Strategic information plays a very important role in the success of company as it helps to analyse the market. Wesfarmers is one the biggest companies in Australia which is doing its operations in effective manner. In this report, the manner in which company operates and the problems it faces in terms of its operations and control are discussed. Further, system acquisition methods and sales procedures adopted by Wesfarmers are also explained. Other than that, role of accounting software packages and their advantages to companies in Australia are also presented with proper competitive analysis.
Wesfarmers Limited is one of the biggest business groups not only in Australia but also in the world which has its head quarters in Perth, Australia. The company operates in the market with different businesses in the fields of retail, chemicals, fertilizer, coal and many more (Wesfarmers, 2017). Because of lots of divisions, the company follows the centralized, hierarchal structure where the information flows from the top to bottom. However, each of the division has its own head and is expected to take the division to new heights with proper strategies and techniques. This particular structure is followed by the company because of the different head of different units, understand the market in different ways as per their customers need and demands. Also, if one business fails, it does not have any impact on the function of others. However, there are some functions which are organized centrally by the head office like human resources as each division has to follow same HR policies. Also, financial decisions for each business is taken by the board of directors where the head of division present their past records and future visions. With this centralized functions specification, the company is able to take control of its divisions in an appropriate manner and also by giving freedom to the different division; it allows them to explore the market opportunities and work independently to gain more market share.
There are many issues that are faced by Wesfarmers because of centralized, hierarchal structure which starts with the delay in decision as if the manager of the particular division wants to launch a particular product or service in the market, he or she has to take permissions from the centralized board and pass on the budget (Wesfarmers, 2017). Centralized board takes its time to review the proposal made by the head, and during this time, it might happen that opportunity is lost and some other companies come up with the solution.
Other than that, there is also an increase in the competition among the different divisions of the company as they fight with each other to provide the worth of their divisions and do not think of the common goal which is to fulfil the goals and objectives of Wesfarmers. It increases the quarrels and makes the working environment negative which affects the working of other departments also which are not involved.
This particular type of structure also reduces the scope of cross cultural activities and reduction in the creativity of the employees. As the divisions are not related to each other, no employees get the opportunity to work with another team which reduces the scope of employee learning and their ability to perform much better.
Other than that, if any changes have to occur in the company, it takes a long time to be executed because a long hierarchal structure have to be followed which takes time and that might affect the working of a particular division.
The most common methods for the system acquisitions have been identified as commercial software, ERP or the custom software based on the needs of clients. Custom software’s have various distinctive business processes as the company are able to modify the software as per their need and demands (Pellinen, 2006). Commercial software is the ones which are standard and cannot be modified. They are equipped with lots of functions like Excel, accounting, word, etc. Companies have to use the functions which are built within. The last is ERP in which, minor customization can be made in some of the functions without developing the systems from scratch.
The system software that is used in the Wesfarmers is customer software because there are different divisions of the company and they all work independently. Company purchases the open ended software from the market and then the engineers in the company make changes in them as per the requirement of divisions (Scapens, 2010). Different processes and systems are added to provide the additional functionalities which help the company to perform effectively. As the employees of the company make modifications, they are able to remove all the bugs that appear while operations and they do not have to wait for the software company person to visit and check as it might waste lots of time.
From the diagram, it can be understood that the working of the company starts by the research in the market then account assessments are done to identify the different opportunities and needs of the customers (Wesfarmers, 2017). After this, different types of sources are identified, and then the products are sending for the development. Proper selling of goods is done with customer relationships.
Gujarathi, (2005) identifies that there are many problems which have to be faced by the companies in terms of the accounting software which operates online and some of them are-
According to Obrien, (2007) accounting software packages had seen a great deal of development as it all started in the year 1991 when MYOB started providing services like accounting, tax and may more to the SME’s. Slowly this software’s started developing more, and since 1993 many businesses since in Asia have relied on this business management as well as accounting software. The software’s which were developed earlier were also not able to fit with the other software’s of that time like CRM, inventory methods, etc. With the passing of time, companies in Australia realized the dire need of the accounting software’s so that they can also concentrate on different functions like ERP, CRM, etc (XERO, 2017). With the time, different companies like Xero, Inuits continued the development of software with new and effective technological changes and at present, these firms carry the solutions of businesses to over 1 million accounting firms and businesses in who whole Asia Pacific Region.
Tracy, (2013) identified that there are many Australian companies which are working in the same field and they all have different market sizes. Gupta, (2011) added that these accounting software’s are used by more than 1 million businesses owners in Australia. The accounting software’s provided by companies are reliable and supports more than 10,000 accounting practices and over 500,000 businesses worldwide. All the organizations from the very beginning are using their knowledge, scale and expertise to help the SME’s in order to build them a better business. The growth of the industry has been forecasted annually at 4.8% by the year 2022-23 which can be said that this industry has lots of scope in future (IBIS World, 2017). The revenue of the industry is $3 billion and annual growth between the years 2013-2018 is 8.3%.
However, (2007) argued that, despite the advantages of accounting software and the presence of many companies, almost half of the SME’s in Australia are still not using these products and only rely on their paper accounting methods or use normal desktop software. This is because, most of the companies feel, using the accounting software will increase their costs and also people will need to be trained which is not possible for them.
