SWOT ANALYSIS AND SUSTAINABLE COMPETITIVE ADV ANT AGE OF THE SELECTED FIRMS

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The market structure in which the firms listed on the JSE food sector operate

From the foregoing it is clear that there are not many listed food firms in South Africa (see table 1.5 in section 1.2). The number and size of firms relate to market structure or industry form. Industry form refers to the classification of the industry according to the existing competitive situation, for example, monopoly, oligopoly, monopolistic competition or pure competition. The South African food industry is regarded as an oligopoly because a few large firms dominate the industry. This view of an oligopoly is consistent with the definition of oligopoly as put forward by Samuelson and Nordhaus (1992:164; 743). The aggregate food turnover of Tiger Brands, I&J, Delfood, Kolosus and Rainbow represented more than 25 50% of food sales in 19995 • Oligopolistic industry fonnats, generally, draw attention to two economically vital factors, namely re1ative costs and collaboration 6 • Relative costs refer to the cost structure of the finns in question which may be simi1ar. Owing to similarities in cost structures, the food manufacturers in question may be constrained in making prices which include a reasonable profit.

Different levels of the tinn at which strategies are formulated

According to Thompson and Strickland (1998:44-51), strategy making occurs at different levels of the firm They identify at least four different levels of strategy making, namely the corporate, business unit (SBU), functional and operational levels. In diversified firms, the strategy formulated at corporate level is known as the « corporate strategy » that represents the strategy for the firm as a whole, which includes all its business units. The business unit strategy represents the strategy for each business unit into which the firm has diversified. This is known as the business (level) strategy. The functional level strategy is formulated at 27 functional level and represents the strategy for each functional unit, such as human resources, marketing and finance. Operational level strategy is known as operating strategy and represents the strategy for each department, unit or operating unit within the functional unit.

STATEMENT OF THE PROBLEM AND REASON FOR THE STUDY

It would appear from the foregoing section and table 1.12 that there is a possibility that the firms in question do not have a well-formulated market strategy and/or are unaware of the essential characteristics of market strategy. Schnaars ( 1991: 19) points out that there is no consensus on the su~ect or the concept of market strategy except for the historical origin of the concept « strategy ». According to Davies (1998:13), Morris and Pitt (1993:36) and Cummings (1993: 133), the concept « strategy » is extremely old. Historically, the term is used in a military context and is derived from the Greek strategos, meaning general. Originally, the word was associated with the leading of military forces in warfare. The application of the term to the firm’s marketing effort is a recent phenomenon. Nevertheless, the use of the term in a marketing sense is closely related to its original meaning, namely to lead. There are four main areas of difference or conflict on market strategy which are briefly explained in the ensuing paragraphs.

THE MACRO-ENVIRONMENT

The macro-environment consists of variables that are beyond the control of the firm’s management (Strydom et al 2000:52; Aaker 1998:99; Wilson & Gilligan 1998:237) and have a significant impact on the firm According to figure 2.1, the macro-environment consists of six sub-environments, namely the (1) political, (2) technological, (3) economic, (4) physicaf, (5) social and (6) international environments. Firms, such as the ones in question, cannot exert any influence on these environments. However, these environments have a significant impact on the firm’s market strategy and its performance through the opportunities and threats that these sub-environments hold for or pose to the firm Each of these subenvironments, which together comprise the macro-environment, is examined in order to determine what possible opportunities or threats may arise from them and impact on the application of market strategy by the firms forming the focus of this study.

Foodstuffs, Cosmetics and Disinfectants Act, 54 of 1972

This Act (as amended) controls the sale, manufacture and importation of foodstuffs, cosmetics and disinfectants and related matters. The sale, manufacture or importation of ·foodstuffs containing or treated with a prohibited substance, or containing a particular substance in a greater measure than permitted by regulation, or not complying with any standard of composition, strength, purity or quality prescnbed by regulation is prolnbited. The use or employment of prohibited processes, methods, appliances, containers or objects is also prolnbited, as is the false description of articles. This Act also prescnbes the packaging of foodstuffs, cosmetics and disinfectants. The aim of the Act is to protect the wellbeing of consumers by prolnbiting the sale of foodstuffs containing or treated with detrimental substances. In terms of the provisions of this Act, a Port Health Officer is required to inspect all imported foodstuffs to ensure that they comply with the provisions of the Act. So, for example, the importation of beef infected with « mad cow disease » and chicken meat contaminated with poultry flu was prolnbited in 1996.

