Strategic Management - Wesfarmers Case Study

This report is based on the case study on Wesfarmers, an Australian conglomerate based in Perth. The report discusses the strategies and actions of Wesfarmers in response to their business environment that have allowed the business to carve its position as the market leaders in Australia. It covers the building blocks, generic strategies, forces that have shaped Wesfarmer's response to the market, international ventures, and ways to improve its performance and long term sustainability.

Running head: STRATEGIC MANAGEMENT
Strategic Management
-Wesfarmers Case Study (topic 1)
Name of the Student
Name of the University
Author Note

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Table of Contents
Part A:........................................................................................................................................2
Section 1.................................................................................................................................2
-Identification and analysis of the generic building blocks that this organization is
expressing...........................................................................................................................2
-Identification and analysis of the generic strategies that this organization is expressing
109......................................................................................................................................4
-Building blocks that are the most important for the firm.................................................5
-Relationship between the four blocks...............................................................................5
Section 2.................................................................................................................................6
-Analysis and discussion of the forces that have shaped Wesfarmer's response to the
market.................................................................................................................................6
Section 3.................................................................................................................................7
.-Examination and comment on Wesfarmers International Ventures................................7
-The rationale of such ventures..........................................................................................7
-Approach taken by the firm in the other markets.............................................................8
-Conformity of the firms strategy to the theory.................................................................8
-Competencies that are leveraged in international activities..............................................8
Section 4.................................................................................................................................8
-What can the firm do to improve its performance and long term sustainability?.............9
Reference to strategic management theories......................................................................9
-........................................................................................................................................10

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Part B....................................................................................................................................11
-A brief report that demonstrates the work on the module activities and participation in
the class............................................................................................................................11
References:...............................................................................................................................14

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Part A:
This part of the report is based on the case study on Wesfarmers, an Australian conglomerate
based in Perth. The company primarily deals with coal mining, fertilizers and chemicals and
is one if the biggest companies in Australia, followed by BHP and Woolworths. The
company has annual revenues of about 68.44 billion AUD, operating income of 4.4 billion
AUD and net income of 2.88 billion AUD. The organization employs 223 thousand
employees and owns a number of subsidiaries (Kotler et al., 2015).
Discussed below are the strategies and actions of Wesfarmers in response to their business
environment that have allowed the business to carve its position as the market leaders in
Australia.
Section 1
-Identification and analysis of the generic building blocks that this organization is
expressing
Wesfarmers clearly expresses and outlines four generic building blocks that have influenced
the business strategies and actions. These four building blocks is what outlines the
‘Wesfarmer’s Way’ that influences the core values, growth enables and the value creating
strategies used by the business and includes the following:
 Boldness: This building block helps to support a robust financial capacity of the
business and thus ensure sustainability through the approaches of responsible
management in the long term, this also develop the business through operating
excellence and addressing the needs and expectations of the customers.
 Integrity: This building block focuses on developing the competencies and skills of
the people and secure commercial excellence and thereby secure opportunities for

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further growth and development for the business. This factor relates to the
development of professional attitudes and approaches within the workforce to develop
workforce integrity.
 Openness: This block focuses on the culture of the organization that influences how
members of the organization adopt new systems within the operations and the
openness to change that is shown by the people. This helps businesses to achieve
entrepreneurial success in the market.
 Accountability: This building block focuses on factors such as social responsibility as
well as the development of financial capacity of the people. A sense of accountability
within the workforce further helps to ensure that the employees shows responsibility
and ownership towards their actions and activities.
(Hubbard et al., 2014)
Figure 1. Building Blocks of Wesfarmers policies and strategies. Source: Hubbard et
al., 2014

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-Identification and analysis of the generic strategies that this organization is expressing
109
The corporate strategy that is used by Wesfarmers in order to provide satisfactory returns to
the shareholders is based on four overarching strategies, that can be associated with the four
building blocks identified above, these generic strategies are as follows:
 Developing the existing business processes through excellence in operations and
satisfying the needs of the customers: This strategy focuses on meeting the needs and
expectations of the customers in order to promote better brand loyalty and brand value
and thereby help to address the objective of achieving commercial excellence, and
create outstanding value for the people and thereby achieve the building block of
Integrety.
 Securing opportunities for growth using various entrepreneurial initiatives: This
strategy focuses on achieving growth opportunities in the market and thereby address
the objectives of innovation and empowering culture and thus develop the building
block of Openness,
 Renewing the portfolio of the business using value adding transactions: This strategy
focuses on the aspect of improving the competency of the business to incorporate
social responsibility and innovation in its operations and thereby help to develop the
building block of Accountability.
 Implementing sustainability of the business through the approaches of long term and
responsible management: This strategy focuses on the development of business
sustainability and improve the financial capability of the business and thereby help to
develop the building block of boldness.
(Kilroy & Schneider, 2017)

