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Business Strategy Of Wesfarmers

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Question:

Discuss about the Business Strategy of Wesfarmers.
 
 

Answer:

Introduction

The development that is taking place in the economy has changed the traditional façade balance between supplier and customer. With the introduction of technology and communications in the global regime customers are having varied choices and supply methods are becoming more transparent (Anderson and Vincze, 2004). The organizations are using various processes with the help of wisdom and knowledge for making decisions by creating solutions and strategies to overcome challenges.

In this context the company provided is Wesfarmers a conglomerate in Australian market that works on diverse operations. It involves liquor, convenience stores, supermarkets, departmental store, safety products, an industrial division including fertilizers, chemicals etc.         

Discuss Upon Concepts of Strategy

A strategy can be described as a plan that needs to be executed by having an action plan that describes the process of an organization can achieve its mission. It is an intangible aspect that includes taking required actions by realizing the directions. This is formulated by the top management and a means of position by offering products in market. In case of formulation of strategy the managers should decide the resources that are important and develop it overtime (Chernev, 2012). The strategies formulated by the organization regarding the service and product strategies helps in driving operational, management process and support. The strategy formulated has to involve customers by working on the outcome achieved by them. The important is to satisfy the needs of the consumer that can be generated through information gathered through surveys, consumer preferences etc.     

For instance the retail conglomerate is offering around STG340m to Homebase for rebranding its name to Bunnings. The brand deals in retail gardener concept and is the largest in UK and Ireland market having more than 260 stores. The turnover annually generated is STG1.5bn by taking acquisition approach as Bunnings is a dominant market player in Australia. There is huge potential in the market by working on the growth by generating sales (Berry, 2016). But, the catch is on Britain consumer market as it is competitive more than Australia so, the supply and consumer preferences has to be different in the UK market. The use of technology for connecting with people in online mode by using various social media tools such as social media, online forums, Facebook etc.

 

Consumer preferences are used to market the products as per their need and want that can be over brands. The main problem arises when a single product is getting sold over another that signals to change the strategy. In 21st century the consumers are spoilt for choice so no single message fits for all individuals. Consumer preferences are directly related to customer satisfaction, purchase and engagement by developing their interest (Anderson and Vincze, 2004). Alternatively, market trend helps in altering the market in which the company operates in as this is useful in analyzing the competition by keeping it ahead. This trend works on the evaluation process by looking deep into the industry of how it has grown and where it will go. The different market trend that influences the business is:

  • Change in demographics market
  • Economy changes taking place
  • Taking into consideration the technology advancement
  • Change in interest or needs of the consumer

The retail industry of Australian market i.e. Coles supermarket of Wesfarmers is continuously changing and diverse. It depicts positive growth by working on five trends sufficing retail discussed below:

  • Consumers will be involved in content creation in case of buying products online
  • The relationship with supplier in this digital era directly impacts customer by taking decisive action (Chernev, 2012)
  • The designs of the store should be such that the shoppers experience something while shopping products
  • The companies in Australia have to use data for leveraging with analytics and cloud for strengthening the business process

Theoretical Concepts of Strategy Principles

In order to gain sustainable competitive advantage strategies framed has to be winning for getting an edge over rivals. This competitive advantage helps in competing in the competition by attracting customers and the basic is using capabilities and resources. The resources existing with the firm is helps the manager to formulate and implement strategy. The various resources are:

 

Resources

Tangible resources are the physical resources or assets of workplace. It includes:

  • Physical equipment, plant and raw materials
  • Financial resources
  • Abilities of organization like structure and processes
  • Human resources like experience, attitude, skills, knowledge (Borchert, 2008).

Intangible resources are termed as non-assets that deal with knowledge, reputation and information. They are:

  • Ability to innovate that involves employees research and facilities
  • Technological resource like trademarks, patents etc.
  • Reputation such as brand name, perceptions etc.

The employees are from diverse field with Torres Strait or Aboriginal constituting 61% and having 500 employees alone in Coles. They are skilled in their approach.

