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The Importance of Strategic Management for Enhancing the Effectiveness of Organizational Structure

Question:

Discuss About The Strategic Management Techniques Adopted?

As per the survey report, it has been evaluated that organizational structure has been amended on the basis of technological adaptation in the workplace for enhancing the effectiveness of organizational structure. From the perception of an organization, adaptations of strategies are done for a long period of time and to could be able to cope up with the market requirements. Further, as per the Hunter (2010), strategic management techniques are adopted in order to enhance the efficiency of the organization. Strategic information system helps the organization to develop the competitive advantage. This is the main objective of the information technology. Various activities of the organization could be operated with the implementation of the strategic information system. In a business organization, unique functions are involved in order to attain the objectives set up by the organizational management and this would be more feasible through effective strategic management policy.

As per Zafar, Babar & Abbas (2013), Wesfarmers is an American Company involved in chemical business, coal mining, etc. and they have adopted the conglomerate type of organizational structure for performing the functionalities of the business entity. This type of organizational structure is the amalgamation of two business entities with the same corporate background. With the effect of the mixture of few organizations together with the same primary company, this kind of structure has been formed and all of them have the unique subsidiary companies. The organizational structure practiced by the Wesfarmers is a unique combination of different functionalities of organizations of different industries and along with this; this is also practiced by multinational corporations. Policies and the rules adopted by Wesfarmers is the formation of competitive organization and it helps the organization to develop its significant place in the business environment. Along with the competitive advantage, this type of organizational structure is also useful in the developing the effective ways for the organization to reach towards the success (Cassidy, 2016).

According to an analysis made by Hunter (2010), organizations are facing unique kind of calamity through which their performances are getting declined. Recently, retailers moved towards the field of food and the liquor drinks in order to achieve the goals of the organization as well as to enhance the profitability but dealing in these products, huge risk factors are available due to which organization may face losses. Author has described the importance of the organizational structure adopted by Wesfarmers while a negative aspect of the same has also been described by the author. With the implementation of this type organizational structure, it has led to the enhancement in the size of the operational as well as managerial expense. Apart from the above crisis, numerous issues have been faced by the organization such as lack of accounting expertise and lack of improvements in the innovation and the development is also a big concern in terms of organization. Besides these aspects, taxation benefits will also be reduced with the implementation of this structure. This will impact the business activities as lack of focus and lack of managerial control will be the main reason or decreasing performance of the organization (Cecez-Kecmanovic, et. al., 2014).

Wesfarmers Limited's Conglomerate Organizational Structure

Software technology has been adopted by the Wesfarmers in order to manage the activities of the organization and integration of various applications in the software will help the organization to utilize its resources in an effective manner. The adaptability of software technology in the workplace will help the organization to attain its desired goals. Due to the adaptation of advanced technology for performing the organizational activities, various functionalities of the organization will ease such as back office work, HR operations, etc.

The aforesaid picture shows the sales flowchart of the Wesfarmers Limited and this describes the procedure of sales followed by them. Below are the details of the activities performed within this procedure:

  • In the first stage of the sales process of Wesfarmers Limited, customers take the entry on the premises of the store. After that, all the products are tied with a label under which all kind of details is written such as a price of the product, bar code, quantity, etc. Customers can select the product as per their requirements, budget (Galliers & Leidner, 2014).
  • Customers are offered with price quotations and on the basis of those quotations, customers can sign the contract for in relevance with the particular product. After agreeing to the contract conditions and by depositing the advanced money customer can ask the manufacturer to start working on their order.
  • After a certain period of placing the order, delivery of goods will be attempted. Along with the delivery of the goods, receipts will be provided to the customers in relation to the order. After delivering the goods and receipts of the goods, the second stage of the sales starts i.e. after sale service (Willcocks, 2013).
  • But if the consumer denies the offer from the manufacturer at the time of quotations showed by them, sales process ends there (Greenblat, 2015).

The person giving the responsibility of maintaining the ledger and the other account books needs to fulfill the requirements in order to maintain the transparency amongst the physical stock available as well as the stock showed by ledgers (Kavanagh & Johnson, 2017).

Following is the description of issues which could be occurred in the lack of managerial control:

  • It is often noticed that responsibility of choosing the supplier is on the shoulders of warehousing manager and after the selection process, orders are being placed. Due to lack of control over the warehousing manager, an organization may face the situation of the inferior quality of raw materials.
  • The manager could also lead to the fraudulent activities due to lack of control over their activities.
  • Adequate security techniques need to be adopted with the adaptation of advanced technologies, this will help the organization to secure its consumers’ data (Morecroft, 2015).

Accounting software will help the organization to record the financial transactions with ease. Previously, the method adopted by the organizations for recording the data was the manual method and manually recording data may increase the chances of errors. Hence, accounting software was adopted in order to remove these issues and meeting with the objectives of the organization in relation to the accurate recording of financial transactions, accounting software was introduced. This software helps the organization to show the clear picture in the financial terms. As per the evaluation made by Realitysoftware (2017), Wesfarmers Limited has adopted the accounting software encompasses with various sections of accounting standards in order to match up with the quality standards set up by the management. According to the author, an organization is enjoying various benefits with the implementation of the accounting software (Pearlson, Saunders & Galletta, 2016). Accounting software is consisting of various accounting methods and the standards which could help the organization in maintaining the transparency between the consumers and the company in order to disclose the financial statements. Following are some of the accounting techniques which are included in the accounting software:

General Entry: All the organizational transactions are recorded.

Accounts Receivable: All debtors are included under this.

Accounts Payable: All creditors of an organization are recorded here.

