Management Strategic Analysis: Wesfarmers Limited's Growth Strategies

This report provides a comprehensive strategic analysis of Wesfarmers Limited, a major Australian conglomerate. It begins with an executive summary outlining the key areas of focus, including the company's strategic approach to ensure long-term growth and revenue generation. The report delves into the current situational analysis, exploring Wesfarmers' organizational structure, operational codes, and sales departments. It further examines the company's planned development, detailing its objectives, priorities, and implementation strategies. Key priorities such as cash flow generation, operating excellence, core values, risk management, long-term stakeholder returns, balance sheet strength, and capital allocation are analyzed. The report concludes with recommendations for continuous growth and references relevant materials, along with appendices that include an organizational chart, competitor analysis, and financial analysis.

Running head: Management
STRATEGIC MANAGEMENT
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Executive summary
The paper gives a strategic analysis of the strategic approach and management that is
applied by the Wesfarmers Limited company to ensure long term growth and revenue generation.
Current situational analysis of the company is presented in the report that includes organizational
structure, operational code, and sale department. Another area that the paper explores is the
planned development that includes the company’s objectives and priorities for implementing the
strategic plan. The paper identifies various priorities areas that drive the company objective and
these include cash flow generation, operating excellence, core value and risk management, long
term stakeholders return, balance sheet strength and capital allocation. The paper makes a
conclusion on the key areas that form the strategic management of the company citing some
recommendations that can be implemented for continuous growth.

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Table of Contents
1. Introduction.......................................................................................................................................4
Wesfarmers Limited..................................................................................................................................4
2. The current situations...........................................................................................................................4
2.1 Basic operations................................................................................................................................4
2.1.1 Organizational structure.............................................................................................................5
2.1.2 Operations code.........................................................................................................................6
2.2 Sales department...............................................................................................................................7
3. Planned development........................................................................................................................8
3.1 Objectives of the company................................................................................................................8
3.1.1 Assumptions...............................................................................................................................9
3.2 Priorities implementation the plans..................................................................................................9
3.2.1 Long term stakeholders return.................................................................................................10
3.2.2 Cash Flow Generation...............................................................................................................10
3.2.3 Balance Sheet Strength.............................................................................................................11
3.2.4 Capital allocation......................................................................................................................11
3.2.5 Operation excellence................................................................................................................12
3.2.6 The core value and risk management.......................................................................................12
4. Conclusion........................................................................................................................................13
5. Recommendations............................................................................................................................13
6. Reference..........................................................................................................................................14
Appendices...............................................................................................................................................17
Appendix I: Organization Chart..............................................................................................................17
Appendix II: Competitor Analysis of Woolworth...................................................................................18
Appendix III: financial analysis...............................................................................................................19
List of table..............................................................................................................................................20
Table 1...................................................................................................................................................20
List of figures...........................................................................................................................................21
Figure 1: Annual Report 2017 Graphical Representation......................................................................21

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1. Introduction
Strategic management remains the primary driver for successful business operations and
management. There are key fundamentals aspects of the strategic management that include the
organizational strategic objective, organizational structure, priorities implementation and revenue
generation. Wesfarmers Limited is a conglomerate organization with a number of companies and
company groups operating with Australia and internationally. The company has a strategic plan
that ensures it realizes continuous growth and revenue generation for long term purpose. This
report analyses the strategic management of Wesfarmers Limited as a management aspect that
enables the company to continue generating a return to shareholders. This report only analyses
the strategic management approach that the organization uses without another external factor that
affects the operation of the company.
Wesfarmers Limited
The strategic management of Wesfarmers Limited consists of various aspects that enable the
company to realize revenue generation and return for stakeholders.
2. The current situations
2.1 Basic operations

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2.1.1 Organizational structure
The organization structure of the Wesfarmers Limited is majorly composed of a board of
directors at the top hierarchy. The company is managed by the board of director that includes all
directors leading various companies and department within the Wesfarmers Limited
organization. At the top of the organization is the managing director that is one of the nine
members of the board of directors of the company. In addition, the company has various top
management leaders that lead various departments within the organization. Under each business
portfolio, there are other leaders and managers for the various departments that are directly
linked to the top management. For instance, the human resources management is directly linked
to the Chief Human Resource officer at the corporate level. Furthermore, the organization has
leaders that oversee international subsidiaries of the Wesfarmers Limited business (Wesfarmers
Limited 2019a).
The leadership structure of the organization, therefore, composes of various leaders and
directors. Firstly, the company has the managing director that is the overall leader of the
company apost that is currently held by Rob Scott. Secondly, the company has chief financial
officer that is a concern with the management of all financial responsibilities of the company.
Thirdly, the company at the top of the management is the group general counsel that offers legal
advisory to the company and also deals with all legal matters that concerns the organization.
Fourthly, there are managing directors for a various group of company that operates under the
Wesfarmers Limited brand. These include managing director Bunning Group, Smart Group, and
Wesfarmers Industrials.Lastly, the company also has some other leaders that include managing
director Business Development, company secretary, corporate affairs, Chief Human Resources,
and Managing director Officeworks (Wesfarmers Limited 2019).

