Human Resource Management Strategy - Case Study Example

External Analysis The external analysis for Pep Stores will help to understand the manner the external environment influences the company and in so all company performing in the particular industry. This analysis will help to understand the importance of combating the external forces in a manner that helps them to gain efficiency and also help Pep Store to prepare strategy based on it that will help them to maximize the opportunities for growth and minimize the threats the business faces. Industry Information Pep Stores performs in the retail sector where they look towards providing products to the customer at the most competitive rates. The company follows a business model of supplying goods at the best possible rate which has thereby increased the level of competition and made service an important component of the business. Pep Stores looks towards ensuring that they provide the customers with quality products and is part of the organized retail sector looking towards conducting business. This has thereby made Pep Stores look towards customers who visit the shopping places and looks towards providing customers products based on quality and competitive pricing. PESTEL Analysis This aspect of the report concentrates on the manner the surrounding environment is influencing the working of Pep Stores thereby making it important that a strategy is crafted which will help the organization to face the contingencies and deal with the surrounding environment in a manner that helps to achieve maximum efficiency and achievement of the objectives (Chew, Cheng & Petrovic-Lazarevic, 2006). Political The change in the political front has affected the manner in Pep Stores carried out business in South Africa. The abolition of apartheid and voting rights being granted to the blacks has affected the manner in which business was carried out and has provided more avenues as the democratic form of government has looked to draft supportive policies. This has been adversely affected by the rise in terrorism activity after September 11 which has made the economy to monitor the way business in conducted so that money doesn’t flow into the hands of terrorist which could hamper the stability in the economy hence have an effect on the working of the organization. Also, the fact that the government has looked towards opening the economies and allow investment from abroad has intensified competition thereby making organizations work in the best possible manner and deliver quality services to the customers (Chew, Cheng & Petrovic-Lazarevic, 2006) Economic The slow down in the economy has hampered the progress of Pep Stores as the purchasing power has been affected. Recessionary conditions have depleted the purchasing power thereby making people postpone their consumption of goods and services and looking forwards towards saving for the future. This has further been affected by rising inflation rate which has further eaten on the income of consumers and increased job losses thereby affecting the manner in which business was conducted. This has gradually swept the prevailing condition in the economy and has affected the growth of business as economies have been hit by the present condition thereby decreasing the volume of business (Chew, Cheng & Petrovic-Lazarevic, 2006) Social South Africa has been affected by the change in the purchasing preference as both the black and white community looks towards purchasing products which are stylish and matches the prevailing trend in the market. This has resulted in a shift in the buying behavior and has increased the demand for such products. This has been aided by the fact that population for the Y generation has grown which has further intensified the demand for trendier products. This has helped the South African economy to ensure that they are able to garner better return and growth for the products which has helped the business to flourish. Lastly, this has been helped by the change in mind set of the consumers as they look towards purchasing the products from the market. People are willing to spend a part of the income on this products which has helped to intensify the demand for the products and has helped to create a market where the organization are able to take decision that will help the business to flourish (Chew, Cheng & Petrovic-Lazarevic, 2006). Technological Technology has played its pats in increasing the opportunity for business in South Africa. The ability of the economy to accept and mold itself with the changing environment has resulted in increased demand for the products. The availability of better technology has helped to strengthen the supply and demand side and ensured that the business is able to provide goods and services at the correct time. Technological advancement has helped the economy to ensure economies in operations and ensure proper delivery at the correct time. This has helped to shape the manner in which business in conducted and has provided the required leverage that will help the organization working in the economy to garner better results and develop its business accordingly (Chew, Cheng & Petrovic-Lazarevic, 2006). Environmental The economy has looked towards ensuring that the different players performing in the retail sector take steps on their front to improve the business and ensure proper facilities that look after the environment. The economy has looked towards ensuring that the basic required infrastructure is developed and steps taken to reduce carbon emission. The economy has looked to ensure that players performing in the industry look into it and take steps to cut down emission. This has altered the manner the business was conducted and organizations that are able to look into it and devise a strategy that looks into the environmental aspect has been able to ensure better results and development on all fronts (Cateora, Mary & Graham, 2009). Legal This is an important consideration for organizations looking to perform in the economy as organizations have to abide by the rules and regulations laid down by law. The organization performing in the retail sector have ensured that they get the required licences and look towards following the rules and regulations that have been laid down so that the business doesn’t gets affected anytime. Organization performing in this sector also looks towards ensuring that they abide by the rules regarding minimum wages. The government has prescribed the wage rate and working hours and organization have to ensure that they remain within the limits. The changes being witnessed on the legal front has affected the manner in which the business was carried out and organizations that are able to integrate it in their working environment are able to sustain growth and ensure maximum efficiency from the external environment (Cateora, Mary & Graham, 2009). Porter Five Force Model This model will help to explain the manner in which the external environment which has a lot of relevance towards the working of Pep Stores affects the business prospects of the company. Understanding this model and identifying the areas that the company needs to work upon will help Pep Stores to make strategies which will help them face the challenges and grow thereby ensuring that the business is able to gain maximum efficiency in their operations. The five force model is as Rivalry among sellers The rivalry among different players is very high as most players working in the industry look to perform by adopting a similar business model. The multitude of rivalry increases as all competitors and players performing in the industry look towards providing same products and services. This makes it difficult to differentiate between the different players performing in the retail sector. An interesting point to note here is that all players performing in this sector looks towards providing better services. Also the policies of the government and the manner in which the local market has supported growth towards different opportunities has intensified the degree of rivalry making it difficult