Beruflich Dokumente
Kultur Dokumente
TERM REPORT
ON
STRATEGIC MANAGEMENT
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Submitted By
Section: B
Submitted To
Submitted On
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ACKNOWLEDGEMENTS
First and foremost, we would like to thank Allah for His help and
granting us the ability to undertake this subject. It is by His Will
that we have been able to complete our term report.
Also, we would thank Mr. Javaid Ahmed for assigning this task to
us, which has enlightened us further in the field of Strategic
Management.
Last but not least, we would also like to thank Ms. Samar Fatima
Mirza (Marketing Manager) of Nandos for giving us her precious
time and providing us with valuable information regarding the
company.
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LETTER OF AUTHORIZATION
Dear Reader,
Sincerely,
Group Members
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LETTER OF TRANSMITTAL
Respected Sir,
The report has been completed after the perpetual hard work,
determination and devotion of past 4 months.
Thanking you.
Sincerely,
Group Members
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EXECUTIVE SUMMARY
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TABLE OF CONTENTS
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Strategic Management
open-minded marketing philosophy. From the start Nando's have pursued a highly
effective marketing strategy which accounts for our phenomenal growth since
1987, (our aim was to change the way the world thought about chicken). We knew
our chicken was unique, that our restaurants were different and that the Nando's
experience was magical, so it followed that our advertising should have a fun and
irreverent personality that showed the funnier side of life.
are left behind. Nando's restaurants are home to the people who work in them and
to our customers. Our doors are always open to anyone who wants to taste the
Nando's Experience. We have Casa's on five continents around the world and it's
our aim and our duty to introduce Nando's to as many people as possible. We
believe the world will be a better place if everyone has a local Nando's Casa to
visit from time to time.
Nandos is devoted to providing its customers appetite for life, who love to laugh and live
to eat. At Nando's we believe in our flame-grilled Peri-Peri Chicken, we believe it's the
best in the world. We aim to be the most successful grilled food restaurant in the world at
delivering the best customer experience in markets we serve and to do so, Nandos will
meet its customer expectations through highest quality food prepared with leading
technology and by hiring and retaining personnel with exceptional capabilities. We believe
in offering quality and value to our customers and grow in such a way that creates
profitability and value for shareholders and structure the society in such a way so as to
improve the quality of life of the whole community. Our distinctive competence is our
open style of informal restaurants, through the wonderful saying "Mi Casa so casa -
My home is your home.
Applying Porters five forces Template to the Restaurant Industry allows us to analyze
the attractiveness in terms of profitability of the industry.
YE
NO
A THREAT OF NEW ENTRANTS S ~
()
(+)
Do large firms have a cost or performance advantage in your
segment of the industry?
Are there any proprietary product differences in your industry?
LOW HIGH
Interpretation
Threat of Entrants are High and unfavorable in the industry. This is a real threat in a
place like Pakistan where the food industry views constantly changing patterns in
demand. Due to its consumer base, that is always on the look-out for new and
changed places to eat. Every now and then, a new caf or a restaurant opens up, out of
which only a few are able to successfully survive in the long run. On Zamzama alone,
there are about 20 known restaurants and cafs. Therefore, Nandos must concentrate
its efforts on Differentiation Strategy, as that is key to survival in the Pakistani food
industry (especially, in the major cities of Pakistan).
Political
This can have two extreme effects on threat of new entrants. If the government brings
out higher restaurant license cost and increased taxes and/or implements strict health
and safety regulations along with more documentation procedures, this will increase
the barriers to entry. However, if the government does the opposite by decreasing
license cost and taxes or has a lenient approach to health and safety procedures, the
threat of new entrants will be high.
Economic
Due to the rising income disparity and the adverse economic conditions, the number
of unemployed is increasing due to which the labor cost will decrease, and the up-
class restaurants will be more in demand as the rich are getting richer. Thus, the threat
of entrants is high because of increased profit margins in such ventures. In case of
improvement in the economy, more people could afford to go out to restaurants which
give more opportunities for new restaurants to come up.
