Integrated Business Project: Wesfarmers' Competitive Analysis Report

This report offers a comprehensive analysis of Wesfarmers, a prominent retail company in Australia, focusing on key business issues such as market competition and internal resources. The study employs Porter's Five Forces to evaluate the competitive landscape, highlighting threats from rivals like Myer and Woolworths, as well as buyer power. An internal analysis, including a SWOT analysis, assesses Wesfarmers' resources and competencies. The report provides strategic recommendations to mitigate identified threats, emphasizing the importance of marketing and customer communication. The analysis underscores the significance of understanding industry dynamics and adapting to maintain a competitive edge in the dynamic retail market. The report concludes with an overview of the company's future prospects and scope for development.

Running head: INTEGRATED BUSINESS PROJECT
Integrated Business Project
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Author Note

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Executive Summary
The report focuses on the identifying issues that are faced by business organisations. The
business issues that are in focus in the report include the competition of an organisation along
with the resource and competency that exists within the organisation. For the purpose of the
report, Wesfarmers, a reputed retail company in Australia have been taken into consideration.
The issues stated briefly and the analysis is done using scholarly theories. For conducting the
analysis of the competition in the retail, market of Australia, Porter's five forces have been
analysed. It has been seen from the analysis that Wesfarmers face a high threat from the
rivals such as Myers and Woolworths and from the buyers. The internal analysis contained
findings of the resources and competencies of the company. SWOT analysis is conducted in
order to identify the resources and the opportunities that can be received by the company.
Recommendations are provided in order to mitigate threats. The proper use of the marketing
team and communication with the customers can help Wesfarmers to mitigate the threats that
exist in the business.

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Table of contents
Background of the company and topic.......................................................................................3
Issues being analysed.................................................................................................................4
Analysis of the issues.................................................................................................................5
Recommendation......................................................................................................................11
Future scope.............................................................................................................................12
Reference..................................................................................................................................13

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Background of the company and topic
Wesfarmers Limited is one of the leading retail company located in Australia. The
headquarters of the company is located in Perth, Western Australia. The company deals with
not only providing retail facilities to the customers but also provides fertilisers, chemicals and
industrial safety products. The company was established in 1914 and currently is popular on
an international basis. The areas served by the company include Bangladesh, Ireland, New
Zealand and the United Kingdom. The previous year saw Wesfarmers gain financial revenue
of AUS$465.98. This helped the company in overtaking BHP Billion as the leading company
in the Australian market. Wesfarmers is considered as the largest private employer in the
country. It has been reported that the company has over 205,000 employees working across
various sectors on an international basis. Wesfarmers is a conglomerate has various
companies in its subsidiaries such as Coles, Kmart and so on (Wesfarmers.com.au, 2017).
The report analyses the type of industry and competitors that exist in this type of
industry. According to He, Zha & Li (2013), the analysis of the competitors is an important
factor that every manager needs to consider before setting up a business. The type of industry
determines the level of competitors it may attract depending upon the preferences of the
people. Apart from this, another topic that the report analyses are the global resources and
capabilities that the company possess in order to gain a competitive advantage. Maintenance
of proper resources can help an organisation to undertake decisions that add as a competitive
advantage for a company. The report focuses on these topics and the analysis of the topics
related to Wesfarmers. The competitors, resources and capabilities of the retail industry, as
well as Wesfarmers, are analysed in order to understand the significance of the chosen topic.

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Issues being analysed
The issues that have been analysed in the report include the external as well as the
internal analysis of the factors that may affect the successful working of an organisation. The
competitive analysis helps to identify the main competitors that exist in the retail market of
Australia (Fleisher & Bensoussan, 2015). In this regard, it can be said that the main
competitors of Wesfarmers include Woolworths, Metcash and Myer. Hence, the analysis of
the strategies that are adopted by these companies is conducted in the report. The issues that
may arise without the proper analysis of the competitors can lead to a bad investment for a
company. In the case of Wesfarmers, the main reason for the success of the company is the
fact that it conducts a thorough analysis of the main competitors and improves its policies in
the organisation. Apart from this, the report also deals with issues related to the industry.
According to Liu & Tyagi (2017), the analysis of the industry is an important factor as
based on the success that the industry faces, managers decide to invest in setting up a
company based on the industry. This includes proper analysis of the customers and the
factors that lead to the success of the industry. Analysis of the customers, the tastes and
preferences and the responses of the customers can be analysed by gaining the feedback of
the people. Industry analysis is considered as a major issue as it helps in identifying the
factors that cause the success of an industry. In the case of Wesfarmers, this is important as
the retail sector in Australia have a significant development in the market. The popularity of
the sector can sometimes pose a threat as customers expect uniqueness from the companies.
In this regard, Wesfarmers have an advantage over other companies due to the variety of
products it sales in the Australian market.
Other issues that the report focuses on are the resources and capabilities of a
company. According to Wright (2014), the resources of a company determine the potential
success that a company can attain. The resources can be in the form of tangible, intangible

