Pestel Analysis on South Africa Retailindustry Assignment

Pestel Analysis on South Africa Retailindustry Assignment Words: 1218

In the European Union, collectively the country’s largest trading partner, the crisis seems to be deepening as the fear of member countries defaulting spreads from Greece to Italy to Spain. In the East, the Chinese economy has slowed and so has the demand for raw materials. The one area of steady growth, albeit off a low base, has been Africa. The MIFF predicts that for at least the next five years, Africa will remain the focus of the fastest economic growth, with seven of the world’s ten fastest developing economies now on this continent. South Africa, the continent’s largest economy, has to been faring quite as well.

Exports to traditional markets so far this year have been below 2011 levels. Economic growth has been lackluster and official projections for the year have been adjusted downwards more than once. Structural problems in the economy and labor regime constraints are but two of the factors hampering growth. Unemployment amongst those actively seeking Jobs, dropped marginally from 25,2% to 24,9% in the second quarter of this year but remains unacceptably high. Employment initiatives announced by the Government in February this year are eyeful still to take effect.

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In the meantime, the number of recipients of social grants has increased to 15,3 million. Although unsustainable at this level in the long run, given the country’s limited tax base, these grants are also all that stands between a great many people and dire poverty. Page 2 of 8 The group and Africa Despite the rather gloomy predictions for the world economy, there are many reasons we as a board believe Shoplifter will continue to do well into the future. Part of the reason for our optimism is our active involvement on the continent of Africa.

There should be no doubt that there are formidable challenges inherent in trading here. Our experience of almost two decades in Africa, I believe, has also helped us contend with the challenges posed by the present economic environment, for the continent has toughened us and taught us how to trade successfully under often taxing conditions. It has taught management to innovate – if you cannot, you do not survive – and to think creatively. This need to be innovative or Pestle Analysis on South Africa Redundantly By Seeking go under NAS created a very special breed to managers at the Shoplifter Group.

For us, the benefits of innovation can only be realized fully if supported by our own infrastructure and that is what we create and maintain in every market where we operate. Competition in food retailing is relentless, so it is critical that we retain our leadership position by staying at the cutting edge of developments, from applying the most advanced information systems to monitoring changes in consumer preferences and advances in store design and layout. This we achieve through ongoing research, exposure to global trends and acquisition of the skills we need to implement such hinges.

We also increase our competitiveness by constantly expanding the range of value-added services we offer consumers. At the same time, we never veer from our primary business, namely ensuring quality food at the lowest possible prices. According to market research, 67% of the country’s adult population buy groceries from our stores. That is more than 23 million people. I find that quite humbling and also intimidating in terms of the responsibility it places on us to provide these consumers with quality food at prices they can afford.

And we continue to invest lions in infrastructure that guarantees those products reach consumers on time, in prime condition and at affordable prices. The board is deeply concerned about the high level of unemployment in the country, especially as those most affected are young people who have Just come into the labor market. Assignment 1 Seep 2013 Page 3 of 8 Capital raising In March this year, Shoplifter Holdings undertook a successful capital raising of about RE billion and is being used to accelerate our expansion plans in South Africa and the rest of Africa in terms of new stores and infrastructure.

It will also enable us to selectively pursue acquisition opportunities that present themselves in the future. C H Wises Chairman 20 August 2012 Source: Shoplifter Holdings LTD Chairman’s report (www. Sprightliness’s. Co. AZ) “Results not too shabby in tough year”, says Shoplifter by Annealing Valid SHOPLIFTER Holdings CEO White Bassoon says the company cannot apologies for its operational performance. Speaking at a presentation of the group’s annual results on Tuesday, Mr. Bassoon said: “We know the market was disappointed, but we think we did well.

It as a tough year of trading, with new competitors. ” Commenting on the results in a SIS Sense statement, Mr. Bassoon said: “The group’s ability to perform well despite adverse market conditions was again illustrated in the year to June 2012… The turnover increase of 14. 3% in its supermarkets, in an environment in which internal food inflation averaged 4. 9%, represents real growth in excess of The retailer’s trading profit was up 17. 02% to RE. Bonn” “The business environment remained largely unchanged from the previous reporting period…

South African nonusers, beset on all sides by the challenges of rising debt and increased living expenses, continue to face persistent high levels of unemployment, rising electricity, schooling and transport costs, and the impact of a weaker rand, which a CE the prices to all imp arts ” the Sense statement read. “However, the government played its part in assisting consumers and the economy by keeping interest levels at their lowest in 30 years, while continuing the payment of social grants, from child maintenance to old age pensions, to an increasing number of low- income recipients,” he said.

Page 4 of 8 Assignment 1 Seep 2013 Mr. Bassoon noted that the company had maintained its aggressive expansion, with 170 corporate outlets and a presence in 17 countries after opening in Kinshasa in the Democratic Republic of Congo this year. However, he said, the group was “not doing as wonderfully as we thought in Kinshasa”. Looking ahead, the Shoplifter boss foresaw food inflation rising due to the maize shortage and the drought in the US. Mr. Bassoon also flagged electricity costs as a concern that would drive South African price inflation.

On a positive note, social grant spending was set to increase, which would benefit Shoplifter. Mr. Bassoon said the group would continue its expansion strategy, with 104 supermarkets planned to June 2013, and more supermarket activity outside South Africa in the medium term. He said 21 opportunities had been confirmed in Angola and nine in Nigeria, and the group had the capital to fund these opportunities. Source: Extract from an article posted on www. Bedevil. Co. AZ. Question 1 (30 marks) Conduct a PESTLE analysis of the South African retail industry ND discuss the implications for Shoplifter.

Support your answer with examples relative to Shoplifter. Question 2 (1 5 marks) Michael Porter stated that there are five forces that determine industry attractiveness and long-run industry profitability. Make use of Porter’s Five Forces Model to conduct an analysis on the retail industry impacting on Shoplifter. Make use of relevant examples to support your answer. Question 3 (5 marks) Describe the three different types of business level strategies and identify which strategy is followed by Shoplifter. Substantiate your answer.

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