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PESTEL Analysis

Question:

Discuss about the Transformations in Production and Consumption.

Walmart is a recognized grocery, supermarket and retail chain that offers the customers with the day-to-day useful products. The organization has expanded itself globally with continuous improvements and innovations. Walmart has total revenue of US$ 485.87 billion with an operating income of US$ 22.76 billion. Taking use of pioneering and innovative technology is the key strength of Walmart. The organisation has still several of untapped regions where there are chances of growth and expansion. One of such potential markets is the market of New Zealand. The country offers a wide range of opportunities to the MNCs as well as small and large-scale companies to have expansion and sustainability. The net income of Walmart is around US$ 13.64 billion with a total asset of US$ 198.82 billion. The total equity of the organization is around US$ 77.79 billion as of 2016. Walmart has a total 18 subsidiary firms with different products such as electronics, movies, music, home and furniture, home improvement, clothing, footwear, toys, jewelry, health and beauty, pet supplies, sporting goods and fitness, auto, photo finishing, auto, craft finishing/hunting supplies, aprty supplies as well as grocery. Wallmart also has several services offered to the market, which are Walmart-2-Walmart service, Walmart MoneyCard, Pickup today, Walmart.com, Walmart pay and much more.  To attract the market of New Zealand, the organization is expanding with innovative products and  services. There will be automatic customized support availability by the means of SMS. This is highly beneficial for the people who do not have access to android phones. With the help of this serviced, shopping will become a highly improved experience for the customers as they will be able to fetch the information related to the products location and availability just by texting a message of hi and the product name. The innovative product that is focused is based on the fact for facilitating the ease of shopping for people having no access to Smartphone. Due to rise of Smartphone use, people have shifted from physical shopping to online shopping. Around 78% of the people in New Zealand shops from online shopping portals. However due to lack of Smartphone operation knowledge as well as access to internet, few people face problems in ordering the products. Majority of the old people also face problem in ordering hence a simplified way of sending a SMS for the order is focused. There will also be offered high range of organic product so that the increased number of customers (Jaekel, 2015).

To understand the market needs of New Zealand there will be taken use of PESTEL analysis to undertake to market and environmental analysis:

New Zealand comprises of high regulations and laws and these are temporary as there is change of Government in every next three annual years. The workforce availability in NZ is low because of high costs as the labors are skilled but expensive (Dragosdumitrachi, 2015). Walmart can get the workers easily as the company’s position is strong enough to recruit competent labors at high wages.

Social Needs

The economy of New Zealand is high-income. In last decade, the country has experienced a rapid growth. But the R&D is not so strong, and thus there is lack of investments and for updated technologies, NZ is depended on other nations and companies. The buying power of consumers is high and strong as there are least occasions of economic downturn (Lucintel, 2013). Therefore, Walmart has potential opportunities to grow as there is availability of large number of potential buyers. Thus, the organisation can met the customers and the market needs effectively.

On the social context, New Zealand has socially rich values and because of the same it stands at third position among the list of least corrupt countries. This is one of the factors that attract the capital investments from foreign nations. The market needs as per the social factor is that the organisations are required to be highly ethical and socially responsible. Therefore, it is essential for Walmart to adopt equity and ethical based organisational practices. From the historic background of Walmart, it is observed that it has incorporated unethical approaches but it is trying to improve the same with utmost efforts.

There are significant and rapid use of IT and internet. This is highly advantageous for the newly ventures established in the country. There is increasing levels of business development in NZ. Thus, the market needs for Walmart is that it takes use of innovative technologies for attracting the customers as well as the economy (Marketresearchreports, 2017).

There are several pioneering approaches which are implemented in the country for saving the environment from pollution, waste, dust and garbage. The innovative ecological system of the nation maintains the environmental sustainability. Therefore, it is the market need that Walmart must be conscious about all the related regulations and laws of the environmental safety. So that, there is very less or no negative impact over the natural resources and the environment (Higgins and Dibden, 2011).

The multinational companies are provided with business and trade flexibility. The FDIs get support from the Government. Therefore, Walmart is also beneficial for the development of the economy and thus, there are some of the regulations which have to be followed by the organisation (Marketresearchreports, 2017).

