Macro Analysis of Wesfarmers' Expansion Strategy in Indonesia and Poland

Running head: INTERNATIONAL AND GLOBAL BUSINESS
INTERNATIONAL AND GLOBAL BUSINESS
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1INTERNATIONAL AND GLOBAL BUSINESS
Introduction
Wesfarmers Limited is referred to an Australian Conglomerate which has it’s
headquarter at Perth, Australia. The Company is the largest retail organization by
revenue in both Australia and New Zealand. Not only that, Wesfarmers is the largest
private employer in Australia. According to a recent survey, the company has
approximate 220,000 employees across the world. In spite of being the largest retail
organization in Australia, with the emergence of globalization, the management of
wesfarmers is experiencing increasing competition which in turn is imposing negative
impact on the revenue of the company. The chief reason behind this is the lack of global
presence of the Company. In order to gain competitive advantage and enhance its
yearly revenue, the management of Wesfarmers is developing strategy to expand its
business at Indonesia and Poland. In this report, the macro analysis along with the
analysis of its trade and business policy of both the mentioned countries will be
performed.
Analysis of Indonesia:
PEST Analysis
In order to understand the macro environment of the retail industry of Indonesia,
it is highly crucial for the management of Wesfarmers to conduct PEST analysis.
Political factor
The Political state of Indonesia is highly stable. The political system followed at
the mentioned nation is democratic. Stability o the political condition has imposed
positive impact on the retailed sector of the country. Political stability means better
business because political disruption leads to the disruption of supply chain and sales
(Hayami & Kawagoe, 2016). Moreover, in order to facilitate globalization, the
government of Indonesia has lowered several barriers to entry in the retail industry.
Thus, it has become easier for international retail organization to establish their
business in the Indonesian retail industry.
Economic factor

2INTERNATIONAL AND GLOBAL BUSINESS
Indonesia is a developing country and the government is taking various steps in
order to enhance the GDP in the following years. According to researchers, the GDP of
Indonesia has got increased by 5 percent in the year 2016 compared to the previous
year (Fiarni et al., 2016). The enhancement in GDP indicates that the daily purchase of
the consumers of the Indonesian retail sector is increasing. Moreover, the labor market
of the mentioned industry is much cheaper than that of the western retail industry. Thus
it can be understood that the economical condition of Indonesia will impose positive
impact on the business of Wesfarmers.
Social factor
Indonesia has a huge population and the population of the country is not at all
aging. More than 84.3 percent of the population is under the age range of 19 to 42
years. Moreover, the literacy rate of the country is 90.4 percent. Thus The retail sector
of the nation has the opportunity to recruit cheap an skilled labors. However, majority o
the Indonesians prefers shopping from local or street markets over international retail
outlets. This factor has the potential to impose negative impact on the revenue of
Wesfarmers in the long run.
Technological factor:
In spite of being a developing country, the mentioned nation is quite
technologically advanced. The country has 24 hours internet and transport facilities
which in turn impose positive impact on the retail industry of Indonesia. While the
transport facilities enables the retail organizations to maintain an effective supply chain,
the internet facility enable the same to sell their product through online marketing. Not
only that, retail organizations in Indonesia use popular social media platforms in order to
promote their products and enhance consumer loyalty (Magruder, 2013).
Trade and business policy
The business policy of the Wesfarmers includes
1. To deliver quality product to the consumers within an optimum price range