Environmental Analysis of Wesfarmers

THE BUSINESS ENVIRONMENT
(PART – A)

CONTENTS
INTRODUCTION ..................................................................................................... 3
TASK – 1................................................................................................................. 3
Porters five force analysis ..................................................................................3
Micro-environmental factors............................................................................... 4
Strategies to counter potential risks ..................................................................4
CONCLUSION ........................................................................................................ 5
REFERENCES ......................................................................................................... 6

INTRODUCTION
The significance of macro and micro environmental analysis of the firm cannot be
overstated. It supports the firm in understanding and analytically analyse the strategies
required for growth and survival of the company. In this current research report, Wesfarmers
is being taken under consideration. It is one of the leading Australian organization and
dominating the retail (Hubbard, Rice, and Galvin, 2014). The company is headquartered in
Perth, Western Australia dealing in production of chemicals, fertilizers, industrial products
and lot more things. It has given employment opportunities to more than 2 lakh people all
across the nation and have greater prospect to flourish in future. Keeping this in account, the
environmental analysis of Wesfarmers will be carried out. Here, Micro-environmental factors
affecting the operations, performance and profitability of the firm will be analysed and
suitable strategies to counter potential risks will be proposed significantly.
TASK – 1
Porters five force analysis
For the purpose of adopting effective and powerful strategy, there is a need to
enhance the competitiveness of the business of Wesfarmers. For this, porter’s five force
analysis is quite needed: Threat of New Entrants – Talking in relation with Wesfarmers, it is quite popular firm
in Australia dealing in retail trace of different items like safety chemicals, industrial
and energy chemicals, hardware, production of fertilizers, insurance and many more.
With these diversities in place, it can be well attributed that the firm has higher entry
obstruction in relation with its competitors (Dobbs, 2014). The threat of new entrant is
relatively low due to the company’s brand awareness, recognition and diverse market. Bargaining power of Suppliers – The company takes resources and raw-materials
from various markets because they have different variety of products. This should be
noted that there is limited competition in the supplier market of the firm and thus, this
can prove as a main barrier for Wesfarmers, as they are majorly dependent on too
many suppliers. Bargaining power of buyers – The company performs market research on a regular
basis for comprehending the changing preferences and taste of the buyers. They also
engage in promoting sustainable approach for carrying out business that raises further
recognition to an already popular firm like Wesfarmers. Thus, it can be said that the
bargaining power of buyer is quite moderate (Wesfarmers, 2012).
3