Social
The current social trend is in favor of eating out especially at expensive restaurants,
thereby, increasing their demand and also owning such eat-outs is now very socially
appealing thus, increasing the threat of new entrants.
Technological
The rise in innovative technology has made management of restaurants very easy and
the new sophisticated software now enable restaurants to run with less number of
employees, thereby, reducing the labor cost. Thus, this factor increases the threat of
new entrants.
YE
NO
B BARGAINING POWER OF BUYERS S ~
()
(+)
Are there a large number of buyers relative to the number of
firms in the business?
Do you have a large number of customers, each with relatively
small purchases?
Does the customer face any significant costs in switching
suppliers?
Does the buyer need a lot of important information?
LOW HIGH
Interpretation
The bargaining power of buyer is low in the industry firstly because their product is a
commodity item and consumers have no choice but to continue consumption, as it is
also a form of entertainment in our country. This makes the industry more attractive
and profitable and the PEST forces such as increasing population is an appealing
opportunity, however, the economic situation of the country brings along adverse
effects on the industry. Nandos should therefore, bank on the rising income disparity.
Political
This political factor has no direct affect on the bargaining power of buyers.
Economic
The increasing population reduces the power of buyers. Even though the adverse
economic situation of Pakistan is reducing the consumer base, it is still not making
much impact on the bargaining power of buyers.
Social
The trend is moving towards eating at restaurants, which is increasing the base of
consumers, thus, reducing their bargaining power.
Technological
The advancement in technology makes it possible for the buyer to gather all the
information quickly and make informed decisions. Thus, this is increasing the
bargaining power of buyers.
YE
NO
C THREAT OF SUBSTITUTES S ~
()
(+)
Substitutes have performance limitations that do not
completely offset their lowest price. Or, their performance is
not justified by their higher price.
The customer will incur costs in switching to a substitute.
LOW HIGH
Interpretation
The threat of substitutes is medium to low, as this industry does not have any real
substitutes, because restaurants offer unique experiences along with their basic product
i.e. food items. In Pakistan, eating out is a form of entertainment and people generally
like going to specific restaurants and cafs because of their splendid experience in the
past including ambience and food. Nandos should therefore concentrate their efforts on
upgrading their restaurant ambience and the taste offered by them.
There arent many substitutes of the restaurant industry. However, decrease in the
purchasing power of the people could lessen their visits to the restaurants thereby
increasing the threat of substitutes. If better substitutes are provided to people such as
more variety in the ready-to-cook foods could increase the threat of substitutes.
YES NO
D BARGAINING POWER OF SUPPLIERS ~
(+) ()
My inputs (materials, labor, supplies, services, etc.) are
standard rather than unique or differentiated
I can switch between suppliers quickly and cheaply.
My suppliers would find it difficult to enter my business or my
customers would find it difficult to perform my function in-
house.
I can substitute inputs readily.
LOW HIGH
Interpretation
Bargaining power of suppliers is high because the inputs are not easily substituted,
keeping in mind only those companies in the industries that are rather cautious about
their inputs as poor quality inputs can cause them a hefty amount of business. Also,
the inputs are usually of a perishable nature, thus, stock-ups are not possible, that is
why reliability of suppliers is very important. Therefore, these companies usually
have one or two major supplier of main inputs, who can provide good quality inputs
in a timely manner. This is an unattractive aspect of this industry, thats why; Nandos
should integrate backward by probably farming their chicken, in order to eliminate
this power of suppliers.
Political
If the government grants subsidies to other chicken suppliers so that they are able to
produce at the same level and with same quality as KnN, then the supplier power will
reduce. If the government establishes quality standards for using hygienic meat
products, the supplier power would go very high since there is only one major chicken
supplier.
