Wesfarmers: International Market Entry Analysis Report

This report provides a comprehensive analysis of Wesfarmers Limited's potential market entry into Indonesia and Poland. It begins with an introduction to Wesfarmers, an Australian conglomerate and the largest retail organization in Australia and New Zealand, and its strategic goal of international expansion to combat increasing competition. The report then conducts a PEST analysis for both Indonesia and Poland, evaluating political, economic, social, and technological factors influencing the retail industry in each country. It examines the trade and business policies of both nations, including the specific policies of Wesfarmers. Furthermore, the report assesses the risks and opportunities associated with entering each market, considering factors such as infrastructure, consumer behavior, and competition. The analysis concludes with a recommendation on which market is most suitable for Wesfarmers, supported by justifications based on the evaluation of both countries and their respective business environments.

Running head: INTERNATIONAL AND GLOBAL BUSINESS
INTERNATIONAL AND GLOBAL BUSINESS
Name of the Student
Name of the University
Author note

1INTERNATIONAL AND GLOBAL BUSINESS
Introduction
Wesfarmers Limited is referred to an Australian Conglomerate which has it’s
headquarter at Perth, Australia. The Company is the largest retail organization by
revenue in both Australia and New Zealand. Not only that, Wesfarmers is the largest
private employer in Australia. According to a recent survey, the company has
approximate 220,000 employees across the world. In spite of being the largest retail
organization in Australia, with the emergence of globalization, the management of
wesfarmers is experiencing increasing competition which in turn is imposing negative
impact on the revenue of the company. The chief reason behind this is the lack of global
presence of the Company. In order to gain competitive advantage and enhance its
yearly revenue, the management of Wesfarmers is developing strategy to expand its
business at Indonesia and Poland. In this report, the macro analysis along with the
analysis of its trade and business policy of both the mentioned countries will be
performed.
Analysis of Indonesia:
PEST Analysis
In order to understand the macro environment of the retail industry of Indonesia,
it is highly crucial for the management of Wesfarmers to conduct PEST analysis.
Political factor
The Political state of Indonesia is highly stable. The political system followed at
the mentioned nation is democratic. Stability o the political condition has imposed
positive impact on the retailed sector of the country. Political stability means better
business because political disruption leads to the disruption of supply chain and sales
(Hayami & Kawagoe, 2016). Moreover, in order to facilitate globalization, the
government of Indonesia has lowered several barriers to entry in the retail industry.
Thus, it has become easier for international retail organization to establish their
business in the Indonesian retail industry.
Economic factor

2INTERNATIONAL AND GLOBAL BUSINESS
Indonesia is a developing country and the government is taking various steps in
order to enhance the GDP in the following years. According to researchers, the GDP of
Indonesia has got increased by 5 percent in the year 2016 compared to the previous
year (Fiarni et al., 2016). The enhancement in GDP indicates that the daily purchase of
the consumers of the Indonesian retail sector is increasing. Moreover, the labor market
of the mentioned industry is much cheaper than that of the western retail industry. Thus
it can be understood that the economical condition of Indonesia will impose positive
impact on the business of Wesfarmers.
Social factor
Indonesia has a huge population and the population of the country is not at all
aging. More than 84.3 percent of the population is under the age range of 19 to 42
years. Moreover, the literacy rate of the country is 90.4 percent. Thus The retail sector
of the nation has the opportunity to recruit cheap an skilled labors. However, majority o
the Indonesians prefers shopping from local or street markets over international retail
outlets. This factor has the potential to impose negative impact on the revenue of
Wesfarmers in the long run.
Technological factor:
In spite of being a developing country, the mentioned nation is quite
technologically advanced. The country has 24 hours internet and transport facilities
which in turn impose positive impact on the retail industry of Indonesia. While the
transport facilities enables the retail organizations to maintain an effective supply chain,
the internet facility enable the same to sell their product through online marketing. Not
only that, retail organizations in Indonesia use popular social media platforms in order to
promote their products and enhance consumer loyalty (Magruder, 2013).
Trade and business policy
The business policy of the Wesfarmers includes
1. To deliver quality product to the consumers within an optimum price range

