Risk Assessment and Mitigation Plan for Wesfarmers

Wesfarmers, an Australian retailer, faces risks due to Amazon's entry in the market. The company needs to assess these risks and develop a mitigation plan to ensure its financial stability. This assignment provides a detailed analysis of the risks, opportunities, and stakeholder objectives. It also outlines a risk assessment plan with strategies for mitigation and evaluation. The plan aims to minimize the impact of Amazon's presence on Wesfarmers' business.

Running head: COMMUNICATIONS AND INFORMATION TECHNOLOGY
COMMUNICATIONS AND INFORMATION TECHNOLOGY
Name of the Student
Name of the University
Author note

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Executive Summary:
The concerned project deals with the various facets of the risk which is presented by the
entry of Amazon into the Australian retail sector. The project deals with the company
Wesfarmers limited which is one of the largest retail companies in the island continent of
Australia. The various degrees of risks associated with the entry of a rival in the retail market of
Australia have been discussed in detail. The report delves into the varying degree of risks
associated with their entry to the business of Wesfarmers Limited.

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Table of Contents
Introduction:....................................................................................................................................3
Discussion:.......................................................................................................................................3
What is this 'Risk'?.......................................................................................................................4
Legal framework and Standard and Area of address:..................................................................4
Type of Risk and its Responsibility:............................................................................................5
Stakeholders and their Objectives:..............................................................................................5
SWOT Analysis:..........................................................................................................................6
Critical Success Factors:..............................................................................................................6
Communication with Stakeholders:.............................................................................................7
Risk assessment:..........................................................................................................................7
Risk priority:................................................................................................................................7
Opportunities and Risk assessment plan:....................................................................................8
Conclusion:......................................................................................................................................8
References:....................................................................................................................................10

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Introduction:
Business risks form an integral part of every business organization. Business entities
regularly work in a dynamic environment which has its own set of trials and tribulations. The
unpredictability of this ecosystem makes every business a risky venture. Wesfarmers Limited has
been selected as the organization for the concerned report and it also has its own set of risks
associated with it, competition from its rivals, being the most significant one. Amazon has
become one of the most powerful rivals of the Australian retail conglomerate Wesfarmers
Limited. The report deals with the various kinds of risks associated with Amazon, stakeholders
of the company, SWOT analysis of the company, assessment of the risk and implementation of
an action plan to mitigate the risks associated with the competition from rivals like Amazon.
Discussion:
Wesfarmers is a reputed Australian conglomerate which primarily deals in retail, energy,
fertilizers, chemical, liquors and hotels( George et al. 2014). Its headquarter is located in
Western Australia. It is one of the largest private sector companies of Australia and has
shareholder strength of approximately 530,000 (Wesfarmers.com.au 2018). Morgan Stanley, one
of the leading financial services firm has reported that Wesfarmers have to face the uphill task of
dealing with the threat of Amazon, which has ventured into the island nation's retail sector. This
direct rivalry from a global giant like Amazon has posed a significant risk for Wesfarmers. The
details about the risks have been discussed below:

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What is this 'Risk'?
Morgan Stanley reports have said Wesfarmers can lose $400 million revenue to the e-
commerce giant Amazon. They have concluded that Wesfarmers will be mostly affected because
of Amazon's arrival in the island continent (Klettner et al. 2014). They have specifically
mentioned that Wesfarmer's departmental store businesses will take a hit as Amazon enters the
foray. This risk can be classified as a business risk caused by an external factor such as a
competitor's entry into the target market.
Legal framework and Standard and Area of address:
The given risk arises from an external force, which is the entry of a new rival in the
market. The risk arising from such entry is manifold. Amazon has been a concern for the US
markets, as it has been successful in providing everything in its retail section from toothbrush to
shirts at competitive prices. Its ability to implement its success model in other countries have led
to the tumbling of the share prices of Wesfarmers for the past three months. However, in order to
address the unethical impact of the new competition, the Australian Competition and Consumer
Commission is there. Its section 45 deals in Anti-Competitive behavior of rival companies and
puts in a check unethical competitive prices which can cause disruption of healthy competition in
the market (Corones 2014). The Auditing standard 315 follows over here, which assesses the risk
of material misstatement through understanding of the entity and its environment. The risk
addresses the commercial relationships of Wesfarmers and the trading of Wesfarmers. The threat
of new competition may hamper this commercial relationship between Wesfarmers and its
various stakeholders and competitors.

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Type of Risk and its Responsibility:
Strategic risks are those risks which arise from the external factors like competitors,
consumer preferences, technological up gradation, or some drastic changes in the market forces.
These risks require a change of strategy on the part of the affected company. This strategy along
with a robust and constant feedback platform should be built to counteract such risks. The
present risk of the entry of Amazon is a prime example of strategic risk and no can actually be
held responsible for these risks as these are beyond human control but responsibility of
mitigating these risks and ensuring no unethical misstatements are presented to the stakeholders
of the company to minimize the effect of these risks on the financial matters of the company
should be borne by the management of the company.
Stakeholders and their Objectives:
Customers: They are one of the most important stakeholders of the company. Receiving
quality products at affordable prices, voicing their concerns regarding faulty products and
reporting of feedback to Wesfarmers in a timely and direct manner are some of their crucial
objectives (Akbar and Ahsan 2014).
Suppliers: The suppliers look to ensure timely and proper delivery of their supplies to
Wesfarmers and receiving necessary prices for the same in a time bound manner (Kenny 2013).
Wesfarmers maintain healthy relationships with their suppliers.
Government: Government is an important stakeholder of the company. Ensuring
compliance of tax procedures and ensuring carrying out of commercial responsibilities of
Wesfarmers in an ethical manner is an important objective of the government.