Economic
The current economic situation of the country will reduce large scale companies such
as KnN; thus, the supplier power will increase. Also our poultry industry is going
down. This will further increase the power of suppliers.
Social
This factor will not affect the input of food industry.
Technological
Technology has made it possible to manage the poultry industry, thus enabling more
suppliers to come in. therefore, the power of suppliers will reduce.
YES NO
E DETERMINANTS OF RIVALRY AMONG EXISTING COMPETITION ~
(+) ()
The industry is growing rapidly.
LOW HIGH
Interpretation
The rivalry amongst the existing firms is moderate to high as each tries to outdo the other
by offering cost-effective deals to the consumers especially during Ramadan. With the
increasing rate with which these eat-outs are opening, the market share for each of them is
deteriorating. Thus, each is rigorously competing against the rest. In such situation, it is
usually the restaurants with small operations such as Nandos that suffer. Nandos should
therefore, try to combat this issue by increasing their operation via market penetration or
market development.
Political
If the government grants subsidies to local competitors to match the international
chains, the rivalry will increase.
Economic
The fake economic growth has increased the availability of funds; therefore the
competitors can match international chains now. Thus, the rivalry will increase.
Social
This factor will not affect the input of the Restaurant Industry.
Technological
Technology has made it possible for competitors to affectively reduce cost, thereby,
enabling to match each other and copy the others competitive advantage. This will
increase the rivalry between competitors.
Threat of substitutes is
Threat of substitutes 2 1 1
Medium to Low
Somewhat Favorable
Interpretation
Overall, it is an unfavorable industry as the major cities of Pakistan are swamped with
many restaurants and cafes. Nevertheless, the industry position can be exploited to
ones advantage, if strategically smart decisions are taken. For Nandos, the
recommendations include:
Constantly innovate and bring in more competitive advantage that are
unmatchable, in order to reduce the threat of new entrants.
Political Factors: The political factors that mainly affect Nandos concern how the
government relates to health issues concerning food items being served or brings out
new regulations regarding the restaurant business. For Instance: when Bird Flu
occurred in Pakistan, if the government would have asked for ban on chicken items or
some strict regulations on the chicken items being served, then it would have highly
affected Nandos as well. Government regulations regarding franchises or international
chain of restaurants would affect Nandos in relations to itself or in dealing with its
competitors.
Social Factors: The trend of eating out has been carrying on in Pakistan since a very
longtime. Pakistani people have always loved eating out. It is even the main source of
entertainment in Pakistan. Earlier on families would go and eat out, but since the past
few years, this trend increased even further in teenagers, young adults and with
corporate people. Nowadays, if we visit any restaurant such as Nandos, we get to see
a diverse crowd that includes teenagers, families, couples and even corporate
The Internet can revolutionize the entire restaurant industry by including the
aspects of ordering food online. In this way consumers could be provided with
more convenience and be more informed about the menus.
Global chains of restaurants such as fast food joints like KFC and Mc Donalds
have existed since a very long time now. The aspect of a global chain leaves a
positive impression on the minds of the people since they tend to believe that the
product is of quality and hygiene. More and more restaurants are following this
trend and opening up their chains in Pakistan. This does affect the restaurant
industry on a whole. Nandos is also globally widespread but it hasnt penetrated
much in Pakistan as yet.
Product Innovation
Those restaurants that have had a unique menu or recipe have been able create a
strong place in the industry. People have always wanted variety in Pakistan. Any
new element or uniqueness in a restaurants menu could give it a competitive edge
in the market. Nandos has banked on this opportunity by introducing an entirely
new concept adopted from South Africa.
Technological Change
Exit of major firms in the restaurant industry can lead to changes in market shares
of all the companies that compete with such firms. Entry is relatively easy and
keeps on leading to increased competition in this industry.
Decrease in cost can lead to significant changes in the profit margin of the
business. However increasing costs can prove to be detrimental to the businesses
in the industry.
