Primary Analysis on Pestle Analysis of Australia for B&M Company

This report discusses the impact of macro factors such as political, environmental, legal, social, technological, ethical, and economical factors on the start-up of B&M in Australia. It also provides recommendations for the company.

GLOBAL BUSINESS
ENVIRONMENT

GLOBAL BUSINESS ENVIROMENT: 1
Contents
Introduction.........................................................................................................................................2
Primary analysis on Pestle analysis of Australia...............................................................................2
Political factors................................................................................................................................3
Economic factors.............................................................................................................................3
Social factors....................................................................................................................................4
Technological factors.......................................................................................................................5
Legal factors.....................................................................................................................................5
Environmental factors.....................................................................................................................6
Ethical factors..................................................................................................................................7
Recommendation.................................................................................................................................7
Conclusion............................................................................................................................................8
References............................................................................................................................................9

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Introduction
This report brings out the discussion of primary research of macro factors of Australia. The
report undertakes a research on B&M Company and the impact of macro factors such as
Political, environmental, legal, social, technological, ethical, and economical factors on the
start-up of B&M in Australia. B&M stores was incorporated in 1978 (B&M, 2018). B&M
has been one of the leading variety retailer in UK. The company is renowned for its fastest
growth in retail sector in UK considering a revenue growth and number of stores of more
than 25 times until 2016. The company operates a chain of stores, which sell gardening
products, home-living accessories, electric equipment, baby and summer products and
grocery related to food and drinks (Biggs, 2016).
The company is listed on London stock exchange. The company has its trading operations in
England, London, Scotland, Wales, West Midlands, Greater Manchester and many more and
plans to expand the business in Australia by entering in retail sector of the country. Before
entering in the market, the company has to evaluate and analyse the business environment of
the Australian retail sector. Directly or indirectly, every business is affected by political,
social, technological, legal, environment, and economic factors of the country. From the first
establishment in Blackpool in Europe, B&M has developed and grown the number of stores
to 560 and employed more than 28,000 people.
Primary analysis on Pestle analysis of Australia
The decision of the owner in regards to decide whether they should establish the company in
Australia depends on the Macro environment factors. The tax changing policies, trade
barriers, government policy and demographic change affect the company existence.

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Political factors
Australia’s political environment is stable, progressive, and open in terms of providing FDI a
high degree of confidence to run a new establishment in Australia. Australia is renowned
market for MNCs in Asia-Pacific region. Australia has a well-educated, multilingual
workforce. The country has strategic time zone and competitive cost base. These advantages
of competitive cost base and strategic time zone provides a sophisticated and comfortable
environment, which encourages various MNCs to drive technology and innovation.
Prevailing political conditions have contributed to the retail situations in Australia due to
increasing interest of investors, business holding off spending and households. After
establishing the business in the Australia, The Company brings its capital as per the
permission and to raise the remaining capital, the company plans to raise either through
equity or through debt. If through equity, overseas investors believe that falling Australian
dollar currency would lose the confidence of stability of political environment (Instreet
Investment Limited, 2013).
Economic factors
Australia`s GDP was around AUD1677.47billion in 2016 and the per capita income was
estimated at USD51850.27 whereas the purchasing power in regards to per capita income was
estimated at USD 1187.32 (Market research report, 2017). Even at the time recession, the
country has positive consistent growth in the last decade. The country`s manufacturing
potential lies in several sectors such as mining, wholesale and retail trade including their
insurances. Australian economy is a stable economy with increasing FDI inflows in the
country due to increasing demand after the crisis of recession. While deciding the
establishment of B&M, the country`s economic conditions are favourable such as stable
economy, increasing demand of people, and good purchasing power of the people. Moreover,
the country`s economic environment supports retail industry. High purchasing power and

