Final answer:
Steinhoff's strategy, potentially marked by unsustainable practices, led to its share price collapse. Critical lessons are drawn from studying market performance and historical economic failures similar to Steinhoff's situation. A proper evaluation considers demand and supply models and the importance of heeding economic warning signs.
Step-by-step explanation:
To critically evaluate the business model and strategy of Steinhoff prior to the collapse of its share price, it is crucial to consider elements such as the demand and supply model, market performance, and financial crisis warnings. Before Steinhoff's downfall, critics raised concerns about the close tie between the health of the economy and financial institutions, yet these were largely ignored due to prevailing record profits. In hindsight, the Steinhoff scenario echoes the 1929 Stock Market Crash, where heavy borrowing against stock collateral led to widespread bank failures when stock prices dropped.
The strategy of Steinhoff, which may have involved aggressive expansion and financial maneuverings that were not sustainable in the long-term, eventually led to its share price collapse. Understanding the cause of such abrupt market fluctuations requires studying market performance indicators and historical precedents where similar collapses left profound economic impacts. By examining these factors, we can better comprehend how Steinhoff's business model and strategy might have been built on precarious foundations, contributing to its eventual financial challenges.