Strategic Analysis

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Introduction

This report will focus on performing strategic analysis for Bunning Warehouse, which is a division of Wesfarmers. This report will emphasize on performing the PESTEL analysis in the context of the target market of the selected company. In addition to this, the report will focus on conducting porter’s five force analysis for purpose of determining the competitiveness of the market.
Background Information of Company:

Wesfarmers Ltd is the public listed company that is selected in this report for performing strategic analysis. The headquarter of Wesfarmers Ltd is located in the Perth city of Western Australia. This company deals in manufacturing and selling different types of products like industrial & safety products, coal mining, fertilizers, chemicals, etc (Wesfarmers Ltd, 2020). This company has achieved the place of largest employer across the private sector of Australia. This company has employed more than 220,000 employees. There are different competitors of Wesfarmers such as NSW Health, Telstra, Coles, Rio Tinto, Nab, etc. The presence of a company in multiple business segments or multiple market segments creates greater opportunities for the company to ensure sustainable competitive business performance in the business. In other words, the slowdown of any industry will not have a major impact on the business growth of the company.

Macro-environment Analysis:
Political Factors:

The business performance of Wesfarmers Ltd will be highly affected by political conditions in Australia. Example of these political conditions involves Australian Securities Exchange or ASX, Federal or State regulatory bodies including the Australian Competition and Consumer Commission (ACCC), Australian Taxation Office (ATO), etc. The failure of Wesfarmers Ltd to comply with these regulations can cause material adverse effects over the operating and financial performance of the company . The management of Wesfarmers Ltd emphasizes strict compliance with different political and regulations conditions of the country to ensure that their business runs in accordance with the regulations of Australia. The management of the company focuses on highly advanced training programs for the employees of the organization for purpose of keeping them updated about the latest political circumstances and regulations of the country.

Economic Factors:

The economic environment of a country also has a significant level of impact on the business growth or business performance of a country on the international business platform. Total GDP of the economy of Australia was recorded as $1.376 trillion in 2019 ( Appendix-A). At the same time, the per capita GDP of the country was observed as $53,825 in 2019 (Appendix-B). This also indicates a high level of purchasing power of the individuals residing across the country and shows a high level of business scope for Wesfarmers Ltd in Australia for competitive business growth. Key environmental factors and incidents like the global epidemic of the COVID-19 virus have affected the GDP growth rate of the country for 2020. It is anticipated as -6.7%. However, it is predicted that the GDP growth of the country will remain at 6.1% in 2021 (Maidment and Bay, 2020). It is expected to contribute greater profits to Wesfarmers Ltd over the next few years, but it would also be badly affect by the slow growth of Australian Gross Domestic Product (GDP).

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