Product Lines and Service Lines - Wesfarmers Limited - Case Study Example

Name) (Instructor) (Institution) (Course code) (Date) WESFARMERS LIMITED About Wesfarmers Limited Wesfarmers Limited one of the largest listed companies in Australia. It's headquartered in Perth. Wesfarmers Limited deals with a wide variety of product and services. Some of its business operations include office supplies, home improvement, liquor, supermarkets, convenience stores and hotels. It also engages itself with industrial interests including coal, industrial safety products, chemicals, fertilizers and energy The company has been farmers' cooperative of choice since its establishment in 1914. It has a large shareholder base of about 500,000. As a private employer, Wesfarmers employs about 220,000 human capital. The company is working around the clock to meet its primary goal of providing satisfactory returns to its large shareholder base from its diverse operations 1 (a)Corporation Corporation is any firm that satisfies three distinct requirements so as to be recognized as having legal existence. a corporation is independent of its owners. The three requirements needed for the firm to be a corporation are: (i) Continuity of existence; this implies that the firm can beyond the capacity and the lifespan of its owners. It allows its ownership to be transferred either through a gift of shares or sale. (ii) Limited liability; together with its owners, the firm is limited in their liability to its creditors as well as to any other obligatory strictly to the firm’s resources. The only exception is when the owners give their personal guarantees. (iii)Legal existence; this is another critical issue to consider. Legal existence gives the company ability to enter into a contract, own, sell, buy, be sued, sue other firms and persons. Such obligations can make the corporation commit an offence and be punished and do good and be rewarded. The owners of a corporation shareholders who share corporation’s profit and losses made through its operations (Hansmann, 2006, pp. 1-19) Product portfolio It is a composition of all products which a business has. The product portfolio in a corporation can be composed of a variety of categories of products, diverse products lines as well as particular products. Sound management is essential for all these three levels of product portfolio to ensure the success of the corporation. In many businesses, there are different managers managing particular product, product lines, and highest level management managing a complete portfolio. Service portfolio Service portfolio is the representation of all the investments and commitments made by a service provider to its customer base. It requires active management of the investments the service lifecycle. Service lifecycle comprises of all service design, concept, and transition pipeline. Service portfolio is important in the service industry as it aids the management to prioritize its investment. It also critical in helping the managers in the allocation of resources. Service portfolio characterizes the ability and readiness of service provider to meet the customers’ needs. Service portfolio is also important as it instills a specific financial discipline crucial to avoid making investments that are not profitable to the corporation 2. Business research a) Business unit The business unit is commonly referred to as strategic business unit (SBU). The business unit is a center in a corporate company which pays critical emphasis on the market segment and product offering. In businesses, business units are usually having the critical role of a marketing campaign, analysis of competition and marketing plan despite being part of the larger business entity. SBU are sometimes business itself or a branch of it. A large corporation such as Wesfarmers Limited can have several business units which strive to make their own profits as units. Such units are in a position to influence most of the dynamics that affect their performance. In spite of the fact that business units are operated as distinct businesses, business units are responsible to their parent corporation (Möller, Rajala, & Svahn, 2005, pp. 1274-1284) Wesfarmers main business units include; Home Improvement and Office Supplies, Industrials, Coles, Department Stores b) Identification of Product Lines and Service Lines Product Line In business, this is a grouping of products sold under the same brand sold by the same company. It is important to note that companies sell multiple product lines with various brands as demonstrated by Wesfarmers Limited. The reason behind selling through various brands is because consumers have the tendency to products from familiar brands (Dahremöller & Fels, 2015, pp. 437-456) Service lines Just a products line, service lines is the assemblage all services and products associated a certain division of the business (Nooteboom, 2006, pp.119-139) HOME IMPROVEMENT AND OFFICE SUPPLIES This business unit of the Wesfarmers has two divisions. The two divisions are Bunnings and Homebase. Bunnings is the chief retailer of outdoor living and home improvement products in New Zealand and Australia. Other businesses undertaken by Bunnings include the supply to the housing industry commercial tradesperson and project builders. Earlier this year (February 2016) Wesfarmers Limited acquired Homebase. Homebase is a United Kingdom retailer dealing with the home improvement and garden business ("Home Improvement", 