CASE STUDY

XYZ Printers Pty Ltd ( sometimes called XYZ ) , is a Lansdowne ( Cape Town , South Africa) based Printing Business that has been operating 16 years , initially as a partnership of two members but has been owned solely by Tahir James (generally known as TJ , who bought out his partner in 2014) for the past 4 years. Recently, to claim more Broad-Based Black Economic Empowerment (BBBEE) points - as allowed for in the Governments preferential procurement policies), the business has been re-registered with his wife as a shareholder and co-owner.

TJ (58), an experienced printing professional, has worked in the industry all his adult life (over 3 and a half decades) since doing his trade training in the industry as a young man. He worked in the University of Cape Town (UCT) Printing department before taking advantage of the Universitys strategy to outsource most of its printing requirements in the mid-1990s. TJ bought the Universitys ancient ( as he put it ) litho printing machines and , initially with a business partner and ex colleague , persuaded a few of his old UCT printing room team to join them in their new venture.

The University gave the fledgling company its first jobs. Even as TJ has diversified his client base over the two and a half decades, UCT remains his major client accounting for some 60% of his approximately R5 million annual 2019 turnover. This turnover has grown slowly, but steadily in the last few years, doubling from about R2,5 million in 2013.

XYZ Printers specializes in traditional printing (on paper), printing of books/textbooks, university examination papers, study guides, calendars, pamphlets, leaflets, flyers, business cards and invitations. XYZ Printers market / business can be broken down as

• Tertiary Educational Institutions- mainly UCT and UWC- (60%),
• Corporates mainly Golden Arrow Bus Company & Phillip Morris (20%),
• NGOs - mainly HIV Foundation and Scripture Union (12%) and
• Brokers (8%).

XYZ Printers rented premises for most of its early existence but about 5 years ago bought the building in which it operates. This was financed by taking out a R1,5 million Bond through a separate entity ( JamesProp - 100% owned by TJ).

XYZ Printers employs between 11 and 13 employees. 8 full time and 3 part-time (but on an on-going basis) and an additional two or three casuals when the need arises. According to TJ this number can increase by up to 6 or more when there is a lot of work. The permanents (11) include TJ himself, his wife, and his son. As such, it can be classified as a family business. The divide between business and family finances occasionally blurs as all but one of Rodneys family of four work in the business.

TJ, being a printer, is the operations decision maker who also secures new business and makes the major financial decisions in consultation with his wife, who manages the administration and creditors and debtors book. His son supervises production and does a lot of deliveries and client face to face interactions. Although there is a driver who does deliveries, TJ feels that the driver does not fully, or effectively, interact and satisfy the customers need to communicate and give feedback. He believes that a more senior and responsible employee (like his son) provides better interactive service and is better placed to anticipate future customer needs and pick up product and service quality related and other dissatisfactions. So, his son is also involved in delivering and interacting with clients at their businesses.

In 2015 TJ signed up for the SANLAM /TSiBA Enterprise Development Programme which ran from July 2015 to December 2016. Sanlam is one of the two major insurance companies in South Africa. Enterprise Development or ED ( which involves developing or incubating Black and /or Women Owned Small and Medium Enterprises (SMEs) which are seen as potential suppliers to the big business, is a key part of many large corporations BBBEE strategies. TJ admits that he is sceptical of the BBBEE corporate programmes but joined anyway in the hope of becoming a SANLAM printing supplier. His view is that while these schemes are well intentioned, most long-standing traditional supplier relationships are too well entrenched to make way for new entrants. He however tries as much as possible to trade on his own Level 1 BBBEE (the highest level) statusan advantage when competing for many contracts. He even changed his ownership structure to officially partner with his wife, thus increasing his BBBEE certification to the highest level that of Black Woman Owned SMEs. He admits that the SANLAM Enterprise Development programme and the mentorship that came with it enabled him to become legally compliant on many organizational and labour law issues. With his mentors guidance, all his employees now have contracts, and he has a Disciplinary Code and Procedure. It is now easier to deal with poor performance, abuse of overtime, absenteeism, and careless mistakes.

Apart from himself, only 3 or 4 of his employees are fully qualified or technically experienced printing professionals. The rest are unqualified but experienced and committed.

TJ believes that his calling card is professionalism, service, and quality. In line with this belief, he insists that every job is double checked. His biggest fear, and one of his biggest costs, remains returned jobs (these are jobs with a mistake, sometimes due to client mistakes) which XYZ Printers must re-do at its own cost.

He worries about the changing industry (from litho to digital printing as well as the long threatening move to a paperless world. In 2019, in an exercise arranged by his former SANLAM mentor, a group of visiting American business students in visited and studied his business. They gave him feedback, also based on overseas printing trends that left him feeling excited about the future. TJ now believes he can double his turnover from the current R5million to R10 million per annum in 3-5 years but is not sure how to do it. He is also aware that he is getting older and wants his son, who he regards as more tech-savvy than him to be ready to take over the business.

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QUESTIONS

1. Suggest a medium term (3-5 year) growth strategy for XYZ Printers using one of the Strategic Management frameworks. (8 marks)
2. The capacity or readiness of an organisation to implement a chosen strategy is a critical factor in strategic management. In relation to XYZ Printers:
   1. Identify and explain 3 strengths can be taken advantage of to successfully implement a growth strategy (3 marks)
3. 2. Identify and explain 3 weaknesses that may make implementing the strategy difficult (3 marks) (6 marks)