PEST ANALYSIS OF WOOLWORTHS LIMITED

PEST ANALYSIS OF WOOLWORTHS LIMITED

PEST Analysis as a Human Resource Strategy

            Any business organization operates within the context of an environment. The environment of a business organization impacts and influences the business operation in a number of ways. That is why an analysis of the environment is a very essential component of any business organization and at any level of its business life cycle. Environmental assessment is a continuous process. The environment of an organization is categorized into three main environments: internal environment, micro-environment and macro-environment. Internal environment consists of the internal customers who are the staff, their wages and benefits, and the office technology that they handle. The micro-environment refers to the external customers, the competitors, the suppliers, the agents, and distributors. The macro-environment consists of the PEST factors: political and legal, economic, socio-cultural and technological forces. (Marketing Teacher, n.d.) Political Factors are the political and legal regulations that affect spending power of customers, political stability, tax regulations, economic policy, and regional trading agreements. The economic factors refer to the interest rates, inflation, purchasing power parity, GDP, per capita income which are especially important for international marketing. The socio-economic factors are religion, attitude, language, leisure time, gender roles, population size and demography, and environmental awareness. Technological factors specifically refer to new technological innovations. New technology is a competitive edge of any organization as it facilitates innovation and production of cheaper and quality products, fast and efficient distribution of products, and new ways of communication and management of customer-relationship. (Marketing Teacher, n.d.)

PEST Analysis of Woolworths

            Woolworth’s Unlimited is the largest and most successful retail store in Australia and New Zealand offering the best quality and trusted brands, in food, grocery, liquor, petrol, electronic and other general merchandize. It is 87 years old in the business and employs more than 191,000 employees. It has served the communities in Australia and New Zealand economically through creation of jobs and increase in shareholders wealth, investment in infrastructure and stimulated the growth of the manufacturing and agricultural production. (Woolworths Limited, n.d.)

Political Factors

            Woolworth benefits from the Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA). This trading cooperation brings the two countries where Woolworth is operating into a single economy.  Woolworth and its shareholders (foreign and domestic) are also secure in the political stability of both countries. In 2011, Australia ranked 3rd and New Zealand 5th in “IMD World Competitiveness Yearbook”

Economic Factors

            Woolworth operates in an economically sound environment. Australia and New Zealand have a relatively high standard of living compared to the rest of the world. GDP per capita at purchasing power parity of Australia (,699) is ranked number 10 and New Zealand (,966) number 32 based on the 2010 estimates by the International Monetary Fund. (Wikipedia, n.d.)

Socio-cultural factors

            Woolworth is along the trend for a green lifestyle and sustainable corporate practices with its “sustainability strategy 2007-15”. Investors and customers alike who are aware of the environmental impacts of their investing and consuming behavior choose a company with a green-tag and buy and patronize products that are organic.  Further Woolworth also addresses the needs of customers with very little time for shopping with their convenient and efficient services as discussed in the next factor.

Technological Factors

            Woolworth harnessed the innovations of information communication technology to improve the efficiency of their service and satisfy their customers. In 2008 it introduced the self-checkout machines that enable the customer to “scan, weigh and pay for their groceries via cash, credit or debit cards”. (Palmer, 2008) They also employed the SOA (Service Oriented Architecture) software that monitors its business activity, identify bottlenecks of their service in real time and reduce costs. (Foo, 2008) Recently they introduced the Visa’s payWave to reduce waiting time of customers spent in checkout queues. (Budmar, 2011)

            The success of Woolworth as a number 1 retailing company in New Zealand and Australia can be traced to its significantly positive macro-economic environment: political, economic, socio-cultural and technological factors.   

REFERENCES

Budmar, Peter, 2011. Woolworths adopts Visa payWave Technology for Checkouts. [online] Available at:< http://www.arnnet.com.au/article/387304/woolworths_adopts_visa_paywave_technology_checkouts/> [Accessed 28 May 2011].

Foo, F., 2008. Woolies Boost Supply Chain Technology. [online] Available at:< http://www.theaustralian.com.au/australian-it/woolies-boosts-supply-chain-technology/story-e6frganf-1111115892003> [Accessed 28 May 2011].

FTA’s Advantages and Disadvantages. Pdf. [online] Available at: http://www.dfat.gov.au/publications/aus_us_fta_mon/Chapter3.pdf> [Accessed 28 May 2011].

Kylel1, 2009. Woolworths. [online] Available at:<http://www.slideshare.net/KyleL1/strategic-management-group-assignment-1> [Accessed 28 May 2011].

Marketing Teacher, n.d. PEST Analysis. [online] Available at:<http://www.marketingteacher.com/lesson-store/lesson-pest.html> [Accessed 28 May 2011].

NSW Government, n.d. Political Stability. [online] Availablt at:<http://www.business.nsw.gov.au/invest-in-nsw/about-nsw/economic-and-business-climate/political-stability> [Accessed 28 May 2011].

Palmer, D., 2008. Woolworths Trial Self Check-Out Technology. [online] Available at:< http://www.ausfoodnews.com.au/2008/04/21/woolworths-trial-self-checkout-technology.html> [Accessed 28 May 2011].

Wikipedia, n.d. List of Countries by GDP (PPP) Per Capita. [online] Available at:< http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita> [Accessed 28 May 2011].

 

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