2016) Bunnings As stated above, Bunnings is the chief retailer of outdoor living and home improvement products in New Zealand and Australia. Other businesses undertaken by Bunnings include the supply to the housing industry commercial tradesperson and project builders. Bunnings operate from a series of trade centers large warehouses, frames and truss sites and smaller format stores. Bunnings deal with both commercial and consumer customers. According to its financial year ending 2015, this division made a revenue totaling $9.5 billion. By the end of the 2015 Calendar year (31st December 2015), Bunnings was operating 240 warehouses, 32 trade centers, 67 smaller format stores and three frame and truss centers in the entire New Zealand and Australia. Its human capital was more than 40,000 working in various teams ("Home Improvement", 2016) Homebase In its urge to grow and expand its market base, Bunnings acquired United Kingdom’s second largest home improvement and garden business, Homebase. Homebase is operating both in Ireland and the United Kingdom. For the 12 months ending August 2015, Homebase reported revenue worth £1,461.2 million. As at now, Homebase has 263 stores in its operating spheres ("Home Improvement", 2016). COLES This business unit was created in November 2007 following the acquisition of Coles Group. Coles provides a wide variety of services to its customers across Australia. Services it provides include fuel, liquor, financial services, general merchandise, fresh food, groceries. Coles serves more than 20 million customers weekly thanks to its vast store network as well as through its online platform. To manage these operations, Coles employs more than 101,000 of energetic team members who operate in more than 2,400 of its series of retail outlets across the country ("Coles", 2016). Coles Coles is a chain of full-service supermarket operating across the country. It operates more than 770 supermarkets which include those BiLo branded stores. It has good reputation together with a rich history dating back to the year 1914 when it opened in Melbourne. As a result, the Australians trust Cole mainly owing to its consistency, trust, and reputation build over years through the delivery quality, value, and service Coles Online This is an online grocery supermarket where its customers can place orders online. Orders placed online are delivered using vans to all corners of Australia. The conditions in these vans are temperature controlled Coles Liquor This is an umbrella of First Choice Liquor, Vintage Cellars and LiquorLand with 860 stores nationally Coles Express With more than 680 outlets nationwide, Coles Express under exclusive alliance contract with Shell, it provides fuel and operates its store Coles Financial Services With its good brand name in the financial service, Coles Financial Services is dedicated to providing daily products such as credit cards and insurance service to Australians Coles Hotels With 90 hotels under its operation, Spirit Hotels brand provides hotel services in New South Wales, Queensland, South Australia and Western Australia INDUSTRIALS This industrial business unit of Wesfarmers Limited has three divisions with it. These divisions are (i)Industrial and Safety, (ii) Resources and (iii) Fertilizers, Energy, and chemicals. The reason behind this to give more attention to its growth in both scale and group. The three business units are independent of each other but share insights and capabilities where necessary. ("Industrials", 2016) Chemicals, Energy & Fertilisers This division is tasked with the business involving fertilizer, chemicals, and energy serving multiple sectors both domestic and international markets. Some of the businesses carried out in this division include industrial chemicals, ammonium nitrate, and ammonia by the CSBP. CSBP’s primary market is Western Australia’s industrial and resource sectors. Apart from manufacturing and importation CSBP also distributes of nitrogen, phosphate, and potassium–based fertilizers in liquid, compound and blended forms to the agricultural sector in Western Australia. Other services offered by the CSBP comprehensive plant and soil analysis done by it is of team staff along with accredited by partners in the region ("Industrials", 2016) Australian Gold Reagents This is the only manufacturer of sodium cyanide in Western Australia. Australian Gold Reagents is three-quarters owned joint venture with Coogee Chemicals. This chemical is used in the gold extraction of gold. For over two decades, AGR has been manufacturing and distributing sodium cyanide not only to Western Australia but also to international gold mining ("Industrials", 2016). Australian Vinyls This is the chief supplier of polyvinyl chloride resins which is used in a variety of ways which comprise of building profiles, floor coverings, cable installation, piping, packaging, and compounds. ModWood, a subsidiary of Australian Vinyls is responsible for the production of wood-plastic composite products. Using recycled plastic and wood ("Industrials", 2016). Kleenheat The Northern territory and Western Australia gets energy supply from Kleenheat. Kleenheat is responsible for the production importation as well as the distribution of LPG – Liquefied petroleum gas. Its supplies to both commercial and residential markets across Northern Territory and Western Australia. This is made possible by a series of distribution centers and dealers. Kleenheat also retail LPG to commercial