The Business Environment | Macro Environment Report

Executive summary

In this assessment a detailed study will be made on the basis of Woolsworth Company where the researcher will identify the macro environmental factors that influence the company. The assessment is also going to provide the impact of the problems on the performance of the company, its structures and market share with solutions to the problems.

 

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Introduction

In modern business context there are different types of factors that tend to affect the business operations and it is very prominent. Generally the impact can be both positive and negative in nature hence the company needs to identify these factors in order to minimize and maximize the effect in accordance to its nature. In the current assessment there will be discussion over a newspaper article of The Sydney Morning Herald named ‘Strict buying limits may have hurt sales, Woolworths boss warns’ written by Dominic Powell that outlines the macro environment factors that are affecting Woolworths in its operational activities. Woolworths is an Australian based supermarket chain operating in the retail industry of the country. The firm is one of biggest retailers in the market and operates in 1024 locations all across Australia with 225,000. The firm is also financially very big as it incurred a financial revenue of $60.568 billion in the financial year 2019. 

 

Identify macro environmental factors that influence the chosen business

In the newspaper article by The Sydney Morning Herald named ‘Strict buying limits may have hurt sales, Woolworths boss warns’ written by Dominic Powell the effect of buying restriction in the Covid 19 pandemic situations have been identified. The article reports that the chief of the company Brad Banducci has predicted and stated that the restriction of purchase that has been imposed in the current pandemic situation has had implications over the sales of the firm in the third quarter of its financial year. This has also slowed the sales of the company on which rival Coles has taken advantage and achieved a greater sales percentage recording a surge in sales of 13.8% (Powell, 2020).  Now the macro environmental factors that have impacted the company are related to legal, government regulation and environmental aspects. Now the purchasing restriction has been imposed by the government as a regulation to manage the panic demand of groceries that has been created to the existing  lockdown situation. Due to the lockdown there was huge influx of demand for groceries and this benefitted the retailers in an evident way by increase the sales of Woolworths by 10.3% although the government also noticed panic among the people dye to which there as excessive sales and purchase for which it has to impose a limited so that the process can be well distributed among the population of the country.  Now this restriction caused a limit of purchasing that the customer can buy from Woolworths and this regulation was made structure in the coming time. Now in this way the sales growth opportunity of Woolworths was curbed as the firm has to follow the legal and ethical norms to comply with laws set by the state in the pandemic situation (Fernandes, 2020). In an exciting pandemic situation the demand for groceries was uplifted and this was a positive sign for the company that has helped the company to attain a financial growth opportunity in the hard time of the lockdown. Although due to government restrictive regulation the firm was not able to seize such opportunities causing it to get behind its rival Coles that achieved better sales results for the first time after the year 2016. The management of the firm fears that further emphasis of such limitations will affect its sales and will cause slowdown in the operational activities of the firm.

Analyse their impact on business that may be in terms of but not limited to changes in business performance, structure, policies, profitability, growth and market share

The Covid-19 pandemic created a major impact on the Woolsworth Company especially on its structure, policies, profitability, growth, performance and market share. All the points are followed below:

·        Performance- As according to the article due to the covid-19 pandemic there is a major change in the performance of the company since the entire market shrunk down and the sales of the company also decreased due to the pandemic. The strict limits by the government have decreased the performance of the company which results in greater loss.

·        Structure-According to the article the organizational structure of the company also suffered a major loss since the centralized operations of the company that includes the store planning and managing the human resources. The store operations also got affected negatively because of the loss of the Woolworth's sales for the Covid-19 pandemic issues (Peavy et. al 2020). The entire market of the company crashed and also the strict limits of the sales of the company is throwing major challenges to the company.

·        Policies- The trade policy of the Woolsworth Company as well as the duty hour’s policy of the company also had an impact due to the pandemic as according to the article. The work hours have been changed due to the new strict rules and the lockdown rules. The employees are working for a few hours and their wages also got lessened since the company is facing huge losses.

