Dissecting the Business Failure of Wesfarmers: An Environmental Analysis

This paper analyzes the business failure of Wesfarmers through an environmental analysis. It examines the political, economic, social, technological, and legal factors that contributed to the organization's decline. The paper also provides recommendations for the organization's future growth.

Running head: CONTEMPORARY BUSINESS MANAGEMENT
Contemporary Business Management
Name of the Student:
Name of the University:
Author’s Note:

1CONTEMPORARY BUSINESS MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
Overview of Wesfarmers...........................................................................................................4
Business failure..........................................................................................................................5
Environmental Analysis.........................................................................................................5
Political Factors..................................................................................................................5
Economic Factors...............................................................................................................6
Social Factors.....................................................................................................................7
Technological Factors........................................................................................................8
Legal Factors......................................................................................................................8
Environmental Factors.......................................................................................................9
Industry Environment...............................................................................................................10
Threat from new Entrants.....................................................................................................10
Threat from Substitutes........................................................................................................10
Bargaining Power of the Suppliers......................................................................................11
Bargaining Power of the Buyers..........................................................................................11
Industry Rivalry...................................................................................................................11
Competitive environment.........................................................................................................12
Extensive Growth.................................................................................................................12
Failure to embrace e-commerce model of business.............................................................13
Fierce Competition...............................................................................................................13

2CONTEMPORARY BUSINESS MANAGEMENT
Loss of customers to rivals...................................................................................................14
Unsuccessful strategies............................................................................................................14
Financial Resources.............................................................................................................15
Technological Resources.....................................................................................................15
Organizational Structure......................................................................................................16
Human Resources.................................................................................................................16
Capabilities of Wesfarmers..................................................................................................18
VRIO Analysis.....................................................................................................................19
Value Chain Analysis...........................................................................................................20
SWOT Analysis...................................................................................................................20
Strengths...........................................................................................................................20
Weaknesses......................................................................................................................21
Opportunities....................................................................................................................21
Threats..............................................................................................................................21
Current strategies.....................................................................................................................22
Conclusion and Recommendations..........................................................................................23
References................................................................................................................................25

3CONTEMPORARY BUSINESS MANAGEMENT
Introduction
As opined by Grant (2016), globalization or internationalization and the widespread
use of different types of technologies have positively affected the world of business in the
contemporary times. Ansoff et al. (2019) are of the viewpoint that this has enhanced the
competition faced by the different business enterprises in the business world because of the
number of choices that are available to the customers. Different organizations are thus
required to conduct a thorough analysis of the business environment in which they are
operational and develop effective strategies so as to take advantages of the opportunities
presented by the business market and also to mitigate the threats presented by the same
(Morschett, Schramm-Klein & Zentes, 2015).
Wheelen et al. (2017) have articulated that the overall organizational prospects of an
organization depend greatly on the kind of strategies that the organization is using for the
process of its business operations. However, it is often seen that the organizations take the
help of strategies which are not in synchronicity with the key competencies or the capabilities
of the organization and also the requirements of the external business environment in which
the organizations (Rothaermel, 2015). More importantly, the organizations also fail to take
into effective consideration the requirements or the demands of the customers or the changing
needs of their business and this can have catastrophic results for the concerned organization.
This paper will analyze the manner in which disregard of the requirements of the external
business environment can disrupt the business prospects of an organization in the particular
context of the organization Wesfarmers and the recent losses faced by it.

4CONTEMPORARY BUSINESS MANAGEMENT
Overview of Wesfarmers
Wesfarmers Limited, founded in 1914, is an Australian conglomerate business
enterprise with extensive business interests in the retail, chemical, hardware, fertilizers, coal
mining, safety products and others (Wesfarmers.com.au, 2019). More importantly, the
organization offers a wide range of products or services to the customers starting from
groceries, retail products, safety products, fertilizer to insurances and other kinds of financial
services (Forbes.com, 2019). Furthermore, the organization although headquartered in Perth
is currently operational in Australia, New Zealand, United Kingdom and other nations of the
world (Wesfarmers.com.au, 2019). Moreover, the organization as of 2018 was the largest
private recruiter in Australia with more than 220,000 employees from the different regions of
the nation (Forbes.com, 2019). In addition to these, the organization with an annual profit of
more than $37.7 billion was the largest business enterprise of Australia with the closest rival
being Woolworths Limited (Forbes.com, 2019). The acquisition of various Australian
companies like Bunnings Warehouse, Coles Supermarket, Liquorland, Vintage Cellars and
others in the recent times has contributed much towards the growth of the organization under
discussion here in the recent times (Wesfarmers.com.au, 2019). However, in the year 2018
the organization faced a substantial decline in its revenue and in order to cover up for the
losses had to take the help of divestment and give up many of its enterprises like Coles
Supermarket and others which formed the backbone of the conglomeration under discussion.
The organization Wesfarmers faced a substantial amount of backlash in the year 2018
because of the business practices used by it for the process of its business enterprises. For
example, the brick and mortal business model followed by the organization under discussion
faced a significant amount of criticism in 2018 in UK for the hardware business that it was
conducting in the concerned nation (Abc.net.au, 2019). More importantly, the organization
also faced a substantial amount of loss in the second quarter of 2018 and its market share

