SBM3203 Strategic Planning: In-depth Analysis of Wesfarmers Report

This report provides a comprehensive strategic analysis of Wesfarmers, a prominent Australian corporation. It begins by outlining Wesfarmers' background, business strategies (including market segmentation, pricing, private labels, internationalization, strategic operations, and sustainability approaches), and its vision, mission, and values. The report then examines the impact of these strategies on organizational performance. Part B delves into Porter's Five Forces framework, competitor analysis, resource-based theory, and a SWOT analysis. Part C identifies major issues, explores strategic change, and offers recommendations. Finally, Part D provides a list of references. The analysis highlights Wesfarmers' strengths, such as a robust brand portfolio and customer satisfaction, while also addressing weaknesses like limited R&D investment. Opportunities, including market share expansion and cost reduction, and threats, such as increasing isolationism and strong competition, are also discussed. The report provides a detailed examination of Wesfarmers' strategic positioning and future prospects within the retail industry.

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Contents
Project Part A........................................................................................................................................2
Background of the company..............................................................................................................2
Business strategies adopted by the company to gain a competitive advantage..................................2
Vision, mission and value statements of the company.......................................................................3
How strategies impact on the organization performance...................................................................3
Project Part B........................................................................................................................................4
Porter’s five forces framework..........................................................................................................4
Competitor analysis...........................................................................................................................4
Identification of the resources and competencies of the company based on the resource-based
theory.................................................................................................................................................5
SWOT analysis..................................................................................................................................5
Project Part C........................................................................................................................................7
Major issues identify.........................................................................................................................7
Strategic change.................................................................................................................................8
Recommendations.............................................................................................................................8
Project Part D........................................................................................................................................9
References...........................................................................................................................................17

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Project Part A
Background of the company
Wesfarmers is identified to be one of the foremost corporations in Australia. The
establishment is directing the retail market of Australia along with New Zealand. Wesfarmers
deal with the chemicals, fertilizers, industrial products and more. The company has a greater
outlook to flourish in the future. Wesfarmers pursue hard to meet the ends of every customer.
The company even work constantly in order to meet the primary objective which is to
propose a agreeable return to its shareholders. After the acquisition of the Coles, the balance
sheets of Wesfarmers indicate a robust position as Coles is the largest revenue segment of the
company. The company is having almost 15,000 suppliers who ensure product quality.
Business strategies adopted by the company to gain a competitive advantage
Wesfarmers has adopted the business strategies to gain a competitive advantage as
mentioned below:
Market segmentation: Wesfarmers segments the customers on the basis of the valuation of
the commodities sold. This strategy assists the company to form the products which are
demanded more by the customers (Perrone & Wodonga, 2015). It enhances the revenue of the
company. Comprehending the customer demographics can assist in defining the quantity and
quality required by the customers.
Pricing strategy: An aggressive pricing strategy is followed by Wesfarmers in order to attain
more market share. It is made possible by reducing prices. It is only possible to attain if the
suppliers approve to lowering their prices. Deciding lower prices and penetrating to it is the
top strategy for the Wesfarmers (Papke-Shields & Boyer-Wright, 2017).
Private labels: It is another strategy concerning a specific drift of using isolated labels in the
marketplace. Wesfarmers has formed a ‘code of conduct’ to save the attention of the dealers.
It assists in creating a strong connection with the stakeholders of the company. Such a
consistent set of values offered the organization a new status in the market.
Internationalization: Wesfarmers have opted a new global strategy which assists the company
in acquiring a home base in the UK. The company is having a past of interesting greater
names and captivating them over in the field. Wesfarmers is doing the alike in the distant

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land whereas other corporations of Australia deteriorating to do the same. It makes change
quite perilous.
Strategic operations: The company makes sure that it offers sufficient return to the
shareholders in the short and long period. The cash flow cohort procedure of the company
integrates evolution in the long term grossing potentials, effective management of the
employed capital and forming a robust procedure of the capital expenditure (Nickols, 2016).
Approaches for sustainability: Sustainable growth is the major agenda of the Wesfarmers. For
sustainable growth, the company has initiated to make use of the acquisition as it is a greater
move towards success. In order to attain positive growth, Wesfarmers requires sustaining an
increase in the shareholder value. The company ensures that the positive return on the capital
can be attained regularly. Wesfarmers also focus on human resource to attain the
organization’s reputation. The code of conduct is maintained by the human resource
department to ensure sustainable growth and healthy business environment (Prajogo, 2016).
Vision, mission and value statements of the company
Wesfarmers have the mission of having the highest ethical standards among the
organizations which are functioning in the retail industry. The company even aims to develop
the elite, discipline and focus on the working culture to provide a good return to the
customers. It is the vision of Wesfarmers to create value in the sustained and accountable
way. The company focuses on enhancing the physical environment in which strategies are
operated to minimize carbon missions, energy efficiencies, improving water and minimizing
wastage.
How approaches sway on the organization performance
The approaches impact on the organization performance as these strategies lead to the
development in the long term earning potentials. The strategies ensure effective management
of working capital in the company and its holdings. It also creates a robust procedure of
capital expenditure. The strategies focus on investing beyond the cost of the capital which
offers safety to the stockholders and makes shares more profitable. The strategies impact on
the performance of the association by ensuring a positive return on the capital constantly. It
even creates an improved customer base by the product reviews in the several geographic
divisions of the market (Mishra, et al. 2017).

