This assignment will be making an intensive study on the Mr Price group. This will be done by means of a research which will be based on a broad number of issues using company financial report, share prices and newspaper articles. The task will be to give a brief background of the company that clarifies where and when the company started and also outlines what is the company's trade is and how is it fits to overall group. The impact that the macro environment have on the company will also be explored by using the PESTLE analysis.
The study conducted shows that Mr Price group growth is exciting, and is not based upon chasing diminishing marginal growth. This economic principle means that if one factor of production (number of workers, for example) is increased, other factors (machines and workspace, for example) are not held constant, they are also increasing. Otherwise if was not the case; output per unit of the variable factor will eventually diminish.
Mr. Price Group is a trade retail company based in South Africa opens for public to buy its products .It was founded in 1885; it has been traded on the Johannesburg Securities Exchange since 1952. It is a fashion value trader, selling predominantly for cash and is one of the fastest growing retailers in South Africa, and concentrate in the Women's and Man's clothing stores sector. It is also a retail distribution through 937 stores in Southern Africa and 24 franchised stores in Africa.
The focus on retail chains is mainly on clothing, footwear, sportswear, sporting goods, accessories and home wares. The Company operates three divisions: the clothing, which retails sportswear, footwear, sporting equipment and accessories; the Home division, which retails home wares, and the Central Services division, which provides services to the trading segments, including information technology, internal audit, human resources, real estate and finance. I have chosen Mr. Price Sport division and it provides Sporting wear, footwear and accessories.
As it is indicated on Mr Price Group's 2011 Annual Report 'The year, the group celebrates the 25th anniversary of the change in control. The compound annual growth rate in share price and dividends per share over this period has exceeded 25%, with headline earnings per share growing at a compound annual rate of 24%. Other significant milestones have also been achieved this year - retail sales have exceeded R10 billion and profit attributable to shareholders has exceeded R1 billion for the first time.
Retail sales for the 53 week trading period ended 2 April 2011 increased by 12.9% (52 weeks: 10.5%). This compares favorably with the total retail sector, which, as reported by Statistics South Africa, grew by 7.5%. Sales in like-for like locations were up by 7.5% (52 weeks: 7.8%). The groups weighted average trading space increased by 0.7% as a result of expansions and new store openings beign offset by store closures. More than R180 million units were sold, an increase of 9.9% (52 weeks: 7.6%) and product inflation of 3.0% was recorded.
The extensive study was done focus being placed specifically on Mr Price Sport division. They are both international and South African brands. The products are being tested and certified by top South African top sport personalities.
Below are example of the sport clothing items this division have for both female and males :
4. PESTLE ANALYSIS: CHALLENGES FACED IN THE MACRO ENVIRONMENMENT
It is a factor of the environment that could be a threat or an opportunity of the business to create the competitive advantage.
4.1.1 CHALLENGES FACED IN THE MACRO ENVIRONMENT ARE AS
Trade union strikes- the employees of MR Price could embark on a national strike for reasons such as salary hikes. This could in turn hamper the operations of the company for the duration striking. Some of the political decisions taken at the parliament level e.g. reshuffling of Ministers, do impact on the Economy of the country as investors are becoming uncertain about future and therefore leave. This then pose a serious challenge to macro environment.
The point indicated above with regard to political decisions also does affect the value of the county's currency because of the increase to inflation as well as price, therefore retailer's products becomes expensive and that decreases the purchasing power. Market trends are able to assist business to make a strategic decision that will have a negative or positive effect on the business.
Corporate tax and Vat- these are regulated by political authorities and if and when they are amended this will affect MR price's financial
Trade and Tariffs charged to the clothing industry could also impact on the business.
Demographic variable (family, age, income) of the country have a positive or negative influence on the business. Like for an e.g Mr Price Sports does not accommodate a certain age and body size. In most cases purchasing of products is for a certain smaller percentage of slim people and the country has a high percentage of obese as according to ?, but also have high percentage of youth clothes that makes fast purchasing of products.
The above is another crucial challenge that Micro Environment is faced with whereby alignment with the latest technology which is out there has become a dire need. For an example technology has made it possible for online shopping, cell phone app, emailing of tax invoices, online advertising and speed point of which it reduces cost of operation. According to the study conducted, Mr Price Group is on par with technology due to a wide retail distribution to South African stores and franchise stores in Africa.
Business should use recyclable plastics like Mr Price Sports is doing just to be friendly to the environment. They also should participate in saving electricity as just not long ago the country was experiencing load shedding. This can be done by installing solar panel to sustain energy or to save electricity by minimizing consumption thereof. This is an illustration on how success and performance of the business can be impacted by an unforeseen challenge, Mr Price group in particular in this study.
5. PORTER'S MODEL
'Porter's 5 model of analytic tool is a tool that analyses industrial structure in accordance with 5 competitive industrial forces' (Raab'2012). This model looks at determining the probability of business in making a profit.
1. Current Competitors
Mr Price operates in an extremely competitive environment defined by many other low priced and good quality clothing businesses. The business may be presented by an opportunity if the competitor is not doing well and a threat if the competitor is doing well, therefore the business should know its competition in terms of developing marketing strategies that will meet the needs of its consumers.
2. Threats of new entrants
This energy is measured to be strong since there is a probability of new trends emerging that will come with a new competition in the clothing retailer.
3. Bargaining power of suppliers
This energy does not pose a serious threat to Mr Price Group because this retailer is constantly growing and aims at being sustainable. One of its strategic plan goals of aiming at expanding high trading density stores and extraction from unprofitable space also positioned it in a more positive way against this risk.