5CONTEMPORARY BUSINESS MANAGEMENT
declined by 87pc although the organization has seen a significant amount of profit in the first
quarter of the same year (News.com.au, 2019). In this regard, it needs to be said that although
the organization reported a gross profit of $212 million for the second quarter of 2018 yet
because of the losses that it faced in the business market and the organization also lost a
substantial part of the monopoly that it once held in Australian business market (Abc.net.au,
2019). More importantly, the organization faced a 58% decline in its profit margin after
paying the bank loans and debts that it had taken for the purpose of the management of its
business operations (News.com.au, 2019). In addition to this, Bunnings Warehouse which is
considered one of the most profitable companies of organization ended the year with a loss of
$1.3 billion and to cover up the loss Wesfarmers had to withdraw the organization from the
UK market (Abc.net.au, 2019). Apart from this, Target also ended the year with a loss of
$300 million and in order to cover for these financial losses, the organization had to divest
Coles Group (News.com.au, 2019).
Business failure
Environmental Analysis
Political Factors
Hill, Jones and Schilling (2015) argue that one of the most basic demands of business
enterprises is a stable political environment wherein they can conduct their business
operations in an adequate manner. The nation of Australia is a “federal parliamentary
constitutional monarchy” and follows the principle of representative democracy
(Australia.gov.au, 2019). As opined by Saebi, Lien and Foss (2017), one of the most essential
aspects of Australia is the fact that the nation not only has a stable government but at the
same time is free from various kinds of political struggles and turmoil. In addition to this, it is
seen that the national government takes active initiatives for the growth of trade and

6CONTEMPORARY BUSINESS MANAGEMENT
commerce and for this effective import, export, business policies have been formulated
(Kirchoff, Tate & Mollenkopf, 2016). Furthermore, the active trade relations that the nation
has with the other Commonwealth nations and the free trade policy followed by it has helped
in the growth of trade and commerce in the nation in an adequate manner (Lloret, 2016). It is
pertinent to note that these aspects of the political system of Australia has facilitated the
business of the Wesfarmers and also enabled it to gain success in the nation. However, in the
recent times it is seen that the national government has launched various kinds of mandates
like the fair trade policies, consumer protection stipulations and others which had adversely
affected the business of Wesfarmers and is probably one of the major reasons for the huge
losses incurred by the organization (Prajogo, 2016). More importantly, although the national
government of the nation actively supports the supply chain system of the organization and
helps in the procurement of the raw materials yet it is seen that the stringent procurement
norms given by the government in the recent times had adversely affected the business of the
organization (Vrontis et al., 2017). The organization had to face stringent stipulations
regarding the procurement of raw materials from other nation because of the documentation,
transportation, import and other formalities that are involved in the process.
Economic Factors
The nation of Australia has the largest “mixed-market economy” among all the
nations of the world with an impressive GDP of $1.69 trillion as of 2017 (Australia.gov.au,
2019). In addition to this, the nation of Australia stands at the 2nd position in terms of the
amount of wealth held by the individual people of the nation and is next only to Switzerland
(Australia.gov.au, 2019). Furthermore, the national government in order to promote private
trade and commerce offers various kinds of business loans and other kinds of subsidiaries to
the business enterprises (Wang et al., 2015). More importantly, mention also needs to be of
the lenient import, export, tax and other kinds of tariffs that the business enterprises had to

7CONTEMPORARY BUSINESS MANAGEMENT
pay to the national government for conducting trade in the nation. As of 2017, the nation has
a labor force of 12.7 million which ensures the fact that the different business enterprises of
the nation have access to the desired number of workers so as to get the work of their
organization completed (Australia.gov.au, 2019). However, at the same time it needs to be
said that high inflation rate of the nation is one of the major problems for the organization
under discussion here. This means that the prices of the raw materials that are needed by the
organization keeps on fluctuating and affects the production cost of the organization in an
adverse manner. Furthermore, this not only enhances the cost that the organization is required
to spend on its supply system but at the same time renders it untrustworthy as well because of
which the manufacturing department of the organization is facing problems (Martinez-
Conesa, Soto-Acosta & Carayannis, 2017). In addition to this, the nation is still reeling from
the adverse effects of the financial crisis that the world faced in 2007-2008 and this perhaps
accounts for the fluctuations in the annual profit earned by the organization (Vrontis et al.,
2017).
Social Factors
Frynas and Mellahi (2015) are of the viewpoint that the social factors which affect the
business operations of an organization in a particular business environment are the
demographics of the customers, namely, their age, gender, financial status and other
attributes. As opined by Chang (2016), the buying behavior of the customers in the recent
times has changed in a significant manner because of the number of choices that are available
to them. The net result of this is that the customers often opt for the services or goods offered
by an organization which not only has a positive brand image but at the same time reveals
detailed information regarding the corporate social responsibility (CSR) policies and the
supply chain network that it is using (Wang et al., 2015). In this regard, it needs to be said
that the organization under discussion keeping this behavior of the customers into perspective

