STRATEGIC MANAGEMENT PLAN

Submitted in preliminary fulfilment of the requirement for the

Qualification: Advanced Dip Business Management

COLLEGE OF BUSINESS AND ECONOMICS

UNIVERSITY OF JOHANNESBURG
CAMPUS: APB
By
Group Leader’s Full Name & Surname: Edward Moyo
Student Number: 216075158
Contact Details: 081 329 1785
E-Mail: edwardmoyo9@gmail.com
Due Date: 27 October 2020
 DECLARATION BY STUDENTS

I, the undersigned do solemnly declare that:

 I understand that plagiarism means presenting the ideas and words of

someone else as my own, without appropriate recognition of the source.
 I confirm that the work that I submit for assessment is our/my own,
except where I explicitly indicate otherwise.
 I have fully acknowledged all words, ideas and results from other sources
that I have used in this assignment through a generally accepted style of
quotes, references and bibliography.
 I am aware that the university views plagiarism as a serious offence
punishable by a disciplinary committee.

Student No. Surnames Initials Individual Signatures

Contribution
(100%)

1 217032210 PULE KD

2 217094837 MAGAZI P

3 216075158 MOYO E

4 201444522 NEMADODZI T

5 200621186 NGEMA P

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Contents
INTRODUCTION ................................................................................................................................. 4
ORGANISATIONAL DIRECTION ........................................................................................................... 5
Vision ............................................................................................................................................ 5
Strategic intent .............................................................................................................................. 6
Mission Statement......................................................................................................................... 6
EXTERNAL ENVIRONMENTAL ANALYSIS ............................................................................................. 6
External Analysis ............................................................................................................................... 7
Political environment................................................................................................................. 7
Economic Environment .............................................................................................................. 7
Socio-cultural environment........................................................................................................ 7
Technological environment........................................................................................................ 7
Ecological environment.............................................................................................................. 7
Market and Industry Analysis ............................................................................................................ 7
Threats of new entrants ................................................................................................................ 8
Bargaining power of suppliers........................................................................................................ 8
Bargaining power of buyers ........................................................................................................... 8
Threat of substitute ....................................................................................................................... 8
Rivalry with existing competitors ................................................................................................... 8
Internal Environment Analysis ........................................................................................................... 8
Strengths ....................................................................................................................................... 8
Weaknesses................................................................................................................................... 9
Opportunities ................................................................................................................................ 9
Threats .......................................................................................................................................... 9
STRATEGY FORMULATION ................................................................................................................. 9
Corporate level strategy ................................................................................................................ 9
Generic Strategies ....................................................................................................................... 10
Grand Strategies .......................................................................................................................... 11
Internal Growth Strategies ....................................................................................................... 11
External growth Strategies ....................................................................................................... 11
STRATEGY IMPLEMENTATION .......................................................................................................... 11
STRATEGY CONTROL AND EVALUATION........................................................................................... 13
CONCLUSION ................................................................................................................................... 14
RECOMMENDATIONS ...................................................................................................................... 14
REFERENCE LIST ............................................................................................................................... 15

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INTRODUCTION
Pick n Pay was founded in 1967 by Raymond Ackerman and is one of the best-known
retailers in Africa for food, clothing and general goods. The company has consistently
expanded tremendously, now with stores in South Africa, Namibia, Botswana, Zambia
and others, throughout Southern Africa. PnP established a strategic three-phase
turnaround plan for 2013 to return the company to a position of long-term profitable
success, with three broad goals to be achieved; 1. Boost revenues in line with or ahead
of the competition by offering fierce competition, in their service and innovation to
customers; 2. Achieving high efficiencies and reduced production costs to optimize
reinvestment in consumer products and 3. Reconstruct the traditionally sustainable
margin of profit before tax.

