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Wesfarmers is the company that is incorporated in Australia deals with the retail market and leading the retail market in Australia. The company wants to expand its business in the international market. As the owner of the business, I have to revise the opportunities, strategies, risks and inefficiencies of the company if the company makes the international investment. Wesfarmers has opportunities related to the enhancement of business. The strong financial reserves, market leader, and steady growth of sales and cash flows have created an opportunity to think about more earnings. Further, strategies of the company regarding the expansion of the business is helpful to achieve the objectives.
The strategies are based on finance and marketing. The ways to implement these strategies are also mentioned. Risks related to achieving the objectives are also mentioned with the suggested solutions. The nature of the risks shows that the company will not find it hard anymore to make the business successful. The strategies are revised effectively. However, strategies need improvement. The communication procedures and performance measurement indicators should also be mentioned in the strategical analysis (Wesfarmers , 2020 )
The purpose of every business to earn profits and expand its business and operational activities. The expansion of business is directly attached to the profitability of the company. There are two ways to expand the business operation. 1st is to launch the new product in the existing market. In this process, business introduces the new product or service in the market in which it is currently operating. Effective marketing, competitive, and risk management strategies can make the success of the successful. 2nd method is to introduce the business in a new market. This method is known as the internationalization of the business.
The company or business focus on to start the new business in the market, which can be situated across the borders of the company. The profitability and costs of each method are not the same. In the 1st method, there are low costs, i-e costs on the effectiveness of internal and external management, including the choices and preferences of the customers. So, if the newly introduced product and service are made successful, then the profit can be according to the costs, and it will be low than the second. The second method demonstrates higher profits (Iyer, Samarev, & Ukhalkar, 2018 ).
Wesfarmers is the company in Australia, operating nationally. The company deals with retails brands. Retail brands include the Bi-Lo pick n play hypermarket, Coles Supermarket, Bunnings warehouses, Coles Express, Liquor land, Coles Central, 1st choice liquor superstore, Vintage Cellars, Harris Technology, Kmart, Kmart Tyre, and Auto service and target. It is the company spread all over Australia. After being successful in Australia, the company can expand its business to other guarantees. Success in Australia provides the opportunity to lead the business in other countries. As the business owner, my goal to expand the business to earn greater profits and earn the goodwill of the business all over the world (Campbell, 2017 ).
Every country wants to develop business activities in the country and encourage activities in the country. It can be an opportunity for the Wesfarmers to expand its business. Wesfarmers focuses on the mass market. So it can construct the other branch in the countries where the population is high. South Asian Countries are encouraging to the business as well as have a high population. So the sales volumes can be increased by focusing on the high number of people with low-profit margins. The second one is to focus on the niche market. It will demonstrate the high profits margin with the less turnover of the customer. In both of the cases, sales volumes will increase. So the target market and encouraging business environment provides the opportunity to enhance the business for Wesfarmers (Fern Fort University , 2020 )
Wesfarmers has gained a significant market share in the retail market. This market share has tended to lead the market in Australia and created the opportunity for the increase the profits and revenues. This strength of the company demonstrates that the company is financially stable and have the tendency to introduce the business in other countries. Wesfarmers has high financial resources so that it can manage the costs related to the introduction of the business. The availability for the financial resources has created the opportunity for the company to enhance the business. To meet the costs, it can further borrow the funds at the lower costs and lower interest rates because Wesfarmers has earned good reputations so that every financial institution will not hesitate to assist the company financially (Campbell, 2017 ).
The experience is another opportunity for Wesfarmers. It was established it 1914, and since 1914, it is doing the successful business in Australia. This experience has led to establishing any business with experience and perfection. So, the introduction of business will be helpful to make a successful business in other countries. The experience in managing the customers will lead to knowing the preference and choices of customers of that country and audience of that market. The experience of management in managing the risks and threats will lead to timely response to risks and threats. A timely response will lead to minimizing the effect of the risks and threats (Wesfarmers, 2020 ).
The stable free cash flow of the Wesfarmers is the opportunity for the company. The generation free and steady cash flows make ways to invest the money and enhance the operations. With more cash in reserves and bank, the company is able to discover the new markets that are more profitable, more encouraging to business and more productive. It can provide the opportunity to introduce new products. In current business, customers are attracted by providing the facility of online services. This facility is helpful to cover the large area of the market. So the online platform has provided the opportunity (Wesfarmers , 2019 )
Every business has opportunities so that it can enjoy better profits. The successful business utilizes these opportunities effectively. The basic method to utilize the opportunities is to develop strategies on the basis of the opportunities and implement those strategies effectively. The different strategies of the Wesfarmers based on the opportunities are as follows:
The introduction of business in a new country or jurisdiction requires the capital expenditures that are based on financial resources. Now the Wesfarmers is managing its financial resources with the product sales and cash flows. The financial reserves of the company are strong, and it can manage the finance related to the startup costs and other costs by equity financing. Now the question is how the resources are used so that major things shall be covered at minimum costs. Further, if the costs increase, then how the company will manage the extra cash? So, the 1st question is about the management of financial resources. So the key points of the strategy related to the management of financial resources are as follows:
Budgeting and forecasting will be helpful for the estimation of the costs of new business in that country. It will tell the adequate amount of financial resources of the company so that Wesfarmers swill set out the budget according to the forecasted and budgeted costs. It will be ensured that budgeting and forecasting shall be done by taking into consideration all the factors and fewer assumptions. The consideration of factors in budgeting like inflation and documentation costs will lead to less variance. Less variance will be ensured so that the costs can be better estimated and budget shall be set out (Robinson, 2017 )
The foreign exchange rate shall be monitored and forecasted so that the balance of payments can be set out. Further, the level of profitability and revenue will not be disturbed by effective monitoring if the foreign exchange rates. Effective monitoring will be done through the following steps:
Review the operational cycle of the Wesfarmers
Determining the standards to measure and manage the currency risks
Hedging of the risks related to the exchange rates
Creation of FX policy and sticking to it
Accepting the opportunities related to the foreign exchange rates (Nordea Markets, 2020)
The backup plan is based on the arrangement of financial resources. Unfortunately, due to unforeseen event, if the costs and variance increase, then resources shall be handled in a way that it will be borrowed by the bank or other financial institution that will offer the lower interest rates and other transactional benefits.
