Strategic Information System: Wesfarmers Internal & External Analysis

This report provides an in-depth internal and external analysis of Wesfarmers, a conglomerate company in Australia, using frameworks like Porter's Five Forces and resource-based view to assess its competitive environment and strategic capabilities. The external analysis covers political, econom...Read More

Running head: Strategic Information System 1
Strategic Information System
Internal and external analysis of Wesfarmers Company

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Contents
Overview..........................................................................................................................................3
Part 1 (external analysis).................................................................................................................3
Business background.......................................................................................................................3
Industry evaluation..........................................................................................................................3
Environmental analysis....................................................................................................................3
Porter’s five forces...........................................................................................................................4
Competitive environment................................................................................................................5
Opportunities and threats.................................................................................................................5
Part 2 (Internal Analysis).................................................................................................................6
Firm’s resources...............................................................................................................................6
Core competencies of the company.................................................................................................6
Capability analysis...........................................................................................................................6
Suitable information system............................................................................................................6
Evaluation of the system and recommendation...............................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
The competition has increased in every field due to amendments in the technology and increased
demand of the customer towards providing the services as per the latest trend. The main aim of
this report is to provide the depth information about the internal and external analysis of the
company. The report will entail various frameworks in order to elaborate on the internal and
external factors.
Part 1 (external analysis)
Business background
Wesfarmers is the conglomerate company whose headquarter is situated in Perth. The
organization was introduced in 1914 with merchandise of agriculture. It has been found that the
company was providing diversifying of the product lines in starting. The products such as forest
products, hardware,and home improvement products were offered by the company in beginning.
The retail business was started in 2007 in which the company divided the retail business into two
segments (Wesfarmer, 2018). One segment is related to the retail business and the other one is
related to remaining operations.
Industry
It has been found in the context of the retail industry that the scope of the retail industry is wide
in the market of Australia as this industry is faced an affirmative growth. The role of the
economic recovery was huge in the contribution to the retail industry. As consequences of these
criteria, the bonding of the retail companies and the consumers has become stronger. It has been

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analyzed that the customers of Australia like to our chase the local products, but there isa number
of overseas companies that offering various products online. This has become the major reason
of amplifying the intense competition for the domestic retailers of the country (Sutton-Brady,
Kamvounias and Taylor, 2015).
Environmental analysis
Political/ legal factor
The impact of political factors over the retail industry of Australia is huge as increasing business
such as retail supermarkets like Wesfarmers have made competition for smaller retailers and that
is why confine the government to bring with required policies. In the context of the legal factor,
it has been found that the implication of legal in the level of the carbon emission limit has
become the reason of restriction of some industries involving Wesfarmers across Australia.
Economical
The performance of the Wesfarmers gets affected due to amendments in the economic condition
of Australia regarding buying behaviour and customer demand. The market consumption
behaviour is affected due to the global crisis in 2009.
Social
Wesfarmers has a number of employees along with shareholders within the company as it is the
acquisition of Coles Group that has been capable to target a huge population of around 22
million. The company has taken various steps in order to society upliftment and made employee
engagement strategies with Aboriginal and Torres Strait Islander people

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Technological
The role of the technology in the success of the retail industry in the Australian market is huge.
The retail store of the company has become advanced as they invested in technology to provide
the latest services to the customers (Turner and Mortimer, 2014).
Global
The company is more attentive towards maintaining the healthy atmosphere around Australia as
the company has made a huge investment in the technology to avoid wastage of resources
(Hunter, 2014).
Demographic and physical factor
The population o f Australia is growing and it can be anticipated that it can be increased in near
future. It would be supportive for the retail industry and the growth of the company. The retail
industry of Australia is contributed in the economy of the country around 4.5%.
Porter’s five forces
Bargaining Power of the Buyers– the bargaining power of buyers is high as another competitor
such as Woolworths in the retail industry provides various options to choose.
Bargaining power of the suppliers – the bargaining power of supplier is considered as the
moderate as the company is able o maintain the good relationship with customers.
Threats of New Entrant – it is the lower as it is not possible to invest in a huge way to compete
with a large company such as Wesfarmers because multiple operationshave created many
obstacles for the new entrant to survive in the Australian Retail Industry (Biddle, 2016).

