Strategic Management Report: Wesfarmers Limited, Australia - MGT5STR

This report provides a comprehensive strategic management analysis of Wesfarmers Limited, an Australian agribusiness. It begins with an executive summary and company profile, followed by a detailed PESTEL analysis examining the political, economic, social, technological, environmental, and legal factors impacting the company. The report then delves into Wesfarmers' internal organizational analysis, including its resources, capabilities, core competencies, and competitive advantages. Competitive strategies are discussed, and recommendations are provided to address challenges faced by Wesfarmers in 2018. The report concludes by summarizing the key findings and insights into Wesfarmers' strategic management approach. The report utilizes academic writing guidelines and Harvard referencing style, adhering to the requirements of the MGT5STR Strategic Management assignment.

RUNNING HEAD: Strategic Management
Strategic Management
Wesfarmers Limited, Australia

Strategic Management
Executive Summary
This report with the help of the Wesfarmers Limited’s external and internal environment
analysis will discuss the importance of politics, environment, society, technology, economy
and legal factors in the day to day short as well as long term duration of operations of the
industry. Wesfarmers Limited is an agribusiness industry that is one of the best profit earning
industries in Australia. This report will analyse the role of the external factors and the
competency analysis of Wesfarmers strategic management analysis. At the end this report
will suggest some key ideas to deal with two major emerged challenges in the year 2018 for
the Wesfarmers Limited.
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Strategic Management
Contents
Introduction...........................................................................................................................................3
Company profile....................................................................................................................................3
PESTEL environment analysis..............................................................................................................3
Political impacting factors.................................................................................................................4
Economic impacting factors..............................................................................................................4
Social impacting factors....................................................................................................................5
Technological impacting factors........................................................................................................6
Environmental impacting factors.......................................................................................................6
Legal impacting factors.....................................................................................................................7
Internal organisational analysis.............................................................................................................8
Resources and Capabilities....................................................................................................................8
Core competencies analysis and competitive advantages......................................................................9
Competitive strategies.........................................................................................................................10
Recommendations...............................................................................................................................11
Conclusion...........................................................................................................................................11
References...........................................................................................................................................12
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Strategic Management
Introduction
Processes applied to manage strategies in the organisation are followed by a structured
process involving three major steps. First step of the performance is conducting the
environment of the organisation to input the strategic change in the organization. Second step
for strategic management is to implement the required actions in the organisation. Third and
last step is to evaluate the outcomes of the implemented actions in the management. This
requires a detailed knowledge of the internal and external environment of the organisation
and this can be done by PESTEL analysis and SWOT analysis with the identification of
competitive strategies and advantages (Adeoye & Elegunde 2012).
Company profile
Wesfarmers is Australian company established in the 1914 with different name as Western
Australian farmer’s cooperative. The reason behind the establishment of Wesfarmers was
raising demand for less working hours and a better wage. Wesfarmers deals in diversify
business activities like retailing, coal mining, fertilisers business, liquor products, home and
office supplies and many more. Net profit after deduction of taxes US $1,197 million till June
30, 2018. Wesfarmers is one of the largest companies in Australia and a house for job to a
large group of employees around 220,000 and around 500,000 of the interested shareholders.
The basic and primary mission of Wesfarmers is to provide big and satisfactory return to its
shareholders (Wesfarmers 2019).
PESTEL environment analysis
PESTEL analysis is a perfect tool to analyse the external factors affecting the introduced and
invented by Professor Francis Aguilar. This is a tool helpful to identify the factors affecting
the strategic management of an organisation. PESTLE analysis uses the six outsider factors’
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collected data (Perera 2017). Wesfarmers deals in diversify business hence the internal as
well as external environment plays vital role in the formation of the competitive strategies
and advantages. PESTEL analysis for Wesfarmers limited on the basis of current competitive
factors is as follows;
Political impacting factors
Political factors are liable to decide the growth and stability of any industry in a country,
industries like Wesfarmers limited, dealing in the business operation at broad level can be
affected by the political components of a country. Wesfarmers limited can use these points as
the politically affecting factors.
