Wesfarmers' Global Marketing Strategy: Expanding into Germany

This report provides a comprehensive analysis of Wesfarmers' potential expansion into the German market. It begins with a situational analysis, examining the business environment using PESTLE and micro factors like supply chain management and human resources. A detailed market analysis focuses on the German retail industry, customer segments, and profiles. The report identifies key competitors, including Aldi, Tesco, Lidl, EDEKA, METRO, and REWE, assessing the competitive landscape. An organizational analysis delves into Wesfarmers' strengths and weaknesses, culminating in a SWOT analysis. The report concludes with strategic recommendations for Wesfarmers to successfully enter and thrive in the German market, considering the opportunities and threats identified. Desklib offers a variety of resources, including past papers and solved assignments, to aid students in their studies.

GLOBAL MARKETING

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Contents
Introduction...........................................................................................................................................2
Situational analysis................................................................................................................................3
Business environment........................................................................................................................3
Market Analysis................................................................................................................................4
Segment profile.................................................................................................................................5
Competitive analysis..........................................................................................................................7
Organisational analysis......................................................................................................................8
Swot analysis.........................................................................................................................................8
CONCLUSION...................................................................................................................................10
REFERENCES....................................................................................................................................11

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Introduction
In all around the world, companies are expanding its stretch across borders. This is done as
per the requirement of the company’s growth plan. It is essential that a company selects its
new market analysing various factors. Evaluating the environment of the country is a very
essential part of it. This comprises the fact that companies also need to do competitors
analysis so as to understand the nature of the business of their competitors (Bachmann &
Braun, 2011). In almost every industry competition is getting higher and higher and hence
companies need to streamline their resources in a manner that they could achieve the desired
goals. There are various types of opportunities and threats that need to be analysed before
making any decision of entering into the market.
Wesfarmers is one of the biggest companies based in Perth Australia. It is a conglomerate
type of company and hence producing various types of products like chemicals, industry and
safety products, retail, coal mining, fertilisers etc. In the financial year 2016, it generated a
revenue of around AU$65.98 Billion and making it the largest company in Australia. On the
other hand it’s the biggest private employer in the nation with around 220,000 employees
(Vidovich & Currie, 2012). It was found back in the year 1914 and was started as a co-
operative that produces merchandises and services. It got its listing on the Australian
Securities Exchange in the year 1984. Wesfarmers has number of subsidiaries attached with
it.
This report analyse the factors that could the growth of Wesfarmers in the Germany market.
Germany is one of the most populous countries in European Union. It generated a GDP of
$4.171 trillion dollars. This makes a good base for the bigger companies to have stable
business. With per capita income of around $50,425, it is having huge amount of
opportunities for the companies like Wesfarmers to expand its business (Kenny, 2011). In the
European Union it is one of the biggest country hence it will give Wesfarmers a route to the
Europe for doing business. The identification of this opportunity was on the basis of
population and stable nature of the market along with huge capacity to grow.
This report also throws light on the environment of Germany and its suitability for
Wesfarmers expansion. In the later stage of the report, Along with this it also gives the idea
regarding opportunities and threats that could influence their business in Germany.

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Situational analysis
In the competitive environment that is present within the country, it is important that
companies like Wesfarmers understand its market. It is also crucial that a proper
understanding about the environment present in the country must be done. This is necessary
for making of the strategies. It also gives the idea about the internal resources that company
has and the demand that market contains. In spite of the fact that Germany is a stable
economy and big market in European region, there are certain other factors that could impact
the business of Wesfarmers (Campbell, 2017).
Business environment
For any firm first it is crucial that it understands the external environment of the company
before making an expansion. For this analysis PESTLE works as a wonderful tool.
 Political: The political decisions in the European regions have showed a drastic
change in the environment. This had an effect on the Germany as well. For Example
the decisions like Brexit have affected all the countries in the European region.
Germany has a parliamentary democracy. This makes it a suitable market for the
companies to expand (Kilroy & Schneider, 2017). The political decisions have
ensured that the bigger companies could do an effective business.
 Economic: In spite of the fact that economic condition of whole Europe has seen a
gradual downfall, Germany has shown a steep inclination in its growth. Being the
fourth largest economy says the story. Wesfarmers need not have to concern about the
stability of the market as they will have support from the government policies (Biddle,
2016). There is easy availability of the cheap labour as compared to other European
markets makes it suitable for the business. This country has huge amount of resources
and hence the sustainable growth will not be a problem for Wesfarmers.
 Social: Society is changing at a very faster rate in Germany. It can also be seen that
the number of people in different age groups are also changing. It is having people
from every religious background. The cultural variance at the workplace needs to be
tackled at most priority. Higher per capita income is higher and hence it is a good
opportunity for the expansion of Wesfarmers.
 Technological: Germany is known as a country that is highly advanced in term of
technological use. They are known for their innovative and research quality. This will
help Wesfarmers in improving their service quality (Biddle, 2017). With the support