8CONTEMPORARY BUSINESS MANAGEMENT
discloses detailed information regarding CSR practices and also the supply chain network
used by it over their online website. In addition to this, taking into effective consideration the
tendency of the modern customers to opt for the e-commerce mode of business, Wesfarmers
had started to offer e-commerce services to the customers as well.
Technological Factors
According to Chang (2016), the success or the failure of an organization depends
significantly on the extent to which it is being able to integrate the latest technologies within
the framework of its business operations. Wesfarmers actively takes the help of the
technological advancements of Australia and also the other Commonwealth nations with
which it had active trade relations. For example, it is seen that the organization is taking the
help of the technology of automation to enhance the effectiveness of its supply chain system
which in turn had improved the delivery system used by the organization (Hanson et al.,
2016). More importantly, the organization realizing the opportunities offered by the construct
of digital marketing is actively using to not only promote as well as market the products or
services offered by it but at the same time to reach out to a much larger customer base as
well. Along with these initiatives, the organization is also gradually embracing the omni-
channel business model to offer both e-commerce and brick and mortar services to the
customers and also to cater to the needs of the diverse customer groups (Hsu, Tan &
Mohamad Zailani, 2016).
Legal Factors
The different organizations of Australia are required to follow the corporate
legislations of the nation for the process of their business operations. Some of the most
important ones in this regard are the ones related to taxation, management policies, employee
legislations, Corporations Act 2001, the mandates of Australian Securities and Investments
Commission (ASIC) and others (Australia.gov.au, 2019). In this regard, it needs to be said to

9CONTEMPORARY BUSINESS MANAGEMENT
address these stipulations or regulations of the nation, the organization under discussion here
has formulated its own version of corporate governance so to manage the diverse affairs of its
organization in an effective manner. More importantly, it is seen that these legislations of the
nation had a profound impact on the supply chain system used by the organization since the
raw materials used by the organization are subjected to vigorous security, quality and other
kinds of checks so as to ensure that the organization is following all the mandates of the
nation related to procurement of goods or services (Foss & Saebi, 2017). In addition to these,
the supply chain used by the organization is also subjected to various kinds of transport and
other kinds of regulations of the national government of Australia.
Environmental Factors
Australia is a signatory member of the Paris Agreement of 2016 which stated that in
order to combat the adverse effects of environmental pollution the different organizations are
required to reduce the amount of pollutants released by them by more than 2.1%
(Australia.gov.au, 2019). The organization Wesfarmers has taken up environmental pollution
as one of its key CSR issues and thus is currently taking the help of recyclable materials for
packing and other similar kind of practices (Wesfarmers.com.au, 2019). More importantly,
the organization in order to mitigate the damage that it is causing to the environment on the
score of its business operations is taking the help of Green Supply Chain Management
(Schaltegger & Wagner, 2017). This system is being more rigorously used by the
organization for its coal mining, petroleum, hardware and similar kinds of businesses.
Industry Environment
Jenkins and Williamson (2015) are of the viewpoint that the construct of industry
environment analysis is important because of the fact that it reveals insightful details
regarding the business completion that an organization is facing in the business environment

10CONTEMPORARY BUSINESS MANAGEMENT
and also industry trends. Porter’s Five Forces model is one of the most widely used models
for analyzing the level of business competition that an organization faces within a particular
business environment (Wong, Wong & Boon-Itt, 2015).
Threat from new Entrants
The organization Wesfarmers faces a very low level of threat from the new entrants in
the business market of Australia. Various reasons can be attributed to this, namely, the
business market of Australia had already been monopolized by the organizations like
Woolworths, Wesfarmers, Coles and others, the huge amount of investment that is needed to
establish a business venture in Australia, the low investment returns and others (Banerjee,
2017). In addition to this, the free trade policy followed by the national government and also
active patronage given by it to the major business enterprises of the nation are other reasons
which contribute to the same (Epstein, 2018).
Threat from Substitutes
Wesfarmers faces a high level of threat from the various substitutes which are
operational in the business market of Australia like Woolworths, Amazon, Aldi and others.
This can be explained on the basis of the fact these organizations offer almost similar kinds of
products or services like the ones offered by Wesfarmers. In order to overcome this problem,
the organization is currently trying to follow the cost leadership strategy through which it
intends to offer the best quality products or services to the customers and that too at the
lowest price possible (Sroufe & Joseph, 2017).
Bargaining Power of the Suppliers
Leonidou et al. (2015) are of the viewpoint that if the bargaining power of the
suppliers is more than this is likely to adversely affect the business prospects of an
organization. However, within the framework of the retail industry it is seen that the