and residential market. Businesses in Western Australia are also supplied with electric power by Kleenheat ("Industrials", 2016) Industrial and Safety Blackwoods To ensure the safety of work environment, Wesfarmers Limited teamed up with the best in the market. Blackwoods, a full-service provider, is a business unit of Wesfarmers Limited that deals with the supply of workwear, safety gear, tools and other industrial supplies. Blackwoods operates its business across the whole of Australia. This business unit provides various products which are accompanied by reliable advice and service with highest technical expertise and solution. No wonder its large customer base trust Blackwoods technical expertise in various fields comprising of welding, inventory solutions, lifting and rigging, fasteners, apparel and footwear and gas and abrasives ("Industrials", 2016). Greencap As a business unit of Wesfarmers Limited, Greencap largest incorporated risk management and compliance in Australia. Greencap has 10 offices in Australia and Asia employing 360 engineers, technical and other professionals. This business unit provides services to thousands of government and private clients in various including manufacturing, property, retail, education, resources and service sectors. With the highest level of creativity concerning integrated service delivery, Greencap has been able to penetrate its seven service areas across all geographical areas. as a result, Greencap meets all the needs of industrial sector delivering compliance service and efficient risk management ("Industrials", 2016) RESOURCES Wesfarmers Resources plays is a critical role as an export miner. It has invested a lot in coal mines in Curragh mine Queensland’s Bowen Basin. The Wesfarmers Resources has 40% stake in Bengalla mine in the Hunter Valley of NSW. Bengalla mine produces steaming coal for export while Curragh one produces steaming and metallurgical coal for both domestic and export markets ("Industrials", 2016). Curragh It the Australia’s leading entity coal producer. It is known to produce approximately 12 million tonnes of steaming and metallurgical coal yearly. South America, South-East Asia, Europe, and Japan is the market for metallurgical coal while steaming coal is consumed locally. Steaming coal is mainly used local power generation ("Industrials", 2016). Bengalla Bengalla, on the other hand, has the capacity to produce about 9 million tonnes of thermal coal meant for both export and local market. It is important to note that Bengalla coal mine is the most technically advanced in the region ("Industrials", 2016) DEPARTMENT STORES This is the newest business unit established by Wesfarmers Limited. The business was established in February 2016. This business unit is proud to have Kmart and Target where they not only share opportunities but also and use to maximize their potential at the same time maintaining and growing these brands ("Department Stores", 2016) Kmart With a record of 206 stores across New Zealand and Australia, Kmart is one of the largest retailers in the country. This business unit employs more than 30,000 human resources together with those sourcing offices in India, Bangladesh, china and Hong Kong. This business unit deals with a variety of merchandise and apparel at affordable prices on a daily basis. Services offered by Kmart include extensive variety of home brand products leaving their customers satisfied ("Department Stores", 2016) Kmart Tyre & Auto Service With more than 240 stores across the country, this makes it the largest retail tire business, repair and automobiles services. Kmart Tyre & Auto Service is proud to be the largest single employer of mechanics and apprentice. This business unit employs 1,300 human resources to work together towards set goals ("Department Stores", 2016) Target 3. Corporation Revenue Centers This business unit operates and a network of over 300 stores countrywide. It deals with various products for the contemporary family comprising general merchandise, homewares, and apparel. This business unit is working with a team of more than 19,000 employs in its stores working in various capacities ("Department Stores", 2016) This is the income made by business through the sale of assets, goods or services. Revenue is generated from business activities. In other cases, revenue is often referred to as turnover or sales. Other businesses get revenue from fees, royalties and or interests. In simple terms, revenue is business income and may be in any form like monetary units or other equivalents received over a specific time period. The governments receive its income from tax income received from taxpayers (Epstein, 2012, p. 49) The retail segment of service lines is bringing the higher revenue for the Wesfarmers, with Coles supermarket being the highest revenue earner. Bunnings is also another highest profit earner for the Wesfarmers Limited. On the product line, Resources is the highest revenue earner for the Wesfarmers Limited 4. External Environmental Analysis PESTLE analysis of Wesfarmers Limited will not be discussed by business units. This is because it has very many business units which limit to just general PESTLE analysis of Wesfarmers Limited PESTLE Political factors The Australian central government has set out a legal framework with guides the mining industry in the country. Employees working in the sector are protected as from any form of exploitation and their working conditions met. Economic