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disparity of people indicates growth of retail sector in the country. The country has faced the
recession period of whole decade from 2001 to 2011 (Isidro and Marques, 2015).
Currently, the country is promoting FDI inflows because the country has achieved a stable
economic growth. As far as international trade is considered, Australia is extensively
dependent on other countries such as Japan, US, UK, china, and other European countries for
its imports and exports. B&M already has its establishment in European countries. In addition
to that, the international trade will not affect the company directly because it is planning to
establish its manufacturing unit in (Australia Market research report, 2017).
Social factors
As far as social effects regarding global shopping of retail is considered, the sector is facing
problems. In addition to that, retail jobs are at risk because domestic taxation environment is
penalising domestic retailers. This penalty acts as a catalyst for the retail trade in Australia to
shift their business on an online platform to expand on the international level and expand
across overseas. However, B&M Company is not a domestic company of an Australia.
Therefore, it might not face the problems of penalty imposition regarding using the online
platform in Australia. The perpetual existence of B&M Company depends on demand for
particular product, which the company is offering (Sierzchula et al., 2014).
The main three social classes are working class, middle class, and the upper class. All the
three classes have the necessities regarding the retail products such as home living
appliances, baby products, food and drink, and electric equipment. The demand of upper
class generally rely on expensive clothes, cars, and home living accessories. Products
provided by B&M to cater infant care differs from country to country because the child
rearing varies considerably with country`s culture, background, education and occupation of

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the parents. The products, which B&M offers in European countries, may differ from the
products offered in Australian market as per the needs of the people (Oraman et al., 2018).
Technological factors
New technology creates product and service competitive in the market by using new
processes and reducing cost. Organisation such as CSIRP (commonwealth scientific and
industrial research organisation) assists and provides technological assistance to the
organisations by testing them. The indirect tax arrangement has greater impact on
commonwealth and state and territory budgets. These budgets include the influence of how
far technology has reduced the administrative costs. By reflecting a benefit of existence of
good technology especially in retail sector, Australia attracts the potential of B&M Company.
Although it is inevitable and unstoppable for the customers to accept global technology
especially with the growing use of internet and technology (Lucintel, 2012).
Due of presence of globalisation in every sector, these days retail sector in Australia has been
undergoing massive changes regarding global online shopping. With the increasing
competition at a global level between local retailers and overseas retailers, Australian
retailers started embracing trading opportunities at a global level because of introduction of
online platform. Therefore, establishing a manufacturing unit in Australia by B&M Company
can enjoy the benefit of online platforms (IBISWorld, 2018).
Legal factors
The legal environment of a country has indirect influence on the working of a company.
Legal factors relate to legal environment in which the business operates. Laws related to age
discrimination, disability discrimination, and increase in the proportion of minimum wage
rate system affects the organisation`s actions. Legal laws such as new procedures and
systems, which are imposed on business firms especially for a particular sector influences the

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profitability of the organisation. Several laws may restrict the smooth operations of Retail
Company due to hike in minimum wage rate system (Lucintel, 2012).
Recently, there is an imbalance in the advantage offered by Australian government to
Australian retailers and overseas especially for those retailers who sell similar set of products.
While buying goods from an Australian retailer, a customer is bound to pay 10% GST,
whereas if a customer purchases the same product from an oversea seller, they can avoid
paying added GST or duties. Despite this benefit, a customer saves 15-20% of products price.
Moreover, through the above analysis it is evaluated that offshore retailers have a distinct
advantage over the domestic retailers especially considering the sale of goods (Market
research report, 2017).
Environmental factors
Environmental factors such as the influence of pollution and global warning may lead to
restrict the operation of a business. B&M Company who produces home appliances such as
chimneys should not realise toxic gases, which can harm the people lives. As far as laws for
natural resources are considered, the environment protection and biodiversity conservation
act 1999 make it an offensive for companies as well as persons (Vend, 2018).
The crucial eight matters for the importance of environment in the EPBC Act. Any business
do not have the right to hamper the world heritage properties, national heritage places,
commonwealth marine areas, and nuclear actions. Australia has scarcity of basic resources
especially water. The manufacturing of baby products such as food and drinks either need
pure water or it will hamper the quality of the product. Therefore, the B&M Company has to
use chemicals and antioxidants to improve the quality of the food. It is a fact that B&M
Company will not be able to deliver the same quality of product, which it has been delivering
Europe and UK (Australian government department of environment and energy, 2009).