11CONTEMPORARY BUSINESS MANAGEMENT
bargaining power of the suppliers is considerable because of the fact that a handful of
organizations had monopolized the business market and also the entity of brand name or
image is a factor which affects the same (Waddock & Bodwell, 2017). In this regard, it needs
to be said that the organization under discussion here in order to reduce the bargaining power
of the supplier has not only evolved its supplier system but at the same time takes the help of
multi-supply chains.
Bargaining Power of the Buyers
As opined by Grant (2016), the number of choices that are available to the customers
in the retail industry is very high because of the large number of companies which offer
similar kinds of products and that too within the same price range. Furthermore, the cost of
switching over from organization to another is very low and this accounts for the high
bargaining power of the buyers (Pérez‐López, Moreno‐Romero & Barkemeyer, 2015).
Wesfarmers in order to overcome this problem is taking the help of product differentiation
strategy through which it intends to offers superior quality of products to the customers which
are different from the ones that its rivals are offering (Ansoff et al., 2019).
Industry Rivalry
There is a fierce competition in the retail industry of Australia and the majority of the
market share is being held by a handful of organizations like Woolworths, Coles, Aldi, Asda
and others (Saebi, Lien & Foss, 2017). More importantly, the innovative business models and
strategies followed by these organizations had reduced the gross revenue generated by the
organization Wesfarmers and this is perhaps one of the major reasons for the huge losses
incurred by the organization in 2017.

12CONTEMPORARY BUSINESS MANAGEMENT
Competitive environment
The unprecedented growth attained by the organization Wesfarmers can be explained
on the basis of the fact that the management team of the concerned organization was being
able to take into effective consideration not only the requirements of the business
environment in which the organization is operational but at the same time the demands of the
customers as well (Morschett, Schramm-Klein & Zentes, 2015). More importantly, the
organization realizing the boom experienced by Amazon has embraced the e-commerce mode
of business and also offers unique shopping experience to the customers (Rothaermel, 2015).
Furthermore, the effective utilization of different strategies like cost leadership and product
differentiation has at the same time contributed in a substantial manner towards the financial
growth of the organization over the years and also enabled it to gain monopoly in the
business market of Australia. However, the factors which contributed to the decline of the
organization are listed below-
Extensive Growth
Wesfarmers has become the victim of its own extensive growth and this is perhaps
one of the major reasons for the problem of mismanagement that the organization that the
organization is currently facing. The organization in order to monopolize the business market
of Australia acquired a large number of companies like Coles, Target, Bunnings Warehouse
and others in a bid to eliminate competition (Abc.net.au, 2019). However, over the years it
had failed to effectively manage the business affairs of these organizations in an effective
manner and this is perhaps one of the major reasons why these business ventures of the
organizations are incurring such a high amount of loss. For example, Bunnings Warehouse
had to exit from UK business market, Target registered a loss of more than $300 million in
2018 and Coles also met with a similar fate (News.com.au, 2019). Thus, it can be said that

13CONTEMPORARY BUSINESS MANAGEMENT
because of the extensive growth that the organization had it failed to give individual focus to
each of these organizations and this resulted in the failure of these ventures.
Failure to embrace e-commerce model of business
Ansoff et al. (2019) have argued the fact that the success or the failure of an
organization depends substantially on its ability to embrace the recent technologies and also
stay in synchronicity with the demands of the people. It is true that the organization
Wesfarmers currently offers e-commerce services to the customers however it failed to
capitalize on this business model at the right moment. In this regard, it needs to be said that
the organization under discussion here started the use of e-commerce business model when
the Australian retail business market had already been captured by the other organizations
like Amazon, Aldi, Woolworths and others which started the use of this model long before
Wesfarmers (News.com.au, 2019). Thus, it can be said that the failure to effectively utilize
the innovative technology of e-commerce at the right moment is another factor which is
gradually leading the organization to its downfall.
Fierce Competition
As opined by Hill, Jones and Schilling (2015), one of the most important aspects of
the Australian retail business market is the fierce competition which dominates it. As already
mentioned the Australian retail business market is being dominated by organizations like
Woolworths, Aldi, Asda and others which are not only offering better quality products to the
customers but at the same time are taking the help of effective business strategies like omni-
channel business strategy, digital marketing and others. In contrast, it is seen that the
organization Wesfarmers still relies on the use of traditional form of marketing and
promotion, uses brick and mortar model of business which are no longer in synchronicity
with the demands of the business environment (Abc.net.au, 2019).

