NAME:ISHUMAEL MAKOPE PROGRAM:BUSINESS & ITS ENVIRONMENT TUTOR:MR. J KUHUDZAYI DUE: 18 OCTOBER 2010 INTRODUCTION OK Zimbabwe Limited’s business is general retailing, providing quality merchandise and service offering value for money to its customers in all market segments in Zimbabwe and selected countries in the region. To achieve its objectives OK focuses on its human resources, selling and management of costs in the hostile environment in which it is operating. There are many factors that affect the company’s business and the results of its operations, some which are beyond its control.
The following is a description of some of the important factors that threaten the actual results of the company’s operations in the future. Strategy toolkit (www. mindtools. com) defined a threat as something affect the business but is not within the company’s range of control. The threats confronting OK exist or develop in the following areas: 1. COMPETITION This is the major threat that the company is facing apparently. Competition has been defined by wikipedia (www. wikipedia. org/wiki/Competition ) as a contest between individuals, groups, nations, animals, etc. for territory, a niche, or a location of resources.
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The basic resource being fought for by the companies in the retail industry is the $150 that an average working Zimbabwean is earning every 30 days. The Zimbabwean retail market has been characterized by very low market entrance barriers hence the influx of so many convenient shops located at every corner of every town in Zimbabwe. Implications on OK Zimbabwe Ltd The threat of competition affects OK Zimbabwe in the sense that its market share will be diluted by the entrance of the new players hence a subsequent decrease in profit margins (how? ). The margins are reduced by the tendency f companies trying to out do each other by lowering prices hence the reduction in profit margins. Overcoming the Competition Knowledge of the company’s individual service to clients, persuasive power, determination, good judgment, personality-these are the things that have much to do in determining whether or not the company will be able to overcome the tactics of competing agents and to induce a prospect to list with it instead of with your competitor. It should be the company’s duty to sell every possible customer and it is certainly wise judgment to get all the business it can. Matt, L, 2006). 2. POLITICAL INSTABILITY The political situation prevailing in the country poses possible threats to the business world as the two main political rivals in the country are trying to have elections in the coming year (Newsday, 30 September, 2010). History has it that for the past 3 successive elections, there has been tension between the opposing parties hence a decline in the stability of the political system in the economy. Implications on OK Zimbabwe Ltd The level of instability affects OK’s operations in that sales might decline due to reduced people movement.
If people are afraid to move as was the case in the pre- and post June 27, 2008 elections, then OK will not be able to realize the revenue it used to. Furthermore, as the company relies mainly on imports, political tension may also rope in our trading partners in the region and cause the highest recession ever recorded in the country as witnessed in the post June 27 elections. Overcoming the instability The company should put in place measures that will make it survive during the forthcoming period and be adaptive to the changing environment if wishes to succeed.
It should not be aligned to any political party whatsoever. It should just be a good corporate citizen abiding by the laws of the land. 3. INDUSTRY LOW CAPACITY UTILIZATION If market demand grows, capacity utilization will rise. If demand weakens, capacity utilization will slacken. However, in Zimbabwe, the opposite is true. Demand is increasing and the capacity utilization of the manufacturers (for which products OK sells), is dwindling. This is due mainly to the unavailability of power (ZESA), shortage of water and obsolete equipment.
Impact on OK Zimbabwe Ltd As OK is a retailer, it depends on manufacturers for its stocks. With the low industry capacity utilization prevailing in the economy, the level of profitability for trhe company will be greatly affected as it will have to rely on imports for its wares. Any trade barriers that might be imposed by the exporting countries to Zimbabwe will negatively affect the operations of OK Zimbabwe. Overcoming the threat The company has to utilse the current import scheme on all groceries and buy as much as it can stock (at least in the short term).
It can also try to invest in the region so that if business here in Zimbabwe fails, it can at least be able to gain some from the other parts of the region where it will still be profitable to operate from. 4. CUSTOMER/ PRODUCT MIX Customer mix can be defined as the categorization according to demographic and psychographic characteristics that make up their customer profiles while product mix refers to the range of associated products, which yield larger sales revenue when marketed together than if they are marketed individually or in isolation of others.
The customer mix for OK is thus ever changing due to customer sophistication. This also now have a bearing on the product mix for the company. If not properly checked, this will have an impact on the sales and subsequently profitability of the company. The company should thus be adaptable to changes in the market trends and move with “fashion” so that it will be able to satisfy its market. 5. TECHNOLOGICAL CHANGES The rate at which technology is changing is so fast that OK Zimbabwe needs to eep up with the pace. So many companies are now encouraging e-Shopping, which OK and companies here in Zimbabwe are not yet doing. OK might be losing these valuable sales due to people enjoying buying on the Internet. With time the company also needs to make sure that it adapts to these new technologies for it to be successful. References 1. Matt L, 2006, Survival of The Fittest, IT Reality, Idaho 2. www. mindtools. com 3. www. wikipedia. org/wiki/Competition 4. Newsday, 30/09/2010