Toll Group SWOT and PESTLE Analysis

Strength

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Weakness

1. Underperformance of some of the businesses: Toll Group comprises of 5 business segments with each of them providing an average of seven distinct services, thus making an approximate total of 35+ services that the company provides. Besides which, each of these businesses and services they provide are expanded across several countries in the Asian continent. It is therefore only likely that with such a huge spread of the business across several geographies, management is a challenge. This challenge was validated by the lower earnings in the marine business of Toll Global Resources in Australia and Asia, flattening in the gross profit from ocean freight as the freight charges increased due to clients preferring the cheaper water mode over the air mode and consequently the air freight also experiencing a sharp decline in the Toll Global Forwarding Business. In October 2018, Toll announced that it would cut about 330 jobs in Australia and 700 jobs globally as the trucking and logistics group outsourced finance and accounting services to Accenture.

2. The relatively weaker presence of Toll Group in the online delivery market: Toll’s traditional model has been to move consumer goods, mostly by air and road, between warehouses and stores but recently the emergence of online shopping worldwide has forced them to enter in to the online delivery market which is an unchartered arena for them. This unforeseen competition from the E-Commerce model of logistics is a challenge for the company. Its major competitor in this field is Australia Post. As an attempt to face this challenge, the company has launched its Toll Consumer Deliveries business which is its online logistic service wing and also launched a new a $160 million retail and e-commerce fulfillment center in 2018.

Opportunity

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Threat

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Political

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Economic

1. Public-private partnerships in logistics sector: The costs of congestion to Australia have been estimated to escalate to more than $20 billion per annum by 2020, the private costs of which will be disproportionately borne by the logistics industry. Greater investment in infrastructure is required to alleviate this increasing cost. Government finances are typically constrained and are insufficient to finance the optimal investment in infrastructure. Thus private companies such as Toll Group will need to enter into partnerships with local governments to establish logistics infrastructure.

Social

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Technological

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Legal

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Environmental

1. Implementation of Smart Green Environmental Program initiatives: Toll as a logistics provider company has always had a large carbon foot print but in an effort to go green and reduce its carbon footprint it has implemented Smart Green Environmental Program initiatives which has helped it reduce carbon emissions. The company has increased the use of alternative fuels like natural gas, bio-fuel and electricity to facilitate emission reductions and has been able to reduce its carbon emissions by 7% in its Australian operations. Now Toll is considering rolling out the Smart Green Initiatives outside Australia as well.
Innovation in equipment designs and use of best operating practices: The increased usage of high productivity and low emission vehicles, improved fleet utilization practices have enabled the vehicles to carry more freight per vehicle with as low a consumption of fuel as possible.