2BUSINESS ENVIRONMENT
In terms of the corruption perception index also, Australia is continuously slipping with 88 in
2011 to 79 to 2016 (theglobaleconomy.com, 2019). This denotes that impact of corruption is
increasing in the country and it will also have negative impact on the business of IGA. The
capitalistic approach of the government is actually helping the retailers to have lower political
interference and maximization of profitability.
Economical factors
Inflation is on the rise in Australia as it is identified that inflation rate went up from 1.3 to
1.9 between 2016 and 2017. Thus, the more will be the rate of inflation, the more will be the cost
of the end products, which will ultimately reduce the sales volume and business viability.
Moreover, in the case of the retail sector, consumer goods will be badly affected by the higher
inflation rate. IGA will find much lower sets of customers for their products. In addition, the
economic growth of Australia is also showing diminishing trend as it is reported that Australia’s
economic growth came down from 2.83 to 1.96 between 2016 and 2017 (theglobaleconomy.com,
2019). This will also pose challenge for the retail sector as the lower will be the economical
growth; the lower will be the purchasing power of the customers. In terms of the foreign
exchange rate of the Australian currency, diminishing trend is identified. It is reported that value
of Australian currency compared to Dollar decreased from 1.28 in 2009 to 1.04 in 2014. Thus, it
will be challenging for IGA to initiate the international trading process due to the reason that
they will incur loss in the process due to the devaluation of the Australian currency. It is also
identified that the rate of taxation in goods and services is increasing in Australia (Bishop et al.,
2013). Thus, the more will be the rate of tax, the more will be the end price. This will also create
barriers in the targeting strategies of the retail brands.

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