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Executive Summary

This report seeks to develop an international marketing environment analysis for Wal-Mart Inc which is among the largest discount departmental and warehouse stores in the United States of America. Moreover, this report takes an in-depth look at Wal-Mart’s consideration of Australia as a potential international market.

Finally, this report will analyze Australia’s economic and financial, political and legal, social and cultural, technological and competitive environmental factors; and provide a strategic plan through a SWOT analysis.

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Introduction

Wal-Mart was founded in the year1962 by Sam Walton in the United States of America; it is one of the largest multinational retailer corporation running significant discount and warehouses; with 8500 stores in 15 countries. Moreover, it ranks third as the world’s largest public corporation.

Wal-Mart is considering Australia as a potential international market; hence the purpose of this report is to conduct an international marketing environmental analysis in Australia for Wal-Mart.

Marketing Environment Analysis: Australia

A brief description of Australia

Australia officially called the Commonwealth of Australia (ComLaw.2003) is a country located in the Australian continent comprising the mainland, the island of Tasmania and several smaller islands. In fact, it has been ranked sixth as the world’s largest country by total area.

In addition, Australia is a highly developed country. Research shows that it is the world’s 12th largest economy. Similarly, it is a leader in national performance; quality healthcare, quality of life, education, protection of civil and political rights (World Audit.2007).

In light of this, Australia is a potential international market for Wal-Mart owing to the fact that it is a sovereign state with one of the best economies in the world.

Marketing Environment Analysis on Australia for Wal-Mart Inc

This is important for any business or organization because if it ventures into a new market without first analyzing it first, it is bound to fail. In this section, a marketing environment analysis for Australia shall be discussed. The main factors that will be looked at include: Australia’s economic and financial, political and legal, social and cultural, technological, and competitive environmental factors. For the purpose of conciseness this section will be discussed in a tabular format.

Marketing Environmental Analysis  on Australia for Wal-Mart Inc                            Date of analysis: 8/12/2012

Factors

Notes

Economic and financial

 

  • Economy

Australia is facing recession with a 0.5% economic growth rate in the September quarter (2012). Reports in 2012 show that the GDI is at0.2% (Canavan, 2012).  Unemployment has also risen.

  • Taxation

Taxes related to this business in Australia include;

VAT tax:10%

Progressive Income

Corporate tax rate:30%

and Pay-As-You-Earn tax

  • International trade

Since the 70’s Australia’s international trade moved to Japan, Singapore, Korea and the United States.

  • National disposable income

Over the past two decades, Australia’s per capita income has grown tremendously with an average of 2.1 % (Australian Bureau of Statistics,2011)

  • Exchange rates

Australia houses a foreign exchange reserve of $44.98 billion.

  • Import and Export ratios

Export is higher than import by $ 5billion AUS dollars.

Political and legal

 

  • Trading policies

It has an active and diverse international policy agenda that encompasses multilateral, regional and bilateral strategies to collapse world barriers to trade.

  • War and conflict

It’s a politically stable country with no war or conflict.

  • Government policies

The Australia government has an investor friendly policy which motivates foreign investors.

  • Lobby groups

They are allowed in Australia making the residents aware of the real business situation.

Social and Cultural

 

  • The media

It has a high influence on the Australian people.

  • Population

It has a population of 2.1 million as per the 2009 census.

  • Religion

Highly diversified; Catholic, Anglican, Orthodox and Islam

  • Education

A literate population from the age of 15.

  • Health

The government invests heavily in healthcare for its citizens(approximately 10% of its GDP)

  • Work culture

Australians are industrious and know how to balance work and personal life

  • Culture

Australia has a diverse culture; cinema art and architecture, music and sport

Environmental

 

  • Ecological

It is a large island with one of the best flora and fauna in the world.

  • Environmental Issues

International: Global Warming

National: Environmental Conservation

Local: Waste Management

Technological

 

  • Research funding

The Australian government strongly supports the innovation, science and technology industry.

  • Communication

Fiber optic, wireless and satellite are used in Australia

Competitive Environmental factors

 

  • Direct competitors

Kmart Australia, Myer, Big W, David Jones Limited, Harris Scarfe

  • Indirect competitors

 

Woolworths and West farmers

  • Regulatory conditions

The Australian government has an open door policy to investors. However, since set laws are subject to change Wal-Mart should have contingency plans to back it up in case for instance licensing laws are changed.

(Kushal, 2010)

SWOT analysis and Strategic Direction

Strengths

Democracy: from the study above, it is clear that Australia has sound government policies that encourage foreign investors such as Wal-Mart to invest in it. Moreover, it is a politically stable country hence chances of war and conflict is rare if not impossible. This is an advantage for Wal-Mart as this means their business will be stable with no interference from political war.

International trade

The country’s international trade has developed over the past two decades. Australia trades with countries all over the world, specifically; the Middle East, Asia and the United States. Wal-Mart being an American multinational will have no problem fitting in Australia.

Export and Import

Both do extremely well in Australia with export being higher than import this means that the country is economically stable. Hence exporting for Wal-Mart will not be a problem as long as it follows the right, legal procedures.

Technological advancement

In terms of technology, Australia is well to do technology wise with access to the modern fiber optic, wireless and satellite. Hence, communication for Wal-Mart with other branches that will start in Australia will not be a problem. Moreover, setting up sales databases and inventory systems for the corporation is feasible. Additionally, the Australian government heavily funds research in science and technology industry as well as the innovation industry.

Environment

Australia has a spectacular biodiversity that attracts tourists from all over the world. It is also a leader in matters of environmental conservation. Wal-Mart will benefit from this both directly and indirectly; tourists will purchase from Wal-Mart and so will hotels for supplies to be used by the same tourists.

Weaknesses

Upcoming environmental concerns such as ocean dumping and oil spills are weaknesses, although not directly related to Wal-Mart; they pose as weaknesses for Australia.

Opportunities

Mass Media

As seen earlier, the mass media of Australia greatly influences the people. Wal-Mart can use this to its advantage and position itself as an honest and customer friendly organization to the potential Australian customers.

Population

Australia has a large population, of about 2.1 million people. This means that Wal-Mart already has potential workforce and market for its goods and services.

Threats

The major threats facing Australia include: unemployment and inflation. Australia is facing recession which has caused the Gross Domestic Income to reduce. As a result, the unemployment rate has increased to 5.7% and inflation has risen up to 2.3%.

Competitors i.e. other departmental stores such as K Mart Australia, Big W, pose as competition for Wal-Mart.

What is the strategic direction for Wal-Mart?

Wal-Mart should consider setting up in Australia because this SWOT analysis has revealed that it is a favorable market to do business.

Recommendation and Conclusion

The market environmental analysis has revealed that Australia is a favorable market for Wal-Mart. I recommend that Wal-Mart ventures into Australia because it is feasible and factors such as democracy, technological advancement and international trade in Australia will help Wal-Mart’s thrive. In conclusion, this report has looked at the market environment analysis of Australia including political, social, cultural, economic and environmental factors. A SWOT analysis was also conducted.

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