Since 1976, their 'No Name' brand products have become part of their brand, pushing
for the 'good standard for less,' which specifically focused on their target demographic
in the moderate to high-income bracket. Focus is made on offering groceries, clothing
and general products, as well as complimentary added value offerings to satisfy
consumers' preferences and changing needs. The positioning of the company has
already been identified as they are well recognised for their outstanding quality
standards and their recognizable branding across Southern Africa. PnP has
established customer relationships through the Smart shopper software, which
facilitates engagement with their customers as it enhances satisfaction and lets the
customer experience a sense of independence when purchasing what they want. PNP
has ensured a long-term vision, as it has been for over 40 years. However, as
successful as it is Pick n Pay has faced challenges in implementing lucrative strategies
in order to keep them ahead of their competitors.

According to Ehlers & Lazenby (2019), strategic management is characterized as

a method in which the organization creates and executes plans that are integrated
within the organisation to execute developed goals consistent with the priorities
and objectives of the organization. In addition, strategic management involves
recognising the strategic role of the organisation and focus on making strategic
decisions for the future and managing the plan in motion. This assignment will
focus on how PnP can implement different strategies in order to continue satisfying
their customers; and in return gain a competitive advantage.

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ORGANISATIONAL DIRECTION
The first phase of the strategic management process is setting up the organisational
direction, which focuses on creating aspects that employees and managers of a
business need to follow. According to Ehlers & Lazenby (2019), for a business to view
their ideal future they must have a proper direction by creating a vision statement that
will guide employees and managers on how they must do business. Strategic leaders
develop the organisational direction in two ways mostly through the vision and mission
statement while other organisations make use of the vision statement, mission
statement/strategic intent and values to develop their strategy.

Vision
The vision statement is the first step to consider when formulating the strategic
management process since it focuses on the future and dreams of an organisation as
it answers the question “what do we want to become?”. The statement needs to be
clear, feasible, motivational and must serve as a basis for strategy design for it to be
carried out by all employees for the business to achieve its strategic objectives (Ehlers
& Lazenby, 2019).

The company's vision must be shared within the organisation for a generated
commitment that will indicate the desired future that will be achievable, create tension
between current realities and desired outcome, sustained and nurtured during all
strategic conversations. However, a vision statement must not be used as a solution
to a current problem, not about vague concepts, hanging on the office walls but rather
be in the hearts and minds of people (Ehlers & Lazenby, 2019).

Pick n pay’s vision is to have a business that is focused on the needs and aspirations
of their customers (Pick n pay Integrated Annual report, 2020). Pick n pay is living up
to their vision, during the beginning of the Covid -19 pandemic they provided
communities with food through their initiative drive “Feed the Nation campaign”,
stocked enough food as well groceries for their customers and cleaned their stores
regularly and, marked their store floors with social distancing stickers and had their
entrances controlled by screening and sanitising all their customer to curve the spread
(Pick n pay Integrated Annual report, 2020).

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Strategic intent
Ehlers & Lazenby, (2019:64) define strategic intent as an “envisions a desired
leadership position and establish the criterion the organisation will use to chart its
progress”. It gives direction, discovery and destiny to the employees of the
organisation when leaders develop the main goals that keep the organisation focused
on achieving their short term or long-term goals. Setting such goals requires the entire
organisation to be committed to finding better ways to improve the organisation
situation and gain a competitive advantage.

Pick n pay’s management team ensures that their strategies remain relevant and
responsive by guiding and overlooking the business operations. The decision-making
process of Pick n pay considers the environmental, social and governance issues to
support sustainable stakeholders value creation (Pick n pay Integrated Annual report,
2020).

Mission Statement
A company’s mission statement is the mandate that the organisation sets for itself to
accomplish its strategic goals and it needs to be clear just like a vision statement. Its
focus is on the purpose of existence, competition and behaviour of the organisation
within the industry. The mission statement must address the interest of the
organisation's stakeholders, such as the product, market and technology (Ehlers &
Lazenby, 2019).

