Strategic Position Review of Michael Hill Jewelers in New Zealand

Michael heap Jewellers (MHJ) is superstar of the well-nigh recognizable names in the impertinent Zealand sell jewelry industriousness. In 1979, Michael Hill opened his first store in Whangerei. Until then, jewelry stores had been prevail primarily by craftsmen jewellers. Michael Hill changed this with the philosophy to make jewellery get less intimidating and more accessible to the public. In assign for any social club to succeed, it has to take a look at the environment in which it operates. This is why an external environmental psychoanalysis is so great. This involves a regular process of s pilening, monitoring, forecasting, and assessing the external environment. Doing so leave illuminate any opportunities to be exploited or threats to minimize. The first step in the analysis is environmental s plunderning which is identifies any trends or changes which are occurring or lead tardily occurred in the environment. Once identified, the company can then strategise and react in order to exploit the phenomenon. Three useful tools in an environmental analysis are a PESTEL analysis, Porters Five Forces, and Strategic Grouping. Utilising these tools, an environmental scan of the jewellery attention will be performed. PESTEL AnalysisPoliticalMany of the raw materials for the jewellery industry can farm animalate in countries that hold back political instability. Of the baksheesh five diamond producing countries, Canada is the most politically stable, with minimal probability of any mining disruption due to war. The new(prenominal) iv are a different situation. Russia is still in a landed estate of internal agitation regarding Chechnya and other breakaway nations, while Botswana, Angola and Congo are all in a constant risk of war both from within and from neighbouring war-worn countries. A war in any of the above countries would cause a considerable loss in production and have a profound impact on the jewellery industry worldwide.EconomicT he entire jewellery industry relies on commodities such as deluxe, platinum and silver in order to manufacture their product. This can create a problem as the bells of commodities can fluctuate drastically. For example, from 1982 to 2005 gold prices remained relatively stable. From 2005 to 2011 it nearly quadrupled in value. This price ontogeny for the raw material willbe passed on to the consumer cavictimization a price increase in the end product. Conversely, if the price of the commodity drops it would be expected that the price of the finished product would reflect this.SocialIn recent years, it has plow more important to consumers to buy products that have been produced ethically. In the jewellery industry, one of the most prominent ethical issues is the use of blood or meshing diamonds. These diamonds are mined and sold by African rebel forces in order to finance their wars in Angola and Sierra Leone. on that point has been a support system instituted that lets the con sumer know the origin of the diamond that they are looking at purchasing. Consumers can now ask the jeweller to see the certificate of origin for their diamond. Jewellers must now be aware of this and ensure that they buy simply ethically obtained diamonds in order to fulfil this request.TechnologicalThe internet allows consumers to select and leveraging any piece of jewellery they desire online. A intumescent sum of jewellers have online stores or use websites such as amazon.com and ebay.com to reach their customers. It is important for the jewellers to recognise that their clientele are no longer limited geographically and can easily find and in some cases import items that may not be readily available in that region.EnvironmentalBusinesses are showtime to become more aware of the impact that their own production processes have on the environment and are looking for ways to reduce this. The gold mined to produce jewellery is not always extracted with the most environmentall y sound methods. Up to 15% of the worlds gold is produced using artisanal and small scale gold mining, the single largest demand sector for mercury. about all of this mercury is dumped directly back into the environment causing havoc on the surrounding ecosystems. The jewellery industry needs to ensure that they barter for raw materials from exclusively environmentally sustainable mining companies.Legal Due to the sizing of some of the companies in the jewellery industry along with the large sums of notes and causation that accompanies it, at that place are strictantitrust laws in place. The creditworthy Jewellery Council is an international organisation set up to oversee and defend the jewellery industry from various practices. This council has set up antitrust policies in order to protect its members. Industry Environment Analysis Porters Five ForcesPorters Five Forces model is used to evaluate the point in time of rivalry between competitors in a given industry done as sessing the four forces that lead to this outcome. These forces are the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products.Threat of New EntrantsIs the ease in which a new company can start into the retail jewellery industry. It is not difficult to start a jewellery store as the only requirements are start up capital and a premises. There are many small sole trader jewellery shops in New Zealand to attest to this. so, the threat of new entrants is HIGH Bargaining tycoon of SuppliersIs the control that suppliers have over the pricing and distribution of their products across the jewellery industry. Once the wholesalers have sold their products to the retailers, the retailers can sell for any price they deem appropriate. There are many wholesalers in the industry, many base in Asia, giving the retailer alternative suppliers if the price is not right. Therefore the bargaining power of suppliers is LOW Barg aining Power of BuyersIs the power belong to the customer to choose to shop at a store. As there are many jewellery stores to choose from, many of which seem to have sales on every week, the customer can decide not only to shop elsewhere, but even try to haggle for a discount. Therefore the bargaining power of buyers is HIGHThreat of SubstitutesIs the probability that a consumer will purchase something else. Since jewellery is a luxury item and not a necessity, consumers will choose to spend their income on many thing before jewellery even makes the list. Not only do necessities come first, but other luxury items may be higher on the list of things to purchase like golf clubs or bicycles. Therefore the threat of substitutes is HIGH grade of RivalryIs the level of competition within the industry. Even though only trinity out of the four forces were identified as high, the retail jewellery industry is still extremely competitive. The one anomaly was the power of suppliers and the on ly cause that was low is because the suppliers operate in such a competitive state as well, giving more bargaining power to their customers, the retailers. Therefore the compass point of rivalry is HIGH Strategic GroupingA competitor analysis compares a company against each direct competitor. It relies on four key areas for comparison. These are emerging objectives, current strategy, assumptions, and capabilities. By looking at these concepts a response can be formulated and the company can create a strategy. The close-set(prenominal) competitor of Michael Hill is Pascoes. They have similar strategy with pricing and taper market. Walker and Hall aims at a higher level with more designer items and craftsmen in store. Partridge Jewellers is a contrast to Michael Hill with only the best brands and handmade jewellery in their stores in only four select high end shopping districts in New Zealand.ConclusionThrough a PESTEL analysis, an industry environmental analysis and a strategic al grouping map, the retail jewellery industry can be evaluated. The PESTEL analysis showed various trends that may have an effect on the industry while the industry environmental analysis showed that the competitive rivalry in the industry is quite high. The strategic grouping map illustrated that the company itself shares a target market with some other large companies but does not display the hundreds of other little independent firms that offer similar services.What has been learned in this assessment is that Michael Hill has cornered the jewellery retailing industry in New Zealand and has bucked the fiscal trend by being one of the companies on the NZX to make large gains during the recession. Through low prices, Friedman Group staff training, and a good collar of their industry environment, they havebecome one of the leading retailers in New Zealand.