Question 1 (15 Marks)
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
And include references in havard referencing
1.1.1 Market Environment Factors:
1. Market Competition: The Herholdts Group operates in a highly competitive retail industry, with numerous competitors offering similar products and services. This intense competition can lead to price wars, decreased profit margins, and the need for constant innovation to stay ahead of the competition. An example of how market competition affects the Herholdts Group can be seen in their pricing strategy. By analyzing the pricing of their products compared to their competitors, it can be observed that the Herholdts Group often adjusts their prices to remain competitive in the market.
2. Consumer Trends: Consumer preferences and trends are constantly changing, which can impact the demand for the Herholdts Group's products and services. For example, if there is a shift towards more sustainable and eco-friendly products, the Herholdts Group may need to adapt their product offerings to meet this demand. One way to determine the effect of consumer trends on the Herholdts Group is by analyzing their sales data and customer feedback to identify any shifts in consumer preferences.
1.1.2 Macro Environment Factors:
1. Economic Factors: Economic conditions, such as inflation, GDP growth, and exchange rates, can have a significant impact on the Herholdts Group's business operations. For instance, a recession could lead to decreased consumer spending, resulting in lower sales for the Herholdts Group. To assess the impact of economic factors, one can look at the Herholdts Group's financial reports and compare their performance during periods of economic downturns.
2. Technological Factors: Technological advancements can present both opportunities and challenges for the Herholdts Group. For example, the rise of e-commerce has changed the way consumers shop, prompting the Herholdts Group to invest in their online platform to stay competitive. By examining the Herholdts Group's investments in technology and their implementation of new technologies, one can determine how technological factors impact their business.
3. Legal and Regulatory Factors: Compliance with laws and regulations is a critical aspect of the Herholdts Group's operations. Changes in legislation, such as labor laws or environmental regulations, can impact the way the Herholdts Group conducts business. To assess the impact of legal and regulatory factors, one can review any legal actions or compliance issues faced by the Herholdts Group in the past.
References:
- Herholdts Group website: www.herholdtsgroup.co.za
- Industry reports on the retail sector in South Africa
- Financial reports of the Herholdts Group, available on their website