Table of contents :

• CHAPTER 1 THE SCOPE AND METHOD OF THE STUDY
  • i.1 INTRODUCTION
  • 1.2 REVIEW OF THE FIRMS LISTED ON THE JSE FOOD SECTOR
  • 1.2.1 Details of the selected firms that form part of the study
    • 1.2.1.1 Tiger Brands
    • 1.2.1.2 I&J
    • 1.2.1.3 Delfood
    • 1.2.1.4 Kolosus
    • 1.2.1.5 Rainbow
    • 1.2.1.6 Selected international food manufacturers
    • 1.2.2 The market structure in which the firms listed on the JSE food sector operate
    • / 1.2.3 Different levels of the firm at which strategies are formulated
    • 1.2.4 The performance of the selected food manufacturers listed on the JSE
  • l.3 STATEMENT OF THE PROBLEM AND REASON FOR THE STUDY
  • 1.4 OBJECTIVES OF THE STUDY
  • 1.5 RESEARCH DESIGN
    • 1.5.1 General
    • 1.5.2 Secondary research/data
    • 1.5.3 Primary research/data
  • 1.6 LAYOUT OF THE STUDY
• CHAPTER 2 BUSINESS ENVIRONMENT ANALYSIS
  • 2.1 INTRODUCTION
  • 2.2 MACRO-ENVIRONMENT
    • 2.2.1 The political environment
    • 2.2.2 The technological environment
    • 2.2.3 The economic environment
    • 2.2.4 The physical environment
    • 2.2.5 The social environment
    • 2.2.6 The international environment
  • 2.3 THE MARKET ENVIRONMENT
    • 2.3.1 What are the industry’s dominant economic characteristics?
    • 2.3.2 What competitive forces are at work in the industry and how strong are they?
    • 2.3.3 What are the drivers of change in the industry and how strong are they?
    • 2.3.4 Which companies are in the strongest/weakest positions?
    • 2.3.5 Who is likely to make what move next?
    • 2.3.6 What key factors will determine competitive success or failure?
    • 2.3.7 How attractive is the industry in terms of prospects for above- average profits?
  • 2.4 THE MICRO-ENVIRONMENT
    • 2.4.1 The profile of a firm
  • 2.5 SUMMARY
• CHAPTER3 SWOT ANALYSIS AND SUSTAINABLE COMPETITIVE ADV ANT AGE OF THE SELECTED FIRMS
  • 3.1 INTRODUCTION
  • 3.2 SWOT ANALYSIS OF THE SELECTED LARGER FIRMS MANUFACTURING FOOD OF THE MAJOR GROUP MEAT, FISH, FRUIT, VEGETABLES, OILS AND FATS, IN THE PERIOD 1996 TO
  • 3.3 SUSTAINABLE COMPETITIVE ADVANTAGE (SCA)
    • 3.3.1 The development of SCA
    • 3.3.2 Bases for creating SCA
    • 3.3.2.1 Bases for competitive advantage originating within the firm
    • 3.3.2.2 Bases for competitive advantage originating within a specific function
    • 3.3.2.3 Bases for competitive advantage arising from the external environment
    • v 3.3.3 Characteristics of SCA
    • 3.3.4 Four factors required to create an SCA
    • 3.3.4.1 The way in which the firm competes
    • 3.3.4.2 Basis of competition
    • 3.3.4.3 Where a firm competes
    • 3.3.4.4 Whom the firm competes against
    • 3.3.5 The role of synergy in creating an SCA
  • 3.4 THE IMPORTANCE OF SCA TO MARKET STRATEGY
  • 3.5 SUMMARY
• CHAPTER4 MARKET STRATEGY
  • 4.1 INTRODUCTION
  • 4.2 THE CONCEPT MARKET STRATEGY
    • 4.2.1 Competitive strategies and decisions
    • 4.2.1.1 Differentiation strategy
    • 4.2.1.2 Low cost strategy
    • 4.2.1.3 FOCUS strategy
    • 4.2.1.4 Pre-emptive move
    • 4.2.1.5 Synergism
    • 4.2.2 Investment strategies
    • 4.2.2.1 Growth and diversification strategies
    • 4.2.2.2 Holding or maintaining strategy
    • 4.2.2.3 Harvesting strategy
    • 4.2.2.4 Withdrawal (divestment) strategy
    • 4.2.3 Marketing warfare
  • 4.3 MATCHING THE STRATEGY TO THE FIRM’S SITUATION
  • 4.4 SUMMARY
• CHAPTERS THE RESEARCH PROCESS
• CHAPTER 7:CONCLUSIONS AND RECOMMENDA TTONS

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MARKET STRATEGIES APPLIED BY SELECTED JSE-LISTED SA FOOD MANUFACTURERS (MAJOR GROUP MEAT, FISH, FRUIT, VEGETABLES, OILS AND FATS) IN THE PERIOD 1996 TO 1999: AN EXPLORATORY STUDY