Business Research Task
Mr Price Sport
Asipesona Junior Nonyukela
Brief background of Mr Price Group Limited 3
Analysing micro environment with SWOT analysis 4
Analysing market environment with Porters five force model 5
1. Level of Rivalry in the market 5
2. The threat of new entrant 6
3. Availability of a substitute product 6
4. Power of supplier 6
5. Power of buyer 6
PESTLE analysis of Mr Price Sports 7
Strategic Plan for Mr Price Sport 8
Questionnaire for Mr Price Sport 12
Brief background of Mr Price Group Limited
Mr Price Group Limited was founded by Stewart Cohen and Laurie Chiappini where both of them started out on the shop floors and ever since then based their relationship on mutual trust and positive vision. In the early 1985 they recognised factory shops as the future but never had the money to establish one but they never stopped dreaming of achieving their goal of a third generation factory where there would be a low cost structure to allow for low margins with high volumes.
The very first Mr Price Apparel stores were franchised because of the lack of funds but John Orris Ltd was acquired the following year by Stewart and Laurie in a joint partnership with the bank. The listed company began opening Mr Price stores and acquiring franchised stores. Alastair McArthur joined the group as the Managing Director of the company that was later added to the Mr Price Group Ltd. Mr Price Stores were opened rapidly throughout South Africa and by 1995 there were 237 open across the country. In 1996 Sheet Street was acquired and Mr Price Home stores were established in 1998 and Mr Price Sport in 2007. Today there are approximately 1000 corporate owned stores in South Africa and 24 franchised stores abroad.
Mr Price Group Ltd (MRP) is well known for being one of the best discount fashion and home ware retailer. They have a large turnover and the share price is also increasing year by year. Mr Price Sport falls under the greater structure of the company as it is included as part of the other 6 divisions of the Mr Price Group Ltd where it was established and assigned to be one of the divisions in 2007.
Throughout the course of this Research task a Swot analysis will be analysed, current challenges the business is facing with regard to the Market Environment and a Pestle analysis to discuss the challenges faced. Mr Price Sport fits into the greater structure of Mr Price by being the only sportswear retailer where it offers a range of sporting apparel footwear equipment and accessories. All major sport types including seasonal and non-seasonal sport are represented in both industrial and the local brand of Mr Price. The products that are offered in the sportswear department range from adults to young children who enjoy performance, quality, comfort and fit and whether they are participants or spectators.
The stock price at Mr Price Group Ltd is trading at R175, 37c in the South African rand showing what the investors should do whether they want to invest or not and to see the position of the business and how it the economic state of Mr Price Group Ltd and this information is displayed to see how the business is doing in the market place and how their position is in terms of producing their products which are the clothes.
Analysing micro environment with SWOT analysis
• Mr Price Sport is known for being one of the best sporting brands when it comes to sporting equipment with a very recognisable brand where it has a gained a large market share.
• Mr Price Sport has a wide variety of products as it caters sporting equipment from clothes to equipment like rugby balls, cricket kit, golfing equipment and tennis equipment for the whole family.
• The sporting apparel and goods offers low cost products, which appeal to customers in an environment where there are many factors reducing consumer spending (like inflation links to weakening rand against other currencies )
• Mr Price Sport has a wide range of products to offer with the different sports codes and whether it is seasonal or non-seasonal sporting equipment.
• Mr Price Sport has an incredibly effective and diverse CSR programmes like the Red Cap Foundation and the Young Heroes Foundation which appeals to modern consumer who is trying to give back to consumer in some way.
• Many Mr Price Sports stores have been known to be cluttered and also not neat at times with products that are wanted by people being all over the place which leaves a wrong impression of the brand.
• Mr Price Sports offers low price items for their sporting equipment which is often compared to products of Sportsman's Warehouse and can place the quality of the product in the spotlight.
• The sporting apparel lacks the formal quality prices that often attract consumers and allow premium price to be charged.
• Mr Price Sports marketing campaign is not as effective as many other companies- as their television campaign is weak. A company of Mr Price Group Ltd (with a 1.9 billion rand profit in 2014) should have a television advertisement campaign.
• Mr Price Sport's staff often perceived as being lazy, unfriendly and unhelpful.
o Mr Price Sports can look at an expensive brand within the brand. They can have an exclusive range that is higher quality and higher priced in a small section in all stores.
o With the fast growing instability of the credit market there is an opportunity the sporting apparel can grow its cash sales market
o Due to the economic recession, that has largely not affected the sports apparel many of the competitors are struggling financially, Mr Price Sports can thus afford to employ a market penetration strategy to ‘'steal'' market share from competitors are struggling financially so Mr Price Sports can thus afford to employ a market penetration strategy to ‘'steal'' market share from competitors.
o The current predictions of a warm winter allows for the sporting apparel to experiment more with the winter line of clothes and perhaps steal more market share.
o The current instability of the rand could threaten Mr Price Sports profit margins as most of their raw materials are imported from Eastern countries where also inflation is at an all time high and people are left with less disposable income to spend at the sporting apparel.
o The local government elections are coming up in September and next year the national elections. With elections there is always a degree at political instability that reduces investor confidence.
Analysing market environment with Porters five force model
1. Level of Rivalry in the market
It is important for the sporting apparel to know what exactly their competitors are doing. Their competitors include: 1.Mr Price Sport to Total sport, Sportsman's warehouse ,retailers for Nike, Adidas and Under Armour.
In order to understand what the competition is doing, Mr Price Sport can complete a competitors profile. This highlights aspects like their size and financial resources , the competitors market share ,consumer brand loyalty.
