Chemist Warehouse Business Report: PESTEL Analysis and Recommendations

This report provides a comprehensive analysis of Chemist Warehouse, the largest pharmacy retail chain in Australia. It utilizes the PESTEL framework to examine the external environmental factors influencing the company, including political, economic, social, technological, environmental, and legal aspects. The analysis highlights key challenges such as the impact of regulatory bodies and economic conditions. The report identifies the two major stakeholders affecting the business, namely regulatory bodies and the Research and Development department. Recommendations are provided, emphasizing adherence to legal regulations and consideration of economic conditions to ensure the company's success. The report draws from various academic sources to support its findings and conclusions.

Running Head: Chemist Warehouse
Chemist Warehouse
Business Report
AUGUST 27, 2019

Chemist Warehouse 1
Introduction
Chemist Warehouse is the largest pharmacy retail chain in Australia. The company has more
than 8000 staffs at its pharmacy stores. The company was founded in 2000 and its estimated
revenue in 2013-14 was $2.3 billion. Chemist Warehouse is also known for its online pharmacy
services and discounted pharmacy products. However, like every business organization Chemist
Warehouse also face challenges from its external environment. This report helps to analyses
various environmental factors of Chemist Warehouse through the PESTEL analysis and find out
about the two major environmental challenges that mostly affect the company and its business
operations.
External Environment Analysis of Chemist Warehouse
External environment includes all those factors which are beyond of organizational control and
are not related with the organization but affect the organizational operations. These
environmental factors can be analyzed with the help of PESTEL analysis, which is a powerful
strategic tool that helps the organization to assess their business environment and take the
corrective actions (Doucette, et. al., 2012). There are six environmental factors in the PESTEL
analysis which are as follow:
1. Political Factor: In political factors, political rules and regulations are the major factors.
Both Australian state and federal policy law related to pharmacy affect the overall
strategy of the business organization. Chemist Warehouse needs to adjust with both the
laws and rules and regulations. Apart from this, the government also charges different
taxes on the medical products. In such a situation company faces issue to determine the
prices of products that affect the profit margin of the company. Apart from this, the
company also faces issue related to Food and drug administration where strict rules and
regulations on selling products through online platforms is a challenge for the company
(Santos, Melo, Claudino, and Medeiros,2017).
2. Economic Factor: The relationship between pharmacy industry and economic
environment can be describe as “fact of life” (Tang, 2014). Both are necessary for the
human health, but unlimited demand of pharmacy products needs large funds and
resources to produce the medicines for people. However, the economic condition of
people also determines whether they can afford the medicines or not. These all factors

Chemist Warehouse 2
affect the selling and production of medicines of the company. Unemployment and low
income of people force a large demographic to use their own way of treatment or
medicines and avoid the costly medicines of the company (Doucette, W.R., Nevins, et.
al., 2012).
3. Social Factor: Social factors include culture and living style of people. Culture is the key
of most of the individual behavior and their attitudes, values, norms, and ethics etc. The
attitude of person and thinking whether he believes in medicines or naturopath like Yoga,
Exercise, or self-healing process. Sometimes people avoid taking medicines because they
think they can recover the health by their own body process. However, lack of education
and unawareness of people about the use of medicines also affect the company to
promote its product (Spinewine, Fialová, and Byrne, 2012).
4. Technological Factor: Technology is an important part of pharmacy industry.
Advancement in technology helps to produce quality medical products which is free from
biological limitations, not costly, suitable for the health, and expected to be more
effective on disease. The technology also helps the company to produce mass medicines,
so availability will never be a question in front of the company. However, the company is
known for its technological advancement and innovation in medical products that help
the company to easily fulfill the medical needs of people. Apart from this, the company
focuses on R&D department that helps the company to produce effective and health
suitable medicines for people who needs medicines (Justis, Crain, Marchetti, and
Hohmeier, 2016).
5. Environmental Factor: Environmental concern is not only limited to other industries
rather it also connected with the pharmacy companies. The company cares the source of
its raw material, source of energy consumption, environmental pollution, and growing
price of energy. These all factors affect the company at greater extent. Apart from this,
the company needs to care about the sustainable development approach to protect the
natural environment (Hattingh, 2011).
6. Legal Factor: Legal factors are related to those rules and regulations that affect the
production and distribution of medical products and its prices. Generally, every
government follows the strict rules and regulations related to medicines because it is the
matter of human life. The Australian government is also very strict about its pharmacy

