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Question:

Discuss About The Management Strategy And Decision Making.

 
Answer:
Introduction:

Internal analysis of the organization is considered as an exploration of the competency, cost position and competitive viability in the marketplace of the organization. Generally, while conducting the internal analysis it is possible to establish such measure which defines strengths, weakness, opportunities and threats for the organization. The most important objective of internal analysis is the determination of the organization’s strength and competency level. A strong organization use updated technology and tools which can be used for the purpose of achieving its goals. On the other hand, competent organization ensures solid brand identity which is built on the basis of expertise, capabilities and human resources management within the organization (Williams, 2018). This paper defines the internal analysis of the Wesfarmers and this is done in lieu of different areas which include resource and capabilities as competitive advantage, VRIO or VRINE, dynamics capabilities, and balanced scorecard. A brief conclusion is stated after that for concluding this paper.

Resource and capabilities as competitive advantage:

Resources and capabilities are used by various organizations for the purpose of defining their business strategy as the main source of competitive advantage. In this context, it can be said that companies use the resources and capabilities for determining the long-term performance of the company. Presently, there are number of companies which develop their strategy on the basis of development and exploitation of internal capacities. On other side, if resources and capabilities are considered as the important source of the competitive advantage, then it is also considered that each company is armed with its own resources and capabilities which are unique in nature and gives the company great source of competitive advantage (Milara, 2014). In case of Wesfarmers, they use their resources such as human talent and diversified workforce to develop strong relationship with the customers and this is considered as unique capability of the Wesfarmers which provide great source of competitive advantage.  I other words, competitive advantage in case of Wesfarmer in diversity of workforce and this is the reason they focus on building capabilities of their employees (Wesfarmers, 2018).

Capability Vs Competitive strength

-5

-4

-3

-2

-1

0

1

2

3

4

5

Capability area

 

 

 

 

 

 

 

 

 

 

 

Tangible resources

 

 

 

 

 

 

 

 

 

 

 

Physical

 

 

 

 

 

 

 

 

 

4

 

Technological

 

 

 

 

 

 

 

 

3

 

 

Contracts

 

 

 

 

 

 

 

 

 

4

 

Products and services

 

 

 

 

 

 

 

 

 

 

5

Information

 

 

 

 

 

 

 

2

 

 

 

Financial

 

 

 

 

 

 

 

 

3

 

 

Other

 

 

 

 

 

0

 

 

 

 

 

Intangible resources

 

 

 

 

 

 

 

 

 

 

 

Brands

 

 

 

 

 

 

 

 

 

4

 

Reputation

 

 

 

 

 

 

 

 

 

 

5

Customer Goodwill

 

 

 

 

 

 

 

 

3

 

 

Supplier goodwill

 

 

 

 

 

 

 

 

 

4

 

Employee goodwill

 

 

 

 

 

 

 

2

 

 

 

Strategic alliance

 

 

 

 

 

 

 

 

 

4

 

Parents

 

 

 

 

 

 

 

 

3

 

 

Process and system

 

 

 

 

 

 

 

 

 

 

 

Decision making

 

 

 

 

 

 

 

 

3

 

 

Operational systems

 

 

 

 

 

 

 

 

 

4

 

M.I.S.

 

 

 

 

 

 

 

2

 

 

 

Financial information

 

 

 

 

 

 

 

 

 

4

 

Reward system

 

 

 

 

 

 

 

 

 

4

 

Competitor intelligence

 

 

 

 

 

 

 

 

3

 

 

Industry knowledge

 

 

 

 

 

 

 

 

 

 

5

Environment knowledge

 

 

 

 

 

 

 

 

3

 

 

Culture

 

 

 

 

 

 

 

 

 

 

 

Values and attitudes

 

 

 

 

 

 

 

 

3

 

 

Alignment

 

 

 

 

 

 

 

2

 

 

 

Informal structure

 

 

 

 

 

0

 

 

 

 

 

Flexibility

 

 

 

 

 

 

1

 

 

 

 

Innovation

 

 

 

 

 

 

 

 

 

4

 

Change management

 

 

 

 

 

 

 

 

3

 

 

Learning

 

 

 

 

 

 

 

 

 

4

 

Risk taking

 

 

 

 

 

 

 

 

3

 

 

Effective execution

 

 

 

 

 

 

 

2

 

 

 

VRIO or VRINE:

VRIO is considered as the tool which mainly used for the purpose of evaluating the internal resources and capabilities of the organization to determine whether they can used as a source of sustained competitive advantage. VRIO stands for Value, Rareness, Imitability, organization.

Potential Strategic capabilities

Tangible / Intangible

Valuable for customers?

Rare? Better than most

Limitable? Time required to copy

Well Organized?

Strategic capabilities

 

 

 

 

 

 

 

Diversified workforce

Intangible

No

Better

No

Yes

Yes, It has enhanced the operational capabilities of the company.

Strong customer base

Tangible

Yes

Better

No

Yes

The market base of the company has been enhanced and it has helped the company to enhance the revenue as well.

Efficient operational system

Intangible

No

Rare

No

Yes

The operational system process is undergoing.

On the other hand, VRINE model is considered as that framework which mainly analyzes the available resources on the basis of their capabilities and work levels (Carpenter & Sanders, 2009).  

Factors

Meaning

Wesfarmers

Value

Resource or capability is considered as valuable only if it provides the advantage of opportunity to the company.

Diversified workforce is the resource which has capability to provide number of opportunities to the company.

