Canadian Tire: PESTLE Analysis

Subject: Company Analysis
Pages: 2
Words: 661
Reading time:
3 min
Study level: College

The external environment significantly affects the activities of any large company. Canadian Tire’s political influences include relationships with China and the countries where materials are sourced to manufacture goods. Political factors are closely related to economic ones. At the same time, at the state level, political factors such as pandemic restrictions, lockdowns, and border closures, which to some extent contribute to a decrease in retail revenue, are affecting (Roggeveen & Sethuraman, 2020). Finally, the regulation of the laws of taxation of imported goods, corporate taxes, and value-added taxes will also be reflected in the financial performance of this company.

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From an economic point of view, dependence on suppliers is manifested in exchange rates. The stronger the currency of Canada, the more profitable it is to purchase products for stores. This company has a broad business diversification across sectors and divisions across the country, making it easier to recover from the spread of the pandemic in 2020 (Canadian Tire, 2022). Moving a significant portion of sales online has helped keep Canadian Tire competitive in a challenging economic environment.

Social factors also reflect the change in consumer behavior and its adaptation to it. Firstly, e-commerce has become significantly more dominant than offline purchases due to restrictions due to the pandemic and retail development in this area. Secondly, the number of spontaneous purchases naturally decreased, which forced companies to be more careful in the presentation and marketing of each product (Sayyida et al., 2021). In addition, the company has almost two tens of thousand employees, and, like any large company, Canadian Tire must comply with the requirements of social responsibility (Canadian Tire, 2022). The company encourages inclusion and sees its goal in improving the lives of Canadians: the company builds playgrounds and landscaping areas and has its code of conduct.

Technological factors are among the most important in maintaining competitiveness in the market. First of all, going online and making online sales comfortable is a must for any retailer today, which Canadian Tire has successfully managed by combining its brands in one online store. With the development of big data processing systems, artificial intelligence can be used for analytics within the company’s activities and as a recommendation system for consumers based on their purchases. In addition, Canadian Tire has a loyalty program, within which it is possible to draw up the complete portrait of the consumer based on customer purchases and give personal discounts (Triangle Rewards Program, 2022). Within the framework of this information analysis approach, a client-oriented approach based on compelling personal offers is possible.

From a legal point of view, the company is working on the cybersecurity of its databases, where information about employees and customers can be stored. In addition, with some reliance on suppliers, Canadian Tire must have systems in place to control the goods it receives to maintain its reputation with its customers. Finally, depending on the region of Canada, in each of which the company is represented, local legislation-specific trading rules that must be observed may change. Finally, environmental factors include the tendency for governments to approve programs to protect the environment and reduce the consequences of global warming (Canadian Tire, 2022). The company itself is leading the way in reducing non-renewable energy, water, chemicals, and greenhouse gas emissions (Canadian Tire, 2022). Moreover, the most common problem for retailers of this kind is plastic in the value chain. Its reduction plays a vital role in protecting the environment, especially at the scale manufacturers and retailers used to use it.

In general, the company’s strategic horizontal integration approach, with a relatively broad diversification of products, has worked well in the Canadian market. Like any large company, Canadian Tire meets the requirements of social and environmental responsibility while remaining practical in financial performance. The analysis of the external environment showed that the organization copes with all the difficulties in the chosen strategic direction and, at the same time, still has the potential for expansion both within the country and abroad.

References

Canadian Tire. (2022). 2021 Annual Information Form. Web.

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Roggeveen, A. L., & Sethuraman, R. (2020). How the COVID-19 pandemic may change the world of retailing. Journal of Retailing, 96(2), 169. Web.

Sayyida, S., Hartini, S., Gunawan, S., & Husin, S. N. (2021). The impact of the COVID-19 pandemic on retail consumer behavior. Aptisi Transactions on Management (ATM), 5(1), 79-88. Web.

Triangle Rewards Program. (2022). Redeem for the Stuff You Love. Web.