MGT704: Wesfarmers Global Business Management Analysis

This report examines the global business strategies of Wesfarmers, a leading multi-business entity. It analyzes Wesfarmers' business processes and practices to defend against competition, identifying target markets across diverse business segments. The report focuses on key strategies such as diversification and mergers and acquisitions. It applies frameworks like PESTLE, Hofstede's cultural dimensions, and the Globe model to identify differences between countries and inform business processes. The report also provides recommendations for improvement, based on secondary data analysis, and explores how Wesfarmers leverages geographic and product diversification, as well as mergers and acquisitions, to gain competitive advantages and navigate international markets.

Running head: GLOBAL BUSINESS MANAGEMENT
Global business management
Name of the student
Name of the university
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Executive summary
This key purpose of this report is to discuss about the business processes and practices of
Wesfarmers that are being followed by them to defend their business interests against the
competition. The target markets of the different business segments of Wesfarmers are identified
and it was seen that broader target areas are being operated by them. This is due to the reason
that Wesfarmers are multi business entity and operating in different unrelated business areas.
Furthermore, this report also discussed about the key strategic models or approaches being used
by Wesfarmers that include business diversification strategy and mergers and acquisitions.
PESTLE, Hofstede’s cultural dimensions and Globe model are used to identify the key
differences between the two countries based on which, Wesfarmers can implement their business
processes. On the basis of a few areas of improvement, this report stated a few suggestions for
further improvement.

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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 The company.............................................................................................................................3
3.0 The markets...............................................................................................................................4
4.0 The strategy...............................................................................................................................5
4.1 The Frameworks....................................................................................................................5
4.2 The Application.....................................................................................................................8
5.0 Conclusion.................................................................................................................................9
6.0 Recommendations....................................................................................................................10
Reference.......................................................................................................................................12

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1.0 Introduction
The utility of the corporate level in the case of multi business firm is different to that
limited business companies. This is due to the reason that the business factors for the
conglomerates are more diverse and complex compared to the entities operating in the single
business sector. Thus, it is getting more challenging for the multi business companies to defend
their business interest from the entry of the foreign companies. There are different and diverse
strategies that can be initiated by the multi business organizations in dealing with the challenges
they are facing (Alscher and Brauer 2015).
The report will discuss about the strategies that are being initiated by Wesfarmers in
defending their strategic interests against the foreign investors. The integration between the
different strategies will also be discussed. In addition, the target market for Wesfarmers will also
be identified. This report will help in identifying the effectiveness of different strategic processes
of Wesfarmers and the extent to which they are gaining competitive advantages. However, on the
other hand, it should also be noted that the major limitation of this report is the access only to the
secondary data rather than the primary data. Thus, the authenticity and real world practicability
might be hampered.
2.0 The company
In the Australian business scenario, Wesfarmers are one of the leading multi business
entities with having their operations across different business sectors. They are having their
presence in Chemicals, fertilizers, retail and industrial products sector. It is reported that as of
2016, Wesfarmers are the largest business firm in terms of revenue and also they are considered
as the largest private sector employer in the region. Currently, they are having more than 200,000

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employees across all their business operations (Klettner, Clarke and Boersma 2014). Thus,
Wesfarmers can be considered as a leading and major conglomerate in the current time.
3.0 The markets
In terms of the geographic market region, Wesfarmers are having their presence in
different countries such as India, Australia, Ireland, New Zealand and United Kingdom. This
refers the global presence of them across different developed and developing regions. Moreover,
the current global presence of Wesfarmers is also denoting the fact that Wesfarmers are having
their presence in Asian, Oceania and European market except in the American market.
Wesfarmers are also having their presence across different industries such as chemicals, mining,
and retail and industry products (Campbell 2017). Hence, the diversity of the customers for
Wesfarmers is high and broader. Thus, the market sector for Wesfarmers is based on industrial
and domestic customers and both business to business and business to customers approach is
followed. Among all the foreign market operations of Wesfarmers, Australia is their major and
biggest market where they are enjoying the highest market exposure and penetration. Moreover,
the retail wing of Wesfarmers is also having the maximum market presence in Australia in terms
forms of Coles and Kmart (Biddle 2016). Hence, on the basis of the analysis of the market
segments of Wesfarmers, it can be concluded that Wesfarmers are having the requirement for
different strategic tools to defend their business interests.
Geographic variables Wesfarmers are having their presence across different countries including
both developing and developed nations. Thus, the emerging potentialities
of the developing countries and higher potentialities of the developed
nations are being gained by Wesfarmers. Wesfarmers are having their

