Strategic Management Report: Wesfarmers Retail Business Unit Analysis

This report provides a comprehensive strategic management analysis of Wesfarmers, an Australian conglomerate, with a specific focus on its retail sector. The report begins with an executive summary, followed by an introduction outlining the report's objectives. It defines Wesfarmers as a corporation and examines its product and service portfolio, utilizing the BCG matrix for product classification. Business unit research identifies the retail store as the strategic business unit, analyzing its product and service lines. Revenue analysis identifies key revenue streams, supported by financial data from 2013 to 2017, and visual representations. The report then delves into internal environment analysis using SWOT analysis and external environment analysis using PESTLE analysis, identifying key political, economic, social, technological, legal, and environmental factors. The report concludes by identifying sources of sustainable competitive advantage and providing recommendations for future strategic direction.

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

1STRATEGIC MANAGEMENT
Executive Summary
The report has helped in analysis of the product and service portfolio of Wesfarmers retail
department that is situated in Australia. Proper internal and external analysis has been done as
this helped in understanding the issues that can be faced by Wesfarmers. The identification of
the business revenue and source of sustainable competitive advantage as this helped the
company in understanding the different practices.
The main aim and purpose of the report is to identify the different kind of business unit
research wherein the identification of the single business unit has to be done of Wesfarmers.
This has helped in understanding the different issues and solve them effectively.

2STRATEGIC MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
Overview of the Corporation Wesfarmers.................................................................................3
Definition of Corporation and linkage with Wesfarmers.......................................................4
Product and Service Portfolio................................................................................................4
Business Unit Research..............................................................................................................5
a. Business Unit Identification...............................................................................................5
b. Identification of product and service lines.........................................................................5
Business Unit Revenue..............................................................................................................6
a. Identification of revenue....................................................................................................6
Internal Environment Analysis..................................................................................................8
a. Identification of SWOT analysis in Wesfarmers Retail Outlet..........................................8
External Environment Analysis.................................................................................................8
a. Identification of PESTLE in Wesfarmers Retail Outlet.....................................................8
Source of sustainable competitive advantage..........................................................................11
a. Identification of the source of sustainable competitive advantage for Wesfarmers Retail
..............................................................................................................................................11
Strategic Direction...................................................................................................................12
Recommendations for future strategic direction for Wesfarmers Retail.............................12
References................................................................................................................................13

3STRATEGIC MANAGEMENT
Introduction
The report helps in analysis of the identification of a corporation named Wesfarmers
that is based in Australia. Proper identification of the business unit has to be done as this will
help in understanding the meaning of strategic business unit. The identification of the
products and services has to be done as this will help in understanding the meaning of
product and service lines. The identification of the business revenue centre has to be analysed
that will help in identification of the largest revenues created by the Wesfarmers by the
chosen retail stores.
The main aim and purpose of the report is to understand and analyse the external and
internal environment analysis of Wesfarmers. The different sources for gaining sustainable
competitive advantage will be done as this will help in solving the different queries in an
effective manner.
The structure of the report will include the different kind of analysis relating to the
business unit revenue, identification of the business unit as well. Proper external and internal
analysis is required to be done as this will help in solving the different issues in an effectual
manner. Proper recommendations have to be provided effectively as this will help in solving
the different issues in an effectual manner.
Overview of the Corporation Wesfarmers
Wesfarmers is an Australian Conglomerate Company that is headquartered in Perth,
Western Australia. Wesfarmers focuses more on different kind of services that include retail,
coal mining and industrial safety products. It has been one of the largest firms in terms of
revenues and it has overtaken Woolworths and BHP Billiton. There are more than 220,000

