Analyzing the Effect of External Environment on Woolworths Supermarket

This report analyzes the effect of external environment on Woolworths Supermarket, evaluates appropriate frameworks to resolve challenges faced by Woolworths, and analyzes industry-specific factors in decision-making process of Woolworths. The report includes evaluation of external environment of Woolworths on the entire economy along with analysis of the strategies that will reduce the risks and mitigate the risks effectively.

Running head: BUSINESS ENVIRONMENT
Business Environment
Name of the Student
Name of the University
Author note

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Executive Summary
The report has helped in analysing the different external factors that has created huge
presence in the Woolworths supermarket. The different kind of changes has to be resolved in
an effectual manner that has helped the company in solving issues and helped them in
addressing the changes as well.
The main aim and purpose of the report is to analyse the decision-making process tool that
has helped the company in gaining competitive advantage in the economy. Proper
ascertainment has been done that has helped company in gaining competitive advantage and
solve such issues effectively.

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Table of Contents
Introduction................................................................................................................................3
Evaluation of effect of external environment on Woolworths...................................................3
Appropriate frameworks to resolve challenges faced by Woolworths......................................5
Analysis of industry specific factors in decision-making process of Woolworths....................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
The report helps in analysing and critically evaluating the effect of the external
environment on the firms. The firm that has been chosen in the entire report is Woolworths
Supermarket wherein appropriate kind of frameworks help in resolving the challenges that is
faced by the respective firm. Proper and synthesise of the industry specific factors in the
context of the decision-making technique has to be analysed effectively for the different firms
and Woolworths in a respective manner.
The main aim and purpose of the report is to identify the different kind of effects of
external environment on the Woolworths firm. Proper frameworks will be applied as this will
help in analysing the challenges and analyse the decision-making process as well. Proper
analysis is required to be done appropriately as this will help the company in undermining the
business of the retailers and analysing the preferences of the customers in an effectual
manner.
The structure of the report includes the evaluation of external environment of
Woolworths on the entire economy along with analysis of the strategies that will reduce the
risks and mitigate the risks effectively.
Evaluation of effect of external environment on Woolworths
Proper external analysis is required to be done of Woolworths as this will help in
understanding and identifying the political, economic, social, technological, environmental
and legal factors that can affect the business in both positive and negative manner.
The different kind of political factors created poor relationships with the different
suppliers that led to change in the culture of the business (Hansen & Villadsen, 2017).
Woolworths is one such supermarket that had been successful in the entire market had bad
relationship record with the suppliers. There is huge political kind of pressure against the

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duopolistic nature of the entire retail market and it is becoming bitter that is undermining the
retailer’s business (Capers, 2017).
The economic factors include lacklustre spending of the customers in Australia that is
affecting the retailers in the entire Australian market. The regulations are eased in nature in
the paving way of the retailers for the new entrants in the entire supermarket. The economic
factors can affect the business of the entire Woolworths supermarket wherein the spending of
the customers will be causing huge issues in the business (Yendamuri & Demmy, 2017).
The social factors include that it created poor relationship with the suppliers of the
company that is leading to change in the culture of the business. The social factors are
causing huge issues in the business as this will create huge pressure on them to satisfy the
different needs of the customers effectively (Govindan et al., 2015).
The technological factors of the Woolworths Supermarket need to implement the
SAP-based technology along with system of merchandising in order to improve the efficiency
in an effectual manner. The technological advancements will help the company in
understanding the needs of the customers effectively (Govindan et al., 2015).
There are different legal factors that is affecting the business of Woolworths wherein
there is legal battle with the consumer commission and Australian committee. Proper
recommendations are required to be done for implementation of mandatory kind of codes by
NFF. The government or legal environment has the significant impact on the business in an
effectual manner. The different kind of legislation along with other industrial legislations has
to be analysed effectively by the company through monitoring the different functions
effectually (Romiszowski, 2016).
Lastly, the environmental factors have to be taken care by the respective company
effectively as this will create huge pressure on Woolworths. Proper investments are required

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to be done in efficiency of the energy along with initiatives on control of the carbon in the
environment (Vahlne & Johanson, 2017).
Furthermore, the behaviour patterns of the consumers have to be analysed
effectively as the different buying habits will be considered as the cultural factors. The
different kind of personal factors has to be considered effectively by Woolworths wherein the
age along with lifestyle of the consumers along with psychological factors help in
Political kind of pressure against the duopolistic nature of the entire market
Political
There are different kind of regulations in retail paving way for the new kind of entrants
Economic
There is poor relationship with the differnet kind of suppliers as there is change in business culture
Social
Implementation of the technology that is SAP based as to improve the efficiency
Technological
There is legal battle with consumer commission and along with Australian competition
Legal
Investments in the efficiency of the energy along carbon initiatives
Environmental

