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Strategic Analysis Assignment on Wesfarmers

Question

Task:Each student will write a strategic analysis report of NOT more than 2500 words. The report should demonstrate that the student has thoroughly researched their topic. Students should use examples of business practice from the scholarly journals papers, conferences, books and professional magazines to support their arguments. The strategic analysis will be on a local company. The report consists of two parts and should cover the following requirements

Part 1 (External analysis)

  1. Business background
  2. What industry is it?
  3. General environment analysis (economic, physical, sociocultural, global, technological, political/legal and demographic – and work out what the important facts are).
  4. The industry environment ((i.e., supplier power, buyer power, potential entrants, substitute products and rivalry among competitors) and explain briefly what is significant for each).
  5. Competitive environment (Is there a strategic group that you need to take account of? What is the rivalry like in this group? What capabilities do the relevant firms have? What strategies do they follow? What threats do they represent?)
  6. Opportunities and threats

Part 2 (Internal analysis and proposal)

  1. The firm’s resources, tangible and intangible
  2. Capabilities identification (explain the capabilities carefully to indicate what the firm really does.)
  3. Core competency analysis (For each capability, indicate which of the four tests for a core competency it meets).
  4. Propose a suitable information system solution that meets the chosen company needs
  5. Evaluate the proposed system and provide your recommendations

Answer

Introduction
This Strategic Analysis Assignment will present the case of the chosen organisation named Wesfarmers for preparing the strategic analysis of the company. The business practices of the company will be seen with effective analysis of the micro and the macro environment of the company. This Strategic Analysis Assignment also throw lights upon its capabilities and competences. An information system would be suggested to have better business operations in the coming time. This Strategic Analysis Assignment will conclude with a brief analysis and statement.

Part 1: External Analysis

1. Business background: Wesfarmers was grounded in 1914 as a cooperative association by Western Australian farmers. Also, in approximately 100 long years of its establishment it is regarded as one of the well-known and recognized organizations in Australia. Wesfarmers have enormous decent variety in its business activities as it incorporates security and mechanical items, coal production, export, insurance, chemicals, office supplies, home change products, retail establishments and grocery stores. Wesfarmers has one of the biggest numbers of workforce in Australia i.e. around 500,000 investors and roughly 200,000 workers. The central place or the headquarters of the association are in Perth, Western Australia (Wesfarmers, 2018).

2. What industry is it?
The retail business is one of the profoundly expanded ventures in today’s scenarios. There are broad numbers growing opportunities and untapped areas in the retail business. In Australia, there exists immense development and growth opportunities for the associations going into retail business. The retail business is getting an intense focus from worldwide points of view. There are very few entry related obstructions in the retail business of Australia that provide high development and growth chances to the associations (Kitey, Yadav and Dekate, 2015).

Strategic Analysis of retail business in Australia

(Source: Scutt, 2016)

The image and the figures mentioned demonstrates that the retail business of Australia possesses a consistent development in significantly every one of the divisions. There are diverse segments in the retail business of Australia, for example, nourishment, family products, individual adornments, footwear, apparel, departmental stores, takeaway and other retailing fragments. In this way it is well recognized that there are different development opportunities in the retail business of Australia (ibisworld, 2016).

3. General environment analysis
Environment Analysis through Pestle Analysis
Political Factors: There is much consideration which has been fetched from different associations to the supermarket chain, for example, promotion gatherings, non-legislative partnerships and government associations. In light of the retail business' immense size and as a fundamental part of the economy, there are different discussions that persistently happen with respect to the future condition of the retail business on a worldwide premise. The political components that affects the business operations of Wesfarmers incorporates market free trade for the global grocery needs considering market rivalry, enactment for the assurance and safeguarding the domestic farmers and activities taken and subsidies offered by the Government bodies in relation with the local production and the policies related to foreign export (Schulz, 2008).

Economic Factors: The grocery industry of Australia is at potential risk which for its stability and improvement requires a lot of finances, consumer loyalty and effective strategy improvement and development. There are different economic variables that impact the Wesfarmers’s operations for example mergers of giant players, acquisitions, trade cycles, rivalry with opponents, market seasonality, upsurge in currency rates and competition with the various other developing nations (Wesfarmers Limited, 2017).

Social Factors: The most extreme count of the families in Australia purchases the day to day necessary items once in a week which is sufficient for them. In this manner, they are substantially much interested by purchasing items through shopping under one-roof and all things considered, Wesfarmers give them such service and the different divisions of the supermarket, for example, home change, departmental store and so support the client to purchase with ease (Wesfarmers Limited, 2017).

