Organizational Change Management: Case Study Analysis

This case study analysis explores the impact of ethical, social, cultural, and environmental factors on organizational change in Wesfarmers, an Australian conglomerate. It examines the internal and external factors that have led to change, the role of leadership in change management, and how Wesfarmers communicates change with stakeholders. The analysis also discusses the results of the change process and the importance of strategic change for business sustainability.

Running Head: ORGANIZATIONAL CHANGE MANAGEMENT
Case Study Analysis
Change management in Wesfarmers

ORGANIZATIONAL CHANGE MANAGEMENT
Table of Contents
Introduction................................................................................................................................2
Wesfarmers................................................................................................................................3
Ethical, social, cultural and environmental factors impacting Wesfarmers...............................3
External and Internal factors that have led to change................................................................4
Role of leader ship in change management................................................................................5
How Wesfarmers communicate change with the stakeholders..................................................6
Results of change process..........................................................................................................6
Conclusion..................................................................................................................................7
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Introduction
Ethical, cultural, social and environmental factors are some of the imperative factors that
influence the ability of an organization to respond and compete in the business environment.
Eventually, the success of an organization is determined by these factors; since these factors
govern how the organization moves forward and how it is particularly responding to the
external environment. The paper particularly highlights the ethical, social, cultural and
environmental factors impacting Wesfarmers. Wesfarmers is an Australian conglomerate
which interests in New Zealand retail, fertilizers, chemicals, coal, mining, and industrial
safety products.
The paper will highlight the internal and external circumstances and factors that have led to
change in the organization. Internal and external business environments part an imperative
role in the business functioning. The paper will also describe how Wesfarmers approached
the changes and how they managed to cope with the changes in each and every aspect of the
business. Therefore, the report will primarily illuminate on organizational change.
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Wesfarmers
Wesfarmers was established as a co-operative in the year 1914 intended to deliver services
and merchandise to Western Australian farmers. There were more than 65 local co-operative
companies working as agents for Wesfarmers by the year 1919. In the year 1984, Wesfarmers
was registered on the Australian Securities Exchange and then it propagated into a major
retail corporation (Wesfarmers, 2019b). In the 2016 financial year, Wesfarmers upheld the
position of leading Australian company by revenue; with AU$65.98 billion the company
overhauled BHP and Woolworths. The company is the biggest private employer in Australia
with more than 220,000 employees (Wesfarmers, 2019a).
Wesfarmers have diversified business operations which include outdoor living & home
improvement, office supplies, apparels, and general merchandise, and industrial division with
several businesses in energy and fertilizers, industrial and safety products, and chemicals.
The company has a shareholder base of 490,000 (IBISWorld, 2019).
Ethical, social, cultural and environmental factors impacting Wesfarmers
Ethical factors: Wesfarmers’ principal objective is to manage their diversified business
portfolio with financial discipline and deliver agreeable results to the stakeholders.
Wesfarmers’ business model comprises core values of integrity, culpability, transparency,
and entrepreneurial spirit. The company guides each of their stakeholders, subsidiaries and all
of their associations with a code of conduct. For instance, Wesfarmers audited 4000 supply
stores in Asia to ensure that they are following ethical business practices and they do not use
bribery or bondage. The company found 39 critical breaches, from which they took remedial
actions at 21 factories and from the other 18 factories they stopped placing orders (Klinger,
2015).
Social factors: Australian government parts an imperative role in the growth of Wesfarmers.
Factors such as demographics, cultural trends, and population play an imperative role in the
company’s growth. For instance, Australians prefer to shop in a bulk quantity every week;
therefore, Wesfarmers would have a profitable business with supermarkets and departmental
stores (Wesfarmers, 2017c).
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Cultural factors: It is one of the imperative fragments of the business, as culture fosters the
spirit of teamwork and coordination. Wesfarmers considers that empowering culture
encourages achieving good results, and it also encourages the sense of responsibility as well
(Wesfarmers, 2018d).
Environmental factors: Ecological sustainability parts an imperative role in the success of any
business in Australia. Wesfarmers is effectively engaged in some of the crucial
environmental issues such as air pollution, energy conservation, and so on. Through this
means the company creates value for its customers as well as stakeholders (Wesfarmers,
2017c).
External and Internal factors that have led to change
Porter’s five forces would be used to analyze the external factors that have led to change in
Wesfarmers.
Threats of new entrants
 Access to distribution networks is easy for the new competitors capital requirement is
high – making it difficult for the competitors
 Product differentiation is strong
 Economies of scale are also strong in the industry (Hutchens, 2015).
Bargaining power of suppliers
 Suppliers are limited in the industry
 The products delivered by the suppliers are standardized, less differentiated and it has
low switching costs.
 Industry profits are closely tied.
 Bargaining power of the suppliers is weak in the industry
Bargaining power of the buyers
 Buyers do not have much control over the prices, as they do not have many options.
 Product differentiation is high; therefore there are less alternate firms.
 The buyer earning within the industry is low.
The threat of services or substitute products
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 There are very few substitutes available in the industry, but the prices are too high.
 The threat of services is weaker in the industry (Dickson, 2017).
Internal factors impacting change within the organization could be analyzed with the help of
SWOT analysis
Comprehending the internal and external analysis the fact can is implicit that Wesfarmers has
undergone or it is going through a lot of changes in recent times. The company needs to
effectively respond to the changes in order to uphold the competitive standing in the
marketplace. Wesfarmers have a lot of competitive advantage in the industry due to some of
the factors such as strong customer base, good customer satisfaction and strong flow of cash,
but new players can also impact the company because of access to the distribution networks
(Low & Hatch, 2017). This is the only present threat to Wesfarmers, or the capital
requirement is too high for the new companies to invest in the industry (market screener,
2019). Wesfarmers have recently restructured its organizational structure as a part of change
management; the company claims that this restructuring would help the organization to attain
better stability and to uphold strong management. Apart from the organizational
restructuring, the company has also invested a good amount for refurbishing existing stores
and also enhance their digital platforms to attract customers from diverse market segments.
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SWOT Analysis
STRENGTH
- High skilled
workforce
- High consumer
satisfaction
- Strong cash flow
- Good track
record
WEAKNESSES
- Inefficient
financial planning
- Not successful in
integrating work
culture with
different firms
- Weak demand
forecasting
OPPORTUNITIES
- Low inflation rate
- Low
transportation
costs
- Online consumer
channels
THREAT
- Rising pay level
- Intense
competition
- Non
environmental
regulations can
pose serious
threat

