About Wesfarmers

The strategic analysis of an organization is based on the ways by which it is able to adjust with the external environment. The industry in which the organization operates is an important part of the successful operations. The capabilities and resources that are possessed by the company play an important role in the ways by which the organization is able to maintain a sustainable position in the market. The report will be based on the strategic analysis of the external environment and industry in which an organization operates. The organization that has been taken into consideration is Wesfarmers which operates in the Australian retail industry (Morschett, Schramm-Klein and Zentes 2015).

Wesfarmers Limited is an Australian retail based conglomerate that has its operations mainly in Australia and New Zealand. Wesfarmers has acquired the position of the largest organization in Australia. The first store of Wesfarmers was established in the year 1924 in Perth, Sydney. The new store of Wesfarmers was quite innovative in nature and the organization was the first one to use the cash registers which are used for printing the receipts. The operations of Wesfarmers started in Australia in the year 1914 and the supermarkets were further established in the year 1984. The growth of Wesfarmers started in Australia after the year 1920. The organization has established its stores all over Australia. The department stores of the organization were opened in the 1970s. The process of the establishment of departmental stores was completed in the year 1989. The supermarket chain of Wesfarmers has established some more stores all over Australia. The organization had started many new ventures after the year 1999. This has helped in the high growth of the organization in the Australian retail industry (Wesfarmersgroup.com.au. 2018).

The retail industry in Australia has been able to maintain its momentum which was mainly driven by the social and economic development of the country. The major factors that are helpful in the growth of retail industry of Australia are based on the robust economic growth of the country, the rising purchase based power and the rising population as well. The retail industry is also expected to grow at a rate of 2% during the years 2013 to 2018. The market of Australia is also quite flexible in nature and the new organizations are able to enter market easily. The overall estimated size of the retail market is 122 US Dollars. The low rates of interest have also been able to provide high purchasing power of the customers. The retail sector of Australia is thereby driven by the rise in disposable income, confidence of the consumers and the increase of high net worth individuals (Durand, Grant and Madsen 2017). The trends in the market, the growth and different challenges are important factors that affect the Australian retail industry.

The strategic decisions that are taken by Wesfarmers are mostly able to affect its operations in the Australian retail industry. The company is thereby able to operate in a sustainable manner with the help of its resources and capabilities. The sustainable advantage has been provided to Wesfarmers with the help of the strategies that have been formulated in an effective manner. The combination that is formed with the proper strategy made by the company and operational effectiveness is important for the formation of proper resources. The other organizations which were set along with Wesfarmers include, Walmart and Target (Ethiraj, Gambardella and Helfat 2018). The organization had started its business operations as a retail store in Australia and later the expansion had led to the start of new operations in other sectors. The major components of Wesfarmers that have been able to provide the required growth to the organization include, the infrastructure of the firm and the culture as well. The different resources or capabilities of Wesfarmers that have helped the organization to maintain its position are as follows,

• The infrastructure of the organization is an important resource which has helped Wesfarmers to increase its operations all around Australia. The culture that has been followed in the organization has been helpful in the formation of a positive working environment for the employees. The management takes many visits of the retail stores which helps them to maintain proper levels of relationship with the employees (Hill, Jones and Schilling 2014).
• The human resources of the organization are given huge importance by the management of Wesfarmers. The company has been able to create an environment in the organization which is supportive for them to work in an effective and efficient manner. The training that is provided to the employees is able to create the skills which are required for the purpose of working in the organization in an efficient manner. The compensation rates of the employees are also an important capability which is helpful for the proper growth of the organization in the retail industry. The employees are also provided with huge benefits which has helped in the creation of a loyal workforce (Hitt and Duane Ireland 2017).
• The technologies that have been implemented and used by Wesfarmers in an appropriate manner. The organization has been the first in the retail industry to use some new technologies like, the new types of cash registers that are used for the purpose of issuing bills. The organization is also highly equipped for the purpose of the providing the best services to the customers in the industry. The various technologies that have been implemented by the company are based on the inclusion of innovations like, POS, performance tracking systems of the stores, satellite systems and market research (Meyer, Neck and Meeks 2017).
• The supply chain of Wesfarmers is also an important of the proper operations of the company. The organization has been able to create a network of suppliers who belong to the group of local farmers. The company thereby believes in sourcing fresh products from the local growers which are further delivered to the customers. The operating strategy of Wesfarmers is unique in nature and this is based on the freshness of the products that are delivered to the customers. The pricing strategy of the products that are offered by Wesfarmers to the customers is also different and unique. This has led to the creation of a loyal customer base of the company further leading to its sustainable operations (Michael, Storey and Thomas 2017).

The Australian Retail Industry

Valuable – The first important resource that has been possessed by the organization is based on the infrastructure of Wesfarmers which has helped the company to create an effective position in the retail industry of Australia. This resource has provided an edge to the company in the Australian retail industry and has proven to be quite valuable as well.

The second resource of Wesfarmers that has been taken into consideration are the human resources of the company. The human resource or employee base of Wesfarmers has been able to provide an edge to the company in the industry. The workforce of the company has been given utmost importance by the management of Wesfarmers. This has helped in the reduction of employee turnover and has also increased the number of loyal employees (Morschett, Schramm-Klein and Zentes 2015).