Emerging social issues and changing attitudes and lifestyles can be powerful
driving forces of industry change. The trend of eating out has been increasing
consistently in Pakistan giving more opportunities for new companies to come
with more and more variety for the public.
Weight
Weigh Ratin ed
Key External Factors t g Score
Opportunities
Market Potential - growing market for fast
casual 0.17 2 0.34
People's need for variety in the food and
entertainmnt sector 0.10 3 0.3
Rising Demand for Home delivery and
Takeout 0.08 3 0.24
E-commerce 0.02 1 0.02
People's preference for red meat 0.06 1 0.06
People's attraction towards promotional
offers 0.08 2 0.16
Increasing trends for business/corporate
lunches and dinners 0.05 3 0.15
Threats
Economic Problems in the country 0.09 2 0.18
Bird Flu Threat 0.03 3 0.09
Political Problems in the country 0.02 2 0.04
Growing market for cafes in Pakistan 0.06 2 0.12
Availability of nandos table sauces in the
market 0.03 2 0.06
Analysis:
Key Success
factors NANDOS BBQ Tonite Roasters GunSmoke
Weight Rating Weighted Rating Weighted Rating Weighted Rating Weighted
Score Score Score Score
Market Share 0.15 1 0.15 3 0.45 2 0.3 1 0.15
Local Expansion 0.12 2 0.24 1 0.12 2 0.24 2 0.24
Price
Competitiveness 0.10 3 0.3 4 0.4 2 0.2 2 0.2
Management 0.06 3 0.18 4 0.24 2 0.12 2 0.12
Financial Position 0.10 2 0.2 4 0.4 3 0.3 2 0.2
Advertising 0.05 2 0.1 1 0.05 2 0.1 1 0.05
Technology 0.08 4 0.32 3 0.24 2 0.16 3 0.24
Customer Loyalty 0.06 2 0.12 3 0.18 3 0.18 1 0.06
Product Quality &
hygiene 0.20 4 0.8 4 0.8 3 0.6 2 0.4
Employee
Productivity 0.08 2 0.16 3 0.24 3 0.24 2 0.16
Total 1.00 2.57 3.12 2.44 1.82
Analysis:
Nandos is currently being outperformed by its competitor Bar B Que Tonite, which is
17.6% ahead of it. Nandos is slacking off in its market share, which is one of the
most important critical success factors here as compared to competitors Bar B Que
Tonite and Roasters. In Local expansion, Nandos is doing the same as its competitors
Roasters, GunSmoke, while Bar B Que Tonite is behind them. Although, Nandos has
more outlets than the other three companies, it is point of Concern as Nandos is a
global chain while the other three are local companies of a third world country.
Therefore, this implies that Nandos is not capitalizing on its global strength to expand
in the Pakistani market unlike MacDonalds and KFC. Attention should be given to
the price competitive and financial position as Nandos is being out done by Bar B
Que tonite in the former, while in the latter, Nandos is behind both Bar B Que Tonite
and Roasters. Nevertheless, Nandos is doing outstandingly well as far as Product
Quality and Hygiene is concerned, their rating on this CSF stems from the strict
policy on quality and hygiene of Nandos chain that Nandos Pakistan has to follow.
Nandos Pakistan also has leverage in technology over its competitors due to global
backing that it enjoys; however, technology does not play such an important part in
the food industry as evident by its weight. To improve their competitive position, they
should definitely consider opening up outlets in other major cities of Pakistan,
introducing more varieties in their menu, work on their pricing strategy and definitely
bank on their global position to get a better financial advantage.
The Nandos true and original recipe of Portuguese sauces has mounted to be its
biggest strength all over the globe. The secrets of Peri Peri has always created an
edge for Nandos and added value to the over all menu of Nandos.
The overall theme of Nandos is very unique and dipped in the ancient Portuguese
culture. Nandos revolves around a particular theme of cherished life, full of fun,
romance flavors, captive advertisement and enriching moods spills.
