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Submitted By

Section: B

Submitted To

Submitted On

April 21, 2008

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First and foremost, we would like to thank Allah for His help and
granting us the ability to undertake this subject. It is by His Will that
we have been able to complete our term report.

We would like to pay immense gratitude to our parents for their

continuous support and encouragement in all that we have done.

Also, we would thank Mr. Javaid Ahmed for assigning this task to us,
which has enlightened us further in the field of Strategic

Last but not least, we would also like to thank Ms. Samar Fatima
Mirza (Marketing Manager) of Nando’s for giving us her precious
time and providing us with valuable information regarding the

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April 21, 2008

Dear Reader,

We are students of Strategic Management at IoBM and have been

authorized by Mr. Javaid Ahmed to prepare a term report on
“Strategic Management at Nandos Pakistan”, which is to be
submitted on April 21, 2008.

The preparation of this term report required us to perform a

thorough analysis of the restaurant services industry.


Group Members

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April 21, 2008

Mr. Javaid Ahmed

Head of Management and HRD Department
Institute of Business Management, Karachi.

Respected Sir,

This is the term report on “Strategic Management at Nando’s


This report consists of the macro-environmental analysis and

industry attractiveness, the company and competitor analysis,
micro-environmental analysis and internal company resources,
strategic analysis and recommendations and strategic

The report has been completed after the perpetual hard work,
determination and devotion of past 4 months.

If you have any additional questions, we would be pleased to answer


Thanking you.


Group Members


This report covers the Strategic Management Practices at Nando’s

Pakistan. The first part of the report talks about Porter’s five forces
and the PEST analysis to find out the attractiveness of the food
industry. The food industry is reasonably unattractive as there are
already various restaurants and café’s in major cities of Pakistan. In
this part the EFE is also calculated and it is found out that Nando’s
total weighted score is below industry average. In the second part
the company and competitor analysis is carried out through CPM
and it is found out that Nando’s is doing better in few areas than its
competitors and relatively bad in others. The third part discusses
the micro-environmental analysis. In this part the core
competencies of Nando’s are discussed and value chain analysis
and strategic cost management process is carried out. Also, in this
part the IFE is calculated and is found out that Nando’s is doing
above average in it. In the fourth part, strategic analysis and
recommendations are given in which the generic strategy of
Nando’s is stated which is Focused Differentiation Strategy. Also, in
this part the input/matching/output model is discussed where
through various matrices a number of strategies are recommended.
The three main strategies that Nando’s can pursue are: Market
Development, Product Development and Backward Integration. The
last and the most important part is of strategy implementation in
which the components of strategy implementation are employed
and recommended to the board as to what the company will need to
do to implement a new strategy or fine tune its existing strategy.
Apart from that it is also recommended to the board the balance
business scorecard as a strategic performance evaluation process
distinct from the traditional financial, marketing and HR evaluation
methods. In the end a diagnostic survey of primary and secondary
management practices is also carried out and recommendations are
given on the basis of making 4 + 2 work for Nando’s.

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1. COMPANY INTRODUCTION AND HISTORY...........................................................................11

1.1 VISION STATEMENT...........................................................................................................................15
1.1.1 Nando’s Vision Statement.....................................................................................................15
1.1.2 Recommended Vision Statement...........................................................................................15
1.2 MISSION STATEMENT.........................................................................................................................15
1.2.1 Nando’s Mission Statement...................................................................................................15
1.2.2 Recommended Mission Statement.........................................................................................15
2.1 PORTER’S FIVE FORCES......................................................................................................................17
2.2 OVERALL MACRO-ENVIRONMENTAL PEST FACTORS...............................................................................24
2.3 KEY DRIVING FORCES AFFECTING THE INDUSTRY..................................................................................25
2.4 EXTERNAL FACTOR EVALUATION (EFE)..............................................................................................26
3. COMPANY AND COMPETITOR ANALYSIS.............................................................................28
3.1 COMPETITIVE PROFILE MATRIX (CPM)...............................................................................................28
4.1 CORE COMPETENCIES.........................................................................................................................29
4.2 VALUE CHAIN...................................................................................................................................30
4.3 STRATEGIC COST MANAGEMENT PROCESS............................................................................................32
4.4 INTERNAL FACTOR EVALUATION (IFE)................................................................................................35
5. STRATEGIC ANALYSIS AND RECOMMENDATIONS...........................................................36
5.1 GENERIC STRATEGY...........................................................................................................................36
5.2 INPUT/MATCHING/DECISION MODEL....................................................................................................37
5.2.1 TOWS....................................................................................................................................37
5.2.2 SPACE Matrix.......................................................................................................................39
5.2.3 Internal External (IE) Matrix................................................................................................41
5.2.4 Grand Strategy Matrix..........................................................................................................42
5.2.5 Matrix Analysis and SWOT Summary...................................................................................43
5.2.6 QSPM....................................................................................................................................43
6. STRATEGY IMPLEMENTATION................................................................................................46
6.1 COMPONENTS OF STRATEGY IMPLEMENTATION ......................................................................................46
6.2 BALANCE BUSINESS SCORECARD.........................................................................................................49
8. MAKING 4 + 2 WORK FOR NANDO’S........................................................................................55
9. REFERENCES...................................................................................................................................57

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Strategic Management

1. Company Introduction and History

Nando's believes in their flame-grilled Peri-Peri Chicken, they

believe it's the best in the world.

Nando's Chicken, a miracle of life: Nando's Peri-Peri Flame-

Grilled Chicken is a miracle but it didn't fall out of the sky,
no, no, this 8th wonder of the world has much more of a story behind it. A story
that dates back centuries, to a time when brave men and women (it's true there
were women explorers they just never got the credit they deserved) set out from
Europe to explore new worlds and to discover new sea routes to lands of promise.
These explorers were not afraid to live…

Exploring life: These famous Portuguese explorers were trying to

establish a route to the East where it was rumored that gold could be
found (read on and you will learn that they discovered a treasure that
would prove to be far more valuable than gold). The explorers realized that they
would never make it around the tip of Africa all the way to the East without a
stop-over to replenish and rest for their long journey ahead. They came
across a spectacular landing spot in a Southern African country now
known as Mozambique. It was there that they established a port. The
rich and fertile lands of this sub-tropical region enticed many explorers
and their families to settle far from the cold climes of a congested
Europe. The Portuguese settlement began to flourish and life soon revolved
around early evening feasts, with good food, good wine and lots of laughter, all in
celebration of their new-found home.

This legend dates back to the 14th Century, and like

all legends, each narrator adds his own flavor. In
Barcelos, a small town in Portugal, a passing pilgrim
was wrongly accused of theft, for which the penalty
was death. Feeling threatened in a foreign village, he
only had his faith to call upon. He appealed to "Our
Lady" and St. James (the patron Saint of protection) that justice be done. The
pilgrim found his way to the Judge who was to decide his fate.

The judge was about to commence eating a roast cockerel for his dinner. The
UP AND CROW!" The cockerel at once got up and crowed heartily. The
pilgrim was released and went on his way. The cockerel has, to this day, been
the symbol of faith, justice and good luck. At Nando's our policy is based
on those principles and our flavor, service and quality is legendary. We have
faith in our product and will do you justice with a meal to delight you and the
friends who have the good luck to be entertained by you.

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Discovering PERI-PERI, the spice of life: The Portuguese

explorers came into contact with African people who introduced
them to a little treasure called the African Bird's Eye Chilli.
Whether this fiery little chilli was indigenous to Africa or
introduced was not certain, but it is certain that the rich and
fertile climates were perfect for the Bird's Eye chilli to grow with
wild abandon.
The African people called this fiery little chilli, Pili-Pili. The explorers tried in
vain to pronounce Pili-Pili but ended up with their own version called Peri-Peri
and to this day the Bird's Eye Chilli is still known as Peri-Peri. The settlers
immediately experi-perimented with Peri-Peri in their cooking and because much
of life revolved around food Peri-Peri became an integral part of their lives.

Peri-Peri gives life to cooking: You can imagine the delight of

the culinary-adventurous Portuguese mama's, who were already
in heaven with their fresh vegetable gardens and the abundance of
wild meat, when they discovered the secret powers of Peri-Peri
and its effects on their cooking. Peri-Peri added flavor and fire to
all their food making them feel alive. The women were also delighted with the
effect that Peri-Peri had on the libidos of their men and it was no wonder that
they were constantly smiling. The settlers were amazed that something so small
could be so satisfying.

Peri-Peri Chicken and Gold: About 413 years and 2 days after the
explorers had discovered Peri-Peri, the unique Mozambican-
Portuguese style of Peri-Peri chicken made its way to Johannesburg,
South Africa. Gold was the reason many people rushed to
Johannesburg around the 1900's in search of riches. Many
Mozambique-Portuguese settlers moved to Johannesburg, the city of
gold, to cash in on the frenzy. They soon realised that digging for
gold was hard work and feeding hungry miners was a much better business. They
set up informal restaurants that served their famous style Peri-Peri chicken. In a
small suburb called Rosettenville, south of Johannesburg one such restaurant was
created. It was called Chickenland.

Nando's is born: In 1987 two great friends, Robert and Fernando, fell in love
with Peri-Peri Flame Grilled Chicken. They knew that the world had not tasted
anything like it. They made the owner of Chickenland an offer he couldn't refuse,
changed the name to Nando's (short for Fernando's) and by the end of 1987 the
first Nando's was born in the humble suburb of Rosettenville, Johannesburg,
South Africa. Next stop was the rest of the world...

