BIZ202 Business Environment: Macro-Environmental Factors on Wesfarmers

This report provides an analysis of the macro-environmental factors affecting Wesfarmers Limited, a major Australian company. It begins with an executive summary and an introduction that outlines the scope of the report. The core of the report involves the identification and analysis of various macro-environmental factors including political, economic, social, technological, environmental, and legal factors, using the PESTEL analysis framework. The report discusses how these factors influence Wesfarmers' operations, market position, and profitability. Furthermore, it identifies key challenges faced by Wesfarmers due to these environmental factors, such as increased competition, cultural differences, shifting consumer demands, economic fluctuations, and regulatory pressures. The report then proposes potential solutions to mitigate these challenges, including product innovation, customer relationship management, market analysis, and strategic adaptations. Finally, the report concludes by emphasizing the significance of understanding the business environment for organizational success, highlighting the importance of the PESTEL analysis in evaluating and responding to external influences.

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Name of the topic: BUSINESS ENVIORNMENT
Student Details:

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Executive summary
Business environment is amalgamation of external and internal factors that affects the
operating system of company. It involves the factors related to suppliers, clients, owners,
competitors, laws, governments and improvement in various technologies. It is necessary for
company to evaluate the amendments to be made within or outside of the organization. This will
help the companies to develop better strategies and plans to raise the production and profitability
of the organization. This paper concentrates on the macro environmental factors of business
environment that can affect the organization externally.

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Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Identification and analysis of macro environmental factors............................................................4
Political factors influencing Wesfarmers Limited.......................................................................4
Economic factors influencing Wesfarmers Limited....................................................................5
Social factors influencing Wesfarmers Limited...........................................................................5
Technological factors influencing Wesfarmers Limited..............................................................6
Environmental factors affecting Wesfarmers Limited.................................................................6
Legal factors influencing Wesfarmers Limited...........................................................................6
Challenges and Solutions.................................................................................................................7
Possible solutions for the challenges...........................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
Business environment is the addition of all institutions, individuals and other services that
are uncontrollable by the business enterprise. They can affect the sustainability and performance
of the organization because of which the functions of business is depending on those factors.
This report explains the macro environmental factors of Wesfarmers, which is one of the top
companies of Australia and deals with commodities and home enhancements products (Hansen,
2018).
Therefore, this report studies the effect of macro-environmental factors on the company
and explains the problems and challenges faced Wesfarmers due to the factors (Murray, 2019).
This paper also shows relevant methods and framework to evaluate the effect of environmental
factors on the performance of the organization.
Identification and analysis of macro environmental factors
Wesfarmers Limited used PESTEL analysis, which is a strategic tool for examining the
macro-environment of the business. The PESTEL stands for Political, economic, social,
technological, environmental and legal factors that influence the company’s macro environment
(Perera, 2017).
Political factors influencing Wesfarmers Limited
The political factors play an important role in identifying the factors affecting the long-
term productivity and profitability of Wesfarmers Limited in global market. By political factors,
it was analyzed that government plays a significant role in the business of the organization in
terms of legal regulations or taxes. One of the imperative divisions of Wesfarmers is Coal

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Mining, and the federal government of Australia announced that exploitation of mining is
required to be sanctioned by the state government of the state. The government is more
concerned for removing the obstructive policies and trade isolationism so that free vocation can
be accompanied by organizations (university, 2018). The strategy of free vocation may affect the
commercial evolution and development of Wesfarmers Limited. This policy will allow several
Non-Australian retail sectors to enter in market and this can increase competition for
Wesfarmers.
Economic factors influencing Wesfarmers Limited
The economic factors like inflation rate, exchange rate, foreign exchange, savings rate
and interest rates can influence the development of the organization. The economic condition of
the Australian market can affect the enactment of Wesfarmers keeping the obtaining behavior
and customer demand in focus. The natural calamity and climate changes can affect the
fertilizers and chemical business of Wesfarmers (Szirmai, 2015).
Social factors influencing Wesfarmers Limited
The social culture and the methods of performing them can affect the internal culture of
the organization. Social factors of environment like population analytics, demographics and
cultural trends are the major factors that can affect the performance of Wesfarmers. They can
help the company to bring success as in Australia, people depends on one-stop shopping method.
They tend to purchase the essential things in a bulk quantity (Migliaccio & Raskauskas, 2016).
Hence, this is favorable for Wesfarmers to have departmental stores and supermarkets in
Australia.