The embarked history and inherited myth of Nandos gives it a strong believes in
its values being delivered through its food.
3. Distinctive Experience
Nando's offer its customers a unique Nando's life experience that is not only
about chicken. Nando's is about experiencing great times around the table,
laughing and living to eat. It is about having fun and never taking life too
seriously. This experience is backed up with a Nando's promise of quality. If
you walk into any one of Nandos restaurants around the world, you will know
you are in a Nando's, not because they all look the same, they all have their
own unique characteristics and design, but because the promise of the Nando's
Experience is universal. You will find the same warm friendly service,
delicious chicken, and a relaxed informal atmosphere. In its restaurants,
Nandos encourage noise; encourage people to use their hands when eating
and also encourage family gatherings in the spirit of the good old days.
Take-Away
Ketchup from Knorr
Home Delivery
1. Import of supply:
The main ingredients used at Nandos are chicken, fries, ketchup, spices and
sauces. The chicken is supplied to them by K&N, the ketchup by Knorr, the
fries by McKainz, and ofcourse the essence of the recipe is the sauce imported
from South Africa.
2. Operations:
The unique Nando's method of preparing Peri-Peri Chicken ensures you can
eat Nando's knowing you are taking care of your body as well as satisfying
your need for taste. They use nothing but the best A-grade chickens, which are
then trimmed of fat and marinated for 24 hours in their secret Peri-Peri recipe.
Never deep-fried, they are grilled to perfection, on a naked, open flame.
During the grilling process the chickens are continually basted in your choice
of lemon and herb, medium Peri-Peri, hot Peri-Peri, or if you are very brave,
extra hot Peri-Peri, allowing the natural flavor and fire to bring out the best in
our chickens. The finished product needs to be tasted, to be believed.
3. Delivery:
Since its introduction in Pakistan, Nandos has sold its food directly to final
users using the zero level channels.
4. Service:
While the rest of the restaurants in the world may call them waiters, Nandos
call them servers, because waiters make you wait and servers serve you. The
servers at Nandos make extra attraction and retention efforts. Nando's would
never be just about chicken and it would never be just about the two friends
who started it. The Nando's entrepreneurial spirit has become universal,
proudly feeding the souls and appetites of people hungry for life. These
Nando's people are known as Nandocas. They create the Nando's culture.
They make the chicken what it is. Nandocas are team players but are not
afraid to be individuals. Nandocas are interested in the solution not the
problem. They are true to themselves, they have fun, and they love the sound
of laughter. They work with the community to make a difference in peoples
lives. They strive to make each customer experience a magical one and they
continually search for adventure. But most importantly Nandocas love eating
Nando's Peri-Peri Chicken more than life itself.
5. Administration:
6. Training:
Nandos trains its employees not here in Pakistan but send them abroad to
South Africa. The shift managers are usually the one who get the required
training from there and then they give the servers on-job-training. They are
taught and educated about the culture and the Nandos way of life
effect) that is used by Nandocas to describe their 'go for it' attitude that drives
everyone at Nando's.
The secret Peri- Peri recipe has been adopted from South Africa. The import
of the peri peri sauces is an integral part of the costs of the company. The
Chicken supplier being KnNs also charges premium price for the high quality
chicken that it provides to the company. Ketchup is supplied by Knorr and
fries by Mckainz. Water is bottled water by Nestle and the Drinks contract is
with Coca-Cola. Raw Material supply constitutes a major portion of their
costs since they purchase from the Best Brands available. Any change in the
prices of any of the suppliers affects their costs. Transportation costs for these
raw materials also effects the purchases made. If the petrol prices increase it
leads to an increase in the cost of the product.
