Wesfarmers Business Strategy & Development Analysis: Corporate Growth, Mergers, and Future Prospects

Wesfarmers Business Strategy & Development Analysis: Corporate Growth, Mergers, and Future Prospects

A succinct overview of the organization's history and its strategic evolution.

The organization's internal and external surroundings.
The formulation of strategy at the business, functional, and corporate levels.
Competitive advantage and sustainability.
The effects of mergers & acquisitions, global strategy, and partnerships.
Strategic execution and the significance of leadership and entrepreneurship.
Organizational structure, controls, and corporate governance.

The Report should include other pertinent factors and must incorporate research information to validate your findings and suggestions.

Corporate history and summary
This paper examines the Business Development plans of Wesfarmers over the next 12 months. This report includes a full examination of the internal and external business environment of the organization with a description of its original history and strategic growth trajectory. This will be succeeded by recommendations for the formulation of business, corporate, and functional level strategies for the same timeframe. Wesfarmers operates in several sectors both in Australia and internationally. Therefore, a strategic examination of the effects of mergers and acquisitions on the organization is essential for determining future strategy. The following section analyzes the worldwide alliance strategy used by Wesfarmers. This study also includes recommendations about organizational control and governance.

Wesfarmers Limited, an Australian corporation, was established in 1914 as a cooperative entity to provide services and commodities to farmers in Western Australia. The firm was listed on the Australian Securities Exchange in 1984 and progressively evolved into a significant retail conglomerate. The headquarters of Wesfarmers is located in Perth, Western Australia. The company's operations are mostly concentrated in Australia and New Zealand, including areas such as retail, chemicals, industrial and safety goods, fertilizers, and coal mining (Wesfarmers.com.au, 2018).

The Westralian Farmers Cooperative Limited was founded in 1914 by the Farmers' and Settlers' Association of Western Australia. The farm was originally founded to acquire the assets of the West Australian Producers Union and to provide services and merchandise to the rural communities in Western Australia. Wesfarmers successfully acquired 65 local cooperative entities within five years of its inception. In 1940, Wesfarmers acquired national distribution rights for wool, cattle skin, and other products (Wesfarmers.com.au, 2018). They have also functioned as exporters of produce and fruit, insurance underwriters, and purchase agents for Westralian Farmers Limited.

In 1949, Ashburton Transport was bought by the firm, and the following year, they purchased their primary rival, Gascoyne Trading, thereby establishing a monopoly in operations in Northwest Western Australia. Wesfarmers Limited was listed as a public company on the Australian Securities Exchange in 1984.

Currently, the business divisions of Wesfarmers Limited include home improvement and office supplies, Kmart, Target, department shops, the sale of industrial products such as chemicals, energy, and fertilizers, as well as industrial resources and safety equipment. Wesfarmers has several subsidiaries operating in various international nations, including Australia, India, the United Kingdom, Indonesia, Hong Kong, China, and New Caledonia, among others. The primary subsidiaries of Wesfarmers Limited include BBC Hardware, Coles Group Superannuation Fund, Fosseys, Grocery Holdings Private Limited, Howard Smith, Loyalty Pacific, Viking Direct, and Coles Ansett Travel, among others (Wesfarmers.com.au, 2018).

Advantages

• The sustained brand recognition and company value since 1914 demonstrate the exceptional management and operations of Wesfarmers Limited.
• A robust focus on initiating community development enhances the company's brand equity in the corporate sector.
• Wesfarmers provides convenience with rapid customer service.
• Quality and performance are essential criteria of organizational culture.
• The extensive network of physical shops in various places, together with proficient in-store personnel, is a significant strength of the firm. With a workforce of 200,000, Wesfarmers Limited is the largest retail chain in the South Pacific area.
• In addition to physical changes, the corporation now has an E-Commerce platform. A spokesman for Coles said that their new mobile-optimized website is currently operational for users seeking to purchase online via their mobile devices (Ausfoodnews.com.au, 2014).
• The diversity in products and prices accommodates various price points for the firm, enabling the acquisition of a broad spectrum of customers.

Vulnerability

• The primary activities of West Farmers are confined to Australia, indicating a restricted geographic footprint.
• As a market leader, its business actions face significant criticism across different channels.

