Analyzing and Managing the Legal Environment at Wesfarmers

This report provides an analysis of the legal environment surrounding Wesfarmers, an Australian conglomerate. It begins with an introduction to Wesfarmers and its business operations. The report then delves into the legal governance aspects, including general and specific legislation like the Corpor...Read More

Running Head: MANAGING THE LEGAL ENVIRONMENT
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Managing the Legal Environment

Running Head: MANAGING THE LEGAL ENVIRONMENT
Table of Contents
Introduction................................................................................................................................2
Legal governance and the issues that are affecting the organisation.........................................2
General or specific legislation of particular importance............................................................2
General Legislation................................................................................................................2
Specific Legislation................................................................................................................2
High legal risk............................................................................................................................2
Explore the reasons and the implications of the legal risk.........................................................3
Implication of the legal risk....................................................................................................3
Identify and describe the strategic options.................................................................................3
Offer recommendation...............................................................................................................3
References..................................................................................................................................4

Running Head: MANAGING THE LEGAL ENVIRONMENT
Introduction
The Wesfarmers is an Australian Conglomerate which is situate in Perth, Western
Australia. Wesfarmers as found in the year 1914 and the company with a team of 223000
employees and with a revenue of A$68.44 billion in the financial year 2017, the key areas of
interest of this company is chemicals, fertilisers, and coal mining and safety products. With
AU$65.98 billion in the year 2016 Wesfarmers is the largest company in terms of the revenue
as compared to the Woolworths and BHP Billiton. The company is also engaged in the
business of livestock, wool grain and fruit exports (Wesfaremrs, 2018).
Legal governance and the issues that are affecting the organisation
Basically every organisation has to adhere to several laws and regulations of the
country such as Corporations Act 2001, Competition and Consumer Act to promote and
maintain fair competition in the market place, and Environmental Protection Act 1999 to
keep an alignment with the environment. Moreover there are certain management and the
relationship issues that can also affect the organisation such as the labour strike, the low
incentive policy, high employee turnover ratio and the degradation of quality of the products
and the services. These issues affect the organisation and its performance on a broader level.
The major issue was the Federal Government, having the problem in passing the legislation
policy in the absence of the Senate Majority (Wesfarmers, 2017).
General or specific legislation of particular importance
General Legislation
The general legislation includes the behaviour of the Wesfarmers towards the honesty,
integrity and the fair running of the business. The responsibility of the Wesfarmers towards

Running Head: MANAGING THE LEGAL ENVIRONMENT
the market of the finance and the shareholders is the ultimate legislation under Corporations
Act 2001. The main aim of this act is to enable Wesfarmers to comply with its disclosures
and the financial reporting. Apart from this Consumer and the completion laws have been the
part of the general legislation and the Wesfarmers are committed to protect the consumers by
delivering the accurate information in the market (Roddan, 2015).
Specific Legislation
A draft bill to make the amendment of the Superannuation Industry Act 1993 was
considered to give the effect to the new prudential as well as the licensing arrangements in
the year 2003 in month of June. Specifically the company is required to comply with the
recent changes in the Section 46 of the Competition and the Consumer Act in association
with the 457 visa regulations (Wesfarmers, 2017). 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. JJR & Sons admitted the fault on
account of the imbalance in the parties’ right and was not reasonably necessary to protect the
legitimate terms (Recruiters Casebook 2017).
High legal risk
Basically there are four types of the legal risk, structural, litigation, regulatory and the
contractual. Apart from this for nay organisation the risk of the sustainability is the highest
one as sustainability is critical and Wesfarmers are continuously assessing and managing the
risks and opportunities (Kim, et al 2016). The risk that acts as a centre point is the regulatory
risk. The price war between the competitors is highly pressurising and results in the sharp
downturn in the Australian Economy and the company is posed towards the vulnerable cycle
of the economy. The competition is so high that the risk of safety of the workers is coming at
the secondary stage and the company is engaged in enhancing the profit material.

Running Head: MANAGING THE LEGAL ENVIRONMENT
Explore the reasons and the implications of the legal risk
The reasons of the risk are the uncertainty of the price and the fluctuations in the
market. The administrative branch of the government is growing rapidly and the regulations
imposed by the government acts as oil in the fire.
Implication of the legal risk
Short term: In short term period the fluctuations in market will only create more
competition and fight among the companies which may enable them to change the strategies.
Long term: Depression of the stock price as every decision is based on the stock price
and if the market gets a hint of unmitigated risks, the prices of the stock are going to step
down badly (Müllner, 2016).
Identify and describe the strategic options
Risk Acceptance: when the cost of the other mitigation strategies are higher risk
acceptance is the best strategy and clearly the business accepts the risks.
Risk Avoidance: Under this method the risk has been avoided completely and it is
usually the most expensive strategies (Herrera, 2014).
Risk Limitation: It is the most common strategy used by the companies which is a
mixture of the risk acceptance as well as avoidance.
Risk Transfer: the risk is transferred to the third party for example, outsourcing of
customer service. The cost involved is moderate.
Offer recommendation
The most appropriate option is to use the risk limitation method as it is cost effective
in terms of the Wesfarmers and also the customers are the key drivers and therefore it has

Running Head: MANAGING THE LEGAL ENVIRONMENT
been recommended that the company shall also transfer part of the risk. Further the company
shall abide by the rules and regulations in order to be healthy company in which numerous
shareholders can invest. In case of ACCC vs JJ Richards and Sons Pty Ltd [2017] FCA
1224ACCC also requires the JJR & Sons to establish an Australian Consumer Law
Compliance program to be undertaken by each employee involved in the business. Hence it is
recommended to comply by the rules and regulations (Recruiters Casebook 2017).

Running Head: MANAGING THE LEGAL ENVIRONMENT
References
Herrera, M. (2014). Mitigation and BCM Governance, Risk and Compliance. Retrieved from
https://www.mha-it.com/2013/05/four-types-of-risk-mitigation/
Kim, K., Kim, H., Kim, S. K., & Jung, J. Y. (2016). i-RM: An intelligent risk management
framework for context-aware ubiquitous cold chain logistics. Expert Systems with
Applications, 46, 463-473.
Müllner, J. (2016). From uncertainty to risk—a risk management framework for market
entry. Journal of World Business, 51(5), 800-814.
Recruiters Casebook (2017). JJ Richards & Sons Pty Ltd admits it’s time to take out the
garbage Retrieved from https://recruiterscasebook.com/2017/10/22/jj-richards-sons-
pty-ltd-admits-its-time-to-take-out-the-garbage/
Roddan, M. (2015). Economic downturn, supermarket wars biggest threats to Wesfarmers:
analysts. Retrieved from https://www.theaustralian.com.au/business/business-
spectator/economic-downturn-supermarket-wars-biggest-threats-to-wesfarmers-
analysts/news-story/159c85822921871c865faf7435ca2969
Wesfaremrs, (2018). Annual Report. Retrieved from
https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-
annual-report.pdf?sfvrsn=0
Wesfarmers, (2017). Sustainability Report. Retrieved from
https://sustainability.wesfarmers.com.au/media/1835/edited-extract-of-wesfarmers-
2016-sustainability-report.pdf