for the business to be able to ensure adequate opportunities to bank on. Potential of New Entrant The retail sector multiplies the risk and competition involved with the entry of new players. Since, the government has laid down rules which allows different players to enter the business and compete with each other has increased the risk for the business. The manner in which the retail sector has grown provides an opportunity to earn extra money by following a business model which eyes at most section of the society. This has made more businesses look towards entering the market and working in the retail sector which has thereby resulted in an increase in new entrant thereby increasing the risk associated with the business. Threat of Substitute The threats for big players are low as all business look towards following the same business model. The maximum risk for the business is from the local grocery shops that are placed close to residential building. Organizations performing in this sector face stiff competition from the unorganized market but the change in mindset and people looking towards purchasing goods from big shopping arcades and malls have reduced the risk to a certain extent. Still, the maximum possible damage happens from the unorganized sector which looks towards hampering the business of big players especially for those players where the population belongs to the lower segment. Thus, the degree and threat of substitute is limited to a large extent (Czinkota & Ronkainen, 2004). Bargaining Power of Suppliers The growth in the number of players performing in this sector along with the increase in different business opportunity has ensured a mixed bargaining power for the suppliers. Businesses performing in this sector have to procure goods from the vendors who look towards providing competitive prices so that the retail player purchases the goods from them. Increase in the number of vendors supplying goods have intensified competition which has resulted in reducing the bargaining power as vendors look towards long term relationship and ensuring the most competitive rates so that it matches the business model followed by retail players. This has thereby transformed the degree of competition and has helped to control the bragaining power of suppliers to a large extent (Czinkota & Ronkainen, 2004). Bargaining Power of Customer Customers have a low bargaining power as all retail players look towards following the same business model. This has resulted in creating a situation where customers get products at more or less the same price. This has thereby resulted reducing the bargaining power. Customers do have some degree of bargaining power especially when they look to purchase from the unorganized sector as customers looks towards influencing the seller to provide the best prices. This results in the customer getting a better bargain but is limited to a large extent as customers have to rely on the prices supplied in the market and procure goods and services at the prevailing price thereby limiting the extent of bargaining power they have (Czinkota & Ronkainen, 2004). Competitive Environment The degree of competition prevalent in the retail sector is very high. Organizations performing in this sector faces competition both from the organized and unorganized sector. This has resulted in a very thin line which differentiates the business of each player. Since, every player in the market looks towards providing similar services with very little differentiation to offer it has intensified the degree of competition (Kramar, Bartram, De Cieri, Noe, Hollenbeck, Gerhart & Wright, 2011). Players performing in this sector looks towards differentiating themselves solely on the basis of service and ensuring maximum customer satisfaction so that they will be able to ensure maximum efficiency. This can be seen from the following chart Pep Stores Jet Stores Wesfarmers Woolworth Aims at customers who look towards trendier products as the best competitive rate in the market Aims at customers who look towards trendier products as the best competitive rate in the market Aims at customers who look towards trendier products as the best competitive rate in the market Aims at customers who look towards trendier products as the best competitive rate in the market Offers a variety of products at different range so that it matches the needs and requirements of different customers willing to purchase the product Offers a variety of products at different range so that it matches the needs and requirements of different customers willing to purchase the product Offers a variety of products at different range so that it matches the needs and requirements of different customers willing to purchase the product Offers a variety of products at different range so that it matches the needs and requirements of different customers willing to purchase the product Hires the best work force so that they are able to ensure maximum customer satisfaction through their service Hires the best work force so that they are able to ensure maximum customer satisfaction through their service Hires the best work force so that they are able to ensure maximum customer satisfaction through their service Hires the best work force so that they are able to ensure maximum customer satisfaction through their service The above chart highlights that the degree of competition is very high in the organized sector as all business units looks towards providing similar service to the same section of the society thereby making it important to differentiate them on the basis of service and ensuring maximum customer satisfaction. Opportunities & Threats The external analysis for Pep Stores highlights the various opportunities and threats that the external environment creates for the business. Pep Stores need to look into this factor and look towards molding them in a manner that helps to achieve maximum efficiency and achieve their objectives in a better way. This helps to arrive at the following opportunities and threats for the business Opportunities Pep Stores need to look towards ensuring that they diversify their business by moving into other destinations which will help to diversify risk and provide a new avenue to conduct their business. This will help them to get a new market and look towards providing services which helps to enhance customer satisfaction. Pep Stores also need to improve their services and look towards eyeing the entire sector by having goods and services so that they get a bigger market to cater to. This will help Pep Stores to be able to ensure that they are able to create a niche market for themselves which will thereby transform into better business opportunity for growth (Cateora, Mary & Graham, 2009). Threats Pp Stores faces stiff competition from other retail players and also the unorganized sector which has made it difficult to ensure that they are able to provide quality service to its competitors. Also, the fact that all businesses look towards following a similar business model has intensified competition thereby increases the threat for the business. Pep Stores also faces threats from suppliers and increase in the option by having more players will make the suppliers look towards different players which will thereby make it difficult to continue business. This has intensified the degree of competition and has increased the level of threat that Pep Store faces (Cateora, Mary & Graham, 2009). References Chew, M.M.M., Cheng, J.S.L. & S. Petrovic-Lazarevic, 2006. Managers’ Role in Implementing Organizational Change, Journal of Global Business and Technology, Vol. 2, No. 1 Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin:McGraw-Hill Czinkota, M.R. & Ronkainen, I. A. 2004. International Marketing, 7th edn. South-WesternPublishing:Australia. Cateora, P.R. & Mary, C. G. & Graham, J.L. 2009. International Marketing, 14th edn. Irwin: McGraw-Hill. Kramar, R., Bartram, T., De Cieri, H., Noe, R., Hollenbeck., J, Gerhart., B, and Wright, P. 2011. Human Resource Management: Strategy, People, Performance, McGraw Hill: Sydney. Read More