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PESTLE analysis
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  • Country: Australia

What Is PESTLE Analysis?

PESTLE or PEST is a concept in marketing principles that helps the companies to plan the launch of any new project/product/service etc as it helps in tracking the environment of the company in which they are working. Moreover, each letter of PESTLE stands for something , such as P for Politics, E for Economic, S for Social, T for Technological, L for Legal, and E for Environmental.

Doing PESTLE analysis gives a bird’s eye view of the whole company’s environment from different angles that are required before launching any plan or idea. While SWOT analysis helps in getting information about a company’s internal processes, PESTLE analysis provides information about the external factors.

Let us have a look at the PESTLE analysis of a few Australian MNCs:-

1.     National Australian Bank (NAB)-

Company Profile- National Australian Bank (NAB)
Business Sector- Banking and Financial Services
Operating Geography- Australia & NZ, Global

About NAB - NAB is one of the big four Australian banks which was established in 1982 and is located in Melbourne. It has around 1,600 branches as well as service centers across Australia and New Zealand. Also, 35,000 employees were working here in 2016.

PESTLE Analysis of NAB

  • Political- NAB has a policy, under which it bans donations to political parties that make NAB an “Image clean over.” Brexit creates various political and business uncertainties for NAB in areas such as free market access.

    Political factors Affecting NAB are as follows-

    • Risk of military invasions

    • On in the Banking sector

    •  Anti-trust laws related to banking

    • Compulsory employee benefits

  • Economical- Because of the declining prices of commodities in Australia and New Zealand, GDP is getting subdued as a result; low income is generated which is affecting the banking growth. Since 2012, the economic growth of NAB remained sub-trend along with muted outlook.

    Economic factors affecting NAB are as follows-

    • Type of economic system of a country

    • Exchange rate of host country currency

    • Economic growth rate

    • Discretionary income

    • Interest rates

  • Social- NAB is involved in various community investment programs which include financial exclusion and social cohesion. NAB has female representatives in various leadership and executive roles, depicting gender equality.

    Social factors affecting NAB are as follows-

    • Level of education

    • Class structure

    • Leisure interests

  • Technological- NAB has given Personal Banking Origination Platform and various innovative products in the name of technology. It has also made an investment in the Data Republic and “MLC on Track” programs which is helpful in preparation for the data revolution.

    Technological factors affecting NAB are as follows-

    •  Cost structure

    •  Value chain structure impacting the banking industry

    •  Rate of technological diffusion

    •  Impact of technology on product offering

  • Legal- The profitability of NAB’s Clydesdale bank was impacted due to the imposition of fines/penalties by the regulators. The shortcomings in risk management practices as stated in NAB’s internal audit can be subject to litigation in any event of fraud.

    Legal factors affecting NAB are as follows-

    •  Anti-trust law in banking

    •  Discrimination law

    •  Employment law

    •  Data protection

    •  Health and safety law

    •  Consumer protection

  • Environmental- NAB is the first bank ever to achieve carbon neutrality. It focuses on initiatives and other science-based targets to reduce greenhouse gas (GHG) emissions.

    Environmental factors affecting NAB are as follows-

    •  Climate change

    •  Endangered species

    •  Attitude towards green or ecological products

    •    Pollution

2. BHP Billiton-

Company Profile- BHP Billiton

Business Sector- Metals and Mining

Operating Geography- Australia, UK, Global

About BHP - The merger of Anglo-Australian mining companies is named BHP Billiton. It is also known as “the Big Australian” as it is one of the largest companies in Australia. It produces coal and copper, iron ore, coal, and oil. The headquarter of BHP is in Melbourne, Australia. This company operates in over 90 locations globally and has more than 80,000 workers working in 2022.

The PESTLE Analysis of BHP Billiton Group is as follows-

  • Political- Because of the deterioration of the diplomatic ties, China has banned the import of coals from Australia since 2020. The war between Ukraine and Russia has disrupted the Global supply chain of imports. Parliament has also turned down Chile’s move to nationalize the mining industry.Political factors Affecting BHP Billiton Limited are as follows-

    • Political instability

    • Corruption levels, especially in the materials sector.

    • Tariffs related to materials

    • Biasness towards the trading partners

    • Pricing policy

    • Work week regulations etc.

  • Economical- There is a risk of interest rate on borrowings as well as investments. Due to inflation, the price of commodities, metals, etc. is rising gradually.Economic factors affecting BHP Billiton Limited are as follows-

    • Level of education in the economy

    • Increasing rates of unemployment

    • Skill level of workforce

    • Inflation rate

    • Interest rates

  • Social- There has been a steady growth in population, urbanization, and new demand centers. Infrastructure establishment and local rapport. Also, investments in STEM skills are critical for driving technology innovation.Social factors affecting BHP Billiton are as follows-

    •  Skill level of the population

    •   Leisure interests

    •   Education level and standards

    •   Nature of the society

  • Technological- Innovations in the field of technology are providing an edge over competitors. Internet of Things (IoT) is driving innovation in mining.Technological factors affecting BHP Billiton are as follows-

    •  Impact of technology on product offering

    •  Technological diffusion rate

    •  Technological developments in BHP Billiton

  • Legal- The uncertainties in regulations can affect the operations of a company adversely. In Western Australia, new work, health, and safety rules have been implemented.

