Organisational Performance Assignment: External Environmental Factors Impacting Woolworths

Question

Task:
Conduct a research on Woolworths Group limited and prepare organisational performance assignment discussing which external environmental factors are influencing your chosen organization’s performance and/or decision-making of the company.

Answer

Introduction
Woolworths Group Limited selected in the present context of organisational performance assignment is a popular and leading Australian Company, which has a strong retain network throughout Australia and New Zealand. The company was established in the year 1924. Woolworths Group Limited is headquartered in New South Wales and the organisation has applied several competitive strategies throughout the years to gain competitive advantages. The company faced different external as well as internal environmental challenges in the business operation activities throughout the years, but the management successfully overcome those challenges through adequate decision making processes. Different external macro-environment and micro-environment factors are influencing the business performance and decision making processes of Woolworths Group Limited. These external macro-environment and micro-environment factors are discussed in this assignment through the help of PESTLE and Porter’s Five Force Analysis.

Analysis
Different external environmental factors are influencing the business performance and decision making process of Woolworths Group Limited. Some of the important external factors are environment sustainability problems, social consciousness for healthy products, economic challenges due to recent pandemic COVID-19, high bargaining power of different customers, and increased customers. Some of these issues are macro-environment factors and some of the issues are micro-environment factors. These factors significantly influence the performance and decision making activities of Woolworths Group Limited. Following theoretical perspectives will help in analysing the impacts of external environmental factors on the business performance and decision making process of Woolworths Group Limited.

PESTLE Analysis
It is an important situation analytical framework, which will help here to identify the important external macro-environmental factors, which are influencing the decision making processes and performance level of Woolworths Group Limited positively.

Political
The political environment of Australia is favourable for Woolworths Group Limited. Recent reduction in the price of crude oil in the global market is ensuring political sustainability as Federal Government of Australia is becoming successful in maintaining a stable fuel price across the country. This political stand of the government regarding stable pricing of fuel is helping all the business ventures of Woolworths Group Limited to maintain growth and profitability. Especially, the retail segment of Woolworths Group Limited is maximising profit in recent months due to this political stand of government regarding fuel price (Pooe & Mugobo, 2020). Moreover, healthy political relationship of Australia with The United States of America and China is allowing Woolworths Group Limited to important required business resources from these two countries in low tariffs. Most importantly, the amount of trade war has been reduced among international economic giants. These have allowed the federal government of Australia to make good relationship with different economically developed and developing nations. These favourable political scenarios are helping Woolworths Group Limited to enhance business growth.

Economic
The economic condition of Australia is slightly challenging due to the ongoing pandemic COVID-19 as the states and important Australian cities went through lockdown for a certain period of time in the year 2020. Still, the ill-effects of the virus did not go away. The ongoing situation has affected the economic growth of Australia, which has a negative impact on the business growth and sustainability of Woolworths Group Limited. The consequences of this pandemic are unemployment, low disposable income of people, and affected purchasing power of people. Overall, the economic growth of the country also has been affected (Hollander et al., 2020). Overall, these challenging economic conditions also affected the sales growth rate and profitability of Woolworths Group Limited during the pandemic. In this situation, the company is depending on its online platform and Smart Stores to offer the products and services to customers to regain its growth.

Social
The demands of healthy food items, fresh fruits, and high-quality grocery items are increasing across Australia. In addition, the loyal customers also seek for value-added services from their organisations. These demands and trends have significantly influenced the management of Woolworths Group Limited to make some changes in product and service related decision making processes. Woolworths Group Limited never compromises with the quality of the products. On the other hand, the company also wants to give value-added reward points to its frequent customers (Mayberry et al., 2021). These strategies are helping the management of Woolworths Group Limited to satisfy the needs of the customers and retain the customers adequately. Apart from these, use of advanced technology and online platforms in service delivery activities are also helping Woolworths Group Limited to satisfy the service-related social needs of the customers.

Technological
The technological environment of Australia is favourable for Woolworths Group Limited. The company also wants to integrate tech-savvy approaches in the operation management activities to bring efficiency in the overall business operation activities. It is already identified that the technological emergence of Australia has influenced majority of the consumers to get efficient products and efficient services from their organisations. The degree of competition in different Australian industries also has been increased. Looking into these aspects, Woolworths Group Limited has decided to integrate advanced technological applications with the business operation activities frequently. The company has started to use Robotics, Artificial Intelligence, IoT, and Big Data in the business operation activities to become successful (carey et al., 2020). On the other hand, it is also important to state that the company has enhanced its technological surveillance activity in every retail stores. Apart from these, Woolworths Group Limited has introduced the concept of technologically advanced Smart Stores for retailing to satisfy the needs of the customers. Overall, the company has positively focused on the use of advanced technology to ensure competitive advantages. Most importantly, technological emergence of Australia allows Woolworths Group Limited to source and use advanced technological resources in the business operation activities.

