Chemist Warehouse Business Report

Running Head: Chemist Warehouse
CHEMIST WAREHOUSE
Business Report
AUGUST 27, 2019

Chemist Warehouse 1
Introduction
Chemist Warehouse is the largest pharmacy retail chain in Australia. The company has more
than 8000 staffs at its pharmacy stores. The company was founded in 2000 and its estimated
revenue in 2013-14 was $2.3 billion. Chemist Warehouse is also known for its online pharmacy
services and discounted pharmacy products. However, like every business organization Chemist
Warehouse also face challenges from its external environment. This report helps to analyses
various environmental factors of Chemist Warehouse through the PESTEL analysis and find out
about the two major environmental challenges that mostly affect the company and its business
operations.
External Environment Analysis of Chemist Warehouse
External environment includes all those factors which are beyond of organizational control and
are not related with the organization but affect the organizational operations. These
environmental factors can be analyzed with the help of PESTEL analysis, which is a powerful
strategic tool that helps the organization to assess their business environment and take the
corrective actions (Doucette, et. al., 2012). There are six environmental factors in the PESTEL
analysis which are as follow:
1. Political Factor: In political factors, political rules and regulations are the major factors.
Both Australian state and federal policy law related to pharmacy affect the overall
strategy of the business organization. Chemist Warehouse needs to adjust with both the
laws and rules and regulations. Apart from this, the government also charges different
taxes on the medical products. In such a situation company faces issue to determine the
prices of products that affect the profit margin of the company. Apart from this, the
company also faces issue related to Food and drug administration where strict rules and
regulations on selling products through online platforms is a challenge for the company
(Santos, Melo, Claudino, and Medeiros,2017).
2. Economic Factor: The relationship between pharmacy industry and economic
environment can be describe as “fact of life” (Tang, 2014). Both are necessary for the
human health, but unlimited demand of pharmacy products needs large funds and
resources to produce the medicines for people. However, the economic condition of
people also determines whether they can afford the medicines or not. These all factors

Chemist Warehouse 2
affect the selling and production of medicines of the company. Unemployment and low
income of people force a large demographic to use their own way of treatment or
medicines and avoid the costly medicines of the company (Doucette, W.R., Nevins, et.
al., 2012).
3. Social Factor: Social factors include culture and living style of people. Culture is the key
of most of the individual behavior and their attitudes, values, norms, and ethics etc. The
attitude of person and thinking whether he believes in medicines or naturopath like Yoga,
Exercise, or self-healing process. Sometimes people avoid taking medicines because they
think they can recover the health by their own body process. However, lack of education
and unawareness of people about the use of medicines also affect the company to
promote its product (Spinewine, Fialová, and Byrne, 2012).
4. Technological Factor: Technology is an important part of pharmacy industry.
Advancement in technology helps to produce quality medical products which is free from
biological limitations, not costly, suitable for the health, and expected to be more
effective on disease. The technology also helps the company to produce mass medicines,
so availability will never be a question in front of the company. However, the company is
known for its technological advancement and innovation in medical products that help
the company to easily fulfill the medical needs of people. Apart from this, the company
focuses on R&D department that helps the company to produce effective and health
suitable medicines for people who needs medicines (Justis, Crain, Marchetti, and
Hohmeier, 2016).
5. Environmental Factor: Environmental concern is not only limited to other industries
rather it also connected with the pharmacy companies. The company cares the source of
its raw material, source of energy consumption, environmental pollution, and growing
price of energy. These all factors affect the company at greater extent. Apart from this,
the company needs to care about the sustainable development approach to protect the
natural environment (Hattingh, 2011).
6. Legal Factor: Legal factors are related to those rules and regulations that affect the
production and distribution of medical products and its prices. Generally, every
government follows the strict rules and regulations related to medicines because it is the
matter of human life. The Australian government is also very strict about its pharmacy