Capabilities

Capabilities are defined as exploiting the resources of the firm by managing the interaction of resources and working in a process. The threshold capability is needed by the organization for meeting its customer requirement in the marketplace. The capabilities include development process of the product, abilities of the manager, learning proficiencies etc. These capabilities provide advantage over the competitors by providing value over competitors (Vorhies and Morgan, 2005). It is on the basis of the time period the business is staying over a time-period by implementing effective strategy. In Wesfarmers the sourcing the raw materials have to be in building respectful and strong relations. In Australian market Coles have grocery and food suppliers by taking in low prices and working on supply chain effectiveness. The customers are served high service by taking care of their wants.         

An important part of the internal analysis is managing talent i.e. workforce in business by understanding their needs and wants. It can be said that talent is a scared resource so it necessary to be handled with care. Talent management is defined as a commitment to organization by recruiting, retaining and developing superior and talented employees (Kehinde, 2012). In today’s world demographic, globalization and technology is changing at pace with the work itself. The workplace has to integrate strategies with that of human resources for bringing change. Technology is a medium that changes the façade of how people work with the use of mobile technologies that does not considers employee physical presence.

For this HR department of Wesfarmers have to work in accordance with their needs by fulfilling the objectives of attracting and retaining them. The conglomerate provides opportunities to people in their careers with 75,000 in casual mode and 13,000 are permanent. With this the company engages people in different roles and in peak seasons like Christmas employee strength is broader (Sustainability, 2016). Recruitment is the first step for engaging any candidate as per the skills, attitude and knowledge. It is done through online or offline mode by selecting and retaining the talent. This process of retention engages the employee by fostering engagement by providing them culture that is vibrant and positive. The most crucial is development by providing them opportunity to move ahead in career by proving collective agreements to 85% of the workforce in Wesfarmers.    

The workers are also provided with training in various aspects like teamwork, customer service and leadership. A program called New Executive Orientation is for the future of the potential workers and managers. Thus, it can be stated that organization culture gives rise to employee engagement and it supports talent management. This enhances the productivity thereby; the performance is increased by making individual contribution for being successful (Chapman, 2006).

 

Discussing upon Environmental Analysis of Workplace

The environmental analysis of an organization is important for generating an insight into its macro (external) and micro (internal). This helps in understanding the workplace needs by addressing them effectively by screening the environment. For evaluating macro environment PESTLE analysis is incorporated that is given below of Wesfarmers:

Political Factors

This factor addresses the taxation policy, trade regulations, government stability etc. issued by the Australian government. An important role in business is balancing between free markets and system control that is also based up on the location of the company headquarters. This affects the business environment by earning revenue as per the organization structure (Marmol et al., 2015).     

Social Factors

This determines the social environment such as demographics, population, cultural trends etc. by discussing on the purchasing power parity of the Australian consumers. The total Population in Australia is 23, 9316 in (‘000) in year 2015.  In the coming 2030 the population will increase to 30.1m increased from 25.9% (Euromonitor, 2016).

Economical Factors

These factors determine the performance of the economy that has direct implication on company on its long term effects.  The inflation rates, GDP, economic growth etc. addresses to the economy condition of the industry. The GDP growth of Australian market in 2015 is 2.5% and inflation growth is 1.5% in 2015 in Australian market (Euromonitor, 2016).    

Technological Factors

Due to continuous research and development technology is changing its façade by inculcating innovation and creativity in industry.  The amount of technological process adopted by the organizations is beneficial by moving with the trend. The use of latest equipment by being aware by fulfilling the needs and wants of consumer.    

Legal Factors

The laws established by Australian market for the safety of the consumers by formulating policies and strategies for the workplace. These laws have to be formulated in accordance with the company policies and adhering to legislations for consumer safety. The company has to abide by it for protecting the rights of the consumer.    

Environmental Factors

Wesfarmers work on the climate resilience by reducing the emission from climatic changes and working on water wastage. The business works on recycling the products by being more sustainable and managing the use of water efficiently (Sustainability, 2016). The climatic changes are monitored and managing the emission of greenhouse gas by addressing risks.           