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of strong technical background, it will be easier for the company to reach deep into
the market.
 Legal: Legalities in Germany is highly supportive especially in terms of supporting
investments. On the other hand the consumer laws are also powerful which companies
like Wesfarmers have to comply.
 Environmental: It is one of those European nations that are very strict towards
environment misuse. Waste management and carbon emission needs to be properly
handled without which Wesfarmers may face serious problems.
Apart from all these factors there are certain micro factors that could also affect the business
of Wesfarmers. Some of them are:
 Supply chain management: Wesfarmers is known for its supply chain management
that helps in maintaining the balance between demand and supply (Sloan, 2016).
There are many suppliers in the European region which will help Wesfarmers to
achieve what they want to.
 Human resource: In the European region there are highly skilled workforce. Human
resources are technically sound and are capable of improving the overall productivity
of the company (Annabel & Scrymgeour, 2018). Germany is known for its research
oriented workforce.
Market Analysis
It is also crucial that before making an expansion, Wesfarmers understands the market. This
can be done by analysing the market. Since this company aims to come in the retail market
hence the analysis would be based on the requirements of market (Hartmann, Klink &
Simons, 2015).
 German Retail industry: Germany represents 20%of the purchasing power in Europe
with a turnover of EUR 512 billion. Its growth rate has been positive over a long
period of time. It is giving employment to more than 3 million people. The retail
market in Germany is Oligopolistic and is dominated by large number of domestic
retailers. The market is considered to be mature at the same time prices are lowest in
the Western Europe.

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 Customer segments: Wesfarmers has a wide range of variables using which they make
segments in the market. Since this company is making investment in retail market
hence they can target large number of people under their target market (Watson,
2011).
Type of
Segmentation
Segmentation criteria Wesfarmers target market
Geographic Region Domestic/international
Density Urban/rural
Demographic Age 15-65
Gender Males and Females
Life-cycle stage Bachelors and married
Income Low, Middle and Upper
Occupation Students, employees and
professionals
Behaviour Benefit sought Cost benefit and time savers
Personality Careless and easy-going
Status Potential and regular visitors
Psychographic Social class Middle and upper classes
Lifestyle Strugglers, mainstream, cross
cultural
Since company is expected to increase its market base at the later stage of the expansion
process. Hence a different kind of segmentation plan is required by the wesfarmers. Such a
wide segmentation has been possible because it offers a lot of products through supermarkets.
People these days want to buy everything at common store like the supermarkets. Germany is
a big market and its growth rate is also said to be on the higher side. This will benefit the
cited firm at the later stage of their expansion into Germany (Beck & Kenning, 2015). With
around 80 million people within the country it can have a huge market size that they can
capture.
Segment profile
Who

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The occupants of the segments are the people from different sections of the society. The
German people of different age group in both genders are the occupants of the cited firm.
Products of Wesfarmers are for everyone hence products are purchased by people from age
group of 10 years to 80 years. People who have middle or higher incomes are the main buyers
of Wesfarmers. On the other hand people from the lower income or the people who support
national companies generally buy our competitor’s products. This is due to the reason as most
of the retail companies in Germany are from the Germany itself and people love to purchase
food from these stores only.
What
The benefit that customers seek is the quality of the product since in retail most of the
products are such which gets rotten very soon hence the person who needs fresh food
generally buys from our stores. Quality in terms of global standards is the basic criteria used
by the company for comparing products. Customers expect that the stores will be easier to
find, will have large spaces and give fast services.
Where
The decision about purchasing from their stores is made at the platforms like online stores,
social media sites or the stores itself. Customers can seek the Information about the products
through online website and social media platforms. Customers buy products through both
physical and online mediums. Online stores have become the major source through which
most of the sales of the company is done in the past few years especially in those areas where
our stores are not available physically.
When
The first decision about purchasing products from the Wesfarmers stores was made at the
time when people were surfing through internet sites. The products are repurchased when
people gets satisfied with the services and product quality of the Wesfarmers.
Why
Customers buy because they have on faith in the company’s services and products. This also
includes in the time of need or when they want to buy large number of products from the
same store in a very short time. Customers choose one brand as opposed to another when
they find the services of the company to be different or beneficial from the other. This is also
the case when the same product is available in other stores at less cost or the quality of that
product is better.
How
Customers purchase by coming to the stores and making payments through digital money or
buy cash. They have numerous options to select in which they choose anyone. Customer
buying process lies till the time they are not satisfied. Marketing mix affects the purchasing at
each level as product and price element is the basic thing that is checked at initial levels.

