Holganix Case Study

3. Resources

This section outlines the human, capital and R&D resources demanded by Wesfarmer in order to establish the new venture.

3.1 Human Resources

Acquiring Holganix would require certain level of human resource input. While Holganix can be acquired as an entire package with its existing management and employees retained, it is predicted that challenges faced by Wesfarmer predominantly exist in exploring the new market in the United State. A typical example would be the problem of distribution in the host nation market. Unfamiliarity with the host nation consumer prefeerences and behavioral patterns may likely result in failure of market entry. Therefore, there is a strong need for Wesfarmer to closely cooperate with Holganix’s human

If acquired by Wesfarmer, better prospects of the R&D can be ensured by attracting industrial talents and providing the state of art R&D facilities to Holganix. Wesfarmer conducts training and development by providing rich career development opportunities for new graduates as well as existing employees (Wesfarmers, 2016). This ensures the continous injection of talents. To ensure the improvement of existing R&D facilities, Wesfarmers is suggested to set aside a budget of $2 million, mainly used to renovate and enhance the existing facilities and plants for Holganix in Pennsylvania. As claimed by Dougherty (1995), effective corporate venturing helps organzations to avoid incompetencies and maximize their capabilities. The aim for the acquisition is to maximize the core competencies of Holganix in R&D on green agricultural products such as fertilizer. Instead of intevening in Holganix’s operation, it would be much more effective of Wesfarmers to provide sound support and maintain the independence of Holganix to concentate on its specialized

Problems & Solutions

While the prospect of Wesfarmers after the proposed acquisition of Holganix is expected to be bright, there are problems that have been anticipated, based on which initial-round solutions are constructed.

5.1 Production

The hardest part of the acquisition is not getting the resource, but having the resources ready for production in a cost-effective manner. It is widely known that labour price in advanced economies such as US and Australia can be highly expensive. Either Australia or America-based production is therefore likely to increase cost structure and further place financial burden on Wesfarmers. More importantly, such continuous high cost is anticipated as unsustainable in future.

Solution

In order to solve such obstacle, outsourcing strategy can be adopted. The proposed solution is that any heavy-labour involved practices such as product production would be outsourced to Asian countries such as China, which show much more cost-effective labour market. The Holganix lab and R&D centre would primarily focus on innovation conceptualization and idea realization through prototype development. The mass production will be eventually pulled off off-shore.

5.2 Selling to