Organization Overview
The business chosen is Shoprite Holdings, headquartered in Cape Town, South Africa. The firm is known to be the largest food retailer across Africa, enjoying a market share of 30 percent. The form also operates over 2600 outlets in 15 countries in Africa and Islands on the Indian Ocean. Additionally, the firm has over 12000 local employers and about 23500 who work outside South Africa (MarketScreener, n.d.). Nevertheless, the scope of this analysis is limited to Shoprite’s local operations in the South African market.
Shoprite’s Local Operation Management Challenges
Shoprite’s local market operation challenges can be analyzed using Porter’s five techniques. Through the method, whether a 4v model business structure is suitable for use in Shoprite Holdings can be established. This strategy is based on various elements that impact franchises, including the negotiating power of consumers and suppliers, the threat of new entrants, and the danger of replacements (Dludla, 2019).
Because it needs significant cash, only a select few local investors are prepared to become involved in the grocery sector. A few companies compete with Shoprite and have also obtained a corresponding market share; as a result, the likelihood of a new entrant into the South African grocery industry is minimal. Since the enterprise is capital-intensive and needs costly equipment and structures to accomplish high-volume manufacturing, it is impossible to compete with Shoprite Holdings locally since high-volume production requires these things. However, a company may experience expansion if it cultivates a positive relationship with its clientele in a critical area; however, this process will take some time.
The third thing to examine is the danger of replacements for online platforms like Amazon that deliver products to consumers’ homes. The difficulty stems from Shoprite’s high exposure; hence, the company needs to pay close attention to its consumers, unlike Amazon, which has minimal visibility and is evaluated primarily on product delivery (Pro, n.d.). Aside from this, consumers continue to have faith in Shoprite Holdings, which can be attributed to the company’s capacity to provide a variety of items under one roof at reduced rates. The negotiating power of consumers is also addressed in Porter’s five forces study, which indicates that locals have a greater bargaining power due to their status as repeat customers.
This has helped Shoprite expand its customer base by increasing the proportion of repeat customers. A modification in the demand-related business structure is responsible for the increased negotiating power of the client. Shoprite items are in great demand locally, necessitating a solid relationship with genuine client desires.
Shoprite’s negotiation strength is also an issue since the company may lose or retain suppliers depending on their pricing (Pro, n.d.). At Shoprite, the negotiating strength of suppliers is modest, resulting in a weak force. This component is also attributable to the firm’s variation structure. Depending on the sort of demand, activities dependent on Shoprite Holdings’s suppliers may be hampered. Lastly, utilizing the technique, the competitive analysis ranks Shoprite ahead of local competitors. This is due to the uniqueness of Shoprite’s products, which have lower prices and are not distinctive.
Supply Chain Analysis
Examining Shoprite’s fundamental business operations comes first when evaluating the company’s value chain model. These essential business operations include inbound and outbound logistics, operations, sales and marketing, and service provision (Esper, 2020). For Shoprite to expand its performance in the supermarket industry, the above actions must be prioritized. The inbound logistics section of Shoprite is responsible for purchasing the raw materials utilized in the restaurants and other service areas within Shoprite operations and all of the items sold in the supermarket from various suppliers (Hayes, 2022). One of the most critical inbound activity strategies that Shoprite will now implement to achieve a competitive advantage is negotiating for lower prices with all raw material suppliers.
Network Improvement Recommendation of Inbound Analysis
Additionally, Shoprite will hire specialists who can investigate regions with anticipated importation costs before importing goods from those regions. In this case, the specialists will help create avenues to lower Shoprite’s production costs, ultimately costing the company less than its industry rivals. A new dimension will be added to its operations with Shoprite’s operations.
The business must provide a 24-hour service (Hayes, 2022). This implies that Shoprite will continuously operate and allow all clients and potential customers to enjoy the advantages whenever they choose. Shoprite needs to tighten security to guard its customers, employees, and material assets; hence, it will need the assistance of the police and other private security companies.
Outbound Logistics
The distribution of the goods to additional Shoprite mini-outlets, which will be set up in five different areas throughout South Africa, is the responsibility of the outbound logistics. Improving marketing management requires having key distribution centers. The new distribution centers will help to reach customers miles away from Shoprite’s main branch. These centers will offer the company’s services to these customers (Zijm et al., 2019). The increase will boost the supermarket’s market share by at least 20% (Hayes, 2022). The advertisement must also organize stakeholder gatherings to discuss potential issues that any stakeholder, particularly external stakeholders like customers and suppliers, may bring up.
