Strategic information system can be defined as the information systems which are used by the organization so that it can respond towards various corporate initiatives. The main objective of the strategic information system is to provide competitive advantage to the businesses. The strategic information systems are designed specifically for the organization so that they can appropriately cater to the requirements of the target market at a lower cost (Laudon & Laudon, 2015).
This report focuses on the Wesfarmers supermarkets by way of conducting complete internal and external analysis and then proposing an information system solution with the help of which Wesfarmers can improve and simplify its internal operations.
Background of the Business
Wesfarmers Limited is a conglomerate from Australia having its headquarters situated in Perth, Western Australia. The business of the company is diversified in chemicals, New Zealand and Australian retail, safety and industrial products, coal mining and fertilizers. Wesfarmers is considered to be one of the largest private sector employers of Australia as it has approximately 220,000 employees and also has around 530,000 shareholders (Wesfarmers, 2018).
The company was founded in the year 1914 as a co- operative for the purpose of providing merchandise and services to the Western Australian farmers. With the passage of time, the company grew into a major retail conglomerate and also got listed in the Australian Stock Exchange.
Wesfarmers is a conglomerate company which operates in a number of industries. However, the focus of this report is on the business operations of Wesfarmers in the retail sector. Retail industry is considered to be one of the largest employers in Australia. Business in this industry is based on the trading of large range of non- specialized fool lines and groceries such as bread and pastries, fresh vegetables and fruits, dairy goods, toiletries, canned goods, cigarettes and cleaning merchandise. The larger businesses (large supermarkets) in the retail sector of Australia are more profitable as compared to the smaller businesses. Such supermarkets are also capable of enjoying higher returns on their capital (Dixon, Hattersley & Isaacs, 2014).
Economic- As a result of global economic recession, the sales of Kmart, Target and Coles (the divisions of Wesfarmers) were impacted. The economic condition of the Australian market acts as a factor that significantly affects the performance of Wesfarmers in terms of buying power of the customers and customer demand. The market consumption behavior also got affected by the global crisis which further led towards less disposable income (Wardle & Chang, 2015).
Physical- The physical environment of Wesfarmers is being affected due to changed business practices and consumer behavior. Wesfarmers is also taking a number of steps in this regard such as initiatives for the upliftment of the society and formulation of various employment and engagement strategies with Torres Strait Islander and Aboriginal people. It also takes preventive measures so that less harm is caused to the environment (da Silva, 2012).
Socio- cultural- With the passage of time, the lifestyle, attitudes and societal concerns of the Australian people have significantly changed. This has also brought relative changes in the Australian supermarket industry. People are also facing concerns related to health and obesity due to which they have switched to healthy and low- fat foods. Wesfarmers need to consider this pattern in order to stay competitive in the market (Grimmer, 2017).
Global- The operations of Wesfarmers are expanded over a number of countries such as Australia, United Kingdom, India, New Zealand, China, Bermuda, Indonesia, Hong Kong and Singapore. However, it is also considering the capitalization of the market strengths.
Technological- There is a great role of technology in the success of the businesses across Australia. For surviving in the intense competition in the market high investment in technology is considered to be smart. It also aims at offering the best online shopping experience to the customers. Technology is also being used for the security of the stores and customer data.
Political/ Legal- Australian retail industry is greatly affected by the political factors. Smaller retailers are facing severe competition from the dominance of the independent retail supermarkets like Wesfarmers. This has led to the creation of required policies by the government for creating certain restrictions. The government also governs the industry through legislating trading hours and through the monitoring function of Australian Competition and Consumer Commissions (Richards, Lawrence, Loong, Burch, 2012).
Demographic- Australian population has a mixture of ethnic and religious groups. This is due to the presence of Australian immigration policy that governs the immigration and emigration of people. The forecasts provide that the people above the age of 65 ae expected to grow by 25 % by 2051. There is also a fast increase in the population above the age of 85 years (Trevena, Neal, Dunford, Haskelberg & Wu, 2015).
Bargaining Power of the Buyers- Since the company belongs to the retail sector, it suffers from high bargaining power of the buyers. The buyers are offered a variety of options by the competitor of Wesfarmers i.e. Woolworths. This, in turn, leads to high bargaining power of the buyers.
