Introduction:
H&R Block (H&R) is a leading company in tax preparation industry. Risk management is very important in the competitive tax service industry. The purpose of this report is to analyze H&R's macro- environment using STEEP model and identify the potential threats.
Social:
According to statistic Canada, the death rate will be over birth rate in the following years. Less population will results in less requirements to file tax return.
Another factor which can't be ignored is immigration. Statistic Canada predicted that before year 2056, immigrant will be the main source of annually 1% population growth. This will create a demand for bi-lingual employee who can speak the immigrants' native language. Also, the components of the immigration is very important. For example, the company needs to train staff regarding foreign income in an area with a lot of investment immigrants. Re-target market segment is very important for H&R, especially in a city like Toronto.
Technological:
During the recent years various software make DIY tax filing very convenient and less expensive. To compete with this, H&R developed their own software and put them on the market. After years of development, "block at home" is one of the leading software on the market. But with more and more free software emerging, H&R block still face severe competence.
To maintain their tradition tax service competitive advantage, H&R guaranteed that company will reimburse the penalty and interest from CRA caused by H&R's mistake. This marketing strategy successfully attracted a lot of clients to H&R, but whether the company needs to amend its price system is still under discussion.
Economic:
The economic trends have a more complex influence on H&R. On one hand, better economic condition and employment rate means people can have more disposable money and they would require tax services from H&R. On the other hand, market segment for lower income people who seek for instant cash back might get negatively affected.
Environmental:
As an tax preparation service company, H&R is less apt to get influenced by the environment factors. Under the trends of being eco-friendly, H&R also put efforts on the reducing of paper usage. Meanwhile, H&R should properly back up the database system and maintain the original customer's paper files. Otherwise, any lost or damage to either system, would prove be disastrous.
Political:
As a savings and loan holding company (SLHC), H&R is subject to regulation by the Board of Governors of the Federal Reserve System. In 2012, H&R lost a significant percentage of "instant cash back" market due to Ontario change the rent claim from instant refund to trillium benefit. Right now H&R is exploring other alternatives to continue delivering financial products and services to customers. The evaluation of alternatives is in its early stages and the company cannot predict the timing or likelihood of ceasing to be regulated as an SLHC.
Conclusion
It is important for H&R to analyze the appropriate environmental factors, on specific demography and area bases, and respond with correct actions to maintain a competitive advantage.