The Nando's Barcelos Cockerel: A symbol of life.

Robert and Fernando immediately set off on a journey,
carrying with them the Nando's flame that would spread
the Fire and Passion of Nando's to all corners of the globe.

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It was no coincidence that they chose the Barcelos Cockerel as their symbol to
identify Nando's around the world. They too, like the Portuguese explorers of
yesteryear, believed in the legend of the Barcelos Cockerel and its association
with faith, justice and good luck. But it was not just good luck that helped them
share Nando's with the world, it was hard, rewarding work and the good people
they met along the way that made it all possible (not forgetting the exceptional
Peri-Peri Chicken that everyone loved).

Experi-perience Nando's, Experi-perience Life: From the outset, Nando's

would offer customers a unique Nando's life Experience that was not
only about chicken. Nando's would be about experiencing great times
around the table, laughing and living to eat. It would be about having
fun and never taking life too seriously. This experience would be backed
up with a Nando's promise of quality. The Nando’s Escudo was created
as the universal mark of Nando's quality.
The Nando's Barcelos Cockerel can now be found in over 30 countries.
Throughout the world Nando's believes in delivering the Nando's Experience
albeit in different languages and different surroundings. And today the Nando's
flame burns bright. The journey continues…

It's the people that make the chicken: Nando's would

never be just about chicken and it would never be just
about the two friends who started it. The entrepreneurial
spirit of Nando's soon attracted other people with fire in their bellies. They
embraced the same values of pride, passion, courage and integrity spreading the
fire and developing a culture unique to Nando's. Through these people the
Nando's entrepreneurial spirit has become universal, proudly feeding the souls
and appetites of people hungry for life. These Nando's people are known as
Nandocas. They create the Nando's culture. They make our chicken what it is.

The Nandocas (Nando's people): Nando’s feel so strongly about their people
that they have decided to share with people what makes their Nandocas so
special: True Nandocas make life happen. They, like the 15th Century Portuguese
Explorers, believe in faith, justice and good luck, always believing that if you can
dream, it you can do it. They have a sense of pride in everything they do.
Nandocas are team players but are not afraid to be individuals. Nandocas are
interested in the solution not the problem. They are true to themselves, they have
fun, and they love the sound of laughter. They work with the community to make
a difference in people’s lives. They strive to make each customer experience a
magical one and they continually search for adventure. But most importantly
Nandocas love eating Nando's Peri-Peri Chicken more than life itself.

A Slice of Life: Allowing Nando's to flourish in each

country means embracing cultures of the world. One of
the best ways to capture these cultures is having an

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open-minded marketing philosophy. From the start Nando's have pursued a highly
effective marketing strategy which accounts for our phenomenal growth since
1987, (our aim was to change the way the world thought about chicken). We
knew our chicken was unique, that our restaurants were different and that the
Nando's experience was magical, so it followed that our advertising should have a
fun and irreverent personality that showed the funnier side of life.

Walk into any one of our

restaurants around the world and you will know you are in a Nando's, not because
they all look the same - they all have their own unique characteristics
and design - but because the promise of the Nando's Experience is
universal. You will find the same warm friendly service, delicious
chicken, and a relaxed informal atmosphere from New Zealand to
Canada and in between. In our restaurants, we encourage noise, we
encourage people to use their hands when eating and we encourage
family gatherings in the spirit of the good old days. Our motto is that
children should be heard and seen eating. Our only table manner
request is that people smile and enjoy themselves. Nando's
restaurants are known as Casa's, which means "home" in Portuguese. The best
way to explain our open style of informal restaurants is through the wonderful
saying "Mi Casa so casa - My home is your home". It is our belief that a Nando's
feast should be enjoyed in a relaxed environment where the pressures of daily life
are left behind. Nando's restaurants are home to the people who work in them and
to our customers. Our doors are always open to anyone who wants to taste the
Nando's Experience. We have Casa's on five continents around the world and it's
our aim and our duty to introduce Nando's to as many people as possible. We
believe the world will be a better place if everyone has a local Nando's Casa to
visit from time to time.

Nando's is the cackle of the land. Nando's started offering

peri-peri casual dining on the 7th May 2001 in Karachi.
Succulent flame grilled chicken in lemon and herb, medium,
hot and extra hot soon became everyone's favorite - for the
taste as well as the experience. For the yuppies and business
professionals, it is the place to be and to be seen for lunch.
Just walk into any Nando's and enjoy the light heartedness of our comfy and
warm environment. You can take the peri-peri experience home with you with our
take-away service as well.

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1.1 Vision Statement

1.1.1 Nando’s Vision Statement

'Our vision is to create a successful global brand that can rival the really big brands
of the world'

1.1.2 Recommended Vision Statement

‘Our vision is to be the first choice in

grilled food restaurant business
around the globe.’

1.2 Mission Statement

1.2.1 Nando’s Mission Statement

‘Devoted to people with an appetite for life, people who love to laugh and live to eat.
At Nando's we believe in our flame-grilled Peri-Peri Chicken, we believe it's the best
in the world. Taste the unique flavor and fire of our Peri-Peri chicken and we are
sure you will agree’

1.2.2 Recommended Mission Statement

A mission statement is often the most visible and public part of the strategic
management process, it is important that it includes all of these essential components:

1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

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Nando’s mission statement consisted of only 2 components namely: customers and

products and services. Therefore the recommended mission statement can be as

‘Nando’s is devoted to providing its customers appetite for life, who love to laugh and live
to eat. At Nando's we believe in our flame-grilled Peri-Peri Chicken, we believe it's the
best in the world. We aim to be the most successful grilled food restaurant in the world at
delivering the best customer experience in markets we serve and to do so, Nando’s will
meet its customer expectations through highest quality food prepared with leading
technology and by hiring and retaining personnel with exceptional capabilities. We believe
in offering quality and value to our customers and grow in such a way that creates
profitability and value for shareholders and structure the society in such a way so as to
improve the quality of life of the whole community. Our distinctive competence is our
open style of informal restaurants, through the wonderful saying "Mi Casa so casa -
My home is your home.’

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2. Macro-environmental Analysis and Industry


2.1 Porter’s Five Forces

Applying Porter’s five forces Template to the Restaurant Industry allows us to

analyze the attractiveness in terms of profitability of the industry.

(+) (–)
Do large firms have a cost or performance advantage in your
segment of the industry?
Are there any proprietary product differences in your
Are there any established brand identities in your industry?
Do your customers incur any significant costs in switching
Is a lot of capital needed to enter your industry?

Is serviceable used equipment expensive?

Does the newcomer to your industry face difficulty in accessing
distribution channels?
Does experience help you to continuously lower costs?
Does the newcomer have any problems in obtaining the
necessary skilled people, materials or supplies?
Does your product or service have any proprietary features that
give you lower costs?
Are there any licenses, insurance or qualifications that are
difficulty to obtain?
Can the newcomer expect strong retaliation on entering the


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Threat of Entrants are High and unfavorable in the industry. This is a real threat in a
place like Pakistan where the food industry views constantly changing patterns in
demand. Due to its consumer base, that is always on the look-out for new and
changed places to eat. Every now and then, a new café or a restaurant opens up, out of
which only a few are able to successfully survive in the long run. On Zamzama alone,
there are about 20 known restaurants and cafés. Therefore, Nandos must concentrate
its efforts on Differentiation Strategy, as that is key to survival in the Pakistani food
industry (especially, in the major cities of Pakistan).

PEST Forces that affect Threat of Entrants

This can have two extreme effects on threat of new entrants. If the government brings
out higher restaurant license cost and increased taxes and/or implements strict health
and safety regulations along with more documentation procedures, this will increase
the barriers to entry. However, if the government does the opposite by decreasing
license cost and taxes or has a lenient approach to health and safety procedures, the
threat of new entrants will be high.

Due to the rising income disparity and the adverse economic conditions, the number
of unemployed is increasing due to which the labor cost will decrease, and the up-
class restaurants will be more in demand as the rich are getting richer. Thus, the threat
of entrants is high because of increased profit margins in such ventures. In case of
improvement in the economy, more people could afford to go out to restaurants which
give more opportunities for new restaurants to come up.

The current social trend is in favor of eating out especially at expensive restaurants,
thereby, increasing their demand and also owning such eat-outs is now very socially
appealing thus, increasing the threat of new entrants.

The rise in innovative technology has made management of restaurants very easy and
the new sophisticated software now enable restaurants to run with less number of
employees, thereby, reducing the labor cost. Thus, this factor increases the threat of
new entrants.

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(+) (–)
Are there a large number of buyers relative to the number of
firms in the business?
Do you have a large number of customers, each with relatively
small purchases?
Does the customer face any significant costs in switching
Does the buyer need a lot of important information?

Is the buyer aware of the need for additional information?

Is there anything that prevents your customer from taking your
function in-house?
Your customers are not highly sensitive to price.
Your product is unique to some degree or has accepted
Your customers’ businesses are profitable.

You provide incentives to the decision makers.



The bargaining power of buyer is low in the industry firstly because their product is a
commodity item and consumers have no choice but to continue consumption, as it is
also a form of entertainment in our country. This makes the industry more attractive
and profitable and the PEST forces such as increasing population is an appealing
opportunity, however, the economic situation of the country brings along adverse
effects on the industry. Nandos should therefore, bank on the rising income disparity.

PEST forces that affect Bargaining Power of Buyers

This political factor has no direct affect on the bargaining power of buyers.