Prospects

• The nation has recently pursued mergers and acquisitions with several overseas businesses to position the corporation as a worldwide entity. They operate over 30 subsidiaries in countries outside of Australia, including those in Asia and the United Kingdom.
• The rapid development rate beyond Australia is expected to provide a 30% increase in yearly revenue within 2 to 3 financial years.
• They consistently strive to improve service quality and customer experience, consequently establishing benchmarks throughout physical retail outlets in Australia.
• Substantial measures to enhance employee and customer loyalty have been implemented, resulting in the firm being regarded as a highly rated employer.

Menaces

• The emergence of new competitors in the Australian business sector poses a significant challenge to Wesfarmers Limited.
• The recent economic slump and the weakening of the Australian dollar versus the US dollar have significantly diminished consumer confidence and led to a substantial decrease in demand.

Analysis of internal and external business environments
Political determinants

• Limited trade hours constrain the company's sales.
• The elevated costs of planning and zoning in Australia contribute to increased operating expenses.
• The Ad-Hoc laws in Australia also impact the operations of West Farmers.

Economic factors:

• The market conditions of the retail industry contribute to a diminished growth rate in recent times. Additionally, pay rates in Australia are elevated relative to the global market, resulting in a poor sales-to-cost ratio for the organization.
• The recent appreciation of the Australian and New Zealand currencies is advantageous for retail companies such as Wesfarmers.

Socio-cultural determinants

• The average life expectancy of Australians is progressively rising, hence boosting the need for domestic items.
• The active and heightened involvement of women in the workforce is contributing to Wesfarmers' growth in Frontline sales. The rise in average educational equality among Australians is prompting a preference for packaged and processed goods, resulting in increasing visits to retail establishments for routine purchases.
• Australians' brand loyalty has risen, resulting in more frequent visits to branded retail shops.

Technological determinants

• The rise in online shopping trends will expedite sales via the company's E-Commerce channels. The use of disruptive technology to influence customer preferences is also aiding Wesfarmers in enhancing brand loyalty. Data analytics is enabling Wesfarmers to reduce advertising expenses and thereby enhance corporate value.
• Technology-enabled value-added services significantly enhance client retention.

Judicial considerations

• Divestiture of the insurance brokerage business to Arthur Gallagher & Co. in 2014.
• The company's underwriting section has been sold to the Insurance Australia Group.

 Environmental issues

• The student groups with significant transport requirements are subject to reporting the admission rates in accordance with the NGER Reporting Act.
• According to Wesfarmers' annual reports from 2018, landfill trash has decreased by 6%.

Formulation of strategy
The principal objective of Wesfarmers' business is to provide sufficient returns to its stockholders. The potential for additional innovation in Australia's business sector is limited due to significant market saturation. The enhancement of current businesses is crucial for achieving operational excellence and promptly addressing client requirements (Porter, 1996). To meet these objectives, West Pharma Limited should establish convenience shops for consumers and create a 24/7 customer complaints reporting agency. This will enable the organization to get a comprehensive understanding of client demands. They will also comprehend the percentage of consumer wants they can satisfy, therefore documenting the particular requirements of customers for whom they must get items from other companies. Entrepreneurial activities, such as expanding franchise outlets across Australia, must be executed over the following 12 months. Additionally, Wang (2016) asserts that sustainability must be maintained via responsible and long-term governance. Therefore, it is essential that the management and executive body of the firm remain constant throughout the execution of the aforementioned business-level modifications.

It is predicted that after divesting Curragh call assets, demerging Coles, and selling Bunnings, Wesfarmers has sufficient liquidity to finance acquisitions up to 12 billion Australian dollars (Blake, 2018). Wesfarmers is anticipated to pursue the purchase of possible targets such as Oil Search and Caltex BlueScope Steel, each with an enterprise value over 10 billion Australian dollars (Mictchell, 2018). Currently, it is recommended that the planned acquisition of unlisted firms is more probable due to the inflated market value after the demerger of Coles.

The purchase of Bunnings in the UK and Ireland is Wesfarmers' most significant international expansion to date. According to Stanton (2016), there is significant potential in home-based services, which is why the development of this purchased firm is anticipated to be swift. To establish a competitive edge, the home retail service firm must cultivate a network of at least 12 to 15 key partners during the following 24 months. Following the UK, Wesfarmers is seeking to penetrate the home retail markets of the USA and Canada via its conglomerate approach. They will evidently employ the joint venture approach for the creation of a strategic alliance. Nevertheless, significant hazards are associated with rapid development, such as the inequitable allocation of gains among partner firms.