The third resource of Wesfarmers is based on the technologies that have been used by the organization. Wesfarmers is known in the retail industry of Australia for using the technologies in an effective manner for serving the customers and sourcing of products as well. This has also helped the organization to create a competitive advantage in the industry over the other major organizations.

The fourth resource is based on the supply chain that has been developed by the organization. Wesfarmers has developed the supply chain in such manner which has helped in including the local growers and farmers. The organization has done this with the aim of providing the best and fresh products to the valuable customers. This has thereby proven to be a valuable resource for the proper operations of the organization in the retail market. The value that has been provided to the company by this resource is quite high as compared to the others in the industry (Stead and Stead 2014).

Rarity – The infrastructure that has been developed by Wesfarmers in the Australian retail sector is not quite possible for the other major organizations. The resource is thereby quite rare in nature and can be created effectively by only the large retail organizations in the industry.

The human resources are not a rare resource that is possessed by the organization. Wesfarmers has however been able to create a loyal and effective workforce with the help of positive working environment. The environment that has been created by the management of Wesfarmers is an important part of the rarity based factor. The company has also taken special care for providing the best possible benefits to the employees (Trigeorgis and Reuer 2017).

The technology that has been implemented by Wesfarmers in different operations is also quite rare as the organization has been the first in the implementation of many technologies in the retail industry of Australia. The cash registers were first used by Wesfarmers for the purpose of printing receipts for the customers. This resource had been quite rare for the organization at the actual time of its implementation in different organizational processes.

The supply chain based activities of Wesfarmers have however been quite rare in nature. The company has created successful partnerships with the local farmers and growers. This has been an important step towards the proper operations of the company in the retail industry. Wesfarmers has kept the promise of delivering the best products to the customers which were fresh as well. The quality of the supply chain of Wesfarmers has proved to be quite rare as compared to the others in the industry (Wheelen et al. 2017).  

Strategic Decisions by Wesfarmers

Imitability – The first resource of Wesfarmers can be imitated by the other retail organizations based on their size and levels of operations. The infrastructure can be built easily by the large organizations, whereas, it is quite tough for the other organizations to create an infrastructure as large and efficient like Wesfarmers.

The second resource of Wesfarmers is based on the human resources that have been gained by the company in an effective manner. The company has provided utmost importance to the benefits that have been provided to the employees. The workforce has been created by the organization in an effective manner for the purpose of formation of loyal employees. This resource can be imitated easily by the other organizations (Trigeorgis and Reuer 2017).

The third resource of the organization is an important factor which is based on the use of appropriate technology for the purpose of providing services to the customers. The technologies that have been used by Wesfarmers are easily imitable by the other organizations in the retail industry. The technologies that are used by the organizations are based on the ways by which the customers can be satisfied in an efficient manner.

The fourth resource is based on the successful creation of the supply chain of the organization with the help of the local farmers of the area. This resource is not imitable easily by the other organizations as the type of operations of the organizations is different from the other retail organizations. The promise that has been made by Wesfarmers to provide fresh products to the customers is not imitated by the other retail organizations (Hill, Jones and Schilling 2014).

Non-substitutable – The infrastructure based resource of Wesfarmers is not substitutable in nature. The entire infrastructure of the company has been created over the years of its operations in the retail market. This resource has thereby proven to be valuable for the company to maintain its sustainable position in the market in an effective manner.

The second major resource which is non-substitutable is based on the human resources that have been gained by the company in the retail industry. The value that is provided to the organization with the help of an efficient workforce is totally non-substitutable in nature.

The technologies that have been used by Wesfarmers to operate in the market sustainably is an important resource for the company. The importance of this resources cannot be substituted with the help of any other part of the organization. This resource of Wesfarmers is thereby non-substitutable (Durand, Grant and Madsen 2017).

The creation of efficient supply chain is also important for the sustainable operations of a retail organization. The company has been able to create the edge in the retail industry with the help of this non-substitutable resource. The supply chain of the organization which involves the sourcing of fresh products is thereby effective and non-substitutable (Michael, Storey and Thomas 2017).

Threats related to the new entrants – The entry of a new service or product in the retail industry can affect the retail industry and the needs of the customers. The profitability in the industry also suffers in many ways. The threat based on the substitute products and the services is high if it is able to offer value proposition which is different from the offerings that are offered to the customers presently. The major sources of the threats related to this force in the retail industry are from the new products that are offered to the customers. The level of threat from this force in case of Wesfarmers is high as the retail products and services that are provided by the company are easily replaceable (Dobbs 2014).

Resources and Capabilities of Wesfarmers

Bargaining power of the suppliers – The suppliers of the Food & Staples industry of Australia are an important of the operations of the organizations. The suppliers who are present in the dominant position are capable of decreasing the levels of margin that can be gained by the company. The powerful suppliers are thereby able to negotiate in an effective manner so that higher prices can be extracted from the organizations. The high power of the suppliers is based on the ways by which they are able to pressurise the organization with respect to the prices of raw materials. The sources of the threats that are provided by the suppliers is related to the efficiency of the supply chain of an organization. The company can however experiment with the different materials that are used for the manufacture of products. The development of dedicated suppliers is an important step that can be taken by the firms for decreasing the power of the suppliers. The level of effects of this force in case of Wesfarmers is moderate in nature as the company has been able to create a stable chain of suppliers (Dobbs 2014).