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-Building blocks that are the most important for the firm
The building blocks that are significantly important for Wesfarmers through which it can
deliver satisfactory returns for the shareholders includes the following:
 Generation of Cash Flow: This is concerned with the approach to increase long term
earning, managing effectively the working capital of the business, support strong
capital investments, investing above the capital expenses and developing a financial
discipline for the business.
 Strength of Balance Sheet: This approach is concerned with the development of
diversity of funding sources, optimizing the funding costs, maintaining an effective
metrics for credits and perform risk management for the maturities.
 Long term Shareholder Returns: This approach is focused on the improvement of
returns on the capital being invested, increase the dividends of the business with time
and also support better capital management.
 Acquisition Approaches: This approach is focused on the growth and diversification
of the business through acquisitions and thereby increase long term sustainability of
the company in the market.
(Bayne et al., 2017; Collings et al., 2017)
-Relationship between the four blocks
Through the value of boldness, it is possible to support the growth enablers of creating a
robust financial capacity for the business and create a workforce of outstanding people to
support the business success. This in turn can help to support business sustainability and
develop the competencies of the workforce to address the needs of the customer (Bajracharya
& Hastings, 2015).

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The value of integrity can support commercial excellence for the business as well as
supporting the outstanding people of the business. This can help the business the secure new
opportunities of growth as well as address the market trends in terms of customer
expectations (Jie & Gengatharen, 2019).
The value of openness can support the growth enablers of an empowering culture and
innovation within the workforce. This in turn can support a renewed portfolio of the business
and help the business to secure new business growth opportunities (Coal¸2018).
The value of accountability can be related to the growth enablers of social responsibility
and innovation. This can help to address the strategies of renewing the company portfolio
and develop business sustainability through sustainable and responsible management
approaches for the long term (Campbell, 2017).
The four building blocks of the company’s values are therefore interconnected through their
association with the growth enablers and the value creating strategies identified by
Wesfamers.
Section 2
-Analysis and discussion of the forces that have shaped Wesfarmer's response to the
market
The response of Wesfarmers to the market and its market and operational strategy have been
influenced by the following forces that are outlined in the Porters Model. These forces
include:
 Threats of New Entrants: Entry on new businesses have prompted Wesfarmers to
revise its pricing strategy to make them more competitive and provide more value for
the customers.

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 Bargaining Power of Suppliers: This influences the overall profitability of the
business and have prompted Wesfarmers to develop better supply chain and a network
of dedicated suppliers.
 Bargaining Power of Buyers: This influence the pricing of the products and also have
prompted the business to provide better discounts to the buyers, create new and
innovative products.
 Threats of substitute services or products: The risks of substitute products and
services overtaking the services and products of Wesfarmers have prompted the
business to focus on its services and customer satisfaction to retain customer loyalty.
 Rivalry among existing market competitors: This influences the overall long term
sustenance and profitability of the business and have prompted the company to
differentiate its products and services from the competitors and also develop
collaborations with many competitors for mutual benefit.
(Ansoff et al., 2018)
Section 3
.-Examination and comment on Wesfarmers International Ventures
The international ventures of Wesfarmers has been focused on the four key strategies and
their building blocks of the business. This approach have allowed the business to make
continuous improvements in the business approaches, optimizing its performance and
productivity and also reduce the operational costs of the business.
-The rationale of such ventures
These ventures can be justified or rationalized based on the following outcomes for the
business that has been published in the company’s annual report of 2017:

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 Increasing the return on equity from 8.9 (in 2013) to 12.4 (in 2017)
 Improving earnings per share from 195.9 (in 2013) to 254.7 (in 2017)
 Improving net profit after tax from 2,261 (in 2013) to 2,873 (in 2017)
 Increase in free cash flow from 2,171 (in 2013) to 4,173 (in 2017)
(Ginter et al., 2018)
-Approach taken by the firm in the other markets
The approaches taken by Wesfarmers in other market is the approach of portfolio
management, operational restructuring, transfer of skills and sharing of activities through
which the business have been able to manage operational uncertainties, reduce risks in
foreign markets and exploit opportunities for growth (Hitt & Duane Ireland, 2017).
-Conformity of the firms strategy to the theory
The business have followed strict guidelines to follow the strategies and approaches and thus
maintain a high degree of compliance to its objectives and aims and thus achieve success in
the market (Coal, 2018).
-Competencies that are leveraged in international activities
Some of the key competencies that are being leveraged by Wesfarmers within its
international activities include the following:
 Meeting the customer needs and expectations
 Using opportunities for growth in both existing and new markets
 Developing organizational culture to support organizational success and growth
 Ensuring sustainability of the operations that can benefit all stakeholders (internal and
external)
(Knox, 2015)

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Section 4
-What can the firm do to improve its performance and long term sustainability?
In order to further improve the performance and long term sustainability of Wesfarmers, the
following approaches can be adopted by the firm:
 Optimizing the use of resource and preventing waste of resources: This can support
sustainability for the firm by reducing the operational costs of the business and
thereby limiting the business expenditures.
 Regular assessment of the skills of the employees: this can help to ensure that the
skills of the employees are monitored and the need for further training and
development identified and increase the firm’s performance.
 Developing a competency map to chart progress: This can guide the management to
understand the progress of the business and further need for competency development
and thus improve performance.
 Understanding the trends in the market: This can help the firm to respind t the market
changes more appropriately and thus ensure better sustainability.
(Bajracharya & Hastings, 2015)
Reference to strategic management theories
The approaches of the firm can be associated with the following strategic management
theories:
 Industrial Organization Theory: This theory posits the significance of the competitive
forces in the market that determines the performance of the firm. The form have used
this theory to understand and evaluate its competition and take appropriate measures
to gain competitive advantages.

