Strategic Analysis and Recommendations for Wesfarmers

The assignment requires an in-depth analysis of Wesfarmers' corporate strategy, focusing on evaluating their current performance and market position. Students will conduct a SWOT analysis to uncover internal strengths and weaknesses as well as external opportunities and threats. This task involves examining the company's organizational structure, strategic objectives, competitive landscape, and financial health. Based on these insights, students are expected to develop strategic recommendations aimed at enhancing Wesfarmers' overall performance and achieving long-term business goals. The assignment will culminate in a comprehensive report that synthesizes research findings and presents well-founded strategies for future growth and success.

Running head: PART A
Contemporary Business Issues: Part A
Name of the Student:
Name of the University:
Author’s Note:

1PART A
Part A
Executive Summary
Strategic management cycle examines the strategic issues of an organization and suggests
improved strategies for gaining high level of competitive advantage. It is an ongoing process of
creating, implementing and evaluating business decisions, which enables an organization
towards achieving organizational goals. The study has analyzed the strategic marketing
management of Wesfarmers. Wesfarmers is an Australian conglomerate providing services like
retail, coal mining, industrial and safety products, chemicals and fertilizers. As per the survey of
2016, Wesfarmers has become the largest Australian company based on its revenue with
AU$65.98 billion revenue.
The stakeholder analysis matrix has demonstrated that shareholders, customers, suppliers and
employees are the most important stakeholders of the organization. The study has analyzed its
external market though PESTLE and Porter’s Five Forces model. From this analysis, it has been
found that economic development and stable political condition of Australia has boosted the
business development of Wesfarmers. However, the organization faces tough competitive
pressure from Woolworths and Washington H. Soul Pattinson. From the competitor analysis, it
has been found that Wesfarmers has wide products and service ranges as compared to
Woolworths and Washington H. Soul Pattinson. The study has also assessed its internal market
though VRIO and SWOT analysis. From the internal analysis, it has been found that strong
brand image and worldwide distribution network has built sustained competitive advantage for
Wesfarmers. The study had analyzed the strategic options for Wesfarmers through Porter’s
Generic Model and Ansoff Matrix. From such analysis, it has been found that Wesfarmers
follows cost leadership strategy. The organization has high potential for wide geographical
expansion in international markets.

2PART A
Table of Contents
1.0 Introduction................................................................................................................................4
2.0 Sustainability.............................................................................................................................4
2.1 Stakeholder Analysis.............................................................................................................4
2.2 PESTEL Analysis..................................................................................................................6
3.0 Governance................................................................................................................................7
4.0 Strategy......................................................................................................................................7
4.1 External analysis....................................................................................................................7
4.1.1 Porters 5 Forces Analysis...............................................................................................7
4.1.2 Competitor and Customer/Market Analysis...................................................................9
4.2 Internal analysis...................................................................................................................10
4.2.1 Capabilities (VRIO)......................................................................................................10
4.3 SWOT Analysis...................................................................................................................11
4.4 Porters’ generic strategic choices for competitive advantage..............................................11
4.4.1 Cost Leadership............................................................................................................11
4.4.2 Differentiation...............................................................................................................12
4.4.3 Focus.............................................................................................................................12
4.5 Ansoff Matrix......................................................................................................................14
4.5.1 Market Penetration........................................................................................................14
4.5.2 Market Development....................................................................................................14
4.5.3 Product Development...................................................................................................14
4.5.4 Diversification..............................................................................................................14
5.0 Operations................................................................................................................................15
5.1 Recommendations................................................................................................................15

3PART A
5.2 Proposal of Recommendations through McKinsey 7S Framework....................................15
6.0 Conclusion...............................................................................................................................16
Reference List................................................................................................................................17