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The increasing population reduces the power of buyers. Even though the adverse
economic situation of Pakistan is reducing the consumer base, it is still not making
much impact on the bargaining power of buyers.

The trend is moving towards eating at restaurants, which is increasing the base of
consumers, thus, reducing their bargaining power.

The advancement in technology makes it possible for the buyer to gather all the
information quickly and make informed decisions. Thus, this is increasing the
bargaining power of buyers.

(+) (–)
Substitutes have performance limitations that do not
completely offset their lowest price. Or, their performance is
not justified by their higher price.
The customer will incur costs in switching to a substitute.

Your customer has no real substitute.

Your customer is not likely to substitute.


The threat of substitutes is medium to low, as this industry does not have any real
substitutes, because restaurants offer unique experiences along with their basic product
i.e. food items. In Pakistan, eating out is a form of entertainment and people generally
like going to specific restaurants and cafés because of their splendid experience in the
past including ambience and food. Nandos should therefore concentrate their efforts on
upgrading their restaurant ambience and the taste offered by them.

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PEST forces that affect Threat of Substitutes

There aren’t many substitutes of the restaurant industry. However, decrease in the
purchasing power of the people could lessen their visits to the restaurants thereby
increasing the threat of substitutes. If better substitutes are provided to people such as
more variety in the ready-to-cook foods could increase the threat of substitutes.

(+) (–)
My inputs (materials, labor, supplies, services, etc.) are
standard rather than unique or differentiated
I can switch between suppliers quickly and cheaply.
My suppliers would find it difficult to enter my business or my
customers would find it difficult to perform my function in-
I can substitute inputs readily.

I have many potential suppliers.

My business is important to my suppliers.

My cost of purchases has no significant influence on my
overall costs.



Bargaining power of suppliers is high because the inputs are not easily substituted,
keeping in mind only those companies in the industries that are rather cautious about
their inputs as poor quality inputs can cause them a hefty amount of business. Also,
the inputs are usually of a perishable nature, thus, stock-ups are not possible, that is
why reliability of suppliers is very important. Therefore, these companies usually
have one or two major supplier of main inputs, who can provide good quality inputs
in a timely manner. This is an unattractive aspect of this industry, that’s why; Nandos
should integrate backward by probably farming their chicken, in order to eliminate
this power of suppliers.

PEST forces that affect Bargaining Power of Suppliers

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If the government grants subsidies to other chicken suppliers so that they are able to
produce at the same level and with same quality as KnN, then the supplier power will
reduce. If the government establishes quality standards for using hygienic meat
products, the supplier power would go very high since there is only one major chicken

The current economic situation of the country will reduce large scale companies such
as KnN; thus, the supplier power will increase. Also our poultry industry is “going
down”. This will further increase the power of suppliers.

This factor will not affect the input of food industry.

Technology has made it possible to manage the poultry industry, thus enabling more
suppliers to come in. therefore, the power of suppliers will reduce.

(+) (–)
The industry is growing rapidly.

The industry is not cyclical with intermittent overcapacity.

The fixed costs of the business are a relatively low portion of
total costs.
There are significant product differences and brand identities
between the competitors.
The competitors are diversified rather than specialized.
It would not be hard to get out of this business because there
are no specialized skills and facilities or long-term contract
commitments, etc.
My customers would incur significant costs in switching to a
My product is complex and requires a detailed understanding
on the part of my customer.
My competitors are all of approximately the same size as I am.



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The rivalry amongst the existing firms is moderate to high as each tries to outdo the other
by offering cost-effective deals to the consumers especially during Ramadan. With the
increasing rate with which these eat-outs are opening, the market share for each of them is
deteriorating. Thus, each is rigorously competing against the rest. In such situation, it is
usually the restaurants with small operations such as Nandos that suffer. Nandos should
therefore, try to combat this issue by increasing their operation via market penetration or
market development.

PEST forces that affect Rivalry among existing competition

If the government grants subsidies to local competitors to match the international
chains, the rivalry will increase.

The fake economic growth has increased the availability of funds; therefore the
competitors can match international chains now. Thus, the rivalry will increase.

This factor will not affect the input of the Restaurant Industry.

Technology has made it possible for competitors to affectively reduce cost, thereby,
enabling to match each other and copy the others competitive advantage. This will
increase the rivalry between competitors.

OVERALL INDUSTRY RATING Favorable Moderate Implications

Threat of new entrants is

Threat of new entrants 3 2 7

Bargaining power of Bargaining power of buyers

5 1 4
buyers is Low

Threat of substitutes is
Threat of substitutes 2 1 1
Medium to Low
Somewhat Favorable

Bargaining power of Bargaining power of

1 0 6
suppliers suppliers is high
Intensity of rivalry 4 0 5
among competitors Intensity or rivalry is
Moderately High

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Total 15 4 23 Reasonably Unattractive

Overall, it is an unfavorable industry as the major cities of Pakistan are swamped with
many restaurants and cafes. Nevertheless, the industry position can be exploited to
ones advantage, if strategically smart decisions are taken. For Nandos, the
recommendations include:
• Constantly innovate and bring in more competitive advantage that are
unmatchable, in order to reduce the threat of new entrants.

• Backward integration to reduce the power of suppliers.

• More effective differentiation to reduce the rivalry between Nandos and

2.2 Overall Macro-Environmental Pest Factors

Political Factors: The political factors that mainly affect Nandos concern how the
government relates to health issues concerning food items being served or brings out
new regulations regarding the restaurant business. For Instance: when Bird Flu
occurred in Pakistan, if the government would have asked for ban on chicken items or
some strict regulations on the chicken items being served, then it would have highly
affected Nandos as well. Government regulations regarding franchises or international
chain of restaurants would affect Nandos in relations to itself or in dealing with its

Economic Factors: Pakistan is a developing country and the majority of the

population has low purchasing power. Nandos caters to that niche of the Pakistani
society that has a relatively higher purchasing power than the majority of the nation.
Any economic instability or economic recession would decrease the power of a lot of
consumers, decreasing the niche segment that Nandos caters to. Thus economic power
does affect Nandos as people tend to spend less on eating out at relatively expensive
places when they have a tighter budget. If the economy develops and more people
have the purchasing power, then more people would be able to visit restaurants like

Social Factors: The trend of eating out has been carrying on in Pakistan since a very
longtime. Pakistani people have always loved eating out. It is even the main source of
entertainment in Pakistan. Earlier on families would go and eat out, but since the past
few years, this trend increased even further in teenagers, young adults and with
corporate people. Nowadays, if we visit any restaurant such as Nandos, we get to see
a diverse crowd that includes teenagers, families, couples and even corporate
businessmen. Thus eating out is becoming an increasingly important social trend
which works positively for places like Nandos.

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Technological Factors: The restaurant business works well where the management
handles the service well. To be quicker and more efficient in processing and then
serving the orders, restaurants need to have better technology. To keep records of day-
to-business, better technology is essentially important. Cooking also requires better
equipments to work faster and better. Nandos has the essential equipment to make all
of its flame-grilled items which even works towards providing healthier items by not
making deep-fried products.

2.3 Key Driving Forces Affecting the Industry

• The Internet and new E-Commerce opportunities

The Internet can revolutionize the entire restaurant industry by including the
aspects of ordering food online. In this way consumers could be provided with
more convenience and be more informed about the menus.

• Increasing globalization of the industry

Global chains of restaurants such as fast food joints like KFC and Mc Donald’s
have existed since a very long time now. The aspect of a global chain leaves a
positive impression on the minds of the people since they tend to believe that the
product is of quality and hygiene. More and more restaurants are following this
trend and opening up their chains in Pakistan. This does affect the restaurant
industry on a whole. Nandos is also globally widespread but it hasn’t penetrated
much in Pakistan as yet.

• Product Innovation

Those restaurants that have had a unique menu or recipe have been able create a
strong place in the industry. People have always wanted variety in Pakistan. Any
new element or uniqueness in a restaurant’s menu could give it a competitive edge
in the market. Nandos has banked on this opportunity by introducing an entirely
new concept adopted from South Africa.

• Technological Change

Advances in technology can dramatically transform the restaurant industry.

Technological developments can competitively produce significant changes in the
distribution channel and logistics and reduce the costs in the value chain.

• Entry or Exit of major firms

Exit of major firms in the restaurant industry can lead to changes in market shares
of all the companies that compete with such firms. Entry is relatively easy and
keeps on leading to increased competition in this industry.

• Changes in cost and efficiency

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Decrease in cost can lead to significant changes in the profit margin of the
business. However increasing costs can prove to be detrimental to the businesses
in the industry.

• Regulatory influences and government policy changes

Regulatory influences or policy changes such as increased quality and hygiene

standards can drive up costs of firms but would lead to better and safer food items.

• Changing societal concerns, attitudes and lifestyles

Emerging social issues and changing attitudes and lifestyles can be powerful
driving forces of industry change. The trend of eating out has been increasing
consistently in Pakistan giving more opportunities for new companies to come
with more and more variety for the public.

