A Business Analysis Report On Wesfarmers Limited

Task Specification

About the company

Wesfarmers Limited is a conglomerate which has its operations in Australia. The headquarter of the organization is located in Perth, Western Australia. The organization mainly has its business interests in the countries including, New Zealand and Australia. The different industries in which the company has its operations include, chemicals, retail, fertilisers, safety and industrial products and coal mining. Wesfarmers has also been able to acquire the topmost position in Australia based on its amounts of revenues in the year 2016 (Wesfarmers.com.au., 2018).

The organization thereby overtook the large companies like, BHP Billiton and Woolworths which operate in Australia. Wesfarmers is also considered to be the biggest private employers in the country with more than 200,000 employees working in different operating areas. The organization was thereby established in the year 1914 as the co-operative which was supposed to provide different types of merchandise and services to the farmers in Western Australia (Wesfarmers.com.au., 2018).

Wesfarmers has acquired the topmost position in Australian market based on the revenues which have been gained in the year 2016. The company has also developed a new strategy in the year 2018 which is based on the acquisition required for effective internal growth. The CEO of the organization had thereby decided to unveil the plans which had been made by the company based on high levels of optimism. The new strategy based on business of Wesfarmers was thereby based on the acquisition based activities. The business based operations of the organization are based on four major divisions which are related to different types of industries (Barros, Hernangómez & Martin-Cruz, 2016).

The four major divisions of the company thereby include, Coles, which is liquor, food, convenience and fuel based retailer. The second business division of the company is based on outdoor living, home improvement and office products based retailer. The third business division of the company is Target which is a housewares and clothing based retailer. The fourth business division is Kmart which is a discounted department based store (Daspit et al., 2017).

Wesfarmers had taken the decision of de-merging Coles from its operations in the year 2018. Coles would thereby operate as an independent organization from the same year. The retail division of Wesfarmers which operates under Coles has faced a decline of 13.5% in the year 2017. However, the year had proved to be quite profitable for the other divisions of the conglomerate like, Target and Kmart. The profitability levels of Kmart had increased by 144 million Dollars. The overall performance of the conglomerate had thereby gone through many ups and downs which further led to some major losses and changes in the strategies as well (Demir, Wennberg & McKelvie, 2017).

According to Durand, Grant and Madsen (2017), the major issues which are being faced by Wesfarmers are related to the economic downturn in the market. The downturn which has been recently experienced by Australian economy has also affected the operations of Wesfarmers and its profitability levels. The price based war which is faced by Wesfarmers in the industry has affected the levels of profitability of the company. The conglomerate has experienced a jump in the share price with the help of proper operations of the different companies which form an important part. The effective management of the company operations has proved to be a major support for increase in the revenue levels of Wesfarmers. The cyclical nature of Australian economy has acted as a major barrier to increase in profitability of Wesfarmers.

Part 1: Current organizational position

The mission which has been developed by the company is related to the best practice which is formed based on the ethical considerations. The organization thereby aims to deliver levels of returns to shareholders. Wesfarmers has also formed an effective reputation based on the areas of ethical practices. The vision of the organization is thereby based on value which is provided to the employees, customers, community partners and suppliers. The effective development of the economy is also considered to be a major concern which is related to the vision of Wesfarmers (Dyer et al., 2015).

Macro-environment factors affecting the organization

As discussed by Engert, Rauter and Baumgartner (2016), the macro-environment in which Wesfarmers has its operations can be analysed with the help of the PEST framework. The four different types of factors which are able to play a key role in the effective operations of Wesfarmers and other companies operating under the organization are political factors, economic situation, social condition and technological factors.

