week 7 Journal

Week 7

PESTLE Analysis Report on Big Mart store (Nepal)

                                                                                                           

Introduction:

Big mart Supermarket stands out as one of the most valuable brands in Nepalese supermarket industry in a very short span since its inception. The first store was launched on 10th July, 2009 in the finest mall of the country - City Centre Mall, Kamalpokhari, Kathmandu. It has been recognized for its innovation in introducing super marketing to the Nepalese market with a very different and organized approach. It stands out as being the first in Nepal to provide the VALUE & SAVINGS concept to its shoppers.

About Big mart

·         The big mart department store was established in 2009 by Mega Mart.

·         It currently maintains stores at City Centre, Kamal pokhari and Lazimpat in kathmandu

·         With in short period of time big mart has become one of the well known retail stores and serving general public with their daily necessities.

·         Currently the marketing and branding manager of big mart store is Antim Ranjit.

·         The store is planning for major expansion and makes the tally up to 7 by the end of 2013.

Mission statement: Offers the best quality national and international products in their entire store with affordable cost.

Vision statement:  Shop smarter, Live better.

Pestle Analysis:  Pestle analysis report will look at the macro environmental factors (Political, Economic, Social, Technological, Legal and Environmental) and its impact on big mart department which operates in retail sector.

Pestle Analysis of big mart store

Political: The political factors focuses on government policy and meticulously takes into account items such as government intervention in the economy, taxation policy, interest rate and monetary policy, consumer protection right, competition regulation, political stability etc. As in our country political stability is very poor and government changes within short period, this has adversely affected the economy and retail industry sectors like big mart. There is lack of government inspection and government regulation which has increases the inflation in country. High inflation decreases the purchasing power of people which in turn affects the sales of store. At current period our country is at transition period so all the industry including retail are affected but soon this transition will end and the retail store like big mart will boom in their business.

The overall potential impacts of political factor on big mart store is medium the store is still expanding its branches and services in many location though the political situation of country is worsening day by day.

Economic: The economic factors focus on the economic growth, government spending, unemployment rate and policy, taxation, tariffs and subsidiaries, production level etc. The economic growth of our country is very less about 2.98%comparing the neighboring country India about 5.8%. The government spending on the development of infrastructure of country is very poor and this has affected the overall industrial sector. Big mart stores are mainly affected by government taxation policy, unemployment and low production level. The unemployment rate of country is very high and people consumption capacity is very low. There is lack of skilled labor and due to the lack of skilled labor the industries are closed. The country is importing more finished goods than exporting due to this domestic products are less competitive in market. Due to poor economic condition, stores like big mart have not capitalized the resources like labor, capital and technology in full gear which has reduces the potential market value and competences in the market.

 The overall potential impact of economy factor on big mart store is very high. With poor economic condition of country the products and services of big mart cannot be delivered up to the low income level people and majority of people in our country are low income earners so the development of economic sector is most for the retail stores like big mart.

Social: The social factors include demographics, population growth rates, labor and social mobility, education, lifestyle changes, ethnic diversity, living standard, fashion etc. The social factor has great impact on stores like big mart because the big mart has to adapt according to society. The store should target its services and product to every people living in the society and maintain healthy relationship with society. The demographics, living standard, lifestyle, fashion consciousness, occupation have direct impact on the business of store. Without the help of society it is impossible to run the business because the society not only provides the customer but also provides labor work force, supplier and market.

The overall impact of social factor on big mart is high. As social factors influences the daily activities of business, big mart should include people from all ethnic group and focus on upgrading living standard of people by providing quality products and services.

Technology: Technological factors influence a business of big mart in a major way. It affects the business ability to produce, to sell, expand and to maintain demand. The technological factors include the government spending on technology research, new inventions and development, life cycle and speed of technological obsolescence, global communications, and manufacturing advances, internet etc.

With technological advances system the operating cost and inventory cost of big mart store has been reduced which also help in reducing the cost of product but big machines used in stores like wet umbrella dispenser, store equipment have to be imported from India which is very costly.  The government spending on technology is very low and due to limited MNC`s technology advances is poor. The overall potential impact of technology on big mart stores is medium because the store is not competing in global market.

Legal: Legal factors include rules and regulation of governing bodies and this factor try to understand the impact of rules, regulation and laws on the businesses. It mainly includes the regulatory bodies and processes, employment law, consumer protection, industry specific regulation etc. Sound legal system is basic requirements for running of the business operating but at present our country`s legal system is worse, the political parties are unable to make constitution which has affected the business environment of country. There has not been a regular regulation and inspection of consumer protection and employment law which have created problem between employee and employers.

The potential impact of legal factor on big mart store is moderate as government of Nepal is trying to enforce some new rules and regulation on retail industry.

Environmental: Environmental factors include ecology and geographical factor areas such as, natural resources endowments, weather, climate conditions, and also include the environmental issues. Big mart should implement the environment friendly policies and their business activities should not degrade the environment.

The potential impact of environmental factor on big mart store is low.

References

·   James Cadle; Malcolm Eva; Keith Hindle; Debra Paul; Craig Rollaston; Dot Tudor; Donald Yeates (2^nd  Edition, 2010).Business Analysis . British Information Society Limited.

·   Online available at http://www.ekantipur.com/2012/08/01/business/big-mart-to-open-seven-stores-in-kathmandu-by-2012/358057.html [Accessed on, 13 Jan 2013]

·     Gerry Johnson and Kevan Scholes (9^th Edition, 2011). Exploring Strategic Environment: Text and Cases.  Publisher, Financial Times/ Prentice Hall