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 Evolutionary Theory: This focuses on the evolution of the business process over time,
which have been evident from the firms approach to slowly improve its operational
performance.
(Collings et al., 2017)
-

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Part B
-A brief report that demonstrates the work on the module activities and participation in
the class
During the module activities, various important factors could be learnt. The module was
covered in 6 important topics that focused on the best approaches of strategic management
that can be adopted by international businesses and thus help in the development of the
knowledge and understanding of international business managers. The topics included the
following:
Topic 1: Functional Level Strategies
In this topic the strategies that are implemented at the functional levels were discussed and
explored. This included information on various strategic approaches that aimed to develop
and support the processes of marketing, finance, production, operations, Human Resource
Management and research & development. The strategies therefore focuses on the processes
that occur at the functional levels within the organization itself and are influenced by the
goals, objectives and actions of the different departments within the business. The functional
level strategies therefore helped to understand the approaches taken by businesses to improve
or support their day to day operational functions across the different departments and help in
the strategic planning of the business and inform the strategic directions of the management.
Topic 2: Business Level Strategies
Business Level Strategies are those that are implemented at the overall business level, and
followed throughout the organization. This topic helped to understand the important
strategies that can be implemented at the business level such as cost leadership,
differentiation, cost focus and differentiation focus. These strategies are influenced by the

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competitive advantage of the business as well as its competitive scope through which it can
address the factors of uniqueness, cost, and target range (narrow or broad). These strategies
have been useful to develop understand of the best approaches of managing an organization
and thereby help in the development of the skills and competencies in management of an
organization. Furthermore, it can also be noted that the business level strategies are necessary
approaches to ensure an increase in compliance to the business approaches and support best
practices and outcomes from the strategic actions in the business through the development of
the overall culture in the organization (Kilroy & Schneider, 2017).
Topic 3: Global Level Strategies
The global level strategies are the one that can be implemented at the global level and
followed by industries across various countries and markets. It is also the strategy a company
uses in order to compete in the global market and thereby use them when the company
intends to expand internationally. The strategy therefore refers to the approaches of the
business to grow buying the current geographic boundaries. The topic helped to understand
the learn about the different global strategies that can be used by businesses in order to enter
into a global market such as foreign direct investments (FDI), joint ventures, contractual
agreements and licensing. Through the course of this topic, it was possible to understand the
merits and demerits of each of these strategies and thereby understand its appropriateness in
various situations and contexts.
Topic 4: Global Level Strategies and Customer responsiveness 74
This global strategy is specifically associated with the importance of responsiveness to
customer needs and expectations and thereby modifying the business processes and
approaches to address them. The topic was useful to understand how through the various
global strategies, responsiveness to customer expectations can be addressed by businesses.

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The topic was also pivotal to develop and understanding on the best approaches through
which businesses can improve their responsiveness to the needs, expectations and mindsets of
the people (Bajracharya & Hastings, 2015).
Topic 5: Corporate Level Strategies
Corporate level strategies refer to those strategies that businesses often make in order to
manage the entire organization. The corporate level strategies influences several key aspects
within the business such as the management approaches, finances, human resources and
production and sales. From the topic, various important corporate level strategies could be
learnt, which includes stability strategies, expansion strategies, retrenchment strategies and
combination strategies. These strategies can be used in various situations and considerations
which were discussed in the module.
Topic 6: Alternate Corporate Level Strategies
Alternate corporate strategies are mainly focused on alternative strategies that can be taken
for the management of the business. The strategies are aimed to increase operational
resilience and identify alternative steps in the primary ones are not successful, thus creating a
contingency plan for the business. This includes various approaches such as diversification,
concentration, stability, turnaround, liquidation and sale. These approaches could be learnt
from the topic course and have been important in the development of knowledge on effective
strategic business management in an international market (Coal, 2018).

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References:
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strategic management. Springer.
Bajracharya, B., & Hastings, P. (2015). Public-private partnerships in emergency and disaster
management: Examples from the Queensland floods 2010-11. Australian Journal of
Emergency Management, The, 30(4), 30.
Bayne, L., Schepis, D., & Purchase, S. (2017). A framework for understanding strategic
network performance: Exploring efficiency and effectiveness at the network
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Campbell, J. (2017). Insights from the company monitor: Wesfarmers. Equity, 31(8), 16.
Coal, A. M. (2018). Wesfarmers Will Sell Curragh Mine.
Collings, D. G., Mellahi, K., & Cascio, W. F. (Eds.). (2017). The Oxford handbook of talent
management. Oxford University Press.
Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2018). The strategic management of health
care organizations. John Wiley & Sons.
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