Strategic Alliances by Wesfarmers Bunnings

Question: Discuss about theStrategic Alliances by Wesfarmers Bunnings. Answer: Introduction The report is basically describing about the importance of strategic alliances in an organization. Along with this, it is also covering the advantage and disadvantage of adopting strategic alliances within an organization. The main advantage of having strategic alliances is getting competitive advantage in the market. For the discussion, company Wesfarmers Bunnings has been taken. Wesfarmers is one of the largest companies in Australia. The company has diverse business operations such as supermarkets, hotels and stores office supplies. Along with this, the company also works in industrialized division such as chemicals, energy and coals. The aim of this report is to identify the strategic alliances adopted by the company for its business operations (WESFARMERS LIMITED, 2016). Concept for Optimal Strategic Alliances Strategic alliances can be defined as the relationship between two or more parties for operating the business in the market. Companies consider strategic alliances as an important factor for the success. Strategic alliances allow the business partners to create values for the company in the market which cannot be created independently. Companies adopt strategic alliances to reduce the competition, identify opportunities, gain advantage of resources and improve the strategies for business operations. The company Wesfarmers Bunnings has expanded its business in international market. For expanding its home base services in UK, company has deal with Home retail group. To expand its market, Wesfarmers Bunnings will buy home base from the retail group. Companies try to develop a network of strategic alliances in which they can create competitive advantage in the market (Business Insider Australia, 2016). Benefit from Strategic Alliances There are the benefits from the strategic alliances which a company may get. Wesfarmers Bunnings gets advantage in terms of competitive advantage and above average financial returns. Competitive advantage may be a big reason for the companies to enter in the global market and adopt the strategic alliances. If company enters in the market alone, it could face many risks in the international. By adopting strategic alliances, company would be able to decrease the risk in the international market. Competition is the most important part of the business operations and by the proper strategic alliances; company can reduce the level of competition. By the strategic alliances in UK, Wesfarmers Bunnings got good financial revenue and satisfactory return to the shareholders (Zaman, Mavondo, 2001). Figure 1: Growth of Wesfarmers Bunnings (Source: Georges, 2016) It can be seen by the figure that company is increasing its earning year by year. By the strategic alliances with the UK, the company is able to increase its earning as well as RoC growth (Georges, 2016). Disadvantage of Strategic Alliances Despite of advantages, there can be disadvantages of strategic alliances which can be faced by the company. The company Wesfarmers Bunnings is doing deal with the UK, after that second target of the company is USA by conglomerate strategy. The company is also excited to enter in Canada. The company will adopt joint venture technique of strategic alliances. But there can be disadvantage to the company Wesfarmers Bunnings that the company can lose the control. Strategic alliances are a kind of business relationship in which there is no agreement between the parties. There is news in The Australian that the company Wesfarmers Bunnings should beware from the drawbacks of aggressive expansion (MAXWELL, 2016). Along with this, Wesfarmers Bunnings may face the unequal benefits with the partner companies. Company has to ensure that the strategic alliances with the UK and US will be beneficial for the company. With this, there would be the liability of the company for every issues and problem s. There is always a risk of damaging the reputation of the company (Pellicelli, 2003). Conclusion The company Wesfarmers Bunnings is the largest company in the Australia. The company has good reputation in the market. Company is expanding its business in UK and US by the conglomerate strategy. But there can be some disadvantage of the strategic alliances. To prevent the business from the problems, Wesfarmers Bunnings can adopt some strategies. The strategies would be helpful in getting competitive advantage and earning above average financial returns. Wesfarmers Bunnings can adopt the cost leadership strategy in the business. In this strategy, the company can adopt lowest cost production for earning profit. Company can focus on the increasing sales and decreasing cost in the global market. Another strategy which can be applied by the company is differentiating the product and services from others. It will be helpful for the company in getting competitive advantage. The last one strategy is pricing strategy. By the pricing strategy, the company can maintain the competitive advanta ge in the global market. By the skimming of prices in the international market, company would be able to attract new customers. References Business Insider Australia, (2016), This is how Wesfarmers plans to take over the UK with Bunnings, accessed on 19th October 2016 from https://www.businessinsider.com/this-is-how-wesfarmers-plans-to-take-over-the-uk-with-bunnings-2016-1?IR=T Georges, C., (2016), 5 valuable charts to see before buying Wesfarmers Ltd shares, accessed on 19th October 2016 from https://www.fool.com.au/2016/06/23/5-valuable-charts-to-see-before-buying-wesfarmers-ltd-shares/ Maxwell, M., (2016), Bunnings should beware the pitfalls of aggressive expansion, accessed on 19th October 2016 from https://www.theaustralian.com.au/business/opinion/bunnings-should-beware-the-pitfalls-of-aggressive-expansion/news-story/8ef89c0d39d9f0dcf1fe7bbe4ee2136f Pellicelli, A. C., (2003), Strategic alliances: EADI Workshop Clusters and global value chains in the North and the Third world, Novara. Wesfarmers Limited , (2016), who we are, accessed on 19th October 2016 from https://www.wesfarmers.com.au/ Zaman, M., Mavondo, F., (2001), Measuring Strategic Alliance Success: a Conceptual Framework, Monash University.