Bargaining Power of the Suppliers- The supplier’s bargaining power is considered to be moderate in the retail sector. A respectful and committed relationship is maintained by Wesfarmers with the suppliers as it is a part of sourcing. Furthermore, Wesfarmers also aims at maintaining a long term collaborative partnership with the suppliers.
Threat of New Entrants-Since Wesfarmers operate on a large scale, it faces low threat from the new entrants in the industry. Wesfarmers also have a diversified portfolio and also have multiple operations due to which it becomes difficult for the new entrants to ensure their survival in the retail industry of Australia.
Rivalry among existing firms- Intense competition is faced by Wesfarmers from the companies belonging to different industries which are making efforts of mitigation by way of focusing on lowest price, best services and wider range of products. Woolworths is the biggest competitor of Wesfarmers in the retail sector due to which it sometimes faces a significant decline in its sales (Waterlander, Luiten, Eyles & Steenhuis, 2016).
Threat of Substitutes- In the retail business, there are a number of substitutes in the form of convenience stores, online stores, fresh food markets and grocery stores. Consumers now give more importance to factors like easy shopping, less queues, easy availability of parking, etc. Therefore, there is low availability of substitutes in the market.
Woolworths and Aldi are the biggest competitors of Wesfarmers. In the retail industry, Wesfarmers leads through its Coles supermarket. Both of the competitors bring out innovative strategies which has significantly affected the earnings of Coles supermarket. Aldo makes the use of simple and more agile logistics arrangements which has created a threat for Coles supermarket. The competitors are also trying to attract the customers of Wesfarmers (Coles supermarket) by way of offering discounts and other offers such as Buy 1 Get 1. However, Coles have still been able to maintain its position among the top supermarkets of Australia. The customer base of Woolworths is larger than that of Coles (Biddle, 2016).
Coles supermarket is able to handle all the competition as it is supported by heavy investment by Wesfarmers. Such investment allows it to open several stores t different places so that it can reach larger audience.
Opportunities- since Wesfarmers is already engaged in diversified businesses, it can further expand its business outside Australia which will allow it to become a market leader of all the industries of other countries as well. There have been a number of technological developments with the help of which it can easily enhance its services, quality and experience benchmarks across stores. It can also take customer and employee loyalty initiatives through which it will be able to ensure its success for a longer period of time (Campbell, 2017).
Threats- Competitors are the biggest threat for Wesfarmers. The competitors of Wesfarmers in different industries are coming up with new and innovative strategies for the purpose of increasing their market share. Demand and the confidence of the customers have lowered as the result of economic downturn. Moreover, specialized products and services are being offered by the competitors at the equitable prices leading to greater threat for Wesfarmers (Pulker, Trapp, Scott & Pollard, 2018).
Tangible and Intangible Resources of Wesfarmers
The success of Wesfarmers in the retail industry is the result of its tangible and intangible resources. Wesfarmers have adequate human and physical resources with the help of which it is able to achieve its goal. Wesfarmers have a team of 220,000 employees who work had for the achievement of organizational objectives. It also has support centers and distribution offices with the help of which it is able to offer value, range, superior service and convenience to its customers. The brand reputation possessed by the name Wesfarmers acts as the greatest intangible resource for Coles and Kmart supermarket (Booth & Coveney, 2015). This implies that the company is very strong in terms of its tangible and intangible resources. Furthermore, it also has reputation for providing healthy, fresh and quality food products to the customers, wide product range, product innovation skills, efficient management and human resources, strong brand image, proper logistics management, etc.
The major capabilities of Wesfarmers are its effective workforce, brand reputation and effective supply chain. The main focus of Wesfarmers is on building an effective workforce capability, workforce flexibility, indigenous employment and engagement and gender balance. Due to this, Wesfarmers has immense talent with the help of which it is able to meet the overall objectives of the organization. Along with effectively handling the internal operations, the workforce also manages the external operations which include interacting with the customers and helping them in searching for the products in the supermarket (Grimmer, 2018).
Wesfarmers have been capable of maintaining its reputation in the retail sector as well due to the performance of Coles supermarket. Coles provides general merchandise, groceries, fresh food, fuel, liquor and financial services through its online channels and national store network to more than 21 million customers every week. Its brand reputation is due to the reason of quality and safe products offered by it. Along with this, it also makes economic contribution and takes steps for the reduction of the impact of its activities on the environment.
