Question

I need help with (PEST) analysis about harvey norman holdings ltd. please include any links from website as a reference.

thank you

Answer 1

Harvey Norman Holdings Limited PESTEL analysis is a strategic tool to analyze the macro environment of the organization. PESTEL stands for - Political, Economic, Social, Technological, Environmental & Legal factors that impact the macro environment of Harvey Norman Holdings Limited.

Changes in the macro-environment factors can have a direct impact on not only the Harvey Norman Holdings Limited but also can impact other players in the Retailing. The macro-environment factors can impact the Porter Five Forces that shape strategy and competitive landscape. They can impact individual firm’s competitive advantage or overall profitability levels of the Retailing industry.

PESTEL analysis provides great detail about operating challenges Harvey Norman Holdings Limited will face in prevalent macro environment other than competitive forces. For example an Industry may be highly profitable with a strong growth trajectory but it won't be any good for Harvey Norman Holdings Limited if it is situated in unstable political environment.

Political Factors that Impact Harvey Norman Holdings Limited:- Political factors play a significant role in determining the factors that can impact Harvey Norman Holdings Limited's long term profitability in a certain country or market. Harvey Norman Holdings Limited is operating in Retailing in more than dozen countries and expose itself to different types of political environment and political system risks. The achieve success in such a dynamic Retailing industry across various countries is to diversify the systematic risks of political environment. Harvey Norman Holdings Limited can closely analyze the following factors before entering or investing in a certain market-

• Political stability and importance of Retailing sector in the country's economy.
• Risk of military invasion
• Level of corruption - especially levels of regulation in Retailing sector.
• Bureaucracy and interference in Retailing industry by government.
• Legal framework for contract enforcement
• Intellectual property protection
• Trade regulations & tariffs related to Retailing
• Favored trading partners
• Anti-trust laws related to Retailing
• Pricing regulations – Are there any pricing regulatory mechanism for Retailing
• Taxation - tax rates and incentives
• Wage legislation - minimum wage and overtime
• Work week regulations in Retailing
• Mandatory employee benefits
• Industrial safety regulations in the Retailing sector.
• Product labeling and other requirements in Retailing

Economic Factors that Impact Harvey Norman Holdings Limited:- The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign exchange rate and economic cycle determine the aggregate demand and aggregate investment in an economy. While micro environment factors such as competition norms impact the competitive advantage of the firm. Harvey Norman Holdings Limited can use country’s economic factor such as growth rate, inflation & industry’s economic indicators such as Retailing industry growth rate, consumer spending etc to forecast the growth trajectory of not only --sectoryname-- sector but also that of the organization. Economic factors that Harvey Norman Holdings Limited should consider while conducting PESTEL analysis are -

• Type of economic system in countries of operation – what type of economic system there is and how stable it is.
• Government intervention in the free market and related Retailing
• Exchange rates & stability of host country currency.
• Efficiency of financial markets – Does Harvey Norman Holdings Limited needs to raise capital in local market?
• Infrastructure quality in Retailing industry
• Comparative advantages of host country and Retailing sector in the particular country.
• Skill level of workforce in Retailing industry.
• Education level in the economy
• Labor costs and productivity in the economy
• Business cycle stage (e.g. prosperity, recession, recovery)
• Economic growth rate
• Discretionary income
• Unemployment rate
• Inflation rate
• Interest rates

Social Factors that Impact Harvey Norman Holdings Limited:- Society’s culture and way of doing things impact the culture of an organization in an environment. Shared beliefs and attitudes of the population play a great role in how marketers at Harvey Norman Holdings Limited will understand the customers of a given market and how they design the marketing message for Retailing industry consumers. Social factors that leadership of Harvey Norman Holdings Limited should analyze for PESTEL analysis are -

• Demographics and skill level of the population
• Class structure, hierarchy and power structure in the society.
• Education level as well as education standard in the Harvey Norman Holdings Limited ’s industry
• Culture (gender roles, social conventions etc.)
• Entrepreneurial spirit and broader nature of the society. Some societies encourage entrepreneurship while some don’t.
• Attitudes (health, environmental consciousness, etc.)
• Leisure interests

Technological Factors that Impact Harvey Norman Holdings Limited:- Technology is fast disrupting various industries across the board. Transportation industry is a good case to illustrate this point. Over the last 5 years the industry has been transforming really fast, not even giving chance to the established players to cope with the changes. Taxi industry is now dominated by players like Uber and Lyft. Car industry is fast moving toward automation led by technology firm such as Google & manufacturing is disrupted by Tesla, which has stated an electronic car revolution. A firm should not only do technological analysis of the industry but also the speed at which technology disrupts that industry. Slow speed will give more time while fast speed of technological disruption may give a firm little time to cope and be profitable. Technology analysis involves understanding the following impacts -

• Recent technological developments by Harvey Norman Holdings Limited competitors
• Technology's impact on product offering
• Impact on cost structure in Retailing industry
• Impact on value chain structure in Retailing sector
• Rate of technological diffusion