4STRATEGIC MANAGEMENT
employees and the revenues of the company is more than A$65.98 billion
(Wesfarmers.com.au, 2018).
Definition of Corporation and linkage with Wesfarmers
Corporation is defined as the legal entity that will be separate and distinct from the
different employers of the company. The different corporations enjoy different kind of
responsibilities and rights that the different individuals will possess in an effective manner. A
corporation can have one shareholder or several shareholders that have huge influence on
different kind of operations of the company. The product and service portfolios of the
respective company are essential in Wesfarmers Retail Company as they comprise of
different kind of products wherein Wesfarmers Company comprises of different categories of
products that include different kind of product line and individuals’ product as well (Baker
and Saren 2016).
Product and Service Portfolio
With the help of the BCG matrix, the classification of the product is done in the
market that will help in analysing the market share of the product along with the growth. On
the basis of the classification, the product manager of the organization will help in deciding
the different level of investments that is required and the amount of returns that will be
generated from the product as well (Serra and Kunc 2015).
On the other hand, service portfolio is defined as the core repository for the different
kind of information in the organization. Each of the services is listed with the help of current
status along with history. The main descriptor of the service portfolio will be analysed in an
effective manner as this will provide the different kind of product and service packages. The
service portfolio of Wesfarmers is the different kind of services provided by the company that

5STRATEGIC MANAGEMENT
includes supermarket portfolio wherein the portfolio includes more than 19 shopping centres
and it has helped them in dealing with different acquisitions.
Business Unit Research
a. Business Unit Identification
The single strategic business unit within Wesfarmers is the retail store that is based in
Australia. In the Wesfarmers retail store, the strategic business unit is defined as the profit
centre that is required to be analysed that is a fully and proper functional unit that has the
vision and own direction as well. The different analysis has helped in understanding the
different strategic business units that operates in a separate manner. The SBU of Wesfarmers
has a separate and discrete kind of marketing plan for the retail store.
It can be seen that Wesfarmers is focusing on different kind of sectors wherein the
mission and vision of the different sectors are different from one another. It can be seen that
Wesfarmers has separate kind of mission and vision for their retail store that is based in
Australia (Welford 2016).
b. Identification of product and service lines
There are different kind of product and service lines of Wesfarmers wherein the retail
store of Wesfarmers focuses on providing different kind of non-perishable products to their
target customers. The product and service line of the respective supermarket that is
Wesfarmers help in selling multiple product lines under the various kind of brands
(Jarzabkowski and Kaplan 2015).
It has been seen that Wesfarmers retail store is trying to offer the different products
and services effectively with the existing product line. This is done by the Wesfarmers retail
store as to provide the customers different kind of product from the brands that are familiar to
the customers. On the other hand, service line is the grouping of different services and

6STRATEGIC MANAGEMENT
products that are related to one specific division of the business. In Wesfarmers, it can be
seen that it has a retail store and there is another department that specialises in industrial
energy and gases.
Business Unit Revenue
a. Identification of revenue
The revenue is the income that is gained by the business from the different normal
kind of business activities. This kind of revenues are usually generated from the different
kind of sale of goods as well as services to the target customers. The revenue of the company
is often regarded as the different sales or turnover of the during a specific period of time.
The largest revenue that is created for the corporation by the specific unit of
Wesfarmers retail company can be shown as follows:
Years Retail ($) Coles ($)
2017 8528 8646
2016 39242 39217
2015 25848 26841
2014 29850 29592
2013 26874 27856
From the above table, it can be analysed that the revenues have been generated from
both Coles and Supermarkets. It has been analysed that revenues are essential part of the
organization wherein proper analysis is required as to understand the different kind of
advantages that has been provided by the company in a particular sector (Chang 2016). From
the above table, it can be seen that the revenues that has been generated by Wesfarmers has
been greater in the year 2016 and it was amounting to $39242 (Bromiley et al. 2015).

7STRATEGIC MANAGEMENT
From the analysis, it has been clearly stated that the number of customers were larger
in nature and this has helped the retail store in gaining competitive advantage in the entire
market. The different analysis has been done in Wesfarmers wherein it has been seen that
retail market of Wesfarmers has plunged a huge amount of profit nearly about $2,672 and it
has helped the retail store of Wesfarmers based in Australia.
Figure 1: Half-year Results
(Source: ABC News, 2018)
From the above diagram, it can be analysed that the profit after tax has been
distributed wherein it has been seen that the dividends and NPAT of the company has been
greater in the year 2017. With implementation of different technologies, it can be seen that
this has helped the company in earning huge revenues in the market.

