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as it generally will decrease overall risk with no single particular industry being targeted, hence if one form of product lowers in demand there are still other types of products to keep profits coming.Section 3.2 – Key Success FactorsJB Hi-Fi has been successful in creating an image of being a retailer which is able to offer low prices. The nature of JB Hi-Fi as a retailer is that they allow for negotiations with customers to entice them to purchase whatever goods they are interested in. Hence, the general outlook by the average consumer towards JB Hi-Fi is that they are a retailer that is willing to satisfy their customers in the form of great deals that beat most other competitors. JB Hi-Fi has not achieved this ability to give low prices by simply just reducing their profits drastically, they have gained this advantage by lowering the cost of their inputs. In the 2016 financial year, their cost of doing business was at 15.4% (JB Hi-Fi Limited 2016). This percentage meant they had a competitive advantage in comparison to their major competitors, which was achievedby generating more attention towards productivity as well as minimising their indirect expenditures (JB Hi-Fi Limited 2015). Increasing productivity overall would lead to anincrease in profits and sales as employees utilise their time and effort more efficientlyin enticing customers to purchase products through providing knowledgeable advice and great customer service.There are also a variety of other factors which aid in reducing costs for JB Hi-Fi. An example of this is their ability to turnover stock at a high rate. By having a high stock 10
turnover as a home entertainment retailer, it allows for a significant reduction in costs of storing inventory. With stock generally coming in and going out at an efficient rate, it spends minimal time in warehouses and creates savings that allow for the type of bargaining which JB Hi-Fi are currently known for. However, this high inventory turnover must be attributable to the retention of well trained and knowledgeable staff as well as a majority of stores being located in areas with a high number of foot traffic. This solid foundation is what generates the attention and sales that has helpedJB Hi-Fi become as successful as they are. With a high number of their stores being located in shopping centres, it is inevitable that a large number of impulse buyers will be enticed into their stores. This in combination with well trained staff and their low costs of doing business ultimately allows the business to take advantage of most impulse buyers through providing good deals and low prices on products which they may have not wanted to purchase otherwise.The growth and diversification strategy which is also utilised by JB Hi-Fi has garnered success due to a few key factors. Whilst JB Hi-Fi started off selling mainly CDs and Hi Fi, they have since expanded to sell a variety of products such as home entertainment, computers, gaming consoles as well as whitegoods. Of more recent