• Political factors – The political factors are based on the extent up to which government of the country is able to influence the operations of different companies with the help of taxes and the legal regulations as well. The industry of coal mining is considered to be a major department of the conglomerate which is affected by the federal government. The major focus of government policies of Australia is based on the trade protectionism based activities (Ethiraj, Gambardella & Helfat, 2018).
• Economic factors – The major economic factors of Australia are also able to affect the growth rates of Wesfarmers. The service based sector is able to play a major role in the Australian market. The two major sectors of the country which are able to affect Wesfarmers are the service and the financial sector. Wesfarmers is thereby able to enjoy an effective position in market of Australia (Frynas & Mellahi, 2015).
• Social factors – Social environment of the country is able to play a key role in future growth of the organization. The different social factors which can have an immense effect on Wesfarmers include, the cultural trends, population analytics and demographics. The reliance of Australians on the one-step shopping method can affect the revenues of Wesfarmers. The departmental store based chains and supermarkets are an important part of the shopping method of Australian people (Hill, Jones & Schilling, 2014).
• Technological factors – The sustainable technologies play a major role in conducting effective business activities. Wesfarmers has used many progressive technologies for the production based activities. The adoption of emission coal based technology was an important step which was taken by Wesfarmers in order to sustain the business activities. The major areas in which Wesfarmers has been able to implement the technologies mainly include, energy, chemicals, coal mining and production of fertilisers (Hubbard, Rice & Galvin, 2014).

Wesfarmers Limited is an organization which has achieved the topmost rank among around 2000 organizations in Australia. The most important part of income was generated from the Supermarkets and Grocery Stores in the Australian industry. The organization had been able to generate huge revenues in the year 2018 with more than 200,000 employees all over Australia. Wesfarmers has been operating a diverse portfolio of different businesses which operate in hardware, supermarket, department stores, energy distribution, chemicals, safety and industrial products, coal mining (Ibisworld.com.au., 2018). The different industries in Wesfarmers has its business operations mainly include, retail industry which is based on the operations of different organizations including, Coles, Kmart and Target. The company faces huge price based wars in this industry. The chemical, fertiliser and energy based industry is also able to affect the operations of Wesfarmers.

The major competitors of Wesfarmers in the Australian market are Woolworths Limited and Metcash Limited. Woolworths has provided tough competition to Wesfarmers based on the prices of products and services which are offered to the consumers. Woolworths further manages many liquor based stores of Dan Murphy and BWS. On the other hand, Metcash Limited mainly specializes in different items including booze and food. Metcash is a wholesale based grocery supplier and distributor of liquor. The growth related activities of Wesfarmers are also affected by the prices (Karadag, 2015).

The stakeholders of Wesfarmers have a major impact on the effective operations of the company. The feedback which is provided by the stakeholders plays a key role in decision making process of the company. The various stakeholders of Wesfarmers mainly include the employees, customers, suppliers, shareholders, government, media, community, non-government organizations. The diverse stakeholders are able to affect the profitability based levels of the organization and revenues of Wesfarmers. The consumers, who are major stakeholders of the company expect effective products and services at affordable prices (Kasemsap, 2014).

According to Meyer, Neck and Meeks (2017), the major objective behind the operations of Wesfarmers is based on providing satisfactory levels of returns to the shareholders with the help of exceptional management capabilities and financial discipline as well. The core values of the company are related to the openness, integrity, entrepreneurial spirit and accountability. The Code of Conduct which has been set by the company are based on the ways by which Wesfarmers is able to operate in different countries. The decisions and the actions which are taken by the Board of the organization are thereby consistent with the core values and policies which have been set by the management of Wesfarmers.

Part 2: Summary of the external environment

The major strategic position of Wesfarmers is based on the ways by which the growth of the company can be ensured. The organization thereby plans to increase the levels of investment in retail business sector of its operations which works under the name of Coles. The pricing wars which take place between the two large organizations in the industry Woolworths and Coles have affected the strategic position of the company. The organization also works on the strategy of increasing the support provided to the Australian suppliers (Michael, Storey & Thomas, 2017).

Strategic capabilities of Wesfarmers 

The primary objectives of the Wesfarmers Group are mainly based on four different strategies which include the following,

• Strengthening the existing business activities with the help of proper operational excellence and satisfaction of the needs of consumers.
• Securing the different growth based opportunities with the help of proper entrepreneurial initiatives.
• Renewing the portfolios with the help of transactions which are able to add value.
• Ensuring the levels of sustainability with the help of effective long-term based management (Morschett, Schramm-Klein & Zentes, 2015).  