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understanding perception of the perception of the individuals in an effectual manner (Medina
Munrov& Belanger, 2017).
Additionally, it has been seen that the legal environment has created huge impact on
the environment wherein the different kind of industrial legislations along with monitoring
the functions wherein there are different kind of tax norms and law enforcement bodies that
includes the change in the government bodies along with market watch issues as well
(Manson et al., 2015).
The economy plays a major role in the success of the business and there is constant
business pressure on Woolworths as well (Hunink et al., 2014). There can be different kind of
new technological impacts on the company that helps in innovating new products and
services in the organization that can create huge pressure on the firm as well. However, there
can be slow growth of the entire economy and it created growing rate of unemployment that
can create pressure on the market as well (Dusseux et al., 2015).
Appropriate frameworks to resolve challenges faced by Woolworths
With the proper and appropriate identification of the different external factors
challenges, it is essential in nature to solve the different kind of challenges with the help of
the framework in an effectual manner. Proper strategic planning is required in nature in order
to overcome and mitigate the different kind of risks and drive business.
Customer Behaviour has to be influenced by brand and marketing development
wherein this will help in influencing the customer behaviour (Kuratko, Hornsby & Covin,
2014). The two kinds of characteristics of the brand is that proper focus has to be provided on
the choices of the customers in an effectual manner (Yoo, Sawyerr & Tan, 2015). It is known
that the loyal customers are the assets of Woolworths and it is the duty of the company to
ensure that the different demands and needs of the customers are met in an effective manner.

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In the development of the brand, proper campaign is required to be done appropriately as this
will help in focusing on different aspects of the behaviour of the consumer effectively
(Sterman et al., 2017).
Proper marketing campaign has to be conducted by the company wherein proper
promotional events has to be conducted effectively as this can help in resolving the different
cultural issues that has been faced by the individuals along with the company in an
appropriate manner (Laursen & Salter, 2014). The psychological factors have to be updated
in an effectual manner by the company wherein proper update requires to be provided to the
customers and knowledge is required to be provided effectively as well (Ruhstaller et al.,
2015). The respective supermarket needs to understand the well-being along with food habits
of the company that has helped the company in adhering towards catering the needs of the
consumers efficiently.
Reducing and mitigating the risks of the legal or government external environment
by Woolworths as this will help in determining the external factors effectively. Preparation
for the change in the policy has helped the company in monitoring the different legislation,
regulations and policies effectually that can lead to failure of the business. Political stability
is essential as the spending of the government will help in understanding the regulation of the
trading hours and understanding then interest rates effectively. Proper changes in the policy is
required to be done appropriately by Woolworths as this includes the different kind of
minimal wages federation and understand the issues of the customers effectively as well
(Laursen & Salter, 2014).
Managing the economy factors of the entire external business is the economic factor
to yield proper opportunity and this is one of the best strategies to drive the success of the
business effectively. The strategy that is predictive in nature has helped the company in

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managing the different economic factors that is essential in reducing the negative impact of
the changing economy on the entire business. Proper analysis is required to be done wherein
the cultural and personal values has to be understood and analysed effectively.
Proper branding and understanding buying behaviour of the customers is essential
and important in nature as this will help in providing satisfaction to the customers and help
them in generating knowledge of the different brands in an effectual manner. Proper
knowledge of the brand is essential in nature wherein the improvement of the quality is
essential in nature to develop the brand and marketing tactics will help in influencing the
different behaviour of the individuals in the entire market (Laursen & Salter, 2014).
Lastly, proper behaviour of the customers is essential in nature as this will provide
the entire focus on creating advantage and value for the employees in the organization.
Woolworths need to solve the different kind of issues effectually wherein this will solve the
issues with the help of the strategic planning and understand the needs of the consumers as
well. Proper focus on the loyal customers is essential in nature wherein the brand
development programs has to be conducted by Woolworths wherein the company will focus
on the different four external environmental aspects that will help in influencing the
behaviour of the customers in the entire market (Laursen & Salter, 2014).
Resolving the different kind of grievances and issues of the consumers wherein
sustainable emphasis has to be provided on the behaviour of the consumers as this will assist
in understanding the needs along with preferences of the consumers effectively. Proper
sustainable competitive advantage will be provided to the customers wherein the entire focus
is required to be on the loyal customers as to ensure the demand is being met effectively. The
cultural factors have to be analysed wherein the update of the fresh market is provided to the

