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:
a) Competition: The Herholdts Group operates in a highly competitive market, with other retail businesses offering similar products and services. This factor affects the group as it must constantly innovate and improve its offerings in order to stay ahead of competitors. For example, if a new competitor enters the market and offers lower prices or better products, Herholdts may lose customers and market share. This can be seen in the group's annual reports, where they often mention strategies for differentiation and customer retention in order to stay competitive.
b) Consumer Behavior: Changes in consumer behavior, such as shifting preferences or buying habits, can have a significant impact on the Herholdts Group. For instance, if there is a trend towards online shopping or a preference for sustainable products, the group must adapt its business model to meet these changing demands. This can be seen in the group's marketing campaigns, which often reflect current consumer trends and preferences.
1.1.2 Macro Environment Factors:
a) Economic Conditions: Economic conditions, such as inflation, unemployment, and GDP growth, can have a direct impact on the Herholdts Group's business operations. For example, during a recession, consumer spending may decrease, leading to lower sales for the group. This can be seen in the group's financial statements, where fluctuations in revenue and profitability may coincide with changes in economic conditions.
b) Technological Advancements: Rapid technological advancements can also affect the Herholdts Group, as they must constantly adapt to new technologies in order to remain competitive. For example, the rise of e-commerce and mobile shopping has changed the way consumers shop, forcing the group to invest in online platforms and digital marketing strategies. This can be seen in the group's annual reports, where they often mention investments in technology and digital transformation initiatives.
c) Regulatory Environment: Changes in the regulatory environment, such as new laws or regulations related to labor, taxation, or industry standards, can impact the Herholdts Group's business operations. For example, changes in labor laws may affect the group's hiring practices or operating costs. This can be seen in the group's disclosures in their annual reports, where they discuss compliance with relevant regulations and any potential risks associated with regulatory changes.