Organizational structure of Wesfarmers
Wesfarmers is an Australian company which operates supermarkets, liquor, hotels and convenience stores. The company has an industrial division with businesses in chemicals, energy and fertilizers, industrial and safety products. The company is managed by a group of directors and a managing director. There is chief operating officer. There is a company secretary, chief human resources officer and executive general manager (corporate affairs). There is also a finance director (Wesfarmers, 2017). Thus there are several functional heads giving the impression that there is functional organization structure in the company. There are a number of employees under the company secretary with a hierarchical structure. Similarly there are many employees under the chief human resource officer. Some of them are seniors than others in the department. So there are several departments in the company looking after specialized tasks.
But there are also many divisions in the company for various types of businesses. There are divisional heads like Managing Director Coles and Managing Director Bunnings. Coles is a supermarket chain run by the company. There are employees in each of the divisions performing different functions and tasks. Some of them reporting directly to divisional heads. So there is an impression that the company has an hybrid organizational structure. There are many lines of authority in the organization.
Operational problems faced by Wesfarmers
In case of functional organization structure, there is greater degree of specialization (Smallbusiness.chron.com, 2017). The employees in one department know only one kind of work. For example an employee in the sales department would not know how things are done in the human resources department. Moreover there are different divisions in the company. If the salary of one of the employees in the Coles division is not being cleared due to some reason, the person would be asked by the individual’s senior in the division to go to the human resources department to solve the problem. In this case the person might be harassed by the employees in the human resource department as the individual does not know how things are done there (Robbins et al., 2017). This operational problem is due to the lack of knowledge about the work of a department. There needs to be more interaction between the employees of different departments.
According to Fan, Wong and Zhang (2013), governments have built companies with pyramid like structure with many layers of hierarchy to minimize the effects of political interference. As we go up the hierarchy people on different levels of organization decrease.
In Wesfarmers also there are many lines of authority which would create confusions and delays also in decision making. It becomes difficult to understand who is in control in different situations.
According to Fjeldstad et al., (2012) firms increasingly face pressures due to complex and changing global environment. The authors advocate adoption of new type of organizational designs which are formed keeping in mind employees who can self organize and share resources. Protocols and processes are designed for multi employee collaboration. The emphasis is on flexibility in organizational design.
System acquisition method
Every big company nowadays has a software for managing its business operations. These software help in doing the work of recording business transactions and also furnish reports for use by the top management for taking important decisions. The bigger a company, the chances are more complex are its business operations. In the market there are different types of software like commercial software which anyone can buy and install in the company’s computers for use. These are more or less standardized software which offer the same facilities for different users.
But a big company like Wesfarmers has lot of resources. It can contact the best software developers in the country to make a software which is designed specifically for its use (Featuredcustomers.com, 2017). This is a custom software. The software company already has certain software in its stock which it would offer to Wesfarmers. The company like Wesfarmers must have done enterprise resource planning and would like a software which can keep track of the inventory of its products in various divisions. It would like a software which can consolidate the results of its various divisions to produce a consolidated income statement and balance sheet. The software should also be able to tell about the slow moving stock so that company can decide which products to store less in its stores. Moreover if there is any abnormal loss of products, it should also be recorded. The software should be able to calculate automatically liquidity and profitability ratios.
Parry et al., (2012) studied the business to business relationship in software industry. A two level analysis of customer outlook on relationship characteristics was done. It was found the major things that were taken into account while buying software was product price, functionality, bilingual capability, location and software quality. Interpersonal skills, trust and professionalism of seller were also important.
Flow chart of sales procedure
Wesfarmers has over 15000 suppliers across the group. Coles is the largest consumer business and sources food and groceries. Wesfarmers retail businesses source from several countries. These goods are bought to the ports and then taken to distribution centres of the company. Goods are taken from the distribution centres to the stores of the company all over Australia. The customers of the company visit the stores and move around the stores looking at various items. They pick the items they want and place them in a cart. They take the cart to the purchase counter where an invoice is made and on the payment by the customer, the delivery is made.
There are online purchases also (The Conversation, 2017). The customer visits the website of the company on mobile, computer or tablet and clicks the items that are to be purchased. The delivery of the item at the customer’s place is made by Wesfarmers staff.
There is a proper internal control system put in place by the company. When delivery of goods is made from the distribution centre to the store, the delivery note and the purchase order are compared. There is also internal audit of various sales entries made in the computer by the person making sales invoices. The inventory levels are also physically verified.
Zaman and Sarens (2013) studied whether there were informal interaction between the audit committees sent by external auditors and the staff of the company who performed the internal audit. It was found that there were regular meetings among the two parties. In addition there were informal meetings that helped external auditors understand better the work done by internal auditors. The following is the flow chart of sales procedures of Wesfarmers.
