BINDURA UNIVERSITY OF SCIENCE EDUCATION

FACULTY OF COMMERCE

GRADUATE SCHOOL OF BUSINESS (GSB)

‘Where Great Minds Meet’

MASTERS IN BUSINESS LEADERSHIP (MBL)

COURSE NARRATION : Strategic Management

COURSE CODE : MBL514

LEVEL : 1.1

LECTURER : Prof. M. Dandira

GROUP 4: ASSIGNMENT 3

GROUP MEMBERS

ANDREW KWANGARI B230328A

STEPHEN MADZORERA B112873

TAPIWA NAMAKAWA B227806A

FARAI BYRON NYAMUPINGA B214170B

ANITA NKOMO B227646A

TENDAI A KUNAKA B230327A

a) Explain the cooperate strategy being pursued by Econet Wireless

The competitiveness of Econet Zimbabwe to a large extent depends on the choice of generic
strategies pursued at any given time and it has employed differential strategy for its survival
in the mobile industry. Business strategy is needed by a firm to conduct their business
operations in order to improve the profitability of a firm. Differentiation strategy is one of
Porter’s typology of business strategies that focuses on creating unique and high
quality products to differentiate their products from their competitors giving advance benefits
to the customers offering their products with premium price, and investing more in
research and development activities (Sammut-Bonnici, 2015).

The differentiated strategy is a strategy that prioritizes innovation process both product
innovation and process innovation. Innovation plays an important role as one of the key
success factors for a company to achieve a sustainable competitive advantage. Increasing
competition, unceasing turbulence, the pace of globalization, the pace of technological
development, change and uncertainty have led to the introduction of innovations in various
fields. The role of innovation is an important factor in gaining competitive advantage in the
mobile service industry.

The fundamental assumption behind a differentiation strategy is that customers are willing to
pay a higher price for a product that is distinct in some critical way. Superior value is created
because the product is of higher quality, is technically superior in some way comes with
superior service, or has a special appeal in some perceived way(Sammut-Bonnici, 2015). In
effect differentiation builds competitive advantage by making customers more loyal and less
price sensitive to a given firm’s product. Additionally consumers are less likely to search for
other alternative products once they are satisfied.

Differentiation strategy can bring firms more sustainable performance in the long-term run.
Econet use differentiation strategy as its business strategy to achieve certain financial goals
due to its high profit margin and competitive advantages. Firms such as Econet are also able
to maintain their position in the market by their sustainability of business performance even
in higher market competition. High profitability and ability to survive in the market make
firms improve their business performance.

b) Comment on the above corporate strategy in the context of the three test of a good
and winning strategy
1. The Fit Test
 A good strategy has to be well matched to industry and competitive conditions, an
organisations most profitable or advantageous market opportunities and other pertinent
aspects of the business environment in which the organisation operates. In the case of
Econet the differential strategy has proven to be feasible since the mobile market in
Zimbabwe is still growing customers are more likely to go for more superior products.

Assessment of a strategies internal fit should also assess whether the organisation has the
ability to execute the strategy in a competent manner and how feasible it is to deliver the
strategy.

2. The Competitive Advantage Test

The Econet strategy has proved to be very competitive given the increase in market share it
has enjoyed since employing this strategy. Strategies that fail to achieve a durable
competitive advantage over rivals are unlikely to produce superior performance for more than
a brief period of time. Good strategy has enabled Econet to achieve a competitive advantage
over key rivals that is long lasting. The better and more durable the competitive advantage,
the more powerful and sustainable it is.

