Environmental Scan: Analysis of Woolworths Supermarket Industry

Running Head: Business Environment
Business Environment
Environmental Scan

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Table of Content
Brief Introduction............................................................................................................................................................... 2
Company Background....................................................................................................................................................... 2
Analysis of the Australian Supermarket Industry................................................................................................3
Solution to the PESTLE analysis................................................................................................................................... 3
Political Forces................................................................................................................................................................ 3
Economic Forces.............................................................................................................................................................4
Social Factors................................................................................................................................................................... 4
Technological Factors...................................................................................................................................................5
Legal Forces...................................................................................................................................................................... 5
Environmental Forces.................................................................................................................................................. 5
Michael Porter 5 Forces Analysis-Solution to the Problem..............................................................................6
Threat of Entry................................................................................................................................................................ 6
Power of Buyers..............................................................................................................................................................6
Power of Suppliers.........................................................................................................................................................7
Threat of Substitutes.....................................................................................................................................................7
Rivalry Between existing Competitions...............................................................................................................8
Conclusion on Summary...................................................................................................................................................8
References.............................................................................................................................................................................. 9

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Brief Introduction
Businesses are highly sensitive to the external and internal environmental
factors which have the capacity to affect the functioning of the business enterprise.
Internal environmental are in the capacity of the organization, and it can exercise some
control over the outcome of these internal factors (Dobbs, 2015). However, the
organization has least control over the external factors; they can only create proactive
strategies to be wary of the unforeseen situation. The external environment provides
essential business information to the organization regarding the customers,
government policies, and market forces, technological, environmental and economic
policies which has the potential to create adverse impact on the organization (Epstein,
2018). The report here will focus on analysis of PESTLE and Porter 5 forces framework
and give solution to the selected organization, Woolworths Supermarket. The report
will also discuss the responses to the Porter forces affecting the business environment.
Within the purview of the report an in-depth analysis of environmental scan for
Woolworths will be conducted, which will help the organization in creating better
strategies for the future.
Company Background
Woolworths Supermarket is one of the largest Australian supermarket and
Grocery chains which is owned, controlled and managed by Woolworths limited.
Woolworths and Coles together have created a duopoly together in the Australian
market since the year 1924(Business Tech, 2015). Woolworth’s product offering range
in the category of Meat, fresh fruits and vegetables, packaged food, magazines, DVD and

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other goods pertaining to household and home décor. The company at present has
more than 1000 stores and 19 convenience stores in and around Australia and
employees over 111,000 people. The company soon after the dot.com and e-commerce
bubble started spreading its wings in the online sector. At the very present Woolworths
and Coles occupy 80% of the market share, collectively (Woolworths, 2018).
Analysis of the Australian Supermarket Industry
Australian supermarket industry is dominated by a couple of big names and
plethora of small domestic players. The industry however can be seen as saturated and
almost all the participants practice cost leadership and has less focus on differentiation.
This calls for the fact that all the players like Woolworths ad Coles are working towards
reducing their cost, while focussing less on providing differentiated good and services
to its customers (Hill, Jones & Schilling, 2014). Moreover, the popularity of the private
brand labels is increasing akin to the local brands. Australians are buying in big heaps,
the private label brands, which are hurting the sentiments of the domestic producers.
The industry is growing at a slow pace; the average during 2013-2018 has been 2.5%
CAGR. Price war can be seen as order of the day in the Australian supermarket industry
(Hitt & Duane, 2017).
Solution to the PESTLE analysis
This section will focus on the PESTLE analysis which is an external environment
force for Woolworths, here the focus of discussion will be towards understanding what
role these forces play for Woolworths and how the company can prepare a combative
strategy to over the challenges imposed:
Political Forces
The political environment and business have a very close relationship, more so,
when the industry has huge role to play in the economic development of the country.
The business environment is under a lot of pressure if the political situation in the
country is not good, there can be plethora of challenges such as political instability,
change in governmental policies, revising tariff for import and export. The analysis