Published by MBA Skool Team, Last Updated: March 13, 2021
PESTLE Analysis of Walgreens analyses the brand on its business tactics. Walgreens PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Walgreens, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Walgreens PESTLE Analysis can be explained as follows:
In the long term, political factors as a micro economic factor plays a major role as it affects the company’s acceptance and thereby its profitability in a country. Walgreens is an American company that was founded in Chicago in 1901. Being the second largest pharmacy store chain in the United States political risk may lead to sudden changes. These changes could have a great impact on the image of the company. Hence, the integration and political stability of the company in the recent years plays a major role in its stability. The trade barriers and regulations in a country differs from one to another. So, a thorough analysis must be done before setting up a store in a location. All the other government regulations that arise due to the nature of the business must also be taken care of. As Walgreens deals in medicines and medicated items there may be more regulations and greater penalties if they're not followed.
Below are the economic factors in the PESTLE Analysis of Walgreens:
Factors like interest rate, inflation rate, unemployment rate, foreign exchange rates, condition of the financial markets, labour costs and productivity in the economy and the gross domestic product of a country are great determinants under the economic factors affecting the company operations.
Lower interest rates on loans may allow the companies a good source of cheap capital and thereby make it easy for them to establish. Lower employment rates may fetch the company cheap labour which will reduce the costs and thereby increase profits. The exchange rate of a country impacts the profitability as it engages in international trade. All these factors affect the business operations of Walgreens. An unstable currency can be very discouraging for the business. A stable or growing financial market makes it easy for the decision makers to decide on future investments and business models. The GDP of a country has a great impact on the consumer disposable income which could thereby affect the company’s sales and profitability.
Following are the social factors impacting Walgreens PESTLE Analysis:
Analysing the demographic pattern in this society where the company serving may help the company to analyze what to stock according to the demand. Walgreens also sells makeup that is mostly directed towards women, but men do use makeup as well and hence storing the products after analysing the demand would help the company to make maximum sales and profits. The health standards must also be taken care of as the medicines and cosmetics provided are directly consumed by the customer and any screwup while its production or selling after the expiry date make cause reactions and thereby customer complaints. This does not only charge the company with penalty but also has a great impact on its goodwill. The store serves items of both need and want to the customer and hence must be incredibly careful with how the products are market. Social factors like leisure interests, gender diversity, and educational level may also impact company sales.
The technological factors in the PESTLE Analysis of Walgreens are mentioned below:
Huge amounts must be invested in research and development to insure the availability of the latest medicine or cosmetic on the store shelf. This is because a consumer may not return to the store for purchase if he returns without getting the product once. This also requires a good supply chain in place for a brand like Walgreens. The technological analysis of the industry must also be done to remain ahead of competitors at any given point. Technology also has a great impact on costs in such industries as acquiring the right technology in today's times when technology is changing at such a fast pace is very difficult. The right technology convert the right raw materials into perfect finish goods with maximum efficiency, thereby increasing the profits for the company in the long run. Technological factors also involved digital promotions and online shopping with fast delivery. This is because a larger customer base has been shifting to the online mode.
Companies not innovating here may face threat in future.
Following are the legal factors in the Walgreens PESTLE Analysis:
Health and safety laws is one of the most important laws for Walgreens. This is not only in case of the consumer who are consuming the product but also for safe working conditions of the employees who work in the medicine factories ensuring them with occupational disease insurance in case they are affected by the same. Employment laws ensure that the employees get a wage above the minimum wage. The consumer protection law ensures the customer of not been cheated. In case of any lapse the consumer can raise complaint against the company. Anti-trust laws are also in place to ensure fair business practices are adopted by the company. Intellectual Property protection law is also in place to benefit the first mover. Not abiding by such laws may lead to legal charges due to which the firm would have to pay penalties and also spend a lot of time in court proceedings. These legal factors differ from one country to another and hence must be studied properly to operate efficiently.
In the Walgreens PESTLE Analysis, the environmental elements affecting its business are as below:
The medicines and cosmetics required a certain temperature to be stored for longer periods of time and the expiry dates are also set accordingly. Hence, extreme weather conditions may be harmful to the company. Climatic change would also require the stores to make changes according to the products. All the products may not sustain in the same temperature and hence storage must be done accordingly. Apart from this Walgreens should have a proper waste disposal system with proper regulation of waste to avoid any harm to the environment.
Using renewable sources of energy while production of goods and to maintain the store temperature may help the firm to sustain longer due to increased profitability in the long run. The company should also ensure that its brands do not harm any animals during production. Hence before entering any existing market the firm should analyse the environmental standards and strategize to operate accordingly.
To conclude, the above Walgreens PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
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