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Research of business unit

Discuss about the Dynamic Managerial Capabilities for Review and Assessment.

A corporation can be defined as a legal entity which distinct and separate from the owners. Corporations mainly enjoy the responsibilities and rights that the individual possesses. The corporation therefore has the right to enter into the contracts, borrow or loan money, hire employees, pay taxes and own assets.

A product portfolio can be defined as the collection of all the services or products that are offered by the organization. The analysis of product portfolio provides the views on the growth prospects of the company, the stock type, drivers of the profit margins, operational risk, income contributions and the leadership in the market (Hill, Jones and Schilling 2014).

A service portfolio can be defined as the core repository for the various services in a company. The services are listed along with their history and current status. Service portfolio consists of three parts, the service pipeline retired services and service catalogue.

Wesfarmers Limited is a conglomerate that has origins in Australia and the headquarters of the organization is located in Perth in Western Australia. The company operates in New Zealand and Australia. The various industries where the organization has its operations are chemicals, retail, coal mining, fertilisers, safety and industrial products (Wheelen et al. 2017). The organization was founded in the year 1914 and it acted as a co-operative which provided service to the farmers in Western Australia. The various areas where the conglomerate operates are, mining, office supplies, home improvement, chemicals, fertilisers. The company has huge shown huge growth from the time of its inception and further it grew into a retail conglomerate (Group, D. 2018). The report will be based on the analysis of the retail supermarket business of Wesfarmers in Australia. The product and service portfolio of the retail supermarket segment of Wesfarmers will be analysed in the report.

Strategic business units or SBUs are important for the organization which provide multiple products. These business units are also known as the profit centres of the company. These units are focussed towards the products which are responsible for strategy or decision related to the operations of the business. These units are mainly focussed towards the market segment where the company operates. SBUs have a discrete plan related to marketing analysis of the competition (Frynas and Mellahi 2015).

The retail division of Wesfarmers has many operations which include, convenience stores, office supplies, hardware. The retail division of the Wesfarmers group is known as Coles. This division was developed in the year 2007 after the acquisition of Coles Group by Wesfarmers Limited. The entire retail operations of Wesfarmers are operated under the Coles brand. The Coles Group provides a variety of products which have made Wesfarmers the number one retailer in Australia (Frow et al. 2015). The Coles Group has a huge customer base of 20 million customers in just a single week. The company also has 102,000 team members and has its operations in more 2000 retail outlets in Australia.

Product and service lines of Wesfarmers

The products offered by Coles Group include, various fresh items, recipe magazines, fruits, liquor related items and many more. These items offered by the Coles Group contribute to the product line of the organization. The service line of Coles includes services like, online recipes, YouTube channel, financial services and the rewards provided related to shopping activities. The products of Coles supermarket are sold with the help of their physical stores which are present in all the major areas of Australia. The Coles Group also provides its services and products with the help of its online website which is known as Coles Online. The customer service related operations of the Coles Group are also performed with the help of their physical stores and online website as well (Heding, Knudtzen and Bjerre 2015).

Revenue centre can be defined as the division of the organization which helps them in gaining revenue from the sales of the products and the services provided. This division of the firm generates the highest revenues with the help of the sales of goods. Coles Supermarket is the major revenue centre of Wesfarmers Limited. Coles supermarket is the consumer and retail chain which has its headquarters in Melbourne. Wesfarmers Limited acquired the Coles Group in the year 2007 and the retail divisions has been the main revenue centre for the organization. Coles Group has added to the sales momentum of the Wesfarmers after the hardware division of the organization has increased the its growth (Helfat and Martin 2015). The supermarket chain of the Wesfarmers group has been the biggest profit maker of the organization. The Coles Group has its stores in more than 700 service supermarkets, 90 hotels, more than 800 liquor outlets and more than 600 convenience stores. The major revenues are generated from the businesses of Coles Group named, Coles Online, Vintage Cellars, Coles Express and the Coles Financial Services.

Political factors – Political factors play an important role in the determination of the political impact on the long-term profitability of Wesfarmers Limited. The systematic risks related to the operations of Wesfarmers need to be diversified so that success can be achieved in the different countries. The major political factors are related to the stability of the retailing sector of Food & Staples in the economy of the countries. The risk related to military invasion and the corruption levels in the countries are also a major part of the political factors (Chang 2016).

Economic factors – The macro economic factors of the country like, the savings rate, inflation rate, foreign exchange rate, economic cycle and interest rate affect the operations of Wesfarmers. On the other hand, the micro economic factors include the competition norms which affect the competitive advantage of Wesfarmers. The economic factors which need to be considered by Wesfarmers Limited include, inflation, growth rate, growth of the Food & Staples Retailing industry and many more. The intervention of the government in free market, stability and exchange rates affect the profitability of Wesfarmers (Hubbard, Rice and Galvin 2014). The skills of the workforce, labour costs in the country and the unemployment rate are also considered by Wesfarmers.

External analysis of the environment

Social factors – The culture of the society where Wesfarmers has its operations affects the revenues and sales of the company. The attitudes and the shared beliefs of the population of a particular country affect the operations of Wesfarmers. The social factors of the country help the organization in understanding the customers and provide them with the desired products. The skills and demographics of the population, the class and power, the culture, the leisure related interests form the social factors that affect Wesfarmers (Saeidi et al. 2015).

