Case Analysis Of Company Failure: Dick Smith Holding
Business failure is one of the important topic in this era and several research had already did on this topic “why do company failure”. Several business entities has been closed due to several reasons. Dick Smith Holding was one of them, which got collapse and left out electronic market since 2016. Although, it was started with a capital of just $650 it was highly succeed in its starting. Later, company and its branches were unable to make satisfied customers, daily sales were decreases and unethical accounting practices lead this company to the collapse. I like to understand what factors actually lead dick smith to the failure, why its leaders form unable to save this company and are there any chances to save it from failure. The main purpose of this research is to understand the reason behind which lead Dick Smith Holding Ltd to the shout down and provide the recommendation on the bases of findings.
Research methodology is one of the important parts of the research. For this particular topics Dick Smith Holding which is my sample which already out from the Australian market; therefore, secondary data collection method has been used for this proposes; however, qualitative data collection method has been used for this projects. All of the data are taken form online previous research, online database and dick smith website. At the completion of this research report, it is not only find out the problems and factors that causes Dick Smith Holding Ltd to the collapse but also provides possible solution that may save that company from failure. This study will be benefited to all of those companies who are facing same problem as Dick Smith Holding Ltd because recommendation from this study typically related to same company.
Richard Harold Smith is one of the successful business person who established Dick Smith with a total capital of AU $610 in Sydney in 1968. Smith was born in born March 18, 1944, Roseville, NSW Australia and start a Tech company in Sydney. In the beginning, with his little investment capital, he mainly dedicated to installing and servicing car radios. By 1969, within one year of the establishment, his business was succeeded so he expanded his business to the bigger premises. The company increases rapidly, therefore, it expanded its products range. It was produced computer by their own name including a personal computer, electronic kits, satellite TV receiving station and computer game. By 1980, the company was almost in every state and total of 20 stores in Australia. In this period, the company sold 60% of its share to Woolworth limited. The company also sold its remaining share within 2 years to Woolworth limited in AU$ 25 million. Dick Smith successfully introduced an innovation in technology during the 1990s and by 1996, the company established an idea of the powerhouse and introduced some dick smith powerhouse with a range of services including installation, computer repairs and upgrading. The leaders of this company have changed its strategy and always keen to provide a new idea to the customers so by early 2008, Sick Smith electronics renovated its design and introduce their own brand on their name.
At the end of 2012, Woolworth announces restructure by selling its some share to Anchorage Capital limited on Au$115 millionand taking over the operation of David Jones. By the year 2015-2016, the company had 301 stores in Australia and 62 stores in New Zealand with about 3000 staff; however, because of it failed to secure for the stores, Ferrier Hodgson announced that all Dick Smith stores would be shutdown including Australia and New Zealand. This was another business which will be remembered how it was failed.
The company focus was no electronic items since its establishment and it was mainly operating in Australia and New Zealand. Before it was collapse, their leaders try always focusing on innovative items in electronic segmentation. Although, it has successfully expanded until the year 2015, the company was not able to make enough profit and it was unable to increase their customer satisfaction rate with their marketing strategies and management systems. Furthermore, the company was also had problem with their inventory systems and accounting standards which they are using. Woolworth, who was the main stakeholder of this company was tried to safe this company during 2012 but restructure also did not able to change its value. There are several reasons that factors may lead any companies to the failure. Particularly speaking accounting systems and inventory management systems that lead to collapse. According to Montgomery (2018) said that Dick Smith Holding disclosed inventory at November 25, 2012 at $370 million and next following day, on November 26, it was reported down 58 million to 312 million. Furthermore, Murden (2018) claimed that there was not enough evidences about the company’s inventory problems, which accumulated total of $60 million loss in November 2015. PASH (2018) also claimed that there are eight main factors, which lead Dick smith holding to the failure. These are the electronic market has changed significantly, high cost store network, shrinking market share and falling sales, too fast, too much on items on shelves, sales didn’t work, finance was too expensive and loan demands were crushing.
All of these provide negative effects on stock price on security market. Hence, on 2016 the leader announced that Dick Smith was going to close all their stores.
