Discuss about the Case Study on Wesfarmers Limited.
Industry
Wesfarmers Limited belongs to the conglomerate industry and traded as Australian Stock Exchange (Wesfarmers.com.au, 2017).
Location
Wesfarmers Limited operates in countries such as Australia, Bangladesh, New Zealand as well as United Kingdom and Ireland (Wesfarmers.com.au, 2017).
Size of the business
Wesfarmers Limited deals in large-scale business and divided into main segments. In that, retail segments takes into account four divisions such as Coles, home improvement as well as office supplies and Target. The other segment includes industrial business that had been divided into five divisions such as Resources, Insurance, and Chemicals as well as Industrial Safety (Wheelen & Hunger, 2017)
Market conditions
|
Open |
40.43 |
|
High |
40.80 |
|
Low |
40.41 |
|
Bid |
40.60 |
|
Offer |
40.75 |
|
Previous Close |
40.48 |
Wesfarmers Limited closed at 40.71 where 3.01% above its 52-week low of 39.52 that is set on 8th of June 2017.
Customer segments
Wesfarmers Limited has strong economic, social as well as environmental performance within a sound governance framework for providing value to shareholders, employees, customers, suppliers as well as community partners. The company is one of the reputed companies that aim at meeting the needs of the customers through best quality, convenience and service of products. The company provides a safe as well as secure work environment for customers, stakeholders and employees (Rothaermel, 2015).
Demand conditions
Wesfarmers Limited struggles with tough retail conditions over the past five years. It is noted that there are weak economic growth as well as volatile consumer segment because of unstable financial markets that result in a tense time especially for the operators (Wesfarmers.com.au, 2017). It is all about the household ratio that remained high for specified period that reveals that consumers continued to be cautious without spending. It mainly contributed towards fall in the retail demand especially for photographic equipment, recorded music, stationary goods as well as video games and newspapers (Peteraf, Gamble & Thompson Jr, 2014).
Competitors
Wesfarmers Limited faces stiff competition from Woolworths Limited, Metcash Limited and Caltex Australia Limited.
Directors of the company
|
Directors |
Position |
|
Michael Chaney |
Non-Executive Chairman |
|
Richard Goyder |
Managing Director |
|
Terry Bowen |
Finance Director |
|
Paul Bassat |
Non-Executive Director |
|
James Graham |
Non-Executive Director |
|
Tony Howarth |
Non-Executive Director |
|
Wayne Osborn |
Non-Executive Director |
Comprehensive description of the business
Wesfarmers Limited is one of Australian company that is composed of six main business divisions (Wesfarmers.com.au, 2017). In the given case study, it is a known fact that determining the competitive strategy for the company leads to attainment of success with designed as well as implemented alternative solutions. The analysis include the strategic management as well as understanding the ability of the company for providing quality services through use of knowledge management and other enhancing approach (Peppard & Ward, 2016).
SWOT analysis
|
SWOT analysis of Wesfarmers Limited |
|
|
Strengths |
Weakness |
|
Wesfarmers Limited established in the year 1914 that indicate brand legacy (Wesfarmers.com.au, 2017) Wesfarmers Limited focus mainly on community development initiatives (Wesfarmers.com.au, 2017) Wesfarmers Limited delivers convenience as well as customer service (Morschett, Schramm-Klein & Zentes, 2015) Wesfarmers Limited has access to large number of stores, strong workforce with more than 2,00,000 and has in-store staff members (Wesfarmers.com.au, 2017) Wesfarmers Limited provides special offers as well as discounts for attracting customers (Wesfarmers.com.au, 2017) Wesfarmers Limited engages in sales through use of online formats Wesfarmers Limited has wide variety of price points (Wesfarmers.com.au, 2017) |
Despite of being a market leader, Wesfarmers Limited always had been under scrutiny for any of decisions taken for given period of time (Wesfarmers.com.au, 2017) Wesfarmers Limited has low geographical presence (Wesfarmers.com.au, 2017) |
|
Opportunities |
Threats |
|
Wesfarmers Limited expand outside Australia Wesfarmers Limited enhances quality, experience as well as service benchmark that is across the stores (Hill, Jones & Schilling, 2014) Wesfarmers Limited expects employee as well as customer loyalty in and across business activities (Wesfarmers.com.au, 2017) |
Wesfarmers Limited faces huge threat from the competitors (Wesfarmers.com.au, 2017) Due to economic downturn, the company had faced plummeted consumer confidence as well as lower demand at the same time (Wesfarmers.com.au, 2017). As far as competitor is concerned, they offer specialized products as well as services at equitable price levels (Wesfarmers.com.au, 2017) |
PEST analysis
Political factors- Political factor is one of the important factors that need to be known for the company named as Wesfarmers Limited (Wesfarmers.com.au, 2017). The central government of Australia aims at establishing a legislative framework for mining environment. As far as mining companies, they need approval from the state government. For the company, coal mining had been one of the essential division and apartment in different states where it deals with mine management in the most appropriate way (Hill & Jones, 2013).