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Place and promotion suggest them about the ways in which they can buy which product.
Customers use their product as per their requirement. Product fit into their lifestyle or
operations as per the need. They can spend any amount of money based on the necessity they
have regarding the product. They pay as per their ability to pay.
Competitive analysis
In the German market, there are huge numbers of competitors present in the market. Being an
oligopolistic market there are few companies that have captured the market. In the retail
sector there are many European giants that exist like Aldi, Tesco, Lidl etc. On the other hand
there are many regional companies like EDEKA, METRO, REWE etc. which have captured
the larger part of the market.
Wesfarmers is receiving huge amount of competition from the regional players along with
local vendors. Even after this there is huge scope for the cited firm in the German market.
This is due to various types of trends which consumers fulfil. First is the demographic
transition where the demography of Germany is changing especially in terms of the fact that
there is Aging population, higher number of immigrants etc. Second, the urbanisation in
Germany is at very fast speeds which provide an opportunity for the retailers like Wesfarmers
to attract new set of consumers with their products and services (Brockmann, 2013). This
company can consolidate the market with the variety that it has in its product range which
will help them in capturing the larger market share.
There are various types of resources available with Wesfarmers. Its service quality and huge
equity base is one of the best competitive advantages that it can use. Apart from this there are
many subsidiaries of Wesfarmers which could help them in availing products very easily.
Along with this they have over a century year of experience in the retail sector. It would help
them in making strategies as per the requirement of the future retail market in Germany and
hence giving them competitive advantage over their competitors. With the help of suppliers
they can easily make their way above their competitors. They have been using the highest
standards of technology in their operations this would help them in analysing the market
especially with the amount of data it has (Hanf & Schweickert, 2014). It gives them
competitive advantage over most of their competitors. They have strong strategic
management team which would help them in channelizing things in their favour. It also helps
in making decisions that is well above their competitors.

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Organisational analysis
Wesfarmers is a very big organisation in Australia and has years of experience in the retail
Industry of Australia. They can utilise this experience in capturing the market. In Germany it
is seen that in every part of the country some or the other company is a leader. This increases
their chance to expand in the market.
As the retail market of Germany is on expansion hence companies need to understand their
own capabilities so as to grow in the market. Since Wesfarmers have large number of
manufacturing units that is producing different kinds of products hence it would be easier for
the company to avail products. Company has huge amount of capital that can be used for
making investments. It is also necessary that company focuses on the process and phases of
Internationalisation (Mohr & Batsakis, 2018). They have a highly skilled management team
that is capable of evaluating the business situations and take decisions accordingly. It is
owner of the big retail firms like Coles which would provide them a base in managing their
operations and would also give them assistance in their operations overseas.
It is having big warehouses that are capable of solving their problems related to logistics. In
any retail industry, this is one of the biggest problems that they had to face. Apart from this
there are people from different parts of the world that are working under Wesfarmers and
they have a plan for diversity management. Since the working culture in Germany is entirely
different from Australia hence company will also have to adjust themselves according to the
German culture. With the skilled management team that Wesfarmers have, it would not be a
problem. They also have resources in various other countries which would help them in
balancing the situation if in case any problem exists in the later stage of their business in
Germany.
Swot analysis
Along with the external analysis, it is also essential that company understands its internal
capabilities as well as the opportunities and threats available in the market. In the expansion
process such analysis helps the company to understand its resources at the same time to
understand its capability to access the opportunities. It also enables the company to check the
threats they are facing. SWOT is an effective tool in this regards.
Strengths

