Wesfarmers Limited is an Australian limited company working in several industries, such as wholesale, coal mining, biochemical, fertilisers and security products. It is the leading Australian corporation by profits, with AU$65.98 billion revenue in 2016 fiscal year. The company’s headquarters is situated in Perth, Western Australia. The company has several retail stores in major parts of the country. The revenue earned in 2016 fiscal year is below the estimated profit calculated by the company. This business proposal will discuss regarding structure and cost for the new retail store of the company, which will help to enhance their current profit. It will also include timeline and benefits of the proposal.
The estimated profit goals set by Wesfarmers Limited has not been achieved by the organisation. In order to achieve their estimated goals, the company can open a new retail store. For maximising the profits, the company can reduce their operations costs and increase their sales. There are numerous benefits for opening a retail store in the highly populated area. The company could establish a retail store in Wollongong, New South Wales since there is a large number of customers and less competition.
While establishing a retail store, the company could reduce their cost for maximising their profits. The company can introduce an incentive plan for their employees, depending upon their performance. By giving more incentives to higher performing employees and penalising the employees with lower performance could reduce the cost for the company, while increasing employee’s productivity. In the retailing business, companies incurred high cost in transporting their products. To reduce transport costs, the company could invest in purchasing a transporting company or purchase their own transport vehicles, such as trucks. One time investment in transportation could reduce company’s transport costs in the future.
Wesfarmers Limited invests heavily in technology throughout their retail chains. Technology changes rapidly according to time. In order to reduce their costs, the company could reduce their investment in technology. The other option for maximising company’s profits is by increasing the sales. By opening their retail store in the highly populated area, the company could increase their sales. The company could introduce new products in new retail store from different manufacturers. The method of competitive pricing in products increases the number of customers in the retail store. The company could target new audience by advertising in several places of Wollongong.
There are two types of cost in an organisation: Fixed and Variable cost. Fixed cost includes buying land for the store, constructing the building and salary of employees. Variable cost includes the cost of raw material and electricity bill. The cost for buying 40,000 square feet land in Wollongong area could cost around 80 million to the firm. The land should be near high population and large enough to fit all the products of the company. The cost for construction of the building could cost around 60 million to the corporation.
The minimum salary of the store employees is around $1000 for a week. The salary for store manager is around $1500 for a week. Instead of fixed income, the salary of the employees should be based on a performance basis to enhance their productivity. The company’s electricity bill will include lightning, freezer and air conditioning that will cost around $200,000. In order to establish their store, the company could either get a loan from a bank or use their retained earnings. The benefit of using retains earning for investments are that company does not have to pay interest on the loan.
The company can reduce their cost in transporting their products. The retail stores required the daily conveyance of products. To increase the efficiency of transportation and reduce the operating cost, the company could adopt an effective transporting plan. Investing in a transport business or in transporting vehicles, such as trucks, could reduce the future transport cost of the company. An effective transport system could reduce pollution in the environment. The company should establish a warehouse near the retail store, to store the perishable items such as vegetables, fruits, and dairy products. The warehouse would reduce transportation cost because the company could store their products in the warehouse.
As a Project manager of Wesfarmers Limited, the proposed plan can be beneficial for company’s growth. The project manager involves in the planning and execution activities of a proposal. The proposal has been thoroughly evaluated and researched by the project manager. The duties of the project manager include doing secondary research for the project, thorough evaluation of the estimated cost and planning the basic structure of the proposal.
The project manager involves in various activities of the proposal such as:
The company should conduct a meeting of the board of directors to pass the resolution for the new store within next few months. The board of directors should evaluate the proposal for the new store and begin to find a land for the building. The company should find a land for both store and warehouse, before the end of 2017 and the land should be near a highly populated area. The company has to hire a contractor for construction of the retail building. The construction should be completed before mid-2018. Within this time, the company could hire the employees for their store.
The company should construct a warehouse near the retail store for the protection of products. The store and warehouse will require installing of air conditioning and freezer to protect the products, after the construction of the building. The company should deal with nearby suppliers to get products for the store, before the inauguration of the building. The corporation should start to advertise their store in the end of 2018. The company should inaugurate the store at the end of 2018, around the time near Christmas.
There is more than 140,000 retail organisation in Australia. Wesfarmers Limited is one of the major participants in the Australian supermarket retail industry, along with Woolworths and Coles. The establishment of the new retail store will increase the market worth of the company and enhance its net revenues. Following are the benefits of the proposal:
Conclusion
Hence, in order to increase their revenues, Wesfarmers Limited could establish a new retail store in Wollongong area. The company could adopt new strategies to attract more customers and reduce their cost of operations. The land for the new store should be near the highly populated area, to increase foot traffic in the store. The organisation could invest in transportation business to reduce their future costs of conveyance. The company should pay their employees on a performance basis, to increase their productivity. The corporation could adopt these policies, in order to enhance their revenues and to meet their estimated profits.
References
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