2. Operations
They use the best A-grade chickens, which are then trimmed of fat and
marinated for 24 hours at KnNs in their secret Peri-Peri recipe. Their
marination activity is outsourced which saves them from the hassle of buying
the chicken themselves and storing it before and during takes place. The
chicken is never deep Fried but it is grilled on a naked open flame. This gives
the aspect of a healthy product. During the grilling process the chickens are
continually basted in the consumers choice of lemon and herb, mild Peri-
Peri, hot Peri-Peri, or extra hot Peri-Peri. The costs associated with this
process are of the equipment and the basting sauces. Nandos has been able to
manage their operations costs effectively and efficiently.
Nandos waiters are known as servers. The costs of their salaries are not of
very high portion as compared to the material and operation costs. However,
Nandos does not compromise on compensating its employees. The servers at
Nandos make extra attraction and retention efforts for which they are
rewarded. They are also trained to better serve the consumers. The shift
managers are usually the ones who get the required training and then they
give the servers on-job-training. They are taught and educated about the
culture and the Nandos way of life. The delievery system of Nandos is a
new aspect introduced for the company. This delivery system led to extra
costs of delivery boys, bikes etc. However the company is still not able to
generate as much revenue since they deliver only few items on the menu. To
further enhance the delivery system Nandos would have to incur further costs
to purchase better delivery equipment and be able to deliver more products on
the menu. This would then help generate more revenue and offset the costs
associated.
4. Administration
5. R and D
The R and D of Nandos is not very strong in Pakistan. Product launches are not
very frequent due to the low R and D budget. To capitalize on the strength of the
Peri Peri recipe they need to introduce more products which require them to
invest more in the research and development. The Restaurant needs to be
innovative and novel in its approach. An adequate amount of budget should go to
R&D, market researches and development of new tastes and deals based on theses
researches. R & D require high cost but in the long run prove to be an integral
part of the company in gaining a competitive advantage.
Nandos can raise its price further with the rise in perceived quality. Raised price
will cover the rising cost, and high quality will justify high price. The profitability
will still be maintained. The market that it caters to have an inelastic demand
which is why even if a small raise in price takes place it would not affect Nandos
on a large scale.
Type Of
Restaurant STRATEGIC GROUP MAP
s
Fast Food
Kfc, Mc
Donalds, Pizza
Hut
Roasters
BBQ Tonite
Dining
Overall Cost to
the Consumers
Weighted
Key Internal Factors Weight Rating Score
Strengths
Product - their Peri-Peri recipe 0.20 4 0.8
Strong brand personality 0.07 3 0.21
Ambience at the restaurant 0.05 3 0.15
Customer Loyalty 0.02 3 0.06 4.4
Marketing efforts towards the consumer base 0.05 3 0.15 I
Strong Supplier/Distribution system 0.10 4 0.4
Products have essential ingredients for a health
life 0.01 2 0.02
Strong Background from Africa present till today 0.01 3 0.03
Selling Experience 0.04 4 0.16
Strong food concept 0.02 3 0.06
Strong Globalize Strategy - adaptive to culture 0.06 4 0.24
Creative and unique Menu 0.02 4 0.08
Weaknesses
Low Marketing Budget 0.08 2 0.16
Stagnant Growth - Not penetrated 0.15 2 0.3
Communication system within dept- not strong 0.04 2 0.08
Weak Technological system in the
Administration Department 0.04 1 0.04
No Beverage Variety 0.04 2 0.08
Total 1.00 3.02
nternal Factor Evaluation (IFE)
Analysis:
The total weighted score of 3.02 is 20.8% more than the average industry weighted
score. The reason for such a phenomenal score is their PERI PERI recipe which is
their main strength with the highest weight. Basting, marinating and table sauces are
usually the most important ingredients and they are definitely quiet effectively
banking on this strength. Their delicious basting and marinating sauces still remain a
mystery to the rest of the world. Along with this, they are handling all their strengths
really well with the exception of their healthy ingredients, which they are handling in
an average way, although, it has a low weight considering the psyche of Pakistanis,
they can definitely improve their score by communicating the nutritional values of
their ingredients. On the other hand, they are very poorly countering their weakness.
