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MGT501 Business Environment 4

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  • Course Code: MGT501
  • University: Laureate International Universities
  • Country: United States

Question:

This assessment addresses the following subject learning outcomes:

  1. critically evaluate the effect of the external environment on firms
  2. select and apply appropriate frameworks to resolvethe challenges faced by firms
  3. analyse and synthesise industry specific factors in the context of firm decision-making processes

Context:

Contemporary businesses cannot afford to ignore the environments in which they operate. To navigate this vast and ever-changing landscape, businesses must keep a keen eye on the external factors that influence it. Customer behaviour, government regulatory and economic policy, competitor strategy and public opinion all impact on a firm’s success. The environmental scan report is an effort to identify these factors and propose solutions to the risks they pose.

Instructions:

Using the tools and frameworks provided in the content of the subject, you must:

  • Discuss general and historically relevant responses to the four types of factors which can influence the environments in which businessesoperate
  • Categorically and comprehensively respond with a solution to all of the environmental risks and challenges

 

 

Answer:

Introduction 

In the current era, this has been found that it is essential for the company to conduct the analyses related to the environmental factors that can affect the working of the company. This report is environment scan report which is prepared with the objective to propose the solutions to the challenges which is faced by the firm in the environment in which they are managing their operations. This reflects that the report is the continuation of the previous one in which the discussion related to the Woolworths external factors has been done. These factors lead to the issues which affect the company as they won’t be able to meet the needs of the customers. The major focus of the report is to find out the solution of problems that offer the convenience to the company while conducting their business operations in the market.

Background information

Woolworths is a well-known company that is present in the Australian market and came into existence in the year 1924. The company is specialized in selling the groceries item in their supermarkets which mainly include vegetables, fruit, meat and many others. The company is able to manage more than 1000 stores within Australia. In the Australian market, Woolworths is getting affected by the micro and macro factors which are discussed in the previous assessment (Woolworths, 2018). Considering the competitive market, it is essential for the company to find the solutions to the factors.

 

General and historically relevant responses the factors: PESTLE 

Political factors

Woolworths Company is operating their business operations in Australia and New Zealand and both the countries are stable in terms of policies (Armstrong, Adam, Denize and Kotler, 2014). The performance of the company was affected by the campaign introduced by the government which was based on the unfair competition offered by the company to small retailers. This has exploited the image of the company in the market of Australia. The company took the steps to manage the same by appointing a dedicated team who look towards the step taken by the company as this helps them in managing the sustainable position in the market.

Economic factors

The economic factors affect the profitability and revenue of Woolworths. This has been found that the rise in the GDP of Australia and New Zealand is offering the benefit to the company with the rise in purchasing power (Chernev, 2018). This will also bring the changes in the prices of products offered by the Woolworths. The rise in the prices helps the company to earn the profit in the market of Australia.

Social factors

The change in the preference of the customers is affecting the operations of the Woolworths Company. The choices of the customers and demand are affected by the changes in technologies (Hill, Jones & Schilling, 2014). Along with this, the rise in the awareness among the customers related to the organic products is bringing the changes in their preference and choices. Considering the changes in the demand and needs of the customers, the Woolworths Company has started offering organic products. This reflects the way through which the company responded towards the change in the needs of the customers.

In addition, the company initiated offering organic products by evaluating the reviews of the housewife customers for their babies. The below-given image reflects the organic baby food that is offered by the Woolworths company.

This change reflects that the company is a concern related to the demand and needs of the customers due to which they are bringing organic products. Thus, this is clear that change in the factors brings the changes in the response of the company.

 


Technological factors

The change or up gradation in the technology is one of the major factors which is influencing the decisions of the retail industry which include the Woolworths company in the Australia market. Woolworths Company makes use of technology in different areas of their operations which make their operations effective. One of the major decisions took by the company after considering the use of the technology is to make use of the self-checkout based machine which helps the company to reduce the cost. This technology helps the customers to scan the products and make the payments without any involvement of a third person (Kotabe & Helsen, 2014). This reflects that the change in technology made the company respond to the change which influenced the other companies in the retail industry. The convenience which is offered by the Woolworths increased the expectations of the customers from the different retailers present in the market. This leads to the rise in the competition among the market.

Legal factors

It is essential for the Woolworths to abide with entire laws and regulations which help the company to perform their operations in an ethical manner. Responding to this, the Woolworths Company started making the step guidelines for their staff which helps them to align the staff with different constitutional imperatives. This helps the company to respond to the legal obligations effectively.

Environmental factors

In the current era, both Australia and New Zealand has some set environmental policies which are essential to be followed by the Woolworths (Grant, 2016). The company is following the different sets of environmental standards that help them to enter into the area and to manage their operations on time. This reflects the positive response of the company towards environmental standards.

