It is a multi-party democracy; however, the main contest of political dominance is confined to a small number of parties. Grnig, R., & Morschett, D. (2017). Organizational culture derives strong influence from the societal norms, values and trends. Similarly, it is important to understand the industry lifecycle stage. - As Ceylon modernized, becoming the Republic of Sri Lanka in 1972, social and political change helped drive JK's expansion and diversification. After that, we proceeded to the second step, where we assessed the competition in the grocery industry analysis. As does data and copyright laws. Its not only physical retail stores under scrutiny. Subscribe now to get your discount coupon *Only More retail shops are offering food products. Check your email In fact, Sri Lanka is one of the biggest receivers of Chinese FDI. It also means more investors are becoming interested in the profitability offered by retail stores. People save their money for products of necessity. The online shopping trend is growing among people and it has given rise to many local e-commerce stores. If not, select "Manage Preferences" to learn more about managing your cookie preferences. With the help of technology, retail is one of those industries that can survive post-economic destruction. 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USD 300. The Sri Lankan political environment is facing some challenges like suppression of freedom of speech, political dominance struggle, and civil war. (2009). This factor analyses how threatened companies feel in an industry from getting substituted. You may also like reading PESTEL analysis of India and PESTEL analysis of China. ~ 0.0 Page). Porters five forces model helps analyze the competition level in an industry. Lets discuss what external factors impact the grocery industry. Retail stores use a variety of technology everyday. It is worth noting that Sri Lanka faced a number of political challenges e.g. (2014). The country imports it fromMalaysia,Singapore,UAE, India, and China. A retail store needs to meet legislative conditions before opening the shop. Via helps you navigate a fast-changing digital marketplace. It pressurizes the Cargill A. to develop new products quickly, increase product range diversity, integrate flexibility into the value chain and develop healthy business relationships with value chain partners. Entering in mature industries can be more challenging due to market saturation than industries at the growth stage. This article is only an example Each company offers retail products online, to be sold and shipped. PESTLE analysis is a business tool that analyses the external factors affecting an organizations operations. 11.12 Sri Lanka 11.13 Thailand Developing strategic business models and competitive advantage in the digital sector. Besides that, grocery stores are not owned by huge chains, unlike supermarkets. However, more needs to be done to accelerate the digitalisation process. However, suppose you dont have enough time to wander in a 20-aisle supermarket. As a result, the stronger companies acquire the smaller companies or force them out of the industry. By doing so, the grocery industry can generate huge sums of money. Its important to understand the laws long before the store is open for business. The data protection has become an important issue due to consumers privacy and security concerns. PESTLE Analysis Political Factors In Sri Lanka it is a socialist republic state. Heres what you need to know. Sri Lanka has conflicted relations withIndiain the past, but both countries have managed to resolve their conflict amicably. The regulations affect which products can be imported, exported, and sold in stores. Synopsis. Andr Cavalcante, S. (2013). These products arent bought by retailers on a whim. They can easily see which products people are buying, leaning towards, or completely ignoring. It would allow farmers and manufacturers to input information about food products in real-time. Thats when customers got attracted to grocery stores, and as a result, the number of grocery stores increased. Country Profiles examine the economic and political trends in 210 countries and associated regions, serving as a one-stop-shop for data and analysis on the economy, political landscape and the business environment. Likewise, the computer literacy rate needs improvement as it was only 27.5% in 2019 (Hewage and Munasinghe, 2019). Cargill A. can leverage the opportunities offered by social media marketing to improve business performance. Because when contamination happens, every store in the chain has to get rid of the product. A high level of competition exists in the grocery industry since grocery stores are only retailers. Focused R&D and innovation at Blue Star driving growth: Blue Star Limited strengthens its R&D ecosystem, enabling it to release new, innovative goods and services to meet various client needs, giving Blue Star a significant advantage. Cargill A. should develop local teams and develop local partnerships for understanding the societal attitudes and norms to tailor marketing strategies according to unique cultural context. LinkedIn, Messenger, Instagram, and Facebook are some of the most popular social media platforms. Moreover, there are no substitution costs. The Grocery industry experienced growth in the 19th and 20th centuries when the food industry evolved and grocery stores started offering packaged food. We hope the article PESTEL analysis of Sri Lanka has been useful. This can happen when unemployment rates spike. Grocery stores mainly keep packaged food items. Intellectual property regulations are designed to protect the companies' patents and valuable ideas. Each society has distinctive norms and values that play an important role in shaping consumer behavior. This stage of the industry life cycle represents growth in the industry when more people begin to join. Rather than just buying products they only need. The major social networking sites in the country in terms of number of users are Facebook, Instagram, Messenger, and LinkedIn. This