University Report: BIZ202 Environmental Scan of Target Australia

This report conducts a macro environmental analysis of Target Australia, a subsidiary of Wesfarmers, examining factors such as political, economic, social, technological, environmental, and legal influences. The analysis identifies challenges including changes in legislation, consumer buying habits, ...Read More

Running head: PART B: ENVIRONMENTAL SCAN REPORT
PART B: The Business Environment: Environmental Scan Report
[Target Australia]
Name of the student:
Name of the university:
Author note:

1PART B: ENVIRONMENTAL SCAN REPORT
Executive summary
The main purpose of this report is to conduct a macro environment analysis of Target, which is
the chosen business company for this report. Few macro environmental factors to have impacted
the business are being identified. These are changes in legislation, buying habits of consumers,
the Government support and, use of renewable energy resource and the plastic waste. This study
also gives relevant solutions to mitigate these challenges.

2PART B: ENVIRONMENTAL SCAN REPORT
Table of Contents
1. Introduction..................................................................................................................................3
2. Identification and analysis of macro environmental factors........................................................3
3. Challenges and solutions.............................................................................................................6
4. Conclusion...................................................................................................................................8
References........................................................................................................................................9

3PART B: ENVIRONMENTAL SCAN REPORT
1. Introduction
This assignment conducts an analysis of the macro environmental factors that affect the
chosen business ‘Target’. Target is one of the subsidiary brands of a widely renowned Australian
retailer Wesfarmers. Target that once was performing well and was way ahead to Kmart, another
subsidiary band of Wesfarmers, is now struggling to maintain profits over successive quarters of
fiscal years. An analysis of macro environmental factors will inform of the external challenges
being faced by Target. This will help to propose a few points of solution to Target to help the
Company perform much better than it is doing at the moment.
2. Identification and analysis of macro environmental factors
Political:
One of the biggest challenges for the businesses in Australia is to act in accordance to the
“Fair Trade” practices. The “Fair Trade” Act observes and monitors where the raw materials are
accessed from (Business.gov.au, 2019). This means any advantage gaining practice like
accessing to materials at the most competitive price will be monitored for its appropriateness and
violation of the ‘Act’. This also implies that the businesses will be forced to adhere to the
environmental and social norms of accessing the raw materials (Business.gov.au, 2019). This
means the businesses will have to ensure that products offered to customers serve their needs of
price and quality. Additionally, the entire process involved in the products reaching to its end-
user does not make any significant damage to the environment where it operates. Moreover, the
businesses must be taking sufficient initiatives to minimise its adverse environmental impact.
Economic:

4PART B: ENVIRONMENTAL SCAN REPORT
It has been 27 years since the Australian economy has gone recession (Deloitte Insights,
2019). Economic growth is expected to remain excellent in 2019. Business investments will
improve and offset the slack being created by a subdued consumer spending, and a devastating
drought (Deloitte Insights, 2019). The businesses have perfect platform to invest in more new
projects and startup ventures provided that the businesses have adequate government support on
their various business processes. To influence an improved consumer spending the businesses
will need to understand and meet the ever-changing consumer behaviour in the country. The
businesses with better analytic capability for marketing audits should get the advantage of the
current market opportunities. Marketing audit will not just be sufficient to retain the competitive
advantage (Abou-Warda, 2015). Indeed, the business with adequate support of the local
government should have the edge over its competitors.
Social:
Buying habits of consumers is creating troubles to those who either lack the innovation
skills or are not financially capable to perform such tasks. Buying habits of people in Australia is
witnessing a change these days. Online shopping has dramatically grown in Australia over the
last five years (Ibisworld.com.au, 2019). This is due to a rapid growth in the usage of internet
through mobile phones and the computers. Online service providers have been benefitted from
the changing buying habits (Petrescu, Petrescu-Mag, Burny & Azadi, 2017). Consumers are
expecting varieties in products, which is a boost to the online purchase industry considering a
subdued consumer spending in recent time. Unlike brick-and-mortar format of stores online
shopping offers a range of choices to consumers while also maintaining the pricing advantage
and reducing the geographical boundaries. In such scenario, it is imperative for physical stores

5PART B: ENVIRONMENTAL SCAN REPORT
especially to the industry leaders to use latest technologies and to be able to design an improved
online shopping platform.
Technological:
Technologies are making big changes in the Australian supermarket industry. Online
shopping is expected to grow considering the entrance of Amazon in the Australian supermarket
sector. The usage of internet and broadband services are increasing constantly. Customers have
an access to a world of features in the form of online shopping through digital devices like
mobile phones. They are now more involved into the shopping process. They have range of
choices to select from. They can also compare two or more products based on their features and
prices. Mobile payment is furthering their experiences to another level. They can now pay their
utility bills and many more by using their mobile-based app (Morosan & DeFranco, 2016). These
are sufficient reasons to prefer online shopping over shopping from the physical stores for those
who spend most of their time on phones. This is true that many prefer shopping from physical
stores for various reasons such as quality assurance of the products. However, to remain
profitable in long-term the businesses must always think of attracting more new customers and
increasing their customer retention rate.
Environmental:
Contemporary businesses are not just restricted for taking care of their financial
performance. Indeed, they now have added responsibilities to take care of. These include but not
limited to their adverse environmental impact and promoting sustainable business practices.
Supermarkets add more to environment pollution in several number of ways. The use of plastics
for carrying the goods, the lights and refrigerator system all contribute to air pollution. The