14CONTEMPORARY BUSINESS MANAGEMENT
Loss of customers to rivals
The organization Wesfarmers in the recent times has lost a large number of its loyal
customers to its competitors and this is another factor which has contributed to the downfall
of the organization. In this regard, it needs to be said that the competitors of Wesfarmers are
regularly organizing discounted sales, offering free gift cards to the customers, using digital
marketing to attract new customers and other similar measures to attract new customers and
also to retain the existing one (Wheelen et al., 2017). However, when an analysis of
Wesfarmers is undertaken it becomes evident that no similar measures were being undertaken
by the organization to attract new customers or to retain the existing ones. Thus, many of the
loyal customers who had once helped the organization to gain monopoly in Australian retail
market switched over to its rival and this contributed in a significant manner towards the
decline of the organization.
Unsuccessful strategies
Kirchoff, Tate and Mollenkopf (2016) are of the viewpoint that during the
formulation of different kinds of business strategies the organizations need to take into
effective consideration the key capabilities and also the resources of the organization. In this
regard, it needs to be said that the primary resources of the organization Wesfarmers can be
categorized into two sections, namely, the tangible resources and the in-tangible resources
(Saebi, Lien & Foss, 2017). The tangible resources are the ones which can be measured and
is being reflected by the annual reports of the organization (Lloret, 2016). On the other hand,
the in-tangible resources are the ones which cannot be measured and thereby are not only
reflected in the annual reports of the organization like the entity of brand image and others
(Prajogo, 2016). Some of the key resources of the organization Wesfarmers are listed below-

15CONTEMPORARY BUSINESS MANAGEMENT
Financial Resources
The organization Wesfarmers despite the 58% loss in the sales and revenue that it
suffered in the second quarter of the year 2018 was able to make an overall profit of 2.9%
which is lower than the percentage of profit made by it in the previous years
(Wesfarmers.com.au, 2019). However, despite the losses incurred by the organization it still
has a market value of $34.7 billion which makes it the largest business enterprise of Australia
(Wesfarmers.com.au, 2019). This can be explained on the basis of the fact that although the
organization had incurred losses on the score of the companies, namely, Coles, Target,
Bunnings Warehouse and others it was able to derive a substantial amount of profit because
of the diversification strategy followed by it (Forbes.com, 2019). In this regard, it needs to be
said that the organization has companies in almost all the industries and thus even if incurs
loss in one particular industry the profit generated by the other ones compensates for the
losses. In addition to this, it is seen that the organization offers various kinds of gift cards and
loyalty cards to the customers, which they can use only at the Wesfarmers sponsored
companies and this has ensured a steady flow of revenue within the organization.
Technological Resources
The organization actively uses the technological advancements of the nation not for
the enhancement of the quality of products or services offered by it to the customers but at
the same time within the framework of its business operations as well. In this regard, mention
needs to be made of the technology of automation used by the organization for the
improvement of its supply system (Forbes.com, 2019). More importantly, in order to reduce
its manufacturing cost and thereby the operation cost the organization is taking the help of the
latest state-of-the-art machineries (Vrontis et al., 2017). Furthermore, in the recent times it is
also seen that the organization has embraced the digital marketing technology and e-

16CONTEMPORARY BUSINESS MANAGEMENT
commerce technology to further enhance the prospects of its business (Frynas & Mellahi,
2015).
Organizational Structure
Wesfarmers follows the hierarchical organizational structure which ensures a steady
flow of information from the lower departments of the organization to the higher authorities
of the same (Wang et al., 2015). More importantly, this structure followed by the
organization becomes especially important in the context of the international business centers
of the organization wherein effective communication between the higher management team
and the lower departments of the organization is of more importance (Chang, 2016).
Furthermore, this organizational structure followed by the organization enables it to
effectively utilize the resources as well as capabilities of the organization which in turn has
helped it to gain competitive advantage.
Human Resources
Wesfarmers is the largest private recruiter in the nation of Australia and offers
employment to more than 220,000 people of the nation (Wesfarmers.com.au, 2019). More
importantly, it is seen that the organization offers specialized training (on-job training,
advanced training and others) to these individuals so as to enable the met the requirements of
the organization (Foss & Saebi, 2017). Hanson et al. (2016) are of the viewpoint that the
overall organizational performance of an organization depends on the individual
performances of the different workers of the organization. This is the result of this fact that
the organization takes the help of the help of the total quality management (TQM) strategy to
enhance the performances of the different employees. As opined by Banerjee (2017), the
effective use of the TQM strategy helps the organizations to maximize the performance level
of the individual employees of the organization and thereby enhance the overall productivity
of the organization. Thus, it can be said that this extensive focus on the aspect of employee