Chemist Warehouse 3
policies (Wuller, 2010). The government has strict rules to avoid duplicity of medicines
and unethical contamination of element in the products which is dangerous for human
health. Although, the Chemist Warehouse follows all the norms and regulations of
government and care for the protection of the interest of its consumer (patients). Apart
from this, rules and regulations related to packaging, labelling, advertising, designing,
and printing of expiry date also care by the company to ensure patient safety and their
health (Saunders and Rod, 2012).
Two major challenges or force that affect the most to
Chemist Warehouse
Two major stakeholders which are mostly affect the business of company: The two major
stakeholders who impact the company are regulatory bodies and research and development
department.
Regulatory bodies always determine the way organization produce and deliver its product to the
consumer. Regulatory bodies ensure the quality of pharmacy products and ensures the safety and
security of people. Apart from this, regulatory body also cares about the quality of pharmacy
product which is to follow by the company.
The second stakeholder that greatly affect the Chemist Warehouse is Research and Development
department because the company needs with continuous interaction with this department to
ensure better customer service and medicine quality.
Two major environmental forces that affect the Company: The great influence of legal
factors is the major issue for the company. Federal and state rules and regulations determine the
whole pharmacy business including pricing and labelling of the product. Apart from this, the
economic condition determines the sale of the medicines, because people who cannot afford the
costly medicines generally find other alternative of treatment.
Recommendations
On the basis of above environmental analysis of the company, it can be recommended to the
company to follow the legal rules and regulations of the company because compliance of these
rules and regulations ensure the quality product and services for the customers. Apart from this,
the company needs to review the economic conditions of the country and should set the prices of

Chemist Warehouse 4
the pharmacy at low cost because medicines are the necessary need of human and if people
cannot afford the medicines at high cost, it will affect the sale of company as well as life of
people as well.

Chemist Warehouse 5
References
Doucette, W.R., Nevins, J.C., Gaither, C., Kreling, D.H., Mott, D.A., Pedersen, C.A. and
Schommer, J.C., (2012) Organizational factors influencing pharmacy practice change. Research
in Social and Administrative Pharmacy, 8(4), pp.274-284.
Hattingh, H.L. (2011) The regulation of pharmacy ownership in Australia: the potential impact
of changes to the health landscape. J Law Med, 19(1), pp.147-154.
Justis, L., Crain, J., Marchetti, M.L. and Hohmeier, K.C. (2016) The effect of community
pharmacy technicians on industry standard adherence performance measures after cognitive
pharmaceutical services training. Journal of Pharmacy Technology, 32(6), pp.230-233.
Santos, R.R.D., Melo, F.J.C.D.M., Claudino, C.N.D.Q. and Medeiros, D.D.D. (2017) Model for
Formulating Competitive strategy: the supplementary health sector case. Benchmarking: An
International Journal, 24(1), pp.219-243.
Saunders, S. and Rod, M. (2012) Brand network maps: A multidimensional approach to brand-
consumer relationships in the New Zealand pharmacy industry. International Journal of
Pharmaceutical and Healthcare Marketing, 6(1), pp.55-70.
Spinewine, A., Fialová, D. and Byrne, S. (2012) The role of the pharmacist in optimizing
pharmacotherapy in older people. Drugs & aging, 29(6), pp.495-510.
Tang, R. (2014) Supporting pharmacy practice: Strategic marketing. Australian
Pharmacist, 33(7), p.48.
Wuller, C.A. (2010) A capstone advanced pharmacy practice experience in research. American
journal of pharmaceutical education, 74(10), p.180.