·        Profitability- There is a huge impact on the Woolsworth Company’s profitability after the covid-19 pandemic. The company is following the strict limit sales that have been made by the authority. AS according to the news article the company is holding a huge stock but still is unable to do the sales

·        Growth- The growth of the company has stopped since the last few months of the pandemic crisis according to the article. The Woolsworth Company is suffering from major loss as the strict sales rules have been issued where the company will not be able to use its own methods (Forsberg, 2020). The company also pays the salary of all its employees even if the work hours have been lessened.

·        Market share- The market share of the Woolsworth Company has shrunk down as according to the news report article. After the company’s market share, the company is able to recover only 0.4% whereas the ASX 200 gained the market share of 2.67 % share. From March 2020 the company lost 12.9% of the total market share according to the report.

Propose solutions to challenges to counter prevailing/potential risks

Now looking at the current situation of pandemic it can be said that the the frm may be looking toward a solution of financial slowness or possible recession in order to counter the issues that are being faced by the company the following solutions can be followed:

  1. Reduction of cost: Now it can be seen that in the discussion above due to the restriction and limits imposed by the government the firm has witnessed a slowness in its sales due to which it has lagged behind Coles in the competition although it cannot be denied that the firm still has experienced an increase in sales of groceries and it is still financial very stable and strong to go through this pandemic situation. Hence in the current situation the firm should wait for the pandmeic to end and the market to get back to normalcy. In order to increase the longevity of the company's operations and financial stability the firm will have to cut down on its unnecessary cost to optimize the overall cost incurred by the firm to increase the profit margin of the firm from its sales (Fernandes, 2020).
  2. Providing Offers on Products- According to Torr, (2020)  The Covid-19 pandemic has created a mess all over the world and many companies are facing great loss including the Woolsworth Company. The competition of the Woolsworth which is Coles is giving a really tough competition to the company. The strict buying limits of the products by the government have created a negative influence on the sales as well as the growth of the company. In order to attract the customers the Woolsworth Company will have to provide great offers in all the essentials needs.  By providing offers in the essentials things as well as merchandise products the customer will get much attracted to the company and this will also help the company to continue its operations and will help the company to continue the selling the products. Hence it can be said that by providing offers on the products of the company, Woolsworth will be able to continue its sales properly and will be able to attract lot more customers. This solution will also help the company to clear its stocks and inventories, the company might earn less profit. 

Conclusion

It has been concluded from the above that the Woolworth Company is facing a greater loss since March 2020 due to the covid-19 pandemic. The company is bound under some strict rules by the government where the company has to follow the norms for selling its products. It is also concluded from the above that the performance, structure, growth, policies etc of the Woolsworth company has also been affected negatively by the Covid-19 pandemic. From the above the macro environment analysis has been identified in regard to the Woolsworth Company. It is also concluded from the above that the Covid-19 pandemic has created a major problem all over the world and many companies are facing major loss for the lockdown as well as the strict buying rules that have been made by the government. Hence for the problems that are being faced by the company also has some solutions mentioned in the above which will help the company to stay on the track.

 

 

References

Donthu, N., & Gustafsson, A. (2020). Effects of COVID-19 on business and research. Journal of Business Research, 117, 284.

Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. Available at SSRN 3557504.

Forsberg, C. (2020). COVID-19 panic buying hits the vulnerable. Green Left Weekly, (1258), 11.

Peavy, K. M., Darnton, J., Grekin, P., Russo, M., Green, C. J. B., Merrill, J. O., ... & Tsui, J. I. (2020). Rapid Implementation of Service Delivery Changes to Mitigate COVID-19 and Maintain Access to Methadone Among Persons with and at High-Risk for HIV in an Opioid Treatment Program. AIDS and Behavior, 1.

Powell, D., (2020). Strict Buying Limits May Have Hurt Sales, Woolworths Boss Warns. [online] The Sydney Morning Herald. Available at: [Accessed 23 July 2020].

Torr, C. (2020). What the coronavirus has exposed about our finances: your money. Personal Finance, 2020(473), 6-8.

 

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