Report: Analysis of Strategy Development Tools for Wesfarmers Company

This report provides an in-depth analysis of various strategy development tools and their practical application within the context of Wesfarmers, a leading Australian company. The report begins with an introduction to strategy development and its importance for organizational success, then moves ...Read More

COMPETITIVE STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Strategy development tools and their implementation ....................................................................1
1. SWOT analysis........................................................................................................................1
2. PESTLE...................................................................................................................................2
3. Generic strategy development tool .........................................................................................3
4. Ansoff strategic tool................................................................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES ...............................................................................................................................6

INTRODUCTION
Strategy development is one of the vital aspect for success of organisation as greater
extent of success depends on effectiveness of strategies (Fleisher and Bensoussan, 2015). The
report will analyse various strategy development tools with reference to Wesfarmers. This
organisation is one of the leading organisation of Australia and deals in retailing, safety and
industrial products as well as chemicals and fertilisers.
Strategy development tools and their implementation
Strategy development tools helps organisation to formulate strategies with minimum risk
level and maximum possibility of increasing profits. These tools are based on principle to
analyse the existing resources of organisation and rapidly changing market behaviour so that
organisation can use its available resources with their optimized utilization. These tools use
various methods to analyse the factors which could affect organisational goals and methods to
execute them (Wheelen and et.al., 2017). Wesfarmers can use following strategy development
tools for effectively formulating and managing its business strategies:
1. SWOT analysis
This strategy development tool helps Wesfarmers to analyse its internal factors such as its
strength, opportunities, possible threats which organisation may suffer and its weaknesses. This
analysis helps organisation to develop strategies which can use its strength with suitable planning
to avoid threats and to explore huge opportunities. The biggest strength of Wesfarmers is that it
is well established organisation in New Zealand and Australia thus its innovative strategies must
ensure that they do not weaken the brand value of organisation in these regions. The organisation
develops strategies which aims at sustaining its high brand value and customer retention. The
organisation employs highly skilled human resources for sustaining its large communication
network (Rangkuti, 2015). In order to sustain its brand value and growth organisation must
identify its weakness so that it can retain its success for long term Wesfarmers is diversified
organisation which operates in various product lines such as retail, chemical and industrial
products. Thus, it is difficult to maintain the same profit and quality in all segments. Thus, when
consumers have negative response towards any product range then without trying other service
they develop negative image and it affects the overall performance of organisation. The
organisation has vast opportunities in retail sector by operating via online services. Wesfarmers
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must develop strategies which could extract this opportunity so that organisation can address
large customer segment all over the world. It will not only increase the success of organisation
but will also make it recognizable at global level. Despite great success the organisation also
suffers from various threats. Wesfarmers must follow effective strategies by analysing its
competitive threat which can give strong competition to organisation especially in retail segment.
If Wesfarmers will not analyse these threats then it will become difficult for the organisation to
sustain its existence.
2. PESTLE
PESTLE strategic development tool is essential for organisation so that it can build
strategies after evaluating the impact of external factors such as political, technical, legal and
environmental factors. The political factors affect the methods in which strategies are
implemented by organisation. Wesfarmers develops its strategies by considering political factors
such as taxation systems, trade regulations related to food retailing, pricing and wages
regulations which directly affects the operating cost and benefits of organisation. The prior
consideration of these factors helps Wesfarmers to achieve its goals without barriers. The
economic stability of Australia and growth rate of country will directly affect the organisation.
Thus, organisational strategies of Wesfarmers must be according to economic trends of nation
and may require modification with variation in country's economy. It also plays key role in
affecting the structure of strategies related to wages and operational costs (Anton, 2015). The
product related strategies of organisation must be in accordance with social and cultural factors
because product acceptance tendency of consumers is affected by their social environmental.
Wesfarmers must emphasis on promotional and advertising strategies similar to the cultural
values otherwise they will not create much impact as required by organisation. With changing
technologies Wesfarmers must transform its strategies otherwise it will become difficult for
