SECTION A Study the case on Massmart provided below and answer the questions that follow:

Massmart Holdings Ltd. is a South African-based globally competitive regional management group, invested in a portfolio of differentiated, complementary, focused wholesale and retail formats. In 2011, Walmart acquired a majority stake (51%) in Massmart. Massmarts business units comprise Massmart Wholesale and Massmart Retail. Each has a dedicated management team focusing on a retail or wholesale format, merchandise proposition and customer base, and is empowered to take trading decisions within a strategic framework and governance structure defined by the Massmart Group. These are each reliant on high volumes and operational excellence as the foundation of price leadership, in the distribution of mainly branded consumer goods for cash. Massmart is the second-largest distributor of consumer goods in Africa, the leading retailer of general merchandise, liquor and home improvement equipment and supplies, and the leading wholesaler of basic foods. Massmarts wholesale and retail chains are all focused on high-volume and low-cost distribution. The company operates 423 stores in 13 countries in sub-Saharan Africa (including South Africa) through the Groups two business units Massmart Wholesale and Massmart Retail. Massmart is listed on the main board of the JSE Securities Exchange in the Consumer Services-Retail sector. The Massmart Group operates the following brands: Game, Cambridge, Makro, Builders Warehouse, Builders Express, Builders Superstore, Builders Trade Depot, CBW, Rhino Cash & Carry and Jumbo Cash and Carry. In fiscal year 2020, Massmart sold R86.5 billion (2019: R93.7 billion) in low-cost, high-volume merchandise distributed through its widely-recognised, differentiated retail and wholesale formats sold in 443 stores in 13 countries. As of May 2020, Massmart employs over 48 000 associates across its operations.

Competitive Strategy

The sole objective of Massmarts strategic thought and action is the achievement of competitive advantage through the continual improvement of a high-volume, low-expense business model that enables the provision of exceptionally low prices on an extensive range of products to our customer base, comprising a broad spectrum of society in 13 sub-Saharan African countries. Massmarts competitive strategy is consistent with Wal-Marts everyday low-cost structure. Based on its official website, the whole purpose of Wal-Mart is to save peoples money so they can live better. Thus, Wal-Mart offers goods with high qualities but at lower prices than other retailers. In this way, Wal-Mart has a comparative advantage over its competitors in terms of price. This helps Wal-Mart win customers over from other retailers. The Board enhances the quality of decisions regarding strategy facilitating a robust analysis and evaluation of options by the Board and Executive Management team. An annual three-year strategic review ensures that there is continuity and coherence in this strategic thinking. Our vision for growth includes a focus on leadership and transformation, supply chain, private label products, financial services, organic growth, new formats and sustainability, all of which represent key elements of our three-year rolling strategic plans.

Vision and Mission

Massmart is a South African-based, globally competitive, regional management group, invested in a portfolio of differentiated, complementary, focused wholesale and retail formats each reliant on high volumes and operational excellence as the foundation of price leadership, in the distribution of mainly branded consumer goods for cash. The Group actively seeks the continual improvement of performance in the portfolio and its parts, through strategic and structural clarity, high market shares, excellent management, principle-driven ethical leadership, cost-effective technology and the sharing or agglomeration of capabilities, knowledge, resources, influence and information. To this end, thought, leadership, individual and collective performance, and collaboration throughout the Group are appropriately rewarded, with executive management incentivised predominantly on Group performance.

Business Model

Massmarts business model is built on high-sales density formats, procurement scale and cost-efficient routes to market. As a result, the company is able to optimise supplier distribution and obtain price leadership, which enables it to deliver on its commitment to save customers money so they can live better. The merchandise is made available through a network of 443 retail and wholesale stores across 13 countries.

How Massmart drives value

Centralised support services serves as a hub for provision of services to all divisions including technology development, human resources management, general management, procurement, planning and finance. Strategic relationships with suppliers premised on fair and transparent relationships are forged to leverage bargaining power through Group collaboration, the exceptional partnerships with suppliers and working closely with them to achieve its low-cost promise, assortment optimisation, private label, merchandising, product placement and space allocation. Efficient supply chain is operationalised through group-wide transport, logistics, planning and storage ensuring high fulfilment and reduced inventory days that optimise inventory service levels. Effective marketing and sales are achieved through competitive pricing, promotional activity, assortment of products, communication and channel management. Omnichannel offering provides cost savings and improved experience and services for all customers. Skilled associates commitment and ability ensures that Massmart has the strong teams, diverse and inclusive workplace, and empowered leaders that are core to its aim of building the strongest and healthiest retail group, with the best long-term prospects in Africa. Answer ALL the questions in this section.

QUESTION 1

According to the text on Massmart above, The sole objective of Massmarts strategic thought and action is the achievement of competitive advantage through the continual improvement of a highvolume, low-expense business model that enables the provision of exceptionally low prices on an extensive range of products to our customer base, comprising a broad spectrum of society in 13 sub-Saharan African countries.

1.1 (10 marks) In light of the above observation, identify and discuss the strategic concept by which Massmart Group achieves competitive advantage in its operations. Your discussion should briefly highlight the three generic operations strategies by which firms achieve competitive advantage and then a detailed discussion of the specific operations strategy of the Massmart Group. Extract evidence from the case to buttress your discussion.

1.2 (10 marks) Discuss the most important competitive priority (i.e., value driver) associated with Massmarts operations strategy and elaborate on any TWO (2) operational capabilities that would enable the Massmart to achieve this competitive priority.