STRATEGIC MANAGEMENT SECTION A (60) Read the case study below and answer the questions that follow.

STRATEGIC MANAGEMENT SECTION A (60)

Read the case study below and answer the questions that follow. Capitec Bank stands steadfast with strong brand and continued growth Capitec Banks most recent annual financial results for the year ending February 2018 shows that the banks strategy to grow its active client base to nearly 10 million with a focus on middle to higher income clients has continued to be successful; in January 2018 alone the bank signed up 185 000 new clients. Headline earnings were up by 18% to R4.5 billion (2017: R3.8 billion), with almost a third of the employed adult population in South Africa currently banking with Capitec. Other key indicators also show strong growth: Net transaction fee income (non-lending) increased with 31% to R5.1 billion (2017: R3.8 billion), covering 81% of operating expenses and contributing 41% of net income Total retail fixed savings increased by 28% to R23 billion (2017: R18 million) and total retail call savings increased by 16% to R35 billion for the current year Credit clients declined from 1.5 million to 1.4 million, of which 76% also bank with Capitec Bank Credit market share remain relatively flat at 27% of unsecured- and short-term credit, and 5% of the total credit market Strong client adoption of digital banking channels delivered cost benefits to clients and freed up capacity for consultants to better serve and address the needs of clients in the branches. The average waiting time in branch is now 4 min 30s, with only 6% of clients waiting more than 15 minutes. 264 new jobs were created in the South African economy, which takes the total jobs created in 18 years to 13 333 people, of which 85% are younger than 35. For the 5th consecutive year, the latest South African Customer Satisfaction Index (SAcsi) for Banking, conducted by Consulta, revealed that Capitec continues to lead with the most satisfied customers. The Calumniate SITEisfaction survey rates the Capitec Bank app as the best banking app in South Africa. Says Gerrie Fourie, chief executive officer of Capitec Bank, Since the start of the bank 18 years ago, we have remained true to our founding fundamentals and our vision to enable clients to improve their financial lives. As a result, the brand has become synonymous with simple and transparent banking and credit, which offers real value for money and is accessible to all South Africans. The simplicity of our product, process and service experience has stood the test of time. Our growth has proved to be sustainable as we tightly manage the risk and performance of our credit business. Gross loans and advances grew with a conservative 6% to R47.6 billion, with the bulk of the growth coming from the higher income credit card book. The loans in arrears declined from 6.3% to 5.7% for the period. This is in line with the banks strategy to apply stricter credit criteria in selective high-risk sections of the market, while focusing on reducing credit pricing and growing the credit mix towards the higher-income credit client base. The banks earnings growth was therefore driven mostly by their strong banking client growth and resulting fee income. The Capitec credit card, which offers a credit limit of up to R150 000, is used by 290 000 clients with its biggest growth coming from the middle- to higher income segments. The R35 monthly fee and personalized interest rates make it one of the most competitive credit cards in the market. This credit card fee will remain unchanged for the next year. Investing in technology is improving our clients' banking experience more than 1.5 million clients are using our banking app on a regular basis, with 106 million transactions during 2017, more than double compared to last year this time. QUESTION 1 (60)

Assume Capitec has hired you as a Strategy Consultant from Deloitte to advise on a growth strategy for the buoyant markets for 2019. What are the factors you would look at to assess the situation and your recommendations to the client? Your answer should be in the context of the following: Competition/Competitive Landscape: Macroeconomic Trends: Products: Client Capabilities: Customers: