MKG701: Wesfarmers Limited - External Marketing Environment Analysis

This report provides an external environmental analysis of Wesfarmers Limited, an Australian diversified company, using the PESTLE framework. It begins with an executive summary and background on Wesfarmers, detailing its retail and industrial activities, target market, and position as one of Australia's largest listed companies. The report outlines the theoretical framework for external marketing environment analysis, emphasizing the importance of understanding threats and opportunities. It examines various factors including competition, economic conditions, political trends, legal and regulatory issues, technological advancements, and socio-cultural trends affecting Wesfarmers. The analysis identifies key threats such as high market competition and economic downturns, as well as opportunities like business expansion outside Australia and enhancement of customer loyalty initiatives. The report concludes by highlighting the strategic implications of the analysis for Wesfarmers' performance and adaptability in a dynamic market.

Running head: EXTERNAL ENVIRONMENTAL ANALYSIS
External Environmental Analysis
Name of the Student:
Name of the University:
Author note:

1EXTERNAL ENVIRONMENTAL ANALYSIS
Executive Summary
The paper has been carried out on the key objectives of Wesfarmers Limited, an
Australia based company. It has been assessed the strategies used by it in order to ensure a
smooth flow of the organizational work. Paticularly, the paper is completely focused on
analyzing the external environment of this company using PESTLE tool and has also shed
light on the threats and opportunities present for Wesfarmers Limited.

2EXTERNAL ENVIRONMENTAL ANALYSIS
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Case background....................................................................................................................3
Theoretical Framework..........................................................................................................4
Environmental analysis..........................................................................................................4
Summary of threats and opportunities:..................................................................................6
Conclusion..................................................................................................................................6
References:.................................................................................................................................7

3EXTERNAL ENVIRONMENTAL ANALYSIS
Introduction
Competition has always been the central to both the success and failure of a company
in an industry. The companies through their own strategy seek to achieve the top most
positions within their respective industries and competitive advantage is the potential of the
companies in order to gain their desired position through the available resources and
attributes. (Ross 2013) The main aim of this paper is to evaluate the key objectives and the
strategies of an Australian based company known as Wesfarmers Limited. This paper shall
elaborate on the analysis of its external environments by using PESTE tool. It shall further
elaborate on discussing the threats and opportunities present for the company in today’s
market.
Discussion
Case background
Wesfarmers Limited is a diversified Australian company, which has business
operations in industrial and retail activities. It was earlier known as the Western Australian
Farmer’s cooperative (Gilchrist 2015). The retail activities of this company consist of liquor,
supermarkets, convenience stores and hotels; office supplies and home improvements;
apparel retailing and departmental stores. Its industrial activities consists of industrial and
safety; resources; and fertilizers, energy and chemicals. This company markets and
manufactures chemicals, LPG, LNG and fertilizers and is headquartered in Perth, Australia.
Its target group includes the shoppers who seek for convenience, variety, services and
discounts (Le and Phillips 2015). In today’s date, the company is one among the largest
listed companies in Australian area, employing more than 220,000 employees in its business.

4EXTERNAL ENVIRONMENTAL ANALYSIS
Theoretical Framework
External marketing environment analysis is a process of identifying all the internal
and external elements has the potential to affect the performance of an organization (West
and Bogers 2014). This analysis requires the assessment of the level of threats and
opportunities that might present. It is a primary study of the macro environmental forces,
competitor analysis and industry analysis in the purview of the growth of an organization.
The external marketing environment plays a very crucial part in shaping up of the future of
the whole industries and also those of individual businesses (Hung and Chou 2013). This
analysis helps in gaining an insight of the environment that the business is in and the various
factors that may influence it.
The most relevant environments that need to be analyzed are that of the social
environment, political environment, technological environment, and economic environment.
Environmental analysis
Competition: In the formulation of a strategy for business, the managers must take
into consideration the strategies of the company’s competitors (Weatherall 2013). The major
competitors of Wesfarmers Limited are Myer, Woolworths, Best & Less and Metcash
Limited.
Economic growth and stability:
1. There is a low growth rate for Wesfarmers Limited.
2. In comparison to the international markets, the wage costs for Wesfarmers Limited is
higher.
3. Increased strength of the New Zealand and Australian dollars.
Political trends:

5EXTERNAL ENVIRONMENTAL ANALYSIS
1. The regulations of Ad hoc
2. Restriction in the trading hours
3. Zoning, retail tenancy and planning leases
Legal and regulatory issues:
1. The sale of the supporting division to the Australian group
2. The sale of the Wesfarmers Limited insurance broking division to the Arthur J.
Gallagher & Co in the year 2014
Technological advancements:
1. The technology authorized VAS (Value added services)
2. The use of technology in order to foretell or predict the preferences of the customers
and reduce the costs of the business.
3. The increase in online shopping via mobile phones or other electronic or net devices
Socio-cultural trends:
1. Increase in the average educational qualification in the population
2. Gradual increase in the average life expectancy
3. Significant increase in the engagement of women in the current workforce
Marketing strategies and plan:
1. Transforming their liquor offering
2. Extending the value leadership of the company
3. Increasing the space growth and accelerating the density of the sales
4. Differentiating Coles through growth channels

6EXTERNAL ENVIRONMENTAL ANALYSIS
Summary of threats and opportunities:
Threats refer to the situation when the eternal factors jeopardize the smooth running of a
business, while opportunities are the ones that are present everywhere that must be taken and
utilized in order t improve the productivity and profitability of a business. The threats present
for the Wesfarmers Limited include that it is facing high competitions in the market from its
competitors. The competitors of it are offering specialized products and services to the
customers at an equitable price levels. With the same, the economic downturn is leading to
lower demand and plunged level of customer confidence. However, there are several
opportunities present for this company as well. It can expand its business outside of Australia.
It can enhance its service, experience and quality benchmarks across the stores along with
taking customer and employee loyalty initiatives across its businesses.
Conclusion
Hence, it can be said that the paper has been instrumental especially to identify the
strategically implication of the Wesfarmers Limited company resulting to its high
performance in the market. The Pestle analysis and the summary of both the threats and
opportunities, using both macro and micro level factors are representative to the development
and fluctuation in the company beyond several different product and service portfolio.

7EXTERNAL ENVIRONMENTAL ANALYSIS
References:
Gilchrist, D.J., 2015. Antipodean Owenite or colonial socialist: Charles Harper, economic
development, and agricultural co-operation in Western Australia, 1890 to 1910.
Hung, K.P. and Chou, C., 2013. The impact of open innovation on firm performance: The
moderating effects of internal R&D and environmental turbulence. Technovation, 33(10-11),
pp.368-380.
Le, L. and Phillips, J., 2015. LNG: An emerging transport fuel. Energy News, 33(4), p.15.
Ross, D.F., 2013. Competing through supply chain management: creating market-winning
strategies through supply chain partnerships. Springer Science & Business Media.
Weatherall, A., 2013. Computer Integrated Manufacturing: a total company competitive
strategy. Elsevier.
West, J. and Bogers, M., 2014. Leveraging external sources of innovation: a review of
research on open innovation. Journal of Product Innovation Management, 31(4), pp.814-831.