Management Performance Analysis: Dillard’s Inc. – Chapter 2
Chapter 2 Situation Analysis - Dillard’s Inc.
Each and every company that exists must have a situation; the prevailing terms and conditions under which a company operates in. Dillard’s Inc. is not an exception; it operates, which any given context (Harrison& John, 2010). Although the term situation is not properly understood by several investors, it is worth acknowledging it since it houses a firm and its operations; at times its favorable to the business or not. Ideally, a situational analysis is primarily based on the general position or rather the context under which a given firm is undertaking its activities in at any given time (Harrison& John, 2010).
A situation is basically the general state of activities or circumstances that occur within a particular time in the course of a company’s product life (Hitt, Ireland, & Hoskisson, 2013). Actually, a situation is simply what businesses do in order to figure things that can be done at present or in the future to make the business more productive. A situational analysis simply defines and interprets the states of both the internal and the external environment of any given firm (Hitt, Ireland, & Hoskisson, 2013). This chapter will explore the various aspects of an organization’s internal and external environment and what role they play in the prosperity of an organization. More often than not, a situation analysis will give insights into the roles that a business environment plays in the business itself (Fairholm, 2009).
A situation analysis is bale of determining firm’s problems and the opportunities it has if any. Its importance is immense for any organization; it can be used to identify potential barriers and the drivers that a firm can employ to reach the desired destination (Kantabutra & Avery, 2010). In so doing, a situation analysis is a critical tool for measuring performance, speeding up performance and determining the best solutions possible; these are the primary objectives of any particular business and to an inclusion Dillard’s Inc. the basic function of a situation analysis is to examine the business context and propose the best possible solution a business can employ to prosper based on what is discovered to be a hindrance to performance (Harrison& John, 2010).
Most importantly, a situation analysis gives a blueprint by providing the context and required knowledge for planning by vividly describing a company’s competitiveness, the operational and financial situation and the general state of both the internal and external affairs of the firm (Hitt, Ireland, & Hoskisson, 2013). All these put together not only gives a company an insight into the operating environment, but gives the company an overview of its operating context. A situation analysis encompasses several disciplines (Harrison& John, 2010).
External Analysis –General Environment
The external environment of a business is sometimes referred to as a business’ general environment, it is an important aspect of a business and should not be ignored by any firm even once (Hitt, Ireland, & Hoskisson, 2013). A business that does not conform to its external environment is a business that is doomed to failure. A general environment of a business is those forces that are external in nature but have a bigger potential of affecting the business in terms of its operations and customer base. More often than not, a business can do a very little control its external environment; it can only conform or operates in such a way that the external forces exerted by the external environment can have very minimal or no impact to the business; that is all about conformity and innovativeness (Fairholm, 2009).
Several researchers who have worked on the subject of the business environment have constantly advised business to watch the external environment more keenly and with notice (Harrison& John, 2010). The external environment of a business is like its playground, it harbors all the activities that the business undertakes, if not keenly watched, it can turmoil. However, there are diverse opinions on the subject but at least every researcher urges business owners to watch the external environment. The general environment is quite indeterminable; no one can correctly focus what can happen in the near future leave alone several years to come. Other researchers have argued that the external environment is a ground for innovativeness; customers are part of the external environment. Over the recent years, customers have become too demanding; they need goods and services that effectively meet their expectations, tastes and preferences (Kantabutra & Avery, 2010).
All the same, all the researchers have acknowledged the role that is played by the external environment in a business. Contrary to the opinion that the general environment is not part of a business, but only hosts it, it is a quite important feature in a business and its operations, if ignored; the business can fail terribly (Kantabutra & Avery, 2010). It therefore calls for a continuous and periodical analysis of the external environment for any business to be sustainable. Take for example, political or legal situation; it plays a critical role in an organization’s operation. The political situation of a country, say the policies and guidelines a government sets for firms have a potential of an affecting any firm's operation, either positively or negatively (Hitt, Ireland, & Hoskisson, 2013).
