Global Business Management: Analysis of Expansion Opportunities for Woolworths

The report analyses the environment of two countries, China and Germany, for the expansion of Woolworths, an Australian retail company. The report uses PESTLE framework and geo-political analysis to identify the best-suited country for expansion. The report concludes that China provides better growth opportunities for Woolworths.

Running head: GLOBAL BUSINESS MANAGEMENT
GLOBAL BUSINESS MANAGEMENT
Name of the Student
Name of the University
Author Note

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Executive Summary
The report is based on the analysis of the environment of two countries which can be
considered for the expansion of an organization. The company which has been
considered for the analysis is Woolworths which has its operations in Australia. The
two countries which have been selected for expansion of Woolworths are China and
Germany. The environment of the country has been analysed with the help of
PESTLE framework. The geo political environment of the countries is analysed for
deciding its effectiveness. The country which has been ultimately selected for the
expansion is China as it is able to provide effective opportunities for growth to the
company.

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Table of Contents
About Woolworths..............................................................................................3
Identifying the countries where Woolworths can enter......................................3
Analysis of the countries....................................................................................3
Macro-environmental analysis of China............................................................3
Geo-political analysis of China..........................................................................5
About the business and trade based policies of China.....................................5
Risks and opportunities provided by China.......................................................5
Macro environmental analysis of the Germany.................................................6
Geo-political analysis of the Germany...............................................................7
About the business and trade based policies of the Germany..........................7
Risks and opportunities provided by the Germany............................................8
Conclusion.........................................................................................................8
References.........................................................................................................9

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About Woolworths
Woolworths Group Limited is an Australian company which functions in the
retail sector of the country. The firm has been able to acquire the second largest
place in the retail industry in terms of the total incomes. Woolworths has also been
able to become the topmost liquor based retailer in the industry. The first store of
Woolworths was established in the year 1924 with a capital of 185,000 Dollars. The
company has been operating in the retail industry of Australia for a long time and the
revenues have increased in an effective manner as well. The new stores which were
thereby developed by Woolworths were highly innovative in nature and had
implemented effective technologies in order to operate in an effective manner
(Woolworths.com 2018).
The report will thereby be based on the ways by which Woolworths can
expand its operations outside Australia and New Zealand in order to develop a huge
customer base. The company can also aim at increasing its presence in the retail
industry. The expansion will also enable the organization to improve its revenues
and profitability with the help of proper products and services that can be offered to
the customers all over the world.
Identifying the countries where Woolworths can enter
The countries which have been selected for the expansion based plans of
Woolworths are Germany and China. The selection of proper expansion areas has
been made with respect to the revenues that can be generated by Woolworths in
these areas. Germany has been selected from the European continent and China
has been selected from Asia. The countries will thereby be analysed with the help of
PESTLE framework. The geo political situation of the countries will also be analysed
in the report in order to decide the best suited for expanding the operations of
Woolworths (Beamish and Lupton 2016).
Analysis of the countries
Macro-environmental analysis of China
The PESTLE framework can be used in an effective manner for the purpose
of analysing the external environment based factors which are able to affect the
expansion of Woolworths in China.

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Political factors – China has positioned itself as a powerful country in the
world. The country is also a permanent member of Security Council of United
Nations. China is thereby considered to be the fourth biggest country in the world
based on land area. The Communist Party of China is the major ruling party of the
country which has been able to build a stable environment based on the political
operations. The open and stable political environment in China can be considered as
a major factor which can help in the operations of Woolworths. The company can
enter the country successfully and further continue its operations as well (Yu and Ma
2015).
Economic factors – Economic environment of Chins is an important factor
that needs to be considered in order to expand its operations in country. China is
considered to be the second biggest economy in the world based on GDP. The
purchasing power of consumers in the country is also quite high. The economic
reforms which have taken place in China have played a major role in the growth of
the country. The market based economy of China will able to provide enough
support to the operations of Woolworths (Huang, Rice and Martin 2015).
Social factors – The population of China is highest in the entire world which
is approximately more than 1.4 billion. The average levels of wages have thereby
increased in the country which has led to the improvement of consumer spending.
The rates of literacy in China is more than 90 percent. The impressive rates of
progress will be able to affect the choices that are made by customers. Woolworths
can gain a huge customer base in the country with proper services (Forsgren and
Johanson 2014).
Technological factors – The biggest online population of the world is present
in China which is around 772 million people. The large tech giants are present in
country which have been able to develop an effective technological environment in
China. The vision that has been set as the global leader in the fields of technology
and science. The operations of Woolworths will be favourable due to the
technological support which can be provided to the company by the environment in
China (López‐Duarte, Vidal‐Suárez and González‐Díaz 2016).
Legal factors – The laws which are able to regulate the employment based
practices and business operations in China need to be considered by Woolworths.