The potential customers of Walmart are the individuals of the nation. The supermarket chain offers a wide range of grocery and household products. These products met the individuals’ needs of the customers and the people. The individuals still do not find all the required goods under one roof but Walmart offers this facility to the individuals and specifically to the ones who are in search of information and want to have a responsive shopping experience. With automated SMSs, the individuals find the products in a rapid manner and save their time (Leszczyc,  Sinhaand Sahgal, 2004).

The customers of Walmart are usually the one of middle class, upper middle class and high class. These customers possess luxury buying experience which is effortless and where they can spend their least possible time. The working class families are also the primary customers as they have the characteristics of buying things from a supermarket store or retail chain rather than from local vendors on daily basis. Rather than conscious buying, the customers buying from such stores have the characteristics of collective buying as they buy products in a collective manner. Another characteristic of such customers is selectivity. These individuals need numerous options from which the can selected the desired product. Thus, making selection is another characteristic of such customers (Lyons, 2007).

Environmental Needs

From the location perspective, these customers used to visit the malls and other famous areas of the cities where they came for shopping. As well as some of the residential and crowded areas area also the potential locations for these customers. In the shopping malls, and trade centres, the individuals are most likely to visit. Thus, Walmart must select such locations for fetching the interest and attention of the potential customers. 

The common traits in the customers are that they prefer buying the products from a single place; most of the people are from working class, have access to technology and are mainly from the group of collective buying.

The other stakeholders are the businesses. There are several brands which provide their products to the supermarket stores so that the customers can have variety of choices with them at the time of buying a single product. Thus, taking products from different businesses and increasing their sales is another activity of the organisation. Thus, the businesses are the supplier as well as the other stakeholders of Walmart which have their direct association with the organisation by the means of their products. The other stakeholders also include the creditors and other financial institutions. These are the ones that give financial support to the organisations. Therefore, the expansion, brand visibility, increased sales or the decline of the company’s productivity affects these stakeholders.


There are several retail stores and supermarket chains already existing in the markets of New Zealand. These are well-known and recognized chains from which people used to buy products. The primary competitors are Big Fresh, Pak’nSave, new World, Four Square, Woolworths, etc.

There are diverse set of strategies which the competitors takes use of in their sales and operations as well as to have sustainability in the market. Some of the competitors take use of cost-leadership strategy where they offer products at very low prices to attract the customers. The other competitors take use of strategies such as high amount of discounts and offers so that the customers retain with the competitors for achieving huge discounts (McEwan, Campbell and Swain, 2010). Some of the renowned super markets who have high brand visibility take use of celebrities for the promotion and marketing of their products. The customers get fascinated with the presence and association of the celebrities and thus also buy products from the similar organisation. To strengthen the operations, the competitors incorporate strategies such as minimizing wastage, recycling, using innovative technologies for huge production and operational efficiency, etc. (Colla, 2003).

Walmart want to enter the markets of New Zeal and with creative thinking and innovation in its business operations so that it can attain huge attention of the potential customers. The innovation and creative thinking is that there will be automatic customized support availability by the means of SMS. This is highly beneficial for the people who do not have access to android phones. With the help of this serviced, shopping will become a highly improved experience for the customers as they will be able to fetch the information related to the products location and availability just by texting a message of hi and the product name. There will also be offered high range of organic product so that the increased number of customers. This is the innovative idea of Walmart for having innovating entrepreneurial expansion in New Zealand. 

Conclusion

There are numerous competitive advantages which can be achieved by Walmart from its creative contribution. The first and the primary competitive advantage is that there will be decreased dependency over the workforce as the customers will instead of enquiring with the employees will directly use innovative services for fetching the exact location of the products (Insch and Florek, 2009). The second competitive advantage is that there will be saved a lot of time of the consumers and this will give them additional time for searching for more other products. The third advantage is that the individuals who prefer healthy and organic products will also be attracted with the organic products offered by Walmart. And thus the organisation can attain increased brand visibility and long-term market sustainability as future competitive advantages (Murphy, 2007).

