Wesfarmers Business Strategies - Case Study Example

STORY CREATION AND RATIONALE - WES WESFARMERS Introduction Wesfarmers Limited is one among the largest and most successful public companies in Australia, where it is also ranked among the largest retailers in the country. The company is currently being headquartered in the Western parts of Australia in Perth. Currently, Wesfarmers is being regarded as the largest and most effective private employer in the Australian Republic, having extremely 200,000 people in its employment in the entire country. Official records from the government have indicated that the company received a net profit of about $1.05 billion with its operating costs reaching about $8.9 billion which came before the takeover by Coles Group (Smith 2003). In 2007, Wesfarmers made a public announcement that was in the process of purchasing Coles Group, a retail business at a value of A$22 billion (Smith 2003). This process that was highly successful made it the largest and most effective take-over process in the history of Australia. According to company information, it officially took over the Coles group in November of 2007, which came after payment of about A A$20 billion for the retail company group. Rationale The business industry is characterized by various changes that influence practices in businesses and industries at large. This is the reason why many companies that were established decades ago have been modifying their business strategies and approaches in order to remain relevant in the fast-changing world. With each passing year, customer tastes and preferences keep changing, prompting these companies to keep re-inventing their strategies and approaches to remain relevant. This paper examines the path of growth that Wesfarmers, a public company in Australia has undertaken since the time its establishment many centuries ago, focusing on how it has kept changing its business strategies and approaches in order to remain as active and relevant as it is up to present. Company History Wesfarmers has come a long way reaching its current status of growth; it was founded many decades ago, in 1914. During this time, the company used to operate under the name of Westralian Farmers Cooperative that paid attention to the creation and provision of merchandise and services to the people of Australia especially those that resided from the rural parts of the republic (Smith 2003). Additionally the company was actively involved in the operations involving cooperative wheat pool that was most common in the western part of the Australian republic. Smith (2003) explains that in 1924, the company began involvements in media, managing to set up its first radio station that broadcasted to the people in Western Australia. The station operated for some time, receiving wide acceptance across the country; this meant that the station was supposed to increase its operations in order to serve all people in the country. However, the company did not want to take on the venture but instead, gave it up to the government’s Australian Broadcasting Corporation later in 1929, five years after its development (Smith 2003). Through proper management and an increasing client base, the company began active involvements in the sale of wheat and other general merchandise in 1940. In the same year, the company also became the official distributor of Commonwealth Oil Refineries Ltd; additionally, it also involved in the business of auctioneers, where it deal in livestock, wool as well as skin (Smith 2003). It began exporting fruits and grains to other companies and countries in Europe and other countries across the world. It started active involvement in the insurance industry, where it concentrated with underwriting. The company also managed to create a section that dealt with getting agents for the wheat pool of Western Australia in the name of Western Farmers Ltd. By this time, the company had fully established as a very large company (Smith 2003). It had created and now was operating many business premises in different locations, most of which were located in the central business district in Perth. The company had fully operational and profitable business premises in 563-571 Wellington Street as well as many more in Fremantle in the Newman Street. In 1991, the company had managed to set itself as the largest and fastest growing company. In this same year, about 19 million of its records were deposited in Perth in the Library of J S Battye (Smith 2003). This was necessitated by the need for a large and effective storage system that would ensure safe storage of data and other vital records for the increasing business functions of the company as well as data for its expansive workforce and other essential resources. Before this process, the company had successfully changed its name in 1984, becoming Wesfarmes Limited. The process was also followed by a change of its process and functions, restructuring from being a cooperative to a public limited company. Subsequently, the company got listing on the Australian Stock exchange. This development made the company to increase its shareholding and profits that necessitated its business growth and expansions. Wesfarmers Business strategies According to Westfarmers (2015), since the company’s establishment, growth and expansion have been its chief objectives. The company has had the advantage of venturing and diversifying its investments especially in fields that are prime with little or no investments at all. In 2009, Langley (2014) pointed out that the company had devoted towards increasing its expansion strategy, by