Technological factors – The fast changes and disruption in the various technologies have an impact on the revenues and ways of operations of the various organizations. The industry has seen many changes in the last few years and Wesfarmers has to make significant changes in the operations to keep pace with the various changes. The technological factors of PESTLE framework are related to the recent development in the technologies being used Wesfarmers. The impact of technology on the cost structure of the organization, the impact on value chain and the rate of the technological diffusion are all related to the revenues of Wesfarmers in the industry (Laszlo and Zhexembayeva 2017).

Environmental factors – The markets in the different countries have environmental standards that are different from each other. These different environmental laws affect the ways by which Wesfarmers operates in the market. The major environmental factors that need to be considered by Wesfarmers are, the climate change, weather, laws that regulate the pollution in the environment, water and air pollution. The issue related management of waste in the Food & Staples sector and attitude of the organization towards ecological and green products are major factors related to the environment (West, Ford and Ibrahim 2015).

Legal factors – The legal structure related to the protection of the intellectual property rights of a company has an impact on the regulations that are formed in the firm. The major legal that are considered by Wesfarmers Limited in the new market areas are, discrimination related laws, copyright law, employment law, data protection related law, e-commerce law and laws related to consumer protection.

The operating environment of the organization is related to the external and the internal environment where the organization operates. This environment includes the suppliers, clients, owners, competition, improvement in the technologies, government activities and laws and the economic trends. The operation environment therefore has a major effect on the revenues of the company in the industry (Gamble and Thompson 2014).

Operating environment

Wesfarmers has high levels of competition in the market in the food and retail market and they need to be robust in its operations to face the competition and maintain its top position in the market. However, the major competitive advantage for Coles and Wesfarmers in the Australian market is the strategical location of the stores which protect the organization from the price wars that are going on in the market. Wesfarmers has been able to improve its competitive position in the market after the acquisition of Coles which has been set as the retail division of the organization (Bansal and DesJardine 2014). Coles has been one of the largest supermarkets in Australia and its acquisition had proved to be an important step for Wesfarmers. Wesfarmers had been able to create a different position in the industry with the help of acquisition of Coles which had a business which three times stronger than that of Wesfarmers itself. This further helped in the improvement of retail division of Wesfarmers which had shown huge decline in the recent years. This has acted as a major competitive advantage for Wesfarmers and helped the organization in maintaining the topmost position in the Australian supermarket industry (Bocken et al. 2014).

Sustainable competitive advantage is related to the long-term performance and success of a business organization. The competitive advantages are mainly considered to be the strengths possessed by the company which helps the organization to differentiate itself from the others in the industry. Sustaining the competitiveness is important for building a brand and to avoid seeking for short-term opportunities (Adams et al. 2016).

The four factors that are related to the sustainable competitive advantage of an organization are as follows,

  • Sustainable competitive advantage is mainly related to the assets that are maintained by the organization. The assets of the company include, trusted suppliers, loyal customers and the efficient system of operations. The loyal customers act as the major source related to the competitive advantage of the company. The efficiency of internal operations of the company also helps it to sustain in the industry (Gamble and Thompson 2014).
  • The differentiation related factors of the company are also related to the sustainability of competitive advantage. The service, product or the strength of the operations, the investment made by the company in advertising all form a major part of the sustainability of the organization.
  • The brand image of the organization and promotional activities also contribute to the sustainable advantage in the long-term operations. The associations created by the company form a part of the lomg-term competitive advantage.
  • The organizations need to build advantages that can be enduring to the valuable customers. This help the company in maintaining competitive advantage in the market (Heding, Knudtzen and Bjerre 2015).

Strategic direction of an organization can be defined as the course of action that is undertaken to achieve specific goals. The central forces which propel the business towards the intended objective and goals can also be defined as strategic direction. The strategic direction of an organization is important as it helps in the establishment of structure which deals with the internal responsibilities of the each of the workers (Adams et al. 2016).

The major recommendation related to the strategic direction of Wesfarmers would be to increase their concentration on the retail division and improve the diversity of the products and services that are offered to the consumers. The retail division of the organization has been provided huge revenues to Wesfarmers, especially after the acquisition of Coles Supermarket. Wesfarmers needs to increase the various products that they offer in the online platform named Coles online. This further help Wesfarmers to hold their position in the highly competitive market.

References

Adams, R., Jeanrenaud, S., Bessant, J., Denyer, D. and Overy, P., 2016. Sustainability?oriented innovation: a systematic review. International Journal of Management Reviews, 18(2), pp.180-205.

Bansal, P. and DesJardine, M.R., 2014. Business sustainability: It is about time. Strategic Organization, 12(1), pp.70-78.

Bocken, N.M., Short, S.W., Rana, P. and Evans, S., 2014. A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, pp.42-56.

Chang, J.F., 2016. Business process management systems: strategy and implementation. CRC Press.

Frow, P., Nenonen, S., Payne, A. and Storbacka, K., 2015. Managing co?creation design: A strategic approach to innovation. British Journal of Management, 26(3), pp.463-483.

Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.

Gamble, J. and Thompson, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-Hill.

Group, D. (2018). Home. [online] Wesfarmers.com.au. Available at: https://www.wesfarmers.com.au/ [Accessed 29 Mar. 2018].

Heding, T., Knudtzen, C.F. and Bjerre, M., 2015. Brand management: Research, theory and practice. Routledge.

Helfat, C.E. and Martin, J.A., 2015. Dynamic managerial capabilities: Review and assessment of managerial impact on strategic change. Journal of Management, 41(5), pp.1281-1312.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.

Laszlo, C. and Zhexembayeva, N., 2017. Embedded sustainability: The next big competitive advantage. Routledge.

Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), pp.341-350.

West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage. Oxford University Press, USA.

Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.

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