Introduction And Background Of The Company

General analysis of the company

Introduction and Background of the company

Wesfarmers is a multinational company that has its headquarters in Western Australia (David & David, 2016, pg. 34). The company mainly deals with retails in Australia and New Zealand with its main interests in fertilizers, mining of coal, farm chemicals, commercial and safety products. Statistics state that it is the largest company in the country in terms of revenue with an approximate of 71.98 billion Australian dollars. It is also evident that it has the highest number of employees as compared to other companies in the same industry.

The company was founded in the year 1914 as a complaisant company in the name of Western Australian Farmers Association with an aim of supplying products to the farmers (David & David, 2016, pg. 38). The company is in the food and staples industry, however, is involved in different portfolio of businesses such as hotels, supermarkets, liquor business, and office supplies among others. The company majors on providing its customers with value for money services as well as developing relationships embedded in trust, loyalty and commitment (Biddle, 2016, pg. 6)

The company’s businesses have largely contributed to the growth and success of the countries in which they operate in by growing the Gross Domestic Product of the countries as well as protecting and sustaining the environment (Booth & Coveney, 2015, pg. 4). The company ensures that it takes good care of its employees by providing proper working environments and creating avenues and cannels for growth through training and a positive compensation system. The mission of the company is to offer customer fulfillment and gratification and also to ensure that the shareholders get a positive return on their investment. The company embraces strong financial disciplines through its strong management thus ensuring success and growth of the company (Booth & Coveney, 2015, pg. 7).

General analysis of the company

On the general analysis of the company, different factors have been considered and they include;

• Political – these factors have a major impact in the retail industry of Australia. Independent retail supermarkets such as Wesfarmers have grown over time becoming dominant in the market thus creating competition for the growing retailing stores and as a result of this; the government has come up with policies that govern the industry (Da Silva, 2012, pg. 14). It is also evident that some of these laws limit the company from growing into a monopoly. However, there are certain laws such as the waiver of electricity interest rates that favor the operations of the company.
• Economic – these factors affect the market in terms of procurement and consumer behavior. For instance, the global catastrophe in the year 2009 affected the income of the company leading to less disposable income (Kenny, 2009, pg. 34). Climate change and natural calamities also affect the chemical and fertilizer sector of the company reducing the revenue rates.
• Social – the company provides a huge base of employment opportunities and has many shareholders. This has ensured that it targets a population of approximately twenty-two million (Da Silva, 2012, pg. 19). It is also involved in corporate social responsibility activities among other initiatives that improve the living standards of people in the society.
• Technological – growth and advancement of technology plays a critical role in the success of businesses in Australia. This ensures that the company is able stand in the midst of competition through the use of machines and new technological systems (Da Silva, 2012, pg. 23).
• Environmental – over time, the company has ensured that it takes preventive measures towards ensuring that the environment is safe. This is achieved through proper disposal methods, avoiding wastage of resources, proper use of water and flexibility to climate change among others (Samson & Daft, 2011, pg. 229). It is therefore evident that the company maintains high standards to protect and conserve the environment.
• Legal – legal implications such as the restricted emission of carbon dioxide has limited the operations of the company. Policies such as the carbon tax and fair tax has affected the performance and production of the company thus reducing the revenue rates (Da Silva, 2012, pg. 29).
• Demographics – the company strives to provide an inclusive work environment ensuring gender balance and inclusion of people from all walks of life. The customers and shareholders are diverse and this allows the company to acquire the best insight into ensuring that the needs are met. This also strengthens innovation and creativity. It is vital to note that the company also ensures a balance of men to women in senior positions (Kenny, 2009, pg. 36). Today the company has approximately 220,000 employees; with fifty four percent women and forty six percent of men.