The micro factors also deals with the internal analysis of the company in for managing it through internal process. For this SWOT Analysis is conducted in Wesfarmers and it is stated below:

Strengths

The conglomerate is a diversified corporation that is varied in resources i.e. employees and having persistent growth. The company works in large scale by having more than 4000 shareholders by having equity of $24.8bn (Sustainability, 2016). The company has employee strength of 205,000 by working on satisfying the needs of consumer. The focus is on employee training and development in order to retain them with programs being offered.

 

Weakness

The company has strong presence in the Australian market as it is serving the people in the domestic market taking risks. The company is not keen on opening in more geographical locations by expanding its reach to the consumer. With this it is unable to take strategic decision still being a market leader in workplace.   

Opportunities

Wesfarmers has the opportunity to expand in new locations outside Australia as the brand serves quality and efficient products. The business is addressed by customer loyalty and serving the employee with benefits for gaining more customers (Moutinho and Southern, 2010). The other option is acquisition with other organizations by increasing the income level.

Threats     

The threats are constant risk from the competitors that act as external as business risk takes the place. The workplace has to modify its terms and condition for being in the marketplace for serving the customer. Due to economic downturn the demand may go down i.e. of products so it has to be offered to the competitors in competitive price.          

Conclusion

From the above discussion it can be concluded that business strategy of a business should have the essence of fulfilling customer need. A business has to be performed in a logical manner by working on the source of competitive advantage. The strategy adopted should fill the goals and objectives of the workplace by working in the right direction and perception.

 

References

Anderson, C. and Vincze, J. (2004). Strategic marketing management. Boston: Houghton Mifflin.

Berry, P. (2016). Bunnings' big bid for Britain's Homebase. News.com.au. [online] Available at: https://www.news.com.au/finance/business/breaking-news/homebase-could-be-sold-to-wesfarmers/news-story/3a527e35aba5ea08d6f95e0cd30cd21f [Accessed 13 Sep. 2016].

Borchert, O. (2008). Resource-Based Theory: Creating and Sustaining Competitive Advantage. Journal of Marketing Management, 24(9-10), pp.1041-1044.

Chapman, M. (2006). Building an innovative organization: consistent business and technology integration. Strategy & Leadership, 34(4), pp.32-38.

Chernev, A. (2012). Strategic marketing management. [Chicago, Ill.]: Cerebellum Press.

Euromonitor.com. (2016). Australia Country Factfile. [online] Available at: https://www.euromonitor.com/australia/country-factfile [Accessed 13 Sep. 2016].

Euromonitor.com. (2016). Australia in 2030: The Future Demographic. [online] Available at: https://www.euromonitor.com/australia-in-2030-the-future-demographic/report [Accessed 13 Sep. 2016].

Kehinde, J. (2012). Talent Management: Effect on Organization Performances. jmr, 4(2).

Koll, O. (2002). The Strategy-Focused Organization. Journal of Business Research, 55(6), pp.531-532.

Marmol, T., Feys, B. and Probert, C. (2015). PESTLE analysis. [Place of publication not identified]: 50Minutes.

Moutinho, L. and Southern, G. (2010). Strategic marketing management. Hampshire, U.K.: Cengage Learning EMEA.

Sustainability.wesfarmers.com.au. (2016). About Wesfarmers. [online] Available at: https://sustainability.wesfarmers.com.au/our-approach/about-wesfarmers/ [Accessed 13 Sep. 2016].

Sustainability.wesfarmers.com.au. (2016). Waste and water use. [online] Available at: https://sustainability.wesfarmers.com.au/our-principles/environment/waste-and-water-use/ [Accessed 13 Sep. 2016].

Vorhies, D. and Morgan, N. (2005). Benchmarking Marketing Capabilities for Sustainable Competitive Advantage. Journal of Marketing, 69(1), pp.80-94.

Wilson, R. and Gilligan, C. (2005). Strategic marketing management. Amsterdam: Elsevier/Butterworth-Heinemann.

Wright, T. (2014). What Talent Management, Engagement And Culture Share - TalentCulture. [online] TalentCulture. Available at: https://www.talentculture.com/what-talent-management-engagement-and-culture-share/ [Accessed 13 Sep. 2016].

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