Increasing gross margin is a positive parameter and shows the firm’s developing healthily. A higher percentage of gross margins reveal that the company has more capacity to retain on every dollar of sales in order to meet their costs and obligations. Having a gross value of 39% in the year 2013 and 41.39% on the year 2014 indicates increasing gross value and more retention on each dollar sale. But in the year 2015 the gross value slightly decreases to 40%.
Operating profit margin indicates the proportion of the revenue of the firm that is left after paying the variable production costs such as raw materials, labour. The operating profit in the year 2013 was 2.83% which was reduced in the year 2014 to 0.1% indicating less revenue left after paying variable cost of production. This value increased significantly in the year 2015 to a value of 5.79% indicating profitability, thus the company managed to attain operating efficiency in the year 2015.
Net profit margin gives information about the pricing policies, costing structure and efficiency of production of HBC. It also indicates how well HBC can control its cost and its efficiency. In the year 2013 the net profit margin was 0.68% but it decreased significantly to 3.39% depicting the organisation not being able to convert its revenue into profits, but in the year 2015 the company gained efficiency by showing a net profit margin of 2.85%.
Return on assets indicates the profitability of the company with respect to its total asset. In the year 2013, the ROA value was 1.96% which heavily reduced to -7.66% in the year 2014 indicating a reduction in the efficiency of the management to use their assets for generating profits, but the value increased to 8.32% in the year 2015 showing that the firm achieved profitability with respect to its total assets.
The three year financial analysis reveals that although the year 2014 was not very profitable for the organisation, it achieved financial growth and stability in the year 2015.
Physical
The stores of Hudson Bay were first established in Fort Langley in the year 1857. In 1913 the grand “original six” department store was opened in Calgary.
Real Estate
Other physical resources are Hudson Bay Company has acquired GALERIA Holding in which it has acquired 41 GALERIA Properties for a €2.6 billion business deal (Business Wire, 2015).
Production Facility
Hudson’s Bay Oil and Gas Company is its diversified business opened with Mar land Oil Company in the year 1926 and has oil and gas production facilities (Hudson's Bay Company, 2016).
Technological
HBC uses internet based business solutions in order to be efficient in focusing on productivity and growth of revenue for which it has outsourced Cisco’s Internet Business Solutions Group. HBC.net is the internal employee portal of HBC which has directories, e-Learning, Store Management Optimization and all applications regarding management of expenses and travel.
Intangible Resources
Human Resources
The Company believes in hiring excellent human resources to attain market competencies along with the tangible assets it has.
Hudson Bay follows a phased employee transition process in order to help them develop professionally and remain motivated. The company has policies ensuring work life balance to ensure job satisfaction and employee motivation. The work atmosphere and culture is excellent (Indded , 2016).
Innovation and creativity
New international retail brand and renovated stores
In response to the heavy competition from other Canadian retail stores, Hudson Bay has adopted innovation and creativity. The Vancouver store has been renovated using $40 million with a new exterior look, one amongst the biggest TOPSHOP and TOPMAN stores, a new men’s store and many new international brands.
Modified Logo
Figure 1 shows the new modified logo of Hudson Bay. The visual identity of the company was modified and it retained its original name (INFANTRY, 2013). This was an innovative strategy that the company is still grounded in its rich history (Chan, 2013).
Figure 1
Reputation
The company with the leadership of Richard Baker is making smart strategic moves such as nationwide renovation of the stores and making the departmental stores livelier in order to build a market reputation of a unique retailer (Canadian Press, 2013). It is selling more international brands to have a reputation of House of Brands.
Value Chain Analysis
Primary
Inbound Logistics
The suppliers from which Hudson Bay procures the raw materials and the inbound logistics needs to take special care in making products that are ready to sell and have proper labels, bar codes and price tags before they are shipped to the company.
In order to make the inbound logistics delivery better and in control it has outsourced the process to TNT Logistics a third party logistics services in Jacksonville. TNT looks in to the actual home delivery of the products at Hudson Bay and their delivery management system. This system has added efficiency in exactly stating a lead time to the customers which the company is able to meet over 99% of the instances (Harrington, 2006).
Operations
In terms of cash registers and scanners, HBC has adopted the new electronic register which has credit card readers as well as barcode scanners (HBC, 2016) in order to make the operations management more effective and redesign its business operations. Also it has introduced multinational brands in their store to gain competitive operations advantage.
Outbound Logistics
Hudson Bay uses Auto Locate software to ensure that the outbound logistics is efficient. The associate maintains as well as process the daily order requirement and ensures that the order reaches the customers on time complying with the company standards. The customers can also use online shopping and the Auto Locate increases efficiency in the online outbound logistics delivery to the customers.