 The rules and regulations imposed by the government especially for the process of the
business related to the Wesfarmers industries.
 The political stability level of the Australian government in the recent years.
 Policies of a country to protect IP intellectual property of a business enterprise.
 Trade barriers introduced by government may affect the interest of the potential
stakeholders and experts.
 A threat of the invasion of the hostile countries may lead harm to Wesfarmers in form
of divestment by their schemes.
 High rate of taxation affect the performance and the profit earning of a company.
 Laws and regulation related to anti-trust laws of food protection.
 Wages rate and mandatory benefits if the employees in the organisation (Parida et al.
2014).
Economic impacting factors
The economic conditions of a country affect the business and its functions very deeply and
the economy of a country majorly depends on the industries operating in the relevant
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countries and their outcomes. For example in the year of 2009 global crisis of the Australian
economy affected the consumer’s consumptions and decreased the disposable income of the
industry. Economic factor is consist of different elements like saving rates, rate of interest,
rate of inflation, currency exchange rates and cycle of economic determination of the demand
and supply rate of the industrial products (O'brien 2019).
 The system of the economy conditions of the country.
 Comparison of the wages rates with the global market.
 Increasing value of the dollar in the global market.
 Increased or decreased rate of unemployment in the country.
 Level of skills and abilities in the sector of food and retailing.
 Cost and revenue of the industrial labours in the economy.
 The GDP level of the country and the growth in the economy affect the operations of
the Wesfarmers limited.
Social impacting factors
Wesfarmers have a large group of employees and the shareholders both are very important
for the sociological development factor of the industry. Coles group of retailing company
serves more than 22000 million of customers. This organisation takes initiative steps for the
development of the society in form of the large employment providing industry. The factors
of the society that affect the development of the organisation are as follows
 The level of average education among the society increased.
 Gradually increasing life expectancy rate of the people.
 Structure and power distribution with the hierarchical structure in the society.
 Cross cultural development in the organisation of the Wesfarmers.
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 Changes in the culture, practice, belief and attitudes of the society with the change in
the values.
 Health standards, safe and healthy environment for the employed staffs and the
contribution towards a sustained developed society.
 The product range of the Wesfarmers depends on the diversified demographic
population (Timms 2018).
Technological impacting factors
In order to deal with the new challenges in the global market Wesfarmers limited needs to
keep with the technology. Technology plays a vital role to the industrial operations of a
business. As accepting this as the important aspect Wesfarmers introduce the ‘One-shop’
strategy to make the facilitation in the online shopping to its customers. Technology has
shown rapid changes from last five years like in taxi industry sector is now dominated by the
Lyft and Uber same as car industries are moving fast in the automation affected by the
technology in form of electric car revolution. The role of technology in the Wesfarmers is
seen as
 Increased shopping by using online shopping website and mobile shopping app and
other net sources.
 Effects of the technology on customer identification, prediction to use set customer
preferences with the priority.
 Technology helps in the development of the value based services.
 Technology create the effective impact on cost structure in the retailing industry
 New intervention in the technological field of Wesfarmers limited can create a
competitive advantage for the industry (Sammut-Bonicci & Channon 2015).
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Strategic Management
Environmental impacting factors
Different industries have their own different norms to protect the environmental standards
and can result in the increased profitability of the organisation. Environmental standards got
affected by the operations operated by the industries. Wesfarmers have its social preventive
measures that are not to cause harm to the environment. It has invested in the development of
technology to avoid the resource wastage, using water adequately and protection of the
environment from high level damages. The environment in the neighbourhood affects the
functions of the Wesfarmers limited as;
 Weather conditions of a particular place significantly create a great effect on the
overall process of the Wesfarmers limited from the development of the product to
the supply of the product.
 Changes in the climate result in the delay in the operations of the Wesfarmers and
sometimes a product become useless due to adverse climate conditions. Like the
impact of the global warming affected the sale of winter items due to short duration
of the winter season.