Economical factors- Economical factor is one of the important factors that need to be known for the company known as Wesfarmers Limited (Wesfarmers.com.au, 2017). The service sector in Australia considers to be the most essential as well as fastest growing sector that occupies with 71.1% of GDP of Australian population. The highest value service that is present in the industry includes finance as well as insurance that accounts for 8% of GDP. As far as insurance department is concerned, there had been large potential market as well as favorable conditions at the same time (Goetsch & Davis, 2014).
Social factors- Social factor is one of the important factors that need to be known for the company known as Wesfarmers Limited. Most of the families that live in Australia show interest to purchase necessities once per week. In that way, they show interest in one-stop shopping. It is for this reason becomes beneficial for the company such as Wesfarmers Limited for managing its home improvement, supermarkets and department stores (Eden & Ackermann, 2013).
Technological factors- Technological factor is one of the important factors that need to be known for the company known as Wesfarmers Limited (Wesfarmers.com.au, 2017). It is known that Australia is considered to be leading in the mining industry. It is because of the reason as it combines most advanced technology, products, equipment as well as services that create the highest production efficiency in and across the world. The company aims at promoting safe processing, mineral processing, new technology and environmental protection. The company operates in diverse business that mainly include coal mining, industrial as well as chemicals and fertilizers as it is essential guarantee for enterprise development (Bettis et al., 2014).
Analytical techniques to derive and justify their evaluation
Wesfarmers Limited is one of the Australian companies with a market capitalization of more than $48 billion (Wesfarmers.com.au, 2017). Based on the size and presence of Wesfarmers Limited in the Australian market, the company had properly formed the bedrock for most of the investor’s portfolio. The share chart that is elaborated above indicates a mediocre share price performance over the past decade and it takes into account two points to remember (Bettis et al., 2016).
Figure: Share Price Chart of Wesfarmers Limited
(Source: Wesfarmers.com.au, 2017)
The above chart actually ignores the dividend payments of the company that had been substantial as well as purchasing at the right had been rewarded as shrewd investors (Barney, 2014). There are various reasons present that advices to hold the share of Wesfarmers Limited and some of these are as follows:
Dividends- The share that is forecasted by the company equals to 4.7% fully franked that is quite reliable (Wesfarmers.com.au, 2017).
Brand power- The kind of brand power Wesfarmers Limited carries is defensive revenue streams as well as multiple ways for expand in the near future. It is because of the reason why Wesfarmers Limited had other brand names such as Bunnings, Officeworks, Target, Coles.
Wesfarmers Limited is one of the premier companies in and across Australia. After looking at the price of share, it is quite expensive. It is for this reason that it deserves to be in the hold rating (Wesfarmers.com.au, 2017).
Summary of key points
It is necessary for the management of Wesfarmers Limited for using strategic approach to management (Wesfarmers.com.au, 2017). By using this, the principal benefit of strategic management will help the company for formulating better strategies by use of logical, rational as well as systematic approach to strategic choice in the most appropriate way. On analysis, it is summarized that potential benefits of strategic management for the company is to make sure that the business should follow only one direction that is towards achievement of business objectives, success and mission at the same time. In addition, strategic management proves to be one of the important way that ensure attainment of success for the company and adapting to changes in its environment when the business enterprise remains competitive in the upcoming financial year (Wesfarmers.com.au, 2017).
At the end of the study, it is concluded that Wesfarmers Limited had been able to position itself in Western Australia market condition. The company needs to be competitively advantageous where management of the company should focus on factors as it affects the overall performance of the company. Change is important at the time of implementing strategies as it adjust to the needs of the marketplace.
Reference List
Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson Higher Ed.
Bettis, R. A., Ethiraj, S., Gambardella, A., Helfat, C., & Mitchell, W. (2016). Creating repeatable cumulative knowledge in strategic management. Strategic Management Journal, 37(2), 257-261.
Bettis, R., Gambardella, A., Helfat, C., & Mitchell, W. (2014). Quantitative empirical analysis in strategic management. Strategic Management Journal, 35(7), 949-953.
Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Hill, C. W., & Jones, G. R. (2013). Strategic management theory. South-Western/Cengage Learning.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management. Springer.
Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a digital strategy. John Wiley & Sons.
Peteraf, M., Gamble, J., & Thompson Jr, A. (2014). Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.
Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.
Wesfarmers.com.au. (2017). Wesfarmers.com.au. Retrieved 4 August 2017, from https://www.wesfarmers.com.au
Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. pearson.
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