Wesfarmers has faced some major challenges which are based on the supermarket business which has been done by Coles which operates the retail based division. The profit based levels of the company has also gone down in a huge manner in the year 2015. The coal division of the organization has also faced some challenges due to the changes which have taken place in the prices of coal. The changes in weather can also be considered to be a major reason behind the gaps which have been experienced in the strategy of Wesfarmers (Sakas, Vlachos & Nasiopoulos, 2014).

The strategic position which has been developed by the company in the industry is mainly based on the core values of Wesfarmers. The organization has however faced some major levels of issues based on the strategic gaps and has faced high levels of losses in different parts of its operations which are based in various industries (Simon, Fischbach & Schoder, 2014).

Analysis of the internal and external gaps in Wesfarmers 

As discussed by Steinbach et al. (2017), the internal and external gaps in the operations of Wesfarmers are based on the strengths, weaknesses, opportunities and threats which are faced by the company. The SWOT framework can be used for the analysis of these gaps.

Strengths – Wesfarmers has been enjoying a diverse market and also operates a diverse range of businesses which include, Target, Coles and other organizations. The company is considered to hold the highest level of reputation in entire world. An exceptionally high rate of growth is enjoyed by the company in the market.

Weaknesses – The organization has developed a strong level of presence in the Australian market. The capacity of profit making of the organization is however not quite strong. The market in which Wesfarmers operates is highly competitive in nature. The financial crisis faced by Australia has also proved to be a major weakness of Wesfarmers (Theaustralian.com.au., 2018).

Opportunities – The global expansion based activities will prove to be a major opportunity for Wesfarmers. The company can further increase the levels of profitability and revenues of Wesfarmers. The increasing levels of income of the consumers are considered to be effective opportunities for the company (Trigeorgis & Reuer, 2017).

Threats – The increasing costs of the raw materials have affected the levels of operations of Wesfarmers. The high levels of competitiveness in the industry are also considered to be major threats to the operations of Wesfarmers (Wheelen et al., 2017).

Part 3: Analysis of the organizations capabilities

Reaffirmation of existing business strategy 

The business strategy of Wesfarmers has always been based on providing the best levels of returns to its shareholders. The most important part of the mission statement of Wesfarmers is also to provide return to the shareholders. The levels of discipline which are maintained in the business culture are considered to be important in this case. The changes which can be made in the business strategy of Wesfarmers is based on the levels of importance the organization can provide to the customers (News.com.au, 2018).

The business strategy which can be followed by the company in the future is based on the support which is provided by the different departments. The human resource based department of the organization will be able to play a key role in bringing the changes in strategies. The operational strategy which can be implemented by Wesfarmers is based on increasing the levels of importance based on the retail businesses (Trigeorgis & Reuer, 2017).

The major reason behind the selection of the strategy is related to the increase in revenues and profitability levels of the organization. The development of competitive advantage and maintenance of its position in the industry is also considered to be important reason for the implementation of these strategies (Simon, Fischbach & Schoder, 2014).

Major actions to be taken by operational or functional area

The actions which needs to be taken by the different departments of the organization are based on proper implementation of the business and operational strategies. The implementation of operational strategies is based in the employees who are a part of business strategies. The human resource department of Wesfarmers needs to plan for the training which is to be provided to the employees.

Considerations to be taken for implementing the plan

The major consideration which needs to be taken in order to implement the plan is based on the ways by which the employees can be involved within the process. The levels of training provided to employees to satisfy the customers is an important consideration for the plan.

The measurement of the success of the plan will be based on the satisfaction levels of the consumers and the revenues of the company as well. The quarterly results of the revenue levels of the company also needs to be measured with the help of the plan.

The customer satisfaction levels of the company can be measured with the help of the reviews which are provided in the website. The performance levels of the employees on the other hand can be measured with the help of the increase in number of customers. The increase of the share of Wesfarmers in the market can also be measured in order to analyse the effectiveness levels of the plan. The lack of proper levels of performance can thereby be managed with the help of extra amounts of training which are offered to the employees.

References

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