Global marketing is referred to the process of regulating marketing strategies of an organization to adapt to the prerequisites and conditions of other nations Global marketing does not primarily rely on product or service selling at global level but implies to the overall process of planning, creating, positioning as well as endorsing products in the global market. Wesfarmers Limited, one of the most recognized conglomerates in Australia fundamentally focus on offshore business as it seeks for global marketing opportunities (Bayne, Schepis and Purchase 2017). It primarily engages in the retail, coalmining along with production and industrial as well as investment businesses in Australia, New Zealand and the United States and globally. Wesfarmers business segments involve Coles, Home Improvement, wide range of departmental stores, WIS and WesCEF. Wesfarmers LTD comprises a broad range of business beyond Coles that includes companies such as Target, Officeworks, Bunnings and Kmart (Wesfarmers.com.au 2018). Wesfarmers constitutes a broader commercial wholesale market with well-established momentum as well as opportunities pertaining to both Australia and New Zealand (Smith 2016). This global market diversity fundamentally focuses on elevating rate of digital as well as physical presence. The following report evaluates the global market activities of Wesfarmers and focusing on its product and services profile.
Pestle analysis provides comprehensive detail about operating challenges Wesfarmers Limited tend to encounter in prevalent macro environment despite of competitive forces.
Political factors- China central government has recently established legislative framework of mining environmental in order to make diverse legal frameworks in concrete situational contexts. The local government is modifying the shape of customary wet markets and transforming into supermarkets (Solomon et al. 2014). Thus Wesfarmers must analyse the political stability and value of Food & Staples Retailing sector in China’s economy, trade regulations and tariffs associated to Food $ Staples retailing.
Economic Factor- GDP growth of Chinese retail market is anticipated to increase from a reduced rate of 8.2% in 2012 to 11.8% in 2016 which implies that the domestic rate is expected to remain steady in its prospective days as consumer usage is supposed to rise because of overall remuneration growth (Murray 2014). Thus Wesfarmers’ can focus on exchange rate and stability of China’s retail sector and the efficiency of its retail sector in its business cycle stage related to productivity, recession as well as recovery.
Sociological factors- Chinese retail sector witnesses its consumers to exhibit inclination in purchasing essential products and focus on one-stop purchase (Bayne, Schepis and Purchase 2017). Thus it is highly favourable for Wesfarmers to successfully sustain its supermarkets and services of home development along with department stores. Thus Wesfarmers must focus not only on the entrepreneurial spirit of Chinese consumers but further wide encompassing attributes of the society.
Technological factors- China’s retail sector due to its vast landmass as well as unconstructive infrastructural facilities in comparison to Australia or New Zealand retail sector, it requires to fundamentally establish a range of warehouses at strategic locations (Turner 2018). Thus Wesfarmers should not only conduct a technological analysis of Chinese retail sector but also address the forces disrupting the progress of the retail industry. The company might have the propensity to encounter challenges while expanding its diverse business operations associated to coal mining, energy, chemicals and reinforce well-established technical foundation (Bayne, Schepis and Purchase 2017).
Legal factors- Several governmental legislations, regulations and policies tend to pose a direct impact on the performance level of companies like Wesfarmers aiming to execute overseas business activities in China. Furthermore, China government’s policies related to monopoly regulation as well as reduction of consumers’ power can constrain entry to Chinese retail sector with such regulations as license requirement and restrictions on the availability towards resources or raw materials (Barua and Parveen 2014).
Environmental factors- China has immense integration towards environmental protection and safeguard which entails elimination of plastic bags and a depiction of environmental decision making (van Caenegem, Drahos and Cleary 2015). The country has further being inclining towards specific recycling programmes through its National and Social Progress Strategies. Wesfarmers drawing similar agendas with Chinese retail sector is planning the project to reduce the cost of product packaging and raise recycle systems (Barua and Parveen 2014).
Wesfarmers has not yet being competent to attain the market value and share of China retail sector in comparison to Wanda Group, Wumart and the Wanda group (Wesfarmers.com.au 2017). However rate of profitability in recent times has been developed after 2013 through the means of operational developments and progress and coercive growth in the Home Improvement Segment of China retail sector. Sustainability.wesfarmers.com.au (2018) reveal that the elevation to Fiscal 2015 valuation might emerge from revenue upgrades for the primary grocery as well as home enhancement segments or the raised conditions in the Chinese retail economy which is elevating the rate of consumer expenditure. It has been reported that Wesfarmers comprise substantial market share in the conglomerate market of an approximate of 27%. This has implied to the fragmented sector with abundant opportunities and scopes for Wesfarmers to expand in China retail market (Wesfarmers.com.au 2017). Business of home improvement is considered as an effective with earnings rising strongly with enhanced sales momentum as well as growth in regions of the China and develop higher rate of customer segments (Wesfarmers.com.au 2018).
As per the reports revealed by PRC Ministry of Commerce (MOFCOM), Chin comprised over 2500 foreign invested retail business organizations along with around $5.1 billion in aggregated foreign retail investment (Turner 2018). However, regardless to the recent market entry, foreign retailers such as Wesfarmers account for an approximate of 13% of the industry’s total sales and possessions which further suggest foreign retail firms to operate on a larger scale in comparison to Chinese competitors (Bayne, Schepis and Purchase 2017).
Restrictions posed by Chinese Retail Sector to Foreign Investors
Source: (Barua and Parveen 2014)
Turner (2018) reveals that recently series of Chinese online purchasers have grown over 65% to 125 million and e-commerce sales doubled to over $41.1 billion. Furthermore, around 90% of overall online sales relied primarily on consumer to consumer transactions. However, regardless to the B2C (business to consumer) model has been highly effective in China’s e-commerce market the rate of online sales undergone a substantial level of rise (Financial Review 2018). These areas can serve a highly decisive role for Wesfarmers in offering consumer-to-consumer or business-to-consumer services to conduct its individual business (Bayne, Schepis and Purchase 2017). However, Chinese retail sectors critical challenges and threats towards foreign investors have elevated the need of market research based on focus groups and sales records to consider sales and consumer information to efficiently identify the gaps in Chinese retail market.
