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International Business Regions 3 C&A Business Report in South African Region

Executive Summary

The report aims at focusing on the key concerns of fashion retail market in the international region that was targeted by the C&A business in South Africa. It had taken some major approaches of strategic framework of macro-environmental analysis that found that the market in the country is positioned in a declining state in respect of fashion retail is concerned.

On the other hand, critical evaluation of its key challenges gave an acknowledgment that the business had gone through serious issues in the field of several concerns like prices, supplier risks, technology risk and consumer demands in the market.

Moreover, with the analysis on the key stakeholders’ perspective, the paper has highlighted some major areas of focus on the future scope and opportunities that are evident if C&A take certain decision to explore in the market at the end.

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PART A: Consultancy Report

Introduction

Internal business in developing nations has been considered to be working with the perception of growth prospects that are mostly in association with tax policies as well as foreign direct investments. In other words, managing in a business in an international market has been actively considered to be a challenging responsibility so that it can be able to find market position than its domestic market (Haertle et al. 2017). The report has been based on fashion retail business expansion plan of C&A that is an established family-owned business from six-generation for more than a century. It has maintained its business values and the spirit to excel and has become one of the leading fashion brands in Europe.

Moreover, C&A has now planned to expand their business to an international platform, for which they have planned two primary elements: one is to secure the cotton supply directly from farmers that will help the company to sustain its strategy and the other is to open stores around the globe (C-and-a.com, 2020.). For International business advancement, C&A has conducted various researches and have recognized that South Africa has the market to help them grow the business. The firm has been working on retaining the commitments to its stakeholders, and in the past C&A has taken the necessary initiatives to deliver the business along with maintaining the environment as well as boosting the reputation (Retail Detail, 2020). The company is targeting the sub-Saharan region of Africa to expand and see the potential for good business.

1. Brief critical overview of the nature of South Africa’s economy

South Africa is one of the freest countries in terms of economy. South Africa ranks 12th among the 47 sub-Saharan countries with a freedom score of 58. Africa has a well-developed economy and advanced infrastructure, being one of the largest exporters of gold and platinum, the country has a large volume of natural resources (Nieto-Andrade et al. 2017). The country's well-organized economy, legality, energy and transport help in the large stock exchange.

Role of Public and Private Sectors

The public sector is an essential component for the economy of a country and with the implementation of the right strategy has become more relevant. The private and public sector in South Africa plays an important role, as they clawed the maximum area is the retail sector. The public sector has to pay the taxes and follow the rules to maintain the integrity and we'll be id the employees. With all these factors taken into account, the private sector is booming its way to development (Prashantham and Yip, 2016.). Due to lack of employment, start-ups are increasing, adding to the private sectors.

GDP of South Africa

The GDP of the country seems to be 351.1.43 till 2020. The economic factors of a country play a significant role in a business the components that affect the economy are inflation, economic growth, interest rates, and tariff rates. The currency in South Africa, Rand, has lie value in the global marketplace, though the country stands at 34th place In terms of economy in the world. With low currency value, the exchange rate will below, that will affect the business as the value is decreasing (Daviaud et al. 2017). C&A need to plan the finances so that it will be least affected with the decreasing rates of Rand.

External business Analysis of South -Africa

External business analysis can play a significant role in managing political, economic, social, technological, environmental and legal aspects, where the company wants to extend its business. In case of C&A analysis of South Africa has been taken into consideration, as the firm wants to open its stores there and expand in terms of global economy.

Political Factors

This element tells about how the government will interfere in business and to what extent in a country (Muzindutsi et al. 2016). The factors that are included are Labour law, tax policy, and trade policy and so on. The South African government has often been covered with corruption, mismanagement and political intolerance. These issues have led to economic development to slow down. Though with a full Democratic election, the political environment in South Africa has improved. The current scenario has revealed a mixed situation for a new business to open in the country. In this case C&A needs to consider the tax policies with a serious note for its investments.