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Rivalry among existing firms –the company is facing moderate competition in various
industries which it is endeavoring to eliminate by focusing on giving the best services at lowest
prices.
Threats of substitute- the retail products are used by customers on regular basis that is why
there is no alternatives are available. Hence, the threat of substitute is lower for the company.
Competitive environment
The company is able to implement effective strategies in order to compete with competitors. It
has been found that the company was not interested in connecting in a full blown price war with
their competitors such as Woolworths. The strategic group of the company is supermarkets,
liquor, and convenience store and home improvements. The competitors of the company are
Coles, Woolworths and Target. It has been found that the competitors of the company such as
Coles and Aldi are investing more than $500 million to eliminate the cost of grocery products
(Wesfarmer, 2018). However, the company has acknowledged a highly competitive environment
in which the company is elaborating the leadership across categories and products instead of
responding to competitors. The threats have been represented by competitors to attract customers
towards their products and services by lowering the costs.
Opportunities and threats
Opportunities  A large number of stores
 Customer loyalty

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 Strong brand presence
 Growth potential
 Multi-option retailing to Expansion of
the business all over the world
 Option to enlarge products for other
segments
Threats  Rising level of competitors
 Interventions and policies of the
government
 Interest rates variations
 Effective strategies made by
competitors to attract customers
Part 2 (Internal Analysis)
Firm’s resources
The company has tangible as well as intangible resources that help the company to maintain the
consistency of the firm along with the brand equity and the human capital of the company.
Tangible and Intangible resources
The company has human resources, financialresources and the latest technology that are able to
provide huge services to the customer in order to retain them. The financial condition of the

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company is as strong as the revenue of the company was around $65,981 million in 2016. On the
other hand, the competitor of the company had less revenue in comparison to Wesfarmers. The
intangible resources of the company are good will and it has been found that the company has
19.2B AUD (Wesfarmer, 2018).
Core competencies of the company
Core competencies are considered as the strategies that are tough for a business’s attaining
competitive advantages. The core competencies of Wesfarmers are elaborated below:
 The company provides services to the customer by keeping the value of their money.
 The business of Wesfarmers efficiently by reducing the cost in all areas of business
(Berman, 2015).
 The major core competencies of Wesfarmers are its prices and quality of the products that
provide a huge benefit to them to attain competitive advantages.
Capability analysis
Wesfarmers has a huge number of stores and around 220,000 employees which help the
company to increase the revenue of the company in an efficient manner from the online stores as
well. The major capability of the company is a brandpresence that helpsthe company to win the
confidence of the customer and make them loyal towards the company. Along with that, it has
been analyzed that the financial condition of the company is strong which consider as the
strength of the company. It is the company that is well known due to its best quality products and
services to the customers (The Conversation, 2017).

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Suitable information system
The role of the information system in the retail industry is huge as it helps in managing inventory
of the company and support distributed stores through connecting them. It provides instant
knowledgeabout exchange and available stocks which help manager of the retail company to stay
in contact to the more effective way so that he can control profits for the entire company
(Klettner, Clarke and Boersma, 2014). Wesfarmers should use MIS (Management Information
System) as it has several applications that help in managing the flow of information. The use of
MIS in Wesfarmers would be for point of sale data collection, inventory management, logistics
as well as internal communication.
Evaluation of the system and recommendation
It has been found that the role of MIS in retail industry is huge as it helps in various department
of the company. With respect to customer relationship management, it is well known marketing
system that is used for point-of-sale terminals in order to follow up the customer’s account and
accumulate data on the basis of their relationship history. It is one of the tools of CRM that
facilitates to maintain long-term relationship with customers which can be considered as the key
of success for small retailers so that they can compete with large chain (Adams, 2016). Along
with that, it has been evaluated that MIS is helpful in logistics as it allows vendors to draw data
of shipping routinely from stores for the purpose of fulfilling the order. MIS technology offers
retail associated to update pricing of the stocks and conduct inventory audits. It is helpful to
make communication with internal staff through memos and messages to conduct the meeting or
providing the important information to all employees in one go.