Several reports have claimed that China free trade agreement has been recognized as the most effective agreement for any business firm that has been aiming to expand its business in Chinese retail sector (van Caenegem, Drahos and Cleary 2015). It has been taken into consideration to reassure foreign stakeholders regarding the extraction of resources by conglomerate companies. Though Wesfarmers has been fundamentally aiming to sustain its position at the renewable sector of Chinese market, the company has been experiencing considerable rate of limitations by China’s financial discipline and regulations (Klettner, Clarke and Boersma 2014). The organization has further been intending to effectively sustain its focus on –potential agricultural investments as the rate of interest in Chinese retail sector has been gradually increasing. It has been revealed that any form of agricultural areas of avenues involving horticulture would generate higher degree of gains from the recently signed contract for free or unconstrained trade agreement with China (Wesfarmers.com.au 2018).
The company anticipates Australia’s high acknowledging clean and green products would act a decisive role in the retail sector of Asia as well if Wesfarmers can develop a strong brand positioning in the Chinese industry (Wesfarmers.com.au 2017). Wesfarmers has been emphasizing primarily on producing greater level of efficiency from diminutive level of farmers in order to resourcefully sustain its production level while operating its business in overseas markets. The company has been offering goods and products for resale from a wide range of locations outside Australia, in the Chinese retail market (Solomon et al. 2014). Furthermore, purchasing products from the Chinese retail market tends to establish an economically beneficial position for the brand and further facilitates businesses to efficiently provide economical products to its consumer base in China. Reports by Turner (2018) reveal that over 3500 factories have been used in order to manufacture house-brand products for resale in the Chinese retail sector and other parts of Asia.
The challenges of China retail market has gradually become an increasingly significant one for various Western business firms of all value and sizes. Regardless to complex economic climate in European, Pacific region as well as in the US, economic structure of Chinese economy has been rising at the continuous pace for over past few years (van Caenegem, Drahos and Cleary 2015). However, foreign companies like Wesfarmers in order to initiate an entry the Chinese market will require comprehending its inconsistent market conditions.
Wesfarmers to successfully enter the market domain of Chinese retail sector must choose strategic locations. The company must consider strategies whether to establish in more striving and evaluated regions or to encounter risks while setting up in a less developed market of China relies at a great extent on a range of varied factors (Bayne, Schepis and Purchase 2017). For example, it is highly critical for foreign investors like Wesfarmers to spend time efficiently mapping out specific strategic locations of consumers as well as distributors and further comprehending the way Chinese distribution channels and networks vary between diverse locations (Smith 2016). Companies such as Wesfarmers who are aiming to establish local manufacturing facilities will be necessitating comprehensive investigation of factors such as local manufacturing as well as availability to raw materials and cost of human resource processes prior to making any entry to the retail market of China (Solomon et al. 2014).
Studies reveal that comprehensively understanding government policies, regulation and frameworks is highly critical to the success factors of Chinese retail sector. Regulation or procedures have been becoming highly stringent to the initiatives and efforts which foreign companies like Wesfarmers typically conform to (Klettner, Clarke and Boersma 2014). Extensive government regulations of China tend to pose critical impact on the timeline as well as costs of market entry. Thus Wesfarmers have been suggested to competently evaluate the implications of these stringent government regulations of China before committing to its retail market (Sullivan and Gouldson 2017). Furthermore, it is highly significant for foreign retail investors to note that products which have been previously accepted or approved by regulatory authorities in countries of European or the US does not necessarily ensure that similar products or services will be approved by the Chinese market (Singh-Peterson and Lawrence 2015). Thus it is essentially critical for Wesfarmers and other foreign companies to competently evaluate and comprehend the regulatory environment China retail market before any decision making process of entering the market.
Furthermore, choosing the most accurate mechanism for entry is regarded as one of the most significant decisions Wesfarmers must implement while entering to retail market of China (Turner 2018). However, an increasing number of foreign business enterprises along with Wesfarmers are executing individual business processes; the joint endeavored business model constitutes various benefits and can typically be perceived as a form of limited risk strategy.
Conclusion
Thus to conclude it can be stated that having entered or prior entering the Chinese retail market, it is equally crucial for Wesfarmers to constantly regulate any transformations or trends and regulations in the market. The company must further consider the ways in which these trends or regulations will act as an influential role on their business operations. China’s regulation processes typically operating in an opaque manner, it tends to create challenges and threats to anticipate certain regulatory developments before making commitments to the market. Thus Wesfarmers market researchers as well as legal consultants must aid foreign businesses to comprehensively realize the way China’s laws and regulations must be efficiently interpreted. The paper has provided an in-depth evaluation of Wesfarmers market analysis in Chinese retail sector by analyzing its market opportunities and threats along with potential demands of the retail market.
References
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Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), pp.145-165.
Murray, B., 2014. Marketing and Sales: What Science Tells Us and What Marketing and Sales Training Frequently Leaves Out. Effective Executive, 17(1), p.20.
Singh-Peterson, L. and Lawrence, G., 2015. Insights into community vulnerability and resilience following natural disasters: perspectives with food retailers in Northern NSW, Australia. Local Environment, 20(7), pp.782-795.
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Turner, S. 2018. ASX gains solidly as CSL and Wesfarmers power higher. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/markets/asx-gains-solidly-as-csl-and-wesfarmers-power-higher-20180815-h13zxz.html [Accessed 2 Sep. 2018].
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