Tuesday – SBU Section
TJX Companies, Inc.
Team Manager: Winter McNair
PESTEL 1. Political
“We are subject to risks associated with importing merchandise from foreign countries.” (Page 14)
TJX Companies, Inc. has stores in 15 countries, on two continents, and has relationships with over 15,000 vendors globally. TJX Companies imports a great deal of merchandise from South East Asia and is often subject to various political risks beyond their control, i.e. changes in tariffs, duties, quotas, import and export restrictions, compliance with laws concerning ethical business practices (U.S. Foreign Corrupt Practices Act), currency exchange rates, human rights issues, working conditions, and labor rights and conditions in foreign countries. TJX Companies has been proactive and implemented policies to assist with the compliance of such laws and regulations; however, there is no assurance that contractors and vendors will not violate them.
“Global economic conditions may adversely affect our financial performance.” (Page 11)
TJX Companies has stores in 15 countries and vendors spread across the globe and is vulnerable to changes in the global economy. The recent global economic recession, rising unemployment rates, increasing healthcare costs, unstable capital markets, and threats of war all affect consumer spending as well as TJX Companies’ profitability. Political and financial instability adversely affect global trading policies, currency exchange rates, labor conditions, and transportation costs, all of which could interrupt TJX Companies’ intricate supply chain and increase operating costs. Currency exchange rates are a critical variable for any enterprise that buys and sells products and services globally. TJX Companies reports sales outside of the United States in the currency of the store location. This can, and often does, present problems translating sales revenue and inventory costs into U.S. dollars. TJX Companies curbs the effect of currency exchange rates by using inventory hedging instruments and has developed risk management strategies to aid management.
“While we offer a self-service format, we train our store associates to provide friendly and helpful customer service and seek to staff our stores to deliver a positive shopping experience.” (Page 5)
We have become a society that has moved from full-service to self-service. This is evident at the gas pumps and in the grocery stores. Today’s technology supports and encourages this behavior. TJX Companies has incorporated this lifestyle change into its business operations.
“Failure to operate information systems and implement new technologies effectively could disrupt our business or reduce our sales or profitability.” (Page 12)
Efficient operations and successful growth of TJX Companies, Inc. is heavily dependent upon the integrity and security of numerous information systems, data centers, and computer software. Unfortunately, computer information systems are subject to damage and interruptions from various influences such as power outages, computer failures, cyber-attacks, catastrophic natural disasters, acts of terrorism, and other security breaches. TJX Companies incurs expenses to properly maintain current systems and implement new information systems. Failure of any one or more systems could adversely affect profits.
“Increased regulation related to environmental costs, including cap and trade or other emissions management systems could also affect the costs of doing business, including utility costs, transportation and logistics.” (Page 14) It is possible that compliance with current and proposed environmental regulations will increase TJX Companies’ operational costs and thus negatively impact the company’s financial position. 6. Legal
“Failure to comply with existing