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Project Part B
Porter’s five forces framework
The threat of new participants: The new participants in food retailing fetch revolution and
unique conducts of doing things. The new entrants put burden on Wesfarmers by making use
of the lower evaluating strategy, dropping costs and posing new value proposals to the
consumers. Wesfarmers effectively succeeds all of these encounters and construct operative
barriers in order to protect its modest advantage (Saebi & Foss, 2015).
Bargaining supremacy of the suppliers: The businesses in the food commerce purchase raw
material from numerous providers. The suppliers who are in the top position can diminish the
precincts which Wesfarmers can earn in the market. The commanding suppliers make use of
the transferring power to abstract advanced prices from companies in the food industry. The
higher bargaining power of the contractors sinks the overall viability of the company
(Kernbach, Eppler, & Bresciani, 2015).
Bargaining power of the buyers: The purchasers are generally demanding and like to buy the
finest product contributions accessible by disbursing the minimum price as conceivable. It
results in putting pressure on the profitability of the company in the long run. The slighter
and controlling customer base is of the company; higher is the negotiating power of the
clienteles. The ability of the customers is also higher in order to seek growing discounts and
deals.
Threats of substitute products or services: The profit of the industry suffers when the new
products meet the alike need of the customers in diverse ways. For instance, Dropbox and
Google Drive are a substitute for each other and can be used to store hardware drives (Serra
& Kunc, 2015). The threat of substitute products for Wesfarmers as value proposition offered
is high which is exclusively diverse from the present assistances of the industry.
Rivalry among the prevailing competitors: The competitiveness among the players in the
industry is strong. It initiates down the prices and declines the inclusive viability. Wesfarmers
activates in the very competitive food and retailing industry. The competition grosses peal on
the complete extended term productivity of the company (Ioppolo, et al. 2016).
Competitor analysis
Wesfarmers is having competitors like Myer, Woolworths, Best and less and hs home.
Wesfarmers is experiencing a slow decline in revenues. The reason behind is complex stock

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clearances and ongoing deterioration in the sales evolution. In order to compete with the
competitors, Wesfarmers has adopted a differentiated strategy. The main strategy adopted by
the Wesfarmers is changing in the corporeal and service environment at the stores along with
the business operations.
Wesfarmers has started selling more of the products at the main price than at the cut-rate
price. The company has even enabled online business model in the prevailing business model
in order to appeal the technically savvy customers (Biddle, 2016).
Identification of the resources and aptitudes of the company based on the resource-
based theory
Wesfarmers‘s resource-based overview describes that the company has 2 predominant
and perceived coal mines. The company has an intense and in-depth reach of the global
market. The high global presence is made accessible by the global export of coal. The human
resource of the company has the capability to retain and empower potential talent. The
company has more focus on the employee and team advancement along with the high-
performance culture. The purchasing skills of the organization portray that it tremendously
assist sustainable development (Bayne, Schepis, & Purchase, 2017).
Wesfarmers has attained the greatest competitive advantage in the form of people.
The company offers opportunities to its people in order to improve job performance and
advance their careers. Wesfarmers is the main employer in Australia with almost 217,000
workforces.
SWOT analysis
Strength
Good returns on the capital expenditure: Wesfarmers is quite efficacious at the
implementation of the new developments. The company is even capable of generating a good
return on capital expenditure by forming new revenue tributaries.
Robust brand portfolio: Wesfarmers has successfully maintained a robust brand portfolio
over the years. The brand portfolio is quite useful if the company is likely to widening its
product categories. The strong portfolio has even role in appealing to the customers (Grayson
& Hodges, 2017).