    • Legal factors affecting BHP Billiton are as follows-

    • Discrimination law

    • Consumer protection and e-commerce

    •  Employment law

    •  Health and Safety law

    •  Data Protection

  • Environmental- Conserving as well as managing the biodiversity and ecosystem. In order to build a sustainable industry, BHP Billiton works in collaboration.  In order to have decarbonized society BHP is in search of suitable alternatives.Environmental factors affecting BHP Billiton are as follows-

    • Changing weather

    • Changing climate

    • Pollution of Air and Water

    • Endangered species

    • Support for renewable energy

3.  Wesfarmers

Company Profile- Wesfarmers

Business sector- Diversified

Operating Geography- Australia, New Zealand

About Wesfarmers - It is a prominent Australian Company that was previously known as Western Australian Farmers’ Cooperative, established in the year 1914 having its headquarters in Western Australia. The company was formed as a result of the demands of rural worker unions for fewer working hours and more pay.

Wesfarmers was originally a cooperative that grew into one of the largest companies in Australia. It works in various sectors such as food, liquor, home improvement, office supplies, etc. today 220,000 people are working in this company.

The PESTLE analysis of Wesfarmers is as follows-

  • Political- Wesfarmers have restrictive trading hours. It has planning, zoning, and retail tenancy leases. It also has Ad hoc regulations.Political factors affecting Wesfarmers are as follows-

    • Importance of food and staples retailing sector in the economy.

    • Level of corruption in food and staples retailing sector.

    • Regulations and tariffs related to the food and staple retailing sector.

    • Laws related to the food and staple retailing sector.

    • Tax rates and other incentives

  • Economical- the company shows a low rate of growth. It has a higher wage costs as compared to the global market. It has shown increased strength of Australian and New Zealand dollars.Economic factors affecting Wesfarmers are as follows-

    • Level of education in the economy

    • Skill level of workforce in food and staple retailing sector

    • Discretionary income

    • Inflation rate

    • Interest rates

  • Social- The average life expectancy of the population is increasing gradually. Participation of women workers is also increasing. The average educational qualification of the population has also increased.Social factors affecting Wesfarmers are as follows-

    • Attitude towards health, environmental consciousness, etc.

    • Leisure interests

    • Level of education and standard in Wesfarmers Limited industry

    • Skill level of the population

  • Technological- there has been an increase in online shopping through mobiles and other network devices. Usage of technology to predict customers’ preferences and reduce business costs. Technology enabled Value Added Services.Technological factors affecting Wesfarmers are as follows-

    • Recent developments by Wesfarmers in the field of technology

    • Impact of technology on product offering

    • Impact on cost structure

    • Impact on value chain structure

  • Legal- the insurance of Wesfarmers in sold to Arthur J. Gallagher & Co. in 2014. The underwriting division is sold to Insurance Australia Group.Legal factors affecting Wesfarmers are as follows-

    • Discrimination law

    • Health and safety law

    • Data protection

    • Consumer protection and e-commerce

  • Environmental- Firms are supposed to report their emissions under the NGER Reporting act. There has been a reduction of 6 percent in waste that adds to landfills.Environmental factors affecting Wesfarmers are as follows-

    • Changing weather

    • Climate change

    • Management of waste in the food and staples retailing sector

    • Endangered species

4. Fortesque Metals Group (FMG):

Company profile-Fortesque Metals Group

Business sector- Metals and Mining

Operating geography- Australia, Global

About Fortescue metals group-

FMG was founded by Dr. Andrew Forrest in the year 2003 and has its headquarters in Perth. Fortesque Metals Group deals in the construction of mines, discovering major iron ore deposits, and gradually became one of the largest iron ore producers in the world. The company’s annual export is about 175 to 180 million tons of iron ore. It is also considered the lowest-cost iron ore producer in the world. It has more than 10,000 direct employees in early 2022. The company exhibits the value of safety, family, empowerment, etc.

The PESTLE analysis of Fortesque Metals Group is as follows-

  • Political- Due to the increasing anti-China sentiment around the world, the working of FMG is affected.Political factors affecting Fortesque Metals Group are as follows-

    • Political stability and importance of the materials sector

    • Level of corruption in the materials industry

    • Biasness towards trading partners

    • cing regulations

    • Tax rates and incentives

    • Safety regulations in the materials sector

  • Economical- The fluctuation in the foreign exchange rate is also impacting the working of Fortesque Metals Group. Changing interest rates also impact the working of FMG.Economic factors affecting Fortesque Metals Group are as follows-

    •  Type of economic system in which FMG operates

    •  Government interference in the free market and market-related materials.

