Assessment 2: Mini Case Analysis

After conducting an extensive PESTLE analysis into Australia’s environment, the following will outline how Australia’s economic, social and technological macro environmental factors will impact Giant TMC Berhad’s success in the Supermarket and Grocery Stores industry.

Economic Factors
Financially, the Australian economy has had, “an annual average Gross Domestic Product (GDP) growth rate of 2.9 percent over the past 10 years,” demonstrating its resilience despite the subdued customer confidence due to the global financial crisis (Australian Food and Grocery Council 2014, p. 9). Consistent with this, the two issues below must first be considered to determine Giant’s opportunities in the market.

Household Debt
As a result of the simultaneous decline in interest rates and increase in property prices, Australia’s reliance on debt has enhanced. Trading Economics (2016) has forecast this trend is set to increase exponentially from its household debt of 123.10% of GDP in 2015. This trend is set to intensify the pressure on many average Australians as the income growth rate of 1.3% slowly trails behind, negatively influencing customer spending patterns (Phillips and Taylor 2015, p. 3).

Unemployment Rates
On the contrary, the Australian Bureau of Statistics (2016) have indicated unemployment rates have now fallen to their lowest point in over one and a half years, reporting at 5.8% in February this year. With the Australian economy growing 3% in 2015 alone despite the impeding mining industry, the ABS also forecasts an increased demand for jobs and greater potential for upcoming businesses to successfully create new job opportunities.

Social Factors
Furthermore, the Australian estimated resident population (ERP) is expected to reach 26,070,000 by 2020 increasing demand for housing and household products, overall expanding the Australian market (Australian Bureau of Statistics 2015). Consequently, it is essential to discuss the multicultural nature of Australia as well as the English language when assessing the potential for expansion in this diverse country.

Multicultural Society
In the 2011 census, 2.46%, 2.21% and 1.28% of Australian’s respectively identified themselves as practicing Buddhism, Islam and Hinduism (Department of Education n.d.). Despite these modest figures, it is evident there is an available market within Australia for a distinctive retail business such as Giant’s to accommodate for these individual’s needs, for example halal requirements for Muslims. A Malaysian business such as Giant would be a suitable candidate in this situation as they are accustomed to these religious practices and have successfully done so in Malaysia.

English Language
With 76.8% of Australia’s population who only speak English (Australian Bureau of Statistics 2013), a language barrier may impact an international business’ venture to develop in Australia. This can be seen as a significant obstacle when familiarising an international business with the Australian slang and vocabulary when appealing to Australian consumers, for instance, for advertising and marketing purposes.

Technological Factors
Williamson et al. (2015, p. 9) states that:
“While technology is destroying jobs it is also creating jobs…we must pursue innovation through technology as the main contributor to our future prosperity…and is important for Australia, both now and in the future.”
Therefore, in order for the Malaysian hyper-market chain to asses entering the Australian industry, it must be able to compete and surpass competitors from a technological perspective. Some progress in this category includes:

Advanced Material Manufacturing
This involves the use of technology to produce high quality products whilst cutting costs and time. An example of this growing development involves the use of 3D printing systems in manufacturing products with less human intervention. The Australian manufacturing company Keech has already adopted this approach in creating actual sized aeroplanes, motorcycles as well as human blood vessels (Hermens 2014, p. 12).

Energy Efficiency
Additionally, the use of renewable energy sources may potentially affect the policies governing Australian businesses in the future. This is in response to the increase in greenhouse emissions and its consequences on climate change. However, despite the fact the Australian Government is apprehensive to, “move away from a dependence on coal…a low-emissions future…without resorting to nuclear power is within reach” (Falk and Settle 2011, p. 6804).

Recommendation
Utilising the SWOT analysis to draw final inferences, considering Giant is a major player in the Malaysian retail industry and has several other operations, this strength allows it to compete in terms of pricing with Australian supermarkets.
Giant’s weaknesses include maintaining a multinational business as well as corresponding in English. However, its presence in numerous countries reinforces its ability to remain diligent with the frequent changing and volatile nature of Australian policies and by employing suitable individuals, the language barrier can be easily overcome.
Its opportunity lies in the market gap for products that cater to a number of religious and racial backgrounds as mentioned earlier. This eliminates the competition amongst Australian supermarket stores, such as Woolworths and Coles, by creating an uncontested market space in regards to the Red Ocean/Blue Ocean approach.
Lastly, its main threats can be associated with Australian’s increasing household debts, affecting consumer spending patterns and creating a potentially unstable economic environment for the company.
In conclusion, from the information and data collected, I would deduce that Giant expand its business in the Australian market with its unique products as the probability of its success is greater than its chance at failure.

References:
Australian Bureau of Statistics (ABS) 2013, Language Spoken at Home by Sex,
March 2015, Australian Bureau of Statistics, viewed 28 March 2016, <http://stat.abs.gov.au/Index.aspx?DataSetCode=ABS_CENSUS2011_B13>

Australian Bureau of Statistics 2015, Australian Demographic Statistics, September
2015, catalogue no. 3101.0, Australian Bureau of Statistics, viewed 25 March 2016, < http://www.abs.gov.au/ausstats/abs@.nsf/mf/3101.0>

Australian Bureau of Statistics 2016, Labour Force, Australia, February 2016, catalogue no. 6202.0, Australian Bureau of Statistics, viewed 27 March 2016, <http://www.abs.gov.au/ausstats%5Cabs@.nsf/mediareleasesbyCatalogue/46DFE12FCDB783D9CA256B740082AA6C?Opendocument>

Australian Food and Grocery Council 2014, Competitiveness and Sustainable
Growth, KPMG, viewed 25 March 2016, < http://www.afgc.org.au/wp-content/uploads/AFGC-Competitiveness-Sustainable-Growth-2014-FINAL-.pdf>

Department of Education n.d., About Racism, NSW Government Department of
Education, viewed 27 March 2016, <http://www.racismnoway.com.au/about-racism/population/index.html>

Falk, J. and Settle, D. 2011, ‘Australia: Approaching an energy crossroads’, Energy
Policy, vol. 39, no. 11, pp. 6804-6813, viewed 29 March 2016, ScienceDirect, doi: doi:10.1016/j.enpol.2009.12.028

Hermens, H. 2014, ‘Australian manufacturers can and should compete globally’,
Manufacturers’ Monthly, September 2014 issue, pp. 12-13, viewed 29 March 2016, ProQuest Central, 1566534083.

Phillips, B. and Taylor, M. 2015, Buy now, pay later: Household debt in Australia,
AMP.NATSEM, Issue 38, viewed 27 March 2016, <http://www.natsem.canberra.edu.au/storage/AMP.NATSEM%20Report_Buy%20now%20pay%20later_Household%20debt%20in%20Australia_FINAL.pdf>

Trading Economics 2016, Australian Households Debt to Gdp, Trading Economics, viewed 25 March 2016, <http://www.tradingeconomics.com/australia/households-debt-to-gdp/forecast>

Williamson, R. C., Raghnaill, M. N., Douglas, K. and Sanchez, D. 2015, Technology and Australia’s Future: New technologies and their role in Australia’s security, cultural, democratic, social and economic systems, Australian Council of Learned Academies, viewed 29 March 2016, <http://www.acola.org.au/PDF/SAF05/SAF05_Report_web_17Sept.pdf>