WEEK 7

BIG MART

Established in July 2009, Big Mart is a well known superstore in Kathmandu, Nepal. This mart had its first outlet at City Center Mall at Kamalpokhari. It has grown to be a popular shopping destination for all kinds of basic household products, food items, groceries, wide variety of fruits, veggies, dairy products, liquor, staples and most of the items related to health, beauty, household and general items. It has stores in Kamalpokhari, lazimpat, Jhamsikhel and soon opening stores in Kalanki, Balkhu and Koteshwor.

According to an article I recently read, Big Mart intended to open 7 stores in the Valley. They also intend to expand its chain in Battisputali. The article also said that the owners believe that the opening of the second store in Lazimpat was the proof that the Mart is getting positive response from the customers. They have a plan to expand their chain in every nook and corner of the Valley. They recently added the ‘thela concept’ to the Mart in Kamalpokhari and they are still growing rapidly. (Republica, 2008)

This store had about 25000 varieties of products in the initial stage and is growing gradually with the needs of the customers. This store has so far distributed approximately 45000 privilege cards to the loyal customers and it is increasing every day. They use attractive offers to convince their consumers to purchase the offers such as- discounts of 5 to 10 % on maximum products, stock clearance discounts of 50%, combo offers, etc gives a good edge to the promotional strategies.

According to the marketing and branding manager, Big Mart caters to all segments of people with quality products at competitive prices. (E-Kantipur, 2012)

The PESTLE factors are listed below:

Political

Economic

Social

Technological

Legal

Environmental
(Hamel, n.d.)

Political factors

This refers to the political environmental factors that have positive and negative impact on businesses.

For the big mart super market, the political factors inspected would be:

Trading policies, these have high potential impact on the business. The effect time frame would be considered from 0-12 months, depending upon the type of policies. The effect would be positive or negative depending upon the policy again. It is an important factor. Similarly, wars and conflicts, government are given below 

HIGH	MEDIUM	LOW
•      Trading policies •      Government policies •      Wars and conflicts •      Inter country relation and attitude •      Government  leadership •      Government structure •      Internal political issues •      Shareholders / stakeholders needs and demands	•      Election •      Government  term and change •      Political trends	•      Pressure groups •      Home market lobbying •      Terrorism

The high factors if occurs, will have high negative effect, if the government policies are negative they will hamper the business. The time cycle would be from 0-12 month depending upon the actions taken by the govt. same goes with medium and low. These, factors are increasing due to negative government policies. Inter-country relation would affect heavily as certain amount of goods are imported from other countries. And the political trends, wars, conflicts would cause the prices to fluctuate causing the demand for the products to decline. So, all of the listed factors have positive and negative affect depending upon the action taken.

Economic factor:  

The factor related to the monetary system of the economy is economic factors. It includes inflation, interest rates, exchange rates, taxation, etc. the economic factors related to Big Mart are listed below according to high, medium and low impact on the business. 

HIGH	MEDIUM	LOW
•      Home economy situation •      General taxation issue •      Specific industry factors •      Interest and exchange   rate •      Inflation •      Production level •      Internal finance •      Internal cash flow •      Market trade cycle •      Market routes and distribution channel •      Customer and end user driver	•      Seasonality / weather issues •      International trade / monetary issues •      Disposable income •      Job growth / unemployment •      Exchange rate tariffs •      Consumer confidence index •      Import/export ratio •      Home economy trends

All the above factors have high and medium impact on the business. Big Mart is a huge chain as for now in Kathmandu Valley. The factors like inflation, interest rates,  tax rates, internal finance and others have high impact of negative influence as these factors are more likely to add more value to the end consumption product, making it more expensive for the consumers. This might also have positive high impact if the prices fall down and quality increases.

Similarly, the medium impact factors would be- disposable income, international trade, job growth, etc. these factors have medium impact on the business either positive or negative and it is negotiable and the risks can be eliminated.

Here, these factors are increasing in either direction, with potential impact for about 12-24 months, and it is critical.

Social factor: 

Social factors are those factors that relates with the socio-cultural values, beliefs, norms, traditions, etc of an economy.

HIGH	MEDIUM	LOW
•      Organizational culture •      Staff attitude •      Earning capacity •      Media views •      Consumer aptitude and opinions •      Major events and influence •      Consumer buying patterns •      Advertising and publicity •      Hiring standards •      Attitude to people doing  certain type of work	•      Management style •      Occupation •      Leisure activities •      Buying access and trends •      Brand ,company technology, image •      Ethnic religious factors •      Ethical  issues •      Demographics •      lifestyle changes •      Population shifts •      Trends •      Fads •      Diversity •      Immigration	•      Changes in education system •      Education •      Health •      Housing trends •      Fashion and role model

The social factors with high positive and negative impact are – staff attitude, earning capacity, hiring standards, attitude towards work, consumer attitude, earning capacity. These factors directly influence the business of Big Mart because, all these things make a consumer want to buy or not buy from that particular retailer. These factors like consumer view about the business, staff attitude towards work and consumers, the earning capacity that will be the source for spending are all directly linked with the businesses like Big Mart.

