The business environmental analysis

Running head: BUSINESS ENVIRONMENTAL ANALYSIS
BUSINESS ENVIRONMENTAL ANALYSIS
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BUSINESS ENVIRONMENTAL ANALYSIS
1
Introduction
The organizations consider using Porter’s five force model, SWOT assessments and
PESTLE with the purpose of improving their understanding of the market environment and
anticipate different challenges that might be encountered while doing business. Therefore, the
utilization of the models and assessment tools supports the organizations in improving their
strategy building competencies.
Background of the retail industry
The retail industry is encountering growth through the development of different e-
commerce and social media platforms. The shift from the formalized mortar and brick stores to
the online presence have significantly contributed to the growth of the global retail industry. The
global retail sales have increased considerably from US$22.97 trillion in 2017 to US$ 25.04
trillion in 2019 and is still expected to grow to US$29.76 trillion by 2023 (Statista 2020). Active
participation of Woolworths, TESCO, Sainsbury’s and the like in the retail industry have
significantly contributed to the exponential growth and expansion (Sousa et al. 2019). The
companies provide the customers with a wide range of groceries and general merchandise, which
have improved in the years, correlating to the changing taste and preferences of the customers.
Comparative micro factor analysis of 2 companies in the retail industry
Strengths Weaknesses
TESCO
 Leading
market share
 Diversified
Woolworths
 Market
leadership
 Employee
TESCO
 Decrease in
operating
profits annually
Woolworths
 Price wars
with Coles
 Increased

BUSINESS ENVIRONMENTAL ANALYSIS
2
stores
 Superior use
of
technologies
 Improved
product range
policies
 Effective
understanding
of the customer
demands
 Effective
promotional
campaigns in
the different
markets
 Low cost
strategy
increasing
operational
expenses
operational
expenses
 Declining
marginal
income
 Confusion
in
positioning
the
propositions
in the
different
markets
Opportunities Threats
TESCO
 Strategic
alliances with
other existing
brands
 Expansion in
the emerging
markets
 Development
Woolworths
 Focusing on
improving the
experience of
the customers
through
implementing
AI
technologies
TESCO
 Threat from the
changing
context of the
political
situation in
Britain through
Brexit
 Change in the
Woolworths
 Increased
competition
in the
markets
 Threat of
new
entrants and
substitutes