Business Model Analysis: Heytsbury Holdings Limited

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Question :

Conduct a detailed analysis of the business model followed by HeytsburyHoldings and identify the company's position in terms of gaining the value proposition in the various segments.

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Answer :


Heytsbury Holdings Limited is Australian based company which has its retails stores and franchisees all over Australia and few in New Zealand and Europe. The core product of company is home wares, computers and electronics. Value proposition can be defined as business or marketing in such a way that it summarizes why customer should buy product of that company. In simple words any aspect that attracts customer that one particular product will add value to their purchase is called value proposition. In today’s world where competition is increasing every second value proposition plays most important role. And it is said to be essence of business environment.

Heytsbury Holdings limited is using a business model which has been constructed in a way that it enhances and increases value proposition. The design used by company is innovative in its own way the company is using business model in which has two different segments and each segment is designed in a way that it attracts customer. The company has different retails stores so through this stores which are wholly owned by them they are directly connected to their customers understand their needs fulfil them add value to their customers and ultimately helps them in value proposition similarly on the other hand, company has different franchises located in remote local community’s so they directly understand what the customer wants and their they hold its value proposition.

As one of the segment of this company is multinational retailing there are different things which enhance value proposition in retail industry the price is one factor but here we can witness that the company is having 41 retail store which means they have brand name which is very important factor in gaining attention of customer and enhancing value proposition because these retain stores fulfils all the demands of customer as they have direct contact with them and it helps to build goodwill of company in the eyes of customer so whatever customer buys being such big chain it builds strong relation with them and help to enhance faith of customer on product and company as well. Being in direct contact with customer it is ensured that value is delivered to customers in each and every manner. For the retail industry customer is the priority than any other factor so it helps to build strong relation and value. Through direct relation with customer it is easy to maintain feedback which helps company to overcome its drawbacks and on the other hand to implement strategies in such way that it strengthens value proposition.

Other very important structure of company is franchisee based the Hetsbury Holdings Limited has 174 franchises all over Australia, New Zealand and Europe and moreover, the company is trying to expand its business online as well so through these franchisee stores. 

Franchisee system helps the company to connect with local community, so it builds bond between that community and the store. The products offered in these stores are all managed by the company itself, but it can be altered for the specific area and community, so it enhances the relation with customer and add values to product and help the company to improve value proposition.

It can be clearly seen that company is heading one step forward to serve the customer in franchisee model by adding extra value and touching their emotions in a way they serve customers. as the owners are local and know the community very well they know how to make customers happy as portion of franchisee earning is used for add on services which results in value for customer as well as company. The company tries to use local people local business houses to give extra services like installation of electronic products so that they can connect with customer and increase value proposition.

As we have witnessed that the structure of the company which is focused on retail and franchisee is helping to strengthen the value proposition. It is very important to understand that is it adding value to its internal and external stakeholders. Internal and external stakeholders are those people who are somehow connected with company they can be suppliers, employees, customer, owners, managers, society, government and all related people. Company is creating value for all stakeholders by having strong financial position which is evident from the figures given and moreover, the increasing trend of sales revenue.  The company is adding value to its employees by paying them and by maintaining healthy relation because structure has specific hierarchy so there is set rules. On the other hand, government is getting value because the organisation is expanding and has business outside Australia so it’s promoting export which is good for government. If we consider customer perspective they are getting what they want out of their own local community and culture and their words are important so they are gaining value.  So every person associated with organisation is getting value out of it which is good in strengthening its value proposition.

There are different factors which brings value to company and its customers and it all together consist of structure, people management, financial and marketing management.  The classical theory of organisation brings together bureaucratic theory, administrative theory and scientific management.  So each aspect of theory helps to work in way that it gives out value in such a way that it brings the best value proposition. As we have seen the company has unique innovative structure which has two different kinds of approaches but it is based on bureaucratic structure which states that information passes in hierarchy so company has set hierarchy which defines that everything passes from top management to subordinates which makes the things more detailed and clear to every employee and when every employee knows everything correct and top management has all the control in their hands it help to increase value proposition.