Their main weakness is their stagnant growth with the highest weight and with only a
sore of 2. There is no evidence, that they are willing to do anything about it as their
outlets are still missing in the major cities of Pakistan, like Islamabad. They should
definitely improve their growth rate and try to improve their marketing budget. This
will definitely enhance their total weighted score. The strategies to improve the
growth rate would include market development and product development via
establishing more outlets and increasing the variety in their menu, respectively.
5. Strategic Analysis and Recommendations
The company needs to make effort in targeting and communicating their real value to
its specific set of consumers.
Nevertheless, Nandos offers only chicken items; this is in line with their current
strategy. They should really check their strategic approach or correct their focus.
Nandos should stick to its focused differentiation strategy. The following strategies
have recommended for improving their strategic position:
Increase their prices to capture a larger share of their current target market.
Open up outlet in the major cities of Pakistan like Islamabad and Faisalabad.
Effectively communicate their niche marketing strategy to their target
audience to further emphasize what their brand actually stands for.
Add value by offering an outstanding service which is unforgettable and
unmatchable.
5.2.1 TOWS
1. Economic Problems in the (S1 S10, T2) Launch red meat (W3,W4,T4 T7) Up date your
country or sea-food products internal technological systems
2. Bird Flu Threat (S5, T4 T7) Use your to be at par with the other
3. Political Problems in the advertising to attract restaurants
country consumers towards your (W5, T7 T8) Introduce
4. Growing market for cafes in restaurant variety of Beverages to cater
Pakistan (S1, T4 T7) Open up new to the changing tastes of the
5. Availability of nandos table outlets in Pakistan using you people
sauces in the market product advantage to be
6. Only one chicken supplier widespread and be well known.
(KnNs) (S6, T6) Integrate backwards and
7. Huge variety of Restaurants, maintain own chicken farm
fastfood places
8. Changing tastes of people
Analysis:
The highlighted strategies are the best and most applicable to enhance the overall
position of Nandos as they effectively handle the important strengths, weakness,
opportunities and threats.
Backed by their strengths (secret Peri-Peri recipe, outstanding global brand name) and
opportunities (such as growing market for fast casual, peoples need for variety and
red-meat) and with weakness (such as stagnant growth, low marketing budget) and
threats (such as increased variety of restaurants, one chicken supplier and economic
problems in the country) facing them, the highlighted strategies are the best and most
applicable to enhance the overall position of Nandos.
Note: All these strengths and weaknesses have been explained in the IFE matrix,
while the opportunities and threats have been explained in the EFE matrix.
EXTERNAL STRATEGIC
INTERNAL STRATEGIC POSITION POSITION
Y axis
Financial strength 3 +1 worst to + 6 best Y axis:
Environmental stability -2.8 -1 best to 6 worst
3+ (-2.8) = 0.2
X axis
Industry strength 4.17 1 worst to 6 best X axis:
Competitive advantage -2.57 -1 best to -6 worst
4.17 + (-2.57) = 1.6
FS
+6
Conservative +5 Aggressive
+4
+3
+2
+1
CA IS
-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6
-1
-2
-3
-4
Defensive -5 Competitive
-6
ES
Analysis:
Nandos currently falls in the aggressive quadrant of the space matrix. Upon further
analysis, we find that their financial position is just average as not much revenue has
been generated in Pakistan as yet. The environmental stability is slightly below
average and considering the current situation in Pakistan, their political aspect and
economic aspect are not very good. Competitive pressures are high. As far as,
environmental stability is concerned, they should bank on the opportunities facing
them to the maximum, while effectively countering their threats.
On the x-axis, their competitive advantage is average for which they need to pay
attention to their cost competitiveness. The local expansion factor has the worst score
which can be overcome through expanding in other cities of Pakistan. Innovation and
communication of its value is the key here to enhance their competitive advantage.