Strategy: Mr Price Sports can introduce a loyalty card where customers gain points to buy in-store.
2. The threat of new entrant
The high profits the Mr Price Group Ltd generates there is always going to be entrepreneurs looking to tap into the market by opening new business. This includes companies that market by opening stores in South Africa (e.g. H & M)
Strategy: Mr Price Sport needs to put as many barriers in place like negotiating with the centre management to spend large amounts of money on advertising.
3. Availability of a substitute product
This does not refer to a different brand; however, it refers to a different product offering the same need. To a large extent, Mr Price Sports Stores all contain substitute products.ie: if you can't find a jacket, there is always a tracksuit top or sweater.
Strategy: Mr Price Sport must continue understanding needs to ensure they are satisfied with the products it offers. This would also mean Mr Price Sports must ensure their shelves are always stocked.
4. Power of supplier
Mr Price Sports is dependent on many suppliers in all their stores across the country and in the Southern Hemisphere in other countries. Their success depends on these suppliers delivering the right stock at the right time. Any delays will cause customers to not get what they are looking and to possibly stop elsewhere.
Strategy: Mr Price Sports must ensure good communication with suppliers. They must be paid on time, which will ensure that they look after Mr Price Sport's stores.
5. Power of buyer
If it weren't for the customers it would clearly be evident that Mr Price Sports would not be as successful as it is now. The customer must always be placed 1st and they must feel they are receiving value for their money or they will move to another brand.
Strategy: Mr Price Sport would then have to continue to have ‘good' prices for their good products. They can introduce in-store specials to increase brand loyalty.
PESTLE analysis of Mr Price Sports
Political: Challenge= Government corruption-investigation have shown that between 20-25% (R180 billion) of state money has been mismanaged yearly.
Impact on the business: Government will need to recoup the money so Mr Price Sport will need to abide by the increases in taxes and its obligation to support the community.
Strategy: Mr Price Sport needs to abide by the business and not involve itself in any unethical business deals.
The upcoming local government elections in September 2016 and national election in 2017 often destabilize a country by shaking investors confidence.
Strategy: The sporting apparel can diversify its operations into other neighbouring countries to restore investor confidence. The original Mrp group Ltd allows for this type of move.
Economic: Challenge: Inflation is increasing- The basic costs of living are increasingly rapidly
Impact on the business: People have less disposable income therefore don't have extra money for Mr Price Sport's equipment.
Strategy: Run specials like buy 2 and get 1 free or introduce a loyalty card with points which equal free goods.
The decreasing strength of the rand is dangerous to a company that imports most of its stocks.
Strategy: The Mrp Group Ltd can start to source most of its stocks.
Social: Challenge: Crime in South Africa is on the rise and SA is ranked high according to world standards.
Impact on the business: Mr Price Sports suffers financial loss due to theft daily. Mr Price will also lose customers who don't feel safe in the area.
Strategy: Mr Price Sport needs to ensure that all their security policies and equipment are up to date.
In a country as hard hit as South Africa, by HIV/AIDS there is a high chance that the disease will affect business operations.
Challenge: The Mr Price Sports can help host a free HIV/AIDS testing clinics and information sessions to help educate people.
Technological: Challenge: Smart phone technology is advanced quickly and mobile phones are being used o make payments.
Impact on the business: Mr Price Sport is quite under pressure to keep up with technology and when it comes with huge cost implications.
Strategy: The sporting apparel can have a can have research and development teams which are constantly looking for innovative apps that can put Mr Price Sport ahead.
There is always innovation in mechanics that produce the sporting equipment like clothes and new production methods can leave the sporting apparel grows suppliers at a disadvantage and thus the group.
Strategy: The sporting apparel can regularly review their suppliers to ensure that they are keeping up with current innovations.
Legal: Challenge: Basic condition of employment act stipulates right employees have within the workplace.
Impact on the business: Mr Price Sport can face legal action if they violate employee's rights and working conditions.
Strategy: Ensure that HR is well informed of laws and that they are continually listening to employees needs
The sporting apparels group sources its products from typically low wage Asian economies with very lot of labour laws, but those can change any time
Strategy: Mr Price Sport must regularly review their suppliers to ensure that they are compliant with legal labour law.
Ethical: Challenge: Mr Price Sport main manufactures are situated in low wage Asian countries where child labour is often acceptable.
Strategies: Mr Price Sports and well as the Mr Price Group Ltd must ensure that they cultural differences between suppliers and consumers are accounted by appointing cultural officer.
Strategic Plan for Mr Price Sport
1. A corporate combination joint venture strategy is suggested as mrp home, mrp apparel and mrp sport could join premises to make a superstore. This would save money on rent and operate more sales.
2.A market penetration strategy is also suggested as Mr Price Sport is currently in a stronger economic position than its competitors and thus should capitalise.
A growth strategy may also be used as the aim of the sporting apparel would be to turn over the sales volume where a learning growth would be implemented by the company for inside the business by using the SDA to implement learning in the working place. The customer perspective would be for the sporting apparel to focus on how the customer sees the business and what the expectations may be with the internal perspective being the focus on innovative products and services, the management of operations and social investments to improve the business. PAGE 6
Questionnaire for Mr Price Sport
1.Do you know about the brand Mr Price Sport?
2.What do you think they are doing well?
3.What do you think they can improve on
4.Do you think that their products are good quality?
5.If you could change something what would it be about Mr Price Sport?
We can see from the evidence presented above that Mr Price Sport has many opportunities for growth. If they follow the strategies provided in this document they will able to maintain their level and ensure success.
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