Course: Managerial accounting

Nick Scali Private Limited Situational analysis report

Executive Summary
This report focuses on the insights of a business by conducting a situational analysis. To e specific, the Australian furniture company "Nick Scali Private Limited" has been exhibited in the report, in terms of its SWOT, PESTEL, competition, customer and company analysis. As found from the study, there are multiple external environmental factors such as the Australian political environment, economic environment and more that influenced the operations of Nick Scali. On the other hand, it has been found that the company has been operating in the market for the last 60 years, and built a strong reputation among customers, who prefers designer furniture and shows loyalty. However, Recent financial insights of the company demonstrate the lack of efficiency to conceal the market's competitiveness needs. Even though the company's revenue increased, its profitability decreased. This falling performance points to a customer service gap that a lack of loyalty and client satisfaction may have caused. In light of this, it may be said that "Nick Scali Private Limited" should work to improve its performance and uphold client happiness. It can support the brand's long-term viability in the competitive Australian market.

Table of Contents

  • Company Background and business model
  • Situational analysis
  • Industry and competitive analysis
  • Company analysis
  • Customer analysis
  • SWOT analysis
  • Conclusion
  • Reference list

Assignment Help on Consumer Behavior Towards Buying White Goods: A Case Study of LG India - Understanding Consumer Behavior in the Purchase of White Goods

Company Background and business model

Nick Scali is an Australian furniture retailer that operates mainly in Australia and New Zealand. The company has a strong business in sourcing and retailing household furniture and other related products and accessories. The main products offered by the company are lounges, buffets, cabinets, dining tables, coffee tables, armchairs, consoles, mattresses, bedroom furniture, and many more (Nick Scali, 2023). The company is widely spread in Australia and New Zealand, with approximately 108 stores.

Compared to other retail and consumer peers, the business model followed by Nick and Scali is different, as the company mainly focuses on maintaining high margins with a low inventory model. One of the major aspects of the business model of Nick Scali Ltd is that the company's inventory is largely consumed by in-transit products so that just-in-time delivery can be performed (Australian Financial Review, 2021). This reduces the risk of stock obsolescence. The high gross margin set by the company and relatively fixed cost base help it to get a significant amount of operating leverage as sales growth is achieved. A high dividend payout ratio, which has an average of 80%, can be maintained with the help of a cash flow profile.

Strategic Management Assignment Help - T/507/8228: OTHM Level 7 Diploma in Strategic Management and Leadership

Situational analysis

PESTEL analysis





•       The stable government situation on Australian soil provides a good environment for business.

•       The regulations imposed by the Australian government about market entry and how retail companies can operate in the local market have a big impact on the company's business (Goods, 2022).

•       Nick Scali gets enormous benefits from the lower Taxation policy of the Western Hemisphere (Ter-Minassian, 2022).

•       However, changes in taxation policy can have a strong impact on the business of the company.



•       Growing inequality in Australian society can impact business despite the stable disposable income among Australians (Arundel and Ronald, 20210.

•       Inflation can have a strong impact on the business of the company.

•       The volatile exchange rate can strongly impact the company's business plan (Yunusa, 2020).

•       The success and profit of the company strongly depend on the performance of the economy of Australia.



•       The company has to consider the demographics of Australian soil.

•       Due to its strong presence in the market of Australia for a long time, the company has a strong understanding of the market and societal norms as well as a hierarchy (Sergi, 2019).

•       The trends of buying products by the customer and choice of products are also changing, which must be monitored by the company Nick Scali.



•       The latest technology of production is one of the major causes of reduction in the cost of production.

•       The advancement of the internet has increased the trend of online shopping, which has brought new opportunities for the company (Kumar, Hasanuzzaman and Rahim, 2019).

•       Technological advancement has reduced the cost of import and delivery, which has also reduced logistics costs.



•       In Australia, there is a strict policy regarding the environment. And the company has to align their business according to the laws.

•       The Environment Protection Act 1997, waste Management and pollution control act 1998 in the Northern Territory of Australia are some major acts the company must follow while doing business. The company must reduce its carbon footprint as much as possible while maintaining the supply chain (Goods, 2022).



