Your group is part of the management team of one of the best-known businesses in Bloemfontein, namely The Herholdts Group. Through the years, this business has evolved from being a one-store business to having multiple stores across South Africa. 1.1 Do an environmental analysis of the external business environment and indicate how the factors in 1.1.1 and 1.1.2 affect the Herholdts Group. You will have to research the company online before you can do the environmental analysis. You need to identify the chosen factor clearly, explain the effect on the Herholdts group in words (a theoretical answer will not suffice) and provide physical proof of how you concluded the effect/impact.
1.1.1 Two (2) market environment factors
1.1.2 Three (3) macro environment factors
1.1.1 Market Environment Factors:
1. Increasing Competition: One of the market environment factors affecting The Herholdts Group is the increasing competition in the retail industry. With the rise of e-commerce and other brick-and-mortar stores, competition is becoming more intense. This can impact The Herholdts Group by potentially leading to loss of market share, lower profitability, and the need to invest more in marketing and promotions to stay competitive.
2. Changing Consumer Preferences: Another market environment factor that affects The Herholdts Group is changing consumer preferences. Consumers are becoming more conscious of factors such as sustainability, ethical sourcing, and convenience, which can influence their purchasing behavior. This may require The Herholdts Group to adapt their product offerings, marketing strategies, and operational practices to meet the evolving demands of consumers.
1.1.2 Macro Environment Factors:
1. Economic Conditions: Economic conditions, such as inflation, interest rates, and unemployment, can impact The Herholdts Group's business operations. For example, a downturn in the economy may lead to lower consumer spending, affecting sales and profitability. On the other hand, a strong economy may result in increased consumer confidence and higher disposable incomes, which can benefit the business.
2. Technological Trends: Technological advancements, such as the rise of e-commerce, social media, and data analytics, can significantly impact The Herholdts Group. Embracing new technologies can enhance operational efficiency, improve customer engagement, and drive innovation. However, failure to adapt to technological trends can result in falling behind competitors and losing market share.
3. Legislative and Regulatory Changes: Legislative and regulatory changes, such as labor laws, taxation policies, and environmental regulations, can have a direct impact on The Herholdts Group's operations. Compliance with these regulations can involve additional costs and administrative burdens. For example, changes in labor laws may impact staffing costs, while environmental regulations may require investments in sustainable practices.