MKT600: Marketing Situational Analysis of Wesfarmers

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MKT600: Marketing
Assessment 1: Situational Analysis
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Executive Summary
Marketing refers to the activities that are undertaken by the company for promoting the buying
and selling of goods and services. This project report comprises of the situational analysis of the
Wesfarmers which has good brand recognition in Australia. The micro and macro environmental
analysis of the company has been done and it was found that the company has various strength,
weaknesses, opportunities, and threats. Wesfarmers have to face the huge competition in the
development of its new product i.e. sports products. Therefore, the company needs to focus on
developing effective strategies so that it can overcome the threats and capture different
opportunities.
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Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
1. Background of Wesfarmers.........................................................................................................5
2. Analyze the microenvironment....................................................................................................6
3. Summarize the likely competitors, what they offer and who they seem to target.......................8
4. Analyze the macro-environment..................................................................................................9
5. SWOT matrix and strategies for capturing opportunities, defending threats and weakness
overcoming....................................................................................................................................11
Conclusion.....................................................................................................................................14
References......................................................................................................................................15
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Introduction
In this report, the marketing environment analysis of Wesfarmers will be developed explaining
firstly about the company’s background. The analysis will be made regarding the
microenvironment in which the suppliers, competitors, substitutes, and buyers will be described.
There are so many competitors of Wesfarmers the summarization of the same will be done and
the detailed analysis of the company’s Marco environment will be mentioned along with the
SWOT analysis and discussion of the appropriate strategies for capturing opportunities,
overcoming weaknesses and defending threats will be made. The PSESTEL analysis will make it
easier in specifying the threats and opportunities.
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1. Background of Wesfarmers
Wesfarmers Limited is considered as the largest listed company in Australia. The company is
headquartered in Western Australia and is engaged in diverse business operations covering
apparel, office supplies, home improvements, outdoor living, and Industrial divisions with
business in fertilizers, chemicals and energy and safety and industrial products. It has the largest
number of employees in Australia and has around 4,90,000 shareholder base. It was founded in
the year 1914 as a cooperative for providing merchandise and services to farmers of Western
Australia and got listed in 1984 on Australian Stock exchange. Wesfarmers grew into the
conglomerate industry.
Wesfarmers is intending to expand its business by introducing the selling of sportswear and
equipment for both men and women. For the purpose of the same the detailed analysis of both
micro and the macro environment will be exercised (Wesfarmers, 2019).
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2. Analyze the microenvironment.
Wesfarmers Limited is a leading firm of Australia in the food and staples retailing sector.
Porter’s five forces are referred to as the holistic strategy framework. Through porter’s fiver
force sustainable competitive advantage can be built by Wesfarmers in sportswear, equipment,
and accessories.
The Wesfarmers managers can use these forces for analyzing the microenvironment and
developing the strategic position for the new product line and profitable opportunities can be
explored for the company. There are five forces as mentioned below-
 Threats of new entrants- There is a threat to Wesfarmers that the new entrants can be
made in the field of selling of sportswear and accessories. But owing to its good brand
recognition and awareness with the diversified market the low threat for the new entrant
can be considered. The discouragement to the new entrants can be made if the restriction
with the distribution channels can be accessed but there will be high new entrants threats
is existing regulations support the new entry. The company’s existing customers will get
attracted towards the new products of Wesfarmers and with these new customers will be
brought to the company (Barua, & Parveen, 2014).
 Bargaining power of suppliers- The suppliers are having high power. The resources are
availed by Wesfarmers from different markets due to its diverse products varieties the
company deals with. It can be destruction for the Wesfarmers as the dependency of the
organization is on too many suppliers at a time. The dominant positioned suppliers can
lower down the margins of the company that it earns in the market. Higher prices are
extracted by the powerful supplier by making use of their negotiating power. The overall
profitability of the company in the field of sportswear and sports accessories and
equipment can get affected due to the supplier’s higher bargaining power (Kenny, 2013).
 Bargaining power of buyers- Sufficient market research is conducted by Wesfarmers
regularly for understanding the modern trends and buyers expectations that keep on
changing. There are great demands of the buyer in the sportswear patterns and
accessories and want to get the best offerings by making payment of the minimum prices
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to the company. In the long run, the pressure can be put on the profitability of
Wesfarmers. Wes farmer’s customer base is more powerful and they have high
bargaining power and due to which the company will have to offer the high discounts and
offerings to its customers in order to attract them and maintain them and attracting new
customers towards the new product offered by the company.
 The threat of substitute products and services- The substitute product for the sportswear
is less and the sports accessories cannot be substituted which is a plus point for
Wesfarmers in dealing with the sports products. The organization will adopt the
environmentally friendly and energy efficient production method and is offering high-
quality services to its customers that will surely provide the organization with a
competitive advantage.
 Competitive Rivalry- The retail market of Australia is being dominated by Wesfarmers as
it is considered as one of the recognized organization. There is although low competition
to the company but with the new product development of sportswear a company can get
competitive rivalry as there are many companies that are offering the sports-related
accessories and apparel in the market (Kilroy, & Schneider, 2017).
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3. Summarize the likely competitors, what they offer and who they seem to target.
Wesfarmers have various competitors including Incitec Pivot, Mamma Chia, Woolworths, J.C.
Penney, Target, Dusk, and Orica. The company will have competition with the different sports
goods manufacturing company of Australia such as BLK(sports), Catapult sports, and Classic
sportswear after getting into this new product line.