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and physical resources. Physical resources include the employee and the facilities that are
required for conducting a business in a successful manner. The tangible and intangible assets
include the assets as well as the legal documents and procedures that help in the smooth
functioning of a company. In the case of Wesfarmers, the resources possessed by the
company can help it to become the leading retail sector in the country. This is mainly because
of the fact that the company sells varieties of products that need the existence of the
resources. The resources used also increases the capabilities of success among the employees
as well as of the organisation.
It has been observed by Riasi (2015) that the capabilities of an organisation are
formed based on the resources it possesses. This is mainly because of the fact that with the
proper number of resources in an organisation the capabilities can also increase. The skill sets
of the employees can improve and the organisation can benefit with the contribution made by
the employees. An excess number of resources can also help in improving the facilities of an
organisation. This can help in improving the standards of an organisation and make it
competitive in the market. In the case of Wesfarmers, the competency of the company
determines the level of competition it can provide in the market. The number of employees
that the company have outlined the competency it can possess. Thus, based on the
understanding of the issues, it can be said that the analysis of the issues can lead to the
improvement of Wesfarmers and ensure that it can maintain the reputation it holds in the
retail market of Australia.
Analysis of the issues
The issues can be analysed based on the application of theories and models proposed
by scholars. In order to conduct an analysis of the industry and competition, an organisation
needs to undertake the theories related to an external analysis of the business environment.

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According to De Brentani & Kleinschmidt (2015), one of the best theories that can be applied
in order to conduct such an analysis is Porter's five forces analysis. Porter's five forces help to
understand the intensity of the competition that exists in the business market. The intensity
and the attractive nature of the business can determine the profitability of a business. Hence,
in the case of Wesfarmers, the use of Porter's five forces can be used to determine the
external factors of the business. These five forces include the threats that exist from new
entrants, substitute, the rivalry of the industry along with the bargaining power of suppliers
and buyers.
The threat of new entrants- The threat of new entrants signifies the emergence of
new companies in an industry. This threat can be considered as a high or low-level threat
depending upon the type of industry. According to Cavusgil & Knight (2015), the threat of
new entrants can face certain barriers concerning the interference of the Government. Apart
from this, the new companies need to have exceptional potential in order to give a tough
competition to the existing companies. At the same time, it can also be said that the existing
companies may face similar threats owing to the emergence of new companies. In the modern
day, innovation and technological advancement are the main success factors for most
companies (Silva & Marcondes, 2017). Hence, in some cases, it may also prove challenging
for the companies. In the case of Wesfarmers, the threat of new entrants is medium owing to
the fact that the Government of Australia poses restrictions to the emergence of new business
in the market. Hence, the barriers to entry need to be overcome in order to enter the market
business of Australia. At the same time, the reputation that the market holds in the business
cannot be relinquished due to the emergence of new companies of the same industry.
The threat of substitutes- The threat of substitutes indicates the alternate choices that
the customers can make. This is mostly done if the customers find the prices or quality of
products fluctuating a lot from the market standard. The threat of substitutes can also be

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flexible depending on the company and the reputation it has in the market. Leonidou et al.,
(2013) criticised that the threat of substitution can be mitigated easily with proper strategic
management. The substitutes need to be less costly with a better quality in order to gain an
advantage in the market. In this regard, it can be said that Wesfarmers need to analyse the
substitutes that exist in the market. The retail market of Australia has a variety of companies
that provide similar products like Wesfarmers. However, other retail stores do not provide the
additional products such as the safety equipment provided by Wesfarmers (Beske, Land &
Seuring, 2014). Hence, it can be said that threat of substitutes is low in the case of
Wesfarmers. The company have various products that they sell in order to maintain a
competitive advantage over its rivals. Customers need to analyse the market before deciding
on the choice of a store in order to purchase the product.
The threat of rivals- According to Chatfield (2017), a threat of rivals is the most high
profile threat that exists in the market. Every company have rivals that provide proper
intensity in the market. The reason behind conducting the external analysis is to gain an
advantage over the rivals and ensure that the companies maintain the edge in the market.
Hence, it can be said that this threat always remains high for any company as the strategies of
the rivals cannot be determined. The prediction of the rivals needs to be done based on proper
analysis of the market (Lai et al., 2014). In the case of Wesfarmers, the company faces threats
from rival companies like Myers and Woolworths. These companies manufacture the similar
product like that done by Wesfarmers. Hence, the threat from the rivals is high for the
company. In order to mitigate this, it is important that Wesfarmers develop proper strategies
to maintain its dominance in the Australian market. The rivals can be both existing as well as
new entrants in the market. Hence, a proper market research can help the managers develop
strategies in order to maintain a competitive edge in the market.