Industry environment analysis

For the company to adapt the most effective strategy that allows competitive advantage, the five forces analysis is required;

• Threat of new and potential entrants – the company is one of the leading organizations in Australia but has an increased obstruction when it comes to potential competitors in the market. However, due to its recognition, brand loyalty and awareness, the threat of new competitors is relatively low (Dobbs, 2014, pg. 37).
• Power of suppliers– it is evident that the company provides its goods and services from different outlets in the market. This ensures that it has various products in the market, however, there is a restricted rivalry in the supplier market of the company (Dobbs, 2014, pg. 38). This can result to be a major obstacle since the company has very many suppliers at a time.
• Buying power – the company ensures that it conducts a market research regularly to understand the expectation and the changing needs of the customers. As a result, the company can maintain the present customers as well as draw new ones due the sustainable approach in conducting business (Dobbs, 2014, pg. 41). Therefore, the buyer power is relatively low despite the competition in the market.
• Competitive rivalry – it is evident that the company is one of the most renowned companies multi-nationally and is dominant in the retail market. As a result, the company enjoys advantage over its competitors in the industry and thus the contention is relatively low (Dobbs, 2014, pg. 41).
• Substitute threat – the threat of replacement in the company was increasingly high in the recent past. However, the company has embraced production methods that are friendly to the environment and conserve the energy unlike other companies in the same industry (Dobbs, 2014, pg. 43). It is also evident that it has introduced a high customer service that provides the company with competitive advantage. As a result, the threat of substitution has greatly been reduced.

Competitive environment

Some of the competitors for the company include Woolworths, Kroger Company, Terry Costa Inc, Ermes Department Stores and Tallinna Kaubamaj Grupp (Grant, 2016, pg. 23). However, the competition is relatively very low because the company has embraced various strategies that has ensured that its stays on top in the industry. This therefore means that the company faces insignificant competition in the market. It seeks to differentiate itself from other players in the market through changes in the business operations (Hubbard, Rice, & Galvin, 2014 pg. 37).

Industry environment analysis

Capabilities and strategies embraced by the company

Online business – today, technology has a major impact in the success of any business. The company has an online business platform that attracts technologically savvy customers (Hubbard, Rice, & Galvin, 2014 pg. 41). The online platform has ensured that the sales are improved and also gives the company a more stable position in the retail industry. The online platform has also increased the awareness of the brand and improved service delivery to customers.

Unlike other companies in the industry, Wesfarmers sells most of its products at the first price more than the discounted or reduced prices. Kroger Company and Woolworths sell most of their products at a discounted price leading to a surge of customers at a go but resulting in poor performance in the sales revenue (Hackshall, Kassis, & Sutherland, 2014, pg. 16). This strategy for Wesfarmers has improved the profit margins and the general performance as well as increasing the sales revenue tremendously.

Store services – Wesfarmers has embraced the idea of widening the services range provided and improving the quality in service delivery by ensuring that customers have easy access to their stores. As a result, the company has opened many stores in various locations ensuring that they reach customers in different geographical locations customers (Hubbard, Rice, & Galvin, 2014 pg. 49). Competitors such as the Terry Costa Inc. have a limited access to their stores thus Wesfarmers have a competitive advantage. It is also evident that the company has additional services in their stores that attract customers. For instance, some stores have in house coffee shops and this improves the brand image.

These strategies cannot be imitated by the competitors and thus providing Wesfarmers with a sustainable competitive advantage. The wide range of products that match up to the global standards also ensure customer satisfaction and improves brand loyalty.

Opportunities and threats

Opportunities

• The company is able to expand to other regions outside Australia and this enhances the revenue margins as well as profit margins (Kenny, 2009, pg. 40). As a result, the company will be more recognized and able to establish a wider market.
• Improvement on the quality of goods and services to attract more customers as well as increasing sales.
• The income level of the customers is gradually increasing and this ensures that sales are increased.

Threats

• The cost of the raw materials used in production is increasing thus increasing the production and purchasing costs (Kenny, 2009, pg. 51).
• The Competitors such as Woolworths are offering more specialized products at lower prices.
• Economic recession that reduces the demand of products.

Internal Analysis

The company has tangible resources that enhance the proper running of the business. They are very important in the production of the goods and services provided by the company. However, below are the main company resources;

Capital – these are the resources that the company use in the process of production. These include the machinery and factory. Wesfarmers own quality machinery for the production of the goods and also a factory where these goods are produced. The specialized equipment owned by the company ensures production is easy, fast and efficient unlike the competitors. Other capital resources include land and finances (Antonini, 2016, pg. 214).

