Strategic Management Analysis: A Report on Wesfarmers' Operations

This report offers a comprehensive analysis of Wesfarmers' strategic management, focusing on its business operations and strategic planning. It begins with an introduction to strategic management and its importance, followed by a detailed examination of Wesfarmers, an Australian-based company. The core of the report involves applying strategic analysis tools, including SWOT (Strengths, Weaknesses, Opportunities, Threats), PESTLE (Political, Economic, Sociological, Technological, Legal, Environmental), and SMART (Specific, Measurable, Achievable, Realistic, Timely) analyses to assess the company's internal and external environments. The SWOT analysis evaluates Wesfarmers' strengths, such as its diversified business and aggressive management, and weaknesses, like its reliance on the Australian market. The PESTLE analysis examines external factors impacting the company, including political regulations, economic conditions, and technological advancements. Finally, the SMART analysis assesses the company's specific goals and their achievability. The report concludes with an overview of the company's performance and recommendations for enhancing its strategic management plan.

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Running head: Strategic management
Strategic management- Wesfarmers

Strategic management
Table of Contents
Introduction......................................................................................................................................3
Conclusion.....................................................................................................................................12
Reference list.................................................................................................................................13
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Introduction
Strategic management refers critically to the implementation and development of a certain plan
for improvising business operations. A business organization must have its own vision and
mission which will help to analyze a perfect plan and strategy for the business. In order to form
an absolute strategic management, a company needs to align its objectives with its mission and
vision. In this assignment, the learner has critically identified the strategic management process
for the company Wesfarmers with complete detailed information about its business. Based on the
identification and theories that are applied towards the success of the company, few
recommendations have also been provided for enhancing the strategic management plan of the
company Wesfarmers. The learner has also provided theories that have raised the standard of the
company for developing its strategic management plan. The strategic analyzing tools SWOT
analysis, PESTLE analysis, and SMART analysis have provided the relevant information about
the management structure and the strategies that are being used by the company Wesfarmers. By
the end of the assignment, the learner will be able to assess the complete scenario both internal
and external environment of the company Wesfarmers.
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Wesfarmers Limited is an Australian based company. The company is headquartered in Perth,
Western Australia. Its retail business is typically based in the area of New Zealand and Australia
serving safety products, fertilizers, coal mining and chemicals. In the fiscal year 2016, the
company earned revenue of around AU$65.98 billion while overtaking BHP Billiton and
Woolworths. The company has around 205,000 employees and is the largest private employer in
the country Australia. The strategic management plan followed by the company and Richard
Goyder, CEO of the company has assisted it to gain a competitive advantage as well as huge
profitability (David, 2011). The employees of the company critically follow the mission and
vision of the company while fulfilling its objective. For analyzing the strategic management of
Wesfarmers, three analyzing tools have been used. The analyzing tools are SWOT analysis
which critically reflects the internal condition, PESTLE analysis that reflects the external
condition and SMART analysis.
Wesfarmers SWOT analysis-
Strength
Wesfarmers is an expanded enterprise. It's assorted organizations, primarily contain Resources,
Coles, Target, vitality, and different exercises. Wesfarmers' management system is focused
towards contributing towards newer field. The reason is depending entirely on its profitability
during business downturn. It is listed among the enhanced organization in the country Australia.
Wesfarmers is an aggressive organization (Freeman, 2010). The core reason behind it is to offer
more advantages to its investors. Wesfarmers considers the advancement of the company in light
of the help of investors will help the company to attract around 500,000 investors for buying its
shares. Moreover, Wesfarmers focuses on the welfares of its management as well.
Weaknesses
Wesfarmers Limited's item and administration cover assets, vitality and numerous different
circles, so Wesfarmers has considerably fewer amount of rivalry than different organizations that
work in a single zone. Wesfarmers has a solid nearness in the country Australia and most of it
business operates in the local market of Australia. Therefore, as a huge scale industry, it faces
solid business hazard (Goetsch & Davis, 2014).
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Opportunities
Wesfarmers does considerably well in manipulating openings. In the business year 2016,
Wesfarmers bought the company Cole retail business group by investing more than $21 million.