Social Factors

The social factors of a country has it’s the popular beliefs and practices of the population (Sooryamoorthy, 2017). The factors firms the social element are the population growth, health awareness, and career aspects. South Africa is referred to as the Rainbow nation because if it's multiculturalism diversity. The county has 11 official languages and all the religions and beliefs being respected. The decline in the rand has led to unemployment and people are looking forward to starting ups. This element will prove to be favorable for C&A, as the country is welcoming start-up, new stores and will also provide employment to the locals there.

Technological Factors

Technological growth impacts the market and products (Knight, 2016). The major factors that affect the market are new ways of production, distribution and communication. South Africa is the most advanced country in African in terms of technological advancements. The county has great achievements in the software field related to security and banking. The removal of corruption from the system and decline in the Rand has lowered the employment. Therefore, C&A starting their business will be able to avail security and the skills to maintain the security system for the company.

Environmental Factors

The environmental factors are important to sustain nature and involve the sufficiency of raw materials, pollution limits and the rules for the manufacturing process to be sustainable (Kelvin et al. 2017). South Africa has the most popular tourist destinations owing to its natural reserves and resources. The county is also the least risk, for investors as proposed by the G20. For a place where tourists round the globe visits, will give C&A a good audience. For travelers, shopping is a part of the tour, they would visit several markets. The company will get a mixed audience and will gain popularity in other countries too.

Legal Factors

The legal factors in a country that contribute are health and safety, opportunities, advertising, protecting consumer rights, maintaining the standard of products along with the taxation (Lorteau, 2018). The country encourages foreign investments in all sectors, be it retail, of the economy. The country provides fundamental protection to investors and promotes equality. Though for businesses there are some taxes that the company has to follow, like the value-added tax. Along with this, the stamp duty, customs tariffs, transfer charges, capital profits and skill development also add on to the list of taxes.

2. Analysis of present state of fashion Retail industry in South Africa

According to the market survey, South Africa seems to be facing some major challenges in the fashion retail sector. From an online overview, Markets (2020), it has been observed that trading investments made in the country has been affected badly due to the early scenario in the sector had compelled many retailers to close down of many outlets in other sections like garments and food retail as well. Apart from that the industry had to face multiple risk factors due to exchange rate of fluctuations in Africa that might not be able to find recognition in the market. At the same time, it may decline from clothing segment in the business as well badly that might not be controlled here so far.

Based on this bleak picture, it can be assumed that South African market has been mostly affected due to the dominance of other nations and mostly from the end of American fashion and its cultural trends that has not given that fashion world or black beauty with much recognition so far that women in fashion may appear with flexibility (Fibre2fashion.com, 2020). In this regard, it can be evident that fashion in terms of brand expansion idea and decision that has been taken from behalf of C&A business firm, may have this opportunity to find its better place using the local suppliers at the primary stage of this business. Other than this, it can also find its own path of analysis and design in the firm using exclusive tools and techniques that may not be available in the hand of this new competitive industry as well.

Below is a graphical illustration on South Africa’s business state in all retail sectors till 2018

South Africans’ expenditure in each sector

Considering this above graph, it gives an idea and acknowledgement that most of the sectors in the country have its maximum level of expenditure on other retail segments compared to food beverages with 5.0% and rest of household or pharmaceutical expenses (Africa, 2018). It gave an understanding of the key fact that most of the residents of South Africa have their own style of living life in a way that is not depending on any disposable income opportunity or any other privatization of businesses that is widely explored in other places as well. Besides, it has been found that most of the population is dependent on their dealing with business of exports and imports.

Based on this above identification and recognition of the market growth and expansion state, it has been pointed below in the chart that is gathered that the country has its majority of income source through direct dealership with 44% in ratio compared to textile businesses with 18% ratio in the market as well.

South African Dealers with maximum income source

Hence, this overview of the chart has been mostly recognized with the ability to have some more outlooks into the key area that is in relation with the maximum time of involvement in these practices for livelihood as well. So in this concern, in case of C&A the country might be a big challenging location to explore its fashion retail segment for long-term prospects, as the market demands are not sufficiently looking into the penetration level from any other retail brands here.

