Internal Analysis of Wesfarmers: Strategy, Resources, and Performance

This report provides an internal analysis of Wesfarmers, examining its resources, capabilities, and strategic management. It explores how Wesfarmers leverages its diversified workforce and other resources to achieve a competitive advantage. The analysis covers key areas such as resource and capability assessment, utilizing the VRIO and VRINE frameworks to evaluate the value, rareness, imitability, and organization of its resources. The report also delves into Wesfarmers' dynamic capabilities and how the company uses the balanced scorecard to monitor and improve its financial performance, internal processes, customer relations, and employee qualifications. The conclusion emphasizes the importance of resources and capabilities for achieving sustainable competitive advantage, highlighting Wesfarmers' focus on building strong customer relationships through its unique workforce capabilities. The report references various Wesfarmers annual reports and academic sources to support its findings.

Management strategy and decision making 1
Management strategy and decision making

Management strategy and decision making 2
Introduction:
Internal analysis of the organization is considered as an exploration of the competency,
cost position and competitive viability in the marketplace of the organization. Generally, while
conducting the internal analysis it is possible to establish such measure which defines strengths,
weakness, opportunities and threats for the organization. The most important objective of
internal analysis is the determination of the organization’s strength and competency level. A
strong organization use updated technology and tools which can be used for the purpose of
achieving its goals. On the other hand, competent organization ensures solid brand identity
which is built on the basis of expertise, capabilities and resources within the organization
(Williams, 2018). This paper defines the internal analysis of the Wesfarmers and this is done in
lieu of different areas which include resource and capabilities as competitive advantage, VRIO or
VRINE, dynamics capabilities, and balanced scorecard. A brief conclusion is stated after that for
concluding this paper.
Resource and capabilities as competitive advantage:
Resources and capabilities are used by various organizations for the purpose of defining
their business strategy as the main source of competitive advantage. In this context, it can be said
that companies use the resources and capabilities for determining the long-term performance of
the company. Presently, there are number of companies which develop their strategy on the basis
of development and exploitation of internal capacities. On other side, if resources and
capabilities are considered as the important source of the competitive advantage, then it is also
considered that each company is armed with its own resources and capabilities which are unique
in nature and gives the company great source of competitive advantage (Milara, 2014). In case of
Wesfarmers, they use their resources such as human talent and diversified workforce to develop
strong relationship with the customers and this is considered as unique capability of the
Wesfarmers which provide great source of competitive advantage. I other words, competitive
advantage in case of Wesfarmer in diversity of workforce and this is the reason they focus on
building capabilities of their employees (Wesfarmers, 2018).
Capability Vs Competitive
strength -5 -4 -3 -2 -1 0 1 2 3 4 5

Management strategy and decision making 3
Capability area
Tangible resources
Physical 4
Technological 3
Contracts 4
Products and services 5
Information 2
Financial 3
Other 0
Intangible resources
Brands 4
Reputation 5
Customer Goodwill 3
Supplier goodwill 4
Employee goodwill 2
Strategic alliance 4
Parents 3
Process and system
Decision making 3
Operational systems 4
M.I.S. 2
Financial information 4
Reward system 4
Competitor intelligence 3
Industry knowledge 5
Environment knowledge 3
Culture
Values and attitudes 3
Alignment 2
Informal structure 0
Flexibility 1
Innovation 4
Change management 3
Learning 4

Management strategy and decision making 4
Risk taking 3
Effective execution 2
VRIO or VRINE:
VRIO is considered as the tool which mainly used for the purpose of evaluating the internal
resources and capabilities of the organization to determine whether they can used as a source of
sustained competitive advantage. VRIO stands for Value, Rareness, Imitability, organization.
Potential
Strategic
capabilities
Tangible /
Intangible
Valuable
for
customers
?
Rare?
Better
than
most
Limitable
? Time
required
to copy
Well
Organized
? Strategic capabilities
Diversified
workforce Intangible No Better No Yes
Yes, It has enhanced
the operational
capabilities of the
company.
Strong
customer
base Tangible Yes Better No Yes
The market base of the
company has been
enhanced and it has
helped the company to
enhance the revenue as
well.
Efficient
operational
system Intangible No Rare No Yes
The operational system
process is undergoing.
On the other hand, VRINE model is considered as that framework which mainly analyzes
the available resources on the basis of their capabilities and work levels (Carpenter & Sanders,
2009).
Factors Meaning Wesfarmers
Value Resource or capability is
considered as valuable only if
it provides the advantage of
opportunity to the company.
Diversified workforce is the
resource which has capability
to provide number of
opportunities to the company.
Rarity There is scarcity related to the Demand of the diversified

