Comprehensive Business Environment Analysis Report for Wesfarmers

This report provides a comprehensive analysis of the business environment of Wesfarmers, an Australian multinational company. It examines various external factors impacting Wesfarmers' performance, including government regulations, economic policies, consumer behavior, technological advancements, legal considerations, environmental factors, and competitor analysis. The report delves into the specific challenges faced by Wesfarmers in each of these areas and offers detailed recommendations for improvement. These recommendations cover areas such as legal compliance, quality management, marketing strategies, technological innovation, and environmental sustainability. The analysis highlights the importance of adapting to the dynamic business environment to maintain a competitive edge and achieve sustainable growth. The report concludes by summarizing the key findings and emphasizing the significance of environmental analysis as a strategic tool for business success. The report also includes a list of references used to support the analysis.

Wesfarmers
Business Environment

BUSINESS ENVIRONMENT 1
Table of Contents
Introduction................................................................................................................................2
Overview of Wesfarmers.......................................................................................................2
External Environment Analysis.............................................................................................2
Government Regulatory.....................................................................................................3
Economic policy.................................................................................................................3
Consumer behaviour..........................................................................................................4
Technological.....................................................................................................................4
Legal...................................................................................................................................4
Environmental....................................................................................................................4
Competitor..........................................................................................................................5
Recommendations to Resolve the Issues faced by Wesfarmers............................................5
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
The sum total of all the factors (internal and external) that have an impact on the performance
of the business is known as the Business environment (Pailwar, 2014). It is essential to
understand the environment in which business operates in order to successfully run the
business unit at every place. Because, the impact of every environmental factor is on the
business aspects, it can be location, distribution system, nature, personnel policies or product
prices (Kew & Stredwick, 2017). This report is being prepared to analyze those external
factors which have an influence on the performance of Wesfarmers Company.
Overview of Wesfarmers
Wesfarmers Company is an Australian multinational; with headquarter in Perth, Western
Australia (Wesfarmers Limited, 2017). The company majorly operates in the New Zealand
and Australian markets of fertilizers, safety, retail, coal mining, and fertilizers, industrial and
chemical products. By revenue, it is the biggest company in Australia overtaking BHP
Billiton and Woolworths. The biggest private employer in Australia is Wesfarmers, with
about 220,000 employees.
In 1914, the company was established as a cooperative in order to offer services. The
company is listed on the Australian Securities Exchange and grown as a big retail corporation
(IBIS World, 2018). The company was formed by the Farmers and Settlers which is a
Western Australia Association, in order to attain the assets of West Australian Producers
Union.

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External Environment Analysis
The primary analysis and study of the forces of macro-environment, competitor analysis and
industry analysis in the purview of the growth of the organization are known as External
Environment Analysis. Forces of Macro-environment are considered as dimensions in the
wider society which impact the firm’s performance (MBA Skool, 2017). It focuses majorly
on the probability of the future event. The environment of industry involves set of
contingencies that directly affect the action and response of the firm. It emphasizes on the
aspects that influence the firm’s probability in an industry, whereas competitor analysis
majorly focuses on anticipating the dynamics of a competitor in terms of its responses and
action etc. (Hiriyappa, 2013).
Government Regulatory: In this factor, it is implied that the role of government is very
important in influencing the performance of the company. It can influence in the form of
legal regulations and taxes (Fern Fort University, 2018). Coal mining is an essential segment
of Wesfarmers, and it is known that Australian Federal Government has mandated that the
extraction of the mining industry can only be done after the permission of the state
government of the particular state. Along with this political factors generally, have a greater
influence on the retail industry of Australia. The increasing dominance of the retail
supermarket like Wesfarmers has made competition for small retailers. Therefore the
government has implemented some policies in order to restrict this.
Economic policy- The economic factors like exchange rates, interest rates, inflation rate
highly affects the organization’s growth. The service sector has essential role in the
Australian market, and in fact, it is notable that Australia GDP’s 71.1% is contributed by this
sector only. Service and Finance are the essential Australian service organizations, keeping
this in the mind, it can be said that the Wesfarmers insurance market can gain profitable
position in the Australian market. The GDP annual growth rate of the Australian economy is

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2.8% by the year 2016 which reflects that the purchasing power of the people in Australia is
also increasing. Customers with high purchasing power will invest in quality products,
therefore; Wesfarmers should focus more on the quality.
Consumer behaviour- For the Wesfarmers future growth, Australia's social environment
plays an important role. Factors of the environment include population, cultural trends and
demographics perform a significant role in the organization's success. As per the consumer
behaviour of Australia people generally, prefer to buy necessary items in bulk once in a
week. Therefore, it is constructive for the Wesfarmers to have their chain of departmental
stores and retail stores in Australia.
Technological- The important role performed in Australia is by the viable methods of
operating a business. Therefore, Wesfarmers need to depend more on technologically
advanced ways of production which can support the country in handling its ecological
sustainability in future. By considering this aspect Wesfarmers has implemented those
technologies which make use of low emission coal. It is a great change which is important for
sustaining in the market for the longer period. Chemicals, Coal mining, fertilizers, and energy
production are important segments in which Wesfarmers operate and therefore finding good
technology along with regular innovations is required for the enterprise future development.
Legal- Legal factors are those factors which explain the effect of the law on the functioning
of any business. In Australia, there are many new laws which are governing the trade system,
like resource laws, business laws, labour laws, etc. It is very important for the organization to
accept and follow each law while operating the business.
Environmental- The ecosystem in which living being lives offers natural services for all the
species that are important for their survival, quality of life and health. Ecological
sustainability is an integral part of the business process, and organization like Wesfarmers is