Technological Factors: The country of Australia is perceived as the globe's driving country in the mining business and its resources are considered as the global pioneer. It incorporates the equipment and tools and services and products with the cutting edge innovation and advanced technology for the making of most noteworthy proficiency driven items and to advance the trend setting innovation, ecological assurance and protected and secure mineral handling. Wesfarmers’s business operations are exceptionally different and incorporate things like coal mining, industrial products, energy, fertilizers and chemicals and the proficient innovation is the establishment behind the immense achievement and advancement of Wesfarmers (Wesfarmers Limited, 2017).

Legal Factors: The retail business of Australia is exceedingly influenced because of the carbon tax which has been imposed across the country and primarily Wesfarmers.. It has been carefully amalysed that the business activities of Wesfarmers are profoundly influenced by the various regulations imposed by the CCCA i.e. competition and Consumer Commission of Australia and by the New Zealand Commerce Commission. In addition, the need to perform the business in a reasonable and fair way has additionally affected Wesfarmers' operations as there is a prerequisite to practice fair business related polices to work the business morally (Richards, 2012).

Environmental Factors: The business operations of Wesfarmers are affected by ecological factors and in addition the entire Australian retail industry. The petroleum organizations as well as the wine producing companies of Wesfarmers are the ones which are posturing dangers over the earth and the environment and in this manner it is affecting the profitability as well as the growth and performance in various business segments (Richardson, 2012).

4. The industry environment
Environment Analysis through Porter five forces
Buyers’ bargaining power: The purchasers' bargaining power is generally high in the retail business of the country. There are substantial number of retail locations and grocery stores in the retail business that provide things required by the customers for their day to day and regular needs and prerequisites. As there are numerous choices accessible to the customer to choose from along these line buyers' bargaining power is high and intensifying (Knox, 2015).

Suppliers’ boargaining power: In Australia’s retail sector, there are present few big players who possess a larger market share. Therefore this improves the suppliers' bargaining power at a specific level. The general understanding portrays that the power of suppliers is considerably moderate.

Threats regarding new entrants: The retail industry of Australia does not have much threat or risk of new business entrants. The retail business keeps running by the huge players and though it being troublesome for any new participant to catch the current market and in this way the business has almost no risk of new entrants.

Threat related to substitute: The risk identified with the substitute items is altogether lower in the business as the items which are required every day are to a great essentiality and similarly their utilization on a standard premise is additionally vital. The substitutes of these items are not accessible and consequently considering all these aspects, there is little risk identified with substitutes. There exist minimum choices accessible to the purchaser for satisfying up the everyday needs.

Industrial rivalry: The modern competition is noticeably high in the retail sector of Australia as there are few specific and noteworthy business competitors who compete and govern the business, for example, Marks & Spencer, Woolworths, ASDA and so threat of industrial rivalry can be observed at an expanding rate (AFN Staff Writers, 2014).

5. Competitive environment
Rivalry in retail group: The industrial competition among the existing associations is the most ideal approach to investigate the present market circumstance, competition and rivalry in the business. In Australia, there exists several grocery store chains, for example, Walmart, Marks & Spencer, Woolsworth, etc. These are various other supermarket chains possess a solid and reputed position and also has settled and faithful clients. Due to these contenders, it tends to analyzed that s high rivalry among the retail associations. There is high industrial competition takes place in the retail sector of Australia on account of the competitive prices, intense competition and sustained strategies of various retail associations. Wesfarmers hold a solid position in the retail market however there exists a threat of industrial competition over the profits and development of the association.

Capabilities possessed by other relevant firms: There are several competing organisations such as Marks and Spencer Asda, etc. which possess high capabilities. The costs of the products offered by Marks and Spencer are satisfactory in terms of prices as they are reasonable for the customers. However, this is majorly for the upper white collar class individuals only. This is one of the capability possess by Marks and Spencer. The costs are the greatest capability of Asda as the costs are particularly low in comparison with other competitors. Clients are especially faithful to the organization as the prices are usually low and competitive in nature (Chakraborty, et al., 2014). The quality of the products of Marks and Spencer are relatively higher than the other competitors and therefore it progress toward becoming quality conscious for the organization

Strategies of other firms: The administrations gave to the clients are one of the greatest strengths of the organization. There are 24*7 accessible client supports in the online sales. There are additionally productive client administrations at the stores of Marks and Spencer. The administration of ASDA is the strength for the association as the workers serve the clients with the most ideal serves and partners. The clients' issues are taken care of through an idealistic approach (Lloyd, et al., 2014). The training gave to the representatives is additionally considered as the strength for the organization as the employees are all around educated with the complete knowledge of the items and in addition handle all the client enquiries and complaints in a positive way at various other competitive firms (Seaton and Waterson, 2013).