Marketing and Sales
Hudson Bay has taken some smart marketing and sales moves, after the acquisition of Saks Fifth Avenue, the sales of the company in the year 2014 doubled to a value of $1.913 billion from the annual sales of $984 million (CANADIAN PRESS, 2014). It uses innovative marketing tactics to gain market efficiency such as the test initiated by Hudson Bay to study the purchase pattern of the Canadian people in order to better orient their marketing activities. The firm markets itself using integrated marketing strategy and has press releases to inform the shareholders and the stakeholders about the business.
Service
The company strives to provide excellent customer services and has a Customer Service Department to process all customer inquiries and solution to frequently asked questions. HBC gives their loyal customers rewards in the form of redeemable loyalty points, petro-points and redeemable air miles (HBC, 2016). Figure 2 shows customer feedback surveys at Hudson Bay. It encourages the customers to participate in customer feedback surveys to make their services more efficient and also assess how satisfied are the customers with their current level of services. It also shows us they have using an efficient logistics system and the company can response on time to the needs of the customers.
Figure 2
Secondary
Procurement
In order to procure and deliver the merchandise on time Hudson Bay has an efficient customer response strategy. It has a strategic alliance with the manufacturers of the products and brands it sells. This strategic alliance makes it mandatory for the manufacturer to install computerised information systems such as EDI in order to make their procurement of raw materials easy and efficient.
These procurement strategies enable Hudson Bay to lessen their lead times and make the company in a position to respond to market requirements on time and also advise the exact shipment destination to its suppliers. So that it can meet the consumer demands effectively (Choi, 2014).
Technology Development
Hudson Bay is engaged in effective Research and Development to make the processes and the product better.
The new project of HBC is powered by a technological start-up of Boston Swirl. The project is about an enterprise mobile messaging system that has mobile software development kid and beacon hardware. This system gives notification in the mobile app in the store and also has a system for content management that can be used the marketer to communicate with the customers (Fraser, 2014). Also it has partnered with a couponing app Snip Snap and along with Swirl’s Software Development Kit HDC can easily integrate their notifications to these couponing apps leading to marketing effectiveness of the company.
Human Resource Management
The company has a Human Resource Compensation Committee that is involved in the annual reviewing and evaluation of performance objectives and goals.
The company believes in internal promotions for the building of its top management team. However, there is high staff turnover suggesting implementation of a strong employee retention policy (Anonymous, 2009). Hudson Bay gives job flexibility to the employees wherein the employees can shift their shifts after notifying the managers. However, many of the employees of the company reviews that there is a need to focus more on training and development (Indded , 2016). The picture below states the training and promotion phases that Hudson Bay follows for all its employees. As retail industry requires service orientation and on the job training, a new recruit at Hudson Bay is in probation for three months where he/she is placed in a banner store. And trained for transition from academic to professional level then he is placed at a different banner store for a period of five months to develop leadership traits and strategic decision making. After this period the recruit has to handle store operations for 4 months to solidly leadership and other core competencies. After that he is promoted to managerial roles such as store managers etc.
Figure 3: Hudson’s Bay - Phases of Human Resource Development
General Administration
Hudson Bay has efficient strategic management systems for giving training and information to external vendors as well as internal buyers of the organisation. It believes in ethical sourcing and has a Social Compliance Program for the benefit of its stakeholders and the shareholders (Choi, 2014).
Core Competency Analysis
Organizational Capabilities
Specific knowledge, skills and abilities
In the year 1998 HBC led the foundation of its ethical sourcing program along with their Code of Vendor Program. The program formalised in the year 2001 gives the organisation the ability to monitor and provide remedies to ensure that the overall goals of the organisation are met and the factory conditions are improved. This system also enables sharing of industry knowledge and it educated the consumers.
In order to build specific skills and abilities, HBC gives information and training to all their suppliers. The organisation organises vendor training on a regular basis on topics such as Program and Code. The organisation in order to build specific knowledge and abilities gives advanced training sessions to internal stakeholders on topics such as the local requirements of the law, common issues of auditing and integrating process for improvement.
The organisation develops the human resources over time by following certain phases and imparting them the necessary skills and knowledge at each phase making them equipped with skills such as store operations and merchandising.
VRIO analysis
Key Success Factors (KSFs)
Strategic Focus
The firm has a strong strategic focus. This is evident from the fact that the firm is striving to make its brand name stronger and competitive by adopting various strategies such as re-branding, using a new logo and retaining the old name to benefit from the firm’s old historic association with Canada, opening multinational brand and store and strategic alliances and partnerships with Saks Fifth Avenue and 41 GALERIA Properties for a €2.6 billion business deal (Business Wire, 2015). This acquisition is a strong strategic move of the firm that has increased its sales and revenue.
Physical resources
The firm have vast physical resources. It owes and operated retail outlets all over Canada, Belgium, US and Germany. It also owns Galeria Kaufhof, Gilt, Hudson’s Bay, Lord & Taylor as well as Saks Fifth Avenue. One of the biggest costs that an organisation requires to incur is to provide for its facilities as well as equipment’s. Hudson Bay has some really nice facilities leading to the firm’s success.
