WILCON Depot PESTLE ANALYSIS

POLITICAL:

Opportunities:

Wilcon Depot has the opportunity to find new markets and expand its sourcing of goods abroad

and has the potential to export them through the various trade agreements of the country. The

Philippines is in a free trade agreement with the European Free Trade Association. It was

signed in 2016 and entered into force in 2018. This covers trade in goods, services, investment,

intellectual property, and government procurement (International Trade Administration, 2022).

Recently, the country has also entered into a free trade agreement with 14 other Asia Pacific

countries such as Australia, New Zealand, and China in which they signed a Regional

Comprehensive Economic Agreement (RCEP). This agreement aims to create the world’s

largest trading bloc as the 15 Asia Pacific nations represent nearly a third of the world’s gross

domestic product (Seth, 2020). It was signed in 2020 and was entered into force in 2022. The

agreement covers trade in goods, services, e-commerce, small and medium enterprises,

intellectual property, and government procurement. The Senate soon ratified the country’s

membership in February of 2023 (International Trade Administration, 2022).

Stricter environmental standards and compliances can pose a heavy burden on Wilcon.

According to Caboverde (2022), SMEs who are under the burden of heavy environmental

regulations are also in an environment conducive to bribery for such environmental burdens to

be eased. This not only increases the company’s compliance costs but the company may also

experience corruption for them to be compliant with the many environmental regulations

imposed by the government.

ECONOMICAL

Opportunities:

As the economy recovers from the pandemic, there has been a rise in demand for infrastructure

growth. Real estate demand is slowly reverting to pre-pandemic levels despite the threat of

inflation (Ochava, 2023). According to Mirasol (2023), higher interest rates normally bring down

demand, but as the economy grows, it gives consumers more confidence to invest in such

business opportunities. Wilcon perceives a positive opportunity as well due to the increasing

construction and improvement activities both in the public and private sectors, especially under

the current government (Gatpolinan, 2022). Government projects and programs such as the

“Build Better More” program are accompanied by its 8.3T peso funding (Villanueva, 2023).

Railway and highway projects such as the North-South Commuter Railway and the Luzon Spine

Expressway are part of the BBM program aimed at creating infrastructure to connect provinces

and lessen the travel time of commuters (Villanueva, 2023). Projects and programs such as

these provide an opportunity for Wilcon to capitalize on these projects which can increase the

demand for bulk building materials and supplies.

The rising inflation rate from February 2024 has reached 3.4%. According to the Department of

Finance (Lo, 2024), this is still in the government’s target band of 4%. However, despite being

within the target band, this may pose a threat as it can impact customer spending in Wilcon

stores as well as the company seeing a rise in increased costs of supply and other raw

materials. Overall, this has the potential to impact their profit margins as a whole.

SOCIAL

Opportunities:

Urbanization of the country has led to much more consumption of building and construction

materials. However, these vary based on what is being built. More complex and prosperous

communities often consume more construction materials compared to less prosperous ones,

wherein they consume fewer building materials (Schiller & Roscher, 2023). This provides an

opportunity for Wilcon to position itself to target such communities. Emerging mixed-use

township developments have been in development for the past few years, and township

developments such as ArcoVia City, Parklinks, and Vertis North provide a hub for residential,

business, and lifestyle centers all in one place (Bernardino, 2023). This in turn creates a

demand for renovation and construction supplies that provides an opportunity for Wilcon to fill in

the need for such supplies.

Threats:

In a 2022 report by the World Bank, the Philippines ranked 15 out of 63 countries in income

inequality. It showed that only the top 1% of income earners contributed up to 17% of the

national income, while the bottom 50% only managed to capture 14%(Yuki, 2023). The country
also ranks as one of the highest countries with income inequality in Southeast Asia, closely

behind Indonesia and Thailand (The ASEAN Post Team, 2016).

Due to this, disposable income may only be concentrated at the top and limit the growth of the

middle class which is Wilcon’s target segment. With such limits, fewer people might have the

capacity or the resources to spend on home improvement projects.

