Marketing assignment on: Wal-mart, Its environmental analysis

INTRODUCTION

Wal-Mart is the largest chain of retail stores which cover approximately all parts of the world. It owns large departmental discount stores and warehouses. A list in the Fortune Global 500 considers Wal – Mart as the third largest public corporation of the world. This company was founded by Sam Walton in 1962 and currently number of locations where Wal-Mart provides its product and services is 8970. Main products of the company are Apparel, cash and carry, warehouse club, discount department stores, supermarkets and hypermarkets etc. The company is growing at a higher rate and currently looking Australia as a potential market for its business development (Wal-Mart 2012). This report further will be exploring the opportunities and barriers available in the Australian market for Wal – Mart. PESTLE Analysis and SWOT Analysis techniques will be used to analyze the Australian market for Wal – Mart.ENVIRONMENTAL ANALYSIS

PESTLE analysis is the best tool for the Environmental analysis. The technique is used for the Wal – Mart in Australian market below:

PESTLE ANALYSIS

1. 1.      POLITICAL

As we have already discussed that Wal – Mart is present at 8970 locations worldwide, obviously it deals with different type of political situation in different countries. When we look at political structure of Australia we find that the framework of Australian politics is constitutional monarchy and federal constitutional parliamentary democracy. Although the head of state in Australia is Queen Elizabeth II but the powers given to her is limited. While looking at the political structure of Australia it seems that it is a little complex but since Wal – Mart is dealing with these kinds of situations successfully it will not have to face much difficulties in dealing with the Australian political conditions.

1. 2.      ECONOMIC

Economy of Australia has a good potential for the development of retail business. Gross domestic product of Australian economy is US $ 1586 billion and GDP per capita is US $ 68916 which clearly explains that the disposable income in the hands of Australian households is enough to spend on retail shops. Although the economic situation of the country was not good in the previous year as the whole world was suffering from economic crisis and due to that retail sector of Australia also suffered in 2011. Consumer’s preference is shifting now towards the ecommerce and it has enhanced the retail sales in Australia which is a good sign for Wal – Mart. Currently economic growth of Australia is 3 % which up by 0.08 % as compared to the last year’s economic growth rate. Continuous economic growth of Australia will help in the business development of Wal – Mart (Hernandez, V 2012).

1. 3.      SOCIAL

Society of Australia is very much favorable for the development of retail business. Statistics shows that area wise Australia is a big country but the population is a little low i.e. 22.7 million people according to September 2011 estimates. And hence there are no much cultural differences in the different parts of the Australia (Communicaid 2009). Religious structure of the Australian population is given in the following pie chart:

(Source: Kwintessential 2012)

The above diagram clearly shows that maximum number of people in Australia is Christian and hence Wal – Mart will have to deal with same kind of people in different places of Australia unlike India where people are from every religion. National language used in the country is English and people of the nation are very down to earth and mindful. Australians are clear about their preferences and they do not believe in long relationships for developing a business with them. They communicate directly (Kwintessential 2012). All the features of Australian society are positive for the business of Wal – Mart and will definitely help in the business efforts of Wal – Mart.

1. 4.      TECHNOLOGICAL

As we all know that technology has become an essential part of every successful organization, similarly it will help Wal – Mart in Australia. Australia comes among world’s leading companies in the technological development. We have already discussed above that the number of consumers who prefer shopping from the ecommerce websites are increasing which clearly shows that Australian consumers are internet savvy and it will help Wal – Mart in its sales as well as in promotional activities. Australia is a country which continuously spends on its technological development and research. Continuously improving technology of Australia will be a great advantage of Wal – Mart as it will not only help in promotion and sales of the products and services but also in the production and distribution (O’Neill, G 2012).

1. 5.      LEGAL

Following the legal requirements of a country is the most essential thing for the success of any organization today. The main legal requirements which can affect the business of Wal – Mart in Australia are Taxation Laws, Labor Laws, Production related Laws etc. If a company is found not following the legal requirements; a penalty can be charged. Before entering into the business Wal – Mart should know the legal requirements of retail sector in Australia such as licenses, registration, taxes and permits etc. Australia is known for its transparency in the regulations which clearly shows that Wal – Mart will not have to face much difficulty in Australia (Online Biz Magazine 2012).

1. 6.      ENVIRONMENTAL

Taking care of the natural environment around the business has become an important issue for the sustainable business development. Wal – Mart will be required to take care of its natural environment. Environmental factors like droughts or floods also affect the business of an organization. While looking at the environmental factors of Australia we find that urban locations are facing problems of water. Australian government has made some laws relating to the environmental issues of the country which need to be followed by the companies operating in the country. Wal – Mart will also be required to follow these laws so that it can run its business smoothly. It can also involve itself in some CSR activities to protect the natural environment of the country as well as to promote the company (Environmental Protection Authority 2005).

SWOT ANALYSIS

STRENGTHS

• The biggest strength of Wal – Mart is its brand name and financial power which will help it in promotional activities in Australia.
• Distribution is another advantage of the Wal – Mart as due to the big size of the company it can easily get the discounts from suppliers and distributors.
• Competitive pricing is another big advantage for Wal – Mart.
• World level of management is a great strength for Wal – Mart in Australia. The managerial skills will rapidly develop the business of Wal – Mart in Australia (Marketing Teacher 2012).

WEAKNESSES

• The biggest weakness of Wal – Mart in Australia is other small retailers as due to the entrance of such a huge giant small retailers will lose their business and they will have to shut down their shops.
• Sometimes big size of a company also becomes a weakness of it as it requires attention to the every aspect of business every time and handling a multinational business is not easy.
• Environmental issues are another concern for Wal – Mart (RBIS 2008). OPPORTUNITIES

• As we described earlier that the disposable income of Australians are high hence it is an opportunity for Wal – Mart as they are ready to spend on retail shopping.
• Australia is a big country with continuously growing economy and untapped as well. Wal – Mart has a big opportunity to expand its business all over the Australia.
• Increasing internet savvy population in Australia will help Wal – Mart in its sales and promotion and it can enhance its business through effective ecommerce strategy.
• After developing its business in Australia Wal – Mart will become able to expand its business in the other region of Oceania e.g. New Zealand and Indonesia (RBIS 2008).

THREATS

• Since the smaller retailers and vendors will not be able to fight with the business of Wal – Mart therefore they will oppose the entrance of Wal – Mart in Australia.
• The local convenience stores which have established their business will give a huge competition to Wal – Mart as Wal – Mart have to face the travelling expanses.
• Unstable economic and political situation of the country is another issue for the company (Marketing Teacher 2012).

RECOMMENDATION AND CONCLUSION

Whenever we discuss the retail business name of Wal – Mart comes first. It is the largest chain of discount departmental stores all over the world. It has expand its business in approximately all the regions of the world. Currently company is looking India, China and Australia as a potential market for its business development. India and China are highly consumption driven economies and that is why they are the target market of Wal – Mart but Australian economy has other advantages for Wal – Mart. Australia is area wise a big country but population of the country is relatively low with high level of disposable income and that is why Wal – Mart is considering it a potential market. Wal – Mart should definitely enter into the Australian market because Australian economy is an untapped territory and will enhance the revenue of the company rapidly. The biggest advantage is that it will be able to expand its business in the other parts of Oceania region.

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