Later, due to this the company became one of the high ranking retail business groups in
Australia. With respect to the advancement of the system, Wesfarmers is active in evolving its
web based shopping platform like Coles online. Wesfarmers has the chance to build up its
business globally. The needs and demand of people are increasing rapidly which Wesfarmers
needs to focus on and must develop its business worldwide such as the country like India and
South America. Wesfarmers Energy playing solid concentrates on the assurance of the
environment. The conduct of ecological insurance is assured in terms of the interest of the
public, so Wesfarmers is resolved to build up the misuse of practical vitality (Hesterly & Barney,
2010). By the year 2018, Wesfarmers intends to fabricate solar power station which has the
volume to create 600 kilowatts control through the participation with the South Australian
government.
Threats
Wesfarmers faces solid rivalry in terms against the retail business. Wesfarmers claims a gigantic
piece of the pie in Australia's retail, along these lines. This has a huge impact on the retail
business of Wesfarmers which needs to be monitor eventually. Huge number of investors and
businesses make Wesfarmers businesses tough to manage and also this might lead to
unemployment which is a potential threat to the company (Hill, Jones & Schilling, 2014). The
primary business of Wesfarmers is its retail business in the target market and the company solely
depends on it. Wesfarmers overlooks the effect of minimum effort towards other country and it
might minimize the cost of generation. In future it is estimated that this company will have large
number of rivals due to its low focus towards the segments of few areas that should be
comsidered.
Financial and strategic SWOT analysis specifically helps to analyze the competitive positioning
and market analysis of the company Wesfarmers. The management of the company is critically
influenced by the strengths and opportunities the company holds in the competitive market. The
weaknesses and threats analyzed are critically accessed by the managers of the company. This
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SWOT analysis of Wesfarmers highlights several numbers of external as well as internal
strategic factors which the managers should include during strategic development. For instance,
the weaknesses of having its primary market only in the country of Australia are hazardous to the
company and also the trending generation focuses mainly on advanced technology (Kvint, 2010).
This, in turn, makes the company vulnerable in the local market as they critically influence
business performance as well as stability. However, the diversified business of Wesfarmers helps
the company to stay ahead in the market. The managers are efficient to understand the internal as
well as external factors which affect the growth of the business. Managers of the company are
focusing on expanding its business worldwide for enhancing their stability and to raise their
profit margin as well (Le Masson, Weil & Hatchuel, 2010). They also try to focus on its
strengths largely on its economic scale for better business operations and to stay ahead in the
market of Australia.
Wesfarmers PESTLE analysis-
Political factors
The government of Australia build up an administrative system of mining and also it can form
several laws and regulations that may hamper the sustainability of the company. The condition of
mining organizations is strictly maintained by the authorization of the government (Thompson,
& Martin, 2010). In terms of Wesfarmers, coal mining is a critical segment, and an essential
segment in various states. Therefore, it would crucially affect the system which requires mine
management to focus on a different rule which would benefit the company.
Economic factors
In Australia, the service sector is one of the important and quickest developing area and
overcome 72.1 per cent GDP of Australia. The most noteworthy esteem benefit in the business is
funding and insurance, representing 8 per cent of GDP (Wheelen & Hunger, 2011). In terms of
Wesfarmers' insurance segment, this is an expansive potential market and ideal conditions.
Sociological factors
In Australia, maximum number of families purchases life's supplies once every week ，and it is
adequate for seven days. Therefore, they are more inspired by shopping at a single place which
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will have every utility. In the present era of technological advancement, customers prefer online
shopping rather than retail shopping (Audebrand, 2010). Therefore, it is ideal towards
Wesfarmers to deal with its retail chains and super markets. Focusing on digital marketing is also
essential for the managers of the company for enhancing its business operations worldwide.
Technological factors
Australia is one of the world’s foremost mining countries considered as a world leader in terms
of resources and mining industry. It combines equipment, latest technology and products and
services in order to create highest production efficiency (Boyne & Walker, 2010). Wesfarmers
diversified business operation is an essential guarantee towards the development of enterprise
which comprises of good technical foundation in terms of fertilizers, mining, and chemicals.
Legal factors
The legitimate framework is very much stable, that incorporates labor law, normal assets law as
well as the scope of the business law. As a vast business organization, these laws make
Wesfarmers' administration of essential criteria.