Management strategy and decision making 5
demand of the resources and
capabilities.
workforce is not met easily, as
it takes different factors to
achieve this.
Inimitability & Non-
substitutability
Resources are considered as
rare resources only if they are
not easily available to the
competitors.
Wesfarmers must ensure that
their workers are fully
satisfied with the company,
because it is necessary to
ensure their loyalty towards
the organization.
Exploitability It is possible for the firm to
take advantage of the
resources.
Wesfarmers utilize their
human resources in best
manner and ensure strong
customers base.
Dynamic capabilities:
Dynamic capabilities are considered as the ability of the firm to participate, build, and
reconfigure internal and external competences for the purpose of addressing the changes
occurred in the environment. It is possible to differentiate the dynamic capabilities from the
operational capabilities which are related to the current operations of the organization. Dynamic
capabilities in form of contrast refers to the organization capacity for the purpose of create,
extend, or modify the resource base of the organization (Teece, n.d.).
Wesfarmers mainly focus on ensuring that each and every division of the company is
incorporated with best and strong capability of the management and such management of the
company is accountable for strategy development and execution and also for the operational
performance conducted on daily basis (Wesfarmers, n.d.).
Balance Scorecard:
The balance scorecard is considered as the strategic planning and management system which
mainly used by the organizations for the purpose of:
 Communicating to the employees and other what they are trying to achieve.
 Distribute task to their workers on daily basis in context of strategy framed by the
organization.
 Through this system organization prioritizes their products, projects, and services.
 Organization uses this system to measure and monitor the progress in context of targets
sets under strategy.

Management strategy and decision making 6
This system connects the dots between the strategy of the big picture elements such as
mission, vision, core values, strategic focus areas, operational elements such as objectives,
measures or key performance indicators or KPIs, track of strategic performance, targets, and
initiatives (BSI, n.d.).
Balance Scorecard Template of Target Wesfarmers
2013 2014 2015 2016 2017
Financial
perspectiv
e
Reduce cost 15,762,000 14,389,000 14,895,000 16,209,000 16,973,000
Increased
revenues 59,422,000 59,893,000 62,102,000 65,512,000 68,015,000
Internal
process
perspectiv
e
Productivity 39,617,000 41,424,000 43,045,000 45,525,000 46,359,000
Employee
qualification
s Right place on
Right Job
Right place
on Right Job
Right place on
Right Job
Right place
on Right Job
Right place
on Right Job
Customer/
market
perspectiv
e
Customer
Services Better Enhanced
Continuous
improvements
Continuous
improvement
s
Continuous
improvement
s
Retain high
value
customers Better Better Better Better Better
Conclusion:
After considering the above facts, it can be said that resource and capabilities are the
most important factors of any organization as it provides important source through which
organization can achieve competitive advantage. It can be said that companies use the resources
and capabilities for determining the long-term performance of the company. Wesfarmers use
their resources such as human talent and diversified workforce to develop strong relationship
with the customers and this is considered as unique capability of the Wesfarmers which provide
great source of competitive advantage.

Management strategy and decision making 7
References:
BSI. Balanced Scorecard Basics. Retrieved on 10th May 2015 from:
http://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard.
Carpenter, M.A. and Sanders, W.G., (2009). Strategic Management: a Dynamic Perspective
Concepts and Cases . 2nd Upper Saddle River, N.J.: Pearson Prentice Hall.
Jurevicius, O. (2013) VRIO framework. Retrieved on 10th May 2015 from:
https://www.strategicmanagementinsight.com/tools/vrio.html.
Milara, I. (2014). Comparison of resources and capabilities in two companies. Retrieved on 10th
May 2018 from:
http://repositori.uji.es/xmlui/bitstream/handle/10234/97662/TFG_2014_MALOI.PDF?
sequence=4.
Teece, D. Dynamic Capabilities. Retrieved on 10th May 2015 from:
https://www.davidjteece.com/dynamic-capabilities/.
Wesfarmers, (2018). Diversity and capability of our workforce. Retrieved on 10th May 2018
from: https://sustainability.wesfarmers.com.au/our-businesses/industrials/chemicals-
energy-fertilisers/diversity-and-capability-of-our-workforce/.
Wesfarmers. The wesfarmers way. Retrieved on 10th May 2015 from:
http://www.wesfarmers.com.au/who-we-are/the-wesfarmers-way.
Wesfarmers, (2013). Annual Report. Retrieved on 10th May 2015 from:
https://www.wesfarmers.com.au/docs/default-source/reports/2013-annual-report.pdf?
sfvrsn=0.
Wesfarmers, (2014). Annual Report. Retrieved on 10th May 2015 from:
https://www.wesfarmers.com.au/docs/default-source/asx-announcements/wesfarmers-
limited-2014-annual-report.pdf?sfvrsn=0.
Wesfarmers, (2015). Annual Report. Retrieved on 10th May 2015 from:
https://www.wesfarmers.com.au/docs/default-source/reports/2015-annual-report.pdf?
sfvrsn=4.
Wesfarmers, (2016). Annual Report. Retrieved on 10th May 2015 from:
https://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?
sfvrsn=4.
Wesfarmers, (2017). Annual Report. Retrieved on 10th May 2015 from:
https://www.wesfarmers.com.au/docs/default-source/reports/j000901-
ar17_interactive_final.pdf?sfvrsn=4.

Management strategy and decision making 8
Williams, R. (2018). Why Is an Internal Analysis Important?. Retrieved on 10th May 2018 from:
http://smallbusiness.chron.com/internal-analysis-important-80513.html.