6PART B: ENVIRONMENTAL SCAN REPORT
lighting and refrigerator systems inside the stores contribute to the Company’s carbon footprint
impact. Plastic bags cause plastic waste (Qureshi et al., 2015). Hence, sustainability is a growing
issue for the Australian supermarkets. On the other hand, these can be the opportunities to many
others who use better technologies and strategies to reduce their carbon footprint impact. It just
requires using innovation and emerging technologies to reduce the carbon footprint impact of a
company. Businesses with a positive environmental impact will also be able to receive adequate
supports from the local government.
Legal:
Change in legislation can always be an issue for the supermarket brands in Australia.
The problem starts when media attention increases on any sector. It results in a range of
investigations like ASIC (Australia’s Corporate and Consumer Regulator) investigations and
inquiries. This is exactly what happened to the banking and insurance sectors in recent time. The
sector remained in news for a long period of time. It faced a range of inquiries and investigations
from ASIC. In response to it, the Federal Opposition Labour Party called for a royal commission
into the banking and insurance sector. However, the Government did not agree to it, which
created a series of Senate. This also was responsible for many other inquiries as an alternative.
Industry regulation was there in the past, it has now increased even further. A number of
legislation that can cause serious risk to the businesses are ASIC reviews, Senate inquiries,
Productivity Commission inquiries etc. (Graham & Kaye, 2015)
3. Challenges and solutions
Based on the analysis of the macro environmental factors for Target, following are the
challenges to the Company:

7PART B: ENVIRONMENTAL SCAN REPORT
 Change in legislation: Target as mentioned in the introduction section is struggling to
keep up its profit margin. It is due to various micro economic factors such as ineffective
product’ positioning and supply chain management. It is important for Target to address
both micro economic factors as well as keeping an account of the changes in legislation.
The risk of changes in legislation can be reduced by recruiting a person or forming a
department specialized in legal works. The individual or the department will constantly
monitor the upcoming and potential changes in legislation. The Government support: Target being one of the renowned names in the supermarket
sector in Australia should have a lesser problem in receiving the Government support.
However, this may be disrupted if adequate sustainable approaches to reduce its carbon
footprint impact and plastics waste are not adopted by the Company. Buying habits: Buying habits of consumers have changed much in recent few years.
Online shopping has played a significant role in influencing the buying habit. It is
imperative for Target to improve its online user experience to be able to further its
competency in the market. This will require some initiatives to be taken from the
Company. It is suggested that Target should look for opening new and small stores. This
will increase its geographic presence and hence, will reduce the time span to reach to
consumers. Moreover, this will impact its capability to deliver the orders in reduced time
span. Use of non-renewable energy resource and an increasing plastic waste: The use of non-
renewable energy resources will help the Company reduce its carbon footprint impact.
The use of LED over the traditional lights is a better option to go with as this will help
reduce the amount of greenhouse gas emission. By adopting suitable strategies such as

8PART B: ENVIRONMENTAL SCAN REPORT
using the recyclable plastic bags can help reduce its plastic waste contribution. Moreover,
the Company should also discourage the use of plastic bags across its stores.
4. Conclusion
To conclude, this can be said that Target on a broader aspect faces few external business
challenges. These are changes in legislation, consumers’ buying habits, the Government support
and, the use of non-renewable energy resource and an increasing plastic waste. These challenges
if not managed appropriately will further affect its business. Target apart from implementing the
recommended solutions must be in regular research for changing market trends. This will be
useful in modifying the current practices to meet the current demands of the industry.

9PART B: ENVIRONMENTAL SCAN REPORT
References
Abou-Warda, S. H. (2015). A Standardized Marketing Audit Model for Entrepreneurship
Education in Egypt. International Journal of Service Science, Management, Engineering,
and Technology (IJSSMET), 6(1), 75-92. [DOI: 10.4018/ijssmet.2015010105]
Business.gov.au. (2019). Fair trading laws. Retrieved from
https://www.business.gov.au/products-and-services/fair-trading/fair-trading-laws
Deloitte Insights. (2019). Australia. Retrieved from
https://www2.deloitte.com/insights/us/en/economy/asia-pacific/australia-economic-
outlook.html
Graham, J., & Kaye, D. (2015). A Risk Management Approach to Business Continuity: Aligning
Business Continuity and Corporate Governance. Rothstein Publishing.
Ibisworld.com.au. (2019). Online Shopping – Australia Industry Research Reports | IBISWorld.
Retrieved from https://www.ibisworld.com.au/industry-trends/market-research-reports/
thematic-reports/online-shopping.html
Morosan, C., & DeFranco, A. (2016). It's about time: Revisiting UTAUT2 to examine
consumers’ intentions to use NFC mobile payments in hotels. International Journal of
Hospitality Management, 53, 17-29. [DOI: 10.1016/j.ijhm.2015.11.003]
Petrescu, D. C., Petrescu-Mag, R. M., Burny, P., & Azadi, H. (2017). A new wave in Romania:
organic food. Consumers’ motivations, perceptions, and habits. Agroecology and
Sustainable Food Systems, 41(1), 46-75. [DOI: 10.1080/21683565.2016.1243602]

10PART B: ENVIRONMENTAL SCAN REPORT
Qureshi, M. I., Rasli, A. M., Awan, U., Ma, J., Ali, G., Alam, A., ... & Zaman, K. (2015).
Environment and air pollution: health services bequeath to grotesque
menace. Environmental Science and Pollution Research, 22(5), 3467-3476. [DOI:
10.1007/s11356-014-3584-2]