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Ethical factors
Different country has different ethical standards. However, ethics for protecting the natural
habitats remain same. Although, retail sector all over the world suffers from child labour, low
wages, health and safety risks, animal cruelty, and environment degradation. Some of the
retailers who initiated the steps towards achieving ethical standards such as Dresden, an
eyewear retailer aims to take revolutionary steps to provide the world with most comfortable
and affordable eyewear. As a CSR activity, Dresden initiated steps to treat the Australian
beaches, where the inhabitants were suffering from plastic waste (Stinson, 2016). Moreover,
Dresden discarded the use of fishing nets and recycled them at affordable prices. While Fair
Imports Alliance (FIA) encourages healthy competition between all the sellers regardless of
whether a retailer belongs to Australia or overseas discarding preferences to any one retailer
(Fair Imports Alliance, 2015).
Recommendation
Through primary research of Australia’s macro environment by an tool known as PESTLE
helps to analysis how far establishing a European retail company named as B&M Company is
favourable in Australia`s environment. During primary research, it is notices that, Australia
suffers from the poor quality of water and its availability at the same time. Earlier, Australian
retailers face problems at both micro and macro level due to market forces regarding the use
of online platform. The Australian government should give an equal platform for competition
for both local as well as overseas. In spite of using primary research, a researcher might have
used qualitative and qualitative approaches through budget lines, graphical data released by
World Bank, IMF for the economy of the Australia.

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Conclusion
After analysing the macro environment factors of Australia by conducting a primary research,
it can be concluded that establishing a manufacturing unit of B&M Company in Australia can
generate good proportion of financial returns by using the online platform. Australia has
potential business in some sectors such as mining, retail, and wholesale sector. Fortunately,
B&M Company is a retail sector company. The company has large number of people to cater
as population of middle, working and upper class is moderate.

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References
Australian government department of environment and energy, (2009) Local government and
Australian environment law. [online] Available on:
http://www.environment.gov.au/resource/local-government-and-australian-environment-law
[Accessed on 03/09/18]
B&M, (2018) About B&M Stores. [online] Available at: https://www.bmstores.co.uk/about-
bandm-stores [Accessed on 02/09/18]
Biggs, C. (2016) A resource-based view of opportunities to transform Australia's electricity
sector. Journal of Cleaner Production, 123, pp. 203-217
Fair Imports Alliance, (2015) Submission to the Productivity Commission Inquiry: The
Economic Structure and Performance of the Australian Retail Industry. [online] Available on:
http://www.asga.com.au/wp-content/uploads/2015/06/FIA-PC-Inquiry-Economic-Structure-
and-Performance-of-Aust-Retail-Industry.pdf [Accessed on 02/09/18]
IBISWorld, (2018) Clothing Retailing - Australia Market Research Report. [online] Available
at: https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/other-
store-based-retailing/clothing-retailing.html [Accessed on 02/09/18]
Instreet Investment Limited, (2013) Political uncertainty weighs on Australian economy.
[online] Available at: http://www.instreet.com.au/content/political-uncertainty-weighs-
australian-economy-%E2%80%93-instreet-market-and-economic-opinion [Accessed on
03/09/18]
Isidro, H. and Marques, A. (2015) The role of institutional and economic factors in the
strategic use of non-GAAP disclosures to beat earnings benchmarks. European Accounting
Review, 24(1), pp. 95-128

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Lucintel, (2012) PESTLE Analysis of Australia 2012. [online] Available at:
https://www.lucintel.com/pestle-of-australia-2012.aspx [Accessed on 02/09/18]
Market research report, (2017) Australia PESTEL Analysis Market Research Report. [online]
Available at: https://www.marketresearchreports.com/market-research-reports-inc/australia-
pestel-analysis-market-research-report [Accessed on 02/09/18]
Oraman, Y., Unakitan, G., Konyali, S., Basaran, B. and Abdikoglu, D. I. (2018) WHAT
EXTERNAL AND INTERNAL FACTORS AFFECT ORGANIC FOOD SECTOR. New
knowledge Journal of science, 7(2), pp. 33-44
Sierzchula, W., Bakker, S., Maat, K. and Wee, V. B. (2014) the influence of financial
incentives and other socio-economic factors on electric vehicle adoption. Energy Policy, 68,
pp. 183-194
Stinson, R. (2016) the Top 5 Ethical Issues in the Fashion Industry. [online] Available on:
https://ecowarriorprincess.net/2016/09/ethical-fashion-101-the-top-5-ethical-issues-in-the-
fashion-industry/ [Accessed on 03/09/18]
Vend, (2018) A roundup of our top 12 forecasts for 2018 and beyond. [online] Available at:
https://www.vendhq.com/2018-retail-trends-predictions [Accessed on 02/09/18]