Pick n pay’s mission statement reflects the business’s projected image, attitude,
outlook and orientation as well as the statement of intent, it indicates how the
organisation sees its stakeholders. The organisation’s culture is also addressed in the
mission statement by examining the behavioural standards before touching on their
values. Pick n pay invests in their communities by employing people from the
community.

EXTERNAL ENVIRONMENTAL ANALYSIS

According to PESTLE analysis Contributor (2015) environment analysis is a strategic
tool, which consists of the external and internal analysis which may have an impact on
the organisation's performance. External environment analysis is more about what is
going on outside the organisation it has dimensions such as the macro environment
as well as industry and market environment. Whereas the internal environment is all

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about what’s happening inside the organisations with dimensions like the SWOT
analysis and internal analysis for effective strategy development.

External Analysis
Political environment
Consists of how the government tries to influence organisations through its laws and
regulation that guide the organisation. Pick n Pay has to be alert of all the government
policies based on business as well as the tax laws that the government has regulated.

Economic Environment
Organisations are affected by countries economical standing. South Africa’s economy
is unstable because, as we’re currently in a recession many businesses are pulling
out. Pick n Pay has to work out a way to predict what the economy might be like.

Socio-cultural environment
Focuses on society's attitudes and cultural values. Pick n Pay needs to take note of
South Africans attitudes and make sure that no cultural values are disobeyed. The
organisation should be able to provide whatever customers demand to keep them
happy.

Technological environment
Changes many aspects of how companies operate. Every day there's a new way of
doing things. Pick n Pay has to adjust to the 4th industrial revolution by providing
customers with the latest products and services.

Ecological environment
Refers to the relationship between the organisations, human beings as well as air, soil
and water in the physical environment. Pick n Pay needs to run campaigns such as
recycling or providing garden tips and other ways to make a better environment for all.

Market and Industry Analysis

According to Ehlers & Lazenby (2019), industry or market refers to a class of
organisations that develop similar products that are close substitutes for one another,
which customers can swap for, resulting in competition. An industry is formed by
similar competitors combatting for customer attraction.

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Threats of new entrants
The barriers to entry would be a business license as a registered business, health and
safety certificate according to the Health Act 1997; giving clearance to the safety
measures in place to handle food, a liquor license to enable you to sell any form of
alcohol and a license from The Southern African Music Right organisations as well as
the southern African music performance right association covering the rights to play
music (Pillay, 2020).

Bargaining power of suppliers

Pick n Pay is contracted by big brands and suppliers that provide goods and stack it
in shelves as well as run their promotions, which is ideal to keep the cost down for
Pick n Pay, information concerning savings on economies of scale is not available
their trade expenses reached up to R16 billion however their annual turnover grew
from 16.1% to 16.9% showing growth.

Bargaining power of buyers

Pick n Pay base their customer segment on a geographic segment, being based in
large communities and providing products prevalent in the community.

Threat of substitute
The threat of a substitute is based on current rivals that sell a similar product like their
current rivals. The price difference is minimal and the market is based on proximately.

Rivalry with existing competitors

According to the Pick n Pay annual report they occupy 15% of the formal Grocery store
market, their main national competitors would Spar, Checkers, Shoprite and
Woolworths, this is the concentration variable in an industry.

Internal Environment Analysis

According to Ehlers & Lazenby (2019) SWOT analysis is a framework that consists of
strengths, weaknesses, opportunities and threats. SWOT analysis is used by an
organization to evaluate its competitive position and to develop strategic planning.
Furthermore, it is used to assess internal and external factors, as well as current and
future growth potential. Organisations like Pick n Pay use the SWOT analysis to
establish their core competencies in resources.

Strengths
Strengths refer to an integral part of the organisation that describes what an
organisation excels at and what separates it from the competition. Pick n Pay’s

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strengths are; it has a cost advantage due to economies of scale, customer’s loyalty
is high due to strong focus on providing the service, strong brand equity, strong supply
chain and rapid online growth.