2.4 External Factor Evaluation (EFE)

Weigh ed
Key External Factors t Rating Score

Market Potential - growing market for fast
casual 0.17 2 0.34
People's need for variety in the food and
entertainmnt sector 0.10 3 0.3
Rising Demand for Home delivery and
Takeout 0.08 3 0.24
E-commerce 0.02 1 0.02
People's preference for red meat 0.06 1 0.06
People's attraction towards promotional
offers 0.08 2 0.16
Increasing trends for business/corporate
lunches and dinners 0.05 3 0.15

Economic Problems in the country 0.09 2 0.18
Bird Flu Threat 0.03 3 0.09
Political Problems in the country 0.02 2 0.04
Growing market for cafes in Pakistan 0.06 2 0.12
Availability of nandos table sauces in the
market 0.03 2 0.06
Only one chicken supplier (KnNs) 0.08 2 0.16
Huge variety of Restaurants, fastfood places 0.12 2 0.24

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Changing tastes of people 0.01 2 0.02

Total 1.00 2.18


Nandos, Pakistan’s total weighted score is rather disappointing considering their

global background. Currently their total weighted score of 2.18 is about 20% less than
the industry average of 2.5. They are not exploiting the opportunities in the food
industry to their advantage neither are they combating the threats well. The most
major opportunity staring them in the face is the rising market potential which has the
highest weighted score of 0.34, as the trend in Pakistan is moving towards fast-
casuals. To handle this opportunity they must open up new outlets to cater to the
untapped vicinities. Another opportunity that has a high score of 0.3 is the peoples
need for variety. The strategy for such an opportunity would be to add varieties like
fancy beverages (e.g. cocktails and mocktails), sea-food and meat in their menu
(available at Nandos outlets in other countries of the world). Of the threats, that needs
their immediate attention is the rate with which new restaurants that “Pop-up”. To
counter this Nandos must concentrate on increasing its efforts on rightly
implementing their Focused Differentiation Strategy. They should further enhance
their brand image to capture more loyal customers. Another threat which has a
relatively high weighted score is the economic problems of Pakistan; the way this can
be overcome is by establishing subsidiaries under another name. The third biggest
threat with a weighted score of 0.16 is that they have only one reliable supplier; they
can definitely counter this via backward integration that would include farming their
own chicken.

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3. Company and Competitor Analysis

3.1 Competitive Profile Matrix (CPM)

Key Success
factors NANDO’S BBQ Tonite Roasters GunSmoke
Weight Rating Weighted Rating Weighted Rating Weighted Rating Weighted
Score Score Score Score
Market Share 0.15 1 0.15 3 0.45 2 0.3 1 0.15
Local Expansion 0.12 2 0.24 1 0.12 2 0.24 2 0.24
Competitiveness 0.10 3 0.3 4 0.4 2 0.2 2 0.2
Management 0.06 3 0.18 4 0.24 2 0.12 2 0.12
Financial Position 0.10 2 0.2 4 0.4 3 0.3 2 0.2
Advertising 0.05 2 0.1 1 0.05 2 0.1 1 0.05
Technology 0.08 4 0.32 3 0.24 2 0.16 3 0.24
Customer Loyalty 0.06 2 0.12 3 0.18 3 0.18 1 0.06
Product Quality &
hygiene 0.20 4 0.8 4 0.8 3 0.6 2 0.4
Productivity 0.08 2 0.16 3 0.24 3 0.24 2 0.16
Total 1.00 2.57 3.12 2.44 1.82


Nandos is currently being outperformed by its competitor Bar B Que Tonite, which is
17.6% ahead of it. Nandos is “slacking off” in its market share, which is one of the
most important critical success factors here as compared to competitors Bar B Que
Tonite and Roasters. In Local expansion, Nandos is doing the same as its competitors
Roasters, GunSmoke, while Bar B Que Tonite is behind them. Although, Nandos has
more outlets than the other three companies, it is point of Concern as Nandos is a
global chain while the other three are local companies of a third world country.
Therefore, this implies that Nandos is not capitalizing on its global strength to expand
in the Pakistani market unlike MacDonald’s and KFC. Attention should be given to
the price competitive and financial position as Nandos is being out done by Bar B
Que tonite in the former, while in the latter, Nandos is behind both Bar B Que Tonite
and Roasters. Nevertheless, Nandos is doing outstandingly well as far as Product
Quality and Hygiene is concerned, their rating on this CSF stems from the strict
policy on quality and hygiene of Nandos chain that Nandos Pakistan has to follow.
Nandos Pakistan also has leverage in technology over its competitors due to global
backing that it enjoys; however, technology does not play such an important part in
the food industry as evident by its weight. To improve their competitive position, they
should definitely consider opening up outlets in other major cities of Pakistan,
introducing more varieties in their menu, work on their pricing strategy and definitely
bank on their global position to get a better financial advantage.

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4. Micro-Environmental Analysis and Internal Company


4.1 Core Competencies

A competitively important activity that a company performs better than other

competitively important activities is termed as core competence. Whereas, distinctive
competence is something a company does well relative to competitors. Nando’s
believe in maintaining its core competencies in three main areas, that is:

1. Peri Peri Sauces

The Nando’s true and original recipe of Portuguese sauces has mounted to be its
biggest strength all over the globe. The secrets of Peri Peri has always created an
edge for Nando’s and added value to the over all menu of Nando’s.

2. Strong Myth and Culture

The overall theme of Nando’s is very unique and dipped in the ancient Portuguese
culture. Nando’s revolves around a particular theme of cherished life, full of fun,
romance flavors, captive advertisement and enriching moods spills.

The embarked history and inherited myth of Nando’s gives it a strong believes in
its values being delivered through its food.

3. Distinctive Experience

Nando's offer its customers a unique Nando's life experience that is not only
about chicken. Nando's is about experiencing great times around the table,
laughing and living to eat. It is about having fun and never taking life too
seriously. This experience is backed up with a Nando's promise of quality. If
you walk into any one of Nando’s restaurants around the world, you will
know you are in a Nando's, not because they all look the same, they all have
their own unique characteristics and design, but because the promise of the
Nando's Experience is universal. You will find the same warm friendly
service, delicious chicken, and a relaxed informal atmosphere. In its
restaurants, Nando’s encourage noise; encourage people to use their hands
when eating and also encourage family gatherings in the spirit of the good old

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4.2 Value Chain

Restaurant/Retail Outlet
Peri-Peri Sauces from Warehouse in Pakistan
South Africa Store

Chicken from KnN’s Kitchen

Ketchup from Knorr

Fries from McKainz Customer Dine-in

Home Delivery

1. Import of supply:

The main ingredients used at Nando’s are chicken, fries, ketchup, spices and
sauces. The chicken is supplied to them by K&N, the ketchup by Knorr, the
fries by McKainz, and ofcourse the essence of the recipe is the sauce imported
from South Africa.

2. Operations:

The unique Nando's method of preparing Peri-Peri Chicken ensures you can
eat Nando's knowing you are taking care of your body as well as satisfying
your need for taste. They use nothing but the best A-grade chickens, which are
then trimmed of fat and marinated for 24 hours in their secret Peri-Peri recipe.
Never deep-fried, they are grilled to perfection, on a naked, open flame.
During the grilling process the chickens are continually basted in your choice
of lemon and herb, medium Peri-Peri, hot Peri-Peri, or if you are very brave,
extra hot Peri-Peri, allowing the natural flavor and fire to bring out the best in
our chickens. The finished product needs to be tasted, to be believed.

3. Delivery:

Since its introduction in Pakistan, Nando’s has sold its food directly to final
users using the zero level channels.

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The success of Nando's Peri-Peri chicken inspired them to bottle up the

Nando's passion. They realized that people might only want to eat Nando's
Chicken five out of seven days a week. For the other two they would need to
give them the opportunity to use Nando's Peri-Peri in their own homes. This
inspired a range of, now-famous Peri-Peri Sauces, Marinades, Cooking Sauces
and Perinaises, enabling people to take the flavor and fire of Peri-Peri home.
When they were not eating Nando's Chicken, they were free to unleash the
passion and excitement of Nando's Peri-Peri in their own kitchens. Their
sauces became so popular they decided to make

4. Service:

While the rest of the restaurants in the world may call them waiters, Nando’s
call them servers, because waiters make you wait and servers serve you. The
servers at Nando’s make extra attraction and retention efforts. Nando's would
never be just about chicken and it would never be just about the two friends
who started it. The Nando's entrepreneurial spirit has become universal,
proudly feeding the souls and appetites of people hungry for life. These
Nando's people are known as Nandocas. They create the Nando's culture.
They make the chicken what it is. Nandocas are team players but are not
afraid to be individuals. Nandocas are interested in the solution not the
problem. They are true to themselves, they have fun, and they love the sound
of laughter. They work with the community to make a difference in peoples
lives. They strive to make each customer experience a magical one and they
continually search for adventure. But most importantly Nandocas love eating
Nando's Peri-Peri Chicken more than life itself.

5. Administration:

Nando’s is working as a contractual vertical marketing system (VMS). A

contractual VMS consists of independent firms at different levels of
production and distribution integrating their programs on a contractual basis
to obtain more economies or sales impact. With a VMS, the possibility of
conflicts between the marketing channels is low.

6. Training:

Nando’s trains its employees not here in Pakistan but send them abroad to
South Africa. The shift managers are usually the one who get the required
training from there and then they give the servers on-job-training. They are
taught and educated about the culture and the ‘Nando’s way of life’

While it is difficult to describe the intangible essence of Nando's, there is an

Afrikaans (one of South Africa's official languages similar to Dutch) word
called 'Gees', meaning spirit, (the g is pronounced with a frog-in-the-throat
effect) that is used by Nandocas to describe their 'go for it' attitude that drives
everyone at Nando's.

