Strategic Analysis: Wesfarmers Limited

This strategic analysis report provides an in-depth analysis of Wesfarmers Limited, including its business background, industry analysis, general environment analysis, competitive environment, and opportunities and threats. It also includes an internal analysis of the firm's resources and capabilities.

Running head: Strategic Analysis: Wesfarmers Limited
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Strategic Analysis: Wesfarmers Limited
Report
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1/12/2019

Strategic Analysis: Wesfarmers Limited 1
Contents
PART 1.......................................................................................................................................3
1. Business background..........................................................................................................3
2. What industry is it?.............................................................................................................3
3. General environment analysis............................................................................................3
Economic............................................................................................................................3
Physical...............................................................................................................................4
Sociocultural.......................................................................................................................4
Technological......................................................................................................................4
Legal...................................................................................................................................5
Political...............................................................................................................................5
Global..................................................................................................................................5
Demographic.......................................................................................................................5
Supplier power....................................................................................................................6
Buyer power........................................................................................................................6
Potential entrants.................................................................................................................6
Substitute products..............................................................................................................6
Rivalry among competitors.................................................................................................7
5. Competitive environment...................................................................................................7
6. Opportunities and threats....................................................................................................8
PART 2.......................................................................................................................................9
1. The firm’s resources, tangible and intangible....................................................................9
Resources............................................................................................................................9
1. Tangible Assets...............................................................................................................9
2. Intangible Assets.............................................................................................................9
2. Capabilities identification...................................................................................................9

Strategic Analysis: Wesfarmers Limited 2
3. Core competency analysis................................................................................................10
Strengths...........................................................................................................................10
Opportunities....................................................................................................................10
4. Proposed Information system solution and its Evaluation...............................................11
5. Recommendations............................................................................................................11
References................................................................................................................................12

Strategic Analysis: Wesfarmers Limited 3
PART 1
(External analysis)
1. Business background
Wesfarmers Limited is a conglomerate in Australian. Its headquartered is in Perth. It focuses
mainly on Australian and New Zealand Retail Company and manufactures coal mining,
fertilisers, chemicals and safety products and industrial products. Wesfarmers is one of the
largest Australian companies as far as revenue is concerned and earned about AU$65.98
billion in 2016. It is the largest private employer in Australia and has almost 220,000
employees working for the company (Wesfarmers 2019).
It was founded in 1914 with an aim to provide Western Australian farmers with services and
merchandise. It later became a major retail conglomerate.
2. What industry is it?
Wesfarmers Limited is a Public Company. The company earns the most from
the Supermarkets and Grocery Stores.
Mr Rob Scott is the Chief Executive of Wesfarmers Limited. Mr Michael Chaney is
the Chairman of Wesfarmers Limited (Bloomberg 2019).
Wesfarmers Limited operates a diverse range of businesses that are hardware, supermarket,
department stores, chemicals and fertiliser, gas processing, energy distribution, coal mining
and industrial and safety product industries.
3. General environment analysis
Economic
The economic factors associated to any organization are exchange rates, interest rates,
inflation rate these can immensely be responsible for the development of any organization.
Service sectors are very significant in the Australian marketplace. The service sector itself
produces 71.1 % of the Australian GDP. In Australia service and Finance are amongst the

Strategic Analysis: Wesfarmers Limited 4
most vital service organizations. With reference to these facts it is concluded that Wesfarmers
has a more highly profitable ranking position in the Australian market (University 2019).
Physical
Ecological sustainability is very essential for the process of directing business in the
Australian market, so organizations like Wesfarmers is credited for the creation of value for
its costumer’s shareholders and is sincerely engaged in awareness and work towards several
environmental issues. Some of these are prevention of environmental pollution and
conservation of energy.
Wesfarmers carries out all of its business related activities keeping in consideration the ten
Environmental and Community Impact Principles. These principles are guiding principles for
the company for energy effectual methods of production. The actions carried out by the
organization to ensure the welfare of the community. These include decrease in product
packaging and maintaining ecological sustainability this helps the company to carry on its
business smoothly and efficiently in Australia (Islam, Jain & Haque 2016).
Sociocultural
The social environment in Australia is an extremely significant aspect for the development of
the company. Social factors like cultural trends, demographics and population analytics are
important for the success of any organization.
Most Australian citizens prefer and have faith in the method of shopping where people can
come to one place and get all that they need. They favour to purchase the necessities items in
a huge amount once a week so it can last for the entire week coming ahead. This is why it is
an advantage for Wesfarmers that they have departmental and supermarkets store chains in
here (Chan, Yau & Chan 2013).
Technological
It is important to keep in mind that it is important for a business to have a sustainable method
of performing business especially in Australia. That is why companies like Wesfarmers must
also be more dependent on technologically advanced methods of production in for the
maintenance of its ecological sustainability in coming times as well. Considering this it is