Weaknesses
Weaknesses refer to the disadvantages of an organisation in comparison to its
competitors, they hinder an organisation from performing at its optimum level . They
are areas where the business needs to improve to remain competitive. Pick n Pays
weaknesses are; Slower rollout into emerging markets, the size of the organisation had
made the company complacent in its operations leading to loss of major market share.

Opportunities
Opportunities are favourable external factors to the organisation as it provides room
for expansion and growth. Pick n Pay opportunities are adding new exclusive brands,
rebranding the company and franchising.

Threats
Threats refer to factors that have the potential to harm the organisation. Pick n Pays
threats are product substitution, different types of competitors and external changes.

STRATEGY FORMULATION
The strategic formulation is a process where organisations determine and establish
their goals, mission and objectives as well as, to choosing the best plan of action
among all alternative strategies that the organisation is set to achieve (Belyh, 2019).
When doing a strategic formulation an organisation needs to look at different strategies
such as corporate-level strategy, generic strategies, and grand strategies.

Corporate level strategy

According to Avishkita (n.d), corporate-level strategy defines the overall strategic plan
and/or long term goals of the organisation. With a company like Pick n Pay, the
organisation needs to do proper planning. According to Ehlers & Lazenby (2020), it
has to focus on goals and objectives such as, profitability and return on investments,
which is important because Pick n Pay has to make a profit and return all the money
it has spent on products and services it sells. The company needs to ensure
productivity and employee development because it is important to look after your
employees so that they can serve the customers well. Lastly, Pick n pay is going to
have to maintain a competitive position in its industry so that the company appeals to
customers in the fast-moving customer goods industry.
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The corporate goals are going to have to be in line with Pick n Pays corporate strategy
which will determine the future position and growth of the organisation. These include
the following: (1) Geographic expansion where Pick n Pay expands to different places.
The company has different types of retailers like Pick n Pay hypermarket,
supermarkets and one that can be added are spaza shops. (2) Diversification into
adjacent industries offering food from different brands, clothing, appliances and
services such as selling of electricity and water. It has been able to cater to most of
the individual's needs, where one doesn't have to go to different stores to get all their
items but can go to one store and buy everything. (3) Mergers and acquisitions where
Pick n Pay has merged with Boxer stores, Engen and BP garages as well as Fruit and
Veggie. Since Pick n Pay is looking into diversification into adjacent industries maybe
merging with companies that provide hardware or furniture or even medication.

Generic Strategies
While there are numerous strategies identified by organisations, the Porters generic
strategies remain the most commonly known and supported strategies. These
strategies are used to achieve above-average performance in the company. According
to Tanwar (2013), these strategies help companies gain a huge competitive advantage
as it gives them a solid plan of what route to take. Using generic strategies comes with
a lot of risks, however, organisations still make use of them because their risks are
calculated. These strategies consist of Cost Leadership, Differentiation, Focus and
Best- cost- strategy.

Pick n Pay should use focus strategy where it focuses on a specific target market.
Their target market would be low and medium-income families and most rich
households. The store offers a wide range of groceries with different brands, general
merchandise and services. The aim is to provide customers with fresh foods and an
unbeatable customer service that will enable customers to return. The business will
be able to move into multiplatform and multi-channel retail which offers clothing, liquor,
medication and online platforms. The competitive advantage that the strategy brings
is that their main focus is to provide specific customers with the best products and
services.

It also offers convenient service for customers, where customer can do all their
shopping and pay bills such as water, electricity and others. The organisation offering
the customers extra incentives will keep customers coming back, as most of their

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needs and wants are met in one store. However, this strategy is only best when the
target market is large enough to generate profits, organisations need to meet the
specialised needs of the niche market, the customer is brand loyal and likely to shift
their loyalty and lastly, it's for customers who are willing to pay the price for whatever
services and products.

Grand Strategies
According to Clark (2017), grand strategies are strategies used to achieve an
organisation long term goal. These strategies contribute to the whole shaping of the
organisation. Since Pick n Pay is going to be using the focus generic strategy, it can
only use specific grand strategies that are in line with the generic strategy. This grand
strategy focuses on internal growth strategies and external growth strategies.