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The different areas which need to be considered by the company thereby include,
employee remuneration, labour standards and the benefits. The major laws which
can affect the operations of Woolworths in China are The PRC Labour Law 1995, the
PRC Labour Contract Law 2007 and the other administrative regulations as well.
Environmental factors – The natural environment of China has been largely
affected by the rapid pace of economic development which is taking place in China.
The different factors which have played a major part in the environmental
degradation of China mainly include, water pollution, air pollution, changes in the
climate and loss of biodiversity. Woolworths needs to consider the environmental
situation of the country in order to develop its production processes so that their
effect on the environment (Kolk 2016).
Geo-political analysis of China
The geo political situation of Asia Pacific has altered a lot in the past few
years and this has further affected the position of china in the area. The ASEAN
association of the countries has been a major part of the geo political position of
China. The two major driving forces which have been able to affect the situation of
China in the ASEAN association mainly include, economic gains and the formation of
effective alliance. The country has been able to increase its trade based activities
with the help of proper alliances. The positive relationship which has been developed
by China in the world can facilitate the operations of Woolworths (Luthans and Doh
2018).
About the business and trade based policies of China
China has been able to become a large trading based power and a country
which is able to receive foreign direct investment in an effective manner. The trade
performance and economic performance are based on the sound development
based strategy and the reforms which have been implemented. The country had
joined WTO in the year 2001 and they are also engaged in the bilateral and the
regional trade agreements that have provided investment based liberalization. The
trade policies and the business environment is favourable for the entry of
Woolworths (Morschett, Schramm-Klein and Zentes 2015).

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Risks and opportunities provided by China
The risks which can be faced by Woolworths in China are based on the
concerns which have been faced by the country based on high population growth.
The urbanization based issues which are faced by the country can also affect the
growth levels of Woolworths.
The opportunities which are provided to Woolworths are based on the
economic growth and technological environment that has been built in the country.
The social factors and choices of consumers are also an important part of the
opportunities which are provided to the company by its operations in China (Perri
and Peruffo 2016).
Macro environmental analysis of the Germany
Germany is considered to possess the fourth largest economy in the world
and the second largest exporter and third major exporter as well. The standards of
living which have been developed by the country are also quite high. The
environment of the country can be analysed effectively with the help of PESTLE
framework.
Political factors – Germany is able to develop a democratic republic. The
political system of the country functions in an effective manner under the system
which is known as Grundgesetz. The Social Democratic Party is mainly responsible
for leading the political system since the year 1949. The fundamental structure of the
government is maintained in an effective manner with the help of the Federal
Republic of Germany. The stable political environment will thereby provide effective
support to the expansion plans of Woolworths (Horbach 2014).
Economic factors – The raw materials which are available in Germany are
not enough for the operations of different organizations. The country is however
considered to be a leading producer of the wind turbines and the solar power based
technology as well. Germany is known to import around two-thirds of the required
energy. The services sector of the country is able to contribute more than 70% to the
GDP. Woolworths can operate in a profitable manner in the service sector of the
country with the help of its effective services (Buettner and Kauder 2015).

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Social factors – Germany is the biggest country in the European Union
based on the population. The music, local architecture, sports and art is able to
reflect the socio-cultural environment of the country. The ethno-cultural diversity
which has been developed in the society of the country is able to affect the ways by
which organizations operate. Woolworths will be able to operate in an effective
manner with the support that is provided by the culture which has been developed in
Germany (Tüselmann, Sinkovics and Pishchulov 2016).
Technological factors – Technology and national science is backed by
Germany in many different ways. Germany also has many national laboratories and
private research has been provided importance in the country. The technological
position of Germany is also quite important in the European Union. The investment
which has been made by the country in research and development has improved the
technological environment. Woolworths and its operations will be effectively
facilitated by the technological advancement which has been shown by the country.
Legal factors – The legal factors of the country are based on five branches
which include, labour laws, ordinary laws, social laws, financial laws and
administrative laws. The constitutional laws are mainly able to shape the legal
system of the country. The legal issues and system of the country need to be
considered by Woolworths in order to develop its policies effectively.
Environmental factors – The environmental factors of Germany are mainly
based on the renewable resources which have been developed by the country in an
effective manner. The country has also faced some major issues based on the
environment related to different industries and the coal burning based activities as
well (Leonidou et al. 2015).
Geo-political analysis of the Germany
The geo political environment which has been developed by Germany is
based on its relationship with different countries that are a part of the European
Union. Germany is considered to be an important part of the EU based association
which has been formed between different countries. The trade agreements which
have been made by the country will play a major part in the operations of
Woolworths and its entry in the German market (Zander, McDougall-Covin and Rose
2015).

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About the business and trade based policies of the Germany
The trade based regulations followed in Germany are changed on a constant
basis. The country is thereby considered to be an important part of the import and
export based trade system which is followed in the European Union. The Common
External Tariff is applicable to different countries which are a part of European
Union. The trade tariffs of the country will be able to affect the revenues and prices
of Woolworths (Brannen, Piekkari and Tietze 2017).
Risks and opportunities provided by the Germany
The major risks which can be faced by Woolworths in Germany are based on
the lack of proper raw materials for the development of products that are offered to
the customers.
The opportunities on the other hand are mainly provided to Woolworths based
on the ways by which the company can take advantage of the technological
environment and the high standards of living of the people (Leonidou et al. 2015).
Conclusion
The report can thereby be settled by asserting that the processes of
Woolworths will be favourable in China rather than in Germany. The online
operations of company have been started in China and the establishment of proper
stores will also play a major part in the proper growth of the company in the
Australian retail industry. Woolworths can thereby increase its revenues with the help
of physical stores which can be developed by the company all over the country. This
will play a major part in the expansion of operations of Woolworths in an effective
way.

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References
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