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customers effectively and the updates help in analysing the preferences of the consumers
effectively.
Analysis of industry specific factors in decision-making process of Woolworths
There are different kind of industry specific factors that creates huge influence on the
process of decision-making of Woolworths. The different specific factors are as follows:
Firstly, the size of the market has to be analysed by Woolworths in an effectual
manner that will help the company in gaining knowledge on the efficiency and productivity
of the firm as well. The different kind of innovative techniques has to be measured by the
firm in an appropriate manner that will provide Woolworths knowledge on choices and
preferences of the customers effectively.
Secondly, the government policies have to be checked effectively by Woolworths
wherein the different norms of the government will help in providing knowledge on the tax
policies and schemes that has to be followed by respective supermarket in the society. The
entire management of Woolworths need to identify the different changes in the tax and
interest rates schemes effectively as this will help them in developing course of actions for
fulfilment of the different needs as well.
Furthermore, the competition of the other firms or supermarkets has to be analysed
by Woolworths Supermarket as this will help in recognizing the tastes and preferences of the
consumers in the market. The rate of competition has to be understood by them in order to
compete with them with better utilization of resources and satisfying the demands of the
customers effectually.

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SWOT analysis of Woolworths
With the help of the SWOT analysis, it can be said that there are different kind of
strengths, weaknesses, opportunities along with threats of the company. The SWOT analysis
has helped the company in understanding the strengths as this has helped them in managing
the different opportunities along with threats (Capers, 2017). Proper analysis of the different
threats has been analysed that has helped the company in solving them and taking them as the
strength and opportunity as well.
Porter’s Five Forces Analysis of Woolworths
There is huge threat of the new entrants for Woolworths as they entrants are using
different kind of innovative strategies by lowering the different prices of different goods and
services. Woolworths has to innovate new products and services wherein this will help the
company in building new economies and spending money on development along with
research as well (Yendamuri & Demmy, 2017).
STRENGTHS
CSR program is efficient in nature
There is great number of products as well as services
Strong commitment to sustainability along with
environment
It has huge market share as well
WEAKNESSES
They have low kind of international presence
Late entry in the online retail
There has been losing competitive advantage
OPPORTUNITIES
There is prtomising growth of the entire retail sector
Social Media is one such tool for engaging the
different customers
THREATS
There are different kind of discounting wars
Loss of the different customers of Woolworths
There is aggressive expansion of Aldi
SWOT

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The bargaining power of the suppliers is one other threat wherein it can decrease the
margins that can be gained by Woolworths. Woolworths needs to tackle the situation by
building efficient kind of supply chain management and this will significantly improve the
different kind of issues as well.
The bargaining power of the buyers is the other analysis wherein the buyers have
huge demand and they are the ones who wants to buy the best kind of offerings as well.
Woolworths needs to analyse and build large base of customers and streamline the production
along with sales process as well (Laursen & Salter, 2014).
There are different threats from substitute services or products wherein it is seen that
the new kind of products and services meet the demand of the customers in an effectual
manner at less price. Woolworths needs to tackle it by increasing the switching cost for the
customers in an effectual manner.
There is rivalry among the existing kind of competitors wherein it will drive down
the prices and decrease the overall profitability of the entire firm as well. Woolworths need to
build sustainable differentiation and build scale as this will help them in competing in a better
manner (Laursen & Salter, 2014).
With the help of the SWOT and Porter’s Five Forces analysis, it will be easier for
Woolworths to handle the situation in an effectual manner. Woolworths needs to understand
the issues and rivalry from the other existing firms wherein this is decreasing the profitability
of the firm in an ineffective manner. The SWOT and Porter’s Five Forces will help in
tackling the different kind of issues and collaborate with the different competitors effectively
as well.

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Conclusion
Therefore, it can be concluded that proper ascertainment has been analysed in an
effectual manner by Woolworths Supermarket wherein the evaluation of the effects of the
external environment on the firms has been analysed effectively that provided them
appropriate frameworks to resolve the different kind of challenges in the firm.
Proper decision-making process has been analysed with the implementation and
analysis of industry specific factors that has helped Woolworths in understanding the issues
and solved them appropriately. The social, cultural, personal and psychological factors have
been discussed wherein proper ascertainment has been done to solve such issues effectually.
Lastly, the different crucial factors have been considered by Woolworths that has
helped the company in understanding the issues and solved them effectively. The different
analysis has helped Woolworths in managing the brand development program along with
proper researching.

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