Wesfarmers Strategic Analysis: Business & Functional Level Report

This report examines the functional and business-level strategies employed by Wesfarmers to maintain a competitive edge and achieve market leadership. The functional strategies discussed include marketing, emphasizing price penetration and social media promotion; financial, focusing on capital return to shareholders and efficient capital structure; human resources, highlighting innovative people solutions and employee engagement; production, centered on supplier relationships and lean manufacturing; and research and development, emphasizing innovative technologies like drone inspections. The business-level strategies cover cost leadership through discounted pricing, differentiation through brand development like Bunning's warehouse, resource strategy focusing on coal mine value delivery, focused cost leadership involving strategic capital allocation, and the 'Wes-farmer Way' business model framework aimed at shareholder returns and sustainable value creation. These strategies collectively enable Wesfarmers to enhance business efficiency, customer experience, and market share.

Wesfarmers

Wesfarmers
Executive summary
This report has been commissioned to emphasize on the different functional and business level
strategies of the Wesfarmers Company. It is important for the company to focus on considering
the different strategies so that it could be possible to attain the large market share in comparison
to the competitors present in the market. The different strategies considered by the company are
marketing strategy, financial strategy, human resource strategy, production strategy and research
and development strategy. The business level strategies considered by the company are Cost
leadership, differentiation, focus cost leadership and Wes-farmer Way. These strategies have
provided in-depth understanding of the marketing operations of the company.
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Table of Contents
Executive summary.....................................................................................................................................1
Introduction.................................................................................................................................................1
Functional level strategies...........................................................................................................................1
Marketing strategy.......................................................................................................................1
Financial strategy.........................................................................................................................2
Human resource strategy..............................................................................................................2
Production strategy......................................................................................................................3
Research and development strategy.............................................................................................3
Business level strategies..............................................................................................................................3
Cost leadership.............................................................................................................................3
Differentiation strategy................................................................................................................4
Resource strategy.........................................................................................................................4
Focused cost leadership...............................................................................................................5
Wes-farmer Way..........................................................................................................................5
Focused differentiation................................................................................................................6
Conclusion...................................................................................................................................................6
Recommendations.......................................................................................................................................6
References...................................................................................................................................................8
Appendices..................................................................................................................................................9
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1.0 Introduction
In this paper, the discussion will be made on “Wesfarmers Company”. Wesfarmers Limited is
one of the largest Australian Conglomerate company and headquarter is in Perth, Western
Australia. The subsidiaries of the company are Kmart, Office works and Bunning’s workhouse.
In this paper, the emphasis will be given on the functional and business level strategies of the
company that are required by the company to accomplish the set goals and objectives in the
competitive market. The different functional and business level strategies of the company will be
discussed in reference of the company. These strategies assist in maintaining the large customer
base and boost the market share of the company.
2.0 Functional level strategies
There are various functional strategies of the company such as marketing strategy, financial
strategy, human resource strategy, production strategy and research and development strategy.
These are considered as one of the important functional level strategies that are used by the
business to manage the operational functions of the business in the competitive market.
2.1 Marketing strategy
It has been examined that Wesfarmers emphasizes on choosing the price penetration strategy
assist helps to set the lower price if compared with the competitors. The company attained the
large market share by emphasizing on the discounted pricing. The management of the company
has maintained the awareness of the competitors in relation to the price war that is taking place
in the market. The products that are offered to customers are at low cost if comparison is made
with the competitors present in the market. It is analyzed that promotional strategy is also
considered by the company in which they emphasized on social media marketing and also on the
television marketing. With these promotional techniques the company focused towards attracting
the customers as it helps in maintaining the large market share (Bayne, Schepis and Purchase,
2017).
2.2 Financial strategy
The capital return of the company is implemented to return surplus capital to shareholders and to
ensure that Wesfarmers maintains the efficient structure of the capital. It is analyzed that
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company has the strong earnings, cash flow and debt capabilities that helps in undertaking the
capital return without impacting the financial flexibility. Wesfarmers is the company that focuses
on analyzing the overall opportunities of the investors and they also remain committed by
focusing towards the growth while considering the overall returns to the shareholders. To
manage the finance it is examined that Class ruling from the Australian taxation is attained that
helps to reduce the overall cost base of the shares for the capital gains tax purposes. It can be
stated that this is one of the important strategy considered by the company as it helps in
maintaining the overall finance of the business in relation to the operational functions. The
overall activities of the company are managed according to the set rules and regulations given by
the government. So, it can be stated that managing finance is the essential strategy that has
assisted the company in controlling the functions by attaining the competitive advantage (Colpan
and Hikino, 2018).
2.3 Human resource strategy
It is also the effective strategy that has helped the company in managing the business functions.