3INTERNATIONAL AND GLOBAL BUSINESS
2. To understand the specific requirements of the consumers and provide service
based on the specific requirement.
3. To maintain honesty as well as integrity while conducting the business
4. To provide effective training to the employees of the organizations so that they
can effectively maintain cultural competence (Rahayu & Day, 2015).
5. To maintain the work life balance of the employees in order to enhance their job
satisfaction
The trade policy of the organization are as follows
The Trade Policy of Wesfarmers features terms and conditions corresponding to
Trading Laws in compliance with the Corporations Act, 2001.
1. All the employees of the Wesferms are liable to maintain the confidentially of
data associated with the revenue of the organization
2. All the distributors needs to abide by the contract that has been signed between
the management and them in order to ensure an honest business environment.
Risk s and opportunities
The potential risks of Wesfarmers includes
1. The infrastructure and service network of the retail sector of Indonesia needs be
more developed in order to keep space with the increasing consumer demand
that in turn resulting in increased inefficiencies and transaction costs (Duggan,
Rahardja & Varela, 2013). This in turn is hampering the exporters and investors.
2. While deregulation has successfully lowered the barriers, the non-tariff barriers
along with the beurocracy are preventing international investors to enter the
market.
3. In spite of several implementations of ant-corruption systems, corruption in the
business is still a major concern in Indonesia.
The potential opportunities of the mentioned nation are as follows

4INTERNATIONAL AND GLOBAL BUSINESS
1. The consumer base of the retail industry is huge and thus westerners have the
opportunity to enhance its revenue. The Indonesian consumer is ranked as one
of the most confident in the world, and 50% of Indonesia’s 253 million citizens
are under the age of 30 (Amin & Islam, 2014).
2. The labor industry of Indonesia is highly cheap. As a result of this, Wesfarmers
will be able to gain high profit in spite of investing lower cost.
Market analysis of Poland
Wesfarmers’ Business Policy
 The organisation aims to fulfil the needs of the customers by facilitating the
availability of goods and services within a continuous process(Campbell, 2017).
 It seeks to expand its business efficiently in the country it operates by utilising the
growth opportunities available in the competitive
environment(Chapple&Humphrey, 2014).
 The third important business policy that the organisation abides by is maintaining
honesty and integrity in both internal and external environment of the company
(Parkin&Hardcastle, 2013).
Wesfarmers’ Trade Policy
The Trade Policy of Wesfarmers features terms and conditions corresponding to
Trading Laws in compliance with the Corporations Act, 2001(Group, 2018). The clauses
seek to protect the organisation’s prestige and honour in terms of trading of securities
by the employees. It also endeavours to prohibit the organisation’s officers to indulge in
those transactions that yield reputational risk in relation to market expectations. The
terms of such prohibitions, applicable to the employees, include the following:
 Managing those transaction where they possess private information
corresponding to the securities(Group, 2018).
 Conveying internal information about the securities to the outsiders(Campbell,
2017).

5INTERNATIONAL AND GLOBAL BUSINESS
 Employees carrying inside information about the securities are debarred from
participating in any share planof Wesfarmers(Parkin&Hardcastle, 2013).
Macro-level Analysis of Wesfarmers Poland’s Geopolitical Environment:
 Political-The European Market is generally volatile with respect to its political
environment whichhas macro level impacts this retails industry (Antonini, 2016).
Wesfarmers being an independent retailer with increasing business dominance
across borders has found itself at considerable advantage with respect to certain
Government Policies. These policies aim to secure the rights of the shareholders
by restricting monopoly in the market. Other benefits of these policies include
elimination of barriers in energy consumption(Parkin&Hardcastle, 2013).
 Economic-From an economicperspective, the performance of Wesfarmers in the
Poland market is hugely dependent on the consumer preferences in that regions
and their buying patterns. The global crisis followed by unstable socio-political
situation of the country had led to less disposable income among the consumers
which had affected the company’s profit(Group, 2018). In addition to this fact,
natural calamity and climate change had also affected the economy by disrupting
the production of chemical fertilizers(Deloitte United Kingdom, 2018).
 Social-Wesfarmers invest a lot in proper employee empowerment activities
which has resulted in social upliftment within the organisation. It has a very
strong consumer policy which has enabled it to acquire a large consumer base in
new markets. Further, with acquisition of the Coles group it has been able to
diversify its product range thus catering to different levels of needs of the
customers (Chapple&Humphrey, 2014).
 Technological-Technological developments in exponential areas of artificial
intelligence, roboticsand virtual reality have helped the enterprise survive in an
environment of tough competition.The company has developed the concept of
One-Shop, through technological up-gradation which has led to its business
success across Poland(Antonini, 2016).

