Wesfarmers' Business Model, Operations, and Strategic Recommendations

This report offers a detailed examination of Wesfarmers, a prominent Australian conglomerate operating in the retail sector. The report begins with an introduction to Wesfarmers' business model, followed by an in-depth analysis using the Business Model Canvas, outlining key partners, activities, value propositions, customer relationships, customer segments, key resources, channels, cost structure, and revenue streams. It then explores the crucial relationships between these blocks and identifies the critical success factors essential for sustainable business growth, such as understanding customer behavior and utilizing multichannel strategies. Furthermore, the report addresses potential downside risks, including the demerger from Coles and competition from giants like Tesco, and concludes with strategic recommendations for improving the business model, such as narrowing product offerings and introducing its own brand products. This assignment provides valuable insights into Wesfarmers' operations and strategic considerations.

Running head : WESFARMER`S THINK BIG
WESFARMER`S THINK BIG
Name of the Student
Name of the University
Author Note

1WESFARMER`S THINK BIG
Executive Summary
The report aims to describe the various operations of the retail giant of Australia named
Wesfarmers. Wesfarmers is a conglomerate which has various business areas ranging from
grocery, fresh food items, personal skin care o coal, oil and gas as well as retail. The report has
discussed various components of the business of Wesfarmers and its operations in Australia. The
first part of the report has provided a brief introduction followed by the business model canvas.
The relationship between the various building blocks of the canvas along has been provided
along with the critical success factors important for the business. The given report also provides
certain recommendations to the model.

2WESFARMER`S THINK BIG
Table of Contents
Introduction: About the business.....................................................................................................3
The Business Canvas Model............................................................................................................4
Key relationship between blocks.....................................................................................................6
Critical Success Factors to get sustainable success........................................................................9
Downside risk and causes..............................................................................................................10
Recommendations to change the business model..........................................................................11
Refrences.......................................................................................................................................13

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Introduction: About the business
The Wesfarmers limited can be described as an Australian conglomerate which has its
business in Perth in the region of Western Australia. The company operates in the retail
supermarket sector. The company deals in chemicals, fertilizers, coal mining and industrial
safety products. The company has being performing well and recently made a profit of 65.98$
billion. The company has recently become the largest company in Australia by revenue taking
over its competitors (Armstrong et al, 2015). The company began its operations in 1914 as a
cooperative business which provided assistance to the Western Australian farmers. It was in the
year 1940 that the company began to deal in wheat, wool, livestock, fruit and vegetable exports
and came to be known as Westralian Framers Limited. Alongside retail food products the
company also deals in Chemical, Fertilizers, Safety and other related products (Wesfarmers,
2018). At present the firm has its operations in Australia and New Zealand.
Figure 1: The business segments of Wesfarmers (Source: Wesfarmers, 2018).

4WESFARMER`S THINK BIG
The Business Canvas Model
Key Partners
Wesfarmers operates in
the retail supermarket
sector and along with
that it operates in various
other sectors also. The
given subsidiaries and
divisions of the business
are given as follows :
 Kemart
 Target
 Coles
 BBC Hardware
 Ansett
 Travel
 Superannuation
Fund
 Coles Property
Management
 Comnet
 Fosseys
 Morley
Shopping
Centre
 now.com.au
 Theo's Liquor
Key Activities
 Pricing
 Marketing
 Procurement
 Customer
fidelization
 Diversification
 Analyzing
consumer
demand
 Effective
Distribution
system
 Warehousing
and Logistics
 Purchasing
and selling
consumer
goods
(Barquet et al.,
2016).
Value Proposition
 Wide
selection of
products
 Safety
 24/7
shopping
experience
 Online
buying
 Convenient
online
shopping
 Good
prices of
the
products
 Online
shopping
facility
 Diversifica
tion of
business
operations
like Gas,
energy,
Customer
Relationships
 Customer
Loyalty-
wesfarmer
offers good
quality
products to
the customer
and
therefore
they build
loyal
relationships
with the
customers.
 Online
shopping
 Self-service
 Discount
offers
 Affiliation
(Sutton-
Brady,
Kamvounias
& Taylor,
Customer
Segments
Mass audience
Housewife’s
Restaurant owners
Student
Older people

5WESFARMER`S THINK BIG
 Tooronga
Shopping
Centre
 Tyremaster
 Viking Direct
and World 4
Kids.
 Grocery
Holdings Pty
Ltd
 Harris
Technology
 Howard Smith,
Katies Fashions
 Loyalty Pacific
 Masters Home
Improvement
New Zealand
clothing’s
and others.
2015).
 Long term
relationships
 Recipes and
Inspiration
 Brand
awareness
Key Resources
 The company
is one of the
largest
companies in
the continent
of Australia
 It has an
employee base
of 2, 20,000
till 2016.
 The
supermarket
serves
thousands of
customers
 IT
Infrastructure
 Negotiation
power of the
Channels
Super market
Gas stations
Online business
Through its various
outlets
Club card
Social Media
One stop solution for
all customers through
small stores