8STRATEGIC MANAGEMENT
Internal Environment Analysis
a. Identification of SWOT analysis in Wesfarmers Retail Outlet
External Environment Analysis
a. Identification of PESTLE in Wesfarmers Retail Outlet
The operating environment is defined as the external kind of environment wherein
different kind of analysis is done in order to understand the different political, social,
economic, technological, legal and environmental aspects of the external environment. The
external analysis is required to be done by Wesfarmers for understanding the different issues
faced by the company (Slack 2015).
The different meaning of the terms of PESTLE analysis are as follows:
The political factors help in determining the extent wherein the government may
create influence the entire economy. The political factors include different tax policies
and it will affect the environment (Helfat and Martin 2015)
STRENGTHS
Key importance to quality as well as performance
Sales performed through online format
Delivering convenience to the customers
Special discounts and offers to attract the different
customers
WEAKNESSES
The experience is limited to Australia that has
low geographic presence
The company is always under scrutiny for the
different crucial decisions that are taken by
them
OPPORTUNITIES
Expand their business outside Australia
Enhancement of the service and quality
that creates benchmarks for the stores
Customer and employee loyalty
initiativess across the businesses
THREATS
Business is facing different threat from
competitors
There is downturn in economy wherein there is
lower demand
There is competitor that offers the specialized
services and products at equitable level of price
SWOT

9STRATEGIC MANAGEMENT
The economic factors help in determining the performance that will directly impact
the company and this creates resonating long term effects (Koseoglu 2016)
The different social factors help in scrutinizing the different social environment of
market that includes buying trends of customers or higher demand of the different
products (Grant 2016)
The technological factors include the innovative technologies that will help in
affecting the different operations of the company (Mastropieri and Scruggs 2017)
The legal factors include the external and internal sides wherein it includes the
different kind of strategies and legislations such as labour laws
The environmental factors include the different kind of areas that are related to
environment along with the geographical locations of the country (Lasserre 2017)
PESTLE analysis of Wesfarmers is as follows:
Political
The trading hours are restrictive in
nature
There are different ad hoc
regulations
There is importance and stability
of the Food and Staples retailing
sector in the economy of the
country (Gomes, Barnes and
Mahmood 2016)
The labelling of product and other
requirements in Staples and Food
Economic
There is low growth for the entire
industry
Higher rate of wages in comparison
to the entire global market
It helps in increasing the strength
of the New Zealand and
Australian dollars (Carroll, Primo
and Richter 2016)

10STRATEGIC MANAGEMENT
retailing
There are different benefits provided
to the employees
Legal kind of framework for the
enforcement of contract in
Wesfarmers
Social
The average expectancy of life is
gradually increasing
There is huge increase in the
participation of the women
There is average qualification of
education among the entire
population that has been increased
Technological
There is increased online shopping
through mobiles along with other net
devices
Usage of the technology to predict
the different preferences of the
customers along with reduction of
the costs of business
Technology enabled different kind
of services that are valued added in
nature
Legal
The sale of the insurance of
Wesfarmers broking division in the
year 2014 to Arthur J. Gallagher &
Company
There is sale of underwriting
division to insurance Australia group
Environmental
There has to be reduction of wastage
to landfills by 6%
The firms need to report their
emissions under the reporting act of
NGER act

11STRATEGIC MANAGEMENT
Source of sustainable competitive advantage
a. Identification of the source of sustainable competitive advantage for Wesfarmers
Retail
There are four factors of the sustainable competitive advantage that are as follows:
Valuable resources are one of the factors wherein it will allow the different
organizations in improving their effectiveness and efficiency. However, it has been
seen that demands and preferences of customers makes once valuable resources as the
less valuable in nature. The valuable resources must be rare in nature as well
The rare sources are the second factor wherein the resources are not possessed by
other competing organizations as to sustain competitive advantage
Imperfectly imitable resources are the third factor that are extremely costly and
difficult to duplicate
Non-substitutable resources are rare, valuable along with imperfectly imitable in
nature and there are no such resources that will be replacing them or gain competitive
advantage
The source of sustainable competitive advantage for the selected business unit of
Wesfarmers retail store is the environment, health and safety of the individuals working in
the organization. According to the reports of Sustainability.wesfarmers.com.au, (2018), it has
been seen that the customers and employees of the organization are the different sources of
the gaining competitive advantage.