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continuously trying to create value for its shareholders, customers via solving the
environmental issues like energy conservation, prevention from environmental pollution, etc.
It is remarkable that company is operating its business activities with 10 environmental and
community impact principles that make some guidelines for the company of making efficient
ways of energy production. The initiatives were taken by the company in order to confirm the
well-being of the community, maintenance of ecological sustainability, or reducing product
packaging supports company in smoothly operating the business in Australia.
Competitor- In general terms competition is the rivalry between two or more firms,
individuals, social groups, etc. Competition arises when two or more firms try to achieve a
common goal that cannot be shared, where one firm’s gain is the loss of other firm (Dennehy,
2012). Wesfarmers operates its business in an extremely competitive retailing industry of
Food and Staples, where the company faces strong competition from Woolworths (Australian
Government, 2011). It is a well-known leading supermarket in Australia which brings various
strategies in order to give strong competition to Wesfarmers. Besides this HS Home, Myer,
and Best & Less are the strong competitors of Wesfarmers in this industry (MBA Skool,
2017).
Recommendations to Resolve the Issues faced by Wesfarmers
External
Factors
Major Issues Solution
Government
Regulatory
Permission from
State government
A concerned team should be maintained in the
organization which can handle all the legal issues and
permissions which are necessary for operating
business.

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Economic
Policies
Quality of
Product
Wesfarmers should implement a quality management
system in the business in order to provide the best
quality to the customers such as:
Plan- Establishment of resources, procedures and
Quality policies.
Do- Report non-conformances and assessments to
fulfil the gap between the perceived quality and
expected quality.
Check- Wesfarmers should do a proper assessment of
the historical data in order to recognize the
opportunities for enhancements.
Act- Perform proper analysis and take remedial
actions in order to do regular improvements
(Hassiotis, 2015).
Consumer
Behaviour
Buying necessary
items in bulk
In order to attract more customers who purchase
products in bulk, they need to offer various discounts,
offers, vouchers and various schemes to increase the
sales.
Technological Technology
Advancement
The company can create new and innovative
technologies with the help of its research and
development department in order to enhance its
productivity and satisfaction of the customers.
Legal Laws and
Regulations
It is the crucial part of any business, therefore,
Wesfarmers should consider each and every aspect of
the rules and regulations implemented by the

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government and should follow it.
Environmental Environmental
and community
impact
In Australia approx. 8 million cattle and 32 million
sheep are killed every year for the consumption of
human (Animals Australia, 2018). Considering this
aspect Wesfarmers should initiate a program for the
betterment and safeguarding of animals. In this
program employees of the company can take part and
can contribute something to the animals and
environment.
Competition Attracting
Potential
Customers
The Wesfarmers Company should adopt market
penetration strategy in order to attract potential
customers. It will help the company in increasing its
market share and can give strong competition to its
competitors.
Conclusion
Environment analysis is called as a strategic tool. The process to recognize the internal and
external elements that have a major influence on the performance of the company is known
as Environment analysis. The above report has performed the environment analysis of
Wesfarmers Company in order to identify the impact of various factors on its performance.
The factors which were identified are Government regulations, economic policies, consumer
behaviour, technological, legal, and environmental and competition. Along with this
recommendations are provided which will help the company in taking corrective actions
towards improving the performance of the company and increasing productivity.

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References
Animals Australia. (2018). Ritual slaughter in Australia. Retrieved from:
http://www.animalsaustralia.org/features/ritual_slaughter.php
Australian Government. (2011). Economic Structure and Performance of the Australian
Retail Industry. Melbourne: Productivity Commission.
Dennehy, J. (2012). Competition, Gender and Management: Beyond Winning and Losing.
Germany: Springer.
Fern Fort University. (2018). Wesfarmers Limited PESTEL & Environment Analysis.
Retrieved from: http://fernfortuniversity.com/term-papers/pestel/nyse4/4814-
wesfarmers-limited.php
Hassiotis, M.K. (2015). How to Implement the PDCA Cycle (Plan-Do-Check-Act). Retrieved
from: http://news.ewmfg.com/blog/how-to-implement-the-pdca-cycle-plan-do-check-
act-in-any-department
Hiriyappa, B. (2013). Strategic Management and Business Policy. Indiana: Booktango.
IBIS World. (2018). Wesfarmers Limited - Premium Company Report Australia. Retrieved
from: https://www.ibisworld.com.au/australian-company-research-reports/retail-
trade/wesfarmers-limited-company.html
Kew, J., & Stredwick, J. (2017). Business Environment: Managing in a Strategic Context.
U.K: Kogan Page Publishers.