Situation Analysis

Question:
Discuss about the Situation Analysis.

 
Answer:
Introduction:

In Australia Small and Medium Enterprises contributing significant amount of revenues and creating job opportunities. This kind of enterprises are growing and their contribution in the nation’s performance also has become significant. The 97% of businesses of Australia are small and medium enterprises.  They contribute 1/3rd of total GDP. The small businesses comprise of 5 to 19 employees; medium businesses comprise of 20 to 199 employees. In South Australia there are 140,000 small businesses and thus they are the engine of job creation. This firms facilitate innovation and entrepreneurship. The government of South Australia has been focusing on the assisting the SMEs to compete in the global stage. In order to grab the opportunity of growth, these businesses get support from the banks and the market researchers. Since, SMEs are getting greater access to the capital and they are gaining ability to supply global market niche, it is important to produce high value products for small businesses[1]. Therefore, it is important to analyse the situation of these kind of businesses. In this paper, a jewellery company based on South Australia, has been chosen for the analysis. The report will present state of this business. The situation analysis of this small business will also examine the market; competitors; staff and business structure.

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Company Overview

Clarke the Jeweller Pty Ltd. is located at Adelaide, South Australia. It is a family owned jewellery business. Clarke is a master craftsman and his work is appreciated for its originality and use of titanium; gemstones and other contemporary materials. It was established in the year 1985[2]. It is a registered Australian private company. This jewellery firm makes highest standards of jewellery and famous for its creativity. This is a well reputable business that also provides reliable service to regular clients. It manufactures diamond jewellery and import as well.

People

John William Clarke is the Director and Secretory of the company. It employs 13 staffs (estimated)[3]. The number of people in this company is higher than the average small company in South Australia. Therefore, it is one of the employers that hire more than average number of labours in the region.

 
Business and Products

This firm offers diamond and titanium jewellery along with precious gemstones. The company defines four characteristics of the diamonds it offers, Cut; Colour; Carat; Clarity. It offers diamond with proper facets in the stone that maximized the reflection and refraction of lights and gives more sparkle. The firm offers from rare and most valuable colourless stones to coloured diamonds like pink; green; brown and even black. This company also have extremely rare canary yellow coloured stone as well. The diamonds are measured in terms of carat; it offers big stones of high carat. This implies, the diamonds offered by this jewellery are of high value and are very costly. Some tiny natural characteristics are created within the diamond. The size; number and position of these inclusions defines the clarity of a diamond that affects value and cost. Company has vast range of diamonds and they have the provision for choosing diamond prior to the setting by the jeweller. This jewellery also fit an unset stone that is purchased other than from Clarke the Jeweller.

 However, in such case, the assess the stone and then Clarke the Jeweller set the stone with his design. Apart from this stone, the company is also working on Titanium, which is a very difficult material to work with as it may explode if not handled carefully. For exclusive designing, this jewellery firm also uses Gold; Silver and coloured gemstones. It offers Australian Opals; South Sea Pearls and designer jewelleries from different brands, like Clogau Gold; Pink Kimberley Diamonds; Canadian Fire Diamonds etc[4]. Clarke specializes in wedding and engagement ring but also offers neckpieces; bracelets and earrings. Clarke the Jeweller is also stockists of some exclusive watches from Philip Stein; Seiko; Citizen and so on.

Business Structure

“Clarke the Jeweller” is a private company but not listed on the stock exchange. This is not included in the description of Australian cooperative and public company. the liability of the members is limited to the amount unpaid on their shares. The stakeholders of this company are not required to contribute any further money if the shares are fully paid.

Market and Competitors

Clarke the Jeweller is the highest revenue generator among the precious metal jewellery companies located in Adelaide. The revenue of this small business is 2.7 million AUD and this is thrice than the average of the companies under this industry of Australia. This has put the company in top 20% of jewellery firm in the industry[5]. For a small and medium firm like Clarke the Jeweller Pty Ltd, it is important to measure revenue generated per employee. The generated revenue of this organization is around the average revenue per employees for all companies in this country.

The competitors of Clarke the Jeweller in South Australia are P.A. Edwards Pty. Ltd.; Christopher Green Manufacturing Jewellers Pty. Ltd.; Persil Pty. Ltd.; Kensen & Kensen Manufacturing Jewellers, whose revenue is above 1 Million AUD. However, there are many firms in this region. Apart from these companies, there are some more strong rivals located in other parts of Australia, with extremely higher amount of revenue. Some of those high revenue earning SMEs in this industry are: Citygold Australia Pty Ltd in NSW; Teracast Pty Ltd in Queensland; Lenrose Pty. Ltd in Victoria and so on.

 
Market Analysis

The market trend within the gems and jewellery industry changes with the custom. The ongoing trend of jewellery is towards limited production item or unique pieces. Jewellery industry is fragmented as there are numerous artisans for contracts and fame. Some manufacturers or craftsmen of jewellery work and distribute in its own region and some produces on a large scale and distribute nationally. Some artists design jewelleries and make pieces themselves and sell them in their own store. Some of the jewellery firms do not manufacture or designs precious jewelleries, they buy it from the artisans directly. Clarke the Jeweller manufactures the diamond jewellery in gold and silver base. Apart from this, it keeps jewelleries from other manufacturers that are exclusive. It also retails some of the top class branded watches as well.

Clarke the Jewellers also has two kinds of customers, galleries and individuals. As they design jewelleries by their own, the pieces are unique and there is no other copy of that design. Some of these items are purchased by the jewellery wholesalers and some of them are sold to private galleries; museum stores etc. The contemporary designs and the jewelleries are more upscale and modern, thus these are mostly sold to the galleries. Apart from them, the manufactured jewelleries are sold at their own store for the individual customers. People get attracted towards the exclusive designs offered by the Clarke the Jewellers and they also act as a retailer for some branded jewelleries and watch, thus generating significant value perceived by the individual customers.

