QUESTION ONE $[20]$

Planning is the first primary management task conducted by managers. Using examples related to the case study, discuss the steps in the planning process

Read the following case study and answer the questions that follow:

Zero to R$500$m since $2006$ the story of Yuppiechef

Savvy dressers know how to mix cheap brands with high$-$end items. So too do the yuppie chefs among us

Andrew Smith and Shane Dryden were web designers with backgrounds in technology, online marketing and brand$-$building, but they wanted to sell products and not just their time.

After an initial foray into bug zappers and flags $($Smith$$s mom was their first customer$),$ they realised the market was craving a specialist kitchenware retailer.

So$,$ in $2006,$ they created Yuppiechef.

This past week, the partners sold it to the mighty Mr Price Group for nearly R$500$m$.$

You can see the appeal: Yuppiechef has a stellar reputation as an award$-$winning e$-$commerce retailer, and sells more than $10,000$ products from nearly $700$ brands.

It also shifted into bricks$-$and$-$mortar stores in $2017,$ recognising the potential power in omnichannel retail.

As it turns out, shoppers in this country like to see and touch what they$$re buying a lot of the time.

While it took two years for Yuppiechef to generate its first R$1$m turnover as an online company, it took only a few days to reach that at its V&A Waterfront store in Cape Town. Smith says SA shoppers prefer to visit physical stores, which might explain why the country has one of the highest number of malls per capita in the world.

But it is also an unlikely marriage between the listed value$-$oriented clothing and homeware group, and an aspirational kitchen and homeware business.

Mr Price, after all, sells jeans for under R$200,$ while at Yuppiechef, pots can go for more than R$5,000$ and a KitchenAid mixer will set you back about R$12,000.$

"Yuppiechef is a business that we believe will give us the right offering as an opportunity," says Mr Price CEO Mark Blair.

That means a higher$-$income customer base and a greater share of their better$-$padded wallets.

Mr Price didn$$t want to invest in a segment that competes with it but rather one that complements it$.$

So while other operators have been targeting the lower end $($TFG recently bought Jet, and Mr Price itself bought Power Fashion$),$ it seems the more aspirational side has appeal too.

This strategy started to emerge last November as Mr Price mapped out areas for growth in the SA market, which it has now largely confined itself to$.$

Daniel Masvosvere, equity analyst at Sanlam Investments, says the deal is "incrementally positive".

With a stroke, it will ratchet up Mr Price$$s online platform and extend the reach of its homeware offering into the premium end of local retail.

As for the cost of the deal, Masvosvere says: "I can$$t opine on whether they over$-$or underpaid, because we don$$t have a true sense of the extent of the profitability of $[$Yuppiechef$].$ We do know the deal is relatively small at about $1\%$ of the market capitalisation of the Mr Price Group."

But for Smith and Dryden, it$$s arguably every savvy start$-$up owner$$s dream.

Their interest in kitchenware began when Dryden, who$$s something of a foodie, wanted to sell the types of tools that international cooking shows were popularising but which weren$$t easily available in SA$.$

A chef friend recommended including Cuisipro tongs in their must$-$have list, and the first Yuppiechef sale was a pair to Dryden$$s dad. It took months for them to sell to someone they didn$$t know.

In its first year, Yuppiechef sold only $200$ items from its selection of $32$ products.

There was little money coming in$,$ but Dryden and Smith had jobs and they were working on Yuppiechef from a lounge in Plumstead, Cape Town. It took five years before they were able to draw a salary from the business.

International hedge fund Tiger Global, which has also invested in Takealot, Bidorbuy and Private Property, then bought in$.$

It$$s not as if it$$s been a one$-$way track up$,$ though. Yuppiechef used to deliver to customers in Namibia, Mauritius, Botswana and Zambia and briefly also operated in the United Arab Emirates, but turned back to focus on SA$,$ pretty much as Mr Price has done.

Still, you clearly can$$t keep a good entrepreneur down.

Yuppiechef has branched out in other directions $$ including the launch of its own brands, such as Humble & Mash and Jimmy Public. The retailer also sells gift boxes and online cooking courses, and now offers a wedding registry service too.

Masvosvere says this is by no means a transformational acquisition for Mr Price.

"I don$$t see that the business will change its model and make a full pivot into the premium end of the market. At the core of the group is value, as seen in the Mr Price apparel business." Smith and Dryden will continue to run Yuppiechef with their existing team.

But they$$ll be able to draw on Mr Price$$s balance sheet