4PART A
1.0 Introduction
Strategic marketing defines the way in which an organization differentiates itself from its
competitors though capitalizing its strengths towards providing unique value to the customers
consistently. This study will assess the strategic marketing management of Wesfarmers.
Wesfarmers is an Australian conglomerate with interest of retail, fertilizers, chemicals, industrial
and safety products and coal mining (Wesfarmers.com.au 2017). The study will the stakeholders
of the organization though stakeholder-mapping analysis. The study will also analyze its external
market through PESTLE, Porter’s Five Force analysis and competitor analysis. The internal
market of the organization will be assessed through VRIO and SWOT analysis. Apart from that,
the study will also evaluate some strategic options to the organization through Porter’s Generic
Strategy and Ansoff matrix. Based on the strategic analysis, the study will also provide some
recommendation to Wesfarmers for fulfilling the expectation of the stakeholders. Furthermore,
the study will also apply McKinsey 7S Framework for implementing the suggested strategies.
2.0 Sustainability
2.1 Stakeholder Analysis
Stakeholder Mapping Analysis
Stakeholders Environmental Analysis
Impacting Stakeholders
Stakeholder Value Expectation Power
1-10
Interest
1-10
SHAREHOLDERS  Low interest rate and
low growth rate can
reduce return in
investment
 Decreasing growth
rate in conglomerate
industry
 Extreme industry
concentration in
Customer market
 Satisfactory and high
return on investment
 Acceptable and adequate
level of dividends
 Evidence of high growth
potential
6 9

5PART A
CUSTOMERS  Changing consumer
trends
 New low cost
providers in market
 Price sensitivity
 High brand image
 New product
development
 High quality products
9 8
EMPLOYEES  Demand for
extremely favorable
employment
condition
 Increasing demand
for ethical and
purposeful reputation
of the employers
 Adequate remuneration
and favorable
employment condition
 Flexible work structure
and career growth options
 Creation and
maintenance of flexible
work culture
5 9
SUPPLIERS  Unpredictable
international pricing
of raw materials
 Maintenance of
relationship with the
suppliers
 Reliable and regular
commercial supplier
agreement
 Development and
maintenance of long term
relationship and
partnership
4 7
COMMUNITY  High level of
community
expectation
 Miscommunication
with community
Inclusive and cohesive
community environment
Long-term commitment to the
community for its development
5 6
GOVERNMENT  Strict regulatory
reforms
 Changes in tax
reforms
Government expects
Wesfarmers to be good
corporate citizen
Expects adequate contribution
to country’s economy
8 8

6PART A
Table 1: Stakeholder Analysis of Wesfarmers
(Source: Missonier and Loufrani-Fedida 2014)

7PART A
LowInterestHigh
HighPowerLow Shareholders
Government
Customers
Community
Suppliers Employees
Keep Satisfied Manage Closely
Monitor Keep Informed
Figure: Stakeholder Analysis of Wesfarmers
(Source: Bettis et al. 2016)
2.2 PESTEL Analysis
PESTEL ANALYSIS OF WESFARMERS
POLITICAL
FACTOR
 Stable political condition of Australia develops business growth of
Wesfarmers
 Frequent change in government policy often hampers business
conditions
 Restrictive trading hours can limit the profit potentiality of
Wesfarmers
 Reduced tax rate is favorable for Wesfarmers
ECONOMICAL
FACTOR
 Growing economic condition of Australia ensures high level of
business return on investment
 Increased strength of Australian and New Zealand dollars ensure
business profits
 Higher wage cost of Australia increases business cost
 Frequent changes in inflation rate often hamper the pricing policy of
the organization

8PART A
SOCIAL FACTOR  Modern and sophisticated life of people leads them towards make
shopping from supermarkets and hypermarkets
 Inclination of people towards online shopping can be threats for
Wesfarmers
 Increased disposal income of customers can positive impact the
organization
 Increased demand for industrial safety in organizations has also
increased the demand of Wesfarmers
TECHNOLOGICAL
FACTOR
 Advanced technology in understanding customer preferences
 Usage of social and digital media for effective promotion
LEGAL FACTOR  Free trade regulation assists in international business
 Restriction in employment policy can hamper the business
ENVIRONMENTA
L FACTOR
 Wesfarmers needs to report its emission report under NGER act
 Restriction to reduce landfill waste by 6%
Table 1: PESTLE Analysis of Wesfarmers
(Source: Bettis et al. 2014)
3.0 Governance
According to Bergh et al. (2014), the board of Wesfarmers is elected by the shareholders
for observing their interest in long-term financial stability. The board of directors set the
governance framework for effectively governing the organization through effective rule and
regulations. The organization provides adequate return on investment to the shareholders.
Furthermore, the organization uses strict code of conducts for managing the behavior of the
organizational members (Vogel and Güttel 2013). The public policy and corporate reputation
council maintain the community relationship of the organization. Furthermore, the code of
business conduct ensures ethics compliance of the organization.