 

Porter’s five forces analysis

Australia and New Zealand market is very competitive due to which it is essential to analyse the competitiveness of the industry by applying an appropriate framework that is Porter's five forces. This includes the analyses related to the customers, suppliers and competitors of the Woolworths Company (Kotler, 2015). The response of the company considering the competitiveness of the Australian market is given below: -

  • Woolworths has large operations in the market due to which there is a low threat related to the new entrants. The entry of the global organisation within the industry can affect the profitability level of the Woolworths Company. Due to which the company implement the low-cost strategy which help them to remain the leader of Woolworths.
  • The supplier maintains the high bargaining power which affects the prices of products that is kept by the company (Wheelen, Hunger, Hoffman & Bamford, 2017). The company demand for the raw material varies according to the season and the needs of customers which helps the suppliers to maintain their prices in the market. In addition to this, the company response to the supplier’s prices is the effective implementation of the supply chain.
  • The bargaining power of the customers is high for the Woolworths Company as these buyers always demand a wide range of products. This is the reason due to which the buyers can easily switch from one supermarket to another in the search of the wide range of products (David, 2011). Woolworth’s response to the situation is that they offer a wide range of customers on time after understanding the trends and changes in the preference of the customers.
  • There is a presence of the high threat of substitutes for the products and services that are offered by Woolworths. Responding to this change the company implemented the differentiation based strategy which helps them to attract more and more customers by fulfilling their needs with the actual and substitute products which they are searching in the market (Wilson and Gilligan, 2012).
  • The market where the Woolworths Company is operating their business operations is intense as there is the presence of Coles, Aldi, Asda and many others. The company is maintaining the competition with the use of the competitive price. This will help the company to gain a greater share in the market.
 

Respond with a solution to all of the environmental risks

In the current working environment, it is essential for each and every business to effectively manage their risk which plays a vital role in managing the qualitative distinctions related to the numerous types of the risk that are mainly faced by the company. This has been found that mainly there are three types of risk that are faced by the company (Hollensen, 2015). Woolworths deals with the preventable risk, specific risks and the different external risks.

Majorly the company deals with the external factors which affect the operations of the company and it ultimately creates an impact on the profitability and the success of the company. The major sources of the risk which are faced by the company include the political and natural factors. The company also faces the risk due to the major shift in the macroeconomic factors. Woolworths Company cannot avoid the risk or reduce it while dealing in a competitive environment. It is further recommended to the company to focus on evaluating the impact and to respond according to the changes because these change can’t be control by the Woolworths. This has been found that few of the risk need a different analytic approach that contributes in reducing the risk that can contribute in reducing the external factors (Baker, 2014). The analytic approach is used for the analysis to break a problem down into the elements that are essential to solve. Woolworths make use of the various approaches for different sources of external risk.

Scenario Planning 

Scenario planning is considered as effective systematic proves that define the plausible boundaries related to the future states of the world. Participants examine different external forces such as social, technological, political and regulatory and many others (Kumirska, et al, 2016). The advisor informs the Woolworths Company to make them aware of the changes that are essential. According to the changes, the manager of the company makes use of the strategy to deal with the changes.

Wargaming 

This analytical approach supports the vulnerability of the company to bring the changes in their strategies of the competitiveness of the industry. In the approach, the company creates a team that helps in identifying the strategies in the coming years (Kaplan & Mikes, 2012). Woolworths can make use of this approach in dealing with the competitors according to their current beliefs and possibility of actions. The company can evaluate the strategies related to the suppliers, customers, new entrants and many others. Woolworths Company should make use of this analytical approach that helps them to deal in the competitive industry.

Conclusion 

In the end, it can be concluded that Woolworths Company is dealing with the different factors which include the macro and micro environmental factors that can influence the decision of the company. The issues related to the environmental factors are discussed in the previous assessment. According to the issues, the company take their future steps which help them in responding in an effective manner. This report includes the different responses of the company that influence the environmental factors and leads to the risk. The company should make use of an analytic approach that helps them in overcoming or reducing factors. The analytical approach includes the scenario planning and war-gaming that helps the company in offering the respond to the solution of the issues which are majorly faced by Woolworths.

 

References 

Armstrong, G., Adam, S., Denize, S. and Kotler, P. (2014) Principles of marketing. 6th edition. Welbourne: Pearson Australia.

Baker, M. J. (2014). Marketing strategy and management. London: Palgrave Macmillan.

Chernev, A. (2018). Strategic marketing management. 9th edition. Chicago: Cerebellum Press.

David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.

Grant, R.M. (2016). Contemporary strategy analysis: Text and cases edition. New Jersey: John Wiley & Sons.

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. US: Cengage Learning.

Hollensen, S. (2015). Marketing management: A relationship approach. India: Pearson Education Limited.

Kaplan, R.S. & Mikes, A. (2012). Managing Risks: A New Framework. Retrieved from https://hbr.org/2012/06/managing-risks-a-new-framework

Kotabe, M., & Helsen, K. (2014). Global marketing management. New Jersey: John Wiley & Sons.

Kotler, P. (2015). Framework for marketing management. India: Pearson Education.

Kumirska, J., Wagil, M., Stolte, S., Maksymiuk, M., Puckowski, A., Maszkowska, J., ... & Stepnowski, P. (2016). Anthelmintics in the aquatic environment: a new analytical approach. Current Analytical Chemistry, 12(3), 227-236.

Wheeler, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy. India: Pearson.

Wilson, R.M. and Gilligan, C. (2012). Strategic marketing management. New York: Routledge.

Woolworths. (2018). Organic. Retrieved from: https://www.woolworths.com.au/Shop/Browse/fruit-veg/organic

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