Strategic Management of Wesfarmers: Coles Supermarket Analysis

This report analyses the service and product selection of Wesfarmers Organization, with a focus on Coles Supermarket in Australia. It includes internal and external environment analysis, revenue identification, SWOT and PESTLE analysis, and recommendations for future strategic direction.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report has assisted in examination of the service and product selection of Wesfarmers
Organization. The separate department that has been undertaken in the report is Coles
Supermarket that is based in Australia. The external and internal examination has been
showed as this assisted in analysing issues confronted by Wesfarmers as an organization.
Proper identification of strategic business unit along with sources of bearable competitive
advantage has been gained to understand the differences effectually.

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Table of Contents
Introduction................................................................................................................................3
Identification of Corporation......................................................................................................3
Summary of Wesfarmers and link with Wesfarmers.............................................................3
Product and Service Portfolio................................................................................................4
Business Unit Research..............................................................................................................4
a. Business Unit Identification...............................................................................................4
b. Identification of product and service lines.........................................................................5
Business Unit Revenue..............................................................................................................5
a. Identification of revenue....................................................................................................5
Internal Environment Analysis..................................................................................................8
a. SWOT analysis in Wesfarmers Retail Outlet.....................................................................8
External Environment Analysis.................................................................................................8
a. PESTLE in Wesfarmers Retail Outlet................................................................................8
Source of sustainable competitive advantage..........................................................................11
a. Source of sustainable competitive advantage for Wesfarmers Retail..............................11
Strategic Direction...................................................................................................................12
Recommendations for future strategic direction..................................................................12
References................................................................................................................................13

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Introduction
The report throws light on examination of the respective corporation that has multiple
business units. The appropriate analysis of corporate element is required to be completed as
to identify the different products along with various services that are sold by them in the
market. The analysis of the corporate unit revenue has to be done as to identify the largest
revenue in the respective organization effectively.
Furthermore, the external environmental analysis is required to be conducted as to
identify the political, economic, social, technological, legal and environmental factors of the
selected business unit. The source of the justifiable competitive benefit has to be identified
and described with the specific business unit. Proper recommendations have to be done for
the future strategic direction of the company.
Identification of Corporation
Corporation is defined as the legal entity that is separate and distinct from the owners
and it enjoys the different rights along with the responsibilities that is possessed by the
individual in an appropriate way.
Summary of Wesfarmers and link with Wesfarmers
Wesfarmers is one of the Australian conglomerate companies that is based in Perth,
Western Australia. It was founded in the year 1914 and there are 220,000 employees who are
working under the respective company. The respective company serves United Kingdom,
Australia, Ireland along with New Zealand (Wesfarmers.com.au, 2018). The revenue earned
by the organization is A$65.98 billion and the conglomerate company has different divisions
such as Coles retail store, chemicals, coal mining along with safety products. In this
assessment, the Coles Supermarket has been taken into consideration to analyse the different
issues along with other analysis of the external environment effectively.

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Product and Service Portfolio
The product portfolio is the entire collection of the different products and services that
is offered by the company. The product portfolio is an essential element in the financial
analysis as this provides context. With the analysis of entire BCG matrix, product
classification is done that helps in identifying share of the market of respective product as
well as the growth. With the help of the entire arrangement, the executive of the entire
organization can decide the various level of reserves along with return amount that will be
produced (Baker and Saren 2016).
On the contrary, service portfolio is the fundamental source for various information in
company. With the implementation of current history and status of the company, this is
helpful for Wesfarmers in listing the different services in an effectual manner (Serra and
Kunc 2015). The entire service collection of the organization includes the portfolio of the
supermarket that comprises more than 18 shopping centres and this assisted the company in
analysing with various attainments.
Business Unit Research
a. Business Unit Identification
The solitary business unit that has been selected in the entire Wesfarmers organization
is the Coles trade store that is headquartered in Australia. In Coles supermarket, the SBU is
the profit centre required as to analyse a fully purposeful unit that has unique vision and
direction. The proper analysis has assisted in analysing the different SBUs that functions in
an appropriate manner (Welford 2016). The strategic business unit of Coles has discrete
along with separate kind of marketing strategy for the retail unit.
It can be analysed and identified that entire Wesfarmers is mainly focusing on the
various sectors that includes the entire vision and mission of various sectors that varies from