Environmental factors
Australia is a country that hugely supports sustainable environment and also the organizations
associated with the country must focus towards the development of sustainable environment
(Bryson, Berry & Yang, 2010). Therefore, while keeping this point in mind Wesfarmers focuses
on the methods that would help to preserve the existence of ecological environment. It has also
enhanced its business operations like product packaging and recycling for saving the resources of
the environment.
The PESTLE analysis has critically reflected several threats and opportunities which Wesfarmers
are focusing by prioritizing its strategies for global expansion as well as growth around the
world. The external factor of rising environmental awareness among customers can be turned out
to be a positive effect on Wesfarmers (CHUANG & Liao, 2010). It is because the management
of Wesfarmers is planning to launch solar powers station and also changing the packaging style
of the company which will have a direct impact on the consumer market. Hence, it is evident that
managers are aware of the external environment and tries to serve the customers with quality
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product and services. The management of the company is neutral which helps the company to
attain a healthy environment. They are focusing on their leadership style and also involves highly
on satisfying the needs and demands on the employees. This, in turn, helps the company to
complete its goal in the given interval of time. The competitors of Wesfarmers such as BHP
Billiton are a significant threat to the company. Therefore, the managers take those steps which
will help the company to stay ahead in the market. As this kind of company, as well as local
companies, are potential threats to the company Wesfarmers.
Wesfarmers SMART analysis-
Specific
Wesfarmers provides diversified business operations and the main purpose behind it is to offer a
satisfactory return towards its shareholders. At present, Wesfarmers has already acquired K-mart,
Coles, and Target (Cinquini & Tenucci, 2010). During this year, it has been estimated that the
sale of Cole supermarket has been raised by 5 per cent as well as $3 million sales have been
established from Cole’s food. Hence, it is evident that Wesfarmers is focusing in promoting its
business worldwide by grabbing favorable opportunities.
Measurable
By the end of the year, it is expected that the price of the export demand will gradually decrease
which in turn will decrease the earnings. However, the stock market of Wesfarmers is very much
stable, as well as the brand of Wesfarmers, is high. Therefore, each strategic plans are
measurable.
Achievable
In the year 2016, it was estimated that Wesfarmers will be able to earn revenue of $2.5 billion.
Also, it has been noticed that there was a growth of 14.5 per cent in its profit margin. Therefore,
Wesfarmers management is efficient enough to form a plan that can be achievable.
Realistic
The strategic management plan of 5-year bond for raising its profit margin by 20 per cent seems
to be impossible. However, what they offer can make this number realistic (Clarke & Fuller,
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2010). As it has been evident for the financial year 2016, the goals that have been set up the
company has been completed with the given interval of time.
Timely
Wesfarmers focuses primarily on the needs of its customers by offering them quality product and
services (Elms et al. 2010). Even it treats its professional customers with quality services which
are assured to be completed by the end of this year when Wesfarmers chemical and fertilizers
will incorporate in this strategy.
The SMART analysis is a suggestion towards the managers of Wesfarmers which critically
shows how they evaluated their net expenditure by reducing it in each level. The SMART
analysis influences the managerial role in the organization for making their objectives distinctive
and assists the company to complete their each goal. The managers of Wesfarmers focus on
offering quality product and services to its customers and clients which have helped to achieve a
great reputation in the competitive market (Haynes & Hillman, 2010). Even for showing the
public, they have reduced their use of harmful chemical and gases which in turns reduces the
level of carbon dioxide emission. This, in turn, helps to create a sustainable environment and
help the company to gain a competitive advantage as well. Therefore, the SMART analysis has
assisted to analyze that the employees of the company are dedicated towards their work and also
assist them to conduct their task while considering environmental as well as internal factors. The
management of the company strategically focuses on satisfying the needs of the customers while
providing a suitable and stimulating environment for the employees.