 Renewable energy as expensive receive the great interest not only from the
government but also form the customers willing to pay for the products Wesfarmers
limited will produce.
 Firms operating in the business need to report the emissions under the NGER
reporting act (Sammut-Bonicci & Channon 2015).
Legal impacting factors
Legal factors of a country relate to the laws, rules and regulations needed for the operation of
business activities in the country. These legal factors bound the industries with the
amendments form time to time in relation of the business operation in the society. Business
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Strategic Management
entities need to follow the rules framed by the legislation to avoid the barriers in the trade
relations and trade activities. The factors that affect the Wesfarmers on legal basis are as
follow;
 Law related to intellectual property protection
 Copyright and patent laws
 Law and regulations related to employment
 E-trade regulations and consumer protection law
 Legal implications in form of the carbon emission limit have stopped the Wesfarmers
producing the some products causing harm to the environment.
 Tax policy on carbon emission and a fair tax policy for industries affecting the
Wesfarmers operation (Monczka et al. 2015)s.
Internal organisational analysis
Wesfarmers not only face challenges from the outside in the environment on broad level but
these agribusiness industries face challenges from their internal environment as well. These
can be the strengths, weakness, opportunities and the risk factor for the industries. An
industry majorly deal in retailing is busy with the target to satisfy the buyer with the quality
good on minimum price they want and they also need to keep challenging to their
competitors as well. Internal challenges or the industries are power distributed to the
suppliers and buyers. Sometimes suppliers react as the dominating element because of the
demand of their product and they give bargaining threat to Wesfarmers. And the agribusiness
give easy entrance to the new starters hence it raised the level of competition in the sectors
(Wegner & Mozzato 2019).
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Resources and Capabilities
Wesfarmers is operating its business in diversified business area and this is very challenging
for the industry to maintain the available resources meeting the demand and supply to the
business. The vast area where the Wesfarmers limited is operating its functions are
 Bunning
 Coles
 Kmart Group
 Office works
 Target
 Chemicals, Energy and Fertilisers
 Industrial and safety
 Resources
These are the area Wesfarmers Limited is operating the business and maintaining the
resources of the income and profit. These resources affecting the internal as well as external
operations of the environment and they are very important and challenging to maintain
(Adler, Pittz & Meredith 2016).
The primary objective of the Wesfarmers Limited is to deliver better and satisfactory
outcomes to the shareholders. This can be done through the financial capabilities of the
Wesfarmers Limited. Wesfarmers follow the structured Risk managing framework that helps
the management in the reduction of the risk and to deliver better financial outcomes to the
shareholders and better quality products to the customers (Ageron, Angappa & Spalanzani
2012).
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Core competencies analysis and competitive advantages
Core competencies are the most critical and challenging part in the business area of today’s
dynamic world. This is a system that connects the management with the resources and the
new technologies to produce the satisfactory good and products. These are the internal
capabilities or strengths of the industry and strategically important to complete the mission
and target with facilitating industry with competitive advantages where it is operating its
functions.
Wesfarmers limited is focused to return satisfactory outcomes to the shareholder in financial
form and the core competency with the advantages Wesfarmers Limited is dealing their each
business with high degree of autonomy. The group is focused in the key plans rather than the
larger policies and strategies these are their core attribute helping them to achieve the
competitive advantages (Thompson 2014).
 Wesfarmers hire the people that are capable to handle the critical strategies
 Wesfarmers clearly promoter the commercial capability on the basis of leadership
 It focus to the improved culture that gives it the outstanding advantage in the
competition
 It rewards the unique contribution with unique rewards in the innovation to develop
the competitive advantages.
Competitive strategies
The main strategy followed by the Wesfarmers is that their main motive is to deliver a satisfactory
return to its shareholders that are its main stakeholders. These strategies of the Wesfarmers are
focused on the value creating basis (Shi 2017). These policies are
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 It focuses on the empowerment and development of the business with the
development of the present strategies to deal with the employees training to satisfy the
customers’ needs and demands.