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the other. It has been noticed that the retail store of Wesfarmers that is Coles has separate
vision and mission that is handled separately.
b. Identification of product and service lines
There are various products and service lines of entire Wesfarmers company in which
retail store Coles focuses mainly on providing and delivering the non-perishable items to
their customers who have been targeted. The service and product contour of the specific
Coles supermarket is mainly into marketing numerous product line on various brands
(Jarzabkowski and Kaplan 2015).
It has been analysed that the Coles retail market is offering different goods and
services efficiently with the product line that is existing. This kind of activities are taken by
Coles Supermarket as this will deliver the customers with various products from different
brands that are acquainted to target customers in the market.
On the contrary, the service line is different segments in a company that focuses on
selling and offering the customers with various products. In case of Wesfarmers Company,
they have Coles supermarket along with the other different departments that focuses on
industrial gases along with energy (Chang 2016).
Business Unit Revenue
a. Identification of revenue
Revenue is defined as the income increased by the entire business from various
normal business activities. These types of profits are generated from various sale of products
and facilities to the customers in the market. The income of the entire company is observed as
the turnover of definite time span (Bromiley et al. 2015). The largest and highest revenue that
is generated for the entire corporation by specific unit of the retail store of Wesfarmers is
shown in the table:

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Years Retail ($) Coles ($)
2017 8540 8666
2016 39211 39200
2015 25856 26833
2014 29850 29595
2013 26874 27854
From the analysis of the table, it can be identified that the generation of the revenue
from Coles along with other supermarkets has been showed in the table. It is seen that
revenue plays a major role in company in which the analysis is essential as to understand
various kind of competitive advantages provided by organization in a specific sector.
From the analysis, it can be analysed and identified that the generation of the revenue
by Wesfarmers Company is highest in the year 2016 that is amounting to $39211.
Furthermore, the customers are huge in number as this assisted in gaining advantage in the
competitive market. Wesfarmers has gained huge profit in the market that is $2670 and has
assisted retail store Coles based in Australia (Slack 2015).

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Figure 1: Half-year Results
(Source: ABC News, 2018)
From the above results, it can be identified that revenue after tax duty has been
disseminated and has been calculated that the NPAT and dividends of the organization is
superior in the year 2017. With the entire application of dissimilar technologies, this has
assisted the organization in receiving gigantic revenues in the competitive market.

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Internal Environment Analysis
a. SWOT analysis in Wesfarmers Retail Outlet
External Environment Analysis
a. PESTLE in Wesfarmers Retail Outlet
The entire functioning environment is the external environment in which the different
analysis is created as to analyse the political, economic, environmental, legal, social and
technological factors of the environment. The complete external analysis is created to be
followed by Wesfarmers aimed at analysing the problems faced by the organization.
PESTLE Analysis
Political Factors assists in defining the level to which the government can create
influence on the economy. It includes the different kinds of tax policies that can affect the
entire environment of the company. It helps in analysis of the degree of the intervenes from
the government in the entire economy (Helfat and Martin 2015). This includes the different
Strengths
Huge importance is provided on quality and
performance
Providing convenience to the various customers
Special offers are provided to customers to attract
them
Weaknesses
Experience is limited in nature as the presence is
only in Australia
Organization is always under scrutiny as the
cruical decisions are taken as per such decisions
Opportunities
Expand the business outside Australia
Proper enhancement of different services and
provides benchmark for their business
Loyalty among customers and employees by
creating initiativeness
Threats
Facing different threats from various competitors
Downturn in economy causes huge issues and less
demand
Other competitors provide different simialr
services at less cost
SWOT

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policies form government along with political instability or stability in the market has to be
described in the market as well.
Economic Factors include the analysis of determining the entire performance that can
impact the organization in a direct manner and creates effects that are long term in nature.
The economic factors create a less impact on analysis of the measures taken by the
organizations to perform the business effectively (Koseoglu 2016). The micro economic
factors aid in analysing the different methods through which the individuals spend money in
the day to day lives.
Social Factors include the scrutinizing the social situation of entire market that is
inclusive of the trends of buying of the customers or analysis of the demand of the product as
well. It is also known as socio-cultural factors that includes the different beliefs along with
the various attitudes of the individuals in the economy (Grant 2016).
Technological Factors is the inclusion of innovative kind of technologies that assists
in affecting various strategies along with procedures of the organization. The companies have
to analyse the different techniques to produce goods and services along with distributing
goods and services as well (Mastropieri and Scruggs 2017).
Legal Factors include both internal along with external sides that includes various
strategies along with legislatures such as labour or compensation laws. The different legal
factors include the equal opportunities, health and safety of the individuals in the economy
that is required to be provided to the individuals and doing business in an ethical manner as
well (Lasserre 2017). There are diverse issues that are faced by the different marketers in the
economy wherein more and more customers are facing crisis of not receiving the same
materials demanded by them. The organization has to include different copyrights and
trademarks as well to sustain the competitive advantage.