It is observed that the Human resource team of the company is committed towards delivering the
people the effective outcome that helps the business to grow and also it assist in maintaining the
sustainable performance. It has been analyzed that company accomplished it by developing the
innovative people solutions that are also aligned with the strategy of the business at each stage of
the employee lifecycle. The human resource team tries to emphasize on the factors such as
recruitment and selection, training, performance and reward and also it emphasizes on the
succession and development. The members of the team emphasizes on the team players who are
having the inter personal skills and also the passion to deliver the positive results that can assist
in boosting the engagement level and also it helps in enhancing the commitment of the
employees towards the assigned work (Biddle, 2016).
2.4 Production strategy
It has been analyzed that the production strategy of the company relates with the suppliers. The
company maintains its relations with the 18, 000 suppliers across the different areas. It has been
seen that the company has paid approximately $47 Billion to the suppliers. The company wants
to offer value to its customers so that sustainable growth can be maintained. Striving for the
better efficiency in relation to the supply chains helps in ensuring the competitiveness of the
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company. The WesCEF has involved the contractors and also the suppliers to seek the different
ways of offering the opportunities to the indigenous people. Wesfarmers also emphasizes on the
lean manufacturing in which the main focus is on reducing the wastage that can help in
maintaining the efficiency ratio (Campbell, 2017).
2.5 Research and development strategy
It is known as the strategy that has helped the company in accomplishing the set goals. It is
analyzed that company in focusing more on adoption of the innovative technologies that helps to
drive the business efficiency and also it improve the safety at CSBP’s nitrate facility. In 2015,
the company launched the inspection process; CSBP drone inspection program enables the
overall examination of the ammonia plant. Due to the use of drone eliminates the risk of the
product loss and it has helped the company in boosting the market share. So, it can be said that
this is one of the strategy that has impacted the overall growth of the company (Goodman and
Sage, 2016).
3.0 Business level strategies
3.1 Cost leadership
It has been examined that company has considered the low cost strategy and due to this the
company is the leader in relation to the other competitors present in the market. The company
has focused towards the speed up deflation at the Coles strategy as it pursues the strategy of
offering discounts on the household staples. But the Wesfarmers also focused on reducing the
prices on more than 150 items such as on bread, cheese and sugar the prices are reduced as an
“everyday low price”. The company considered the low cost strategy so that it could be easy for
the company to maintain the large customer base (Williams, 2019).
This can be considered as one of the effective strategy that has helped in accomplishing the goals
in the competitive market. It is said by the group of supermarket that the group strategy consist
of the plans to deliver the better store network and they emphasizes on the fresh food that
extends the “value leadership”. The company decided to offer the products that drive the fresh
food and also focuses on transforming the liquor. To reduce the cost is known as the business
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level strategy as it helps the company to be the leader of the market in relation to the competitors
who are present in the market.
3.2 Differentiation strategy
In relation to this strategy, bunning warehouse brand development is the strategy which is
considered by the company to manage its operations. The main aim is to create the national chain
of warehouse stores through which the industry benchmark for the profitability can be set. It is a
balanced package that focuses on DIY. With the help of this strategy it would be possible to
conduct the location planning that can assist in accomplishing the set targets in the competitive
market. It is analyzed that company also focused on the offering the customers with the
differentiated shopping experience by maintaining the great quality and also the great value. The
company emphasized on recent implementation in terms of the in house design and development
capabilities. Increasing the store footprint and to invest in the existing stores network is also one
of the priority for the company as it helps to emphasize on offering good customer experience
which also helps in boosting the share market of the company. This can be also considered as the
business strategy considered by the company so that customer experience can be improved
(Wang, 2016).
3.3 Resource strategy
Wesfarmers has considered this strategy in which resources has an important role in relation to
maintaining the coal mines. It is analyzed that the Resources of the company vision is to be one
of the high performance resource company that helps in delivering the value through initiative
and innovation. There are also different divisions that seek to attain the sustainable basis in
relation to mining operations and also in terms of safety and development of the people. The
company pursuit the growth in the shareholder value by enhancing the existing mines and the
overall expansion takes place in terms of division portfolio and also through acquisition of the
different Greenfields projects. The company also focused on increasing the export sales in which
the metallurgical coal export sales has been enhanced so that efficiencies and market growth can
be maintained. This is also the effective strategy that is considered by the company as it helps in
maximizing the resources which will lead to the growth in the opportunities and also in the
market share (Moody, 2017).
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3.4 Focused cost leadership
It is also the strategy in which the two speed investment strategy is considered by the company.
This is the effective strategy that helps in pumping the less capital into the underperforming coal
and chemical business and also emphasis is on the areas that are performing well such as
Bunnings. Also, it has been analyzed that the investor presentations of the company also released
this week was $200 Million and $400 reduction in the entire capital expenditure that has forecast
the present financial year of the company. This strategy can be considered as the focus cost
leadership strategy that emphasized on maintaining the less capital and also helped in performing
well in the competitive market. Therefore, with the help of this strategy the main emphasis is
maintaining the business operations in comparison to the other competitors that are present in the
market (Sullivan and Gouldson, 2017).