Strategic Analysis: Wesfarmers Limited 5
vital to keep in mind that that Wesfarmers has implemented the use of technology that
ensures the use of low emission coal that will help to sustain their business incoming times.
Some other areas where the company works are Coal mining, chemicals, energy and fertilizer
production and that is why latest and solid technological foundation and constant innovation
is very much required in the development of their business in coming times (Luftman et al.
2013).
Legal
There are various rules and regulations that accompany the ruling and governing of the
Australian trade system. Some examples are business laws, labour law, resource law etc. The
company is supposed to obey all laws in order to conduct their business.
Political
The political factors determine the extent up to which a country’s government plays a
significant part in impacting the business of any organization, in the arrangement of any legal
guidelines. The organisation has a Coal mining department, and it should be kept in mind that
it has been made compulsory by the federal government of Australia that mining industries
exploitation has to be permitted by the government of state. The policies of the government
of Australia are more determined on the abolition of the trade protectionism as well as
restrictive policies that has resulted in the fact that free trade is allowed to be carried on by
the organizations of different countries in a more convenient manner by the organizations of
other countries. This particular policy might not lead to the economic growth of Wesfarmers,
because many foreign retail sectors might be able to easily enter the market. This will
increase competition for Wesfarmers (Antonini 2016).
Global
The organisation offers a wide range of products and services that are not exclusive for the
utilisation of any particular group of people and community and it mostly sells necessities,
which is why it is a global brand and provides to all. The company has its stores all over the
world.
Demographic

Strategic Analysis: Wesfarmers Limited 6
The company’s demographic comprises of all individuals as it has supermarket chains and
departmental stores that are accessed by everybody from general public of all in order to buy
their daily necessities.
The company also has chemicals and fertilisers department due to which its products are also
focused for people concerning that department such as scientists, farmers, agriculturists,
biochemical engineers etc. They also have gas processing, energy distribution, coal mining
department and thus concerns people associated with all these fields as well for the workers
associated to these works and the consumers who indirectly obtain their products and
services.
4. The industry environment
Supplier power
The organisation gets its resources from various different markets because of which it has a
diverse range of products. The competition for the organisation is quite limited in the supplier
market which is why it can be a huge obstacle for Wesfarmers it depends on a lot of suppliers
at one time (James 2013).
Buyer power
Wesfarmers carries on a lot of market research in order to take note of the changes in the
expectation and buying trends and behaviour of customers. The company promotes its
sustainable business methods which gives them added recognition. This is why the power of
buyer is moderate (Hubbard, Rice & Galvin 2014).
Potential entrants
Wesfarmers is an extremely recognized organization of Australia that is involved in the
production and retail trade of several products. So, it can be concluded that the entry
obstruction of Wesfarmers is quite high in comparison to its competitors. Due to the
recognition that it has the awareness of the brand and its varied market the danger from new
entrant is quite little (Dobbs 2014).
Substitute products

Strategic Analysis: Wesfarmers Limited 7
The company has implemented environment friendly and energy efficient production
methods. The company is also reputed for providing high quality consumer service. All these
aspects keeps the position of the company quite safe due to which its risk of substitute is
quite little (Booth & Coveney 2015).
Rivalry among competitors
Competing organisations lower their prices and decrease their profits when rivalry is very
high. Wesfarmers is involved in this competition as well. Due to the competition the profits
do get low at times.
How Wesfarmers can tackle Rivalry by:
 Developing scale for better competition.
 Constructing a sustainable differentiation.
 Collaborating with competitors to increase size and range in the market.
5. Competitive environment
The strategy of the company aims to competitive advantage. That means the company wants
to be capable of attracting and retaining maximum customers on the basis of their different
attributes that is provided by the company to perform better than its competitors (Vernon
2012).
Some changes in strategy for business improvement that the company has it has attained
following competitive advantages are:
 Unique business model – Creation of an exclusive business model that consists of
both physical store and online store has created competitive advantage for the
company (Sharma et al. 2015). The 24/7 availability including home delivery are
other aspects that provide competitive advantage.
 Product differentiation - The product vies assortment of Targets has and development
of merchandises to give more options to customers has been good for the company.
One of its daughter companies Target (Target 2019) has its own line of merchandises
that are designed according to the global trends (Kellner, Wagner & Toporowski
2014). This attracts more customers.
 Cost advantage – Provision of products in more reasonable prices.