Marketing strategies will be based on the nature of competition in the new market and barriers to entry. Effective marketing will demonstrate the success of the business. So the major focus will be on the marketing and critical points shall be reviewed while implementing the marketing strategies. Some of the points of marketing strategies are as follows:
There shall be the fixed standards related to the measurement and monitoring the choices, preferences and behaviours of the customers. It will demonstrate the selection and designing the products according to the needs of the customers.
Competitive analysis will be part of marketing strategies. Market leaders of the new market will be monitored in respect of their steps and reactions on certain matters. Further, these strategies will consider the factors that will be helpful to gain the maximum shares in the market.
Branding of the products shall be done so effectively so that every person of the country should be well known to the products of the company as well as Wesfarmers itself (Olson & Slater, 2018 ).
Wesfarmers is likely to face the following risks while enhancing business activities. Further, the suggested solutions are given forthwith:
Credit Risks: Business in a new place will demonstrate the allow credit sales to encourage business sales. However, the chance of credit losses becomes higher. Credit losses will demonstrate low profitability. The risk can be solved by issuing the letter of credit to the customers or other security document that should be signed by both parties and represent the debts (Vineyard, 2019 ).
The second risk can be cultural differences. There can be a change in the organizational culture while moving the business. Culture of the organization represents the shared values of the employees. So the culture of the organization will be according to the employees. This risks can be solved by providing pieces of training to employees about the culture and compliance with the culture of the organization (Sánchez-Sánchez, Salaberri, & Sánchez-Pérez*, 2017).
Compliance with the legal standards, rules and laws of the new jurisdiction can be the risk for the Wesfarmers. The laws related to the performance of the business, corporate social responsibility and other laws like employment law and data protection laws can be different. So it can be solved by knowing the relatives' laws and tried to comply with it.
The conclusion of the research reveals that Wesfarmers has great opportunities to expand its business in the international market. These opportunities are related to the financial strength of the company as well as strong goodwill of the company. Moreover, as a market leader, it has got the chance to introduce its brands overseas and to get higher profits and revenues. The strategies of the company are based on the opportunities. The strategies of the company have effectively dealt with the problems. However, the strategies need more improvement. In financial strategies, the company has dealt with the management of financial resources. Marketing strategies are based on the competitive analysis, customer's choices and branding of the products. The risks that Wesfarmers may face risks related to international Trade.
Wesfarmers has significant policies related to the opportunities for the enhancement of business. However, there is still improvement in the strategic implementation if the business. The company has not made any policy regarding communication. Effective communication will be the most important factor in the success of the business. So information should be shared by using effective and secure channels. Other lacking factors about the strategies are performance measurement. There should be effective strategies that should measure the performance of the employees and company as well (Maestrini, Maccarrone, & Caniato, 2018 ).
Campbell, J. (2017 ). Insights from the company monitor: Wesfarmers. Equity.
Fern Fort University . (2020 ). Wesfarmers Limited SWOT Analysis / Matrix. Retrieved from Fern Fort University : http://fernfortuniversity.com/term-papers/swot/nyse/4814-wesfarmers-limited.php
Iyer, G., Samarev, R., & Ukhalkar, S. (2018 ). System and process for analyzing images and predicting personality to enhance business outcomes. Worldwide applications.
Maestrini, V., Maccarrone, P., & Caniato, F. (2018 ). Supplier performance measurement systems: Communication and reaction modes. Industrial Marketing Management.
Nordea Markets . (2020). 5 steps to manage your currency risk. Retrieved from Nordea Markets : https://insights.nordea.com/en/ideas/5-steps-to-manage-your-currency-risk/]
Olson, E. M., & Slater, S. F. (2018 ). The application of human resource management policies within the marketing organization: The impact on business and marketing strategy implementation. Industrial Marketing Management.
Robinson, K. M. (2017 ). Can We Afford That?: One Library's Transition to a Data-Rich Acquisitions Environment for E-Resource Budgeting and Forecasting. Technical Services Quarterly .
Sánchez-Sánchez, L. C., Salaberri, S., & Sánchez-Pérez*, M. d. (2017 ). Multiculturalism and internationalization in Spanish universities: North-south socio-cultural differences? 7th International Conference on Intercultural Education ‘Education, Health and ICT for a Transcultural World’, EDUHEM 2016, 15-17 June 2016, Almeria, Spain.
Vineyard, J. (2019 ). 6 Risks in International Trade & How to Manage Them. Retrieved from Universal Cargo : https://www.universalcargo.com/6-risks-in-international-trade-how-to-manage-them/
Wesfarmers . (2019 ). Annual Report .
Wesfarmers . (2020 ). Wesfarmers . Retrieved from Wesfarmers : https://www.wesfarmers.com.au/
Wesfarmers. (2020 ). OUR HISTORY. Retrieved from Wesfarmers: https://www.wesfarmers.com.au/who-we-are/our-history
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