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2.1.2 Operations code
Wesfarmers limited operation code composes of integrity, openness, accountability,
entrepreneur spirit. These operation codes are divided into various management levels. Firstly,
the company remains responsible for shareholders and another financial market. The board and
management lead the organization in stirring the accountability code of operation by being
responsible for the strategic direction of the company. The board and management uphold high
standards of operation that shows good governance and accountability to all stakeholders of the
company. This ensures that the company remains to focus on the corporate objective of
delivering a satisfactory return to shareholders and other stakeholders (Johnston, Clark &
Shulver 2012).
Secondly, the company is founded on the principle or code of integrity, fairness, honesty,
and accountability. The company operates under the principle of integrity when dealing with
stakeholders such as suppliers and customers and this enhances employees within the company
performs duty with diligence and care. Thirdly, the company complies with its policies,
procedures, and obligations that ensure that management does not receive or make improper
payment. The company observes and adheres to consumer laws, anti-bribery laws and laws that
guide the company against improper payments. This is to ensure that the company delivers its
objectives without malpractices that may affect its operations (Giesler &Veresiu 2014).
Fourthly, the company has a sustainable code of operations that is based on sustainable
economic, social and environmental operations within the market. It is the core belief of the
Wesfarmers that company should remain responsible more than providing employment and
wealth creation in the country. Fifthly, the company treasures the organizational relationships

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that involve treating employees and staffs with respect, diversity and a safe working
environment. To carry out this responsibility, the company remains zero tolerant of bullying,
discrimination, and harassment or any other unacceptable conduct at the workplace (Nobanee &
Jaya 2015). Sixthly, the Wesfarmers limited tries to reduce conflict of interest throughout the
organization especially when dealing with other businesses. Throughout the operation of the
company conflict of interest that may result from family business trading with Wesfarmers under
the influence of an individual is avoided at all cost.Lastly, the company upholds the
confidentiality of information when dealing with various stakeholders. The company remains
professional and treats any information at the professional level without irresponsible behaviors
(Hill & Gareth 2012).
2.2 Sales department
Wesfarmers Limited sales department is organized based on various business and
departments that operate within the organization. Some of the departments that have been
operating as of 2018 include Bunning, Coles, department stores, Officeworks, industrials and
other business. Firstly, Bunning one of the key groups under Wesfarmers Limited experience
sales increase of 8.9% from 2017 generating a total revenue of $12,544m. This was due to the
7.8% increase in store-on-store sales throughout Australia. Secondly, Coles is another company
has been operating under Wesfarmers as of 2018 and generated a sale of $39,388 million mostly
derived from food and liquor sale that grew at 2.1 percent. Thirdly, Wesfarmers has Department
Stores division that comprises of comprising Kmart, Kmart Tyreand Auto Service, and Target.
The department has also experienced revenue growth of 3.6% totaling to $8,837 million. Of this
revenue, Kmart alone has over 20 stores as of 2018 realizing8%sale increase. Fourthly, the

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Wesfarmers Officeworks is one of the leading suppliers of office products and made revenue of
$2,142m in 2018. The Officeworks has more than 165 stores operating within Australia and this
has ensured an increase in the sale of 9.1%. Lastly, the company has Industrials division that
composes of Chemicals, Energy and Fertilizers Industrial and Safety; and Resources. The
department over the past one year has growth improvement of 14.7% coupled with an increase in
sale leading to revenue of $5,269m (Wesfarmers Limited 2018).
3. Planned development
3.1 Objectives of the company
The strategic objective of WesfarmersLimited is to deliver a satisfactory return to
shareholders through financial discipline and management of many portfolios. The strategic
objective of the organization is named the Wesfarmers Way is majorly focusing on strong
management of each business portfolio to ensure that each business delivers the required return
to shareholders. Furthermore, the company has core values, value creation strategies and growth
enablers that ensure that the company is geared toward the objective of delivering a satisfactory
return to shareholders of the company (Wesfarmers Limited 2018b).
As part of the objectives of the company, there are value creation strategies that form the
core operation guidelines for the realization of the organizational objectives. Firstly, the
company strengthens its existing businesses excellent operation and satisfaction of customer’s
needs. Secondly, the company has adding values transactions that ensure that portfolios are
renewed for effective operation. Thirdly, Wesfarmers secure growth through an entrepreneurial
initiative that ensures that the company invests in business opportunities. Fourthly, through the

