Legal Environment and Risk Management: Wesfarmers Company Analysis

This report provides an overview of the legal environment of Wesfarmers, an Australian-based company. It examines the company's compliance with relevant laws such as the Corporations Act 2001 and the Competition and Consumer Act. The report identifies key legal issues affecting the organization, including disputes, incentive policies, and employee morale. It categorizes legal risks into structural, litigation, regulatory, contractual, and sustainability areas, exploring the reasons and implications of these risks, such as uncertainty, government pressure, and economic slowdown. Strategic options for managing these risks, including risk avoidance, acceptance, transfer, and limitation, are discussed. The report concludes with recommendations for compliance, audits, policy renewals, customer satisfaction, and market share maintenance. The analysis is supported by references to relevant literature and case studies, offering a comprehensive understanding of Wesfarmers' legal and risk management challenges and strategies.


Managing Legal
Environment


 Wesfarmers is Australian based company
 It was found in 1914
 The current revenue of the company is $65.98
 Its competitors are Woolworths, BHP Billiton
 The business in which the company is
engaged is chemicals, coals, fertilisers, export
of fruits and vegetables (Wesfaremrs, 2018).
Overview of
Organisation


 The company needs to comply with the different
laws and rules such as
 Corporations Act 2001
 Competition and Consumer Act (Wesfarmers, 2017).
 The issues that affect the organisation are
 Disputes
 Incentive policy
 Appraisal
 No morale and no goals
Legal Governance
and issues


Dimensions of legal
Environment
(Source: Roddan, 2015)


 General
The general specifications includes the adherence to laws
and to cater the services to the customer in the best
manner through the compliance of the laws
 Specific
Under the specific scenario the amendments to the laws
and such as Super Annuation Industry Act 1993. (Wang,
Dulaimi & Aguria, 2004). In the case of ACCC vs JJ
Richards and Sons Pty Ltd [2017] FCA 1224, ACCC
took action against to enforce the unfair trade practice in
terms of standard form small business contracts
(Recruiters Casebook 2017).
General and Specific
Legislation


 The legal risk are categorised into four areas
 Structural
 Litigation (Wesfarmers, 2017).
 Regulatory
 Contractual
 Sustainability
High Legal risk


 Uncertainty
 Government pressure
 Competitors strategy
 Economic slow down
 Rapid changes in the industry
 Entry of new substitutes
 Political unrest
Reasons and Implications of the Risk


 Short term:
 Price fluctuates
 Market gets disturbed
 Alignment fails
 Long term:
 Depression of stock
 Goodwill gets affected
Implication of risk


 Risk Avoidance
 Risk Acceptance
 Risk transfer (Wang, Lin & Huang, 2010).
 Risk Limitation
Strategic Options


 This step is the method under which the risk is
totally avoided and is not taken in the
consideration at all
 Reverse method (Holzmann & Jørgensen,
2012).
 Most expensive method
 Companies do not use much of this
Risk Avoidance


 Under this methodology the risk is completely
accepted
 The steps to mitigate are researched
 All the best options are evaluated
 The best fit option is implemented
 Cost effective
Risk Acceptance


 The risk of the company is transferred to the
third party
 For example outsourcing of customer services
 Payment of the bills through the third party
vendors
 Medium level cost (Roddan, 2015).
Risk transfer


 The most used and common method
 The hybrid policy of the two methods
 Mixture of Risk acceptance and risk avoidance
 Only potential risks are accepted
 Non potential risks are ignored
 Cost effective
Risk Limitation


 Comply with laws and regulations
 Audit shall be undertaken
 Renew polices according to changes in
environment
 Customer Satisfaction
 Maintain market share
 Adhere by the policies
Recommendation


 Roddan, M. (2015). Economic downturn, supermarket wars biggest threats
to Wesfarmers: analysts. Retrieved from
https://www.theaustralian.com.au/business/business-spectator/economic-d
ownturn-supermarket-wars-biggest-threats-to-wesfarmers-analysts/news-st
ory/159c85822921871c865faf7435ca2969
 Wesfaremrs, (2018). Annual Report. Retrieved from
https://www.wesfarmers.com.au/docs/default-source/default-document-libr
ary/2017-annual-report.pdf?sfvrsn=0
 Wesfarmers, (2017). Sustainability Report. Retrieved from https://
sustainability.wesfarmers.com.au/media/1835/edited-extract-of-wesfarmer
s-2016-sustainability-report.pdf
 Wang, J., Lin, W., & Huang, Y. H. (2010). A performance-oriented risk
management framework for innovative R&D projects. Technovation, 30(11-
12), 601-611.
 Wang, S. Q., Dulaimi, M. F., & Aguria, M. Y. (2014). Risk management
framework for construction projects in developing countries. Construction
Management and Economics, 22(3), 237-252.
 Holzmann, R., & Jørgensen, S. (2012). Social risk management: A new
conceptual framework for social protection, and beyond. International Tax
and Public Finance, 8(4), 529-556.
 Recruiters Casebook (2017). JJ Richards & Sons Pty Ltd admits it’s time to
take out the garbage Retrieved from
References