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presence across the world and are not depended on a particular economy
for their business.
Industrial variables In terms of the industrial variables, Wesfarmers are having their presence
in diverse sectors such as chemicals and retail sectors. These sectors are
unrelated and hence Wesfarmers can be considered as conglomerate.
Customer types In terms of the customer types, Wesfarmers are catering to both business
and domestic customers. Domestic customers are being tapped by their
retail chains while the other and sectors of Wesfarmers are catering to the
industrial clients.
4.0 The strategy
4.1 The Frameworks
One of the major strategic choices for Wesfarmers is the diversification approach. This is
due to the reason that they are following both geographic and product diversification. In terms of
geographic diversification, Wesfarmers are having different businesses in different regions. For
example, they are having their retail stores in the Australian market but not in the Indian market
where they are having mining business (Alessandri and Seth 2014). Thus, with the help of the
geographic diversification, Wesfarmers are gaining the maximum from the different market
according to the available resources. In the global market scenario, different regions are having
different market trends and operating in the standardized sector will not be viable enough. In this
case, the geographic diversification of Wesfarmers is ensuring that they are gaining global
branding as a conglomerate (Shim 2013).

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On the other hand, it is also identified that Wesfarmers are also following product
diversification in their business. This refers to the approach of operating in different business
sectors and offering diverse value propositions in a single market. For instance, Wesfarmers are
offering retail goods as well as the fertilizers and chemicals, which are unrelated products.
Hence, it can be concluded that diversification strategy is being extensively followed by
Wesfarmers.
Apart from the diversification strategy, Wesfarmers are also following mergers and
acquisitions. With the help of the merger and acquisitions, both the horizontal and vertical
growth is getting followed by them in addition to covering newer market areas. This is due to the
reason that merger and acquisitions are helping Wesfarmers to gain the new market areas in
shorter time period along with expanding their presence in more areas (Fosfuri, Giarratana, and
Roca 2016). Thus, tapping the new market regions is easier for Wesfarmers along with gaining
more exposure to defend against the foreign companies.
Effectiveness of diversification strategy in business level scenario
With the initiation of the business diversification, Wesfarmers are defending their
existing business areas as well as tapping the foreign market opportunities. This is due to the
reason that business diversification strategy is helping them to offer different product ranges
across different segments and covering the entire market. For example, both the Coles and Kmart
are the retail brands under Wesfarmers and are catering to different customer segments. Coles
are targeting the premium sets of customers while Kmart is catering to more mass market
customers (Borda et al. 2017). Furthermore, they are catering to chemical industry and mining
industry as well. This is ensuring that Wesfarmers are covering the entire market segments

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through different value propositions and entering foreign firms will find it difficult to match the
market coverage of Wesfarmers. Due to the fact that Wesfarmers are having presence across
different sectors, the dependency on a particular sector is less for them and thus getting more
competition in a certain sector can be easily mitigated by adjusting with the performance from
other sectors. This is proving the fact that Wesfarmers are effective enough in defending their
business interest in the domestic market (Ramaswamy, Purkayastha and Petitt 2017).
Apart from defending the domestic market from the onslaught of the foreign entities,
Wesfarmers are also leveraging their diversification strategy in tapping the foreign market
opportunities. This is due to the reason that the more will be the diversified business operation
and offerings, the more will be the competencies to tap the larger market in the foreign region
(Yang, Narayanan and De Carolis 2014). For example, Wesfarmers are having their presence in
the Indian market where they are having the opportunity to tap the different business sectors as
per the trends and potentialities. In comparison with a company operating in a specific market,
Wesfarmers can tap the different market segments at once and can gain the maximum return
from the foreign market. Thus, it can be concluded that with the help of the diversification
strategy, Wesfarmers are also competent enough in tapping the foreign market.
Effectiveness of mergers and acquisitions in business level scenario
One of the major examples of Wesfarmers of merger is the merger between Wesfarmers
Dalgety and IAMA. This merger helped Wesfarmers Dalgety in becoming the biggest rural
merchandiser of Australia and it is also reported that this merger helped Wesfarmers to gain the
market leadership status by acquiring more than 33 percent of the market share in this sector. On
the other hand, acquisition of Coles helped Wesfarmers to challenge Woolworths in the