organisation to understand preferences of customers. For instance, the latest trends of online
shopping and card payments is required to be included in strategies of Wesfarmers for attracting
more customers. It is essential for the organisation to follow legal implications in its operational
and functional activities. The failure to inclusion of these policies within strategies can lead to
legal troubles and will have adverse impact on brand value (Fleisher and Bensoussan, 2015). The
legal implications may include privacy acts, quality and safety standards as well as employment
related regulations. Wesfarmers can increase its brand value by fulfilling its social and
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environmental responsibilities. This can be achieved by organisation by providing separate
segment for waste reduction, environment protection acts, charity events in its organisational
strategies as well as by participating in social events. It will also help organisation to sustain its
growth against the future challenges which will arrive due to changing climate and environment.
3. Generic strategy development tool
In order to gain competitive benefits, it is essential for Wesfarmers to analyse the factors
which could force customers to prefer Wesfarmers over others. The generic strategy tool,
developed by Michael Porter analyse factors which can be used to achieve competitive
advantage. One of the most important generic factor is the cost leadership strategy. The prices
and quality are ultimate factors which are considered by consumers. Thus, Wesfarmers must
analyse the market trends and methods and develop strategies so that it can reduce operating
costs and can increase its sales and profits. The strategies like discounts, cash backs, gift
vouchers can gain more attention of customers. In order to address huge target audience
organisation can also follow differentiation strategy of generic tools. With this strategy tool
Wesfarmers can ensure that its products are easily differentiable from that of its other
competitors. It is essential for the organisation to conduct market research and implement
innovations according to expectations and requirements of consumers (Osiyevskyy and Dewald,
2015). The innovation with quality standards will help organisation to retain customers for long
term and thus will increase customer loyalty towards brand. Wesfarmers is one of the leading
organisation which operates large market segment thus it will be beneficial for organisation to
develop strategies by considering specific focus strategies on selected region as each market
segment will have different customer expectation and requirements (Theaker, 2017).
4. Ansoff strategic tool
This strategy tool helps organisation to develop strategies which stimulates the future
growth. The most important factor in this strategy is market penetration strategy. With this
strategy Wesfarmers aims at selling more products to its existing market and customers. This can
be achieved by reducing prices and improving the promotional activities. Such strategies will
help organisation to grow in the existing market with its customers (Yin, 2016). The product
development strategies will help organisation to gain competitive advantage over other
organisations. Wesfarmers must develop strategies to conduct market researches so that it can
develop innovations in products for attracting and retaining its targeted audience. Organisation
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can also accomplish this by collaborating with other brands. Apart from product development
Wesfarmers can also employ market development strategy. With increasing participation of
technology, it is possible for organisation to expand its target market globally without
considering the geographical boundaries. Global exposure can also provide resources at lower
cost while generating more profits at the same time (Wesfarmers' two-speed investment strategy,
2015). Another tool of Ansoff strategy is diversification which will help organisation to enhance
its profits and scope but this strategy involves great risk but it can be achieved by Wesfarmers
through combination of both market and product development. It will help organisation to ensure
the future growth.
CONCLUSION
From the report it can be concluded that strategic development tools are essential for
business to achieve its goals. The report has explained some of these tools which on effective
implementation helps organisation to sustain its position in competitive market. Thus, it can be
concluded from the report that organisations must employ these tools before implementing any
strategy.
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REFERENCES
Books and Journals
Anton, R., 2015. An Integrated Strategy Framework (ISF) for Combining Porter's 5-Forces,
Diamond, PESTEL, and SWOT Analysis.
Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective
application of new and classic methods. FT Press.
Osiyevskyy, O. and Dewald, J., 2015. Explorative versus exploitative business model change:
the cognitive antecedents of firm‐level responses to disruptive innovation.Strategic
Entrepreneurship Journal. 9(1). pp.58-78.
Rangkuti, F., 2015. SWOT Analysis: Dissecting Business Case Technique. Publisher PT
Gramedia Pustaka Utama. Jakarta.
Theaker, A., 2017. What is public relations? In The Public Relations Strategic Toolkit (pp. 17-
27). Routledge.
Wheelen, T.L., Hunger, J.D., and et.al., 2017. Strategic management and business policy.
Pearson.
Yin, N., 2016. Application of AHP-Ansoff matrix analysis in business diversification: The case
of Evergrande Group. InMATEC Web of Conferences (Vol. 44, p. 01006). EDP Sciences.
Online
Wesfarmers' two-speed investment strategy, 2015 [Online] Accessed through
<https://www.afr.com/business/retail/fmcg/wesfarmers-twospeed-investment-strategy-
20150520-gh5tob>
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