 The entrepreneurial initiatives are the target for the security of growth and
development of the possible opportunities.
 The long term management of the sustainable development is seen as the higher
responsibility for the business development (Kilroy 2017).
Recommendations
Wesfarmers Limited is playing very cleverly in the agribusiness industries with the setting
the challenging competitive strategies for the competitors. Some recommendations to develop
the business strategies of the Wesfarmers Limited are to develop the information system by
using the new innovated technology in the operations that can help the employees to
understand the functions well and operate it properly (Zurzolo 2013). The main raised
challenges in 2018 for the Wesfarmers Limited were;
 Pricing and security of the energy supply
 The risk associated with the climate changes in form of regulatory, physical and
regulatory form
Wesfarmers Limited in this new financial year is focused on these two major strategies to
accomplish the main target to satisfy the shareholders by the best financial return.
Conclusion
From the deep external and internal analysis of the Wesfarmers Limited strategic
management this report concludes the different factors affecting the growth and development
of the industry. It is analysed with the PESTEL analysis that Wesfarmers Limited possess a
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very strong and challenging place in the market, this analysis shows that it is effectively
working in the terms of the innovations, technology, political, environment policies and the
legislative aspects of the country. This report on the basis of its competency analysis
concludes that the strategies followed by the Wesfarmers Limited are adding value to its
management and operations and giving its operations a beneficial competitive advantage.
References
Adeoye, O & Elegunde, A 2012, 'Impacts of External Business Environment on', British
Journal of Arts and Social Sciences, vol 6, no. 2.
Adler, TR, Pittz, TG & Meredith, J 2016, 'An analysis of risk sharing in strategic R&D and
new product development projects', International Journal of Project Management, vol 34, no.
6, pp. 914-922.
Ageron, B, Angappa, & Spalanzani, A 2012, 'Sustainable supply management: An empirical
study', International journal of production econnoics, vol 140, no. 1, pp. 168-182.
Kilroy, DASM, 2017, 'Valuing the Current Strategy. In Customer Value, Shareholder Wealth,
Community Wellbeing', Palgrave Macmillan, pp. 109-141.
Monczka, RM, Handfield, RB, Giunipero, LC & Patterson, JL 2015, Purchasing and supply
chain management, Cengage Learning.
O'brien, J 2019, Category management in purchasing: a strategic approach to maximize
business profitability, Kogan Page Publishers.
Parida, V, Sjodin, DR, Wincent, J & Kohtamäki, M 2014, 'Mastering the transition to
product-service provision: Insights into business models, learning activities, and capabilities',
Research-Technology Management, vol 57, no. 3, pp. 44-52.
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Perera, R 2017, The PESTLE analysis, Nerdynaut.
Sammut-Bonicci, T & Channon, TF 2015, 'Pricing strategy', Wiley Encyclopedia of
Management, pp. 1-3.
Shi, X,QSM,LT,JA,FL,&XG 2017, 'Challenges and opportunities', Frontiers of Structural
and Civil Engineering , pp. 35-46.
Thompson, PA 2014, ' Wesfarmers 100: The People's Story 1914-2014', Wesfarmers Limited.
Timms, N 2018, Social work values: An enquiry, Routledge, Abingdon.
Wegner, D & Mozzato, A 2019, 'Shall we cooperate, or shall we compete?How network
learning episodes influence strategic', journal Management and Enterprise Development, vol
18, no. 3, pp. 171-188.
Wesfarmers 2019, delivering value today & tomorrow, viewed 23 August 2019,
<https://www.wesfarmers.com.au/>.
Zurzolo, GA,KJJ,MML,TSL,TD,&AKJ 2013, 'Foods with precautionary allergen labeling in
Australia rarely contain detectable allergen', he Journal of Allergy and Clinical Immunology:
In Practice, pp. 401-403.
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