Rarity

There is scarcity related to the demand of the resources and capabilities.

Demand of the diversified workforce is not met easily, as it takes different factors to achieve this.

Inimitability & Non-substitutability

Resources are considered as rare resources only if they are not easily available to the competitors.

Wesfarmers must ensure that their workers are fully satisfied with the company, because it is necessary to ensure their loyalty towards the organization.

Exploitability

It is possible for the firm to take advantage of the resources.

Wesfarmers utilize their human resources in best manner and ensure strong customers base.

Dynamic capabilities:

Dynamic capabilities are considered as the ability of the firm to participate, build, and reconfigure internal and external competences for the purpose of addressing the changes occurred in the environment. It is possible to differentiate the dynamic capabilities from the operational capabilities which are related to the current operations of the organization. Dynamic capabilities in form of contrast refers to the organization capacity for the purpose of create, extend, or modify the resource base of the organization (Teece, n.d.).

Wesfarmers mainly focus on ensuring that each and every division of the company is incorporated with best and strong capability of the management and such management of the company is accountable for strategy development and execution and also for the operational performance conducted on daily basis (Wesfarmers, n.d.).

 
Balance Scorecard:

The balance scorecard is considered as the strategic planning and management system which mainly used by the organizations for the purpose of:

  • Communicating to the employees and other what they are trying to achieve.
  • Distribute task to their workers on daily basis in context of strategy framed by the organization.
  • Through this system organization prioritizes their products, projects, and services.
  • Organization uses this system to measure and monitor the progress in context of targets sets under strategy.

This system connects the dots between the strategy of the big picture elements such as mission, vision, core values, strategic focus areas, operational elements such as objectives, measures or key performance indicators or KPIs, track of strategic performance, targets, and initiatives (BSI, n.d.).

Balance Scorecard Template of Target Wesfarmers

 

 

2013

2014

2015

2016

2017

Financial perspective

 

Reduce cost

15,762,000

14,389,000

14,895,000

16,209,000

16,973,000

Increased revenues

59,422,000

59,893,000

62,102,000

65,512,000

68,015,000

Internal process perspective

 

 

 

 

 

 

Productivity

39,617,000

41,424,000

43,045,000

45,525,000

46,359,000

Employee qualifications

Right place on Right Job

Right place on Right Job

Right place on Right Job

Right place on Right Job

Right place on Right Job

Customer/ market perspective

 

 

 

 

 

 

Customer Services

Better

Enhanced

Continuous improvements

Continuous improvements

Continuous improvements

Retain high value customers

Better

Better

Better

Better

Better

Conclusion:

After considering the above facts, it can be said that resource and capabilities are the most important factors of any organization as it provides important source through which organization can achieve competitive advantage. It can be said that companies use the resources and capabilities for determining the long-term performance of the company. Wesfarmers use their resources such as human talent and diversified workforce to develop strong relationship with the customers and this is considered as unique capability of the Wesfarmers which provide great source of competitive advantage. 

 
References:

BSI. Balanced Scorecard Basics. Retrieved on 10th May 2015 from: https://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard.

Carpenter, M.A. and Sanders, W.G., (2009).  Strategic Management: a Dynamic Perspective Concepts and Cases . 2nd Upper Saddle River, N.J.: Pearson Prentice Hall.

Jurevicius, O. (2013) VRIO framework. Retrieved on 10th May 2015 from: https://www.strategicmanagementinsight.com/tools/vrio.html.

Milara, I. (2014). Comparison of resources and capabilities in two companies. Retrieved on 10th May 2018 from: https://repositori.uji.es/xmlui/bitstream/handle/10234/97662/TFG_2014_MALOI.PDF?sequence=4.

Teece, D. Dynamic Capabilities. Retrieved on 10th May 2015 from: https://www.davidjteece.com/dynamic-capabilities/.

Wesfarmers, (2018). Diversity and capability of our workforce. Retrieved on 10th May 2018 from: https://sustainability.wesfarmers.com.au/our-businesses/industrials/chemicals-energy-fertilisers/diversity-and-capability-of-our-workforce/.

Wesfarmers. The wesfarmers way. Retrieved on 10th May 2015 from: https://www.wesfarmers.com.au/who-we-are/the-wesfarmers-way.

Wesfarmers, (2013). Annual Report. Retrieved on 10th May 2015 from: https://www.wesfarmers.com.au/docs/default-source/reports/2013-annual-report.pdf?sfvrsn=0.

Wesfarmers, (2014). Annual Report. Retrieved on 10th May 2015 from: https://www.wesfarmers.com.au/docs/default-source/asx-announcements/wesfarmers-limited-2014-annual-report.pdf?sfvrsn=0.

Wesfarmers, (2015). Annual Report. Retrieved on 10th May 2015 from: https://www.wesfarmers.com.au/docs/default-source/reports/2015-annual-report.pdf?sfvrsn=4.

Wesfarmers, (2016). Annual Report. Retrieved on 10th May 2015 from: https://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?sfvrsn=4.

Wesfarmers, (2017). Annual Report. Retrieved on 10th May 2015 from: https://www.wesfarmers.com.au/docs/default-source/reports/j000901-ar17_interactive_final.pdf?sfvrsn=4.

Williams, R. (2018). Why Is an Internal Analysis Important?. Retrieved on 10th May 2018 from: https://smallbusiness.chron.com/internal-analysis-important-80513.html.

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