Woolworths Group Australia: Micro and Macro Business Environment

This report provides an in-depth analysis of the micro and macro environmental factors affecting Woolworths Group's business operations in Australia. It examines the impact of government regulations, policy changes, social shifts, technological advancements, and political uncertainties on the co...Read More

06 August 2018
The Business Environment
Woolworths Group

Introduction
A business entity operates in an environment consisting of several factors and the
forces that influence the business operations. These external and the internal forces gives the
opportunity to the organisations to promote and expand the business. In addition to this,
sometimes these environmental factors also impede the growth of the businesses. Though the
success of an organisation mainly depends upon the internal factors such as the business
structure, organisation of the working capital, technology absorption, labour cooperation and
more, the macro environment forces such as the taxation policies, Government regulations,
laws and legislations and more also have a significant impact on the operations (Kew &
Stredwick, 2017). The report provides an insight of the effect of the micro and the macro
environmental factors on the business of the Woolworths Group in the recent years.
Government Regulations
 Recently the Government had made amendments in the Liquor Control Act resulting
into a ban in opening of the more than one outlet of a certain size within a radius of 5
kilometres. The company behind the BWS and Dan Murphy’s stores stated that the
regulation will lead to the company into non- opening of any new bottle shops in
Western Australia (Brook, 2018). The company had found the decision to be
oppressive in the interest of both the retailers and the consumers.
Policy Changes
 With the increase in the health consciousness among the consumers, the company
refined its strategy and included the health foods in its portfolio in order to have an
edge in the battle of the supermarkets (Brown, 2018). The company has announced

the expansion of the organic and the wholefood range with an inclusion of about 350
products in its stock.
 Earlier the company used to charge differential prices for few commodities in the
online and the offline supermarkets. There was a high of approximately 7.4 to 7.7 in
the online prices, as compared to the offline prices in the physical stores, in order to
cover the delivery and logistics charges. However, as the customers were unhappy
because of the same, the company decided to make changes to its policy in the year
2015 (Collier, 2015).
Social Changes
 In the year 2017, the David Jones business of the Woolworths group had faced an
oppressive year (Khumalo, 2017). The sales of the said business declined, because of
the decline in consumer spending power. In addition to this, the consumers were not
receptive of the private label clothing range in the market. This further resulted in
decline in the overall group’s result.
 The company had achieved good half -year results with an increase in the profits by
38 percent. The credit was given to the investment of the millions of the dollars
towards the price reduction and thus improving the consumer perception about the
products of the company (Mitchelson, 2018). The company had also invested a
significant amount to engage in the date mining activity, to gain an understanding of
the shopping behaviour and to improve the presentation of the stores to attract more
customers.
 With the increasing women empowerment practices across the globe, and to match
the pace of the same the company aims to reduce the gender inequality at the
workplace. The company has formulated a goal of having at least 40 percent women
at the executive positions in the company, by the year 2020 (Woolworths, 2017a).

Technological Changes
 To maintain the success and the smooth shopping experience and to en- cash the
opportunity in the online marketing and the globalization, the company had modified
its site with the improvement in navigation and the functionality. Moreover, the
company had also launched its mobile application on Android an iOS (Supermarket,
2017).
 The company introduced a new refrigerant technology in the year 2017. The
technology was based on the significant reduction in the refrigerant charge and the
refrigerant leak. The technology was stated to be step towards the company’s target of
innovation with the natural refrigerant, which is a step towards the achievement of the
emission target and reduction of the carbon footprint (Woolworths, 2017b).
Political Changes
 The company reported to have its first decline in the annual profits in eight years. The
same was depicted by the share prices, as the share prices fell by 2.54 percent
(Khumalo, 2017). The company had cited the reason for the decline in the results as
the political uncertainty in South Africa. The company had stated that the political
effect had created a tough trading environment for the enterprise.
Social Responsibility
Some of the changes and happenings in the Woolworths in fast few years on the lines of the
social responsibility are as follows:
 Recently the company announced that the company would not offer the plastic bags in
its retail stores (The Guardian, 2018). The company stated in the press release that it
gives out around 3.2 billion plastic bags each year to the customers. Hence, the