Guidelines for the formulation of commercial, corporate, and functional level strategies
Wesfarmers Richard Goyder has been instrumental in connecting the realms of business and Federal politics. His position is significant due to his adept management of alterations in competition rules and bank-imposed fines that might have substantially affected the corporation. His influence on the government has mitigated corporate tax reductions and facilitated exemptions in the company's energy bill. Consequently, the resource-based cost to the corporation has been much lower than that of other prominent retailers in the Australian market.

The board now consists of nine members, including eight non-executive directors. The combination of abilities, diverse knowledge, and experience of the deltas enables them to fulfill obligations and achieve the strategic objectives of the firm with various business operations. Rob Scott is the group managing director of the firm, which successfully executed the Bunnings acquisition during his tenure. He played a pivotal role in steering the New Zealand economy out of the financial crisis with the initiation of tax changes and the implementation of partial floats for five government enterprises (Wesfarmers.com.au, 2018). Consequently, his function is essential to the organization. Archie Norman, with extensive expertise in Retail Management, presently serves as the director of Coles and Target.  It is advisable that David Cheesewright, with 19 years of retail and manufacturing management expertise with Walmart, be assigned a more substantial position than just serving as a candidate on the Coles Board (Blake, 2018).

Conclusions

Currently, the business divisions of Wesfarmers Limited include home improvement and office supplies, Kmart, Target, department shops, the sale of industrial products such as chemicals, energy, and fertilizers, as well as industrial resources and safety equipment. The enduring consistency of brand recognition and business value since 1914 demonstrates the exceptional management and operations of Wesfarmers Limited. A substantial number of physical shops situated in various areas, together with proficient in-store personnel, is one of the company's greatest strengths. Thomas Limited, with a staff of 200,000, is the largest retail chain in the South Pacific area. The principal objective of Wesfarmers' business is to provide sufficient returns to its stockholders. The potential for further innovation in Australia's business sector is limited due to significant market saturation. Strengthening existing businesses is crucial for achieving operational excellence and promptly satisfying consumer demands. Furthermore, Wesfarmers is poised to broaden the scope of its operations. Wesfarmers is anticipated to pursue the purchase of possible targets such as Oil Search and Caltex BlueScope Steel, each with an enterprise value over 10 billion Australian dollars. Currently, it is advisable that the planned acquisition of unlisted firms is more probable, since the market value after the demerger of Coles has escalated significantly. To establish a competitive edge, the home retail service firm must cultivate a network of at least 12 to 15 key partners during the following 24 months. Following the UK, Wesfarmers is seeking to penetrate the home retail markets of the USA and Canada via its conglomerate approach. They will evidently employ the joint venture approach for the creation of a strategic alliance. Nonetheless, significant hazards are associated with rapid development, such as the inequitable allocation of gains among partner firms.

Reference List

Ausfoodnews.com.au. (2014). Wesfarmers reveals strategies to grow Coles and other businesses. Australian Food News. Retrieved on 21st March 2019. Retrieved from https://www.ausfoodnews.com.au/2014/05/28/wesfarmers-reveals-strategies-to-grow-coles-and-other-businesses.html

Blake, D. (2018). Shareholders to vote on Coles demerger next month. InsideRetail Australia. (Online). Retrieved on 21st March 2019. Retrieved from https://www.insideretail.com.au/news/shareholders-to-vote-on-coles-demerger-next-month-201810

Mictchell, S. (2018). Wesfarmers' M&A firepower hits $12b post Coles demerger: Citigroup. afr.com. Retrieved on 21st March 2019. Retrieved from https://www.afr.com/business/retail/wesfarmers-ma-firepower-hits-12b-post-coles-demerger-citigroup-20180606-h110zi

Porter, M. E. (1996). What is strategy. Published November.

Stanton, R. (2016). Corporate strategic communication: a general social and economic theory. Macmillan International Higher Education.

Wang, S. (2016). Corporate Retailing. International Encyclopedia of Geography: People, the Earth, Environment and Technology: People, the Earth, Environment and Technology, 1-12.

Wesfarmers.com.au, (2018). 2018 Wesfarmers Sustainability Report is available atsustainability.wesfarmers.com.au. THE BOARD OF WESFARMERS LIMITED. Retrieved on 21st March 2019. Retrieved from https://www.wesfarmers.com.au/docs/default-source/corporate-governance/2018-corporate-governance-statement.pdf

Wesfarmers.com.au, (2018). Structure and composition of the Board. WESFARMERS SUSTAINABILITY REPORT 2018. Retrieved on 21st March 2019. Retrieved from https://sustainability.wesfarmers.com.au/our-principles/governance/robust-governance/structure-and-composition-of-the-board/