Government’s taxation has the capability of either paralyzing an organization’s operation, thereby greatly limiting its ability to offer services thus leading to eventual failure and collapse. But this is not always the case; governments are continuously struggling to give and enabling environment to support its entrepreneurs and lift the economic status of their subjects. It’s very practical that Dillard’s Inc. was compliant with the laws and the legal processes of the land, without it, it couldn’t have rose to its current status (Kantabutra & Avery, 2010).
Most significantly, the socio-cultural situation has the capability of affecting an organization’s activities. Actually, it’s is said that its cultures that dictates an organization’s output. A business cannot develop if it doesn’t match the tastes and preferences of the locals; the locals are the immediate customers, if they can’t consume what the business is producing, then such a business is doomed to failure. Just the same way socio-cultural and political situation is important to the business, the prevailing economic situation in the country of location is equally important (Hitt, Ireland, & Hoskisson, 2013).
The economic environment is a strong external force that impacts greatly on any single business entity; it is undeniable that during the global economic crisis, several major organizations across the world suffered greatly. As a result of the crisis, several firms closed. Economic situation dictates people’s purchasing power and to an extension dictates firm’s sustainability (Kantabutra & Avery, 2010).
Businesses depend on technology; it therefore insinuates that a business’ level of sustainability is determined by its level of innovativeness; innovativeness in its very basic form is an outright function of technology (Fairholm, 2009). Since the 19th century, firms have been struggling to meet the constantly changing and more dynamic technological revolution across the United States of America. In the cosmopolitan world, it has been proved beyond reasonable doubt that production immensely depend on the level of technology and innovation (Kantabutra & Avery, 2010). The current state of American markets demands producers to produce goods that conform to the current technology. However, it is not cost effective to produce goods using the old techniques; it’s quite expensive, consumes a lot of time and does not meet the quality standards. For competitiveness, firms need to adopt the latest technology just as done by Dillard’s Inc. (Fairholm, 2009).
Other external forces that affect businesses are global and demographic situation. Global factors can be economical or even warfare just like the world war one and two (Darbi, 2012). Demographic situation is nothing but the people, their composition, cultures, ages, sexes and distribution. Demography affects an organization as it offers customers, raw materials, and work force; basically, business cannot be sustainable without these. All these factors constituting the external or general environment should be closely monitored for an organization’s prosperity (Darbi, 2012).
Industry/Task Environment
The task environment is an external environment which has a direct impact on the business (Hitt, Ireland, & Hoskisson, 2013). Task environment consists of specific dimensions that form part of the firm’s surrounding that have a higher potential of negatively or positively influencing the organization (Darbi, 2012). The task environment is comprised of five major elements, the competitors, regulators, customers, suppliers and the business strategic partners. Since all these five dimensions are related to the organizations, their effects are thought to be very direct and almost immediate (Darbi, 2012).
Internal Analysis
The internal environment of an organization is quite specific and only relate to the distinct features of the organization (Fairholm, 2009). The internal environment of a business constitutes the business owners, employees, physical environment and the board of directors. Business owners are the people who have invested in the business; they have rights to claim property from the business itself (Darbi, 2012). The board of directors is elected by the firm’s stakeholders and has the role of overseeing the work of the top management team. The internal environment of Dillard’s Inc. is quite deterministic, serene and gives room for good performance (Fairholm, 2009).
Strategic Analysis
Dillard’s Inc. has several distinct characteristics that make it outstanding in the market. In fact, it’s it uniqueness that makes it outstanding and most reputable (Dillard's, 2015). First, the company has several brands which give it a competitive advantage over the others. Its brands include Antonio Melani, Gianni Bini, Roundtree and York, Daniel Cremieux and GB. The company is said to have several branches across the United States of America, it has a total of 28 branches in all 28 States of America, which gives it an upper hand and a bigger market niche (Kantabutra & Avery, 2010). SWOT analysis of Dillard’s Inc. reveals that the company is still at a higher stake and effectively beat its close competitors. SWOT analysis is basically an analysis of strengths, weaknesses, opportunities and strengths of a given company (Fairholm, 2009).
