Analysis of Macro Factors in Business Environment and Performance Review of Myer

This report analyzes the macro factors affecting the business environment and performance review of Myer, a retail departmental store group in Australia. The report identifies the key issues in the external business and provides insights into the strategies adopted by Myer to cope up with the increasing competition. The report also discusses the impact of political, economic, social, technological, legal, and environmental factors on the retail industry in Australia.

BUSINESS ENVIRONMENT

Business Environment: 1
Contents
Introduction...........................................................................................................................................2
Analysis of macro factors in business environment...............................................................................2
Performance review of Myer.................................................................................................................4
Conclusion.............................................................................................................................................5
References.............................................................................................................................................6

Business Environment: 2
Introduction
New trends and forces shape the retail industry. Retail is major contributor of GDP in the
economy. However, there are several forces in the macro and micro environment that exploit
the changing demographic and economic trends (Vliet, 2010). The analysis of Myer, a retail
departmental store group has more than 60 stores in the best place of Australia. Myer
Company focuses on reducing dependency to drive sales that will positively affect operating
gross profit.
Analysis of macro factors in business environment
Below are the various environmental factors that influence the working of the organisation
 Political factors- In the retail sector by government assist the organisation through
training partnerships and apprenticeship program structure. Government also imposes
parallel import restriction of all products. Myer advised the government to establish a
retail advisory panel similar to mining resource panel. These panels indicate the
largest employing industries. Government has harmonised state as well as territory-
based requirements such as workers compensation, occupational health, and public
liability (Myer, 2011).
 Economic factors- Australia has been following floating exchange rate system where
the exchange rate keeps changing. Myer offers maximum brands and is only retailer
in the Australia. Myer sources its goods from more than 800 suppliers so that it can
provide customers variety in the same organisation. When Myer imports from huge
number of suppliers on credit basis in foreign currency, final payment that was
recognised will be different from the initial amount due to fluctuation in exchange-
rate. Moreover, the trade payable accounts can be either understated or overstated
(Cummins, 2011).

Business Environment: 3
 Social factors- The Company has mould its operation according to consumer
preferences. The increased preferences for good quality of products like cosmetics
provide an opportunity to focus on gaining competitive advantage and satisfy
customers. The population of Australia is culturally diverse. However, the Myer as a
retail organisation have to provide a wide range of products to meet the expectation of
customers (Park, Chae, & Cho, 2017).
 Technological factors- International competitiveness of retail industry of Australia has
increased due to use of internet and e-retailing. The federal government has
established rules and regulation that helps to commercialise and protect new
entrepreneurial ideas. Moreover, Myer has focused on store-experiences that are more
tactile. In retail, audience and customers are empowered when the use of technology
was liberalised. Myer improved its in-store experience by leveraging the technology.
Myer applied this technology in shoe department. Recently, Myer collaborated with
EBay to launch world`s first reality store. The virtual reality of Myer connects to
existing official ebay site, which helps to access new eBay VR department store app.
Once the app is installed, customers can place the smartphones in the shoptical set
with VR glasses to experience and start shopping (Williams, 2016).
 Legal factors- after listing on ASX, more rules and regulation were imposed on Myer
such as Myer was expected to maintain high standard disclosures. Myer`s
shareholders expects better performance that result in increase in share price. Myer
had to enhance its performance to maintain a level so that it won`t breach the listing
rules of ASX. These would increase the liabilities on the management and there is a
high possibility of manipulation of the accounts to meet the expectation of the
shareholders led to reporting of high profits through window dressing revenues.

Business Environment: 4
 Environmental factors- Australia have a dry climate with shortage of water. The
human activities negatively affect the marine environment. Selecting a target audience
in this environment becomes difficult and become challenging to Myer retail market.
Reported in 2017, Myer recycled waste product of approximately 57%, which
improved sustainability in the retail market (Myer, 2017).
Macroeconomic factors- Myer holding ltd. faced another blow after CEO resignation.
Myer became second worst performer on the ASX 200 over the few past years. Shares in
the retail market have fallen 88% after re-listing in November 2009. The business has
faced strategic challenges that were very difficult to overcome.
Microeconomic factors- A huge percentage of Myer revenue is incurred with trendy
fashion products because with the change in fashion the preferences of the consumer
transformation era of also changes. Myer`s products no more matched with the preferences of
the customers.
Identifies the key issues in the external business
 The struggling retailer was trying to cope up with the increasing competition due to
arrival of Amazon.com. The sales had fallen drastically in the year. Myer captured
around 3.5 million visits in 2009 every week. Due to failure of the technology such as
CCTV, which led to loss due to theft (Thomson, 2014).
 Lower consumer preferences led to growing obsolete items in the stock. Financial
reports of 2008, Myer`s inventory turnovers declined from 4 in 2008 to 3.8 in 2009.
The transformation era when company separated from Coles group, 2006.
Performance review of Myer
Myer plans to prioritise investments in order to deliver gains in omni- channels to
achieve the greater productivity and increase the efficiency across the assets. The company

Business Environment: 5
strongly believes that the investment will position Myer to deliver continuous and sustainable
profit in high dynamic environment. In 2017, Myer continue to invest on Myer exclusive
brands with updated installation to build brand service model (Myer, 2017).
Reportedly, the company continues to improve productivity by simplifying and
making efficient the operating model in the stores. Certain cost association with new stores
Myer implementation to Net profit after tax was $67.9 million. Establishing cost of new
stores with New Myer was $20 million (Williams, & Cameron, 2015). New suppliers agreed
to ethical policy shows 100%. Myer plans to invest $600 million in capital for new Myer
stores. The company also prioritise four strategies majorly such as customer led offer,
wonderful experiences, omni-channel shopping, and productivity step-change (Myer, 2017).
Conclusion
From the above report, it is recognised that six key macro level factors affect the
operation of the business. Before 2009, Myer has faced many market clashes due to
resignation of CEO and drastic fall in sales. However, in 2017, Myer has opened many new
stores with separate budget of implementation through net profit after tax. The strong results
through digital and omni- channel enable the company to stand in a heightened competition.

Business Environment: 6
References
Cummins, C. (2011). Myer shrinks from challenges to retail sales. Retrieved from:
https://www.smh.com.au/business/myer-shrinks-from-challenges-to-retail-sales-20111218-
1p0vg.html
Myer, (2011). Barriers to a competitive Retail Sector. Retrieved from:
http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/
file/Myer_PC_Inquiry_Submission_2011_FINAL.pdf
Myer, (2017). Annual report 2017. Retrieved from:
http://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/
file/Myer_Annual_Report_2017.pdf
Park, H. Y., Chae, S. J., & Cho, M. K. (2017). Controlling shareholders’ ownership structure,
foreign investors’ monitoring, and investment efficiency. Investment Management and
Financial Innovations, 13(3).
Thomson, J. (2014). Richard Umbers' New Myer plan left same old problems. Retreived
from: https://www.afr.com/business/retail/richard-umbers-new-myer-plan-left-same-old-
problems-20180214-h0w3bc
Vliet, V. (2010). PEST Analysis. Retrieved from ToolsHero:
https://www.toolshero.com/marketing/pest-analysis/

Business Environment: 7
Williams, A., & Cameron, N. (2015). Myer admits struggle to meet omni-channel customer
expectations. Retrieved from: https://www.cmo.com.au/article/570819/myer-admits-its-
struggling-adapt-omni-channel-customers/
Williams, A. (2016). How Myer is leveraging technology to boost customer experience.
Retrieved from: https://www.cmo.com.au/article/603811/how-myer-leveraging-technology-
boost-customer-experience/