Organizations Channel Environment

This article discusses the organizations channel environment, including government, competition, markets, and PESTEL analysis. It also covers the economic, social, technological, environmental, and legal factors that organizations like Myer should consider before entering a new market.

Organizations Channel Environment 1
ORGANIZATIONS CHANNEL ENVIRONMENT
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Organizations Channel Environment 2
Organizations Channel Environment
Government
Myer has raised its complain to the Federal Government in relation to the GST threshold
on imported goods as it happens to be unfair to their Australian retailers (Evans, Lignier and
Tran-Nam 2013, p.7). Currently, the tax on goods and services applies to imports which exceeds
more than one thousand dollars’ worth. According to retailers, an unfair playing field has been
the result for local business thus making their trading environment to be more difficult than it
already is. On the other hand, consumer groups have faced opposition with regard to change of
the threshold thus raising questions over the costs of collecting GST versus the benefits. The
rising employment costs, import duty and escalating utilities costs have continually impacted
Australian retailers thus an unfair advantage to foreign retailers.
Competition
Myer faces great competition from Amazon with fear being that their department stores
with a wide variety of products will be affected once Amazon enters the Australian market. Their
competitive advantage that they currently in retail marketing is expected to be annihilated once
Amazon enters the market (Barney 2014). The threat posed by Amazon has led to a large number
withdrawing their shares from Myer to a low of 44% in 2017. Premier Investments happen to be
their largest shareholder but has shown agitation with possibility of an exit. Existing competitors
to Myer include Xero, Bellamy’s and Smartgroup. There have been calls from the likes of
Premier Investments urging Myer to adopt a new strategy. The current strategy is similar to the
old one with the difference being a change on emphasis.

Organizations Channel Environment 3
Markets
Myer’s market is majorly within Australia. With news of Amazon entering the Australian
market, Myer opened an online platform in 2017 with sales ranging from entertainment, home
and lifestyle experiences and products. Their decision to compete against Amazon by
introducing an online shopping platform was questioned by Gary Mortimer from Queensland
University of Technology. He argued that Myer was just reacting to the current market situation
rather than coming up with a clear strategy that would maintain its competitiveness (Mortimer
and Grimmer 2017, p.30). There has been a development in 2018 where for the first time, Myer
has been pushed out of the index since 2009. Morgan Stanley investment bank discontinued the
coverage of Meyer on March 2018 and cited reallocation of resources thus suffering another
blow. As reported on March 8 2018 by Financial Review magazine, the market value of Myer
had fallen from $950 million in the previous year to $603 million in the previous six months, to a
further $370 million in the week of the publication.
PESTEL Analysis
Political Factors
Myer operates in more than a dozen countries hence its exposure to different political
systematic risks and political environment. It follows that Myer Holdings analysis a number of
factors before investing or entering a market: risk of military invasion, political stability, legal
framework for the enforcement of contract, level of corruption, trade tariffs and regulations
related to retailing, intellectual protection of property, taxation rates and incentives, etc (Yüksel
2012, p.52).

Organizations Channel Environment 4
Economic Factors
Factors such as rate of savings, inflation rate, foreign exchange rate, interest rate and
economic cycle are a determinant to the aggregate investment and aggregate demand in every
economy (Armstrong, Kotler, Harker and Brennan 2015). Myer can use the economic factors of
a country such as inflation, growth rate and industry’s economic indicators like consumer
spending and retailing industry growth rate so as to forecast the growth trajectory of the sector
and the organization. economic factors that Myer ought to consider are: the intervention of the
government in retailed retailing and free markets, exchange rates and the host country’s currency
stability, the quality of infrastructure in retailing industry, education level in the country, etc.
Social Factors
Every organization’s culture is impacted by the culture of a society and their way of
doing things. Shared attitudes and beliefs of a certain population determine how marketers at
Myer will understand the customers in a given market, and ways to design their marketing. Myer
ought to consider: demographics and the level of skills exhibited by the population, education
level and standard in Myer industry, culture on gender roles, etc.
Technological Factors
Myer need to consider several factors towards adopting technological change: the impact
of technology on product offering, impact on cost structure, rate of technological diffusion and
impact on value chain structure. The speed at which the company integrates new technology
should be considered where slow speed will lead to a smooth integration while fast speed would
result to little coping time and ability to make profit.

Organizations Channel Environment 5
Environmental Factors
Before entering a new market, Myer should consider: weather of the region, climate
change, recycling, laws regulating environmental pollution, etc. these factors will determine how
its operations fare (Jurevicius 2013, p.13).
Legal Factors
Some countries lack a legal framework that is protective to intellectual property rights of
organizations. Myer should take caution when entering such markets as there can be theft of its
secret source hence the overall competitive edge. Discrimination law, data protection,
employment law, copyright, etc., are some of the factors to take into consideration.

Organizations Channel Environment 6
References
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
Evans, C., Lignier, P. and Tran-Nam, B., 2013. Tax compliance costs for the small and medium
enterprise business sector: Recent evidence from Australia. Tax Administration Research
Centre University of EXETER Discussion Paper, pp.003-13.
Jurevicius, O., 2013. Pest & pestel analysis. Strategic Management Insight, 13, p.2013.
Mortimer, G. and Grimmer, L., 2017. Why retailers want you to ‘click and collect'. The
Conversation, (30).
Yüksel, İ., 2012. Developing a multi-criteria decision making model for PESTEL
analysis. International Journal of Business and Management, 7(24), p.52.