Internal Growth Strategies

Concentrated growth refers to the market penetration of Pick n Pay which aims to
increase market share by concentrated market efforts (Pearce, Mason et.al, 1990).
Pick n pay needs to stay focused on their present market and the present products
and services. Whereas, product development refers to the improvement and modifying
of products and services to increase sales. Pick n Pay has to partner with different
brands especially ones that are in their maturity stage so that it offers customers the
best products. It's also important to offer a variety of products from different brands
that won't limit the customers.

External growth Strategies

There are many external growth strategies, however concentric diversification and
strategic alliance are the only 3 that link to Pick n Pay. (1) Concentric Diversification
refers to an organisation adding related products and services to the product offering.
Pick n Pay can keep on adding other innovative products from new suppliers into their
offering. (2) Joint Ventures is a partnership that is temporarily formed by two or more
organisations to get profits on an opportunity. Pick n pay can create a joint venture
with petrol stations, local spaza shops, and local companies. Joint ventures allow Pick
n Pay to enter new markets in a new geographical area

STRATEGY IMPLEMENTATION
This is the most critical new phase in the management process that follows after
strategies have been formulated. Strategic implementation is all about putting strategy
into action. Organisations like Pick n Pay operate in ever-changing business

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environments where there is an implementation of strategies and innovation is a
leading factor. Therefore, all levels of management must be responsible for top
management to supervisory levels; middle management is responsible to make sure
strategy implementation reaches into all business functional areas.

According to Business Day (1999), organisations need to focus on barriers to strategy

implementation. The barriers to strategy implementation are the following:

 Organizational structure and strategy have no alignment.

 The information and communication systems (ICS) is insufficient to provide
progress concerning strategy implementation.
 Implementation coordination efforts are ineffective.
 Top management and middle management failed to provide adequate
leadership and direction.
 Employees do not understand the goals set clearly and the strategy formulators
are not present in the implementation process.

Therefore, Pick n Pay’s strategy implementation must consider the following issues at
all times: environmental responsibility, sustainability, social responsibility and
stakeholder engagement. An organisation that fails to take this into considerations
could have its strategy implementation efforts jeopardized.

When implementing strategies organisations use various strategy implementation

drivers namely reward systems, leadership, organizational structure, organizational
culture and resource allocation. According to Ehlers & Lazenby (2020), leadership and
organizational culture are sought to be the important drivers with reward systems as
a motivating factor for employees for them to embrace a change and those that are
doing well are often rewarded. Therefore, Pick n Pay needs to select environmentally
sensitive strategies, cost-effective, offer a competitive advantage, meet their
customers’ expectations and in return should yield higher profits. According to Belyh
(2019), there are five steps in strategic implementation which Pick n Pay should follow
when executing the formulated strategies.

Evaluating and communicating of the strategic plan - This step includes aligning of
strategies with initiatives, as well as aligning of annual goals and objectives to budget,

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communicating and clarifying objectives and strategies to all employees of the
organisation.

Developing an implementation structure - Determining of key managerial tasks and

responsibilities that need to be carried out and delegate the activities to the right
individuals, key operational tasks should be determined and assigned to the right
individuals. Tasks must be assigned to relevant departments of Pick n Pay where
staffing structure should be evaluated for effectiveness.

Developing implementation support programs and policies - Pick n Pay must establish
performance management systems that will monitor every employee performance.

Budgeting and allocating resources - Pick and pay should equip the implementers with
budget and resources.

Execution of activities - This is the stage where everything is operationalized, Pick n

Pay must provide continuous engagement of employees by offering training.