3.5 Wes-farmer Way
This can also be concerned with the overall framework of the business model that consist of the
core values and also growth enablers that helps in creating the value that direct towards the
primary objective of offering the returns to the shareholders that are sufficient. In relation to this
there is also value creating strategies that has a primary objective of focusing on the objectives
such as it helps in boosting the existing business through operational excellence and it helps in
satisfying the basic needs of the employees. It also assists in securing the overall growth
opportunities by the entrepreneurial initiatives. The key emphasis of this approach is on
maintaining the long term focus and also it helps in acting sustainable in the overall creation of
value which helps in building the business. It can be the strategies that can assist in controlling
the routine functions of the business and also has the aim to boost the market share in the
competitive market.
3.6 Focused differentiation
The company emphasizes on delivering the better store network such as it accelerate the sales
density growth and also focus on improving the local offering. The space has also been enhanced
by the company such as target 2% net selling area growth and also the focus is on the priority
network gaps and growth corridors. This has also helped in continuing the renewals that ensure
the consistent customer experience. Greater focus has also been given on the fresh food that
boosts the collaborative partnerships with the suppliers and also secures the supply to support the
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future customer demand. Also there is integrated category management considered by the
company that helps in securing the overall functions of the business. It can be stated that this is
the best business strategy that assists in attaining growth among the different competitors (Kilroy
and Schneider, 2017).
4.0 Conclusion
It can be concluded that the company considers different functional and business level strategies
so that it could easy to accomplish the set goals. These strategies offer the company a chance to
beat the high level of competition that exists in the market. With the help of these strategies the
company can easily maintain its competitive advantage in the market. The functional level
strategies considered by the company are marketing strategy, financial strategy, human resource
strategy, production strategy and research and development strategy. The business level
strategies considered by the company are Cost leadership, differentiation, focus cost leadership
and Wes-farmer Way.
5.0 Recommendations
It is recommended that it is important for the company to focus on the different strategies so that
the operational activities can be managed smoothly.
 Promotion
The company should also emphasize on promoting the products and services through the online
platform. It is considered as the best way that can help in boosting the demand of the services in
the market. The online platform that should be considered by the company is Facebook as it is
one of the best medium of posting the pictures of the products and services. These are some of
the effective strategy that helps in managing the overall outcome of the business. So, this is the
effective strategy that can help in controlling the functions and also maintain the brand image of
the company.
 Build the end to end supply chain
The company should focus on bringing improvisation in the distribution centers such as the labor
planning should be improved and also simpler system and processes should be considered. It is
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necessary for the management to bring transparency in the third party partnership and also in roll
out planning. It is important for the management to ensure that the right product is delivered by
the right channel and at the right time. Also, it is important to minimize inventory days so that
productivity can be boosted in the workplace.
 Discounts and vouchers
Wesfarmers should emphasize on introducing the different discounts and vouchers to the
customers so that they can give more preference to the products of the company. It is the
effective way that can assist in managing and boost the sales of the company’s products. If
discounts and offers are provided to the employees then it can assist the customers in availing the
service in low cost as compared to the other competitors. Therefore, it can be said that this is one
of the effective strategy that can assist in reducing the overall cost of products and also it will
help in maintaining the large customer base. If discounted products are provided then customers
will avail more and at last it will help in maximizing the satisfaction level of the customers
towards the services and products of the company. Therefore, it can be stated that this is
recommended that this strategy can help in attaining the large customer base in the highly
competitive business world.
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References
Bayne, L., Schepis, D. and Purchase, S., 2017. A framework for understanding strategic network
performance: Exploring efficiency and effectiveness at the network level. Industrial Marketing
Management, 67, pp.134-147.
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.
Colpan, A.M. and Hikino, T. eds., 2018. Business Groups in the West: Origins, Evolution, and
Resilience. Oxford University Press.
Goodman, M.K. and Sage, C., 2016. Transgressing Retail: Supermarkets, Liminoid Power and
the Metabolic Rift. In Food Transgressions (pp. 149-172). Routledge.
Kilroy, D. and Schneider, M., 2017. Valuing the Current Strategy. In Customer Value,
Shareholder Wealth, Community Wellbeing (pp. 109-141). Palgrave Macmillan, Cham.
Moody, W., 2017. Overview of Western Australia's coal industry. Energy News, 35(1), p.14.
Sullivan, R. and Gouldson, A., 2017. The governance of corporate responses to climate change:
An international comparison. Business Strategy and the Environment, 26(4), pp.413-425.
Wang, S., 2016. Corporate Retailing. International Encyclopedia of Geography: People, the
Earth, Environment and Technology: People, the Earth, Environment and Technology, pp.1-12.
Williams, P. 2019. Wesfarmers sticks with low-price strategy. [Online] Available at:
https://thewest.com.au/business/finance/wesfarmers-sticks-with-low-price-strategy-ng-ya-
203243. [Accessed on 10th May 2019].
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Appendices
(Source: Campbell, 2017).
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