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4.3 Strategic Cost Management Process

Nandos is involved in the following activities:

1. Raw Material Supply

The secret Peri- Peri recipe has been adopted from South Africa. The import
of the peri peri sauces is an integral part of the costs of the company. The
Chicken supplier being KnNs also charges premium price for the high quality
chicken that it provides to the company. Ketchup is supplied by Knorr and
fries by Mckainz. Water is bottled water by Nestle and the Drinks contract is
with Coca-Cola. Raw Material supply constitutes a major portion of their
costs since they purchase from the Best Brands available. Any change in the
prices of any of the suppliers affects their costs. Transportation costs for these
raw materials also effects the purchases made. If the petrol prices increase it
leads to an increase in the cost of the product.

2. Operations

They use the best A-grade chickens, which are then trimmed of fat and
marinated for 24 hours at KnNs in their secret Peri-Peri recipe. Their
marination activity is outsourced which saves them from the hassle of buying
the chicken themselves and storing it before and during takes place. The
chicken is never deep Fried but it is grilled on a naked open flame. This gives
the aspect of a healthy product. During the grilling process the chickens are
continually basted in the consumers’ choice of lemon and herb, mild Peri-
Peri, hot Peri-Peri, or extra hot Peri-Peri. The costs associated with this
process are of the equipment and the basting sauces. Nandos has been able to
manage their operations costs effectively and efficiently.

3. Service and Delivery

Nandos waiters are known as servers. The costs of their salaries are not of
very high portion as compared to the material and operation costs. However,
Nandos does not compromise on compensating its employees. The servers at
Nando’s make extra attraction and retention efforts for which they are
rewarded. They are also trained to better serve the consumers. The shift
managers are usually the ones who get the required training and then they
give the servers on-job-training. They are taught and educated about the
culture and the ‘Nando’s way of life’. The delievery system of Nandos is a
new aspect introduced for the company. This delivery system led to extra
costs of delivery boys, bikes etc. However the company is still not able to
generate as much revenue since they deliver only few items on the menu. To
further enhance the delivery system Nandos would have to incur further costs
to purchase better delivery equipment and be able to deliver more products on

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the menu. This would then help generate more revenue and offset the costs

4. Administration

The administration system of Nandos works at a very restricted level where

costs are concerned. In a country where electricity supply is very volatile not
having backup systems could cause a lot of mismanagement. This problem is
very much associated with Nandos as well since their systems are not up to
date. Nandos has a very small administrative staff due to the small number of
outlets in Pakistan. However if they plan to expand its operations then the
company would need to invest in better management systems and skilled

5. R and D

The R and D of Nando’s is not very strong in Pakistan. Product launches are not
very frequent due to the low R and D budget. To capitalize on the strength of the
Peri Peri recipe they need to introduce more products which require them to
invest more in the research and development. The Restaurant needs to be
innovative and novel in its approach. An adequate amount of budget should go to
R&D, market researches and development of new tastes and deals based on theses
researches. R & D require high cost but in the long run prove to be an integral
part of the company in gaining a competitive advantage.

Nandos can raise its price further with the rise in perceived quality. Raised price
will cover the rising cost, and high quality will justify high price. The profitability
will still be maintained. The market that it caters to have an inelastic demand
which is why even if a small raise in price takes place it would not affect Nandos
on a large scale.

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Type Of

Fast Food
Kfc, Mc
Donalds, Pizza

Fast Casual Cafes Gunsmoke


BBQ Tonite

Arizona Grill, CK,

Fine 5 Star restaurants


Low Medium High

Overall Cost to
the Consumers

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Key Internal Factors Weight Rating Score

Product - their Peri-Peri recipe 0.20 4 0.8
Strong brand personality 0.07 3 0.21
Ambience at the restaurant 0.05 3 0.15
Customer Loyalty 0.02 3 0.06
Marketing efforts towards the consumer base 0.05 3 0.15
Strong Supplier/Distribution system 0.10 4 0.4
Products have essential ingredients for a health
life 0.01 2 0.02
Strong Background from Africa present till
today 0.01 3 0.03
Selling Experience 0.04 4 0.16
Strong food concept 0.02 3 0.06
Strong Globalize Strategy - adaptive to culture 0.06 4 0.24
Creative and unique Menu 0.02 4 0.08

Low Marketing Budget 0.08 2 0.16
Stagnant Growth - Not penetrated 0.15 2 0.3
Communication system within dept- not strong 0.04 2 0.08
Weak Technological system in the
Administration Department 0.04 1 0.04
No Beverage Variety 0.04 2 0.08
Total 1.00 3.02

4.4 Internal Factor Evaluation (IFE)


The total weighted score of 3.02 is 20.8% more than the average industry weighted
score. The reason for such a phenomenal score is their PERI PERI recipe which is
their main strength with the highest weight. Basting, marinating and table sauces are
usually the most important ingredients and they are definitely quiet effectively
banking on this strength. Their delicious basting and marinating sauces still remain a
mystery to the rest of the world. Along with this, they are handling all their strengths
really well with the exception of their healthy ingredients, which they are handling in
an average way, although, it has a low weight considering the psyche of Pakistanis,
they can definitely improve their score by communicating the nutritional values of
their ingredients. On the other hand, they are very poorly countering their weakness.
Their main weakness is their stagnant growth with the highest weight and with only a

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sore of 2. There is no evidence, that they are willing to do anything about it as their
outlets are still missing in the major cities of Pakistan, like Islamabad. They should
definitely improve their growth rate and try to improve their marketing budget. This
will definitely enhance their total weighted score. The strategies to improve the
growth rate would include market development and product development via
establishing more outlets and increasing the variety in their menu, respectively.
5. Strategic Analysis and Recommendations

5.1 Generic Strategy

Although, Nandos Pakistan claims to be following a Focused Differentiation Strategy,

they haven’t really implemented it that well. Nandos Pakistan caters to that Niche
market which requires a different taste and value and is prepared to pay the price for
it. Their focus is entirely on the Upper Middle and Upper-Upper class. The strategies
implemented by Nandos have not exactly catered specifically to this focused
differentiation strategy.

The company needs to make effort in targeting and communicating their real value to
its specific set of consumers.

Another contradiction in this strategy is that there is no outlet in Islamabad, Pakistan,

where mostly the rich and the influential reside. Now is the time to really bank on the
rising income disparity in the economy via increasing their prices. This will also
attract more customers from upper-middle/high class, as it is quiet socially appealing
for them to dine at expensive places.

Nevertheless, Nandos offers only chicken items; this is in line with their current
strategy. They should really check their strategic approach or correct their focus.

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Nandos should stick to its focused differentiation strategy. The following strategies
have recommended for improving their strategic position:

• Increase their prices to capture a larger share of their current target market.
• Open up outlet in the major cities of Pakistan like Islamabad and Faisalabad.
• Effectively communicate their niche marketing strategy to their target
audience to further emphasize what their brand actually stands for.
• Add value by offering an outstanding service which is unforgettable and

5.2 Input/Matching/Decision Model

5.2.1 TOWS

Strengths ------- S Weaknesses ------- W

1. Product - Their Peri-peri 1. Low Marketing Budget

recipe 2. Stagnant Growth - Not
2. Strong brand personality penetrated
3. Ambience at the restaurant 3. Commmunication system
4. Customer Loyalty within dept- not strong
5. Marketing efforts towards the 4. Weak Technological system
consumer base in the Administration
6. Strong Supplier/Distribution Department
system 5. No Beverage/Soup Variety
7. Products have essential
ingredients for a health life
8. Strong Background from
Africa present till today
9. Selling Experience
10. Strong food concept
11. Strong Globalised Strategy -
adaptive to culture
12. Creative and unique Menu
Opportunities ------- O SO Strategies WO Strategies

1. Market Potential - growing 1. (S1, O1 O2 O5 ) New 1. (W1 , O4) Create a website

market for fast casual product launches such as red and use it as a medium of
2. People's need for variety in meat and vegetable products advertising
the food and entertainment 2. (S1 S2 S6 S7 S8 S9 S10, O1) 2. (W2, O1) Penetrate into
sector Open up Outlets in Existing more cities of Pakistan
3. Rising Demand for Home and Other Cities such as 3. (W5, O2) Introduce
delivery and Takeout Islamabad beverages and other food items
4. E-commerce 3. (S2 S5, O6 O7) Advertise to cater to the growing needs of
5. People's preference for red their existing products more to the people
meat attract consumers
6. People's attraction towards 4. (S2 S5, O6 O7) Bring up
promotional offers promotional offers like coupons,
7. Increasing trends for deals, corporate discounts etc.
business/corporate lunches and 5. (S1 S10, O3) Use the latest
dinners technology to Deliver further hot
as well as cold items on the
6. (S1 S2 S5 S7, O 4 O6) Create

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an Attractive and Interactive

Website for the consumers of

Threats ------- T ST Strategies WT Strategies

1. Economic Problems in the (S1 S10, T2) Launch red meat (W3,W4,T4 T7) Up date your
country or sea-food products internal technological systems
2. Bird Flu Threat (S5, T4 T7) Use your to be at par with the other
3. Political Problems in the advertising to attract restaurants
country consumers towards your (W5, T7 T8) Introduce
4. Growing market for cafes in restaurant variety of Beverages to cater
Pakistan (S1, T4 T7) Open up new to the changing tastes of the
5. Availability of nandos table outlets in Pakistan using you people
sauces in the market product advantage to be
6. Only one chicken supplier widespread and be well known.
(KnNs) (S6, T6) Integrate backwards and
7. Huge variety of Restaurants, maintain own chicken farm
fastfood places
8. Changing tastes of people


The highlighted strategies are the best and most applicable to enhance the overall
position of Nandos as they effectively handle the important strengths, weakness,
opportunities and threats.
Backed by their strengths (secret Peri-Peri recipe, outstanding global brand name) and
opportunities (such as growing market for fast casual, people’s need for variety and
red-meat) and with weakness (such as stagnant growth, low marketing budget) and
threats (such as increased variety of restaurants, one chicken supplier and economic
problems in the country) facing them, the highlighted strategies are the best and most
applicable to enhance the overall position of Nandos.