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 Wesfarmers is having an experience of more than 100 years in the industry which
gives them knowledge regarding the ways in which they can face different situations.
 Germany is a strong economy having 4th largest GDP in the world. This will facilitate
Wesfarmers in increasing their market value (Swoboda & Elsner, 2013).
 With more than 80 million consumers in Germany, it is a big market base for any
retail company to capture.
 Wesfarmers has a huge amount of financial resources and hence it will not face
problems in terms of investment expenses.
 This company has invested a lot in the community development initiatives which has
helped them in creating their positive image of the company.
 Effective online services are offered by the Wesfarmers which would help them in
serving for the larger part of the market.
 Large product variety is offered by the company that is capable of attracting huge
amount of consumers towards their business.
Weaknesses
 There is decrease in the overall sale of the products through stores which has been
their major source of revenue.
 In the last few years various stakeholders are not happy with business of Wesfarmers.
This can be seen with the example of Coles as they are planning to get demerge from
Wesfarmers (Business Sweden, 2015).
 It is having least experience in the European market.
Opportunities
 The rate of Urbanisation in Europe is very high which gives huge opportunity to the
companies like Wesfarmers to expand their business.
 As the control of the retail industry is in the hands of few organisation hence making a
place in the market will not be such a big issue (Euromonitor International, 2018).
 GDP and per capita income of the nation is expected to increase at much faster rate
which is a wonderful opportunity for the company.
 In Germany the ageing population is a challenge but it is an opportunity for the retail
industry.
 Food and Apparel retail is growing at much faster rate in Germany hence Wesfarmers
need to capture this segment of the market.

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Threats
 Financial conditions of the neighbouring external market outside Germany in Europe
are not so good.
 Sales in German language is often needed for which cited firm will have to be ready.
 Few dominating retailers with high customer loyalty are a major challenge for the
German market (Farfan, 2017).
 Low prices reduce the chances of increasing the profit base of the Wesfarmers.
CONCLUSION
From the above based report it can be concluded that Wesfarmers is one of the biggest firms
in Australia. It is planning to expand their business in the European region. They have
selected Germany as one of the major markets in the Europe for expansion. The external and
internal environment for the retail market within the Germany is very positive and is expected
to increase in the coming years. There are large numbers of variables that are affecting the
business of the Australian companies. Wesfarmers with its high amount of resources are able
to capitalise the opportunities that are present in the market at the same time facing threats
that are present in the market. SWOT analysis of Germany shows its effectiveness as a
market for retail industry.

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REFERENCES
Annabel, B., & Scrymgeour, M. (2018) Business: Retail matters: Getting to home base. AJP:
The Australian Journal of Pharmacy, 99(1174), 54.
Bachmann, R., & Braun, S. (2011) The impact of international outsourcing on labour market
dynamics in Germany. Scottish Journal of Political Economy, 58(1), 1-28.
Beck, S., & Kenning, P. (2015) The influence of retailers’ family firm image on new product
acceptance: an empirical investigation in the German FMCG market. International
Journal of Retail & Distribution Management, 43(12), 1126-1143.
Biddle, I. (2016) The Wesfarmers/Woolworths duopoly war: The Bunnings vs. Masters
battle. Busidate, 24(3), 3.
Biddle, I. (2017) Target Marketing: Gaining customer details to maximise marketing
strategies. Busidate, 25(4), 10.
Brockmann, M. (2013) Learning cultures in retail: apprenticeship, identity and emotional
work in England and Germany. Journal of Education and Work, 26(4), 357-375.
Business Sweden, (2015) BUSINESS OPPORTUNITIES WITHIN THE GERMAN RETAIL
MARKET. Retrieved from:
https://www.business-sweden.se/contentassets/ce6afe38474b4121840c20b971127d48
/germany-retail-opportunities.pdf
Campbell, J. (2017) Insights from the company monitor: Wesfarmers. Equity, 31(8), 16.
Euromonitor International, (2018) Retailing in Germany. Retrieved from:
http://www.euromonitor.com/retailing-in-germany/report
Farfan, B. (2017) Learn About the Largest German Retail Companies. Retrieved from:
https://www.thebalancesmb.com/largest-german-retailers-2892112