9PART A
4.0 Strategy
4.1 External analysis
4.1.1 Porters 5 Forces Analysis
PORTERS 5 FORCES ANALYSIS OF WESFARMERS
THREATS OF NEW
ENTRANTS
 Investment cost is quite high for new entrants in conglomerate
industry
 New low cost providers are threats to Wesfarmers
 It is quite tough for new entrants to beat the high established
conglomerate like Wesfarmers
 Low threats of new entrants
THREATS OF
SUBSTITUTE
 Face extreme pressure from the substitutes like grocery shops,
individual retailers, shops and others
 High quality of products facilitates the Wesfarmers to beat with the
substitutes
 Moderate threats from substitutes
COMPETITIVE
RIVALRY
 Tough competitive pressure from the competitors like Woolworths,
Washington H. Soul Pattinson and Best & Less
 Large market size facilitates in minimizing the competitive pressure
 High competitive from competitors
BARGAINING
POWER OF
SUPPLIERS
 Extreme dependency on Suppliers
 Powerful suppliers use their negotiating power on Wesfarmers
 High needs for quality products have increased the demand of unique
suppliers
 High bargaining power of Suppliers
BARGAINING
POWER OF
BUYERS
 Wide availability of retailers and other shops have increased the
bargaining power of buyers
 Strong price competition has increased the bargaining power of
buyers
 Moderate bargaining power buyers
Table 3: Porters 5 Forces Analysis of Wesfarmers

10PART A
(Source: Simon, Fischbach and Schoder 2014)
Figure 2: Porters 5 Forces Analysis of Wesfarmers
(Source: Gans and Ryall 2017)

11PART A
4.1.2 Competitor and Customer/Market Analysis
Factors Wesfarmers Woolworths Washington H. Soul Pattinson
Products and Services  Retail
 Chemical
 Coal mining
 Industrial and safety
products
 Fertilisers
 Supermarket
 Petrol
 Liquor
 General Merchandise
 Home Improvement
 Hotels and Gamling
 Coal Mining
 Bulk Handling
 Telecommunication Carrier
 Retailing pharmaceutical
products
 Fruit juice
Pricing and Cost Price is higher than Woolworths
but lower than Washington H.
Soul Pattinson
Price is lower than both
Wesfarmers and Washington H.
Soul Pattinson
Price is higher than Wesfarmers
and Woolworths
Distribution Channels  Hypermarket
 Supermarket
 Wholesale
 Retail Channels
 Supermarket
 Wholesale
 Retain channels
 Retail Channels
Market Share 45% (FY2015-FY2016) 39% (FY2015-FY2016) 34% (FY2015-FY2016)
Sales Revenue 68,099$M (FY2017) 53578 (FY2017) 55896 (FY2017)
Strength  Sales through online
channels
 High brand reputation
 Wide product portfolio
 High brand reputation
 Low cost of products
 Efficient Operation
 Reputed brand recognition
 Wide ranges of products
Weakness  Limited international
expansion
 Low skilled employees
 Limited in online sales
 Inadequate employee
 High price
 Lack of operational
efficiency
Target Customers  Target customers from
households to business
persons
 Mostly seeking customers,
who needs high quality
products
 Major customers are
benefit seeking
 Repeated customers to
purchase products
 Customers seeks high
product quality
 Customers seeking online
advantage to purchase
products
Table 4: Competitor and Customer Analysis of Wesfarmers
(Source: Greco, Cricelli and Grimaldi 2013)