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Strong record of assimilating complimentary firms: Wesfarmers has an effective record of
incorporating complementary organisations by mergers and acquisition. There are several
technology companies which are incorporated by Wesfarmers through the mergers and
acquisition (Wolf & Floyd, 2017). These technology companies have helped Wesfarmers in
streamlining its operations and building a consistent supply chain.
A higher level of customer satisfaction: Wesfarmers through its devoted customer
relationship management partition has been capable to attain a higher level of customer
satisfaction among the prevailing customers and good brand impartiality among the
prospective clienteles (Bryson, 2018).
Weaknesses
Venture in research and development: The investment made by Wesfarmers in research and
development is quite less than the investment made by the fastest growing players.
Wesfarmers has not been able to contend with the foremost players of the industry when it
comes to innovation.
Limited success outside core business: Wesfarmers is one of the leading companies in the
Australian food and retail trade but it faces dares in moving to other product sections with
present culture (Arend, et al. 2017).
Improper fashion planning: financial planning by Wesfarmers is not done accurately and
effectively. The current asset ratio and liquid asset ratios of the corporation also propose that
the organization can usage the cash more effectively than it is exploiting at the existent.
Opportunities
Enlargement in the market share: The economic uptick and upsurge in the customer outlay
after the collapse and slow growth rate in the industry represent a prospect for Wesfarmers to
seize new customers and to enhance its market share (Elbanna, Andrews & Pollanen, 2016).
Stable free cash: The constant free cash flow proposals the prospect to invest in adjacent
product divisions. With the availability of more cash in the bank, the business can make an
investment in the innovative technologies and in the new products sections. It can open a
window of opening for the company in other product classes.

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Decreasing the cost of transportation: The decreasing cost of transportation helps the
company in bringing down the shipping prices. It also assists the company to bring down the
cost of the products and the company can boost profitability. The company can even pass on
the assistances to the clients in order to advance the market share.
Threats
The trend toward isolation: The increasing trend towards isolationism can create a similar
reaction from other government, therefore, Wesfarmers can suffer from the negative impacts
on global sales.
Strong competition: Stable productivity has enhanced the number of companies in the
commerce in the last 2 years. It has put descending pressure on the effectiveness along with
the overall sales of Wesfarmers (Bui & De Villiers, 2017).
Project Part C
Major issues identify
The implementation of the strategies results in the potential benefits, but these
benefits are not possible to attain without facing issues. Wesfarmers chosen for conquering
development through acquisition but the dealings made before the worldwide financial crisis
made the change unsafe. For the positive return on the capital, the company is required to
balance between the growth rate and the sustaining upsurge in the shareholder value. The
human resource department also has to be ensured by the company that it is taking care of the
responsibility and sorting the issues related to governance, gender, human rights, racial
diversity and more (Campbell, 2017). When it comes to internationalization then also the
company has to face issues related to the laws of the foreign country.
At the time of application of the aggressive pricing strategy, the company faces issues
in approving lower prices. The market has also become more customers driven after the
international financial crisis. Changes in the prices of the products cost to the organization. At
the implementation of the strategies of private labels, the suppliers start to lose market share
as they majorly vend their products to the great corporations. It reduces the value of the
products. Loyal customers also slip the prospect of purchasing their product of choice.

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Strategic change
Wesfarmers faces strategic changes after the implementation of business strategies.
 The company identified the factors required to attain the strategy.
 The company attained a better understanding of the current business.
 Wesfarmers attained clarity, focus, and direction regarding where the company is and
where it required going.
 The business strategies created new opportunities for the business and enlarged
market share.
 Better business results and likely to focus on where the business wants to be.
 Simplification of the brand portfolio. The company is able to manage the portfolio of
brands and operates as an individual brand.
 The strategies helped the company to produce differentiated products by meeting the
specific needs of the market (Cassidy, 2016).
Recommendations
Wesfarmers is recommended to recognize the top talent which is accountable for the
wellbeing of the company along with the reputation. Such people add value to the company.
Wesfarmers should make sure that the top quality service is offered by these persons. The HR
department can offer such labours prizes and inducements to appreciate their work. Before
internationalization, Wesfarmers should view the demand in the market. The demand
structure has the capability of addressing the organization to expand. Add on, it is also
required to evaluate the nature of the increasing demand.
In order to overcome the issues faced in the market segmentation, Wesfarmers should
restrict to function in the wide geographical area along with the domestic and global markets
because of pattern changes in the demand. It has been observed that the demand is different
in the varied communities. Therefore, the products necessitate a survey in every location in
order to determine the request for the products (Channon & Jalland, 2016). Else, it can result
in over supply and inventory accretion. Wesfarmers is recommended to conduct market
research before obtaining another firm. It requires assessing the financial condition of the
organization along with the economy’s power. Otherwise, it can affect the financial position
of Wesfarmers and can result in economic blunder. For instance, the acquirement of Coles by
Wesfarmers took place just afore the worldwide financial crisis. This incident resulted in hard
days for the company but the appropriate research prior acquisition saved the company from

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the trouble. Proper research helps in knowing the perfect timing for the acquisition. The code
of conduct drags the company from making isolated tags as it affects suppliers. In this
situation, Wesfarmers is recommended to sell innovative products which are not provided by
the dealers till now. The products are required to be discovered which have great demand in
the market. Such a way, Wesfarmers can enhance brand worth along with the total income.
Project Part D

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