Note: All these strengths and weaknesses have been explained in the IFE matrix,
while the opportunities and threats have been explained in the EFE matrix.

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Financial Strength Environmental Stability

Return On investment 4 Technological Changes -2
Leverage 3 Demand Variability -4
Liquidity 2 Competitive Pressures -5
Price Range of Competitive
Working Capital 3 Products -3
Cash Flow 3 Economic Tension -2
Political aspect -1

Average score 3 Average Score -2.8

Competitive Advantage Industry Strength

Customer Loyalty -2 Growth potential 5
Techonlogical Know How -2 Profit Potential 4
Capacity Utilization -2 Financial Stability 3
Local Expansion -5 Technological know how 5
Product Quality -2 Resource utilization 5
Employee Retention -1 Capital intensity 3
Cost Competitive -4

Average Score -2.57 Average Score 4.17

Y axis
Financial strength 3 +1 worst to + 6 best Y axis:
Environmental stability -2.8 -1 best to –6 worst
3+ (-2.8) = 0.2
X axis
Industry strength 4.17 1 worst to 6 best X axis:
Competitive advantage -2.57 -1 best to -6 worst
4.17 + (-2.57) = 1.6

5.2.2 SPACE Matrix

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Conservative +5 Aggressive

-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6

Defensive -5 Competitive

Nandos currently falls in the aggressive quadrant of the space matrix. Upon further
analysis, we find that their financial position is just average as not much revenue has
been generated in Pakistan as yet. The environmental stability is slightly below
average and considering the current situation in Pakistan, their political aspect and
economic aspect are not very good. Competitive pressures are high. As far as,
environmental stability is concerned, they should bank on the opportunities facing
them to the maximum, while effectively countering their threats.
On the x-axis, their competitive advantage is average for which they need to pay
attention to their cost competitiveness. The local expansion factor has the worst score
which can be overcome through expanding in other cities of Pakistan. Innovation and
communication of its value is the key here to enhance their competitive advantage.
However, the industry strength saves their day as this restaurant industry has a lot of
growth potential. Provided that the company is in the right strategic direction, it will
see profit margins very soon through association with this industry.

The following strategies can come in very handy to better their position:

• Market Development: This can be achieved through opening of outlets in

other cities of Pakistan, starting with the big cities and then moving on to other
cities if feasible.
• Product Development: Upgrading their services, adding more facilities at the
outlets such as play area, adding new product variety in chicken or launching meat
or sea-food products.

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• Market Penetration: Opening more outlets in existing cities: Karachi or

• Backward and Horizontal Integration: Moving backward as well by owning
quality farms that enhance their strength of “Products have essential ingredients
for a healthy life”. Horizontal integration could be achieved by merging with
similar fast casual restaurants to better enhance their capabilities.
• Diversification: Although, they are slightly diversifying by catering to the
retail market via selling their table sauces at the retail stores. They can further
diversify by getting involved in the entertainment industry, which is a rather
lucrative industry, according to the current trends as there aren’t many
entertainment outlets in Pakistan.

5.2.3 Internal External (IE) Matrix

The IFE Total

Weighted Scores

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
4.0 3.0 2.0 1.0

The EFE 3.0 to 4.0
Weighted 3.0
Scores Medium
2.0 to 2.99

1.0 to 1.99


In IE Matrix, Nandos with a strong internal position and a medium EFE score is now
in the 4th quadrant. This quadrant is the “Grow and Build Quadrant” which suggests
that Nandos needs to build and grow its current position.

The strategies in this quadrant include:

• Market Development which can be achieved via opening up in cities like
• Market Penetration that could be done by opening up more outlets in
current cities being catered that is Karachi and Lahore. It could also be done
by Nandos catering to lower end of the market under a different brand name.
• Product development via variety to their menu and upgrading their service.

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• Integration including Forward, Backward and Horizontal. In case of Nandos

only Backward and Horizontal Integration makes sense.

5.2.4 Grand Strategy Matrix

Rapid Market Growth

Quadrant I

Quadrant II

Weak Strong
Competitive Competitive
Position Position
Quadrant III Quadrant IV

Slow Market Growth


Nandos falls in quadrant 1 since it has a strong competitive position through its Peri
Peri Recipe which no other restaurant offers and the restaurant industry is a fast
growing market. Currently, Nandos needs are doing alright as compared to its
competitors, the reason it is slacking of is that Nandos is not communicating the value
to the consumers. To enhance their strategic outlook as per their position in the first
quadrant, Nandos should concentrate on aggressively advertising to communicate the
real value of the product to the consumer. It can also carry out market development by
opening up outlets in other cities of the country. Secondly, they can penetrate the
market by opening up subsidiaries to cater to the lower end of the market, under a
different brand name. Another thing they can do is product development via
enhancing their quality of service, add features to their chain of restaurants e.g. kids
play area and/or add more variety in their current menu. Nandos can also integrate
with their competitors (horizontal Integration) to reduce their competition and
increase their consumer base. They definitely backward integrate by farming their
chicken; this will also reduce their supplier’s power over them.

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5.2.5 Matrix Analysis and SWOT Summary

Alternative Strategies IE SPACE GRAND COUNT

Forward Integration X X X 3
Backward Integration X X X 3
Horizontal Integration X X X 3
Market Penetration X X X 3
Market Development X X X 3
Product Development X X X 3
Concentric Diversification X X 2
Conglomerate Diversification X 1
Horizontal Diversification X 1
Joint Venture

5.2.6 QSPM

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Strategic Alternatives
Strategic Management
DEVELOPMENT Open Outlets in for meat products
New Product New Geographic
Launches Regions

Strengths Weight AS TAS AS TAS AS TAS

Product - Their Peri-peri recipe 0.18 4 0.72 4 0.72 1 0.18
Strong brand personality 0.07 4 0.28 4 0.28 2 0.14
Ambience at the restaurant 0.08 4 0.32 3 0.24 1 0.08
Key Internal Factors
Customer Loyalty 0.02 3 0.06 2 0.04 1 0.02
Marketing efforts towards the
consumer base 0.05 2 0.1 3 0.15 1 0.05
Strong Supplier/Distribution system 0.04 4 0.16 4 0.16 4 0.16
Products have essential ingredients
for a health life 0.01 3 0.03 3 0.03 4 0.04
Strong Background from Africa
present till today 0.02 - - -
Selling Experience of many Decades 0.04 2 0.08 2 0.08 2 0.08
Strong food concept 0.03 3 0.09 4 0.12 2 0.06
Strong Globalised Strategy - adaptive
to culture 0.05 2 0.1 3 0.15 2 0.1
Creative and unique Menu 0.01 - - -

Low Marketing Budget 0.10 3 0.3 3 0.3 1 0.1
Stagnant Growth - Not penetrated 0.15 2 0.3 4 0.6 1 0.15
Communication system within dept-
not strong 0.05 4 0.2 4 0.2 4 0.2
Weak Technological system in the
Administration Department 0.05 3 0.15 3 0.15 3 0.15
No Beverage/Soup Variety 0.05 4 0.2 2 0.1 1 0.05

TOTAL 1.00 2.66 3.14 1.47

Key External Factors

Market Potential - growing market
for fast casual 0.15 3 0.45 4 0.6 3 0.45
People's need for variety in the food
and entertainment sector 0.10 4 0.4 3 0.3 2 0.2
Rising Demand for Home delivery
and Takeout 0.08 - - -
E-commerce 0.03 - - -
People's preference for meat 0.07 4 0.28 3 0.21 4 0.28
People's attraction towards
promotional offers 0.08 - - -
Increasing trends for
business/corporate lunches and
dinners 0.05 - - -

Economic Problems in the country 0.07 2 0.14 3 0.21 4 0.28
Bird Flu Threat 0.03 4 0.12 2 0.06 4 0.12
Political Problems in the country 0.02 - - -
Growing market for cafes in Pakistan 0.06 3 0.18 4 0.24 1 0.06
Availability of Nandos table sauces
in the market 0.03 - - -
Only one chicken supplier (KnNs) 0.08 1 0.08 1 0.08 4 0.32
Huge variety of Restaurants, fastfood
places 0.12 3 0.36 4 0.48 1 0.12
Changing tastes of people 0.03 3 0.09 1 0.03 1 0.03

TOTAL 1.00 1.92 1.97 1.8

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After strategically analyzing the alternatives, we find that the most attractive strategy
is the second strategy that is Opening up of outlets in new geographic regions. The
reason as to why such is the case is explained below.

Strategy 1:

A close competition of strategy 2, the reason why this strategy has received a lower
total attractive score is that it is relatively less effective while countering the weakness
of “stagnant growth” (which has a high weight of 0.15), also while handling the
opportunity of Market Potential - growing market for fast casual (has the highest
weight of 0.15), along with combating the threat of Huge variety of Restaurants, fast
food places (highest weight of 0.12), than STRATEGY#2. Therefore it lost out on the
most important factors, along with losing on other relatively less important strengths,
weakness, opportunities and threats.