•       The suppliers and manufacturers both have to follow strict Australian safety standards.

•       The company must follow the environmental and business laws in Australia.

•       Issues regarding intellectual property rights, copyrights, and patents are some of the major issues that the company has to always take care of while doing business in the retail industry in Australia.


Table 1: PESTEL analysis

(Source: Self-developed)

Industry and competitive analysis
The company operates in the Australian market and has a stronghold in the Australian and New Zealand markets. Being a retailer in the industry of export and retailing of furniture, the major competition that the company faces while doing its business is mainly from the retail industry of furniture. The revenue of the furniture market in Australia in 2023 amounts to 11.34 billion US dollars. However, competition in the furniture industry is very high (Research and Markets, 2020). The major competitors of the company are IKEA and Fantastic Furniture. Both companies have a strong market and provide strong competition to the company's business. Ikea has found a way to only pay a little tax to the government with the help of franchise fees and intellectual property payments. This option is not available to the company. The revenue of Nick Scali in the year 2022 was $283.9 million.

On the other hand, the same thing for IKEA was $1.699 billion (GmbH, 2022). This suggests that IKEA has a stronger hold in the business than Nick Scali Ltd. But the other competitor of the company, Fantastic Furniture, had less revenue, which was $50 million, than Nick Scalli. This suggests that the major threat to the company is from IKEA.

Impact of Supply Chain Management on Organizational Performance - A Case Study of Zara


Company analysis
The financial results of "Nick Scali Private Limited" have been declining. The company's profitability fell even after growing revenue. Profitability dropped from $84.02 million in 2021 to $74.09 million in 2022 (Business News Australia, 2023). The decline in the company's contribution margin and net profitability has been mostly attributed to the rising operational and supplier costs. One of "Nick Scali Private Limited" biggest flaws is this. It signifies the need for more efficiency for the company to sustain itself in the competitive market.

On the other hand, the company has a wide array of product portfolios and a strong logistic network, which strengthens the capacity of the company to meet customer demands. Additionally, its 60 years of experience contributes to the company's functionality in targeting its customers and getting their support (Nick Scali, 2023). However, the declining performance suggests a gap in customer support, which the lack of satisfaction and loyalty might have generated. Hence, it can be said that "Nick Scali Private Limited" should strive to promote its performance and maintain customer satisfaction. It can promote the sustainability of the brand in the Australian competitive market.

Customer analysis

Demographic segmentation
In the case of a demographic segment of customers, it thrives on dividing customers into smaller groups depending on their age, income, education, gender and more. In terms of demographic segments, "Nick Scali Private Limited" primarily targets female customers of 25 to 34 years old who are educated and belong to a higher income group (Nick Scali, 2023). Secondarily, middle-income males are also targeted by "Nick Scali Private Limited" by providing discounts and offer to manage its high pricing range.

Psychographic segmentation
"Nick Scali Private Limited" majorly emphasises the designs of the products produced by them, which helps its customers make a lifestyle statement by using this furniture. Specifically, the aesthetic designs of furniture items produced by "Nick Scali Private Limited" allow customers to improve their interiors (Nick Scali, 2023). With such products, Nick Scali primarily targets customers who are psychologically inclined to describe their stylish lifestyle or choices. On the other hand, Nick Scali also aids customers in getting high-quality furniture items for everyday use (Foster, 2020). Hence, the company secondarily targets customers who are psychologically inclined to high quality and durability of the types of furniture.
Behavioural segmentation
Regarding behavioural customer segments, "Nick Scali Private Limited" primarily strives for loyal customers, who tend to make repeat purchases from the brand (Nick Scali, 2023). The company also tends to conduct sales on different occasions (Nick Scali, 2023). It indicates the company focuses on the customers, who are likely to purchase furniture time-by-time or occasionally. It is a secondary target of "Nick Scali Private Limited" in the behavioural customer segment.