ORGANIZATIONAL CHANGE MANAGEMENT
These steps would help the organization to attain better sustainability in the challenging
business environment Wesfarmers (2019b).
Role of leadership in change management
Leaders part an imperative role in the change management process, as they aren’t resistant to
the people’s prospect. Employees in an organization rely on leaders for connection with the
organizational verdicts, attaining clarity and accountability in the middle of change process
(Ali, et. al., 2017). Role of leadership in change management process is as follows:
 Develop a strong connection between the employees and organization
 Support people to understand the organizational vision and cope with the changes
 Understanding the problems and fixing it with appropriate solutions (Ali, et. al., 2017).
How Wesfarmers communicate change with the stakeholders
Wesfarmers effectively communicate change with the stakeholders by creating a
communication plan in the initial stages. Before implementing any changes in the
organization, Wesfarmers ensures that the stakeholders are aware of every perspective of
change and they are contented with the changes. The company also ensures that every
stakeholder is engaged in a project life cycle (Husted & Allen, 2010).
Every organization undergoes resistance or difficulties while making any changes.
Wesfarmers have also undergone resistance while making changes in their organizational
structure. Employees in the organization would resist change because they would consider
that changes would complicate their job and position; apart from this direct and indirect
political influence also resists the organizational changes (Wesfarmers, 2019e).
The result of the change process
A notable change has been observed in Wesfarmers after making necessary changes in the
organization. Results of change process produced appreciable results for Wesfarmers, retail
businesses Bunning, Coles, Kmart, and Officeworks performed well for the financial year
2016. The company has refurbished its existing stores and digital platforms which have
resulted in good customer response. These changes have also offered sustainability to the
business as well.
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Conclusion
The fact is tacit every organization have to cope with the changes strategically in order to
attain business sustainability. The impact of external and internal business environments is
also one of the prime reasons to drive change in the organization. The paper encapsulates that
there were many external and internal environmental factors that driven change in
Wesfarmers. Ethical, social, environmental and cultural factors also influence change in the
organization. Through the paper, the fact can be comprehended that organizational changes
made in Wesfarmers helped them to achieve good business and to attain sustainability as
well. The company also considers engaging stakeholders in every part of the change process
in order to make sure that they are contented with the change.
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References
Ali, A.A., Singh, S.K., Al-Nahyan, M. and Sohal, A.S. (2017) Change management through
leadership: the mediating role of organizational culture. International Journal of
Organizational Analysis. 25(4), pp. 723-739.
Husted, B.W. and Allen, D.B. (2010) Corporate social strategy: Stakeholder engagement
and competitive advantage. Cambridge University Press.
IBISWorld (2019) Wesfarmers Limited – Premium Company Report Australia [Online].
Accessed from: https://www.ibisworld.com.au/australian-company-research-reports/retail-
trade/wesfarmers-limited-company.html [Accessed 13 April 2019]
Klinger, P. (2015) Ethical focus for Wesfarmers [Online]. Accessed from:
https://thewest.com.au/business/finance/ethical-focus-for-wesfarmers-ng-ya-130887
[Accessed 13 April 2019]
Low, C. & Hatch, P. (2017) Wesfarmers vows coles will be competitive forever [Online].
Accessed from: https://www.smh.com.au/business/companies/officeworks-for-sale-as-
wesfarmers-looks-to-cash-in-20170214-gud0f8.html [Accessed 13 April 2019]
Marketscreener (2019) Wesfarmers Ltd (WES) [Online]. Accessed from:
https://www.marketscreener.com/WESFARMERS-LTD-6491330/news/Wesfarmers-2019-
Half-year-Results-and-Special-Dividend-462-KB-28041146/ [Accessed 13 April 2019]
Wesfarmers (2019a) 1914 The Wesfarmers Story Begins [Online]. Accessed from:
https://www.wesfarmers.com.au/who-we-are/our-history/the-wesfarmers-story-begins
[Accessed 13 April 2019]
Wesfarmers (2019b) Who We are [Online]. Accessed from:
https://www.wesfarmers.com.au/who-we-are/who-we-are
Wesfarmers (2019c) Sustainability Report 2017 [2017]. Accessed from:
https://sustainability.wesfarmers.com.au/media/2464/2017-wesfarmers-sustainability-full-
report.pdf [Accessed 13 April 2019]
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Wesfarmers (2019d) Wesfarmers Shareholder Review 2018 [Online]. Accessed from:
https://www.wesfarmers.com.au/docs/default-source/reports/wes18-048-2018-shareholder-
review.pdf?sfvrsn=6 [Accessed 13 April 2019]
Wesfarmers (2019e) Stakeholder engagement [Online]. Accessed from:
https://sustainability.wesfarmers.com.au/our-report/stakeholder-engagement/ [Accessed 13
April 2019]
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