Question

The Wesfarmers group owns and operates the following organisations Bunnings, Kmart, Target, Officeworks, Would you consider these businesses related or unrelated from a diversification perspective? In drawing your conclusion it helps to consider the value chains of each of these organisations.

Answer 1

The Wesfarmers group is well diversified into retail business of home products, general merchandise, office supplies etc. These are related businesses from a diversification point of view. The value chain of all the businesses mentioned here are similar to each other. They start from the basic level, go through several stages and then reach the customer via their retail stores. The similarity in the value chain is a source of profit as it reduces cost and this is another benefit of related diversification