There can be control problems in the above system. There can be a situation where the goods brought from the distribution centre are less and are allowed to come in. In this case more goods were ordered but purchase order not compared properly with the delivery note (Smallbusiness.chron.com, 2017). In this case there would be lesser goods at stores and many customers would return empty handed.
There could be theft of goods at the store by staff or customers. They should be properly checked. The goods delivered to the customer should be in accordance with the invoice made. The staff at the purchase counter might be corrupt and misappropriate money received from customers and manipulate accounts to show less sales.
Development and adoption of the accounting software packages
In the early 1950’s and 1960’s big companies started handling lot of data. This data could be automated only with the help of computers. Early accounting programs were written for mainframe computers (Mainframes.com, 2017). Mainframe served a large number of users and data was processed in batches. First privately owned UNIVAC 1 in 1955 started handling payroll for a General Electric factory in USA. The companies in 1960’s invested in making accounting systems that conformed to their specific needs.
The introduction of SAPRF in 1973 meant that there was a single software which could be used by hundreds of people. In 1978 companies could automate their accounting for a few thousand dollars. In 1983 Lotus 1-2-3 was introduced. In this software there were rows and columns in which data could be stored. The data could be numeric as well as text. Even graphs could be made on black and white screens. This software could be run on small computers as well.
In 1985 Microsoft launched its spreadsheet called excel which is part of the MS Office software even now and is hugely popular. In 1987 Turbocash in South Africa launched automated system for trial balance, balance sheet and income statement. Ledgers could be consolidated in minutes. Now we have accounting software packages like Xero and MYOB which can make even bank reconciliation statements and other tasks which the accountants had to once do manually on their notebooks.
According to Denton, (2012) cloud computing technologies such as Google Docs and Microsoft Office live can improve instructional methods. Department of education in some countries is adopting cloud based features like file sharing and online publishing. Other cloud based activities like cloud accounting are now also on the rise.
Current market size
The market for cloud accounting is growing in Australia. There are small as well as large businesses which are moving to cloud accounting as it in many cases leads to lesser costs, convenience and lesser work for the companies. The subscriber base of the leading accounting software companies has been growing. Xero’s subscribers grew by 51% during 2016 to reach 717000 customers globally. Australia is Xero’s biggest market accounting for 312000 subscribers followed by Newzealand with 186000, the United Kingdom with 133000 and the USA with 62000 subscribers (CRN, 2017).
MYOB has increased its revenue 11% to hit $178 million for the half year ending 30 June 2016. The number of online subscribers was up by 41% with a total of 200000 users. Quickbooks rose 61% in 2016 to 53000 customers. Quickbooks though a smaller player compared to Xero and MYOB has been growing fast which means that there is hope for other companies to make more customers and increase their market share.
Leading software in the market
Leading software in the market are Xero, MYOB, Reckon and Quickbooks. These accounting software have become popular because of the number of tasks these software can do, their prices, convenient availability and after sale service. All these software have moved to the cloud and provide online accounting. There are some features in each of the four software that provide them competitive advantage. Xero provides multicurrency accounting which is useful for companies operating in different countries (Xero, 2017). The software also provides asset management facilities. There are different assets on which depreciation is to be provided and they are bought and sold also. Similarly there is automatic making of bank reconciliation statements. Reckon software is more popular among small and medium enterprises. It provides facility of unlimited invoicing and payroll accounting. One can also track projects through this software (Reckon, 2017).
MYOB software is more popular among big companies. It is useful for companies like Wesfarmers which have multiple divisions and thousands of customers. The software has fully integrated customer relationship management features. The software can help in shipment tracking and supply chain management. Quickbooks is known for quick invoicing and payment reminder system. It also provides online banking and mobile apps for tracking information.
Problems faced by users of accounting software
There are many challenges faced by users of accounting software. Some of these software are quite expensive but do not have commensurate features like automatic calculation of bank reconciliation statement. This feature is missing in many software and this is a major problem because reconciliation helps to find missing transactions and incorrect accounts. Some accounting software are slow. This leads to more time taken and extra costs. Many accounting software are outdated. They are inaccurate jeopardizing the entire accounting system of the company. The firms should buy latest software from reputed companies even if it is more expensive.
Cloud accounting has many advantages but if there is no proper data security software installed, the data of the company can be stolen. This could lead to loss of thousands of dollars especially if bank accounts are manipulated when online accounting is used. There is the need to install powerful data security software (Filehippo.com, 2017). But this also has some costs involved. Some accounting software are difficult to understand and very less training is provided by the vendor. In this case the company has to organize training programs for its employees.
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