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Bargaining power of suppliers- The bargaining power of suppliers indicates the
number of sellers that are available in the market. According to Jain, Aguilera & Jamali
(2017), every company need suppliers to help in gaining the resources and required materials
to continue the manufacturing of products. The role of suppliers is an important factor for
retail companies as most of the companies have to rely on purchasing products from the
suppliers. Hence, it can be said that suppliers have an opportunity to claim their own price
while selling products to the companies. This can provide a disadvantage for the companies,
as there may be chances of losing potential suppliers. In the case of Wesfarmers, the threat of
suppliers is low because the company focuses on manufacturing fresh products. With the
existence of subsidiary companies covering the products they sell, Wesfarmers does not have
to maintain negotiations with the suppliers in order to gain raw materials required for
manufacturing their product. Thus, Wesfarmers does not face much threat from the suppliers
owing to the reputation it holds in the market and the fact that the company manufacturers
produce in the company itself.
Bargaining power of buyers- Mihet (2013) stated that the bargaining power of buyers
reflects the purchasing power of the customers. The factors that affect the purchase of
customers need to be analysed by a company. The customers are a major stakeholder of a
company and can help in increasing the reputation of the company. Hence, it is necessary for
every company to ensure that the satisfaction of the customers is maintained. With an
increased number of substitutes, customers can select the company that provides satisfaction.
The factors that affect customer satisfaction include price, quality and reputation of a
company. In this regard, it can be said that Wesfarmers face a similar threat from the
customers that purchase products from the store. The existence of high profile competitors
makes it difficult for Wesfarmers to increase the prices of the product. Hence, without proper
justification or compensation, it can be difficult for the company to impress buyers with an

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increased price of the products. Hence, the bargaining power of the buyers of Wesfarmers is
high. Thus, it can be said that the external factors identify the issues that exist in the business
market and help to analyse the ways by which it can be mitigated. Hence, recommendations
can be provided to Wesfarmers in order to minimise the high threat in the market and create
an opportunity for improvement.
Figure: Porter’s Five Forces
(Source: E. Dobbs, 2014)
The analysis of the resources and competencies of Wesfarmers can be done by
conducting a SWOT test. According to Nag, Han & Yao (2014), SWOT analysis helps to
identify the weakness of a company and ensure that it can be converted into the strengths.
The threats to a company are also analysed in order to find opportunities to improve in the
future. Based on the external analysis of the competitors faced by Wesfarmers, the SWOT
analysis about the existing resources of the company can help in identifying ways to improve
the internal factors that affect the business of the company.

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Strength
 Strong brand legacy
 Involves in community development
 Huge amount of workforce
Weakness
 Limited opportunities for growth
 Decision taken are always made
public
 Inexperienced workers outside
Australia
Opportunity
 Expansion into other territories
 Enhance the service quality
 Become number brand in the
Australian market
Threat
 Rival companies like Myers,
Woolworths
 Economic crisis in most countries
 Non-specialised products as
compared to competitors
Table: SWOT Analysis
(Source: Created by author)
The table shows that Wesfarmers can create opportunities based on the strength of the
company. The brand legacy that the company holds can act as a strong point for the success
of the company. As commented by Shockley & Fetter (2015) reputation of a company brings
about faith in the minds of the people. Apart from this, the community service provided by
the company can help in increasing the reputation of the company around the world. Another
biggest advantage that the company has is the fact that the human resource of the company is
large. It has over 205,000 people working in different sectors in different locations. Thus, the
workforce required for the success of the company can help in eliminating the weakness. The
limited opportunity for growth is a weak point for the company. This is mainly because of the
fact that the manager does not venture in international borders. This is mainly due to the
inexperienced workers that the company have outside Australia. According to Vogel (2014),

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in the age of technology and media, secrets of a company cannot be maintained. The
decisions taken within a company can leak out owing to a small change in the attribute of a
company. Similarly, being a reputed organisation, Wesfarmers face a similar challenge.
The biggest threat to the companies comes from companies such as Myers and
Woolworths, two most reputed companies in the retail industry of Australia. Apart from this,
owing to the expansion of the market, the company often faces threat from the dip in an
economy in most countries. Countries like Bangladesh have a continuous fluctuation in the
economy. The competitors also have specialised products that help them to gain a
competitive edge over Wesfarmers. Wesfarmers sell many products without any specific item
in its artillery. Hence, the customers looking for a specific type of product prefer the rivals of
Wesfarmers (Armstrong & Taylor, 2014). However, with the resources that the company
have and the competencies that are built because of the resources, Wesfarmers can become
the leading company with the highest revenue in the overall Australian business market. The
service quality can be enhanced and more opportunities for expansion in international borders
can be brought about after converting the threats. In order to do so, the company need to
make certain changes.
Recommendation
After conducting the internal as well as the external analysis, it can be said that
Wesfarmers need to formulate certain strategies that can help in improving the company and
create an opportunity for improvement. In order to mitigate the threat from the competitors,
Wesfarmers need to conduct proper market research. The company can train the marketing
experts in trying to gain information about the strategies that are adopted by the rivals. They
can do so by communicating with the customers and reading reviews left in the social media.
This can also serve the purpose of the threat that arises from the bargaining of the buyers. The