Strategy 2:

This is the most effective strategy as evident by the total attractive score as their main
weakness is the stagnant growth along with a very important opportunity of great
market potential for fast casual restaurants. With threats such as growing cafes in
Pakistan, it is must that Nandos aggressively opens up outlets so it is in the
consumers’ face. This will definitely uplift the international chain image of Nandos if
it opens up in cities like Islamabad and Faisalabad along with countering the threat of
economic problems in Pakistan, as the rich, influential politicians, diplomats and
industrialists reside in such cities. These cities also have better political conditions;
thus, will give Nandos less economic loss due to strikes, riots, etc.

Strategy 3:

This strategy of backward integration received the worst score because on the most
important strength of their peri-peri sauce, it has an attractive score of 1 i.e. it is not at
all attractive relative to the other strategy, as it barely capitalizes on this particular
element. The only strength that this strategy is more useful for is “Products have
essential ingredients for a healthy life” than the alternatives is one with lowest weight
due to its relative importance. Of the weakness, the other two are better at countering
the weaknesses, while it is only better than opening new outlets in other geographical
areas in the opportunity: “people’s preference for meat” which has a relatively low
weight of 0.07. Nevertheless, it is better at combating two important threats, namely
one major supplier of Nandos and the economic situation in the country than the other
two alternatives, as this strategy will enable better supply management while facing
these two threats.

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6. Strategy Implementation

Implementing and executing strategy entails converting the organization’s strategic

plan into action and then into results. Putting a strategy into place and getting the
organization to execute it well call for different sets of managerial skills.
Implementing strategy is primarily an operations driven activity revolving around the
management people and business processes. Executing strategy is action-oriented,
make-things-happen task that tests a manager’s ability to direct organizational change,
motivate people, develop core competencies, build valuable organizational
capabilities, achieve continuous improvement in business processes, create a strategy
supportive corporate culture, and meet or beat performance targets.

Keeping our strategy of following focused differentiation, the most recommended

strategy appeared is of market development through opening of various outlets in
different geographical regions, can be implemented through following ways:

6.1 Components of Strategy Implementation

Nando’s should take into consideration the below discussed components in

implementing the strategy;

1. Building an organization with Competencies, Capabilities and Resource

strengths to carry out the strategy successfully:

Nandos expertise in Peri Peri sauces and for grilled Chicken serves as its strength
that a company is fairly good at doing and that enhances its competitiveness. The
goldilocks of unique advertising and symbolic representation of the myths add
strong hold of the organizational expertise in translating its culture to its
operational activities and in brand transformation. Nando’s has a wide worldwide
distribution and supply chain network, through which Nando’s is capable of
importing its main constituent of the recipe, that is its marinades, and also the
chicken from its sole supplier KnNs’. The forwarded myths and strong culture of
Nando’s is it’s another strong competency, the company can articulate at by
translating the corporate culture into the administrating activities. The finest
chicken from KnN’s and the imported high quality ingredients do not allow

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Nando’s to compromise at the quality dine, which can be used to strengthen the
differentiation element for the Nando’s.

Although Nandos have pool of talented, fresh and young workforce, yet they
lack energy and risk taking capabilities. Therefore, Nandos should provide proper
training to it workforce consistent to its lively and energetic culture.

2. Developing Budgets to steer ample resources into those value chain

activities critical to strategic success:

New strategies require significant budgets. Though being a global company the
resources of Nando’s are not equally or substantially granted to the local
franchisees to develop and implement strategies bringing higher initial costs to the
company. In order to implement new strategies such as product development and
market development, Nandos needs to increase its budget. The market
development strategy would subsequently increase their distribution costs and also
the product development would mean buying sea food and meat which would
additionally increase the supplier costs. Therefore, Nando’s will have to have
efficient budget in hand so as to align their budget with strategy.

3. Establishing strategy supportive policies and procedures

Nando’s need to stabilize its strategy in two important areas of concern, with
respect to the recommended strategies of product development and market
development. Firstly, Nando’s need to expand its budget for its marketing and
promotional activities, by not just promoting few of it products at an interval basis
to the set of products marketed to the masses. This shall also inculcate to drive
from audio and print marketing to media advertisements. Moreover, Nando’s also
needed to revise its policies regarding the internal communication of the
organization. Despite of the limited number of workforce, Nando’s still
experience communication gap and dispersed functional activities, not integrated

4. Instituting best practices and pushing for continuous improvement in how

value chain activities are performed

Nando’s can improve on its value chain activities by implementing the strategy of
backward integration which would help Nando’s drive the costs out of the value
chain. Nando’s can do so by initiating its own poultry farms in South Africa in
this way Nando’s would not require to import the sauces and the marinades, infact
they can directly import the chicken marinated in the Peri Peri sauces, under the
specialized supervision of the Nando’s at South Africa. This shall in long run will
cause the company to drive costs out of its value chain, and will led all the
Nando’s global franchisee’s import chicken from one place.

5. Installing information, communication, E-commerce, and operating

system that will enable company personnel to carry out their strategic
roles day in and day out

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Nando’s is weak at its internal administrative infrastructure, communication, and

e-commerce also. Despite of being a global company, Nando’s weak
infrastructure hurdles in the administrative role of the company and hinders in
delivering the effective results within the internal environment. The
communication gap also plays a worrying role by hindering a strong corporate
integrity. Moreover, lack of technical upgradation and absence of local Nando’s
website is another area of concern.

Nando’s can work over all these three basic factors to strengthen its day to day
operations to achieve effectives and efficiency of work.

6. Tying Rewards and incentives to the achievement of performance

objectives and good strategy execution

It is essentially important that the base of the rewards and incentives shall lie on
the performance of the employees. An attractive and lucrative reward system not
only motivates the employees towards optimum performance but also attract the
talented workforce. The strategy thus requires the good workforce to implement it,
and which requires fair reward system to attract and motivate employee for the
achievement of performance.

7. Creating Strategy Supportive work environment and corporate culture

Nando’s passed on culture is very strong that depicts their beleives, values, and
perceptions. The unique and energetic culture possessed by Nando’s gives it a
unique strength which is hard to compete at. But this culture is limited more
towards literate values and publications in Nando’s Pakistan than practically
adopted and implied.

One very important aspect of instilling a cultural change is that it should be more
than cosmetic, i.e. it has to be complemented by actions and real movement, and
such actions must be indicative of the management’s commitment to new strategic
initiatives and associated cultural changes. The easiest method is to engineer some
quick successes that highlight the benefits of strategy-culture change, thus making
enthusiasm for the changes contagious.

In order to finely execute the recommended strategy of product development and

market development, Nando’s should hold its key strength of unique culture and
the energy flowing from the Portuguese times, and translate them into the strong
corporate culture, and lucrative environment to work at.

8. Exerting Strategic Leadership

Nando’s strategic leadership is only possible with a strategic mind on the top.
Success of an organization depends upon the sailor who boats the voyage through
strong values, accepted culture, risk-taking mind set, and vigorous moves to

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implement the documented plans that matches with the consistent and future
customer needs, and creating a competitive edge.

In order to implement, the recommended strategy, Nando’s need to have a leader

with more of the risk-taking and managing capabilities, open to experiences and
positive to the challenges. Mangers needs to assimilate the best possible
information, research work and study, to identify problems, provide conformity
that the actions undertaken in the execution of the strategy are in the right
direction and learn what obstacles lie in the path of good strategy execution and
develop a basis for determining what can be done to remain competitive.

Since Nando’s have a small workforce operating Nando’s in Pakistan, the

corporate culture should be flatter with functional group and a strong leadership of
CEO. It is the leader who creates power and force that constitutes strategy, so that
it is implemented correctly and consistently across the organization.

6.2 Balance Business Scorecard

The balanced scorecard is a strategic planning and management system that helps
everyone in an organization understand and work towards a shared vision. A
completed scorecard system aligns the organization’s picture of the future (shared
vision), with business strategy, desired employee behaviors, and day-to-day
operations. Strategic performance measures are used to better inform decision-making
and show progress toward desired results. The organization can then focus on the
most important things that are needed to achieve its Vision and satisfy customers,
stakeholders, and employees.

The Balance Scorecard is a strategic approach and performance measurement system

that enables organizations to translate a company’s vision and strategy into
implementation, working from four perspectives:

1. Financial Perspective: To succeed financially, how should we appear to

our shareholders?
2. Customer Perspective: To achieve our vision, how should we appear to our
3. Business Process Perspective: To satisfy our shareholders and customers,
what business processes must we excel at?
4. Learning and Growth Perspective: To achieve our vision how will we
sustain our ability to change and improve?