is the third major source of revenue generation to the economy. Daidj, N. But just like every other industry, the retail sector is affected by the six principles of PESTLE/PESTLE analysis. PESTEL analysis is a widely used strategic planning and management tool. In some countries, recycling has almost become a business norm. The sales of grocery stores depend upon inflation directly. The National Minimum Wage Act, No. Country Background 5 Page For conducting external environmental analysis of Coca-Cola, the country selected is Sri Lanka. Wall, S., Minocha, S., & Rees, B. At this point, the industrys growth rate decreases since it is already operating at its full potential. Springer Berlin Heidelberg. It is important for Cargill A. to understand economic factors such as foreign exchange/interest rate, labor market conditions, inflation and saving rates etc. Hou, J., Lu, Q., & Han, Y. This investment will also increase stakeholder satisfaction and expand the customer base due to enhanced brand image. ENVIRONMENTAL ANALYSIS PESTEL Analysis Analysis of Political Factors Cinnamon is one of Sri Lanka's main exports. Offering luxury products at premium prices to a market where the high-end market is considerably small in number will require Cargill A. to adopt the niche marketing strategies. This shows that although people consider supermarkets the new go-to place, actually these grocery stores provide groceries to most of the US. Although the state is trying to make the investment climate more attractive, economic mishandling is adversely affecting output, which is pressurised by hyperinflation. Now that you understand the difference between grocery stores and supermarkets lets proceed further and conduct a grocery industry analysis. The retail industry is everywhere. Approximately more than 21 million people are populating Sri Lanka. The country must work on to ensure that the economy is stable, the rights of informal workers (70% of the workforce) are protected, the jobs in the apparel industry are saved, and high food price inflation is brought down (World Bank, 2020). A detailed analysis of the technological environment can help Cargill A. capture the technological trends to achieve certain business advantages, such as- increasing profitability, boosting innovation process and enhancing the operational efficiency. Some examples of environmental factors that Cargill A. need to consider are given below. Scope of Sri Lanka - PESTEL Analysis Report. A recommendation is that the company's strategies must include the external factor of rising health consciousness among consumers. (Ed.). The demand and supply of labor determine the wage rates and supply of skilled workforce. The high fluctuation on local currency can be a cause of serious concern for Cargill A. Cargill A. can benefit from it and invest in renewable technologies to ensure long-term sustainability. GSTF International Journal on Computing, 1(1), 73-80. In this stage of the industry life cycle, some companies emerge as larger and more financially stable than others. civil wars, political power struggle, and suppressing dissent and activism in the past. Buddhism is the majority religion, and roundabout70.2%of the people believe in Buddhism. Growing economies offer wide-ranging growth opportunities to the Cargill A. Currently, the economy worldwide is in a great spot for retail industries to expand. However, buyer power represents the power of buyers to dictate the prices in the market. We extract and organise ecommerce data from over 1,500 online retailers in 40 countries providing daily updates on pricing, assortment size and key attributes. As well as cash registers to manage money after a sale. Economic. Aug-22-2018. Most companies have a business website. You might be thinking that there is no difference between grocery stores and supermarkets, but thats not true. In case of a global recession, the purchasing power of the people will drop, and the grocery industry will observe severe financial losses. There are almost 40,000 stores in the US that sell groceries. Cargill A. must consider the following social factors to conduct macro-environmental analysis: Changes in demographic patterns like aging population, migration trends and socio-economic variables have paramount importance for international business organizations like Cargill A. Our model papers and solutions are purely meant for Economic factors affecting Sri Lanka. US$ 300.00. 1, pp. According to the World Bank (cited in Trading Economics, 2021), the GDP of Sri Lanka was worth around $84 billion in 2019. Strategy. Pearson Education. Sri Lanka has been exposed to different cultures throughout the history as evidenced from the fact that it was called Taprobane by ancient Greek geographers, Serendib by Arabs, and Ceylon by European mapmakers (Peiris, 2021). A framework for PEST analysis based on fuzzy decision maps. It also means having to abide by more economic and political factors. High unemployment signals the availability of surplus labor at comparatively lower wages. After we cleared the difference between the two, we conducted the grocery industry analysis. This negative current account balance indicates the Sri Lanka is net borrower from the whole world. All rights reserved LCHW. However, its main imports are broadcasting equipment, gold, cars, knitted fabrics, and refined petroleum. Cargill A. needs to consider the investments made by competitors on a micro and macro level to understand how new technologies influence the firms value chain and prevailing cost structure. 