6INTERNATIONAL AND GLOBAL BUSINESS
Risks and Opportunities of Wesfarmers corresponding to the Poland Market:
Risks
Wesfarmers has taken a huge risk in expanding its business in one of the European
Countries, Poland. Polish retail industry is on a growth surge at present, price
competition being one of the most influencing factors, especially for grocery retails
(Beech&MacIntosh, 2017). Poland is the largest country in Central and Western Europe
to have around 73 percent value share in its outlets of hypermarkets and
supermarkets(Campbell, 2017). However, the organisation also has to combat
considerable amount of risks in terms of the following aspects:
 Slow performance in diversified portfolio amidst the large scale completion
remain as one of the impending risks.
 As per Deloitte retail forecast of May, 2018, retail industries such as Wesfarmers
continue to face adequate challenges due to strong population growth and slower
wealth accumulation among the consumers(Deloitte United Kingdom, 2018).
Weak per capita household income has limited the spending power, adversely
affecting the industry as a whole.
Opportunities
 Development in the home improvement division has aided Wesfarmers to secure
its place among the top 250 retailers in the world with a composite retail revenue
increasing at a growth rate of 5.2% (Campbell, 2017).
 Promotion in social media has helped the company create a larger consumer
base in a tightly competitive European market(Chapple&Humphrey, 2014).
 Non-traditional measures such as subscription service and flash sales adapted
by the organisation have helped it to reap benefits from the shared economy
(Parkin&Hardcastle, 2013).
 Market saturation has led to shift in small grocery retailers and convenient stores.

7INTERNATIONAL AND GLOBAL BUSINESS
Conclusion
From the above discussion, it can be concluded that, both Poland and Indonesia
can be considered to be potential market both Poland and Indonesia is not highly
saturated. Not only that, for Wesfarmers. Unlike the developed western countries like
Australia, US and UK, the retail industry of both Poland and Wesfarmers are not highly
saturated. Moreover, the low cost of labors along with the developing GDP of Indonesia
will impose positive impact on the business of the Mentioned organization. However,
considering the fact that the government of both the nation has lower the barriers in
order to enhance the number of international investors in the retail industry, the
company may face excessive competition in the retail market. In order to deal with that,
the company needs to develop effective strategies like online marketing to gain
competitive advantage. Finally, considering the fact that the retail sector of Indonesia is
much developed yet less saturated than that of the Poland, Wesfarmers should select
Indonesia to be its target market.

8INTERNATIONAL AND GLOBAL BUSINESS
Reference List
Amin, M., & Islam, A. (2014). Are there more female managers in the retail sector?
Evidence from survey data in developing countries. The World Bank.
Antonini, C. (2016). An empirical analysis of environmental externalities incidence on
financial performance.
Beech, N., &MacIntosh, R. (2017). Managing change: Enquiry and action. Cambridge
University Press.
Campbell, J. (2017). Insights from the company monitor: Wesfarmers. Equity, 31(8), 16.
Chapple, L., & Humphrey, J. E. (2014). Does board gender diversity have a financial
impact? Evidence using stock portfolio performance. Journal of Business
Ethics, 122(4), 709-723.
Deloitte United Kingdom. (2018). Deloitte UK | Audit, Consulting, Financial Advisory and
Tax services. [online] Available at: https://www2.deloitte.com/ [Accessed 31 Aug.
2018].
Duggan, V., Rahardja, S., & Varela, G. (2013). Service sector reform and manufacturing
productivity: evidence from Indonesia. The World Bank.
Fiarni, C., Maharani, H., & Pratama, R. (2016, May). Sentiment analysis system for
Indonesia online retail shop review using hierarchy Naive Bayes technique.
In Information and Communication Technology (ICoICT), 2016 4th International
Conference on (pp. 1-6). IEEE.
Group, D. (2018). Home. [online] Wesfarmers.com. Available at:
http://www.wesfarmers.com/ [Accessed 31 Aug. 2018].
Hayami, Y., & Kawagoe, T. (2016). The agrarian origins of commerce and industry: a
study of peasant marketing in Indonesia. Springer.
Magruder, J. R. (2013). Can minimum wages cause a big push? Evidence from
Indonesia. Journal of Development Economics, 100(1), 48-62.

9INTERNATIONAL AND GLOBAL BUSINESS
Parkin, A., &Hardcastle, L. (2013). Government–business relations. Government
Politics in Australia, 275.
Rahayu, R., & Day, J. (2015). Determinant factors of e-commerce adoption by SMEs in
developing country: evidence from Indonesia. Procedia-Social and Behavioral
Sciences, 195, 142-150.