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Recommendation
A proper digital marketing plan has to be made for globalizing its product and services
worldwide. This, in turn, will help the company to enhance its visibility in the competitive
market. The organization Wesfarmers needs to build up a proper online promoting plan, which
will enable the association to build up a decent steady and working methodology. Towards
building up a suitable digital promoting plan, the group needs to concentrate on the utilization of
various types of web-based social networking devices. In the period of advanced technology,
people focus mainly on online marketing as well as digital innovation (Kim, 2010). Therefore,
Wesfarmers must have the targets of the business towards developing web-based social
networking instruments as it will significantly act as the perfect stage towards the advancement
of a legitimate ad and limited time techniques. Wesfarmers needs to apply a dynamic use of
online networking instruments towards the elaboration of a decent digitalized promoting.
Wesfarmers must also focus on developing a suitable corporate social responsibility. If a certain
portion of the net profit is contributed in terms of corporate social responsibility to the backward
regions of the country Australia, then it will certainly benefit the company as it will significantly
act as a source of advertising (Leiponen & Helfat, 2010). This, in turn, will help the company to
gain the attention of potential customers as well as professional clients.
The thought towards creating proper pricing strategies will enable Wesfarmers to concentrate on
the acquiring choices of the clients. It is especially commonplace the pricing choice immensely
influences the buying behavior of the clients. The point of this specific task is to persuade items
to the clients. The total advertise structure is the general market structure where there the buying
behavior of the clients are highly differentiated (Lucas, 2010). If the association needs to build
up a legitimate client base, Wesfarmers needs to build up suitable and solid pricing
methodologies which will assess quality product at reasonable price for the ideal customers.
The organization needs to evaluate an appropriate situational analyzing tool, as the use of the
marketing blend is insufficient for the association to advance the new services and products. It is
the essential task of the management to check both the inward condition and in addition the
outside conditions of the market (Makri, Hitt & Lane, 2010). The situational analyzing tool such
as SWOT Analysis and PESTLE Analysis will assist the company in gaining better stability in
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the target market. Hence, it needs to be conducted after every certain interval of time. The
implication of this specific promoting tool will enable Wesfarmers to build up a suitable
atmosphere both internally as well as externally. It is particularly vital to get distinctive
information about the status of the market, which will control the association to finish up the
request of the item, which the company dispatches.
The product quality must be ensured by the 3rd party. In this specific situation, the organization
should utilize the ISO standard for guaranteeing the item quality (Noland & Phillips, 2010). The
ISO affirmed items will have the capacity to pull in more clients towards its quality products and
administrations. The organization must get the standard testament from the International
Organization for Standardization.
So as to guarantee the social improvement, the organization must take an interest in the social
advancement programs together with the nearby social laborer associations. They should support
the diversions and social or social projects. Keeping in mind the end goal to enhance the natural
improvement, the organization should utilize the various strategies (Poister, 2010). In the
generation methodology, they must guarantee the most reduced carbon discharge. This should be
possible by utilizing the creative specialized types of gear.
In order to successfully rise in the market, the company must focus on exploring the other parts
of the world for expanding its business worldwide. This can only be done if the company focus
on its internal strategies and make an effective plan which will benefit the company as well as
the workers working for the company. Strategic management is necessary for every company to
establish a solid background as well as to improvise the business operations (Zhou & Wu, 2010).
So far, Wesfarmers is excellent in its strategic management process. However, there are few
factors that have to be considered as well as solved for better productivity as well as profitability.
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Conclusion
In this assignment, the learner has elaborately described the strategic management of the
company Wesfarmers. The learner has used three theoretical concepts for analyzing the strategic
management. These are SWOT analysis, PESTLE analysis, and SMART analysis. After
evaluating the theories, it has been observed that Wesfarmers has a strong hold in the market of
Australia. However, there are factors like government regulations, online shopping and other
factors which affect the profitability of the company Wesfarmers. If the company holds on to its
position and expand its business operation worldwide it can gain a more competitive advantage.
Creating a sustainable environment is also a part of a strategic management process which this
company has to accomplish for better growth in the future. The company must also focus on its
internal management group by following the recommendations that have been provided for
managing the external environment as well. The company Wesfarmers needs to work on their
strategic management plan for making their business operations more effective as well as to stay
ahead in the competitive market. Globalizing its services and products is one of the biggest steps
that the company must focus right now for enhancing the stability of the business. This, in turn,
will critically help the company to stay ahead in the competitive market.
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