Strategic Management Report: Wesfarmers Company Environment Analysis

This report provides a comprehensive analysis of Wesfarmers' strategic management, examining its internal and external business environments. It utilizes frameworks like McKinsey 7S and PEST analysis to evaluate the company's strategies, structure, systems, skills, staff, style, and shared values, as well as the political, economic, social, and technological factors impacting its operations. The report delves into Wesfarmers' business, functional, and corporate strategies, exploring its competitive advantages and sustainability practices. Furthermore, it discusses the leadership style within the company and its organizational structure, concluding with an overview of Wesfarmers' role in the economy, society, and environment, highlighting its adherence to the triple bottom line concept.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author’s note

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Contents
1. Introduction..................................................................................................................................3
1.2 Back ground of the company: Wesfarmers...........................................................................3
2. Internal and external business environment................................................................................4
3.1 Business strategy.......................................................................................................................7
3.2 Functional strategy.....................................................................................................................7
3.3 Corporate strategy......................................................................................................................7
4.1 Competitive Advantage.............................................................................................................7
4.2 Sustainability.............................................................................................................................8
5. Leadership in the company..........................................................................................................8
6. Organsiation structure..................................................................................................................8
7. Conclusion...................................................................................................................................9
Reference list:................................................................................................................................10

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Executive summary
This assignment is undertaken to understand the basic concepts of strategic management. Some
of the concepts include internal and external environment analysis, leadership strategy, business
strategies, functional strategies and operational strategies. The assignment also explores the
concepts of corporate structure and sustainability. In order to complete the study Wesfarmers
organisation has been chosen.

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1. Introduction
Any business organisation operates under several circumstances and factors which result
in the success or failure of the business. Achieving the objectives leads to the success of the
business. Depending on the values and the principles of the company the objectives are set. The
process of strategic management is important in an organisation as it ensures proper organisation
of the function, business and corporate operations of the business (Wheelen et al., 2017)
Strategic management can be defined as the growth and incorporate of the plan for performing
the functions of the business on a daily basis. The most basis strategic management decision that
has to be taken is to lay down the foundation of the company with the help of a mission and a
vision statement which will be followed by aims and objectives. Depending on all of these
factors the management of a business organisation formulates policies and devices rules which
will help the company reach its goal (Hill et al., 2014).
1.2 Back ground of the company: Wesfarmers
Established as Western Australian farmers' cooperative, in 1914, the organisation has
emerged as one of the largest conglomeratesin Australia. The company has a diversified product
line - there are a plethora of services that operate under the organisation for example: coaland
energy, several retail store formats home improvement; stationery items; department stores; ther
is also an industrials division with businesses in chemicals, fertilisers and industrial safety items.
Retail is one of the major sections of the brands.
Apart from being one of the largest organisation sit is also one of the largest employers of
Australia with around 220,000 employees the company also has shareholder base of
approximately 530,000(Wesfarmers.com.au, 2018).

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The goal of the company is to offer an agreeable return to the shareholders.
Aims and objective:
 To cater to the needs and requirements of the customers by providing them with products
and services which is of industry standard
 To ensure that the employees enjoy a work environment and culture which is rewarding
and fulfilling so that they can enjoy job satisfaction
 To contribute towards the growth and expansion of the company and in turn the economy
of the country
 To provide a sustainable future for the society in which the company is operating in
 To determine the responsibility the company has towards the environment
 To adhere to the principles and the values with which the organisation was situated and to
follow the global ethical norms within as well as outside the operations of the business
(Wesfarmers.com.au, 2018)
2. Internal and external business environment
Internal business environment of Wesfarmers can be analysed with the help of mckinsey 7s
framework,
The hard aspect
Strategy: diversification of the products and services are one of the major strategies that are
followed by the company. There are a number of brands that are operating within the company

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which are from various industries. The company focuses on the shareholders and the customers
as the most important stakeholder.
Structure: Because the company operates in various industries the structure of the subsidiary
organisation is also separated by the industry or the brand in which the company operates. For
example Cole’s supermarket has its own corporatestructure and culture, buton the other hand
Woolworths has its own structure.
Systems: Similarly, the company will have the system of operation based on the organisation
and the industry of operation(Wesfarmers.com.au, 2018).
The soft aspect
Skills: The skills of the people are based on the organisationand the industry of operation, the
employees of Kmart will have different skillsthan people working in the energy sector. The
company ensures that the employees of the organisation are in a healthy and safe environment
and they are also offered career development opportunities within the company.
Staff: The conglomerate has large workforces who are responsible for driving the day to day
business of the organisation (Alshaher, 2013).
Style: The organisation is led by Rob Scott who is designated as the managing director.He does
not follow the traditional view of a leader guiding the people and knowing the answer to the
entire question; rather he is a learner and he is aware of the dynamics of the business and invites
new ideas and views.
Shared Values: The company focuses their effort on the customers and the shareholders; hence
formulates all the decisions based on this principle(Alshaher, 2013).