    •  Quality of infrastructure in the materials industry

    •  Level of education in the economy

    •  Rate of unemployment

    •  Interest rates

  • Social- FMG has taken initiatives for bushfire relief. It has also created opportunities for Aborigines.Social factors affecting Fortesque Metals Group are as follows-

    • Level of skills of the population

    • Hierarchy and power structure in the society

    • Level and standard of education in FMG

    • Leisure interests

  • Technological- Fortesque metals group uses autonomous technology in mining operations. Along with autonomous technology, 3D printing technology is also used in the mining industry.Technological factors affecting Fortesque Metals Group are as follows-

    •  Developments in the field of technology by FMG

    •  Impact of technology on product offering

    •  Impact on cost structure in the materials industry

    •  Impact on value chain structure in the materials sector

    •  Technological diffusion

  •  Legal- Fortesque Metals Group fights the battle with financial data companies over the publication of iron ore prices. It intensifies regulations and regulatory pressures in the mining industry.Legal factors affecting Fortesque Metals Group are as follows-

    • Anti-trust law in the industry

    • Law of discrimination

    • Consumer protection and e-commerce

    •  Law of employment

    •  Health and safety law

    • Protection of data

  • Environmental- It takes initiatives to fight climate change. Also, it follows sustainable water management practices.Environmental factors affecting Fortesque Metals Group are as follows-

    • Changing climate

    • Laws that regulate environmental pollution

    • Water and air pollution

    •  Management of waste in the materials sector

    •  Endangered species

    •  Attitudes toward and support for renewable energy

5. Woolworths Group (WOW)-

Company Profile- Woolworths Limited

Business Sector- Retail, Diversified

Operating Geography- New Zealand, Australia, Global

About Woolworths Limited-

The company was founded in the year 1924 and is also known as “Woolies” and is the largest supermarket chain in Australia, owned by Woolworths Limited. For 60 years Woolworths Group has started operations in fresh food stores. It has also made a revolution in the transport and storage sector. Over 225,000 employees are working in Woolworths group as of FY21.

WOW, deals in a wide range of products such as magazines, DVDs, health and beauty products, household products, pet and baby supplies, etc. the company has won the Best Sustainable Display at the annual Creative Retail Awards in London for the ‘Magical botanical gifting window: plastic waste’ Christmas 2018 window displays.

At St Edmund’s College in Castle Hill, the first Mini Woolies were introduced in 2018. It is the biggest supermarket chain in Australia that aims to deliver the best in convenience, value, and quality for the customers.

The PESTLE analysis of Woolworths Limited Revenue is as follows-

  • Political- There is political pressure against the duopolistic nature of the retail market.Political factors affecting Woolworths are as follows-

    • Political stability and importance of the Food and Staples retailing sector

    • Level of corruption in food and staples retailing sector

    • Biasness towards trading partners

    •  Anti-trust laws related to Food and staples retailing

    • Pricing regulations

    • Work week regulations

  •  Economical- the global economy is overheating. Rules and regulations are eased in the retail sector paves the way for new entries.Economical factors affecting Woolworths are as follows-

    • Type of economic system in the operating country

    •  Exchange rates and stability of the host country’s currency

    •  Level of skill of the workforce

    •  Level of education of the economy

    •  Rate of unemployment

    •  Inflation rate

    •  Changes in interest rates

  •  Social- Poor relationships with the suppliers it is leading to a change in the business culture.Social factors affecting Woolworths are as follows-

    •  Level of skill of the population

    •  Class, power structure, and hierarchy in the society

    •  Level and standard of education in Woolworths Limited’s industry

    •  Attitude towards health, environmental consciousness, etc.

    •  Leisure interests

  • Technological- In order to improve efficiency SAP-based merchandising system is implemented. In order to ease business conduct, leveraging technology is used.

    Technological factors affecting Woolworths are as follows-

    • Developments in the field of technology by Woolworths Limited competitors

    • Impact of technology on product offering

    • Impact on cost structure

    • The rate of technological diffusion

  •  Legal- Litigations and lawsuits. Strict mandatory codes were recommended and implemented by NFF.Legal factors affecting Woolworths are as follows-

    •  Discrimination law

    •  Employment law

    • Health and safety law

    • Anti-trust law in Food and Staples Retailing industry and in the overall country

  •  Environmental- investments are made in energy efficiency and carbon initiatives.Environmental factors affecting Woolworths are as follows-

    •  Changes in weather and climate

    •  Laws regulating environmental pollution

    •  Air and water pollution

    •  Management of waste in the Food and staples retailing sector

 

To Sum Up

PESTLE analysis is important for the company as it provides information about the business direction, its positioning, growth targets and risks to the productivity. It can also determine the validity of existing products and services.
 
Replace with any other work like each letter of stands for Political, Economic, Social, Technological, Legal, and Environmental factors.
 

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