factors The service sector is the fastest growing sector in Australia. Insurance and finance are contributing to this. This provides favorable condition for Wesfarmers service Lines Sociological factors People in Australia often do their shopping once a week. It is, therefore, crucial supermarkets to stock all products to attract large customers who like the one-stop shopping experience. This is good news for Wesfarmers Limited which manages home improvements, department store, and supermarkets Technological factors Australia one of the leading mining countries in the world, therefore, propelling it to the world leader in this sector. This is attributed to its utilization of advanced technology along with world class services. By so doing, the highest level of efficiency is achieved where the environment is protected by used of technology. With various business run by Wesfarmers Limited in industries, chemicals and fertilizers, coal mining among others provide a good foundation for business growth Legal factors Laws and the judicial system is Australia is properly constituted therefore business law, natural resources and labor laws are sound providing a good playground for business growth. Such laws enable Wesfarmers Limited to operate its large business without many risks Environmental factors The laws in Australia gives protection to the environment by preventing it from environmental pollution from any form of pollution. Being a large company, Wesfarmers has put in place measurements to reduce environmental pollution by recycling its waste 4. b. Operating Environment The outside circle affecting the business is known as operating environment. Some of the factors are dynamic therefore requiring the business to be keen in order to succeed. Operating environment include customers, suppliers, interest groups/public and competitors (Bajgoric, 2010, p. 317) 5.a. Source of sustainable competitive advantage of Wesfarmers Limited Some of the competitive advantages of Wesfarmers is that its business is very diversified as discussed above. This has not let the company stop. It is continuing to grow and acquiring other business both locally and internationally. This persistent grow gives it an edge over its competitors in the industry. Its business units grouped based on the products they are dealing with, as a result, these units share ideas and resources limiting competition and duplication in order to maximize profits 5.b. Competitive advantage Competitive advantage is situations that gives a business, entity or a country to make produce goods or offer services at a much lower price which are desirable to the customers. Competitive advantage enables the business to make more sales than its competitors. Some of the factors that contribute to competitive advantage include brand, intellectual property, product quality, cost structure, distribution network and customer support (Lapersonne, 2013, pp. 221-251) 6. Strategic direction Recommendations. Wesfarmers Limited need to expand its market beyond Australia and New Zealand as their main markets. It should target the emerging economies to reap big before competition rises. Wesfarmers Limited is an international brand with enough capital to venture into new markets Definition of term In business, it is the combination of the company’s strategies, mission, and vision in aligning itself to its aspirations and how to achieve it. In simple terms, it is plan to which the business aims to be in a specified period of time (Pinegar, 2006, pp. 464-466) References Bajgoric, N. (2010). Server operating environment for business continuance: framework for selection.IJBCRM, 1(4), 317. http://dx.doi.org/10.1504/ijbcrm.2010.038622 Coles. (2016). Wesfarmers.com.au. Retrieved 23 August 2016, from http://www.wesfarmers.com.au/our-businesses/coles Dahremöller, C. & Fels, M. (2015). Product Lines, Product Design and Limited Attention. SSRN Electronic Journal, 119, 437-456. http://dx.doi.org/10.2139/ssrn.1993128 Department Stores. (2016). Wesfarmers.com.au. Retrieved 23 August 2016, from http://www.wesfarmers.com.au/our-businesses/department-stores Epstein, L. (2012). Bookkeeping kit for dummies (p. 49). Hoboken, N.J.: Wiley. Hansmann, H. (2006). Corporation and Contract. SSRN Electronic Journal, 1, 1-19. http://dx.doi.org/10.2139/ssrn.892830 Home Improvement. (2016). Wesfarmers.com.au. Retrieved 23 August 2016, from http://www.wesfarmers.com.au/our-businesses/home-improvement Industrials. (2016). Wesfarmers.com.au. Retrieved 23 August 2016, from http://www.wesfarmers.com.au/our-businesses/industrials Lapersonne, A. (2013). Managing Multiple Sources of Competitive Advantage in a Complex Competitive Environment. Future Studies Research Journal: Trends And Strategies, 5(2), 221-251. http://dx.doi.org/10.7444/fsrj.v5i2.120 Möller, K., Rajala, A., & Svahn, S. (2005). Strategic business nets—their type and management.Journal Of Business Research, 58(9), 1274-1284. http://dx.doi.org/10.1016/j.jbusres.2003.05.002 Nooteboom, B. (2006). Service value chains and effects of scale. Service Business, 1(2), 119-139. http://dx.doi.org/10.1007/s11628-006-0009-4 Pinegar, J. (2006). What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services by Anthony W. Ulwick. Journal Of Product Innovation Management, 23(5), 464-466. http://dx.doi.org/10.1111/j.1540-5885.2006.00217.x Who we are. (2016). Wesfarmers.com.au. Retrieved 23 August 2016, from http://www.wesfarmers.com.au/who-we-are/who-we-are Read More