 As the rules and regulations are set by top management everyone has to follow it to attain the organisational goals. In this kind of system no one can play inside the organisation everyone has delegated duties so all the manger and franchisee owners must be having positive attitude towards listening and accepting things so that there should not be any disputes which can defame the name of company as goodwill is very important factor to gain value in market and among customers and to shoot the value proposition so in case of 

Heytsbury Holding Limited it can be seen that management has all the control and the increasing trend of profits, revenue and sales can be witnessed which clearly describe the position in the eyes of customer so, organisation structure is innovative and unique in every manner which is boosting value proposition of company. (Max Weber) described that bureaucracy is the most efficient way of working.

The other very important aspect in gaining value is people management and it can be defined as from recruiting then hiring and training in such a way that they bring value to the organisation and it has been stated that 470 employee work in head office where 2000 people in retail chain and 12000 in franchisees all around so in this kind of structure where there is set hierarchy people are recruited and selected for specific job purposes according to set criteria and administrative theory  states the concept of departmentalization which gives more efficiency to work because every employee knows his job in better way and there is no collision or confusion. And in this structure where there are franchisees the franchisor employ his own employees from same community and culture and that’s why they better understand the customer their community and culture which eventually help in value proposition. Each franchisee store has different culture so it shows that company has adopted and welcomed every culture and community which helps to gain value proposition. Further,  this help the company to make good impact on people as they feel attached with the organisation so whatever they buy they feel they got some value out of it this element has been supported by different organisational theory.

Every organisation has its own marketing strategies which is key perspective of any organisation to attain its goals and to focus on the target market. Heytsbury Holdings is using television and press media for its marketing and is now focusing on online media as well because in today’s era it’s very important to focus on it. The main marketing which has been done by company is social marketing  which states direct contact with ultimate consumer and all employees are doing this some knowingly other unknowing and organisation is taking benefit out of it. Marketing theory explains that the organisation should advertise in such a way that people feel that buying this product will add some value and company is doing this by maintaining relations with customers, understanding their need and fulfilling those needs and using television media and press media and even collaborating with consumers socially because nothing can bind them in a way their culture can.

Focusing on financial strategies it has been seen that it is public company which is registered for Australian stock Exchange and is trading and on the other hand it has property portfolio as well. 

As stated company sales revenue is $3.96 billion from franchisee and $1.48 billion from retail stores and it has increasing trend of 11% since 2000 so these figures state that company has strong financial background which ultimately gives benefits to those who are the shareholders of the company this helps in gaining value proposition because increase in sales, revenue and profits increase liquidity and increase the performance of organisation as well.  When the share market of any company has increasing trend it helps in gaining goodwill which ultimately helps in gaining value in the eyes of consumer and other people connected with company. 

The other factors which can be considered for financial practices it can be understood in viewing franchisee business as the major revenue comes from this. Franchisee structures states that it is in hands of owner of franchisee but controlled and regulated by specific organisation franchisor uses the name, goodwill and product of company in return gives specific amount to the organisation for deal and agrees to pay some percentage to the organisation. So with better financial condition company can focus more on strategies in gaining value proposition.

From the entire above scenario it can be clearly seen that company is gaining and enhancing value proposition from all the segments. The Heytsbury Holdings has all the positive perspectives which helped it having strong value proposition and one of the major factor in gaining value is interaction with local culture and community. From the positive revenue and profits it is evident that organisation is performing well in the market and gaining the trust of customer which is very important aspect of organisational theory.

There are few recommendations which company can consider to further increase it value proposition, goodwill and to strengthen its market position. First of all, the company should use more marketing strategies as television and press media is not enough. Company is already thinking to expand marketing by using online media but they should focus on other segments of online media which consist of selling product through ecommerce sites by advertising on huge portals this will help to strengthen value proposition. Moreover, they can use some techniques to show community and all other stakeholders that they are trying to help environment and trying to adapt sustainability in their organisation. As there major products are electronic they can focus on saving electricity by trying some new innovations in their product and customer will feel that they are adding something in their life by buying the products which will be something different from other competitors. With adopting these measures company can gain name in market and can expand by adding value to its organisation.