17CONTEMPORARY BUSINESS MANAGEMENT
performance has enabled the organization to not only gain competitive advantage but at the
same time a substantial amount of success in Australia.
The organization actively takes the help of its websites to offer information to the
customers regarding the new products or services offered by it. In the recent times it is seen
that it is has diversified the product or service range offered by it so as to meet the
requirements of the different customers and also to offer them quality services (Schaltegger
& Wagner, 2017). In this regard, mention needs to be made of the healthy and organic food
products offered by its subsidiaries like Coles, Target and others. Furthermore, to enhance the
brand awareness of the customers it actively takes the help of the construct of value
proposition to convey the value or the benefits that the customers are likely to derive through
the use of their products or services. The key value proposition of the organization are listed
below-
 The wide range of products or services that the organization offers to the customers is
designed to take into consideration each and every requirement or demands of the
customers
 Focus is on the quality of shopping experience of the customers, namely, the physical
experience and also the online shopping experience of the customers
The organization for the pricing of the products or services offered by it to the customers
follows the strategy of cost leadership so as to offer the best quality products or services at
the lowest possible prices (Wong, Wong & Boon-Itt, 2015). It is pertinent to note that
because of the setback that it had faced in UK and other nations the focus of the organization
is on stabilization of its business current business operations. In addition to this, it is seen that
because of this the organization is inculcate the new business model of omni-channel
business model through the effective usage of which it is likely to offer both physical and

18CONTEMPORARY BUSINESS MANAGEMENT
also online shopping services to the customers (Jenkins & Williamson, 2015). In this regard,
it needs to be said that these measures of the organization are designed to help to gain
competitive advantage within the business market of Australia.
Capabilities of Wesfarmers
The key capabilities are organization under discussion here are listed below-
 Organizational: The organization had evolved its own brand of corporate
government and is also taking the help of various kinds of policies as well as
procedures for the improvement of the supply chain model followed by it and also its
business prospects in Australia and other nations.
 Human: The organization offers extensive training to the employees so that they are
being to perform as per the industry standard. In addition to this, it is seen that the
CEO of the organization Robert Scott is known as one of the best leaders in the
Australian world and renders various kinds of leadership and management services to
the organization (Wesfarmers.com.au, 2019).
 Physical: The organization is currently utilizing omni-channel business model
through which it offers both physical and also online shopping services to the
customers from the different parts of the nation.
 Reputational: The organization enjoys a positive brand image in the business world
not only because of its long history but also because of the large number of products
or services offered by it to the customers.
 Valuable: The focus on quality and also effective customer relationship management
are the two factors which had made the organization and also the products or services
offered by it to the customers valuable.

19CONTEMPORARY BUSINESS MANAGEMENT
VRIO Analysis
Value The effective human, financial and technological resources of the organization
had helped it in a substantial manner to pursue international expansion. This is
not only aimed to expand the business of the organization but at the same to
enhance the profitability of the organization and thereby help it to gain
competitive advantage
Rareness The subsidiary companies of Wesfarmers, namely, Coles, Target, Bunnings
Warehouse and others has not only enabled it to gain monopoly in the business
market of Australia but also to offer a wide variety of products or services to
the customers (Abc.net.au, 2019). This in turn contributes in a significant
manner towards the rareness of the organization.
Imitability The organization is currently using Platform strategy to enhance its tie-ups with
the various local dealers which in turn has channelized and thereby improved
the availability of goods or services manufactured by the organization in the
market (Morschett, Schramm-Klein & Zentes, 2015). This contributes in a
significant manner towards the imitability of the organization since the
organizations have to depend on vendors and third players for the delivery of
their goods or services in the market.
Organized The organization takes the help of hierarchical organization structure to
effectively organize the different departments of the organization to ensure the
steady flow of information and also to get the work of the organization
completed in an effective manner.

20CONTEMPORARY BUSINESS MANAGEMENT
Value Chain Analysis
A value chain analysis of the organization reveals the fact that the business activities
of the organization can be categorized into two sections, namely, primary and secondary. The
primary activities are related to inbound logistics, operations, outbound logistics, customer
service, sale and others. It is pertinent to note that for the effective management of these
activities the organization had an effective supply chain system, offers regular training to the
employees to enhance sale and also to manage effective relationship with the customers
(Ansoff et al., 2019). Furthermore, it is seen that through the usage of the Platform strategy
the organization had been able to create its own networks which in turn had much improved
the quality of supply system. More importantly, for the effective management of customer
relationship the organization had established a separate department for the management of the
same. In this regard, it needs to be said that the organization had been able to gain
competitive advantage because of the effective utilization of its human, technological and
financial resources for the management of the above mentioned primary activities.
SWOT Analysis
Strengths
The long history as well as the wide range of products or services offered by the
organization can be said to main strength point. Furthermore, the organization has active
interests in almost all the major industries, which means that although it is incurring loss in
one industry it would be able to make it up with the profit that it had earned from other
industries (Prajogo, 2016). More importantly, the omni-channel business model that the
organization is currently following is another strength point of the organization which
distinguishes it from others.