The strength of Dillard’s is that it has 28 branches in the 28 States of America, the weakness is that it’s an old company which might be affected by old technology, lack of innovation and the emergence of major competitors in the recent days, the opportunity is that it can open more branches in the remaining States, finally the threat it faces is that if it fails to restructure and be innovative enough, it will finally face stiff competition (Dillard's, 2015). The company is characterized by a culture of hard work, responsiveness and innovation. The firm is organized into several functional units to help ease its work. On management, the firm through the board of directors only selects the best and most experienced presidents to lead the organization (Fairholm, 2009).
Performance Appraisal
An analysis of the firm’s finances reveal that the company is placed at a good financial position and is better placed than its closest competitors. The total assets were estimated at $ 4,380,186 as at October 2015 and at $ 4,170,071 as at January 2015. The figures reveal that the company has enormous assets and completing it out would be much difficult for emerging firms (Dillard's, 2015). The total sales of the company rose by 1% in the year 2015, during the fiscal year, a total sales value of $ 6.78 billion was realized. During the fiscal year, almost all sales rose; that was a positive remark and a show of growth. Consequently, the high sales noted in the year 2015 led to an increase of Dillard’s net income by an index of 3% resulting to a total of $ 331.85 million. It also reported an increase in retailer’s cash levels to 22%, approximately $ 611.6 million (Dillard’s, 2015).
Summary
This chapter has exclusively explored the various situation an organization can exist in. nonetheless, this analysis was able to prove that indeed situation is a major aspect of business. A situation is basically the general state of activities or circumstances that occur within a particular time in the course of a company’s productive life (Hitt, Ireland, & Hoskisson, 2013). Both the general and task environment are external forces that people have thought to be not very important to a business, however, it is very crucial to the activities of a business and should be closely monitored. However, the internal environment is much direct and should be thoroughly coordinated. All the three situations, if thoroughly monitored, will give a business a serene environment and spur its economic growth (Dillard’s, 2015).
Companies that have carefully analyzed the situation under which they operate are likely to grow at a faster rate than that which is still struggling with its environment (Dillard’s, 2015). After all, it’s all about conformity, however much the environment might be posing a challenge to the operations of the organization, the organization should do as much to conform. Dillard’s Inc. is a practical example of an organization that understand its environment, it can be attributed to its success over the years. Since it started operating in 1938, at no time has it had issues with the environment, be it internal, external or task (Dillard’s, 2015).
References
Darbi, W. (2012). Of Mission and Vision Statements and Their Potential Impact on Employee Behavior and Attitudes: The Case of A Public But Profit-Oriented Tertiary Institution. International Journal of Business and Social Science, 3(1), 95-109. Retrieved from http://www.ijbssnet.com/journals/Vol_3_No_14_Special_Issue_July_2012/11.pdf
Dillard’s, Inc. (DDS) Sets New 52-Week Low at $ 66.69. The Legacy (Fri, Dec 18)
Dillard’s, Inc. (DDS) To Issue Quarterly Dividend of $ 0.07 on February 1st. TrickerReport.com (Mon, Dec 28)
Dillard's, Inc., (2015). Dillards -Dillard's, Inc. - Investor Overview. Investor.shareholder.com. Retrieved from http://investor.shareholder.com/dillards/
Fairholm, M. (2009). Leadership and Organizational Strategy. The Innovation Journal: The Public Sector Innovation Journal, 14(1). Retrieved from http://www.innovation.cc/scholarly-style/fairholm3.pdf
Harrison, J., & John, C. (2010). Foundations in strategic management. Mason, Ohio: South Western Cengage Learning.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: Competitiveness & globalization. Mason, OH: South-Western Cengage Learning.
Kantabutra, S., & Avery, G. (2010). The power of vision: statements that resonate. Journal of Business Strategy, 31(1), 37-45. Retrieved from http://search.proquest.com.hodges.idm.oclc.org/docview/202677477?OpenUrlRefId=info:xri/sid:wcdiscovery&accountid=40795