Strategic Analysis: Wesfarmers Limited 8
 Value creation – Value creation means providing customers better products at a
cheaper price than other competitors and the organisation abides by it. This attracts
more customers.
6. Opportunities and threats
Opportunity Threat
 Expansion in a global level will
enable help the organization to
improve its revenue and increase
its profitability it will also be
easier for the organization to make
its name beyond Australia and
New Zealand.
 Wesfarmers can improve quality
and service.
 The level of income of the
consumers is constantly increasing.
 The prices of required raw
materials are rapidly increasing in
Australia.
 Competition from organizations
like Meta Cash Limited
Woolworths, Myer etc. (Biddle
2016)

Strategic Analysis: Wesfarmers Limited 9
PART 2
(Internal analysis and proposal)
1. The firm’s resources, tangible and intangible
Resources
 The entire staff including all employees irrespective of their level of involvement in
sales.
1. Tangible Assets
 Infrastructure
 Land
 Money in the form of Cash
 Machines and equipment
 Supplies for office
 Stock of products being sold and services being provided. For example: Industrial
equipment, chemicals, grocery items etc.
 Marketable securities
2. Intangible Assets
 Kindness
 Copyrights
 Corporate intellectual property
 Brand
 Permit
 Logos
 Secrets of trade
2. Capabilities identification
The organisation enjoys a very diverse market consisting Target, Coles etc. which is why
they are able to experience constant progress without the influence of any industry
recession.

Strategic Analysis: Wesfarmers Limited 10
 The company is among the most reputed ones around the globe in the entire world
and has gained huge recognition for its brand.
 The company has an exceptionally high rate of growth.
 The company has around 400000 shareholders.
3. Core competency analysis
The Strengths and opportunities of Wesfarmers are its core competences.
Strengths
 The organization is one among the largest and the oldest corporations of Australia. It
is a very diverse organization and its wide range of businesses includes supermarket,
insurance, energy, retail, and resources. The strategy of Wesfarmers’s is to form
association with and invest in more new fields so that it can spread and widen its
business and range even more and stay away from the influence of an industry
downturn.
 Wesfarmers is an extremely competitive organization. Their most important target is
to bring provide more advantages to their shareholders. Wesfarmers abides by the fact
that the development of an organization is dependent on the support it gets from its
shareholders which is why it interests around 400,000 shareholders to buy its shares.
Wesfarmers also pays attentions to all its employees.
 More than 50% Wesfarmers is taken over by Burnings. Burnings offers hardware for
home improvement. It has an exclusive strength when it comes to market share and its
wide range of products.
Opportunities
 Coles acquisition is an amazing opportunity for Wesfarmers. In 2007 in the month of
November Wesfarmers spent almost $22 billion to buy the Coles Group after which
they became the leader among Australian retailers. Wesfarmers always promotes
online shopping facilities like Coles online. Earlier Coles group was the 2nd biggest
supermarket chain of Australia.

Strategic Analysis: Wesfarmers Limited 11
 The organization also has the opportunity for the development of its international
strategy essentially for energy division and recourse; it can sell mine and energy for
the development of developing nations for fulfillment of the demand of resources.
 Wesfarmers has the opportunity of developing solar as well as wind power. This
technology will construct and strengthen the future of Wesfarmers business.
4. Proposed Information system solution and its Evaluation
To achieve the targets of the company, the organisation requires building a supervisory unit
to observe employee as well as work environment. Also employee performance is measured
by the unit and rewards are given accordingly (Renwick, Redman & Maguire 2013).
Team work is essential for organisation performance. Information must be shared and
transferred for ease in work. By the help of this way the workers will be capable enough to
work better in a team to achieve organisations targets.
Leadership is a very significant aspect for the management of human resource. The bosses
are accountable for encouraging and directing the employees to give their 100% and his/her
behaviour and the way he/she treats employees highly determines the work. The employees
must have active participation in decision making (Rahm & Riha 2012).
The quality of product must be third recognised party certified. Wesfarmers must use the ISO
standards. If the products are ISO certified more customers will be attracted (Jiang et al.
2012). The company must consult the Organization of Standardization in order to obtain the
standard certificate.
To ensure development in a social aspect the company must participate more in the social
programs of development along with the organizations that are local who perform social
work. To ensure development of the environment they must make use of technical
equipment’s that are energy efficient (Priem, Li & Carr 2012). They must ensure that carbon
emission is minimal.
5. Recommendations
 To increase profit for the organization along with increase in demand for their
business products provision and services. Burnings provides very low cost for home
hardware. The organization is responsible for the improvement of profit for Burnings.
 Improvement of performance of business for the addition of more value to services.
For example, insurance division can provide better service than other competitors.

