Report: Analysis of the Operating Environment for Wesfarmers - 2019

This report analyzes the operating environment of Wesfarmers, an Australian retail giant. It examines both internal and external factors influencing the company, including competitors like Woolworths, suppliers, and clients as internal factors, and economic, social, political, technological, and environmental changes as external factors. The report highlights the high bargaining power of buyers and suppliers, intense competition, and Wesfarmers' collaborative efforts with rivals. It details the company's climate change policy, technological innovations, and dedicated relationships with stakeholders. The report identifies threats such as competition from Woolworths, regulatory challenges, and changing customer preferences. The analysis is supported by references to relevant sources like The Motley Fool and Wesfarmers' sustainability reports.

BUSINESS ENVIRONMENT 0
Business Environment
Student’s Details-
7/25/2019

BUSINESS ENVIRONMENT 1
Operating Environment of Wesfarmers
The operating environment of Wesfarmers defines the internal and external factors that
affect the company which are competitors, suppliers, clients as internal factors and economic,
social, political, technological and environmental changes as external factors. Each factor has its
own positive and negative influences on the company. As the company is in retailing business,
there is high bargaining power of buyers and suppliers and faces intense competition from the
rival firms which has led the company to collaborate with the rival firms. Wesfarmers have taken
major steps to reduce the impact of climatic changes in Australia. They have made a climate
change policy by improving greenhouse gas efficiency which has reduced the cost and risk for
the company (Wesfarmers limited, 2017). This action is taken to mitigate the environmental
factors affecting the business Wesfarmers. The economic and political stability has influence on
the productivity of the company. Apart from this, the company has made innovations in
technology in order to overcome the impact of technological changes are being brought up by the
competitors. The company is known for their dedicated relationship with the shareholders and
suppliers. Wesfarmers have analyzed the buying patterns and social trends in order to overcome
the impact of social factors.
Threats
Wesfarmers have threat of competitors. Woolworths are the major competitor of
Wesfarmers as both the companies have same product offering (McArthur, 2016). If the
competitor’s product is unique or giving value to the customers, then it threat for Wesfarmers
and will ultimately impact sales revenue of the company. The laws and regulations of the
Australia pertaining to quality of the food items and other licensing requirements can be serious
threat to the company as it will impact the prices of the company’s products. Changing trends in
the behavior and preferences of the customers which has impact on the growth of the company.
Therefore, Wesfarmers have to change the portfolio of the product to maintain the customer
base.

BUSINESS ENVIRONMENT 2
References
McArthur, T. (2016, May 24). Is this the biggest threat to your Wesfarmers Ltd and Woolworths
Limited shares? Retrieved July 25, 2019, from The motley fool:
https://www.fool.com.au/2016/05/24/is-this-the-biggest-threat-to-your-wesfarmers-ltd-
and-woolworths-limited-shares/
Wesfarmers limited. (2017, January 1). Sustainability Report 2017. Retrieved July 25, 2019,
from Sustainability.wesfarmers.com:
https://sustainability.wesfarmers.com.au/media/2464/2017-wesfarmers-sustainability-
full-report.pdf