Threats posed by other firm: There is solid and vigorous rivalry in the Australia’s retail business. The products and services are easily accessible at exceptionally competitive costs which develops substitute threat. There are several items accessible which are regarded as the substitutes of the Wesfarmers’s product which builds up a substitute risk for the organization's products and services. For instance, there are organizations like Wools worth, Marks and Spencer, Coles and Asda which gives a particularly intense rivalry to Wesfarmers and the accessibility of substitute items is high from their side (Melis, et al., 2015).

6. Opportunities and threats
Opportunities

  • Business expansion outside Australia
  • Improvement in the quality, services and management
  • To have 24*7 online customer support as well as have representative and customer service providers in the organizations

Threats

  • Industrial rivalry and increasing competition
  • High rate of customer switching
  • Competitors are offering resembling products and services at lower cost and thus threatening the profits of the company (Goyder, 2014)

Part 2: Internal analysis and proposal
1. The firm’s resources, tangible and intangible:Wesfarmers’s Resource based overview

  • The organization has two predominant and perceived coal mines
  • Intense and in-depth reach of worldwide market
  • High global presence by global export of coal
  • The human asset of Wesfarmers have capacity to retain and motivate potential talent
  • Higher emphasis over the employee and team advancement and high-performance culture (Goyder, 2014).

2. Capabilities identification

wesfarmers business

(Source: Goyder, 2014)

The value chain examination is a crucial tools in analyzing the capabilities of the wesfarmers business. The value chain analysis supports in understanding capabilities of Wesfarmers and will show the internal performance conditions and help in building up the business activities to be powerful. The primary business activities of the company includes the administrations to the clients, deals, outbound coordination, activities and inbound coordination (Goyder, 2014). It shows that the fundamental point of the sourcing system of the organization is to achieve the sustainable performance rather the company actualize the approach of domestic food sourcing because of the reason that there can be development and advancement of the residential firms as well (Seddon, et al., 2012). To help the local makers, Wesfarmers local takes use of the strategy and the approach of the local food sourcing. The purchasing strategies of the company depicts that it extremely supports the sustainable development (Hays, n.d.).

3. Core competency analysis: Following is the VRIO analysis of the capabilities and the core competencies of Wesfarmers:

VRIO analysis

It shows that the company gains the competitive advantage of good price positioning, effective supply chain integration, sound market proximity. But in case of local adaptation and customer service lacks behind its competitors.

4. Propose a suitable information system solution that meets the chosen company needs.
There is a need of a sound and effective information system solution which can meet the needs of Wesfarmers. For this, there must be used and implement the SAP Business One information solution. It is an integrated solution which gives visibility and extreme control on each part of the business. It records all the minutes and basic business data and conveys best that what have to oversee and develop. SAP Business One is an adaptable programming. With the use of the mobile, the company can get to it from anyplace. Again according to the business requirements, it gives the adaptability of choosing platforms. It has a sound understanding of the various business activities like client relationship administration, human asset administration, stockroom administration, finance programming and furthermore for discount and conveyance business detailing (Alles, Brennan, Kogan and Vasarhelyi, 2018).

5. Evaluate the proposed system and provide your recommendations
By evaluating the proposed SAP Business One system in this Strategic Analysis Assignment, it has been analyzed and identified that it the main system which streamlines the business forms. These business forms incorporates buy administration, CRM, back, bookkeeping, deals and advertising, inventory network administration, acquiring and so on. It is single programming which keeps all the business data in single framework. It is completely adaptable arrangement and can be altered easily as per business needs. It has adaptability of utilizing it 24*7 whenever anyplace by means of mobile. It takes add up to control of the financial business activity (Taylor, et al., 2015). This incorporates Bookkeeping, Controlling, rearranging, managing an account and compromise, money related revealing and investigation. SAP Business One shows signs of effective understanding of the client necessity and afterward it ends up simpler for meeting their prerequisites. This incorporates deals and opportunity administration, advertising effort administration, client administration, benefit administration, revealing investigation, preparing deals group. It also support in arranging to-pay cycles, receipts, receipt, returns, installments, acquisition, ace information administration, distribution center and bookkeeping, account payables, state-of-the-art announcing. SAP Business One keeps a check over the stock control and appropriation screens, track, and keep up at continuous. This incorporates distribution center administration, stock administration, issue control, generation arranging, material arranging and detailing (Alles, Brennan, Kogan and Vasarhelyi, 2018).