Strategic Analysis: Wesfarmers Limited 12
 With the help of outstanding management and marketing activities the organization
can make the business larger with respect to size, physical facilities, improvement in
amenities that are offer and market scope in other countries. International strategy
should be developed to achieve this bigger spread and reach. The power of Australian
dollars is very high due to the decrease in the value of American dollars. This can be
used as an advantage international business expansion.
 Kmart division can be merged with the Target division because they sell the same
products and together they can provide bigger profits.
 For environmental protection the company must develop alternative environmental
recourses in place of mine like Solar and wind power.
References
Antonini, C 2016, An empirical analysis of environmental externalities incidence on financial
performance.
Biddle, I 2016, 'The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters battle',
Busidate, vol 24, no. 3, p. 3.
Bloomberg 2019, Company Overview of Wesfarmers Limited, viewed 12 January 2019,
<https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=875660>.
Booth, S & Coveney, J 2015, '‘Big Food’—The Industrial Food System', In Food
Democracy, pp. 3-11.
Chan, E, Yau, OH & Chan, R 2013, 'Consumer sentiment in Australia: a replication and
crossâ€national comparison', Asia Pacific International Journal of Marketing.
Dobbs, M 2014, 'Guidelines for applying Porter's five forces framework: a set of industry
analysis templates', Competitiveness Review, vol 24, no. 1, pp. 32-45.
Hubbard, G, Rice, J & Galvin, P 2014, Strategic management, Pearson Australia.
Islam, MA, Jain, A & Haque, S 2016, 'A Preliminary Analysis of Australian Government’s
Indigenous Reform Agenda ‘Closing the Gap’and Corporate Accountability', In Key
Initiatives in Corporate Social Responsibility, pp. 341-354.
James, D 2013, 'Supermarket self-regulation is a joke', Eureka Street, vol 24, no. 23, p. 55.

Strategic Analysis: Wesfarmers Limited 13
Jiang, K, Lepak, DP, Han, K, Hong, Y, Kim, A & Winkler, AL 2012, 'Clarifying the
construct of human resource systems: Relating human resource management to employee
performance', Human Resource Management Review, vol 22, no. 2, pp. 73-85.
Kellner, , Wagner, G & Toporowski, W 2014, 'Differentiation in Online Retailing from a
Consumer’s Perspective–A Repertory Grid Approach', InEuropean Retail Research, vol
Springer Fachmedien Wiesbaden, pp. 43-57.
Luftman, J, Zadeh, HS, Derksen, B, Santana, M, Rigoni, EH & Huang, ZD 2013, ' Key
information technology and management issues 2012–2013: an international study', Journal
of Information Technology, vol 28, no. 4, pp. 354-366.
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to technology innovation, entrepreneurship, and strategic management research', Journal of
management, vol 38, no. 1, pp. 346-374.
Rahm, BG & Riha, SJ 2012, 'Toward strategic management of shale gas development:
Regional, collective impacts on water resources', Environmental Science & Policy, vol 17,
pp. 12-23.
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and research agenda', International Journal of Management Reviews, vol 15, no. 1, pp. 1-14.
Sharma, D, Chowhan, D, Singh, D, Gupta, D & Shrivastava, M 2015, 'Consumer perception
on online-business: a marketing strategy for new entrepreneur', Sudhinder Singh and Gupta,
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Marketing Strategy for New Entrepreneur (January 15, 2015).
Target 2019, Target, viewed 12 January 2019, <https://www.target.com/>.
University, FF 2019, Wesfarmers Limited PESTEL & Environment Analysis, viewed 12
January 2019, <http://fernfortuniversity.com/term-papers/pestel/nyse4/4814-wesfarmers-
limited.php>.
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Wesfarmers 2019, Wesfarmers, viewed 12 January 2019,
<https://www.wesfarmers.com.au/>.

Strategic Analysis: Wesfarmers Limited 14