TECHNOLOGICAL

Opportunities:

The Philippine e-commerce market was worth 17 billion dollars in 2021, largely due to over 73

million active users at the time. This growth is estimated to be worth over 24 billion dollars and

continue growing by 17% through 2025 (International Trade Administration, 2022a). The top

product categories of this growth include beauty, electronics, fashion, furniture, health, and

household care. With the rise of accessible technology, it's no wonder that pivoting to having

both an online and a brick-and-mortar store allows Wilcon to operate and serve consumers at a

wider reach while also significantly boosting their sales at the same time.

Threats:

Investing in an e-commerce website and digital marketing can be costly for Wilcon. This

includes hardware, software, operations, maintenance, licenses, implementation, and innovation

(Grigul, 2023). Every business must research and determine if the cost of implementing such a

program can sustain both the e-commerce website as well as its digital marketing strategy. This

is a threat to Wilcon if not handled properly and could potentially result in losses if not managed

properly.
LEGAL

Opportunities:

The Philippine Green Building Code seeks to improve efficiency and building performance by

promoting site sustainability and resource management which aims to reduce the negative

impacts of buildings on human health and the environment. This code proposes a strict and set

rule of standards that must be followed to ensure the efficient use of resources (Department of

Public Works and Highways, 2015). These sustainable practices create a demand for

eco-friendly building materials for Wilcon. Currently, Wilcon has already begun the work and is

now already in the lead of retailing sustainable solar panels (One News, 2021). However, the

opportunities should not end there as there are more eco-friendly building materials Wilcon can

pursue.

Threats:

DTI has seized over 2,000 units of uncertified consumer products such as electric grills, electric

fans, self-ballasted LED lamps, incandescent lamps, and ceramic tiles averaging almost half a

million pesos from retailers in Balintawak, Quezon City as part of its efforts to combat

unregulated products on the market (Philippine Daily Inquirer, 2023). Uncertified or unregulated

products such as these pose a serious threat to Wilcon as it may be held liable for any risks and

damages the faulty products may cause to its consumers should these find their way into Wilcon

stores.

ENVIRONMENTAL

Opportunities:
The government-backed Philippine Action Plan for Sustainable Consumption and Production

(PAP4SCP) is a framework that aims to guide and influence sustainable behavior and practices

across all sectors and levels of the government (SDS Admin, 2020). The framework aims for

Filipinos to produce and consume green goods and services to accelerate the shift towards

sustainable and climate-smart practices and lifestyles (SDS Admin, 2020). It promotes and aims

to educate the awareness of the importance of using green goods and services and utilizes this

awareness into a shift to start slowly patronizing such green goods and services. It also aims to

strengthen the country’s National Eco-labeling program wherein it influences customers’

preferences with an ecolabel seal to streamline the process to entice more manufacturers and

producers to have their products certified (SDS Admin, 2020). This alone opens an opportunity

for Wilcon to capitalize on a new market to produce eco-friendly material and energy-efficient

appliances as this can create a drive in consumer preferences as they start looking for products

with eco-labeling.

Threats:

Natural resources have always been an advantage of the Philippine economy. However, due to

resource shortages, this has become a looming threat. Natural resources in the country such as

lumber have begun to decline. In 2015, the Forest Management Bureau of the Department of

Environment and Natural Resources (DENR-FMB) stated that the Philippines would require over

six million cubic meters of wood annually, and this is expected to increase even more in the next

few years (Empeño, 2023). Only 25 percent of the wood used is sourced locally while 75

percent is imported. This alone may increase raw material costs for Wilcon which could reflect

on their store prices. A 2021 report by the United States Department of Agriculture’s Foreign

Agriculture Service (FAS) in Manila has reported that our lumber industry cannot support and

meet the demand for residential, commerce, and public construction projects (Empeño, 2023).
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Caboverde, C. E. (2020). The Effect of Environmental Regulations on the Profitability of

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