Competitive environment

Human Resources Management – The company has a huge number of employees that assist in the production of the goods and services offered by the company.

Financial – It is also evident that the company owns other subsidiary company that ensure the financial stability of the company. Such companies include Bunnings, Myers and Coles. All these assets ensure that the company is a going concern (Islam, Jain & Haque, 2016, pg. 347). Consequently, the company has incorporated an accounting information system.

Accounting Information System – An AIS is a structure that gathers, stores and processes financial information that is used in the decision-making process of an organization. Research states that there has been increased application of the accounting software in Australian companies including Wesfarmers. The company uses the MYOB (Mind Your Own Business) ERP accounting software (Schaltegger, Etxeberria, & Ortas, 2017, pp. 112-114). This program is specially designed to meet all the accounting needs for companies with various activities such as Wesfarmers. Since the company has various industries, this software is aimed it integrating all these activities by providing financial related information. These accounting activities include; basic financial accounting, financial reporting among others that are used to make timely decisions that contribute to the success of a company.

Intangible resources

Some of the intangible resources in the company are goodwill, brand recognition and property rights such as patents and trademarks (James, 2013, pp. 69). These are assets that can neither be seen nor touched but are of significance to the company. Other intangible resources include; brand loyalty and rand image.

Capabilities identification.

The primary objective of the company is to ensure that they deliver satisfactorily to the shareholders and the customers (Kenny, 2013, pg. 33). This is achieved through proper financial disciplines and effective management of the business portfolios. The company also embraces various strategies to ensure growth and success. Some of the firm’s capabilities include;

Talent management- the company employs highly skilled and qualified employees. It attracts committed and loyal employees who contribute to the success of the organization. The company believes in maximizing the potential of employees for sustainable success (Samson & Daft, 2011, pp. 225-227). It also believes that people are the greatest assets in an organization while strategies are tools for implementation. The company also provides training programs and effective remuneration schemes thus attracting a pool of talent which is then converted to efficiency in production.

Capabilities and strategies embraced by the company

Core competence analysis

Research states that the most significant business resources today are the core competencies. These are the internal capabilities that ensure that an organization is able to fulfill its mission, attain its objectives and ensure that it gains competitive advantage (Drejer, 2002, pg. 156). Some of the core competencies include;

• Client service – the company is aimed at providing quality service to its customers. It is evident that it conducts a market research regularly to ensure that it meets the changing needs of the customers unlike the competitors (Hull et al, 2013, pg. 160).
• Analytical thinking – the company employees and management have the ability to solve problems logically and ethically. This is evident in the daily operations of the business.

Proposed Information systems for the Wesfarmers Company

Information systems are software used in the organization and evaluation of data or information. The software ensures that data is processed into useful information that is majorly used in problem solving and in decision making (Stair, 2017, pg. 214). The company can embrace the Enterprise resource planning information system that is used to integrate all the vital sectors in the business since its only present on the accounting department.  This involves departments such as planning, sales, inventory, advertising and marketing as well as the finance and employee information. This helps to make work easier and also improves accuracy thus minimizing errors (Stair, 2017, pg. 219).

Figure 1: Source: https://www.infocomdata.com/2014/05/erp-business-backbone.html

Conclusion and Recommendation

The proposed system is very important in ensuring the automated flow of information that helps to evaluate business progress and also for future planning. Since the company has various outlets, the system will aid in ensuring that information shared is accessible to the senior management without having to go to the locations physically. It is vital to note that Wesfarmers prides in a very strong rank in the Australian market. However, the company will need to embrace various strategies in order to sustain itself in the market by gaining competitive advantage.

References

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MKom, HI 2014, “E-BUSINESS INFORMATION SYSTEM SHARE KNOWLEDGE,” ERP: The Business Backbone, accessed August 27, 2018, from https://www.infocomdata.com/2014/05/erp-business-backbone.html

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