21CONTEMPORARY BUSINESS MANAGEMENT
Weaknesses
The major weakness of the organization can be said to be its inability to formulate
business strategies on the basis of the requirements of the external business environment and
also the changing needs of the business world (Vrontis et al., 2017). The net result of this is
that the organization failed to capitalize on the e-commerce model at the right moment and
this resulted in a substantial loss of competitive advantage in Australian business market. In
addition to this, because of extensive expansion followed by the organization it is facing
severe management issue and this resulted in the exit of Bunnings Warehouse from UK and
also the huge losses that Target Australia incurred for the fiscal year of 2018.
Opportunities
The major business opportunities which galores the organization is the full-fledged
use of the e-commerce business model which will enable it to offer services on par with
Amazon, Woolworths and others. In addition to this, the organization can also take the help
of Corporate Social Responsibility (CSR) practices to further enhance its brand image and
earn the loyalty of the customers. The organization of regular discounted sales is another
opportunity that the organization can utilize to enhance its business prospects.
Threats
The major threat that the organization is facing is the fierce competition that it is
experiencing in the Australian business market. Another threat that the organization is facing
currently is the problem of ineffective management. As already mentioned the organization
had become the victim of its own growth and thus it needs to formulate effective measures so
as to enhance the quality of management practices followed by it.

22CONTEMPORARY BUSINESS MANAGEMENT
Current strategies
Wesfarmers is currently taking the help of the omni-channel business strategy to offer
both online as well as physical shopping options to the customers. It is pertinent to note that
this strategy is being followed by the organization in response to the e-commerce business
model followed by its competitors (Wang et al., 2015). More importantly, in the present times
it is seen that the buying behavior of the customers have undergone a drastic change and they
are increasingly opting for the online mode of shopping (Chang, 2016). Thus, the
organization through the usage of this strategy hopes to reclaim the monopoly that it once
held in the Australian business market.
The organization is also taking the help of Platform strategy and the Green supply
chain management process. The primary objective of the organization behind the usage of
these tactics is to improve the effectiveness of the supply chain system used by them and also
to mitigate the damage that they are causing to the environment on the score of their business
operations (Saebi, Lien & Foss, 2017). More importantly, the organization with the objective
of improving the individual performance level of the different workers of the organization is
also taking the help of TQM strategy.
Digital marketing is another important strategy that the organization is currently
following to effectively promote as well as market the different products or services offered
by them to the customers. Furthermore, it is seen that the usage of this marketing is not only
cost effective for the organization but at the same time enables it to reach out to a
comparatively larger customer base in comparison to the traditional methods of marketing
and promotion (Jenkins & Williamson, 2015).

23CONTEMPORARY BUSINESS MANAGEMENT
Conclusion and Recommendations
To conclude, the external business in which an organization is operational wields a
significant amount of influence on the business activities of an organization and thus it
becomes imperative for the organizations to take into effective consideration the same. More
importantly, the requirements or the demands of the business world and also the customers
have changed in a significant manner in the present times and the organizations need to
integrate them within the framework of their business activities. This is perhaps one of the
major reasons why the organizations which are disregarding these factors of the business
world are increasingly finding it difficult to sustain themselves within the business world.
This becomes evident from the above analysis of the organization Wesfarmers and also the
manner in which it failed to take into effective consideration the key requirements of the
environment in which it was operational.
Three of the most important measures that the organization Wesfarmers can use to
enhance its performance are listed below-
 E-commerce: One of the major reasons for the problems that the organization is
currently facing in Australia was its inability to embrace the e-commerce business
model at the right time. Furthermore, organizations like Amazon, Woolworths and
others have been able to gain competitive advantage through the usage of this
business model. Thus, it is likely that the organization Wesfarmers are likely to gain
in a substantial manner through the usage of this business model.
 Corporate Level Strategies: The organization has become a victim of its own
growth and in order to address this problem the organization can take the help of
Stability strategies. The effective usage of these stability strategies will enable the
organization to stabilize its current business operations and thereby mitigate the
threats that it is currently facing.

24CONTEMPORARY BUSINESS MANAGEMENT
 Effective management practices: One of the major reasons for the setbacks that
the organization has received in UK and other nations is the ineffective management
practices followed by it. Thus, the organization through the improvement of the
management practices which it is currently utilizing can help the organization to
address the threats that it is currently facing in an effective manner.

