Thursday, January 3, 2013

week 7


PESTLE analysis of Big- Mart Store

Introduction



One of the valuable brand supermarkets in Nepal is Big-mart located in city-center mall Kamalpokhari, Kathmandu, Nepal, established in 10th July, 2012; primarily branch in Lazimpat was opened in 2009. It is reputed and become famous to the populace in very short span of time. It has been developed and famous because of its innovation in introducing super marketing to the country with a unique and different approach then competitors. It is also known as the mart which provides customer full of satisfaction in their products and services. It follows a approach named “VALUE & SAVINGS” terminology to their customers.

Facts about Big-Mart

 Ø  Mega Bank established the Big-Mart Departmental store in 2009.
 Ø  Presently, Antim Ranjit was the Branding and Marketing Manager of Big-Mart.
 Ø  It is currently running in two different places in Kathmandu Valley which is in lazimpat and city centre, kamalpokhari.
 Ø  It is one of the most recognized and famous retail store and serves general public with their day to day usage products and other necessary stuffs.

Below are the PESTEL analyses of Big-Mart Store:

1        1 .      Political

Political factor is the very important element which effects directly and indirectly a lot in various business, whether it is IT, Marketing, communication, advertising, Media, Social work, or all others. So, obviously big-mart and all others stores operating in country get affected. Nepal is consider a country without constitution, the consequences of internal war from several years are not made end till today. Constitution of Nepal was failed to address or let say issue by the constitutional Assembly. The alteration in government in every 6 to 8 months by which the policy was barely execute in support of retail business. As a result, big-mart find difficult to open with new outlets of other sectors. Due to political condition of our country big mart feels difficult to open in other areas and to survive, having their interest and desire to open. In addition Government is not supporting any kind of store like big mart.

Moreover Today’s Customer is street smart and knowledgeable, so their demands about the particular products and services are day by day increasing. So they are pressuring the big mart to providing quality goods and services with the low price. So, marts suffer difficult to minimize the cost and lowering the benefits.

Furthermore, government does not provide any facilities to big mart in which big mart is paying higher tax rate to the government. So mart is not facilitates or benefited with any kind of interest from the government. Management of the big mart faced stockholders pressure because of not giving high-rate of return.

Thus, management should be responsible to their Shareholders, Community, Consumers and hence to be very alert and careful.

    2.      Economic

As we know in Nepal there is a lot of consumers from high-level, middle level to low level class, Big-mart have different opportunity to make loyal customer in a stipulated amount of time. In addition customers close to big mart are the dedicated customer, if they once purchase products from big mart become used to and cannot go to other places. Customers purchase the products from neighboring departmental store relatively from the big mart to save money as well as time. Nowadays Big mart taking high price from customers obtain weakness of losing customers. Competitors of big-mart provides low price to customers of offering discounts and gifts which results attracting the customers.

In addition, big mart is a retail store; they need to give high amount of tax and subsidies to the government. However, they are also losing opportunities because of low number of outlets, which tends to be low profit. In addition due to inflation big mat get pressured from workers to increase their salaries and wages which results the cost is higher.

Consequently, to enlarge the number of customers and provide them satisfaction big marts needs to open their outlets and provides services is various communities and places, also the expansion of higher national income can facilitates to increase the demand of big marts products and services.

3        3.       Social
In Nepalese society buying products and services in departmental store are increasing slowly day by day. Life style and perception of the people are changing nowadays. So, there is no doubt that this affects the big mart business. Big mart focus high level of people at first but nowadays, it also focus and provide services to middle class people. No doubt, societal changes and perception impact in the level of demands for the big mart product and services. Presently big mart turns out to be social place to hang out, to have coffee and breakfast and close to friends and relatives. Big mat has assists to show the societal position of people as they will select the products according to their taste and preferences. Changing in education system is also one of the reason to slowly attract towards the departmental or stores like big mart.
For this reason, big mart should need to develop clear site policies and strategies to facilitate superior facilities to meet the target requirement and desire of the customer.

4.  Technological

 Information Technology is a part of retail store for inputs and changes the life style of the people. Nowadays big mart made specific department for IT, to records consumer’s data and transitions on their database and maintain supply chain in order to run day to day operational activities and functioning well. It system really helps big mart a lot to provide different strategy according to their specific group of customers. It facilitates the big mart to put an effective and effective CRM (customer relationship Management) program. Furthermore, it also facilitates to know and understand their customer opinion and ideas. It system helps big marts a lot to add value to their customers and providing better services to their customers.