4. Bargaining power of buyers
This force is strengthened by the fact that Mr Price clothing division has a powerful competition from other clothing stores. This therefore is pushing it to development of new strategies that has a wide choice to its target market.
5. Threats of substitutes
This energy is not of such a challenge to Mr Price Clothing. Products suit the taste of its target market and are unique, low ' cost and good quality. Customer retention remains the best as its trend analyses usually meet the needs and demands of its targeted group.
6. SWOT ANALYSIS
SWOT analysis is a strategic tool that helps a business to identify its strengths, weaknesses, opportunities and threats. The business controls its strengths and weaknesses to improve its competitive advantage.
6.1.1. MR PRICE GROUP SWOT ANALYSIS
-The business units are experienced and excel in its division.
-It has a big domestic market and some internationally.
-It is making a high profit margin and revenue.
-The business units are small therefore productivity is limited.
- Enough research and development are not done to its optimum.
-The cost structure is not on point.
-Unsure of future profitability.
- Uncertain about future debt rating.
-Has market locally and internationally markets
-Growth in rates and profitability
-Projected capital growth
- It has a possibility of venturing into new markets.
- Changes in Tax that may be affected by legal system.
-Lack in development may have a negative effect on financial capacity.
-Technology is not up to scratch and this may affect profit margin.
-Government regulations which can be unpredicted.
-Changes in price which can lead to customer loss.
-Rising cost of raw materials which can cause the escalation in price.
7. STRATEGIC PLAN TO BE APPLICABLE TO MR PRICE GROUP
A strategic plan is a roadmap to grow business and help it to succeed. It includes information to be considered in making a business to succeed. The vision for the business should be a leading statement which will tell the business' aim which will give direction of what the business should achieve.
Section 1: Executive Summary
The Executive Summary of a strategic plan should be completed last, and this section merely summarizes each of the other sections of your plan. The Executive Summary is important since it will help other key constituents, such as employees, advisors, and investors, quickly understand and support your plan.
Section 2: Elevator Pitch
An elevator pitch briefly describes the business. It is key to business' success and should be updated annually. It is vital because employees can clearly and concisely articulate business to others, therefore business inevitably does not miss out on tons of sales and other opportunities.
Section 3: Company Mission Statement
Your company mission statement explains what your business is trying to achieve. With regard to internal decision-making, mission statement guides employees to make the right decisions; decisions that are in line with helping the company achieve its mission. For external parties, such as investors, partners, and customers, mission can inspire them to take the actions you want.
Section 4: SWOT
The reason to include a SWOT analysis (analysis of Strengths, Weaknesses, Opportunities and Threats) in the Strategic Plan is to help determine the best opportunities to pursue to achieve growth goals. It also helps identify which strengths you must develop in the near future to improve the company.
Section 5: Goals
Setting and achieving goals is the seal of successful companies and is a critical element of your strategic plan.The key is to first identify 5 year or long-term goals. Next, identify one-year goals; that is, one must achieve in the next year for it to be successful and to put the company on the right path to achieving your 5 year goals.
Then determine goals for the next quarter and the next month. Ideally an update of a strategic plan should be done monthly to modify this section.
Section 6: Key Performance Indicators (KPIs)
Great businesses understand their metrics and KPIs. It is critical to track KPI's the so that the business knows exactly how is it performing and can adjust as needed.
For example, a basic KPI such as Total Sales is critical for understanding if the company is performing well. 'Underlying' KPIs are equally as important. For example, if sales are affected by number of visitors to business' website, then these KPI should be tracked and if visitors to website decreased, it should be know and this be fixed immediately rather than waiting until sales fall then action is taken.
Section 7: Target Customers
In this section of a strategic plan, the wants and needs of each of the target customer groups are identified. This is important in focusing on marketing efforts and getting a higher return on investment on your advertising expenditures. This is because the more the business is direct to target customer wants and needs in marketing, the better are attracted.
Section 8: Industry Analysis
Industry analysis doesn't have to be a comprehensive report on what's going on in the market. However an analysis should be conducted to ensure the market size is growing (diversify), and help identify new opportunities for growth.
Section 9: Competitive Analysis & Advantage
The same as industry analysis, competitive analysis doesn't have to be a thorough report listing every detail about every competitor. Rather define who key competitors are their strengths & weaknesses and determine current competitive advantages and ways to develop additional advantages.
Section 10: Marketing Plan
In addition to a strategic plan, one can develop a comprehensive marketing plan to grow the business by including a marketing plan. The right marketing plan identifies everything from target customers, how you will reach them, how you will retain your customers so they repeatedly buy from the business. Done correctly this will lead to a successful business.
If is evident from the study conducted that from Mr Price Group's performance and success growth can be achieved through closely examining external and competitive environment, and also having marketing strategies that enhances purchasing power. That in turn enables Mr Price Sport' Clothing division to make most of available opportunities.
The study also shows that a proactive and dynamic approach adapted by Mr Price Group maintains its competitive edge, however transforming its weaknesses into strengths can further strengthen the brand.
1. Mr Price Corporate webpage ' available at www.Mr Price Group
2. Interview conducted at Mr Price
3. Internet search
MR PRICE SPORTS: RESEARCH QUESTIONS INTERVEIW
1. WHAT SPORTING ACTIVITIES WEAR DOES MR PRICE HAVE ?
ANSWER : TENNIS, SOCCER, YOGA, NETBALL, SWIMMING, ECT
2. DOES SPORTING WEAR ACCOMMODATE ALL AGES AND SIZES?
ANSW : NO MAINLY UP TO FORTY FIVE AND DO NOT HAVE BIG SIZES
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