Bargaining power of the buyers – The power of the buyers in case of Wesfarmers is high as the customers can sometimes become much more demanding. They always expect the best offerings for the lowest prices that are possible. The power of the buyers of Wesfarmers is moderate in nature. The main reason being that the company has been able to create large customer base in the retail industry. The organization has also been innovating new products which has led to the reduction of bargaining power of the customers. The major sources of threats in this case are the number of buyers of the company that are present in the market (Dobbs 2014).

Threats of the substitute services or products – The presence of substitutes services and products in the retail is quite high. The threats based on substitute products are thereby related to the unique offerings of the other organizations as compared to Wesfarmers. The availability of the substitute products in the retail market is quite high. The main reason behind this is the presence of huge number of organizations in the retail industry of Australia. The level of threats based on substitutes in the retail industry is moderate in case of Wesfarmers. The sources of these threats posed towards the company are mainly the different companies who are able to provide similar products to the customers (Dobbs 2014).

Competitive rivalry – The competitive rivalry is considered to be another major force in the industry which is able to affect the operations of retail organizations. The levels of rivalry that exists among the existing organizations in the market is quite high in the Australian retail industry. The major competitor of Wesfarmers in the industry is Wesfarmers which is a conglomerate. The competition in the industry has taken huge toll on the profitability of the organizations which operate in the market. The major sources of this force are thereby based on the competitors of the organization in the retail industry. Wesfarmers has tried to face the competition that exists in the market with the help of sustainable differentiation that has been created with the help of its services. The company has also planned to collaborate with the competitors for the purpose of increasing its share in the retail market of the country (Dobbs 2014).

The major goal or objective that has been set by Wesfarmers is based on the five major priorities which are,

• Building the store-led and customer team and culture.
• Generation of a sustainable amount if sales momentum in the Food sector.
• Evolving the Drinks based business operations of the company so that more value can be provided to the customers.
• Empowering the portfolio business of the company for the purpose of pursuing strategies for delivering shareholder value.
• To become a lean retailer with the help of end-to-end systems and process excellence.

The organization thereby aims at building an effective retail team which has the ability to solve the issues that are faced by the customers in an effective manner. The company has also aimed at organizing many programs that are based on listening the voice of the customers. The organization has always aimed at keeping the customers first in the different operations that are conducted by them.

The five generic strategies that will be most applicable for the successful operations of Wesfarmers in the Australian retail market are as follows,

• The organization needs to build a customer centric approach and make the business operations more service oriented rather than being product oriented. This will be helpful for the company to create a loyal customer base in Australia and others areas of its operations.
• The generic strategy that can be applicable for the operations of Wesfarmers in the retail industry is the cost leadership strategy. The company has to create a sustainable position in the retail industry with the help of low priced products. This will help in the creation of competitive advantage in the market.
• Wesfarmers needs to increase its presence in the retail industry with the help of expansion of its operations outside Australia. This will help the company to create a position in the international retail market and increase its shares in the market as well.
• Wesfarmers has a strong and stable network of suppliers who are the local farmers and growers. The organization needs to strengthen relationships with these local people for the easy sourcing of fresh raw materials from them. This will be helpful to provide the customers with fresh products as well.
• The organization can further aim at increasing the customer base with the help of low priced products. The cost leadership can be helpful for the organization to gain a huge competitive advantage in the market in the easiest manner possible.

Staffing – The organization has more than 190,000 staff across the stores all over Australia. The staff of the company are also present in the various distribution centres and support offices as well. Wesfarmers has a firm belief on the core of the business operations. The staff or employees who are a part of Wesfarmers have access of the various activities related to training, education and services.

Leadership – The leadership team of Wesfarmers is mainly based on The Group Executive Committee. This team is responsible for taking care of the various management decisions, the daily running and the operations. The members of this team further provide these reports to the Board of Directors.

Conclusion

The report can be concluded by stating that the industry in which Wesfarmers has its operations is highly competitive in nature. The organization thereby needs to use and further update its resources for the purpose of operating in the Australian retail industry in a sustainable and profitable manner. This will further help the company to enhance the capabilities and operate in the retail industry for a longer and face the competition effectively. Wesfarmers will thereby be able to create its position in the retail market which will help in the formation of effective market share.

Wesfarmers thereby needs to follow the various generic strategies that have been recommended previously in the report. This will help the company to create a loyal customer base and reduce the power of the consumers. The company needs to create an edge in the market so that the competitors are not easily able to provide the substitute products to the loyal customers of Wesfarmers.

References 

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Wesfarmersgroup.com.au. (2018). Wesfarmers Supermarkets – Wesfarmers Group. [online] Available at: https://www.Wesfarmersgroup.com.au/page/about-us/our-brands/supermarkets/Wesfarmers/ [Accessed 16 Jul. 2018].