In addition, by the means of reasonable price of organic products like, compact fluorescent light bulbs, fair traded coffee, etc. It is believed by the customer that this product plays a crucial role in environment protection and changing trends of marketplace and behavior, due to which there is the reach of higher customers.

          5.  Legal

Legal relates the things which are linked with the legal environment in which big mart is operating. Newly launch legal system in any country has affected directly to the organizations of the nations. Legal system like an enlargement of minimum wage system, the foreword of age discrimination and other inducement and services has forced retailer business like big mart for the cost increase. Big mart is directly affected in terms of costs and others by the changes of law which has been made. In addition it also affects the demands of the products and services, if the law is in favor of customers then there is positive signal to the big mart otherwise not.
Different types of law of the country which affect the retailer business like big mart. Such as at first the competition law which is made to save small retailer business and confirm that there is no subsistence of monopoly in retail firm and consumers are not demolished from the monopoly power from the individual store, secondly consumer laws are made to look after the right of consumer next to the ambiguous and unfair practices. Thirdly health and safety laws are made to facilitate workers a protected and sound environment where they works using the safe products. Finally important law that is employment law is made to defense the right of workers including the sections like minimum incentives, salaries and bonus, amenities or minimum working hours. These laws are also made to take care of employee next to power exploitation from boss or higher level.

         6.  Environmental

Environmental change, climate or weather conditions are the environmental factor which affect the retail industry like big mart. It may affect positively or negatively to the retail business example big mart. As for example, in winter season the demand of blanket is high whereas in summer its demand id low. From this it is clear that big mart also get affected from season to season. In addition to protect the natural environment big mart need to use renewable bags rather than using plastics bags, which degrades and affect the natural environment, commence environmental savings programs like plantation of trees from areas to areas and use the different environmental friendly modern technology. Hence it saves a natural environment and can play a vital role to increase their brand value and add value in their products and services.

The external issues which supermarket like big mart would have to consider at the time to have competitive advantage than others are as given below:




§  Competition from other vendor (competitors)
As we know today’s customers are very clever of selecting the store they first understand the prices differences between one to another store. When competitors sell products and services even $5 lower price than other who sells same product in the supermarket gets affected and become a great challenge for the retailer of supermarket. So to get rid of these supermarkets need to be familiar and monitor different strategies and activities of competitors.

§  Economic viewpoint.
Each economy differs from one another. It is because of purchasing power of the people in the respective country. Supermarket needs to understand economic condition as well as standard of living of the people of the nation. Purchasing power of a particular country or of people determines whether it is pros or cons for selling the goods and services to the supermarket. Hence it is necessary for supermarkets to observe and understand and be familiar to have a competitive position in the market.

§  Political and Legal condition.
Political scenario plays an important role to operate a business in an economy. Favorable political condition means the favorable business environment or vice versa. Political stability increases the purchasing power and standard of living and provides positive impact in the business environment.

§  Balance of Level of demand and supply.
Supermarket need to think about the level of demand and supply. It is necessary to forecast the demand of the customer, by considering the demand supply should be made, if there is excess supply then we need lots of space to keep the products which decrease the profit margin or if there is excess demand than Supermarket unable to provide the goods and services which is also not beneficial. So, appropriate balance is essential to be competitive in the market.

So, above things needs to be remember and understand to have competitive advantage from others.


References:


1. Daft, R.L., and K.E. Weick. 1984. Toward a model of organizations as interpretation systems. Academy of Management Review 9: 284-295.

2. Dess, Gregory G. 1987. Consensus on strategy formulation and organizational performance: competitors in a fragmented industry. Strategic Management Journal 8: 259-277.

3. Eisenhardt, Kathleen M. 1990. Speed and strategic choice: how managers accelerate decision making. California Management Review (Spring): 39-54.

4. Harari, O. 1994. Beyond the "vision thing." Management Review (November): 29-31.

5.  Lamb, Robert, Boyden Competitive strategic management, Englewood Cliffs, NJ: Prentice-Hall, 1984.

6. Teece, David J.; Pisano, Gary; Shuen, Amy (August 1997). "Dynamic Capabilities and Strategic Management". Strategic Management Journal (John Wiley & Sons) 18 (7): 509–533.|doi=10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z





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