Business Environment

Running head: BUSINESS ENVIRONMENT
Business environment
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1BUSINESS ENVIRONMENT
Introduction
In the current business state of affairs, impact and influence of the external business
factors are more than ever. This is due to the reason that in the current business scenario,
organizations are facing different and diverse business situations, which are becoming difficult
for them to cope up with. In this case, it is important for the contemporary business organizations
to effectively determine the external business factors using different frameworks to have the
proper understanding about their trends and patterns (Gupta, 2013). Accordingly, the
organizational strategies can be initiated by them in the long term. In addition, it is also
important for the business organizations to also identify the extent to which the particular
external factor is having their impact on the operations.
In the previous assignment, the micro environmental factors of Woolworths are being
discussed and in this section, the macro environmental factors will be discussed. In addition, the
impact of the environmental factors will also be evaluated from the perspective of the business of
Woolworths. In accordance to the identified challenges, a few recommended steps will be
discussed in this section.
Determination of the external environment
Political factors
In the current business scenario, political factors are important to get determined due to
the reason that changes in the political scenario will change the entire business approach of the
organization. Woolworths are having their major business in Australia and thus the political
scenario of Australia will have the most impact on their business. It is identified that Australia is
having stable political regime in place with having efficient governance. In addition, majority of

2BUSINESS ENVIRONMENT
the political alternatives in the country are pro-business and pro-capitalist. Thus, the business
environment for Woolworths is favorable in Australia (Acemoglu & Robinson, 2013). However,
it should also be considered that pro-business and pro-capitalist approach is also having own set
of challenges. This is due to the reason that with the business friendly approach in the country,
more global companies will get attracted and Woolworths will face increased level of
competition in the market. In addition, it is also identified that Australia is having favorable
political relationship with the major economies across the world including the free trade
agreements with a few countries. Thus, it is beneficial for Woolworths in having larger
opportunities in the global market by means of having more market and trading potentialities
(Marsh, Lewis & Chesters, 2014). However, on the other hand, it should also be noted that
different Australian states are having different sets of business regulations and standards and it is
important for Woolworths to have the proper understanding about these differences and initiate
their business strategies accordingly.
Economical factors
It is reported that Australian economy is growing at a constant rate from the last few
years. This is one of the major positive sides for Woolworths due to the reason that the more will
be the growth of the economy, the more will be the market opportunities for them. However, it is
also being identified that rate of competition is rapidly increasing in the Australian retail market
due to the inflow of new entrants (Bishop et al., 2013). This is mainly due to the reason of lower
entry barriers in the market and favorable business environment. Thus, profitability of
Woolworths is getting affected with the increase in competition. Another major and probable
economical factor will be the emergence of economic recession. This will reduce the purchasing
power of the customers and average revenue trend of Woolworths will get affected (Fairlie,