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Environmental Factors include various types of areas that are environmentally
related and the geographical location of the entire country is included. This is one of the
essential part as there is increase in the scarcity of the essential raw materials along with
pollution targets as well. The sustainability is becoming less in the entire economy that is
dangerous for the whole economy as well.
PESTEL Analysis of Wesfarmers
Political
The trading hours are obstructive in
nature
Regulations related to Ad Hoc
(Gomes, Barnes and Mahmood 20
16)
Zoning and planning tenancy leases
Economic
The growth rate of the industry is
low in nature
Wage costs are high in nature to the
entire market that is global
The forte of Australian dollars is
increased
Social
There has been gradual increase
in life expectancy rates of humans
Women participation is becoming
high in nature
Technological
The online shopping has been
increased in the organization in the
market
The technology has been utilised as
this helps in predicting the behaviour
of the customers (Carroll, Primo and
Richter 2016)
Legal
There is auction of the underwriting
division in Australia insurance group
Environmental
The different organizations are
required to report the emissions

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under NGER reporting act
Source of sustainable competitive advantage
a. Source of sustainable competitive advantage for Wesfarmers Retail
There are different factors of gaining maintainable competitive advantage in the
market that are described as such:
The resources that are valuable in nature is major factor that will permit the various
companies in improving the overall effectiveness and appropriateness. Though, the
preferences along with the various demands of the customers makes the valuable
resources as less valued possessions and this is seen that the resources that are
valuable are rare in the economy as well.
Rare kind of resources are another vital factor in which such resources are not being
possessed by the other organizations in the market as to gain the competitive
advantage in the market
The imitable resources that are imperfect in nature is the third major factor that are
costly along with it is hard to copy and make the duplicate of the same
The resources that are rare in nature are non-substitutable and there are no other
resources in the market that can replace the same. This can be a major issue for the
company in sustaining the competitive advantage in the market
The different kinds of maintainable competitive advantage for the Coles supermarket
that is the designated business unit of Wesfarmers focuses mainly on safety and health of the
employees in organization. As per the different reports of the Sustainability of Wesfarmers, it
is noticed that employees along with customers of the company are different and varied
sources of gaining competitive advantage in the market.

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Strategic Direction
Recommendations for future strategic direction
Therefore, it is suggested that the entire Wesfarmers organization has to focus mainly
on various weaknesses and threats that are faced by the organization and this can be a huge
issue for the business in the future as well. Proper strategic expansion is necessary and
essential as this assists Wesfarmers in outlining the strategic direction and planning in an
appropriate manner. Strategic course will help and assist the entire organization in
understanding the business goals that has to be achieved by the business in the future.
Furthermore, the different kind of analysis of the strategic management will help Wesfarmers
in managing the issues.

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References
ABC News. 2018. Wesfarmers net profit plunges nearly 87pc on Target and Bunnings UK
write-downs. [online] Available at: http://www.abc.net.au/news/2018-02-21/wesfarmers-
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Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
Bromiley, P., McShane, M., Nair, A. and Rustambekov, E., 2015. Enterprise risk
management: Review, critique, and research directions. Long range planning, 48(4), pp.265-
276.
Carroll, R.J., Primo, D.M. and Richter, B.K., 2016. Using item response theory to improve
measurement in strategic management research: An application to corporate social
responsibility. Strategic Management Journal, 37(1), pp.66-85.
Chang, J.F., 2016. Business process management systems: strategy and implementation. CRC
Press.
Gomes, E., Barnes, B.R. and Mahmood, T., 2016. A 22-year review of strategic alliance
research in the leading management journals. International business review, 25(1), pp.15-27.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
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Helfat, C.E. and Martin, J.A., 2015. Dynamic managerial capabilities: Review and
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Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools‐in‐use: A framework for understanding
“technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.

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Koseoglu, M. A. 2016. Growth and structure of authorship and co-authorship network in the
strategic management realm: Evidence from the Strategic Management Journal. BRQ
Business Research Quarterly, 19(3), 153-170.
Lasserre, P., 2017. Global strategic management. Palgrave.
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Management, 33(1), pp.53-66.
Slack, N., 2015. Operations strategy. John Wiley & Sons, Ltd.
Sustainability.wesfarmers.com.au. 2018. [online] Available at:
https://sustainability.wesfarmers.com.au/media/2222/2017-wesfarmers-sustainability-full-
report.pdf [Accessed 22 Mar. 2018]. (Sustainability.wesfarmers.com.au, 2018)
Welford, R., 2016. Corporate environmental management 1: Systems and strategies.
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Wesfarmers.com.au. 2018. Home. [online] Available at: http://www.wesfarmers.com.au/
[Accessed 22 Mar. 2018].