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Employees: The primary objective of the 220,000 employees of Wesfarmers is to ensure
conducive working conditions and just remuneration.
Community: The communities are an inextricable part of Wesfarmers. They want proper
functioning of the Corporate Social Responsibility wing of Wesfarmers, so as to ensure overall
wellbeing of the business and its communities on a whole.
SWOT Analysis:
Strengths: Brand legacy, convenient customer service, community initiatives, large
number of workforce and dedicated workforce and sales through online format
(Wesfarmers.com.au 2018).
Weakness: Constant media scrutiny because of being a market leader and market limited
to Australia.
Opportunities: Scope of expansion in foreign locations, exemplary services and loyal
customer base.
Threats: Rising competition from major foreign players and economic downturns
affecting company performance.
Critical Success Factors:
Critical success factors are those key areas which have significance impact on the firm's
performance. The major CSFs of Wesfarmers are:
 Successful acquisitions.

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 5-year plans.
 Product research and development.
 Customer satisfaction.
 Diversification of business.
All these factors impact Wesfarmers profitability and performance in different ways
which ultimately impacts its financial performances (Jones et al. 2014).
Communication with Stakeholders:
The various stakeholders of the company would be communicated about the necessary
adjustments arising out of Amazon's entry by way of meetings in a timely manner.
Risk assessment:
The risk assessment shows that the entry of e-commerce company like Amazon may
cause major injuries to the overall health of Wesfarmers and the level of risk is 'H', which shows
that senior management attention is needed.
Likelihood of the problem arising is very high unless stringent steps are taken to mitigate
the risks associated with the entry of Amazon in the Australian retail sector. The major
consequences being loss of market share, financial goodwill, customers and drastic decrease in
profitability.
Risk priority:
The risk can be prioritized in 'H' category which requires robust planning at senior
management levels to discuss plans to mitigate the risks. This can lead to change of market

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strategy, possible merger or amalgamation with Amazon to decrease the impact of the risk
(Harding 2013).
Opportunities and Risk assessment plan:
The concerned risks present a list of opportunities to Wesfarmers which could act as
prospective lifelines for the company. A possible merger, amalgamation with a reputed
competitor, sharing of technical expertise, expansion beyond Australian market etc (Moscardo et
al. 2013)
The risk assessment plan involves constructing a fool proof plan to mitigate the financial
losses arising from such a risk. It shall be prepared with active involvement from the
management of the company with the approval of all the stakeholders of Wesfarmers. The plan
shall involve identification of root cause, preparing and assessment of strategies and selection of
a suitable one. The financial records need to be maintained as the impact of such strategies has a
direct bearing on financial performance of a company. Weekly communication with the
stakeholders will be done to report every step of implementation. A risk register can be
maintained for evaluation purpose, like the one given below.
(Created by Author)
Conclusion:
The concerned report deals with the various risk aspects of the entry of Amazon in the
Australian retail sector for Wesfarmers limited. Stakeholders and their various objectives have

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been presented. The impact of the risk of Amazon’s entry on the business of Wesfarmers has
been shown. The opportunities presented by such kind of risks also have been shown in the
report. The kind of risk it proposes, the stakeholders of the company, mitigation plan, evaluation
plan of the risks have been discussed in detail.

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References:
Akbar, S. and Ahsan, K., 2014. Analysis of corporate social disclosure practices of Australian
retail firms. International Journal of Managerial and Financial Accounting, 6(4), pp.375-396.
Corones, S., 2014. Competition policy review: draft recommendations on competition
laws. Australian Business Law Review, 42(6), pp.479-486.
George, R., Bennett, D., Ham, C. and Ruprecht, J., 2014. Planning to develop sustainable
irrigated agriculture in Northern Western Australia. In NRM Tipping Point Conference,
Busselton, April.
Harding, D., Shankar, S. and Jackson, R., 2013. The renaissance in mergers and acquisitions:
The surprising lessons of the 2000s. Bain & Company.
Jones, P., Comfort, D. and Hillier, D., 2014. Environmental and Social Programmes and Rapidly
Growing Retailers. Economia Seria Management, 17(1), pp.5-17.
Kenny, G., 2013. The stakeholder or the firm? Balancing the strategic framework. Journal of
Business Strategy, 34(3), pp.33-40.
Kenny, G., 2013. The stakeholder or the firm? Balancing the strategic framework. Journal of
Business Strategy, 34(3), pp.33-40.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible business
strategy. Journal of Business Ethics, 122(1), pp.145-165.

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Moscardo, G., Lamberton, G., Wells, G., Fallon, W., Lawn, P., Rowe, A., Humphrey, J.,
Wiesner, R., Pettitt, B., Clifton, D. and Renouf, M., 2013. Sustainability in Australian business:
principles and practice. Wiley-Blackwell.
Wesfarmers.com.au. (2018). Cite a Website - Cite This For Me. [online] Available
at:https://www.wesfarmers.com.au/docs/default-source/corporate-governance/audit-and-risk-
committee-charter.pdf?sfvrsn=4 [Accessed 7 Mar. 2018].
Wesfarmers.com.au. (2018). Home. [online] Available at: http://www.wesfarmers.com.au/
[Accessed 7 Mar. 2018].