People management and development
The culture of the organisation is people centric. The workforce at Hudson Bay are trained to give quality retail services to the customers and take risks that are smart and leads to innovation. People development is a process at the organisation that takes place in various phases of training and skill development. Having strong, oriented and well trained as well as informed workforce is one of the key success factors of the organisation as it leads to satisfied customers.
Conclusion
The internal analysis of Hudson Bay Company reveals that the company had adequate resources such as financial, physical and technological in order to ensure steady and profitable operations. Having a centuries old reputation surely helps the organisation to build a brand image of trust.
The value chain analysis reveals that the firm has the required primary and secondary resources. With the outsourcing of inbound logistics to TNT it has ensured that the demands of the customers are met on time 99% of the times adding value to the firm’s market health. They also have an environment of technology development and adaptation.
The core competency analysis suggests that the organisation encourages skill and knowledge development to ensure a positive growth environment. The VRIO analysis reveals that the attributes use of creativity and innovation and marketing has helped the firm to achieve competitive parity. It has an efficient distribution network giving the firm sustained advantage.
Having the required physical resources, strategic focus and the people and development contribute to the firm’s success.
References
Anonymous. (2009). Success through succession at Hudson's Bay Company: Talent‐manage-ment system proves its worth in a takeover. Human Resource Management Internatio-nal Digest, 6-8.
Business Wire. (2015, June 02). Hudson’s Bay Company Completes Acquisition of G-ALERIA Holding. Business Wire A Berkshire Hathaway Company. Retrieved from http://www.businesswire.com/news/home/20150930005898/en/Hudson%E2%80%99s-Bay-Company-Completes-Acquisition-GALERIA-Holding
Canadian Press. (2013, April 11). HUDSON’S BAY AIMS TO BECOME ‘HOUSE OF BRANDS’ WITH NEW RENOVATIONS. Marketing Magazine. Retrieved fro-m http://www.marketingmag.ca/brands/hudsons-bay-aims-to-become-house-of-brands-with-new-renovations-76340
CANADIAN PRESS. (2014, December 09). HUDSON’S BAY COMPANY NEARLY DOUBLES ITS RETAIL SALES. Marketing Magazine. Retrieved from http://www.marketingmag.ca/brands/hudsons-bay-company-nearly-doubles-its-retail-sales-132484
Chan, K. (2013, March 09). Hudson's Bay makes big comeback, relevant to Canadia-n retail once again. Vancity Buzz. Retrieved from http://www.vancitybuzz.com/2013/03/the-hudsons-bay-company-launches-retail-re-brand/
Choi, T. M. (2014). Fashion Retail Supply Chain Manag-ement: A Systems Optimization Approach (p. 8). CRC Press.
CISCO SYSTEMS. (2004). HUDSON'S BAY COMPANY USES INTERNET BASED SOLUTIONS TO TARGET ITS MARKETPLACE-ONE CUSTOMER AT A TIME. CISCO SYSTEMS. Retrieved from http://www.cisco.com/c/dam/en_us/about/ac79/docs/wp/Hudson_CS_0416.pdf
Fraser, J. (2014, August 05). Hudson's Bay Partners with Swirl, Snip Snap on Beaco-n Roll Out. Marketing Magazine. Retrieved from http://www.marketingmag.ca/tech/hudsons-bay-rolls-out-mobile-beacons-in-5-canadian-stores-121357
Harrington, L. (2006, August). The Consumer Products Supply Chain: Shopping for Solutio-ns. Inbound Logistics. Retrieved from http://www.inboundlogistics.com/cms/article/the-consumer-products-supply-chain-shopping-for-solutions/
HBC. (2016). Executive Biographies. HBC. Retrieved from https://www2.hbc.com/hbc/investors/corporate/executive/biography.asp?bid=62
HBc. (2016). Our History: Transportation & Technology: From Registers to Scannn-ers. HBC. Retrieved from http://www.hbcheritage.ca/hbcheritage/history/transportation/registers/
Hudson's Bay Company. (2016). Other Business: Diversification: Oil & Gas. Retriev-ed from http://www.hbcheritage.ca/hbcheritage/history/business/other/diversification-oil-gas
Indded . (2016). Hudson's Bay Company Employee Review in Canada. Indded one se-arch all jobs. Retrieved from http://ca.indeed.com/cmp/Hudson's-Bay-Company/reviews
INFANTRY, A. (2013, March 6). The Hudson's Bay Company unviels new logo for Cananda's oldest department store. The Star. Retrieved from https://www.thestar.com/business/2013/03/06/the_hudsons_bay_company_unveils_new_logo_for_canadas_oldest_department_store.html
Innovation, Science and Economic Development Canada. (2016). Corporate Social R-esponsibilty. Hudson's Bay Co. (HBC) A Case Study in Ethical Sourcing. Ret-rieved from https://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/rs00168.html