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company’s long-term management, the company ensures a sustainability operation (Thompson
2014).
Apart from value creation strategies, the company has growth enable that is also part of
the strategic directions that ensure that the company achieves its objectives. The company has
outstanding people that offer both management and operation geared towards growth. The
company offers commercial excellence services through excellent policies that ensure growth.
Innovation is a key growth enabler that is also connected to the entrepreneurial capability of
company management. The organization upholds the quality of diversity and the company does
through empowering a culture of the community it operate in. over the past years, the company
has demonstrated financial operation capability that enhances the growth of the company rapidly.
Lastly, the company has a comprehensive sustainable responsibility that enables the company to
grow within the challenging environment (Bansal & DesJardine 2014).
3.1.1 Assumptions
The company objective and realization of the objective is grounded on the assumption
that all the financial risk is control. The attainment of the company objectives does not consider
the risk that may occur derailing the company from the strategic direction. This is based on the
assumption that the risk management framework of the company takescare of any unprecedented
risk (Steven, Storey & Howard 2017).
3.2 Priorities implementation the plans
The Wesfarmers Way is the philosophy that ensures that the company delivers on its
objectives to shareholders and other stakeholders. This has propelled the company to consider

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some priorities when implementing the strategic plan. Some of the priority implementation areas
that ensure the strategic plan of Wesfarmers include long term shareholder return, cash flow
generation, good balance sheet strength, excellence operating and financial reporting (Rumelt
2011).
3.2.1 Long term stakeholders return
Wesfarmers Limited is geared towards delivering a return to shareholders and this is the
overall company priority. The company considers the investment and operational strategies to
deliver the goal of the company that is based on a satisfactory return on the capital invested in
the company. This has been the overall objective of the company and the company has come up
with various strategies to maintain the strength of the balance sheet and cash flow generation.
This is also characterized by proper capital allocation to various departments within the
organization. Effective capital management is a priority that ensures the company delivers better
result each year. Moreover, the company recognizes the frankingcredits to shareholders that it
aims to distribute to all shareholders (Bert 2017).
3.2.2 Cash Flow Generation
Cashflow generation is a number one priority for the implementation as this ensures that
the company remains long term earnings growth. In order to maintain the cash flow generation,
the company has devised some strategies. Firstly, the company has come up with effective ways
to manage the working capital to continue growing. Secondly, the company has strong capital
expenditure processes that ensure there is a continuous cash flow generation. Thirdly, financial
discipline is another way the company has to develop those services to prevent improper

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financial management. Lastly, the company seeks to invest above the cost of the capital as this
ensures that investment decisions are effective (Krajewski, Ritzman & Malhorta 2013).
3.2.3 Balance Sheet Strength
The balance sheet strength is another priority that the company uses to implement its
strategic plans and this ensures there are revenue generation and maximizing opportunities.
There are things that the organization does to maintain the balance sheet strength. Firstly, the
company has diversified funding sources that ensure there is no dependent on a single source of
funds (Shamoon&Saiqa2011). Secondly, risk management and risk maturities are another way
that the company maintains balance sheet strength and this is through smooth debt maturity that
reduces the financial risk of repayments. Thirdly, maintenance of strong credit metrics ensures
that the company has a good credit rating in the market leading to excellent investments. Lastly,
optimizing the funding cost is a balance sheet maintenance strategy that is based on the ability of
the company to optimize institutional financial cost (David & Forest 2016).
3.2.4 Capital allocation
In order for the company to rely on its long-term business objective, the company
through its capital allocation strategy has considered various departments. Firstly, the company
allocates capital based on the existingportfolios that are geared toward growth. The company
allocates capital to its existing business portfolios that are towards the growth of the market
shares and position within the country and internationally. Secondly, the company also allocates
capital based on the adjusted opportunities through leveraging market and investment
opportunities for competitive advantage. Thirdly, the company also allocates capital based on

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value-accretive transactions that aim to increase financial discipline especially in opportunities
and through ownership transaction models (Balaji & Sanjit 2017).
3.2.5 Operation excellence
The operating excellence is another key area where the company major in so as to
achieve strategic objectives. The company has come up with various operating strategies that
give the company a growth advantage and delivers a satisfactory return on the capital invested.
Some of these include sustainable operations, value-adding transactions, growth opportunities,
and financial reporting. Firstly, Wesfarmers Limited has a sustainable operating strategy that is
directed towards long term sustainable social responsibility within the market. Secondly, value
addition transaction that involves those business transactions that leads to long-term shareholders
returns. Thirdly, the company takes advantage of growth opportunities through excellence
investment that ensures the company's overall growth and revenue generation. Lastly, financial
reporting and evaluation is another key operational strategy that ensures that the company has
operation excellence (Cameron 2014).
3.2.6 The core value and risk management
Core values and risk management is another priority area that ensure that the strategic
plan is implemented. The company has core values that are based on integrity, accountability,
and openness which drives the operation and excellent result. These core values are linked to risk
management that aims to act in the most professional way to reduce any financial risk. The
operation codes and risk management system that are based on the company compliance to laws
and regulations have made the company realize its objective. The risk management procedure of