6WESFARMER`S THINK BIG
company
(Joyce &
Paquin, 2016)
Cost Structure
The important cost structures of the given in the given
business model are :
 Staff
 Taxes
 Real estate
 Advertising
 Cost of goods (Thompson, 2014).
 Acquisitions
 Logistics
Revenue Streams
 Online sales
 Retail store sales
 Advertising
 Financial income from insurance and bank
business.
Key relationship between blocks
The building blocks of the business canvas model are used to [portray the different
aspects o a business`s operations. The business canvas model primarily provides information on
the given five aspects of the business enterprise:
 Customer segments
 Value Propositions
 Channels
 Customer Relationships
 Revenue Streams
 Key Activities

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 Key Partnerships
 Key Resources
 Cost Structure
The business canvas model is formed in order analyze the different aspects of a business
enterprise and to get the detailed information about any business. This is done in order to
understand, how a business is generally performing and the areas need to be improved. It is very
important for any analysis that see t it that they have a well defined business model which helps
the company to perform well in all the given aspects of the firm.
It can be stated that the different blocks of the business canvas model are closely related.
The blocks are mutually dependent on one another; hence any change which is made on one
particular block often has a drastic effect on the other block (Muhtaroglu et al., 2013). For
example, the key value proposition of the organization states all the aspects which an
organization offers and I any changes take place there it should be understood that the cost
structure of the given company is also bound to change. If the cost structure changes then, that
shall have an impact on the selling prices set of the company and the revenue structure of the
firm.
Another case can be taken of the key resources which are gained by the firm. The key
resources tend to have a huge impact on the key activities of the firm and even an impact on the
cost structure of the firm. If Wesfarmer`s decides to attain a new resource for example a new
supermarket in a part of New Zealand, then the a key activities indulged in by the firm will
undergo a certain change. This will then impact the costs of the firm, which is the third block

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being affected. Lastly, it may also have an impact on the revenue earned by the firm which may
then cause huge changes in them.
Figure 2: The brands under Wesfarmers (Source: The Conversation, 2018)
Critical Success Factors to get sustainable success
The Critical success factors are a management term which is very often used to describe
that element of the business and how the business needs to determine whether the organization
has been successful in its operations or not. These factors tend to have a huge impact on the

9WESFARMER`S THINK BIG
business of the organization (Massa & Tucci, 2013). If a business aims to become successful in
future or rather attain sustainable success then it needs to see to it that the company has been
performing well in the these areas.
The CSFs that Wesfarmers has to get right to achieve sustainable success are as follows:
Understanding the behaviour of the Customer
The retailers need to realize that the behaviour of the customers in order to take critical
decisions on various aspects of the business enterprise which range from decisions like what they
need to offer the company and also decisions like how can they strengthen their relationships
with the consumers. To understand the various aspects of a consumer`s behavior, the company
creates various feedback forms, conducts certain surveys and so that they are able to get on to the
right track.
If the firm is able to do so, they can be successful in the future because it will be doing
the right things that the customer desire.
Making use of Multichannel Strategies
The consumer needs are extremely varied. It is very often for any business enterprise to
offer the business with all kinds of facilities and options in order to see to it that the business is
extremely successful in its avenue (Hong & Fauvel, 2013). Hence, the business needs to make
use of Multichannel Strategies and target the customer using various mediums like online,
convenient stores and mobile application to capture the larger share of a customer demand.
Wesfarmer`s needs to see to it that it is catering to what the customers are looking out for and
this can be done using techniques like the follows :

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 Opening neighborhood convenience stores
 Opening corners in gas stations
 Online avenues
 Home delivery
Other CSFs are as follows:
Enhancing customer experience
By providing good quality products at convenient prices, Wesfarmers can enhance its
customer experience
Improving operational efficiency
Operational efficiency plays a key role in determining the success of business in the
future and through this move (Cochrane, 2014).
Downside risk and causes
Downside risk is a kind of risk whereby the company can suffer a huge loss if the market
condition changes. The risk can be posed by external factors of the firm whereby the company
suffers a huge blow. The cause for downside risk for Wesfarmers could be as follows:
Its demerger from the Cole group
According to Kiel (2014), Wesfarmers has decided to demerge from Cole and for this
reason, it could be exposed to a downside risk whereby the market share could be captured by
Cole and Wesfarmers could suffer a huge loss.
Entrance of a giant like Tesco

11WESFARMER`S THINK BIG
If a retail giant like Tesco decides to enter into the business then it could lead to a huge
loss for the Wesfarmers. This is because Tesco has a huge operational experience and for this
purpose, if it decides to enter into the Australian market then, it could lead to a downfall for
Wesfarmers.
Recommendations to change the business model
The given changes could have been recommended:
1. Wesfarmers can narrow don its offerings
Very often when a company intends to become successful, it tends to offer various
products to the different customers but it should not be the ideal case. Instead the company
should narrow down its offerings and make premium quality products. It can then seize the
opportunities available and expand its operations to emerging markets of the South East Asian
countries like Bangladesh, Nepal, India and other emerging countries. Although these countries
have a presence of the famous local retail organizations serving the market, however internal
expansion can be made a priority in the business`s model to cater to a larger market and to
become an international name. If the company is successful in doing so then it would be able to
increase its revenues and also be able to expand the base.
2. It can introduce its own brand products to save costs and increase profits
The company has a wide product line which has enabled it to serve all the needs of the
customers in order to expand operations and achieve operations excellence. It is suggested that it
increases its Key resources and employs brands which are the company`s own in order to cut the
costs of the firm in order to see to it that the company is able to improve its revenue structure. If