Acquire the Best MS70087E - Global Marketing and Digital Business Assignment Help from UK Tutors for Top Grades!

SWOT analysis

Internal Strengths

Internal Weaknesses

•       Long-term experience in the future Australian market makes it beneficial for "Nick Scali Private Limited" to understand customers (Nick Scali, 2023).

•       It has a strong network of suppliers and distributors. The strong network strengthens the internal supply chain capabilities of "Nick Scali Private Limited".

•       The company has a wide product portfolio range, including sofas, beds, lounges, dining tables and chairs, mattresses and more.

•       With a wide variety in its product portfolio, "Nick Scali Private Limited" also has a strong go-to-market strategy. It strengthens the company's internal capacity and contributes to its effective performance (Growth and Value, 2023).

•       A strong employment system and skilled workforce have largely appreciated organisational efficiency to meet customer demands.


•       The financial performance of "Nick Scali Private Limited" has been deteriorating.

•       Even after increasing revenue, the profitability of the company declined. From 2021 to 2022, the profitability reduced from $84.02 million to $74.09 million (‌Business News Australia, 2023).

•       The rising operating and supply costs have been a major factor in reducing the company's contribution margin and net profitability. It is one of the major weaknesses of "Nick Scali Private Limited", which has limited the capacity of the company to sustain itself externally (‌Koehn, 2023).

•       Overall, it has been found that the net contribution and the profitability ratio of "Nick Scali Private Limited" are below the industry average.

•       The organisation does not effectively invest in its research and development operations, which creates a gap in the company's internal innovation (‌Lau, 2020).

External Opportunities

External Threats

•       The furniture market in Australia is projected to grow explicitly by 2027 (refer to Figure 1). It signifies the opportunity "Nick Scali Private Limited" has to grow in the market (‌Statista, 2023).

•       Reducing transportation costs can help "Nick Scali Private Limited" manage operational costs and increase contribution margin and profitability (Munawar et al., 2021).

•       Accelerating technology in the Australian business market will likely facilitate business growth.

•       Fierce competition in the market is a major threat to "Nick Scali Private Limited" as it struggles to achieve competitiveness (‌Long et al., 2020).

•       Financial disruptions like the pandemic have halted the operations of "Nick Scali Private Limited", which is one of the reasons for the company's deteriorating financial health. Hence, it can be said that such financial shocks can be negative determinants for the operability of "Nick Scali Private Limited" (‌Koehn, 2023).

•       The rising cost of raw materials can further influence the operational cost of "Nick Scali Private Limited" and might undermine the company's profitability (Li et al., 2022).

Table 2: SWOT analysis of Nick Scali Private Limited

Unlock Your Success: Unit 7 Business Strategy Assignment Assistance - Mastering SWOT and PESTLE Analysis for Level 5 Diploma in Business


Conclusively, it can be said that "Nick Scali Private Limited" has dealt with significant influencers in the Australian business market. The PESTEL analysis suggests that different environmental factors influence the business differently. On the other hand, it has been found that despite effective experience and capacity, the company fails to sustain its profitability and growth due to a significant gap in its management capacity and the influence of many external business factors. Hence, "Nick Scali Private Limited" must utilise market scope and its internal strengths to successfully revive itself and gain profit in the Australian financial market.

Situational Analysis Report FAQ

  • What is a situational analysis report?
  • What are the benefits of a situational analysis report?
  • What kind of information is included in a situational analysis report?
  • How is a situational analysis report used?
  • What are some common mistakes to avoid when writing a situational analysis report?
  • Are there any resources available to help me write a situational analysis report?

Get Expert Assignment Solutions for Marketing Essentials in the UK

Do you need to hire an online writer for your HND assignment? Get assistance with BTEC assignments to ensure they are completed within deadlines. If you're struggling with your topic, there's no need to worry. Whether the subject is management or economics, we conduct thorough research on every project. Our team includes some of the UK's best essay writers, skilled in crafting descriptive, persuasive, expository, and narrative essays across various subjects.







Are You Looking for Nick Scali Private Limited Situational analysis report?