Credit cards, mobile money payments, a one-month guarantee on capital goods like televisions and mobile phones to facilitate transactions, and free delivery of goods purchased above a specific capacity and weight will give the company a competitive advantage in the market (Zijm et al., 2019). The credit card and all the mentioned financial mediums will impact easy payment. One of Shoprite’s main strategies is pricing to draw in more customers. Prices will be reduced weekly every three months to increase sales and give the business a competitive edge.
Operations Risk Analysis
Table 1 – Operational Risks and Mitigation
Improvement Recommendations
Based on the research at Shoprite, several suggestions for improvement may be recommended, such as establishing a viable strategy, adopting precision targeting, and pushing Shoprite’s limited holdings to join an ecosystem of partnerships. The recommendations, in this case, can be achieved through a PDSA cycle, which consists of four stages—plan, research, and act (Gielens & Gijsbrechts, 2018). In this particular scenario, the ideas have the potential to assist in solving the majority of Shoprite’s problems and help the company in preserving its lead over its competitors by improving its management.
Using a Viable Strategy
By recommending a viable strategy, Shoprite is positioned to see a hole in its design and devise a plan to use a related approach to accomplish its goals. Thanks to implementing an integrated system, Shoprite is now set to nurture its future, shorter-term, and long-term ambitions. In this particular scenario, the idea has the potential to significantly speed up Shoprite’s ability to win over new consumers from their rivals. This may be accomplished by getting the most out of Shoprite-X and ensuring that Shoprite Holdings can access any new technology (Cherry, 2022).
Through the business unit, Shoprite can use analytics to research their competitors’ customers and predict their requirements. By doing so, Shoprite assures it can cultivate long-term connections with its customers by launching innovative and competitive new items. In this case, the management should research viable strategies that can be implemented efficiently to help improve Shoprite’s revenue growth KPI.
Joining a System of Partnerships
The idea for Shoprite Holdings to engage in an ecosystem of partners will assist the company in preserving its competitive edge and accomplishing its goals. Companies like Starbucks have a large number of loyal customers; as a result, when Starbucks enters into a partnership with Shoprite Holdings, the majority of Starbucks’ customers will begin purchasing goods from Shoprite because they will be aware that Shoprite is now operating under the same umbrella as Starbucks. The management, in this case, is therefore easy, and assigning roles to attract competitors’ clients is simple since the partner companies know their customers’ preferences (Cherry, 2022; Gielens & Gijsbrechts, 2018). The recommendation, in this case, can be implemented gradually based on the customer satisfaction KPI of the various companies.
Precision Marketing
Lastly, another improvement that can be made at Shoprite, which will ensure that the company is operational and has a competitive advantage in the market, is to use technology and innovate new software interfaces, both of which will promote interactions and help market Shoprite Holdings. This will be accomplished by taking advantage of technology.
One example of this would be Shoprite Holdings’ use of the rainmaker media precision marketing firm, which has enabled the company to establish methods for promoting its brand (Esper, 2020). The recommendation, in this case, should be implemented immediately by the senior management. This should be in accordance with the profit margin KPI, which should be improved following a fall in profits.
References
Cherry, J. (2022). How the Shoprite Group is reinventing itself for the future. Cherryflava. Web.
Dludla, N. (2019). Update 3-shoprite hit by challenges in Africa’s frontier markets. Reuters. Web.
Esper, T. L. (2020). Supply chain management amid the coronavirus pandemic. Journal of Public Policy & Marketing, 40(1), 101–102. Web.
Gielens, K., & Gijsbrechts, E. (2018). Handbook of research on retailing. Edward Elgar Publishing.
Hayes, A. (2022). The supply chain: From raw materials to order fulfillment. Investopedia. Web.
MarketScreener. (n.d.). Shoprite Holdings Ltd: Shareholders, board members managers, and company profile. MarketScreener.com. Web.
Pro, E. M. B. A. (n.d.). Shoprite Holdings (South Africa) Porter Five Forces Analysis. embapro.com. Web.
Shoprite Holdings. (2018). Key risks integrated report. Web.
Zijm, H., Klumpp, M., Regattieri, A., & Heragu, S. (2019). Operations, logistics and Supply Chain Management. Springer.