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Technological factors influencing Wesfarmers Limited
Technologies have a very important role in the success of the business organization. The
technological factors of environment help Wesfarmers to compete with its competitors in
Australian market (Vaiman, Sparrow, Schuler, & Collings, 2018). Hence, the production of
Wesfarmers is depending on the technology for maintaining the company’s ecological
sustainability in future.
Environmental factors affecting Wesfarmers Limited
There are various environmental factors or standards in different markets of Australia.
Even in countries, different states have different laws and regulation regarding environment.
Through the complete production assortment held by Wesfarmers has superior precautionary
procedures for not causing damage to the environment. The company has made investment in
technology for eliminating the depletion of resources, adequate usage of water etc. (Bagasra &
Heggen, 2018). Therefore, Wesfarmers has maintained high standards for protecting the
environmental damage.
Legal factors influencing Wesfarmers Limited
The legal factors of environment involve new rules and regulations of the law leading the
employment structure in Australia. Legal factors such as resource law, labor law and business
law have restricted the production in Wesfarmers Limited. The new tax rules such as fair tax,
carbon tax policy etc. cam affect the performance and productivity of Wesfarmers (Finch &
Fafinski, 2019).

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Challenges and Solutions
Challenges refer to a condition suffered by an organization when the external factors of the
environment disturb the plane functioning of business. The challenges faced by Wesfarmers by
the macro environmental factors of business environment are:
 Wesfarmers was facing high level of competition in Australian market as the state
government allowed the new entries in the market ( Wormer & Besthorn, 2017).
 The company faces cultural differences between the employees within the organization.
This was because of their difference in culture and working.
 The demand of consumers for the products and services of Wesfarmers Limited was
diminished as people were not interested to purchase the products as there were more
companies in the market having same business and varieties of products (Kingsbury,
2018).
 The most important challenge faced by Wesfarmers is the flow of low income as the
consumers buying behavior has been affected by the economic condition of the company.
 Wesfarmers was facing pressure from the government new rules and regulation, because
of which the policies of the company has been restricted.
Possible solutions for the challenges
 For reducing the competition in market, the company is required to make necessary amendments
in its products and services. Wesfarmers can do significant innovations in the technology and
product of the company.
 Wesfarmers is one of the leading companies in Australia, so the company should retain
information about the choice and demand of their customers. This will help the company to
manufacture those products, which are demanded by the consumers.

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 The company should analyze the outside market condition about their business and their
competitors and their business. Wesfarmers can overcome the issues related to the substitute
products in the market (50MINUTES.COM, 2015).
 Healthy relations with consumers will help the company to maintain the interest of consumers.
The company should adopt some new changes for increasing their production and profitability.
Conclusion
From the above context, we can conclude that business environment is very significant
for the organizations. It is necessary for all the organization to analyze their internal and external

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amendments in the environment. This report helps us to analyze the impact of different
environmental factors on the performance and profitability of Wesfarmers.
Various challenges can be overcome by relevant decision-making process of the company. the
model used by the organization was PESTEL analysis, which was used to evaluate the influence
of macro environmental factors. Therefore, this report analyzed various effective measures or
framework adopted by Wesfarmers for reducing the chances of facing the environmental
challenges.
References
Wormer, K. V., & Besthorn, F. (2017). Human Behavior and the Social Environment, Macro
Level: Groups, Communities, and Organizations. Oxford University Press.

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50MINUTES.COM. (2015). PESTLE Analysis: Understand and plan for your business
environment. 50 Minutes.
Bagasra, O., & Heggen, C. (2018). Autism and Environmental Factors. John Wiley & Sons.
Finch, E., & Fafinski, S. (2019). Legal Skills. Oxford University Press.
Hansen, A. (2018). Environment, Media and Communication (2nd ed.). London: Routledge.
Kingsbury, D. (2018). Western Sahara: International Law, Justice and Natural Resources.
Routledge.
Migliaccio, T., & Raskauskas, J. (2016). Bullying as a Social Experience: Social Factors,
Prevention and Intervention. Routledge.
Murray, B. (2019). The Purpose of Business: Why Values, Meaning and Purpose Really, Really
Matter. Effective Executive, 22(1), 10-17.
Perera, R. (2017). The PESTLE Analysis (1.0 ed.). Nerdynaut.
Szirmai, A. (2015). Socio-Economic Development. Cambridge University Press.
university, f. f. (2018). Wesfarmers Limited PESTEL & Environment Analysis. Retrieved august
2019, from fernfortuniversity:
http://fernfortuniversity.com/term-papers/pestel/nyse4/4814-wesfarmers-limited.php
Vaiman, V., Sparrow, P., Schuler, R., & Collings, D. G. (2018). Macro Talent Management: A
Global Perspective on Managing Talent in Developed Markets. Routledge.

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