Solution

Interest rates

The interest rates represent a change in the amount charged to loan facility or savings made. For REDTAG operating in the fashion sector, it impacts on upgrading their fashion products, renovate clothing line and expand their services.

According to Gürkaynak et al. (2025), an increase in interest rates lower existing income hence caution in spending on clothing lines. With some of the competitors not affected by interest rates, they can continue providing appropriate options, and affordability with experience increased.

The inflation rates initiate necessity for balancing operation costs with the retention level increased.

Priority- Optimisation of operation efficiency is the priority for REDTAG. This priority would be pursued through an evaluation of efficiencies, review of costing and expansion of how they partner with different organisations for maintaining market competitiveness. The strategic cost control and flexibility in fashion costs and maintaining existence in the markets. Hence, according to Gürkaynak et al. (2025), the strategic controlling of costs and flexibility of rates score are core for maintaining competitiveness and compromise of provision of services.

Inflation Rates

Inflation rates are defined as the increased/decreased costs of procurement of goods and services for day to day expressed in percentages. According to Billi and Kahn (2018), they contribute increased costs of operations such as paying for utility, costs of suppliers of different products and services. Eventually, the profit margins are lowered hence need for costs adjustment amidst competition. For example, in REDTAG operations, demand for fashion is significantly impacted by cost of living ensuring cost-sensitive clothes sourcing.

Priority– Cost management would be the priority for the organisation. According to Dias Jordão et al. (2018), as part of cost management, they would need to ensure that they do not increase prices on core operational areas. The cost management would be pursued through initiatives including suppliers’ contracts negotiation, efficiencies improvement and enhancing value-based operations. Further, the inflation rates would lead to prioritising on employee’s retention approaches. This is with the customer care teams in the organisation being guaranteed of their motivation albeit cost increase which affect the staff.

Environment Factor

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