3. The Performance Test

The mark of a good strategy is strong organisational performance. Performance indicators

typically include measures of profitability and financial strength, such as return on equity or
the organisations credit rating or measures or competitive strength and market standing, such
as market share. Econet has gained huge chunk of market almost three quarters which also
translate to profitability the strategy has worked well as far as performance test is concerned.

c) Discuss the strategic options that can be adopted by Econet Wireless for Voice
Service market
Since Econet has managed to secure large market share on voice services it has options to
adopt different strategies with regards to that service this include cost leadership strategy.
According to Porter's Generic Competitive Strategies, cost leadership, a firm sets out to
become the low-cost producer in its industry. The sources of cost advantage are varied and
depend on the structure of the industry. They may include the pursuit of economies of scale,
proprietary technology preferential access to raw materials and other factor.

In terms of Econet cost leadership source maybe due to economies of scale and experience
differences and learning curve economies.

Economies of scale; Thus, when a firm has the lowest average cost per unit, it will achieve a
cost benefit over its competitors. A firm can achieve this by using specialized machines,
building larger plants, increasing employee specialization, spread overhead costs over more
units produced.

Experience differences and Learning Curve economies: Past experience with product, can
be utilized into higher efficiency, since works with higher skill level and knowhow can
produce more efficiently, than new works without experience(Dess & Gerry, 2016).

If the firm can achieve and sustain overall cost leadership, then it will be an above average
performer in its industry, provided it can command prices at or near the industry average.

The goal of Cost Leadership Strategy is to offer products or services at the lowest cost in the
industry. The challenge of this strategy is to earn a suitable profit for the company, rather than
operating at a loss and draining profitability from all market players. This strategy involves
the firm winning market share by appealing to cost-conscious or price-sensitive customers.
This is achieved by having the lowest prices in the target market segment, or at least the
lowest price to value ratio that is price compared to what customers receive(Sammut-Bonnici,
2015). To succeed at offering the lowest price while still achieving profitability and a high
return on investment, the firm must be able to operate at a lower cost than its rivals.

Low costs always encourage customers to stick to a brand unless other brands are offering
something extra. It ensures that the firm has a strong and more market presence. A firm
enjoying cost leadership is in a better position to absorb any increase in price from suppliers.
Their low-cost structure helps them to absorb the price rise without marginally passing the
same to the end user.

Cost Leadership is a very effective strategy. A company that is able to successfully achieve
this strategy could ensure long term success. The biggest risk, however to a company
following this strategy is that rivals could imitate the cost reduction strategies. Thus it is very
crucial for the cost leader to continuously find ways to reduce the cost(Dess & Gerry, 2016).
Companies adopting this strategy focus mainly on reducing per unit costs. It could lead to
overlooking other crucial factors, such as research and development, studying market trends,
and the macro environment. Overlooking these factors could lead to the company losing its
hold on the market in the long term. Other downside of this strategy is that competitors can
easily imitate it. Once the competitors are able to achieve similar cost advantages, the entry
barrier is broken. It could result in the cost leader losing its competitive advantage in the
short run.

In light of the above characteristics comment on the vision and mission statement for
Econet Wireless Zimbabwe.

Econet has used vision statement strategically to help the organization in long term planning
scenario building issue identification and analysis and helping to determine the best
allocation of limited resources. The vision statement allowed the organization to operate
consistently towards a future it has defined as successful and worthy of attainment. The
market share of the organisation is continuously growing and reaching all corner of the
country, closely fulfilling the vision of providing telecommunication service to all
Zimbabweans

The mission statement must be used in discussion of managerial dilemmas, routine decision
making, and problem solving. To help create competitive advantage and build teamwork and
long-term organization public relationships the mission statement must become an essential
fibre that is woven throughout the organization culture and pervades its operations. Econet is
not living up to its mission statement the growth of Econet is not really attributed by its
efficiency but poor competitors. However its pioneering in technology since it’s the first to
roll out 5G.
 REFERENCES

Dess, G. G., & Gerry, M. (2016). Strategic management: text and cases, eighth edition
(eighth edition). McGraw-Hill Education.
Sammut-Bonnici, T. (2015). Strategic Management. In Strategic Management (First Edition,
p. 521). University of Malta. https://doi.org/10.1002/9781118785317.weom060194