The overall cost of the proposal will be $20 million as it includes expansion in New Zealand as well as implementation of new technology in almost all its new stores, which will be opening in New Zealand.

Following is the future fiscal state if the organisation. The total revenues are planned to increase with each passing annual year. It is forecasted that Walmart will have a sustainable entry in the markets of New Zealand and support the coming years byits efficient operations.

With this business proposal, there are expectations that there will be increased sales of the products in the new regions as well as high productivity and efficiency in operations will automatically generate profits. There will be new customer base which will help Walmart un expanding its sales and earn huge profits.

There are equal chances that there can be marketing loss in this business proposal. But if any kind of marketing loss takes place then the negative consequences can be mitigate or reduce by following ways:

  • To evaluate and analyze the reasons for marketing loss.
  • By making new advertisements and marketing approaches (Albaum, Albaum and Duerr, 2008)
  • By promoting the products and brand at various platforms
  • To employee more number of people for undertaking operations (Müller-Lankenau, Wehmeyer and Klein, 2006)

References

Albaum, G.S., Albaum, G. and Duerr, E., 2008. International marketing and export management. Pearson Education.

Colla, E., 2003. International expansion and strategies of discount grocery retailers: the winning models. International Journal of Retail & Distribution Management, 31(1), pp.55-66.

Dragosdumitrachi, 2015. NEW ZEALAND STRATEGY 2015: PEST ANALYSIS (PART 3). Retrieved on: 17th May, 2017, Retrieved from: https://dragosdumitrachi.wordpress.com/2014/05/22/new-zealand-strategy-2015-pest-analysis-part-3/

Higgins, V., &Dibden, J. (2011). Biosecurity, trade liberalisation, and the (anti) politics of risk analysis: The Australia-New Zealand apples dispute. Environment and Planning A, 43(2), 393-409.

Insch, A. and Florek, M., 2009.Prevalence of country of origin associations on the supermarket shelf. International Journal of Retail & Distribution Management, 37(5), pp.453-471.

Jaekel, B. 2015. Walmart sparks SMS innovation to transform in-store product search. Accessed on: 17th May, 2017. Accessed from: https://www.retaildive.com/ex/mobilecommercedaily/walmart-tech-competition-sparks-sms-innovation-transforming-in-store-product-search

Leszczyc, P.T.P., Sinha, A. and Sahgal, A., 2004. The effect of multi-purpose shopping on pricing and location strategy for grocery stores. Journal of Retailing, 80(2), pp.85-99.

Lucintel, 2013. PESTLE Analysis of New Zealand 2013. Accessed on: 17th May, 2017.Accessed from: https://www.lucintel.com/pestle_of_new_zealand_2013.aspx

Lyons, K., 2007. Supermarkets as organic retailers: Impacts for the Australian organic sector. Supermarkets and Agri-Food Supply Chains: Transformations in the Production and Consumption of Foods, pp.154-172.

Marketresearchreports, 2017.PEST ANALYSIS OF NENBW ZEALAN.Accessed on: 17th May, 2017.Accessed from: https://www.marketresearchreports.com/countries/new-zealand

McEwan, B., Campbell, M. and Swain, D., 2010. New Zealand culture of intoxication: Local and global influences. New Zealand Sociology, 25(2), p.15.

Müller-Lankenau, C., Wehmeyer, K. and Klein, S., 2006. Strategic channel alignment: an analysis of the configuration of physical and virtual marketing channels. Information Systems and e-Business Management , 4(2), pp.187-216.

Murphy, A.J., 2007. Grounding the virtual: The material effects of electronic grocery shopping. Geoforum, 38(5), pp.941-953.

Walmart, 2016.2016 Annual Report. Pp.68. Accessed on: 17th May, 2017. Accessed from: https://s2.q4cdn.com/056532643/files/doc_financials/2016/annual/2016-Annual-Report-PDF.pdf

Walmart, 2017.Walmart.com's History and Mission.Accessed on: 17th May, 2017. Accessed from: https://help.walmart.com/app/answers/detail/a_id/6

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