Moreover, the supply chain of Wesfarmers is its greatest capability. The logistics network allows it to save costs and increase the profitability over its competitors. The effectiveness of the distribution network is due to technological capabilities and supplier relations (Philpott, 2014).
World- Class Supply Chain- Supply chain of Wesfarmers has played a great role in gaining competitive advantage and in effectively catering to the needs of the customers. It allows Wesfarmers to focus on cost savings and efficiency and in the management of unnecessary expenses.
Branding and Market- The fresh food products offered by the supermarkets of Wesfarmers have created the brand reputation and differentiated image. The marketing of the products further leads to increase in sales (Cameron, Sayers, Sacks & Thornton, 2015).
Innovation- Innovative marketing strategies and internal strategies are adopted for achieving increased profitability. It also takes innovative steps from time to time in order to reduce the impact of its activities on the environment (Mitchell, 2015).
Integration- some supplies of Wesfarmers are integrated with the production if its inputs. It is the talent of employees and top level management with the help of which all the operations are effectively managed by Wesfarmers (James, 2013).
Taking into consideration the operations of Wesfarmers, it is recommended to adopt software with the help of which it can effectively manage its activities in the single go. The supermarket stores obtain information related to the customers such as their names, contact numbers, email address, etc. for the purpose of sending them different offers. Such information is stored on the system of Wesfarmers supermarket and it is the duty of Wesfarmers to take effective steps for ensuring its security and confidentiality. An information system solution can be adopted for this purpose which will perform the function of protecting the data of the customers through safe security techniques and minimize the internal and external threats. The designing of such system solution will be undertaken by the experts who will use detection and prevention systems for intrusion, vulnerability management and remediation tools through which Wesfarmers will be able to maintain the confidentiality and integrity of customer data (Rivard, Harb & Meret, 2013).
Another information system solution which can be used by Wesfarmers supermarkets is for the management of its internal working. This solution will help Wesfarmers in integrating all the departments so that the purchases and sales can be effectively managed. Through this system solution, information regarding the workings of the Wesfarmers in other industries can also be obtained easily. When all the operations will be integrated, the workings will become easier and productivity will enhance.
The evaluation of the proposed information system solution provides that the requirements the business requirements of Wesfarmers can be adequately and appropriately met after the adoption of such system solution. It is further recommended to maintain the security standards by giving prime importance to the security of customer data. This is possible with the help of adopting efficient information system solution. This will further lead to enhancement of the brand reputation in the market. Moreover, the integration of the system with that of different departments will help in catering the needs of the business in an effective manner (Saeed, Bamarouf, Ramayah & Iqbal, 2016).
Conclusion
Therefore, it can be concluded that strategic information system plays an important role in providing competitive advantage to a business. This report focused on Wesfarmers supermarkets by way of conducting complete internal and external analysis and then proposing an information system solution with the help of which Wesfarmers can improve and simplify its internal operations. The general environmental analysis of Wesfarmers provides that Wesfarmers is able to effectively deal with the outside factors. However, Woolworths and Aldi pose serious threat for Wesfarmers due to their competitive strategies.
The internal analysis of Wesfarmers provides that its tangible and intangible resources have contributed towards its strong position in the market. Supply chain, brand reputation and effective workforce comprise the capabilities of Wesfarmers. At the end of this report, an information system solution is proposed for Wesfarmers which will assist it in security maintenance and improvement of internal operations.
References
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da Silva, M., 2012. A broad business challenge-Sustainable Company of the Year. Ethical Investor, (98), p.14.
Dixon, J., Hattersley, L. and Isaacs, B., 2014. Transgressing retail: supermarkets, liminoid power and the metabolic rift. In Food Transgressions: Making Sense of Contemporary Food Politics. Routledge Abingdon, Oxon.
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https://www.abc.net.au/news/2018-03-16/coles-cut-by-wesfarmers-as-it-goes-back-to-trading-assets/9555286
https://www.smh.com.au/business/companies/coles-earnings-fall-adding-to-wesfarmers-bunnings-uk-woes-20180220-p4z109.html
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