Bunnings Warehouse Property Trust Opportunities and Threats - Essay Example

International Business Organisation Report (SWOT Analysis Only) Bunnings Warehouse Property TrustOpportunities and ThreatsOpportunities: Intelligent forecasting regarding mergers: Bunnings warehouse property trust which was formed in 1998 has its roots in a mother company called Wesfarmers Limited which has conglomerated with its strong competitor i.e. Harvard Smith Limited in 20011 which was a strategic merger. As it eliminated the competitive threat and opened opportunities for organization in terms of meeting the market demand.

Sustainability in growth and development:The organization had only 20 ware houses at the time of its joining the stock exchange and has been successful in expanding its units to ten times (230 = 131 warehouse stores + 99 smaller outlets) by purchasing the units distributed through out the Australian territory2 so that it is able to serve diversified clients efficiently. Strong opportunity lies in expanding its growth.Its commitment to social and community interests:The company has made sure that in addition to its monetary achievements it also takes care of community interests i.e. encouraging legal way of collection of timber3 and avoiding unnecessary wastage of electricity4 etc.

By doing so its image among the customers has been strong. For example, to help those struggling families affected by fire accident in Norply factory in Kyogle recently , Bunnings Warehouse in Lismore conducted a special auction5.Aggressive publicity campaigning:In today’s competitive market, advertising about the product is very crucial which has been followed strictly by the Bunnings ware house Property trust which resulted in creating an opportunity not only in maintaining the present level of customers (20% of the Australian poulation)6 but also in enhancing the customer number for future.

Excellent customer satisfaction : The customer representatives are well versed with product details and explain in simple manner to the customers which opened opportunity for higher customer satisfaction.Diversified business activities: To compete with big firms like K Mart and Big W7, it has entered in to garden and nursery services in addition to its hardware activities. Its parent organization Wesfarmer has been earning considerable net profit from coal mine business due to hike in coal export prices which will make opportunities in investing good amount for renovating the business of Bunnings warehouse property8.

-------------------------------------------------------------------------------------------- Bunnings Warehouse Property Trust, 2 Bunnings Warehouse Property Trust, 3 Wesfarmers, Bunnings, “Social Responsibility Report 2005. 4 Ibid.5 Make a bid for Kyogle workers. The Northern Rivers Echo Main news. 2005. Issue 1142 dated 20.10.2005. http://www.echonews.com/1142/index.html.6Better Homes and Gardens, “Brand Review”, < http://bhg.com.au/transient/mediakit/mediakit_brand.html> 7 National Australia Bank, “Wesfarmers”, Credit Research, August 2002, p. 14. 8 Stephen McMahon, “Coal price fuels Wesfarmers’ growth”, The Age, August 10 2005 < http://www.theage.com.

au/news/business/coal-price-fuels-wesfarmers-growth/2005/08/09/1123353317424.html> Threats:Non uniform reflection in its sales growth and its infrastructure creation: It is really worrying to find that the rate of jump in net profit of the company has been restricted to 1.1 % against 24 % jump in previous year which is big threat. Inefficient cost minimization programmes: The company could not maintain optimum debt to equity ratio due to economically unviable exrcises9.It could not maintain its word of introducing new schemes of reinvestment of dividends which may take the customer confidence away and poses a severe threat.

Another threat is in the form of absence of proper plan to invest in options and futures market10. Down turn in the housing or property market in Australia severely affects the prospects of this trust.Threat also operates in the form of difficult trading conditions in Victoria, Queens land and NSW made its trade sales diminished by 1.9 % against the previous year. Maintaining a prudent interest rate hedging position may not be feasible in long run11.Acquiring properties with long term leases to substantial tenants is risky and may result in poor liquidity and capital evasion.

-------------------------------------------------------------------------------------------9 Bunnings Warehouse Property Trust, < http://www1.bunningspropertytrust.com.au/company.asp?ID=1> 10 Dresdner Kleinwort, Glossary,