Jewellery industry of Australia has performed well in last five years. The revenue of this industry is expected to rise at an 3.5% through 2011 to 2016. The current revenue of this industry is $2 Billion[6]. Jewellery manufacturing sector is mostly based on eastern states of Australia, thus 80% of enterprises are located in Queensland; New South Wales and Victoria. The world price of silver and gold has declined sharply that are the two major inputs for this industry. Therefore, the manufactures have lowered prices. This in turn has resulted into rise in demand from the retailers; wholesalers and end consumers as well. in addition to this, the jewellery and watch retailing industry is also expected to grow at a rate of 1.9% through 2015 to 2016.

Marketing

The Clarke the Jewellers display their latest design on their website. Apart from that they also have public pages in the social media sites, where they post pictures or news of their latest creation. By offering unique designs and various customer services related to repairing they attract customers. Seasonal offerings also another way of their marketing. The artistic skill of the Clarkes and their marketing campaign help it to promote their store. They display their products on craft shows; art festivals attract buyers.

Environment Analysis
SWOT Analysis

Strength: Unique and creative designs of Clarke the Jeweller is the major strength of the company.

It’s location in the one of the important city Adelaide.

High revenue per employee than average industry standard.

Retailer of some branded watch gives benefits of product diversification.

Online website facility provides competitive advantage.

Location at Adelaide Arcade gives advantage over other jewellery businesses.

Weakness: Clarke the Jeweller has no customer base outside Adelaide.

Inability to meet demand due to small size of the firm it a major obstacle.

Constantly creation of new design is a struggle for the company.

Less number of employees cause mismanagement and lack innovative ideas.

Opportunity: Opportunity to grow in the national market to increase the market share.

High price can be charged for best quality stone with new and unique design.

Opportunity to export jewellery through online trading can attribute to high revenue.

Growing demand for jewellery and precious stones will continue to generate high income for the firm.

Being top revenue generator in South Australia, it can expand from small to medium or large business with time.

Threats: Availability of precious metals like Gold and Silver is decreasing.

Clarke’s design is often copied by other cheap costume jewellery artisans.

Many small jewellery businesses are growing in South Australia.

Slowdown of the economy decreases the demand for costly items like jewellery.

The price of inputs like gold and silver fluctuates very often, thus the jewellery price fluctuates.

Rise in price of inputs may detrimental to the industry.

Most of the retail activity takes place in Victoria; Queensland and New South Wales instead of South Australia.

 
Porter’ Five Forces:

Bargaining Power of Buyers: The buyers have less bargaining power as the price of per unit of Gold or per Carat of diamond is same all over the nation. Moreover, the more is the work done on the stones or metals the more will the price charged by the firm. Since, there are many buyers, demanding for the same unique design, the buyers cannot influence the price of the product of this firm.

Bargaining Power of Suppliers: The Suppliers supply precious stones and metals. Their power is also strong, as there are not huge number of suppliers in this industry. The firm has to obtain material from certain suppliers only. So the firm cannot control the price of inputs.

Threats of New Entrants: The threats of new entrants are moderate in this industry. This is because; since the jewellery manufacturing or retailing businesses are small in size, it can start by a single person or the artisan. However, access to precious materials and to set up a jewellery business requires a sufficiently high investment.

Threats of Substitutes: There are many jewellery firm in the South Australia and a consumer can shift from Clarke the Jeweller to another firm. Moreover, many designs are mimicked and made with cheaper materials to sell it at a very low cost. People can substitute those products on a temporary basis. However, the precious gems and metals have no other substitutes. Therefore, the threat is moderately low.

Competitive Rivalry: There are many rivals in this industry. In Adelaide, there are many small firms producing exclusive designer jewellery. In other states, the competition is much higher. Therefore, this small business faces tough competition. 

 
Conclusion

From the above discussion, the situation of the Clark the Jeweller, a small jewellery manufacturer and retailer of South Australia, has been identified. The firm is highest revenue earner of South Australia. However, it faces many competitors in the same business. The company has opportunity to expand as the market for jewellery is ever growing. The scenario of the Australian market is preferable for the growth of this company. 

 
References

‘Adelaide Designer Jewellery | Clarke The Jeweller’ (Clarkethejeweller.com.au, 2016) <https://www.clarkethejeweller.com.au> accessed 22 August 2016

‘Jewellery Manufacturing In Australia Market Research | Ibisworld’ (Ibisworld.com.au, 2016) <https://www.ibisworld.com.au/industry/default.aspx?indid=293> accessed 22 August 2016

‘Precious Metal Jewelry Companies’ (https://listings.fta-companies-au.com, 2016) <https://listings.fta-companies-au.com/l/100191174/Clarke-the-Jeweller-Pty-Ltd-in-Adelaide-SA> accessed 22 August 2016

‘South Australia’S Economic Priorities. A Place Where People And Business Thrive – Small Businesses Access Capital And Global Markets’ (Economic.priorities.sa.gov.au, 2014) <https://economic.priorities.sa.gov.au/priorities/small_businesses_access_capital_and_global_markets> accessed 22 August 2016

‘South Australia’S Small Businesses Have Access To Capital And Global Markets’ (economic.priorities.sa.gov.au, 2015) <https://economic.priorities.sa.gov.au/__data/assets/pdf_file/0003/4557/Small_businesses_access_capital_and_global_markets.pdf> accessed 22 August 2016

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