showing great support to the supermarket group – Coles. According to Langley, the company had explained that since the financial year of 2009, it had attained very low prices for its products, something that had attracted many clients. Additionally, the company had also created several loyalty programs, established many better partnerships with suppliers. It had also developed new formats in all its stores in order to enhance their effectiveness and efficiency. The development of new product categories was also targeted at increasing client base for the supermarket since it would have many product categories, something that would strengthen its financial position and performance. According to in the supermarket group, its established business strategies included establishment of plans that would deliver better and highly effective store networks that centered on having fresh foods. In this case, the supermarket would manage to create and extend its respective value leadership, simply its operations and supply chains. Additionally, it would also extend its new channels and other services as well as transforming its liquor business. According to Coles, the idea of increasing investments into the fresh food industry would help in improving its local offerings and building a deeper and long-term collaborative partnership and associations with supplier. This approach would play a big role in positioning the company towards excellence and effective performance. A good approach towards implementing this strategy would involve the “Australian first” policy on sourcing. The supermarkets growth strategies involved driving a strong and effective growth of the fresh food industry as well as extending its respective leadership. Additionally, the growth strategies would also concentrate on transforming the company’s liquor industry in order to attract effective performance through increased sales and productivity. The process of achieving this strategy would include differentiating Coles group through establishment of new effective growth channels. A simplifying and improving supply chain was also part of the growth strategy, including establishment of an in-store and other above store business operations. Industry Context and Outlook It is important to appreciate the fact that Wesfarmers has been very successful in its operations in many industries since its development. However, the company’s transformation into a public company was very effective in ensuring that it enhanced effectiveness and efficiency of its operations in few and successful industries. Venturing in the supermarket business through selling of fresh foods among other merchandise was very effective in its growth processes. Additionally, the selling of liquor has also worked to the company’s advantage because it has made it increase its client by attracting people that had put off the drinking of liquor for various reasons. According to Greenbalt (2014), Wesfarmers has been actively involved in the process of ensuring that it actively invests in new businesses and different industries in order to enhance its operations. Greenbalt explains that the company has been eying investments in China in Hong Kong in the process of creating and enhancing its overseas operations. So far, the company has streamlined its internal operations and capabilities so that it can exploit the many business opportunities that exist in other countries. So far, the company has managed to create an effective workforce that is able to take on the many opportunities that exist in international companies. In this regard, it hopes to bank on its experience that it has developed in the past in order to create and consolidate on its success in the new markets that it has realized including China among many others. The company should be weary of the changing business environment in international markets in its growth and expansion processes. In order for this to happen, it needs to ensure that it creates an effective research and development team that can check on the these and other issues necessary for its expansion processes. Many companies that have managed international and global expansion have excelled because they always find a ready market that has not tested its products. However, there are always many obstacles to conquer including economic upheavals, which are very common and unpredictable. With good economic management and forecast of these changing patterns, Wesfarmers can manage to build a successful business empire that can challenge many other economic giants in the same and other industries. One of the best approaches is to have a pool of workers that can guide it through its growth and expansion strategies. In this case, it can successful tackle the many challenges that are associated with international expansion and business growth. Additionally, the company should develop business strategies and approaches that can enhance its effectiveness in international business growth and expansions. Notes Greenblat Eli. 2014. Wesfarmers eyes International expansions. < http://www.smh.com.au/business/retail/wesfarmers-eyes-international-expansion-20140527-3930c.html> (Accessed April 21 2015). Langley Sophie. 2014. Wesfarmers reveals strategies to grow Coles and other businesses. < http://ausfoodnews.com.au/2014/05/28/wesfarmers-reveals-strategies-to-grow-coles-and-other-businesses.html> (Accessed April 21 2015). Smith Kevin. (2003) 50 years of powering Western Australia : from Western Colleries to Wesfarmers Coal. Collie, W.A.: Wesfarmers Premier Coal. Westfarmers 2015. Growth strategies (Accessed April 21 2015). Read More