Each of these perspectives is evaluated through objectives, measures, targets and


Objectives Measures Targets Initiatives

Financial 1. To grow 1. Capturing more 1.Increasing Opening outlets
revenues urban markets revenues by 20% in Islamabad and
2. To increase 2. Financial by the end of Faisalabad along
profits and ROI Ratios 2008 with opening
And Trend 2.Increasing ROI more outlets in

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analysis by 15% by end Karachi

of 2008
Customer 1. Attract and 1.Increased 1. Increasing 1. Stabilizing
retain more customer sales volume by delivery
customers database 35% by end of networks
2.Stabilizing 2. Repeated 2008 2.Introducing
market for customers 2. Sales of brand more variety
business loyalty cards by based menu
executives 10% by end 2008 3. Introducing
3.Increase brand Brand Loyalty
loyalty Cards
Internal 1. Backward 1. Dealing with 1. Driving costs 1. Initiating
Integration one supplier for out by 40% poultry farms in
sauces and South Africa

Learning and 1.Training and 1.Participation in 1.Pool of 1. Training of

Growth developing Decision making energetic and employees
employees 2. Measuring risk taking 2. More product
2.Accelerate demand for new workforce Research and
R&D role products 2. Introducing Development
3.Adopting 3. Extent of new and 3. Infusing
dynamic, Global culture improved global culture.
energetic and adoption products
risk taking 3. Cultural
culture Transformation

Financial Perspective

Nando’s foremost objective in terms of financial perspective is to increase its

revenues and ROI. Since Nando’s target niche market of upper-middle and upper-
upper class, the measurement of these financial objectives can be made through
capturing new urban markets in Pakistan, such as in Islamabad and Faisalabad.
Nando’s can open up their outlets in these cities and can develop their market in
new geographical regions thus increasing revenues. Moreover, Nando’s can also
expend its number of outlets in Karachi, especially in areas where it can find its
potential market such as Zamzama, Boat Basin, Stadium Road, and Sharah-e-
Faisal. Since a bigger proportion of revenue is generated from the business
executives, opening outlets at corporate localities will benefit Nando’s with more
revenues and thus increased ROI.
Also since it shall take sometime for Nando’s to develop its market in Islamabad
and Faisalabad, despite of expected substantial revenues, the new geographical
regions may not be able to reap greater ROI for the company; and the targeted
ROI from these regions shall remain comparatively low than the already
operating outlets and new outlets in Karachi. Therefore, though we can target
good revenues from the new geographical regions, the total contribution to ROI
shall not be very attractive from these new regions for the next 7-8 months. The
financial ratios and trend analysis can further measure the success of the objective
attainment at the end of the operating year.

Customer Perspective

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Since Nando’s is opting for market development, it can firmly constitute its
objective of attracting and retaining customers with respect to the customer
perspective. The majority of the customers walking into Nando’s are business
executives coming for lunch. This grants a good market to Nando’s for stabilizing
the market for the business executives through Nando’s Loyalty Cards.

Nando’s Loyalty Cards

Nando’s loyalty cards are the premium corporate discount cards, that allows 50
dines on a single card, valid for 6months at a discounted price. These cards can be
bought by the organizations to use them as a short term reward or as a means or
appreciation for the employee, and award them at their performance
measurement. The minimum number of cards an organization can purchase shall
range from 15-20. The organization shall pay for 20x 50 dines at one point of
time, thus increase in revenues for the company. This will give advance revenues
for the company that is before a sale was actually made. This method is effective
to increase the sales, attracting business executive, and creating more demand for
the Nando’s Loyalty Cards.

Moreover, Nando’s can make its delivery network more effective and strong to
meet the needs of the corporate and regular customers. Another initiative that can
be taken to attract and retain customers is through more variety based menu. This
will require Nando’s to introduce new products and beverages. The attainment of
these objectives can be measured through increased customer database and
repeated customers walking in the outlet.

Internal Perspective

Nando’s can exercise backward integration by initiating its own poultry

operations through farming chickens in South Africa. Currently Nando’s is
importing its Peri Peri and other main sauces from South Africa, and buying
chicken from KnN’s, where these sauces are send to be marinated. This whole
process of importing sauces, buying expensive chicken from KnN’s and paying
extra for marinating that chicken costs a high amount to Nando’s , resulting
diminishing profit margins. Moreover, the uncertain economic conditions of
Pakistan regarding Bird Flu also have adverse affect over the sales of Nando’s.
This can be rectified by importing chicken from Nando’s own farms under the
hygienic processing, free from bird flu endangers. The chicken imported shall be
already marinated into Peri Peri secretive sauces and Nando’s Pakistan can
simply import the marinated chicken from South Africa, having vast cost
reduction in supply chain process, and can refrigerate it at their respective outlets.
The whole process can drive out the costs on an estimation of 40%.

Learning and Growth

Since the strategies proposed and the objectives undertaken revolves around the
market and product development, Nando’s need to put great emphasis on the
training and development of the employees in managing these objectives and to
further training the new hired employees in accordance to the increasing

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operations in various regions. Moreover, the company needs to exert a dynamic,

energetic and risk taking culture to encourage the workforce move vigorously in
implementing the strategies and taking and managing calculated risks in market
development process. Also since, Nando’s is recommended for product
development, another objective of Nando’s shall be to accelerate the R&D
activities in introducing new products, for a variety based menu. These objectives
can be achieved through more product research and development, training
employees and infusing global culture in Nando’s Pakistan. Nando’s shall also
require to focus its targets such as generating a pool of energetic and risk taking
workforce, introducing new and improved products and exercising cultural

7. Diagnostic Survey of Primary and Secondary

Management Practices

STRATEGY Inferior Average Superior

1 2 3 4 5
The company has a clearly articulated
and widely understood strategy.
The company has strong external
antennae and quickly anticipates
external shocks, emerging
opportunities, and market downturns.
The company has a very good
understanding of its competitors and
can anticipate competitor’s moves.
The company is focused on
extending/improving its core business
or businesses and is committed to
growing them aggressively.
Subtotal of strategy score 9

EXECUTION Inferior Average Superior

1 2 3 4 5
The company’s product’s and services
consistently meet customer
The company consistently improves
employee productivity.
The company’s programs and
initiatives consistently achieve desired
The company’s IT systems enhance its
ability to execute its value proposition.
Subtotal of execution score 13

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CULTURE Inferior Average Superior

1 2 3 4 5
The company sets demanding
performance standards for all of its
The company consistently raises the
performance bar.
The company’s culture is exciting,
engaging and fun.
The company has clear values that
people in the company can abide by.
Subtotal of culture score 13
1 2 3 4 5
The company makes decision quickly.
The company minimizes bureaucracy.
The company’s business processes are
The company effectively cooperates
across the organization.
Subtotal of organizational structure 13

TALENT Inferior Average Superior

1 2 3 4 5
The company has great “talent” and
“bench strength” at each position.
The company successfully develops
The company designs jobs that
intrigue and challenge talented
The company‘s senior management is
personally involved in recruiting and
developing talent.
Subtotal of talent score: 8

QUALITY OF CEO/BOARD Inferior Average Superior

1 2 3 4 5
The CEO is uncanny at spotting
opportunities and problems before others.
People at all levels of the organization
feel connected to the CEO.
The CEO matches words with actions
(“walks the talk”).
The company‘s board members know the
business and have a significant stake in

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the success of the company.

Subtotal of CEO/Board score: 13

INNOVATIVE CAPABILITY Inferior Average Superior

1 2 3 4 5
The company is continually transforming
or reshaping its industry.
The company’s product’s, devices or
innovations are better than those of its
The company does not hesitate to
cannibalize its existing business or
People who have new ideas are respected
and enjoy high status in the company.
Subtotal of CEO/Board score: 10

Total Score: 79

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8. Making 4 + 2 Work for Nando’s

A list of behaviors that can support excellence in of the management practices are
outlined below:

Primary Management Practices

1. Strategy

Nando’s customers want it to open up outlets in Islamabad and also in more

locations in Karachi. Also, the customers want more variety in the menu.
Therefore, Nando’s should build a strategy of market development and product
development around what the customers really want. Similarly, Nando’s should
also fine tune its strategy based on the changes that take place in the marketplace.
Simply coming up with a new strategy doesn’t work; the strategy also needs to be
communicated to customers and also to the employees within the organization. To
do so, Nando’s should stay focused on its strategies.

2. Execution

The customers at Nando’s expect the same quality grilled food, fun and energetic
environment and efficient service whenever they come to Nando’s anywhere in
the world. To do so, Nando’s should put the decision making authority close to
the front line employees so that they are better able to react to the changing
market conditions. Nando’s should also improve its productivity at a rate that is
roughly twice the twice the industry average.

3. Culture

Nando’s culture is an entrepreneurial culture which means that it should

encourage energetic, dynamic and risk taking culture. The entrepreneurial
spirit of Nando's can attract talented people. Therefore the people at Nando’s
should embrace the same values of pride, passion, courage and integrity. In
the same way, Nando’s should also empower its employees to make
independent decisions so that they themselves are able to find ways to
improve operations. Nando’s should continuously reward the high achievers
within the organization and at the same time keep raising the performance bar,
so that the employees keep on improving their performance. Rewards don’t

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necessarily mean financial rewards; they can also be psychological ones.

Since Nando’s culture is an entrepreneurial culture, therefore, it should create
a challenging and satisfying work environment. Also, Nando’s should create
an environment where its people abide its core values.

4. Structure

The structure of the company should be such so that it reflects simplicity in which
it’s easier to work in and with the organization. Nando’s can do so by promoting
cooperation and exchange of information across the whole company. This would
further reduce bureaucracy.

Secondary Management Practices

5. Talent

Nando’s does have a lot of young employees. It can hold on to talented employees
and develop them more by filling mid and high level jobs with outstanding talent.
Also, creating and maintaining effective training and development programs, by
designing jobs that challenge the best performers and keeping the senior
management involved in the selection and development of people.

6. Innovation

Nando’s seriously needs to come up with more new and innovative products.
Also, it should not hesitate to cannibalize existing products. Furthermore, Nando’s
need to enhance all its operating processes.

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9. References

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