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Australian retail business. Woolworths is the market leader in the Australian retail market and by
acquiring Coles, Wesfarmers gained the competency to challenge Woolworths. This is ensuring
that Wesfarmers got enough market presence in their home market and will be difficult for the
foreign investors to match the scale of operation of them (Gomes et al. 2013). On the other hand,
mergers and acquisitions are also effective for Wesfarmers in tapping the foreign market. This is
due to the reason that merging or acquiring of the foreign entities can help Wesfarmers to gain
the maximum exposure in the foreign target market and they can also leverage on the market
equity and presence of the partnered firm.
4.2 The Application
Hofstede’s cultural dimensions can be effective in determining the implementation of the
above identified approaches. According to the Hofstede’s cultural dimensions, the cultural
differences between the countries can be identified. In this case, it should be noted that the
diverse business of Wesfarmers is implemented in different countries on the basis of the internal
factors. For example, the hierarchy level of Wesfarmers in India and in Australia is different and
is based on the respective cultural factors (Mazanec et al. 2015). With the help of the Hofstede’s
cultural dimensions, factors such as power distance between the two countries can be identified.
For example, Wesfarmers can identify the difference in power distance between India and
Australia and designs the implementation strategy accordingly.
Another framework to identify the difference between the two countries for Wesfarmers
is Globe cultural competencies. According to this model, uncertainty avoidance extent of the
societies can be identified. In the case of Wesfarmers, determination of the uncertainty avoidance
can help to identify the social norms and rituals being followed in two countries. Accordingly,

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the business process and practices of Wesfarmers can be designed. The retail offerings of Coles,
Kmart and Target are not the same across all their foreign markets and they are offered according
to the respective social factors (Venaik and Brewer 2013). Hence, each of the different social
factors in different countries of operation of Wesfarmers is getting identified.
The last framework being used for determining the geographical and political differences
between the two countries is PESTLE analysis. With the help of the PESTLE analysis,
Wesfarmers are identifying the political challenges prior to the investment in a foreign country.
For example, diversifying the business in a new country or acquiring a new company in a foreign
market should be done after identifying the key political factors (Beugelsdijk, Maseland and Van
Hoorn 2015). If Wesfarmers are willing to acquire a new retail company in the United Kingdom,
PESTLE analysis can help in identifying the key external factors to be faced by them in the new
market. On the basis of these risks and other factors identified, diversification and merger and
acquisitions strategies are initiated. The probability of the success of the strategic frameworks
will get increased only when they will be implemented on the basis of the respective national
factors (Dartey-Baah 2013).
5.0 Conclusion
This report concluded that Wesfarmers are one of the leading multi business entities from
Australia and the business factors for the multi business entities are different to that of the single
market based business. The business factors for Wesfarmers are more diverse and complex in
nature. In this report, it is identified that due to the different business areas of Wesfarmers, their
target segment is also diverse in nature as well as broader. These target areas are identified in this
report. It is also identified that among different strategic frameworks available, Wesfarmers are

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mainly following diversification and strategic alliances approach. With the help of the business
diversification approach of Wesfarmers, they have expanded in different sectors and in different
countries and ensured the global branding. On the other hand, initiation of the merger and
acquisitions is also helping Wesfarmers to gain major market exposure by leveraging on the
competitive advantages of other brands. This report concludes that Hofstede’s cultural
dimensions, Globe dimensions and PESTLE analysis are effective in determining the differences
between the two countries. On the basis of these differences, Wesfarmers design their business
process and practices. The following sections will discuss about a few recommended steps that
will help to mitigate the limitations in business effectiveness of Wesfarmers.
6.0 Recommendations
 It is recommended that Wesfarmers should follow the market penetration approach over
the current market development approach. This is due to the reason that there are huge
opportunities to be gained and tapped by Wesfarmers from their current markets of
operation. For instance, Wesfarmers are having few business operations in India and their
retail business is still not evident there. However, India is one of the largest retail markets
in the world. Thus, Wesfarmers should now focus more penetrating in their existing
market, which will further help to defend the existing markets against the competitions.
 It is also recommended that Wesfarmers should focus on blue ocean strategy in
expanding or diversifying in a new business sector. This is due to the reason that
probability of return from the segment with high competitive rivalry will be low and not
viable for Wesfarmers. In this case, initiation of the blue ocean strategy can be effective
in gaining the maximum for Wesfarmers.

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 Lastly, Wesfarmers is recommended to also focus on gaining standardization globally in
terms of each of their business segments. This is due to the reason that the more will be
the standardized process and practices, the more will be the cost leadership and
advantages for Wesfarmers.

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