According to Bagad, (2008) MYOB has been a leader in the market from the very long time, and it can be seen from it dual digit revenue development for the half year ending June. In Australia, the company is a leader in the cloud accounting for different SME’s. In the first half of the financial year, companies are exploiting its powerful base with the adoption of new clients and are also making efforts to retain the existing clients by offering them valuable solutions and packages. The company acquired almost 63% of the new users in the first half of accounting period in selecting cloud products and over 86,000 paying subscribers utilizing these resources. Tracy, (2013) added that products of MYOB are used by more than 1 million businesses owners in both Australia and New Zealand. $833.1 Million listing of the company in May 2015 was the largest technology organization listing ever on ASX which allowed the company to make huge earning and gain great market share. The company also accounts for the 67% of the back office software that is used in Australia (MYOB, 2017).
In the current scenario, MYOB is fighting one the biggest companies in this field which is XERO. It is a company which is again showing a great rise in its sale and recorded a great growth of 54% last year. This company is also providing many seminars and other free offers to the users so that they can increase its presence. There are some other companies like Intuit also, which is new in the market but with its advanced accounting software’s and great marketing, it has also shown a great success.
Lucey, (2004) said that system of the cloud based accounting is increasing the efficiencies in the organizations. Rather than purchasing the complete IT infrastructure, organization are now accessing their accounting software via the internet for some minimal monthly charges. It is allowing organizations to devolve and make concentration fully on their operations as well as financial resources. More than 12% of the small businesses in Australia are using cloud accounting software provided by MYOB.
Shaikh, (2013) identified that one of the biggest challenges that these accounting firms have to face with its cloud accounting system is the security of data as there are many hackers in the world who can hack into the system of the company can bring out the sensitive information of different companies that are using this software. In order to avoid this, these companies like MYOB invests lots of money in order to develop its architecture and design so that best practices in the industry can be applied. Harsh, (2014) argued that not many SME’s like MYOB, XERO, etc. can afford this kind of the security that can involve the security of clients and their sensitive information (XERO, 2017).
Furthermore, Shaikh, (2013) added that it is very much important to prepare its organization for all the software’ processes so that they can move to technological environment and avoid the ineffective manual process. Still, there are many organizations which are not taking the advantages of the cloud accounting because they are used to the old methods. It is very necessary to train the employees so that they can be advanced. In order to address this, XERO organizes free webinars for different SME’s free of cost so that companies can understand its importance.
Conclusion
From the analysis, it can be said that Wesfarmers company is trying to maintain its position in the market however there are various operational issues because of centralized structure, competition in industry and control issues faced with accounting software’s like hacking, confidentiality affects its performance. Also, the use of accounting software needs is increasing in Australia among SME’s due to their functionalities. Competition in this industry is also increasing and companies like XERO, MYOB, etc are making their mark by introducing various updates. In order to become market leader, various challenges have to be handled by companies like hacking, use of all accounting standards in the urgent manner.
References
Books and Journals
Bagad, V., 2008. Management Information Systems. Technical Publications.
Gujarathi, M., 2005. USE OF ERP SOFTWARE IN ACCOUNTING. Emerald Group Publishing Limited. pp.207 – 220.
Gupta, H., 2011. Management Information System. HITESH GUPTA.
Lucey, T., 2004. Management Information Systems. Cengage Learning EMEA.
Obrien., 2007. Management Information Systems. Tata McGraw-Hill Education.
Pellinen, J., 2006. The role of standard software packages in mediating management accounting knowledge. Qualitative Research in Accounting & Management. 3(2). pp.145-160.
Scapens, R., 2010. Professional accounting media: accountants handing over control to the system. Qualitative Research in Accounting & Management. 7(3). pp.395-414.
Singh., 2007. Information System Management. APH Publishing.
Tracy, J., 2013. Accounting For Dummies. John Wiley & Sons.
Zwick, M., 2004. A software architecture for reconstructability analysis. Kybernetes. 33(5/6). pp.997-1008.
Online
Harsh, S., 2014. MANAGEMENT INFORMATION SYSTEMS. Available through: <https://departments.agri.huji.ac.il/economics/gelb-manag-4.pdf>. [Accessed 14 August 2017].
MYOB., 2017. About MYOB. Available through: <https://www.myob.com/au/about>. [Accessed 14 August 2017].
Shaikh, T., 2013. Introduction to information systems. [Online]. Available through: <https://www.londoninternational.ac.uk/sites/default/files/programme_resources/lse/lse_pdf/subject_guides/is1060_ch1-4.pdf>. [Accessed on 14 August 2017].
Wesfarmers., 2017. The Wesfarmers Way. [Online]. Available through: <https://www.wesfarmers.com.au/who-we-are/the-wesfarmers-way>. [Accessed on 14 August 2017].
XERO., 2017. About Xero. [Online]. Available through: <https://www.xero.com/about/>. [Accessed on 14 August 2017].
IBIS World., 2017. Software Publishing in Australia. [Online]. Available through: <https://www.ibisworld.com.au/industry-trends/market-research-reports/information-media-telecommunications/except-internet-music-publishing/software-publishing.html>. [Accessed on 14 August 2017].
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