And factors such as branding, technology, population shift, fads, etc has medium negative impact on the business. Brand has huge positive impact and very medium negative impact. Brands with popularity are winning the race, but brands that are not popular do not die. They at least survive.

The low positive influence of changes in education system, housing system, health etc is well known. The fashion models are only appreciated in Nepal than imitated. The idols are just for name sake so; they have least positive impact on people. Same goes with the housing trends. People in Nepal are more comfortable with the “kirana store/retail shop” concept. 50% of the population (may be more) still shop in the traditional and most trusted “kirana pasal”. 

These factors have maximum impact for about 6-12 months approximately and are decreasing gradually. (Gyawali, 2011)  

Technological factor:

Technological factors are those factors that help in technical field of any business.

HIGH	MEDIUM	LOW
•      Replacement •      Global communication •      Waste removal recycling	•      Dependent technology •      Competing technology	•      Research funding

The factors like replacement, global communication, recycling has a high positive impact on the business as it creates a brand image and a goodie goodie image in the consumer minds.

The factors like competing technology, dependent technology, etc and promotion technology like web page, promotional sites, etc has medium negative impact on the business. This is a retailer, and most of the times, technologies are not even used and instead of that customer care matters a lot. People are more attracted to good information providers than one line information providers that is lacking in Big Mart.

The research funding would be the least negative factor as even without in depth further research this business will still survive for certain period of time. However, with changing market, if the research is not done properly, then problems might arise.

These factors will have 0-6 months affect as the technological life cycle should be kept minimum.

Legal factor

 

The factors related with laws and Acts regarding various aspects of businesses is known as legal factors. It includes the employment law, working hours, consumer protection laws, etc.

HIGH	MEDIUM	LOW
•      Employment law •      Currently legislation home market •      Regulatory body and  process •      Consumer protection •      Competitive regulation •      Industry specification regulation	•      Future regulation •      Environmental regulation	•      European international  regulation

Various types of laws related with competition, legislation home market, consumer protection, industry rules, etc has high positive and negative impact in increasing order. They have been made to protect consumers, businesses from exploitation and extreme competition.

Environmental laws however have medium negative or positive impact. If the business follows the law and rules then obviously it will flourish or else it might be the target for pressure groups.

The time frame for the effect would be 12-24 months again depending upon the actions taken.  

Environmental factor

Environmental factors refer to the factors present in the surrounding. It includes work environment, surrounding issues, local societal environment, staff attitude, etc.

HIGH	MEDIUM	LOW
•      International issues •      National issues •      Local issues •      Customer value •      Staff attitudes •      Staff engagement •      Investors values	•      Sociological •      Management style •      Global factor	•      Organizational culture •      Staff morale

The factors such as staff attitude, investor’s value, local issues, national issues have direct impact on the business and can be positive as well as negative depending upon the actions that the firm takes. If the firm takes a positive action related to these issues then it will have a positive impact. However, if the firm is hampering the environment then the business is certain to suffer

The medium impact is caused by the global factor, management style, social factors, etc.

And the factors such as organizational culture, staff morale have low negative impact and high positive impact because if the staff is kind towards a customer, this will be a “feel good” factor for the customer, making them want to visit again. Hence, low negative high positive impact.

These influences are for about 0-6 months. It is increasing day by day and is critical to the success of the store. 

References:

E-Kantipur, 2012. eKantipur.com. [Online] Available at: http://www.ekantipur.com/2012/08/01/business/big-mart-to-open-seven-stores-in-kathmandu-by-2012/358057 [Accessed 4 April 2013].

Gyawali, S., 2011. EconKancha.blogspot. [Online] Available at: http://econkancha.blogspot.com/2011_03_01_archive.html [Accessed 4 April 2013].

Hamel, G., n.d. Hearst Communications, Inc. [Online] Available at: http://smallbusiness.chron.com/reason-use-swot-pestle-analysis-40810.html [Accessed 4 April 2013].

Republica, 2008. Nepal Republic Media Pvt. Ltd. [Online] Available at: http://www.myrepublica.com/portal/index.php?action=news_details&news_id=42684 [Accessed 5 April 2013].