decision to phase out the plastic bags has been taken as a part of the social
responsibility.
 In the year 2015, the company had diverted about 60000 tonnes of the food waste
from the landfills and thereby contributing towards the greener and the cleaner planet
strategy of the company (Woolworths, 2017c).
Effects of the other factors
 With the globalization resulting into the shrinkage of the global markets and the
consumer supplier distance and the trend of the online shopping, the companies are
formulating their individual digital strategies. Woolworths also formulated its strategy
to match the pace. This resulted positively for the company, the same was evident by
the increase in the online clothing sales over 100 percent between the year 2016 and
the 2017 (Supermarket, 2017). The company was also ranked as the best online
shopping platform The Times / Sowetan 2017 Shopper Survey.
 Recently in July, 2018, the two stores of the company at Durban faced dual explosive
attacks. The explosion resulted into fire and the damage was caused to the stores
(Wicks, 2018).
Conclusion
Thus, as per the discussion in the previous parts it can be concluded that the environmental
factors of an entity play a significant role in the growth, success and the operations of the
entity. As evident from the various sections of the report, the business of the Woolworths has
faced tremendous changes over the last few years, across the globe because of the various
micro and macro-economic factors. As a result, the company has been consistently engaged
in the formulation of the new policies or reforming the old, in order to tackle the changes and
survive in the market. Thus, it can be said that the companies must carefully analyse their

environments and must accordingly respond to the changes and the trends to continue
sustaining its position in the market in the long run.

References
Brook, B. (2018). Woolworths claims it could be prevented from opening any new bottle
shops in WA. Retrieved from: https://www.news.com.au/finance/business/retail/woolworths-
claims-it-could-be-prevented-from-opening-any-new-dan-murphys-stores-in-wa/news-story/
76b291f76b9fc1abcf68cb72dac484f5
Brown, V. (2018). Health foods ramped up as new weapon in supermarket wars. Retrieved
from: https://www.news.com.au/lifestyle/food/eat/health-foods-ramped-up-as-new-weapon-
in-supermarket-wars/news-story/640a3e35bcd9fafb636148c70cc513ae
Collier, K. (2015). Woolworths changes online grocery pricing by stealth. Retrieved from:
https://www.heraldsun.com.au/news/woolworths-changes-online-grocery-pricing-by-stealth/
news-story/4919dd9f75fa55e21604a83a234364f8?
nk=650c777bec8ab3064a074ca195a5165b-1533554084
Kew, J., & Stredwick, J. (2017). Business environment: managing in a strategic context. (2nd
ed.). Kogan Page Publishers.
Khumalo, K. (2017). Woolworths annual profits do not look good. Retrieved from:
https://www.iol.co.za/business-report/companies/woolworths-annual-profits-do-not-look-
good-10932893
Mitchelson, A. (2018). How Woolworths is winning over consumers. Retrieved from:
https://thenewdaily.com.au/money/finance-news/2018/02/23/woolworths-half-year-profit-
coles/
Supermarket. (2017). Woolworths digital strategy is gaining momentum. Retrieved from:
https://www.supermarket.co.za/news-article.asp?ID=7280&CatTags=15-Innovation%20and
%20technology

The Guardian. (2018). Woolworths and Coles to phase out single-use plastic bags. Retrieved
from: https://www.theguardian.com/environment/2017/jul/14/woolworths-to-phase-out-
single-use-plastic-bags-over-12-months
Wicks, J. (2018). Woolworths stores targeted by explosive devices in Durban. Retrieved
from: https://www.timeslive.co.za/news/south-africa/2018-07-05-woolworths-stores-targeted-
by-explosive-devices-in-durban/
Woolworths. (2017a). Woolworths 2017 Corporate Sustainability Report. Retrieved from:
https://wow2017cr.qreports.com.au/xresources/pdf/wow17cr-full.pdf
Woolworths. (2017b). Woolworths launches new refrigerant technology. Retrieved from:
http://crs.woolworthsgroup.com.au/page/news/planet/woolworths-launches-new-refrigerant-
technology/
Woolworths. (2017c). Woolworths pleased to see food waste reduction is now a national
priority. Retrieved from:
https://www.woolworthsgroup.com.au/page/media/Latest_News/woolworths-pleased-to-see-
food-waste-reduction-is-now-a-national-priority