MNG3701

Assignment no: 2

STUDENT NUMBER
6 7 8 4 8 4 9 4
IDENTITY NUMBER

8 8 0 6 1 1 0 6 6 9 0 8 4

Marks

Examiners
1 2 3
Question

No.

Table of
contents
Introduction

Body
……………………………………………………….
Conclusion
Student's initials and surname
Bibliography

Technical
presentation
Total

________

DECLARATION OF HONESTY

STUDENT NUMBER: 67848494

I, Zandile Cynthia Ngcobo declare that this, assignment is my own work and that
no one has done it on my behalf, nor did I copy answers from someone else’s work
and that all the sources that I have used or quoted have been indicated and fully
acknowledged, using complete references.
28/04/2023

Signed Date
Introduction

Rainbow Chickens is a familiar household brand in many South African households,

the parent company, RCL, may not be so recognisable. Yet, RCL Foods is a leading
African food producer in South Africa with a market capitalisation of R16 billion,
employing over 21 000 people in operations across South Africa, Swaziland,
Namibia, Botswana and Zambia. RCL distributes its branded and private label food
products through their route-to-market supply chain specialist, Vector

In the below assignment, I will be commenting on various methods to analyse the

internal environment and based on the case study I will be conducting an internal
environment analysis. In question 2 I will be explaining the strategic importance of
analysing the external environment and critically discussing the various methods for
external environment analysis. The macro-environment refers to the broader
condition of an economy as opposed to specific markets. Using the information from
the case study I will be conducting an analysis of the RCL macro and market
environment. Lastly, I will identify the business-level strategy of RCL and comment
on its appropriateness based on my findings in questions 1 to 3 above.
Question 1 A

Internal environment analysis is the process of assessing of internal resources and

capabilities of an organization to know its strengths and weaknesses. The
organizational internal factors such as goals, policies, resources, structure, culture,
etc. There are four components of the internal environment analysis which are
Strengths, Weaknesses, Opportunities, and Threats

Value chain analysis- according to Venter and Botha (2022) this analysis is a
means of evaluating each of the activities in a company's value chain to understand
where opportunities for improvement lie. Conducting a value chain analysis prompts
you to consider how each step adds or subtracts value from your final product or
service.

The resource-based view (RBV) - is a decision-making framework used to govern

the strategic resources a firm can exploit to achieve sustainable competitive
advantage. Barney's 1991 article "Firm Resources and Sustained Competitive
Advantage" is widely cited as a pivotal work in the emergence of the resource-
based view.

Functional analysis- according to Venter and Botha (2022)functional analysis is a

Branch of mathematical analysis dealing with functionals or functions of functions. It
emerged as a distinct field in the 20th century, when it was realized that diverse
mathematical processes, from arithmetic to calculus procedures, exhibit very similar
properties.

Question 1 B

Core competencies: RCL benefits from its significant size and scale, combined
with diversification, to counter cyclicality and provide a platform for expansion. They
recognize their management team's extensive knowledge and experience in the
South African food industry and their strong operational track record of delivering
steady, through-the-cycle revenue growth. In addition, their expansion into Africa
through several projects in sub-Saharan Africa is aligned with their low-risk African
expansion strategy. Finally, Remgro Limited is a highly regarded strategic
shareholder.

Capabilities: according to the case study, RCL Foods’ market share to expand
across various food product categories. Their sizeable portfolio of core categories
enables them to reach a wide range of consumers and diverse touch points through
the depth of distribution and strong market penetration. It also contributes to
growing their scale and cash flow as a basis for future strategic growth.

Resources: according to the case study, RCL recognise their management team's
extensive knowledge and experience in the South African food industry and their
strong operational track record of delivering steady, through-the-cycle revenue
growth. In addition, their expansion into Africa through several projects in sub-
Saharan Africa is aligned with their low-risk African expansion strategy. Finally,
Remgro Limited is a highly regarded strategic shareholder.

Question 2

The strategic importance of analysing the external environment is a critical step in

preparing a strategic plan. This is a multipart task because it includes collecting a
variety of data to get a precise picture of the situation. Based on this analysis, the
company can then make comprehensive decisions to further its growth.

2.1 The various methods for external environment analysis according to

Venter and Botha (2022)

1. Scenario Planning- helps decision-makers recognize ranges of potential

outcomes and impacts, evaluate responses and be able to manage for both
positive and negative possibilities. By envisaging potential risks and
opportunities, businesses can become proactive versus simply reacting to
events. This is very crucial because allows professionals, and the public, to
respond vigorously to an unknown future.

2. Porter’s Five Forces model- Porter's Five Forces are the Threat of new
entrants, bargaining power of buyers, Bargaining power of suppliers, Threat
of new substitutes, and Competitive rivalry. This model assists strategists to
understand what makes an industry profitable and provides perceptions
needed to make strategic choices.

3. PESTEL model- PESTEL stands for Political, Economic, Social,

Technological, Environmental, and legal. It can be used in a range of
different scenarios and can guide people professionals and senior managers
in strategic decision-making. It enables an understanding of the wider
business environment. It inspires the development of external and strategic
thinking, and it can enable an organization to anticipate future business
threats and take action to avoid or minimize their impact

4. Four corners model- is designed to help understand another business,

its intent and strategy. Competitive analysis is a key part in how you grow
within a market, it can inform your own strategic decisions as you combat for
market share and provide awareness into the KPIs you should measure.