Assessment of specific difficulties and complexities involved in establishing a business presence in South Africa

From the above discussion, it has been evident from data; the country has been going through a biggest challenge at this moment during as well as it has always been in a greater level of challenge of its operations in doing its business exploration in technology.

Consumer purchasing pattern is a challenge

From this graphical statistics above, it could be visible clear that SA has its consumer’s interests in traditional buying nature from shops or outlets. Nearly 69% of the shoppers in SA have this tendency of getting things directly from the local shopkeepers as well. On the other hand, it has also been identified that there are some operational challenges in such as supplier behavior, technology risks, expensive distributors’ challenges or threats are some of them again (BCG Global, 2020). Apart from that pricing variability is another concern that made it difficult for business establishments. Therefore, these are few complexities that are unable to be accepted from the market penetration levels as well as fashion field.

3. Critical evaluation of fashion retail market in South Africa

The fashion retail market in South Africa has been considered in a state of developing in a slow and steady flow and seems to be growing in a rate of 5% for the upcoming few years. According to Msimango (2019), automation on the area of unemployment has been extremely neglected from the end of proactive responsibilities in the business. However, as it is observed that majority of the nations like Europe and America has been dominating the country in all sectors, so it has become a difficult initiative for Africa to cope up with the competition in the market (BBC News, 2020). In this respect, it has been well acknowledged that South Africa in terms of retail growth and development in the area of business practices need to be well evaluated, as it may not be able to find any static position in this particular field of business as well.

Other than this, it has been influenced by Mahlangu and Makhitha (2019), demographic factors are major concerns of the business that cannot be avoided in respect of having fashion retail business run successfully on the market as well. In compliance of this particular business is concerned here, it has been well understood that majority of the businesses in fashion retail sector might have standard position if automation is given major priority in weaker sections. Babst et al. (2020), stated that consumer buying behavior has been mostly influenced by the advertising measures taken as well as media planning strategies for the sake of measuring the opportunities involved in the integrating brand management. From this perception here, it has been considered that South African consumers are less accustomed to fashion attires or luxurious brands and more importantly they would prefer to stay without much fashionable attire.

For example, as per African Consumer Sentiment Survey conducted in the year 2018, it has been found that the household earning in every resident in South Africa is near about $ 500 per month or even less than that. At the same time, it has been found that they are tend to buy packaged goods with an approximate 75% and beverages 60%, which is their habit more preferred one than beauty or fashion (BCG Global, 2020). This can be assumed with a new area of prosperity as well as a concern in the field of fashion retail sector as well. In this scenario, C&A may require to have some in-depth market analysis and hire some experts in the field so that the marketing team can be able to find a suitable target market for sooner.

Moreover, it has been critically examined that fashion retail in South Africa is growing on demand now, as per changing technical trends and practices in the country itself (Parschau and Hauge, 2020). It determines the fact that majority of business practices on retail industry has been taken with a serious note as well as pointed out with the overall perspective of business that in South Africa business practices dealing with fashion and garments cannot flourish without technical implications in terms of manufacturing and reducing the pricing range of materials and resources as well. Therefore, in case of C&A to explore its business directly to the platform of retail fashion, the management needs to depend on its strong and effective marketing team so that they can be able to deliver their services with immense patience and positive approach at the end.

4. Critical discussion of the challenges in partnering with local South African Stakeholders

Stakeholders play an important role in the business and can include partners, employees, and investors. A major concern for the stakeholders is to see how an organization responds to issues like social, environmental. In private companies, the stakeholders are observed to be more involved in the process and active in all the strategies developed by the company. However, a company has many stakeholders, from every sector of business to under the market; there is a scope for challenges for the company in maintaining the partnership with the stakeholders (Chapman and White, 2020). Therefore an organization should seek ways to handle the stakeholders, keep the communication clear among all the stakeholders to reduce the chance of misunderstandings.

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However, in South Africa challenges are faced with the stakeholders in terms of information and technology, planning and legislation.

