Environmental Analysis Zhuoning Yang

1.  Introduction

The Harvey Norman Holdings Limited owns the main brand Harvey Norman, which is one of the largest retailers in Australia (Barrile, 2007). It is a franchiser and they are more than 230 retail stores in Australia, New Zealand and they also operate in Slovenia, Ireland, Northern Ireland, Malaysia, Croatia and Singapore (Harvey Norman, 2004). According to Harvey Norman’s annual report (2014), the current operation is to assist franchisees through investment and provide high-quality training for franchisees’ employees. Meanwhile, Harvey Norman position through the provision of strategic assistance to franchisees where necessary. However, with the increasing of franchise sales and profitability, the level of strategic support from franchisees was decreased significantly ("Harvey Holdings Limited: Annual Report," 2014). David Jones Ltd, Woolworths Ltd and Myer Holding Ltd are the main competitors of Harvey Norman, and the fierce competition is based on price rivalry. Furthermore, with the entry of international and online retailers, the market has been changed significantly.

1.  Macro-environmental factors

A PESTLE analysis assists an organization to evaluate macro environment （PESTLE analysis，2009）. A PESTLE analysis for Harvey Norman as below:

1.  Political

Firstly, Harvey Norman has benefits from an economic stimulus program by Australia federal government to encourage customer purchasing during a strong economic recession during 2009（Leigh, 2012). However, the government has increased the tax rate from 23.13% in 2013 to 29.50% in 2014, this will have a negative impact on the company’s net profit after tax ("Harvey Holdings Limited: Annual Report," 2014). The Omni channel strategy will be continue executed and reinforced to offset the negative effect on tax policy.

1.  Economic

With the increasing sales trend and continue focus on franchisees’ expansion within homemaker categories, the need for strategic support from franchisees has been reduced by nearly 19% during the 2013 financial year. The company will continue to focus on franchisee’s commitment to training and development to increase the overall customer experience ("Harvey Holdings Limited: Annual Report," 2014). Furthermore, a large, strong property portfolio has been integrated into the Harvey Norman Omni channel tactic, the franchisees as tenants that pay a reliable and immobile income stream to the company. Lastly, the company-operated retail segment in New Zealand has significantly increased 18.7%, due to the stronger New Zealand currency. However, the sales stream from Ireland and Northern Ireland’s stores has been decreased because of irrationality of electrical and computer categories in the end of 2012 ("Harvey Holdings Limited: Annual Report," 2014).