Legal
The legal environment of Australia is slightly challenging for Woolworths Group Limited. The business enterprises have to follow several strict regulations in business to overcome the possibilities of legal challenges. Customers, employees, and other stakeholders have fundamental legal rights in Australia. Hence, the companies need to follow those rights. Most importantly, the management of Woolworths Group Limited follows ethics and equality to enhance positive employee management. The company follows stakeholder engagement to make the stakeholders satisfied. On the other hand, Woolworths Group Limited also focuses on business efficiency and quality management to satisfy the needs of the customers (Nwoba et al., 2021). These strategies are adopted by Woolworths Group Limited to overcome the possibilities of legal challenges in business.

Environmental
The natural environment is also challenging for Woolworths Group Limited in Australia as policy makers and federal government in Australia have made it clear that all the business enterprises are responsible to reduce the GHG and carbon emission level in business operation activities. High carbon footprint and lack of environmental sustainability in business can result in legal challenges for the business enterprises. Looking into these pressures, the management already has taken several sustainable initiatives, such as water recycling, zero solid waste management, dependency on substitute energy resources, and green business models (Adhikary et al., 2020). These activities are somehow helping Woolworths Group Limited to maintain environmental sustainability in business.

Porter’s Five Forces
It is an important situation analytical tool and application of this tool can help here to determine the impact of external micro-environmental factors on the business performance and decision making process of Woolworths Group Limited.

Buyers’ Bargaining Power
The bargaining power of consumers in Australia is high for Woolworths Group Limited as the demands of customers for the quality products, differentiated services, and price efficiency have increased. Therefore, Woolworths Group Limited are considering these in business operation activities by ensuring technological advancement, price efficiency, diversification, quality management, differentiation, and effective service in business operation activities (Sullivan & Gouldson, 2020).

Suppliers’ Bargaining Power
The suppliers’ bargaining power in Australia is not high for Woolworths Group Limited as the company already has an established supply chain and distribution network. On the other hand, Woolworths Group Limited is a strong brand name and major supply networks want to do business with Woolworths Group Limited. The stakeholder integration policy of Woolworths Group Limited motivates the suppliers to strengthen the relationship with the management of the company (Freeburn & Ramsay, 2020).

Threat of New Entrants
The threat of the new companies is limited for v in Australia. The main business of Woolworths Group Limited is retail. The retail industry of Australia is highly competitive. It is really difficult to enter into the competitive retail industry of Australia and snatch away the market share of the leading companies like Woolworths Group Limited and Coles. Apart from these, high market entry cost and strong legal entry challenges result in limited threat for Woolworths Group Limited from the new companies.

Threat of Substitutes
The threat of the substitutes is high for Woolworths Group Limited in Australia. Retail is the main business sector of Woolworths Group Limited and e-commerce business are major substitutes of Woolworths Group Limited. The demands for e-commerce services and products are increasing among the Australians. Looking into these demands, Woolworths Group Limited has launched online platforms to sell their differentiated products (Buys et al., 2020).

Industry Competition
The retail industry of Australia is highly competitive and degree of competition is high for Woolworths Group Limited in Australia. Most importantly, Coles Supermarket and Online E-Commerce retailers are major competitors of Woolworths Group Limited. Looking into the higher degree of competition, the company has adopted different competitive strategies (Lifstein et al., 2020). For example, the company has introduced Smart Stores, online platforms, differentiated products, customer reward points, and tech-savvy services etc.

Conclusion
Woolworths Group Limited is a profitable Australian company, which mainly focuses on retailing business activities. Since its establishment, the company faced different macro-environmental and micro-environmental challenges in business. The management has used different competitive strategies in business like technology advanced Smart Stores, online delivery of products, online platforms for product selling, product differentiation, customer loyalty services, robotics in operation activities, and other tech-savvy business operation activities to become successful.

References
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Sullivan, R., & Gouldson, A. (2020). Climate Change and the Governance of Corporations: Lessons from the Retail Sector. Routledge.