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With the help of PEST Analysis the external environment of the company can be analyzed:
Political:The political environment of the home country Australia is stable and it encourages
business in the country and hence the rules and regulations are formulated in such a way that
such a conglomerate can operate with ease. The inflation rate, currency exchange rate and the
regulation regarding the license of Coal mining, liquor etc. are properly regulated by the
government policies of Australia. The regulations of the country help investors in the process of
business. On the downside, thestrategy of free trade may not facilitate the economic growth of
Wesfarmers as it ensures a large number of competition in the market as all these factors are also
true to other companies who are willing to operate in the same industry (Antonini 2016).
Economic:Rate of inflation, interest, exchangeetc. are some of the economic factors that can
significantly affect the development ofthe organization. Australia is a developed economy and
encourages trade and business in the country. Wesfarmers operates in various industries
therefore it contributes to several markets in the economy.
Social:The operations of the business which are offered by the company is based on the social
needs of the company. Therefore factors such as demographic, cultural trends, societal
perspectives etc. impact the business. Australian society is liberal and has a tone of acceptance
hence the diversified business line is accepted by the people easily (Chan et al. 2013).
Technological: Technological advances help an organisation to change and adapt to the
dynamics of the industries in which the subsidiaries are working. Wesfarmers is a conglomerate
which is required to fall back upon advanced technology in order to drive towards achieving the
objectives and the goals adhering to the ethics and principles(Wesfarmers.com.au, 2018).

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3.1 Business strategy
The strategy that the company can invest in order to improve the business operations is to
provide the organisationwith values that should be implemented in the business strategies of all
the subsidiaries.As a parent organization, it is important for the company to ensure that the
perspective of the business is in a streamline.
3.2 Functional strategy
The company has a central administrative body which looks after the operation of the
business from an administrative perspective. The company can implement technology to make
the process more streamlined. The process of can be developed and then the people can be
trained to use the technology.
3.3 Corporate strategy
The company can engage in mergers and acquisitions of consultancies as that is one of
the sectors that is not explored by the company much, but has potential in the Australian market.
A consultancy will not only expand the business but also will help in more employment (Gupta,
2013).
4.1 Competitive Advantage
Diversifications of products are the process by which the organisation incorporates the
process of gaining competitive advantage over the other organisation. Also based on the specific
organisation, the strategies keep changing. The focus of the company is providing the people
with a plethora of products and services with the help of subsidiary companies in reasonable
price but of high quality and facilities.

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4.2 Sustainability
The company has adapted to the concept of corporate social responsibility (CSR) and
ensures that they fulfil their responsibility towards the society and the environment along with
the business. The company works under four principles:
People: development; diversity and safety
Sourcing: suppliers and HR practices
Community: contribution towards the community and safety of the product
Environment: Climate change resilience as well as Waste and water use and lastly governance.
5. Leadership in the company
As discussed above, the leadership of Rob Scott is more of transformational where the
company is open to learning and changing according to the dynamics of the industry
environment. He believes in learning and gathering knowledge while guiding the people of the
organisation towards the achieving the goals of the organisation.
6. Organsiation structure
The organisation follows a hierarchy structure of management which can be described as
the matrix structure as there are several subsidiaries of the company. The structure is
complicated and has its own structure with in the operation.

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7. Conclusion
Wesfarmers has a complicated form of management where the subsidiaries form the base
of the foundation of the company. It is one of the largest conglomerates in Australia and also has
its operation in a plethora of industries. Wesfarmers play an important role in the economy of the
country as well as have contribution towards the society and the environment. The company
follows the triple bottom concept of business model and ensures that all the subsidiaries follow
the same.

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Reference list:
Alshaher, A. A. F. (2013). The McKinsey 7S model framework for e-learning system readiness
assessment. International Journal of Advances in Engineering & Technology, 6(5), 1948.
Antonini, C. (2016). An empirical analysis of environmental externalities incidence on financial
performance.
Chan, E., Yau, O. H., & Chan, R. (1990). Consumer sentiment in Australia: A replication and
cross-national comparison. European Journal of Marketing, 24(10), 44-58.
Gupta, A. (2013). Environmental and pest analysis: An approach to external business
environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an
integrated approach. Cengage Learning.
Wesfarmers.com.au. (2018). Annual report 2017. wesfarmers.com.au. Retrieved 19 March 2018,
from https://www.wesfarmers.com.au/docs/default-source/default-document-library/
2017-annual-report.pdf?sfvrsn=0
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., &Bamford, C. E. (2017). Strategic management
and business policy. pearson.