The description regarding the current size of the market as well as the latest trends followed by the Wesfarmers Limited has been conducted. Wesfarmers Limited is a multinational brand and they are in the peak position in their industry as per au.finance.yahoo (2017). In the same year, Wesfarmers Limited has achieved a growth rate of 4.3% and with this growth rate, overall revenues were recorded at $34.9 billion with the profitability of $1.6 billion and profits are increased by 13.2% from the last effective year. There are a number of retail stores and supermarkets are available but Wesfarmers Limited which are dealing in Coal and the mining industry and the Woolworths Limited which are dealing in household items are enjoying the peak positions in the Australian market (Peppard & Ward, 2016). Since a very long time period, they both are the primary object of the retail industry and they both have covered approximately 70% market share across the globe in the retail industry. Amongst this share, Wesfarmers is carrying the market share of 35%.

The Positive and Negative Aspects of Wesfarmers Limited's Organizational Structure

Wesfarmers Limited is attaining the competitive advantage in the retail industry and behind this success, there are numerous leaders’ hard work is hidden. The first key employee of the organization is the current CEO of the Wesfarmers Limited Richard Goyder who was appointed as the Managing Director of the organization in 1993. He is very potential and with his efforts, an organization is enjoying the peak position today. With the mixture of leadership skills of CEO and the available resources, an organization has achieved the desired position in the global market. Despite Richard Goyder, Rob Scott is also one of the great leaders who has contributed a lot to Wesfarmers' success. He is the current Deputy CEO of the organization. Apart from these two officers, an organization has a number of leaders who have the capability to take the organization on next level. The workplace of the Wesfarmers Limited is quite effective and impressive as the organization is performing its duties under the guidance of two most important person as well as effective leaders of the organization (Rainer, et. al., 2013).

Reviewing performance of the current CEO, it has been evaluated that they have adopted the policy of retention of the key employees. According to the policies adopted by them, employees’ requirements and their demands are fulfilled regularly to motivate them for enhancing their performance. Along with the fulfillment of their demands, an organization has adopted the policy of training and the development in order to update its employees' information regularly and to keep them aware in relation to the latest trends followed in the market. Retention of key employees is very crucial from the perception of an organization because replacement of new candidate does not provide the assurance of positive results and it may lead to the loss situations but retention of key employees assures the organization of positive results (Sarker, Xiao & Beaulieu, 2013).

With the implementation of the ERP framework in the organizational workplace will help them to perform numerous activities with ease but still there will be some activities which need to be conducted manually. The basic motive for the adaptation of ERP framework is to attract its clients through showing the transparent image of the organization through financial statements. Statements made with the ERP software are error free as well as they show the clear picture of the organization hence; it will help the organization in order to gain competitive advantage (Readyratios, 2017).

Wesfarmers Limited is the top multinational brand in the Western part of the Australia in terms of retail and supermarket industry. It has been concluded from the above discussion and views of various authors that they are involved in numerous types of businesses such as liquor, coal mining, chemical products, etc. They have primary competitors from the Australia itself i.e. Woolworths Limited is also the leading supermarket chain store in the Australia and New Zealand. In order to analyze the competitive position of the organization, various methods were used. Type of organizational structure followed by the Wesfarmers Limited and the strategies adopted by them in order to gain some competitive advantage was also executed under this report. Apart from these issues, advanced accounting software, controlling factors of the accounting software, size of the market and the market share across the globe as well as in the local market were discussed in the report.

References

au.finance.yahoo, 2017, Yahoo finance, Assessed on 12th September 2017, https://au.finance.yahoo.com/quote/WES.AX/analysts?p=WES.AX.

Cassidy, A., 2016. A practical guide to information systems strategic planning. CRC press.

Cecez-Kecmanovic, D., Galliers, R.D., Henfridsson, O., Newell, S. and Vidgen, R., 2014. The sociomateriality of information systems: current status, future directions. Mis Quarterly, 38(3), pp.809-830.

Galliers, R.D. and Leidner, D.E. eds., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

Greenblat, E, 2015, Wesfarmers restructure to streamline operations, Assessed on 12th September 2017,  https://www.theaustralian.com.au/business/wesfarmers-restructure-to-streamline-operations/news-story/415bab7720bb6d61ade215957048d276.

Hunter, M. G., 2010, “Strategic Information Systems: Concepts, Methodologies, Tools, and Applications”, University of Lethbridge, Canada, vol. 1, pp. 315-332.

Kavanagh, M.J. and Johnson, R.D. eds., 2017. Human resource information systems: Basics, applications, and future directions. Sage Publications.

Morecroft, J. D. 2015. Strategic modelling and business dynamics: a feedback systems approach. John Wiley & Sons.

Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2016. Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.

Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

Rainer, R.K., Cegielski, C.G., Splettstoesser-Hogeterp, I. and Sanchez-Rodriguez, C., 2013. Introduction to information systems. John Wiley & Sons.

Readyratios, 2017, Conglomerate, Assessed on 12th September 2017, https://www.readyratios.com/reference/accounting/conglomerate.html.

Realitysoftware, 2017, Accounting software development, Assessed on 12th September 2017, https://www.realitysoftware.ca/services/software-development/accounting/

Sarker, S., Xiao, X. and Beaulieu, T., 2013. Qualitative studies in information systems: a critical review and some guiding principles. MIS quarterly, 37(4), pp.iii-xviii.

Willcocks, L. 2013. Information management: the evaluation of information systems investments. Springer.

Zafar, F., Babar, S. & Abbas, H., 2013, “The Art Of Strategic Management- A Key To Success In Corporate Sector”, European Journal of Research and Reflection in Management Sciences, vol. 1 (1), pp. 15-24
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