5. Stakeholder analysis- involves stakeholder identification and mapping,

followed by identifying and prioritizing issues, to guide stakeholder
engagement. This is the process of gathering information about any person
that will be impacted by (or can impact) your project. Conducting a
stakeholder analysis will permit you to recognize all your stakeholders as well
as their needs and expectations.
Question 3 analysis of the RCLmacro and market environment.

3.1 Market/Industry environment analysis- Porter’s Five Forces

The threat of substitutes - According to Peet Venter and Tersia Botha. Where
close substitute products exist in a market; it increases the likelihood of customers
switching to alternatives in response to price increases. This reduces both the power
of suppliers and the attractiveness of the market. Rainbow Chickens is a familiar
household brand in many South African
households

The threat of new entrants to the market - According to Peet Venter and Tersia
Botha. Profitable markets attract new entrants, which erodes profitability. Unless
incumbents have strong and durable barriers to entry, for example, patents,
economies of scale, capital requirements or government policies, then profitability will
decline to a competitive rate

The bargaining power of buyers -is an assessment of how easy it is for buyers to
drive prices down. This is driven by the: number of buyers in the market; importance
of each individual buyer to the organisation; and cost to the buyer of switching from
one supplier to another. If a business has just a few powerful buyers, they are often
able to dictate terms. As per the case study consumer behaviour is always in flux
with more focus on value, with price and affordability becoming key factors in
consumer decision-making. Online shopping among higher LSM groups continues to
rise with an increased preference for foods perceived to be healthier.

The bargaining power of suppliers to the organization - An assessment of how

easy it is for suppliers to drive up prices. This is driven by the number of suppliers of
each essential input, the uniqueness of their product or service, the relative size and
strength of the supplier and cost of switching from one supplier to another. RCL
acquired Vector with the strategic intent to control and optimize its outbound supply
chain

The intensity of the competitive landscape -Higher levels of competition create

more options for buyers and suppliers. The main driver is the number and capability
of competitors in the market. Many competitors, offering undifferentiated products
and services, will reduce market attractiveness. Rules may have an influence on this.

3.2 Macro-environment analysis: PESTLE model

Political factors - According to Peet Venter and Tersia Botha Political factors
include aspects such as the government and its political policy and economic
interventions and policies. The government of a country is a major role Player in the
remote environment of all organisations. An example of political forces in South
Africa is the change of leadership in the ruling party, namely the African National
Congress (ANC). On 14 February 2018, the former president Jacob Zuma resigned
and was replaced by President Cyril Ramaphosa. This had an enormous effect on
various indicators, for example, the value of the country’s currency and business
confidence.

Economic factors. According to Peet Venter and Tersia Botha. These include
factors such as the economic growth rate, the inflation rate, interest rates and
exchange rates. Economic forces influence the demand for products and services, so
it is important for strategists to monitor and forecast events in the domestic and
global economies. Economic forces are often interdependent with socio-cultural
forces. For instance, an ageing population can influence unemployment figures and
salaries of a younger workforce significantly. Socio-cultural factors. These include
factors such as social values, culture, lifestyles, and demographics. Stakeholder
groups are products of society. Their values, morals, beliefs and subsequent
behaviours and lifestyles are therefore influenced by society at large. Developing
social trends may also offer organisations various opportunities. For example, health
and fitness lifestyle trends have created opportunities in the home fitness, nutritional
supplement, low carbohydrate food and even bicycle industries. Organizations
therefore stand to gain if strategists can identify and assess the effects and
opportunities presented by socio-cultural forces, as well as manage and sustain their
relations and reputation with stakeholder groups:

Technological factors - According to Peet Venter and Tersia Botha these include
factors such as research and development new products and processes, and new
technologies. The innovation and technology fields have grown exponentially in
recent years. They continuously driving the development of new products and
services thereby creating new industries.

Legal factors – According to Peet Venter and Tersia Botha these includes factors
such as regulations and laws in which organizations must comply. No organization is
fully exempt from government legislation and regulations. However, no tall laws and
regulations apply equally to all organizations.

Environmental factors - According to Peet Venter and Tersia Botha these include
ecological and environmental forces of nature such as weather, climate change, and
associated factors such as water shortages. RCL continued with its expansion into
Africa and acquired a 33.5% stake in Ugandan poultry producer, HMH Rainbow, and
in 2016, acquired a 50% stake in Matzonox, a waste-to-value operation. 2019 saw a
45% stake in L&A Logistics, a distribution operation based in Zambia. RCL continues
to expand its operations and footprint. They must implement strategies to fight
ecological factors.

Conclusion

Conducting an internal and external analysis will assist RCL to assess the internal
resources and capabilities of an organization to know its strengths and weaknesses.
Furthermore, it will give the company a complete picture of the current situation and
the steps they can take to plan your marketing. This will also determine the
opportunities and threats in an industry or any segment that will drive profitability,
growth, and volatility.
References

1. Venter, P & Botha, T. 2022. Practising strategy – a southern African

context. 3rd. Cape Town: Juta.

2. Burt, DN, Petcavage, S & Pinkerton, R. 2010. Supply management. 8th

edition. Singapore: McGraw-Hill.

3. Lysons, K & Farrington, B. 2006. Purchasing and supply chain

management. 7th ed. Essex, England: Pearson Education Limited

4. Robert M. Monczka; Robert B. Handfield; Larry C. Giunipero; James L.

Patterson. 2021. Purchasing and Supply Chain Management. 7th Edition.

5. University of South Africa. 2023. MNG3702: Strategy implementation and

control Study Guide. Pretoria.

6. Ehlers, T & Lazenby, K. 2019. Strategic Management – Southern African

concepts.