Conclusion
From this Strategic Analysis Assignment the different parts of the company has been assessed, for example, its micro environment analysis with the help of Porter fiver forces. It has been analysed and concluded in this Strategic Analysis Assignment that the organization possess a significant and strong position in the market and with its viable techniques and business activities there exists no risk of any new threat and competition. The macro environment analysis is assessed through Pestle analaysis which shows that the company is working effectively in terms of innovativeness, social, political, environmental, and legitimate components, there is a need of some alters for acquiring maintainability through the natural variables (Jones, Hillierand Solace, 2014). With the analysis of the value chain, it is concluded that the organization have incredible and huge stream of inventory network and procedures to help its essential and different exercises. From a general strategic analysis of Wesfarmers, it is connoted that the organization has incredible improvement and development openings in future in the event that it accurately and adequately actualize its business techniques if it takes adequate use of the effective information systems. The student consigned us with this task because it was a Strategic Analysis Assignment holding very demanding deliverables. In this Strategic Analysis Assignment we have strictly followed the format given in marking rubrics to cover in helping the student to cover all the deliverables in the assignment.

References
AFN Staff Writers, 2014.Wesfarmers reveals strategies to grow Coles and other businesses. Accessed on: 24th August, 2018. Accessed from: http://www.ausfoodnews.com.au/2014/05/28/wesfarmers-reveals-strategies-to-grow-coles-and-other-businesses.html

Alles, M., Brennan, G., Kogan, A. and Vasarhelyi, M.A., 2018. Continuous monitoring of business process controls: A pilot implementation of a continuous auditing system at Siemens. In Continuous Auditing: Theory and Application (pp. 219-246). Emerald Publishing Limited.

Chakraborty, R., Dobson, P.W., Seaton, J.S. and Waterson, M., 2014. Market consolidation and pricing developments in grocery retailing: a case study. In The Analysis Of Competition Policy And Sectoral Regulation (pp. 3-29).

Goyder, R. 2014. Introduction & Group overview.Wesfarmers Limited Strategy Briefing Day. 248. Accessed on: 24th August, 2018. Accessed from: https://bit.ly/2P3yeAu

Goyder, R. 2014. Introduction & Group overview.Wesfarmers Limited Strategy Briefing Day. 248. Accessed on: 24th August, 2018. Accessed from: https://bit.ly/2P3yeAu

Ibisworld, 2016. Consumer Goods Retail in Australia: Market Research Report, Accessed on: 24th August, 2018. Accessed from: http://www.ibisworld.com.au/industry/default.aspx?indid=1720

Jones, P., Hillier, D. and Comfort, D., 2014.Environmental and Social Programmes and Rapidly Growing Retailers. Economia.Seria Management,17(1), pp.5-17.

Kitey, S.S., Yadav, M.D.K. and Dekate, P.R., 2015. Role and Impact of Liberalization, Privatization & Globalization (LPG) On Retail Industry. International Journal, 3(6).

Knox, M. 2015. Supermarket Monsters: The Price of Coles and Woolworths' Dominance. ReadHowYouWant.com, Limited. Pp.198.

Lloyd, T.A., McCorriston, S., Morgan, C.W., Poen, E. and Zgovu, E., 2014. Retail price dynamics and retailer heterogeneity: UK evidence. Economics Letters, 124(3), pp.434-438.

Melis, K., Campo, K., Breugelmans, E. and Lamey, L., 2015. The impact of the multi-channel retail mix on online store choice: does online experience matter?. Journal of Retailing, 91(2), pp.272-288.

Richards, C., Lawrence, G., Loong, M. and Burch, D., 2012.A toothless chihuahua?The Australian Competition and Consumer Commission, neoliberalism and supermarket power in Australia. Rural Society, 21(3), pp.250-263.

Richardson, D., 2012. The liquor industry. Australia Institute.

Schulz, P., 2008. CRM and the Australian food retail industry. GRIN Verlag.

Scutt, D., 2016. Australian retail sales fall flat in December, Accessed on: 24th August, 2018. Accessed from: http://www.businessinsider.com.au/australian-retail-sales-fall-flat-in-december-2016-2

Seaton, J.S. and Waterson, M., 2013. Identifying and characterising price leadership in British supermarkets. International Journal of Industrial Organization, 31(5), pp.392-403.

Seddon, P.B., Reynolds, P., Willcocks, L.P. and Mahler, P., 2012. How To Succeed In The Transformation Of An It Function: Lessons From Coles Myer Limited. In PACIS (p. 84).

Taylor, J., Roberts, J., Oram, C., Gupta, A., Itani, M., Baroudi, S. and Smith, R., SugarCRM Inc, 2015. Customer relationship management system and method. U.S. Patent 8,972,876.

Wesfarmers Limited, 2017. Sustainability at Wesfarmers. Accessed on: 24th August, 2018. Accessed from: http://sustainability.wesfarmers.com.au/our-approach/sustainability-at-wesfarmers/

Wesfarmers, 2018.Who we are.Wesfarmers — a diversified corporation. Accessed on: 24th August, 2018. Accessed from: http://www.wesfarmers.com.au/who-we-are/who-we-are

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