Constraints of sharing information:

The shareholders have resistance towards sharing the complete information, they delay in conveying their views toward the organization's plans and this affects the business (Parschau and Hauge, 2020). C&A can overcome this challenge by communicating with the stakeholders; use the power technique where the pattern will be purpose, outcome, and engagement of the stakeholders. They w have to change the approach toward difficult stakeholders.

Issues of Design and strategies of businesses:

Another challenge faced with the stakeholders in the country is they want to design the results of any plan or strategy developed by the organization. The stakeholders primarily consider their requirements over the organization needs (Kelvin et al. 2017). They would perceive the problem but do not want to look for the root cause of the problem. The company C&A can use the 5W (Who, What, Where, When and Why) technique to overcome this situation. Once the root cause is recognized, the solutions will be beneficial for long.

The stakeholder's habit of miss-defining the needs is another challenge for business. They define their wishes as to the outcomes of a plan. The stakeholders want to provide required in the areas they are not expert in. To overcome this challenge, C&A should actively analyze the requirements list received from the stakeholders and secure the necessary requirements like quality are documented (Chapman and White, 2020). The company should use a proper method to assure the quality requirements as by the abbreviation SMART (Specific, Measurable, Achievable, Relevant, and Time-specific)

The company has taken a European approach too, to deal with the stakeholder's challenges in South Africa. The stakeholder's engagement in the organizations should be recognized as a part of policies and strategies. The shareholder's engagement will help the firm to realize the strategies.

Perception of Anglo-American management philosophy in partnership

The ways according to Anglo-American policy requires to have is the key process of partnership as well as management philosophy to have better assimilation between the business growth, as per their thinking process. It involves below as follows:

Resourcing - the organization needs sufficient staff that will help in development, implementation and they also are stakeholders in the company.

Engagement - the company should make the local stakeholders effectively engaged with all the processes.

Impact engagement - C&A should identify and assess all the ways of development with the engagement of if the stakeholders (Uddin et al. 2017). Based on the overview of the country’s market and the stakeholders’ challenges, the organization need to get a better market research and identify suitable target customers ready to buy its products, as per choice and preferences. Hence, from the perception of Anglo-American management philosophy is concerned, it has been evident that stakeholders need to be well identified in the country before going into an contract of business directly as well as having its better outcome and finding suitable scope as well.

5. Critical evaluation on the future potential of fashion retail business opportunities in the country

From the overall market analysis, it gave an acknowledgment those future potential fashion retail business opportunities in the country is limited, as there are limited options and scope of doing the business in an effective way. In this regard, for C&A, it needs to consider some area of concern so that business can be enhanced in the right direction as well as can be made conventional in appearance and outlook.

From Strategic perspectives of C&A

According to Lues and De Klerk (2016), it has been considered that strategies of business need to be in compliance with without any discrimination that is applicable in South African region. It determines the fact that there will be no inequalities among the inhabitants of South Africa while giving priority to the people for employment services. At the same time, another perspective would be to provide fair career opportunity for the staffs to be hired in the nation at standard remuneration schemes (Uddin et al. 2017). This can at least find some better scope of exploring into this country. C&A would provide these prospects so that opportunities for people in the country may embrace to come up for working and business exploration as well.

From domestic organizations

Another domestic’s perspective would be to enhance technology-based firms in South Africa needs to be upgraded with an implication of automation so that value of the business can be improved (De Marchi et al. 2020). In this respect, it cannot be denied from the fact that a domestic organization in Africa has been facing this trouble, which might be integrated with value proposition as per target customers and demand.

Conclusion

Therefore, based on the overall analysis of the business of fashion retail market in South Africa, it seems that the region has maximum number of threats as well as similar level of opportunities as well. In other words, it has been identified that most of the businesses in the country have gone in losses due to its poor demand and negligence in automation as well.

However, as per key strategic contribution on the business is concerned, it has been evident from the market research of the country that majority of population is not aware of much fashion in the nation due to which it might have stayed ignored as well as due to some other domination as well. Hence, for C&A it needs to concentrate on customer profile first and strengthen its priority levels in front of the customers so that they can be supported with goof market responses.

References

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