25CONTEMPORARY BUSINESS MANAGEMENT
References
Abc.net.au, (2019). Wesfarmers net profit plunges nearly 87pc on Target and Bunnings UK
write-downs. Retrieved from https://www.abc.net.au/news/2018-02-21/wesfarmers-
profit-falls-87pc-on-target-bunnings-uk-write-downs/9469302
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., & Ansoff, R. (2019). Implanting
strategic management. Springer.
Australia.gov.au, (2019). Australian Government Home. Retrieved from
https://www.australia.gov.au/
Banerjee, S. B. (2017). Corporate environmentalism and the greening of strategic marketing:
Implications for marketing theory and practice. In Greener Marketing (pp. 16-40).
Routledge.
Chang, J. F. (2016). Business process management systems: strategy and implementation.
Auerbach Publications.
Epstein, M. J. (2018). Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Forbes.com, (2019). Wesfarmers on the Forbes Global 2000 List. Retrieved from
https://www.forbes.com/companies/wesfarmers/#431a670f5d0a
Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How
far have we come, and where should we go?. Journal of Management, 43(1), 200-227.
Frynas, J. G., & Mellahi, K. (2015). Global strategic management. Oxford University Press,
USA.

26CONTEMPORARY BUSINESS MANAGEMENT
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Hanson, D., Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management:
Competitiveness and globalisation. Cengage AU.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2015). Strategic management theory. Cengage
Learning,.
Hsu, C. C., Tan, K. C., & Mohamad Zailani, S. H. (2016). Strategic orientations, sustainable
supply chain initiatives, and reverse logistics: Empirical evidence from an emerging
market. International Journal of Operations & Production Management, 36(1), 86-
110.
Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis.
Routledge.
Kirchoff, J. F., Tate, W. L., & Mollenkopf, D. A. (2016). The impact of strategic
organizational orientations on green supply chain management and firm
performance. International Journal of Physical Distribution & Logistics
Management, 46(3), 269-292.
Leonidou, L. C., Fotiadis, T. A., Christodoulides, P., Spyropoulou, S., & Katsikeas, C. S.
(2015). Environmentally friendly export business strategy: Its determinants and
effects on competitive advantage and performance. International Business
Review, 24(5), 798-811.
Lloret, A. (2016). Modeling corporate sustainability strategy. Journal of Business
Research, 69(2), 418-425.

27CONTEMPORARY BUSINESS MANAGEMENT
Martinez-Conesa, I., Soto-Acosta, P., & Carayannis, E. G. (2017). On the path towards open
innovation: Assessing the role of knowledge management capability and
environmental dynamism in SMEs. Journal of Knowledge Management, 21(3), 553-
570.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international
management (pp. 978-3658078836). Springer.
News.com.au, (2019). Bunnings UK and Target savage Wesfarmers’ profit. Retrieved from
https://www.news.com.au/finance/business/retail/wesfarmers-poor-bunnings-uk-
target-performance-drags-down-profit/news-story/
19a6f05696ffeb33676e9b2077dff125
Pérez‐López, D., Moreno‐Romero, A., & Barkemeyer, R. (2015). Exploring the relationship
between sustainability reporting and sustainability management practices. Business
Strategy and the Environment, 24(8), 720-734.
Prajogo, D. I. (2016). The strategic fit between innovation strategies and business
environment in delivering business performance. International Journal of Production
Economics, 171, 241-249.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education,.
Saebi, T., Lien, L., & Foss, N. J. (2017). What drives business model adaptation? The impact
of opportunities, threats and strategic orientation. Long range planning, 50(5), 567-
581.
Schaltegger, S., & Wagner, M. (2017). Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.

28CONTEMPORARY BUSINESS MANAGEMENT
Sroufe, R., & Joseph, S. (Eds.). (2017). Strategic sustainability: the state of the art in
corporate environmental management systems. Routledge.
Vrontis, D., Thrassou, A., Santoro, G., & Papa, A. (2017). Ambidexterity, external
knowledge and performance in knowledge-intensive firms. The Journal of
Technology Transfer, 42(2), 374-388.
Waddock, S., & Bodwell, C. (2017). Total responsibility management: The manual.
Routledge.
Wang, G., Dou, W., Zhu, W., & Zhou, N. (2015). The effects of firm capabilities on external
collaboration and performance: The moderating role of market turbulence. Journal of
Business Research, 68(9), 1928-1936.
Wesfarmers.com.au, (2019). Home. Retrieved from https://www.wesfarmers.com.au/
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic
management and business policy. Pearson.
Wong, C. Y., Wong, C. W., & Boon-Itt, S. (2015). Integrating environmental management
into supply chains: a systematic literature review and theoretical
framework. International Journal of Physical Distribution & Logistics
Management, 45(1/2), 43-68.