BLK(Sportswear), established in 2011 is a clothing company that manufactures the sportswear.
The company is the sponsor and official supplier of different events, sports team and players
including Queensland and West Indies cricket team, Fiji, Scotland Rugby league, Newcastle Jets
FC, Benfica, D.I.T., Barrow, Dover Athletic, Port Vale, Las Vegas Lights football team.
Catapult Sports is a public ltd. the company listed in the ASX that give its services to around
2500 teams in 135 countries, around 39 sports worldwide. The company is now targeting to add
more team around the world to provide its products and services. three physical product is
mainly offered by the company: Optimeye S5, Clearsky T6, and Optimeye S6 (Aithal, et. al,
2016).
Classic sportswear is the privately held company which is also called as classic and is engaged
in sports clothing manufacturer in Australia. The company manufactures the sports clothing for
Australian rugby league, soccer, football, basketball, and rugby union. The company target is
now to attract more sports team for providing its products to them (Gillespie, & Riddle, 2015).
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4. Analyze the macro-environment.
PESTEL analysis is the strategic tool for analyzing the macro environment of Wesfarmers such
as political, economic, social, technological and environmental factors.
 Political factors- The significant role is played by the political factors for determining the
factors that can impact on the long-term profitability of Wesfarmers in the market. The
political stability and significance of retail sector in the economy of country, legal
framework for the enforcement of contract, anti-trust laws in relation to the sports
retailing company, tax rates, incentives, safety regulations of industry are some of the
political trends that the company needs to consider as they can impact the company's
business to a great extent (Cadle, 2014).
 Economic factors- The savings rate, rate of foreign exchange, interest rate, and inflation
rate determine the aggregate investment and demand in an economy. The efficiency of
the financial market, economic growth rate, economic indicators of industry, consumer
spending are the trends that Wesfarmers have to consider for forecasting the growth in
the new product development. It can be said that sports products will enjoy a profitable
position in the Australian market.
 Social factors- For the future growth of Wesfarmers, the Australian social environment
plays a significant role. The organization’s success largely depends on population
analytics, cultural trends, and demographics for the success of Wesfarmers. One-stop
shopping method is adopted by the Australian citizen and therefore, departmental store
and supermarkets chain will bring good business revenue from the new product
development. Shared attitudes and beliefs of the population play an essential role in
understanding the customers of Wesfarmers of the targeting market and will help in
designing the marketing message for sports retailing industry (Aithal, 2016).
 Technological factors- various industries around the world are disrupting fast due to
technology. The technological progressive production means is required to be relied upon
by the Wesfarmers and by this the ecological sustainability can be maintained in the
nation in the future. For the future development of the Wesfarmers continuous innovation
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and good technological foundation will be made so that the company can get better
results from the sportswear and sports equipment selling (Chikweche, & Fletcher, 2012)
 Legal factors- various laws such as discrimination law, employment law, health, and
safety law, intellectual protection law, and anti-trust law of Australia impact a lot on the
Wes farmer’s decisions and actions. While conduction of trade, Wesfarmers is required to
abide by each of these laws.
 Environmental factors- It is very important for Wesfarmers that the managers make the
analysis of the different markets that the company is focusing on target as different
environmental standards or norms prevails for different markets. Laws regulating to the
environmental pollution, weather or climate change, recycling and attitude towards
renewable energy are some of the environmental factors that should be considered by
Wesfarmers (Kennedy, et. al, 2012).
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5. SWOT matrix and strategies for capturing opportunities, defending threats and
weakness overcoming.
Strengths Weakness
 Wesfarmers has diversified market and
persistence growth can be easily
experienced by the company due to
different varieties of diverse business.
 The high growth rate of Wesfarmers in
the market
 High reputed organization in the world
and has earned strong brand
recognition which will help the easy
development of sports products in the
market
 Online formats are also sued by the
company for selling purpose which will
increase the sports products selling
 In order to attract customers,
Wesfarmers offers different discounts
and offers (Pike, & Page, 2014)
 Customer oriented services are
provided by the company and they also
provide the delivery convenience
 Strong workforce, a large number of
stores, and in-store staff
 It operates in a highly competitive
market
 Due to the strong presence of
Wesfarmers in Australia, strong
business risks are encountered by the
organization
 No efficient planning of finance
 Organizational structure is compatible
with the present business model.
Hence, limiting expansion in the
product segment
 IT has a low graphic presence as
experience is limited to Australia
(Gupta, 2015)
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Opportunities Threats
 Australia market can get expanded
 Service, quality can get enhanced, and
can experience benchmark across the
different stores
 Customer and employee loyalty
initiatives across the business
 The constant increase in the consumer's
income level
 Profitability and revenue will enhance
through the global expansion and new
product development (Rajput, et. al,
2012)
 Raw-material cost is increasing rapidly
in Australia
 Huge competition from rivals
 The economic downturn may lead to
lower demand and plummeted
confidence level of consumer
Appropriate Strategies
Wesfarmers can use the cash more efficiently as per the liquid asset ratio and current asset ratio.
Sufficient amount of money should be spending on research and development; sufficient supply
chain should be built with the multiple suppliers. For defending the threat of high competition
with the competitors, sustainable differentiation should be built. The building of scale should be
done so that it can enable the company to compete better. The company can also opt to
collaborate with its competitors so that increase its market share and size. Opportunities can be
captured by making the optimum utilization of the available resources, product reliability, safety,
and efficiency. Focus on following the customer social responsibility and providing its customers
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