Grade 11 and 12 Business Studies Environments: Environmental scanning SWOT Part 1

Summary

This educational video discusses the importance of environmental scanning for businesses, particularly for students in grades 11 and 12. It explains the micro and macro environments, emphasizing the need for companies like Mr. Price to adapt to external factors such as the energy crisis in South Africa. The video introduces tools like SWOT analysis and PESTEL to help businesses formulate strategies to address their internal strengths and weaknesses, as well as external opportunities and threats. It also highlights Mr. Price's vision to be the most valuable retailer in Africa and how they plan to achieve it through growth strategies despite challenges like load shedding and economic factors.

Takeaways

• 🔍 Environmental scanning is crucial for businesses to understand and respond to changes in their micro, market, and macro environments.
• 🏢 The micro environment includes internal factors like a company's people, policies, and processes, which can be controlled.
• 🌐 The market environment encompasses external factors like competitors, suppliers, and trade unions, which can be influenced but not controlled.
• 🌍 The macro environment consists of PESTEL factors (Political, Economic, Social, Technological, Environmental, Legal), which are beyond a company's control but can be strategized against.
• 🛒 Mr. Price, a retail company, needs to conduct environmental scans to stay competitive, especially in response to issues like load shedding in South Africa.
• 📈 A company's vision and mission guide its strategies, which are developed through understanding internal and external environmental factors.
• 📊 Tools like SWOT analysis help businesses identify strengths, weaknesses, opportunities, and threats within their micro and macro environments.
• 💡 Mr. Price's strengths include affordable and fashionable clothing, a wide demographic, and a cash-based operation, which reduces exposure to bad debt.
• 🚫 Mr. Price's weaknesses involve poor quality, messy stores, inconsistent sizing, and a perception of being a cheap brand.
• 💼 Opportunities for Mr. Price could include improving quality, rebranding, local manufacturing, diversifying into new trading divisions, and expanding the customer base.
• 🚨 Threats to Mr. Price include strong competitors, energy crises, theft, economic factors, and changing fashion trends.

Q & A

What is the purpose of an environmental scan in business?

An environmental scan in business is used to understand what's happening in areas that could affect the company. It helps companies to be aware of changes in the market, economy, legal changes, and other external factors so they can formulate strategies to counter any issues.

What are the three environments that a company needs to consider?

The three environments are the micro environment, which includes the company itself, its people, policies, and processes; the market environment, which includes competitors, suppliers, and trade unions; and the macro environment, which encompasses political, economic, social, technological, legal, and other external factors (PESTAL).

How did Checkers respond to the energy crisis in South Africa?

Checkers responded to the energy crisis by equipping all their stores with generators, realizing that load shedding was not going away, and formulating an energy crisis strategy to continue trading despite the issue.

What was Mr. Price's response to the energy crisis, and what was the consequence?

Mr. Price did not have a strategy to combat the energy crisis, and as a result, they would close their stores during load shedding, leading to a loss of 1 billion Rands in sales.

What is Mr. Price's vision according to the script?

Mr. Price's vision is to be the most valuable retailer in Africa, with passion, value, and partnership at the heart of their business.

What strategy is Mr. Price implementing to address excess stock due to electricity blackouts?

Mr. Price is implementing a growth strategy that includes selling off excess stock and making new acquisitions to diversify their portfolio.

What tools can a company use for internal environmental scanning?

Tools for internal environmental scanning include SWOT analysis, value chain analysis, resource base analysis, balanced scorecard, and Total Quality Management (TQM), among others.

What are the two tools used for analyzing the market environment?

The two tools used for analyzing the market environment are the Six Forces model and SWOT analysis.

What are some strengths of Mr. Price mentioned in the script?

Some strengths of Mr. Price include being affordable, fashionable, having a wide demographic, being a well-known brand, and having a diversified portfolio with various trading divisions.

What are some weaknesses of Mr. Price that could be turned into opportunities?

Weaknesses of Mr. Price that could be turned into opportunities include poor quality, messy and untidy stores, sizing issues, bad service, and a high dependence on the South African market.

What are some threats to Mr. Price's business?

Threats to Mr. Price's business include strong competitors, the energy crisis, theft, rising labor and fuel costs, short-lived fashion trends, and exchange rate fluctuations.