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It has been recommended by the company to focus on this information system as it helps in
attaining more competitive advantages in comparison with other competitors such as
Woolworths, Target and Coles. It has been analyzed that the company is facing huge loss in the
departmental store business in which the earning of the company get affected by $145m because
of the upper level of the stock clearance, lower price of Australian Dollar and restructuring cost
(Wesfarmer, 2018). It is required for the company to focus on such aspects so that the company
could prevent itself from these losses.
Conclusion
It can be concluded that Wesfarmers is a well-known company in the retail industry as it
provides huge quality products at a lower price that attract a number of the customer towards it.
The report has been made on the internal and external analysis in which various frameworks
have been used to demonstrate the importance of these factors over the success of the company.
The report has been included to recognize the strategic implications of Wesfarmers providing to
its upper level of productivity on majority of the retail industry. Wes farmer’s core competencies
and capabilities are the major reason for their success. MIS has been proposed for the company
so that the company can grow in an efficient manner in comparison to their competitors.

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References
Adams, M.A., 2016. Contemporary case studies in corporate governance failures. Governance
Directions, 68(6), p.335.
Berman, B., 2015.How to compete effectively against low-cost competitors. Business
Horizons, 58(1), pp.87-97.
Biddle, I., 2016. The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters
battle. Busidate, 24(3), p.3.
Hunter, T., 2014. Test your strategies with the ASX Sharemarket Game. Equity, 28(6), p.10.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible business
strategy. Journal of Business Ethics, 122(1), pp.145-165.
Sutton-Brady, C., Kamvounias, P. and Taylor, T., 2015.A model of supplier–retailer power
asymmetry in the Australian retail industry.Industrial marketing management, 51, pp.122-130.
The Conversation., 2017.Company results: how competition is transforming Australia’s retail
sector. [online] Available from: https://theconversation.com/company-results-how-competition-
is-transforming-australias-retail-sector-72844 [accessed 18/08/18].
Turner, K. and Mortimer, G., 2014. How your shopping choices will help Coles and Woolworths
take on the banks. The Conversation.
Wesfarmer, 2018.Wesfarmers | Intangible Assets.[online] Available from:
https://tradingeconomics.com/wes:au:intangible-assets. [accessed 31/08/18].

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Wesfarmers, 2018.Annual Reprt. [online] Available from:
https://www.wesfarmers.com.au/docs/default-source/reports/2008-annual-report.pdf?sfvrsn=2
[accessed 31/08/18].

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Bibliography
Adams, M.A., 2016. Contemporary case studies in corporate governance failures. Governance
Directions, 68(6), p.335.
Berman, B., 2015.How to compete effectively against low-cost competitors. Business
Horizons, 58(1), pp.87-97.
Biddle, I., 2016. The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters
battle. Busidate, 24(3), p.3.
Campbell, J., 2017. Insights from the company monitor: Wesfarmers. Equity, 31(8), p.16.
Hunter, T., 2014. Test your strategies with the ASX Sharemarket Game. Equity, 28(6), p.10.
Janssens, M.R. and Kaptein, M., 2016. The ethical responsibility of companies towards animals:
A study of the expressed commitment of the Fortune Global 200. Journal of Corporate
Citizenship, (63), pp.42-72.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible business
strategy. Journal of Business Ethics, 122(1), pp.145-165.
Mortimer, G., 2016. How Kmart ate Target: a story of retail cannibalism. The Conversation,
(31).
Sutton-Brady, C., Kamvounias, P. and Taylor, T., 2015.A model of supplier–retailer power
asymmetry in the Australian retail industry.Industrial marketing management, 51, pp.122-130.

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The Conversation., 2017.Company results: how competition is transforming Australia’s retail
sector. [online] Available from: https://theconversation.com/company-results-how-competition-
is-transforming-australias-retail-sector-72844 [accessed 18/08/18].
Turner, K. and Mortimer, G., 2014. How your shopping choices will help Coles and Woolworths
take on the banks. The Conversation.
Wesfarmer, 2018.Wesfarmers | Intangible Assets.[online] Available from:
https://tradingeconomics.com/wes:au:intangible-assets. [accessed 31/08/18].
Wesfarmers, 2018.Annual Reprt. [online] Available from:
https://www.wesfarmers.com.au/docs/default-source/reports/2008-annual-report.pdf?sfvrsn=2
[accessed 31/08/18].