Trade Queens Limited is a highly successful FMCG in Zambia. Salient points from the Year-end report indicate the following: Operating profit for the 2022 financial year is up 60% year on year, margins up at 10% year on year, Market share at a record high at 85% and Revenue is up 29% year on year. Further, Trade Queen had won several major retail accounts from competitors during the past year.

Managers at Trade Queen were keen to understand the bases of these successes as a way of understanding strategic capabilities 1To this they undertook an analysis of customer value. From this analysis they identified that the major retailers with whom it had been successful, particularly valued a powerful brand, a good product range, innovation, good service and reliable delivery. In particular, Trade Queen was outperforming competitors when it came to delivery, service and product range.

They then undertook an activity mapping exercise of their value chain. Some of what emerged from this the senior management knew about: but they were not aware of some of the other explanations that emerged.

When they analysed the bases of reliable delivery, they could not find reasons why they were over performing competitors. The logistics of the company were different from other companies. They were essential but not unique - threshold resources and competences.

When they examined the activities that gave rise to the good services they provided, however, they found other explanations. They were readily able to identify that much was down to their having a more flexible approach than their competitors, the main one of which was a major South African multinational. But the explanations for this flexibility were less obvious. The flexibility took form, for example, in the ability to amend the requirement of the Retailers' orders at short notice; or when the buyers in the retailers had made an error, to "bail them out" by taking back stock that had been delivered. What was less obvious were the activities underpinning this flexibility. The mapping surfaced some explanations:

• The junior managers and staff within the company were "bending rules" to take back goods from the major retailers when, strictly speaking the policies and systems of the business did not allow it.
• Plant utilisation was relatively lower and less automated than competitors, so it was easier to change production runs at short notice. Company policy on the other hand, was to improve productivity through increased utilisation and begin to automate the plant. Lower levels of production management were not anxious to do this, knowing that if they did, it would reduce the flexibility and therefore diminish their ability to provide the service customers wanted.

Much of this was down to the knowledge of quite junior managers, sales representatives and staff in the factory as to "how to work the system" and how to work

together to solve the retailers' problems. This was not a matter of company policy or formal training but custom and practice that had built up over the years. The result was a relationship between sales personnel and retail buyers in which buyers were encouraged to "ask the impossible" of the company when difficulties arose.

Sound logistics and good quality products were vital, but the core competences which underpinned their success were the result of linked sets of activities built up over the years which it was difficult, not only. for competitors but also for people in the organisation to identify clearly.

REQUIRED:

A. Why might it be difficult for the large automated South African company to deal with Retailers in the same way as Trade Queens?

B. How should Trade Queen's senior managers respond to the explanations of strategic capability surfaced by the mapping?

C. What could erode the bases of competitive advantage that Trade Queen Ltd has?