STRATEGY CONTROL AND EVALUATION

According to Ehlers & Lazenby (2019), strategic control is a key attribute to determine
and deliver predetermined results through two main methods of reviewing content,
evaluating and controlling the execution process. In essence, control is monitoring a
strategy thoroughly to ensure the intended results are achieved, with feedback.
Feedback allows adjustment to attain the best results. They are different control
measures namely;

Premise control is used to determine and verify systematically and continually whether
the broad and information the strategy is based on are valid.
Strategic surveillance the firm identifies and invigilates a range of events inside and
outside the organisation that may affect the strategy of the business.
Special alert control Is a rapid reconsideration of the strategy upon an unexpected
event.
Implementation control that is exercised as the implementation process is underway.

Following Pick n Pay’s strategic outline their long term goals aim to grow sales by
providing great value service and innovation for customers, achieve high levels of
operating efficiency and lower cost to enable maximum re-investment and restore the
underlying profit before tax margins to a sustainable historically sustainable level. The

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best control strategy to suit the retailer would be strategic surveillance as it has room
for flexibility.

Evaluation is a way to monitor the current or past strategy for continuous improvement,
there are 3 main evaluation methods to sustain a competitive advantage for
continuous improvement. Benchmarking is a process of developing a yardstick of
progress to measure the current state, the yardstick tends to be the best in the industry
to increase competitiveness. Total quality management is aimed at designing and
delivering high-quality products to customers which improves organisational
performance. According to Rouse (2017), TQM’s objective is to reduce wastage and
increase efficiencies by improving the production process. Lastly, re-engineering is a
process or reorganising the organisation into a system that creates value for
customers by shortening the value chain and eliminating barriers

In Pick n Pay’s annual report we see an evaluation of the company’s previous terms,
their mandate from 2013 t0 2015, the group aimed to stabilise their operations and the
financial position and in 2016 to 2020 the planned to change the trajectory through
optimising product range, lower prices and more attractive promotions all the win
customers over, we see here the retailer used re-engineering to maintain the supply
chain and eliminate any unnecessary barriers. They achieve 130 new stores, 5 000
new or redesigned products, increase online sales by 17%. I would recommend Pick
n Pay make use of total quality management to improve the quality overall and reduce
wastage.

CONCLUSION

RECOMMENDATIONS

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REFERENCE LIST

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The Next Generation Library. Available from:
https://www.yourarticlelibrary.com/strategic-management/types-of-corporate-
level-strategies/99697
2. Belyh, A. (2019) Steps to strategy formulation. Cleverism. Available from:
https://www.cleverism.com/strategy-formulation-
guide/#:~:text=Strategy%20formulation%20is%20the%20process,alternative
%20strategies%20to%20achieve%20them.&text=That%20route%20or%20fra
mework%20will%20be%20created%20through%20strategy%20formulation.
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businesses-
14377.html#:~:text=Grand%20strategies%20are%20major%2C%20overarchi
ng,from%20product%20development%20to%20liquidation.
5. Ehler, T. And Lazenby, K. (2020). Strategic Management: Southern African
Concept and Case. Fourth Edition.Pretoria. Van Schaik Publishers
6. Harvey, J. A and Pearce. J. A. (1990) Concentrated Growth Strategies.
Academy of Management Executive. Vol 4(1).
7. Lazenby, J.A.A (Ed.). 2018. The strategic management process: South African
perspective, 2nd ed. Pretoria: Van Schaik
8. PESTLE analysis Contributor. (2015). what is Environmental Analysis?
Available from: https://pestleanalysis.com/what-is-environmental-analysis/
9. Pillay, C. (2020). Licensing and Permits For The Food Industry | SME SA.
[online] SME South Africa. Available at: https://smesouthafrica.co.za/FAQs-
licenses-and-permits-food-service/ [Accessed 24 Oct. 2020].
10. Pick n Pay (2014) Strategic Focus. Integrated Annual Report. Available from:
https://www.picknpayinvestor.co.za/financials/annual-reports/2018/strategic-
focus.php
11. Rouse, M. (2017). Total Quality Management (TQM). [online] SearchCIO.
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Management
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