2. Every industry has a different buyer power. So without wasting time, lets proceed and analyze the competition in the grocery industry. All Rights Reserved, Economic factors: Nearly $30 trillion dollars in a couple more years, Social factors: Buying in bulk and collecting endless data, Technological factors: A digital catalogue for easy browsing, Environmental factors: Contamination and blockchain technology, A stronger economy allows consumers to buy products they want, more disposable income to spend on friverous products, main social factors affecting the retail industry, They use market research to identify buying trends, about environmental issues inside of the stores, General Mills SWOT Analysis: 3 Opportunities to Gain Competitive Advantage, Root Cause Analysis: An Easy 6-Step Complete Guide, Mayo Clinic SWOT Analysis 2023: Healthcare Business Checkup, 3 Top Tech Tools for the Modern Commercial Contractor, Strategies for School and College Security, Steps to Secure your Business After a Cybersecurity Breach. It is an acronym for political, economic, social, technological, environmental and legal factors that shape the macro business environment. International Journal of Business and Management, 7(24), 52. Cargill A. must adjust its business management practices while entering in markets with high or low power distance. Similarly, market segmentation based on social class may be ineffective where social class stratification is low. Curious about how we partner with you to help you solve your complex modern-day business problem? The country has a mixed legal system and its employment laws do not distinguish between foreign or local employees. Technological trends can be used to start the creative social media campaigns for developing online brand communities. Operating in countries with high corruption level and weak law enforcement makes the business environment increasingly unpredictable for Cargill A. due to jeopardized public trust on business organizations and overall political and economic structure. The grocery stores are smaller in size and offer limited products, of which almost 90% are food related. For example, a supermarket will have a pharmacy, a toy area, a clothing area, etc. These steps can help you get back, Copyright 2020 Weberience LLC. Consumer preferences are the main social factors affecting the retail industry. correct email will be accepted, (Approximately This detailed PESTEL analysis of Sri Lanka aims to explore some of the powerful macro factors that impact on Sri Lanka today and may continue doing so in the future. Cargill A. needs to consider the following political factors during the strategic planning process: High political stability provides a stable and friendly business environment with predictable market growth trends. According to a report from World Bank, the Sri Lankan economy is facing the challenge of transformation. Developing a multi-criteria decision making model for PESTEL analysis. M Market Research Reports and the M Market Research Reports Logo are registered trademarks of Market Research Reports, Inc. Disclaimer: Market Research Reports, Inc. has no affiliation to, and is not associated with any other website(s) or organization(s). This report coversSri Lanka's PESTEL (political, economic, social, technological, environmental and legal) analysis. Sri Lanka is one of the worlds beautiful countries and it attracts tourists from across the world. These regulations impact the economy, consumer buying habits, and international trade laws. Although the state is trying to make the investment climate more attractive, economic mishandling is adversely affe . Because no one can afford or justify the purchases. Major political instability and distressed government finances have blighted Sri Lanka, which is mostly unfree for economic freedom. It is officially known as the Democratic Socialist Republic of Sri Lanka. If they dont, not only will the food by pulled from the shelves, but it could also lead to legal troubles for the company. What are the best sectors for investment? After constructing the industry life cycle and assessing the competition in the grocery industry, lets proceed and carry out the environmental analysis of the grocery industry. In the grocery industry, buyers have great power. Online shopping rate is increasing rapidly, and a number of local e-commerce sites have emerged as well. The stores in the grocery industry dont feel much threatened by new entrants since there are many barriers to their entry. When its on the decline, the opposite is true. With the help of this tool, companies decide if they should enter an industry. This can only happen if the suppliers are low in numbers or they are supplying something very unique or scarce. Once a food, like lettuce, has E.coli, every store needs to toss out their lettuce. Sri Lankas economy is facing some challenges and the countrys economy is facing some challenges. There are almost 40,000 stores in the US that sell groceries. He holds an MSc in Tourism & Hospitality from the University of Sunderland. So I did it on Sri Lanka. Like a point of sales system. That doesnt mean they should avoid having a business website or showcase their products online. We also cant forget about environmental issues inside of the stores either. Integrity, Cargill A Case Analysis and Case Solution, 3-Joe-Smith-s-Closing-Analysis-A-Spanish-Version, 4452-China-Versus-Japan-On-the-Verge-of-a-Trade-War, 4453-Alleviating-Poverty-and-Malnutrition-Successful-Models, 4457-Sugar-Daddy-Quotas-and-the-U-S-Government, 4458-Australian-Wheat-Board-Ltd-Becoming-a-Grower-owned-Corporation, 4459-Global-Farmer-and-the-Future-of-Soybean-Production-Spanish-Version, 4460-Global-Wine-Wars-New-World-Challenges-Old-A-Spanish-Version, 4461-Global-Conservation-Trust-A-Foundation-for-Food-Security. The 19th and 20th centuries when the food industry evolved and grocery,. Facing some challenges and the countrys economy is facing the challenge of transformation you. Of transformation thinking that there is no difference between grocery stores and supermarkets but... Local e-commerce sites have emerged as well forget about environmental issues inside the. 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Han, Y people begin to join industry, buyers have great power as larger and more financially than... Or scarce represents pestle analysis for supermarket industry in sri lanka power of buyers to dictate the prices in the grocery industry.! Pest analysis based on social class may be ineffective where social class stratification is low, its main imports broadcasting!