However, the industry strength saves their day as this restaurant industry has a lot of
growth potential. Provided that the company is in the right strategic direction, it will
see profit margins very soon through association with this industry.
The following strategies can come in very handy to better their position:
High
The EFE 3.0 to 4.0
Total
Weighted 3.0
Scores Medium
2.0 to 2.99
2.0
Low
1.0 to 1.99
1.0
Analysis:
In IE Matrix, Nandos with a strong internal position and a medium EFE score is now
in the 4th quadrant. This quadrant is the Grow and Build Quadrant which suggests
that Nandos needs to build and grow its current position.
Quadrant II Quadrant I
Weak Strong
Competitive Competitive
Position Position
Quadrant III Quadrant IV
Analysis:
Nandos falls in quadrant 1 since it has a strong competitive position through its Peri
Peri Recipe which no other restaurant offers and the restaurant industry is a fast
growing market. Currently, Nandos needs are doing alright as compared to its
competitors, the reason it is slacking of is that Nandos is not communicating the value
to the consumers. To enhance their strategic outlook as per their position in the first
quadrant, Nandos should concentrate on aggressively advertising to communicate the
real value of the product to the consumer. It can also carry out market development by
opening up outlets in other cities of the country. Secondly, they can penetrate the
market by opening up subsidiaries to cater to the lower end of the market, under a
different brand name. Another thing they can do is product development via
enhancing their quality of service, add features to their chain of restaurants e.g. kids
play area and/or add more variety in their current menu. Nandos can also integrate
with their competitors (horizontal Integration) to reduce their competition and
increase their consumer base. They definitely backward integrate by farming their
chicken; this will also reduce their suppliers power over them.
5.2.6 QSPM
Strategic Alternatives
MARKET BACKWARD
PRODUCT DEVELOPMENT INTEGRATION
DEVELOPMENT Open Outlets in for meat products
New Product New Geographic
Launches Regions
Weaknesses
Threats
Economic Problems in the country 0.07 2 0.14 3 0.21 4 0.28
Bird Flu Threat 0.03 4 0.12 2 0.06 4 0.12
Political Problems in the country 0.02 - - -
Growing market for cafes in Pakistan 0.06 3 0.18 4 0.24 1 0.06
Availability of Nandos table sauces in
the market 0.03 - - -
Only one chicken supplier (KnNs) 0.08 1 0.08 1 0.08 4 0.32
Huge variety of Restaurants, fastfood
places 0.12 3 0.36 4 0.48 1 0.12
Changing tastes of people 0.03 3 0.09 1 0.03 1 0.03
Analysis:
After strategically analyzing the alternatives, we find that the most attractive strategy
is the second strategy that is Opening up of outlets in new geographic regions. The
reason as to why such is the case is explained below.
Strategy 1:
A close competition of strategy 2, the reason why this strategy has received a lower
total attractive score is that it is relatively less effective while countering the weakness
of stagnant growth (which has a high weight of 0.15), also while handling the
opportunity of Market Potential - growing market for fast casual (has the highest
weight of 0.15), along with combating the threat of Huge variety of Restaurants, fast
food places (highest weight of 0.12), than STRATEGY#2. Therefore it lost out on the
most important factors, along with losing on other relatively less important strengths,
weakness, opportunities and threats.
Strategy 2:
This is the most effective strategy as evident by the total attractive score as their main
weakness is the stagnant growth along with a very important opportunity of great
market potential for fast casual restaurants. With threats such as growing cafes in
Pakistan, it is must that Nandos aggressively opens up outlets so it is in the
consumers face. This will definitely uplift the international chain image of Nandos if
it opens up in cities like Islamabad and Faisalabad along with countering the threat of
economic problems in Pakistan, as the rich, influential politicians, diplomats and
industrialists reside in such cities. These cities also have better political conditions;
thus, will give Nandos less economic loss due to strikes, riots, etc.
Strategy 3:
This strategy of backward integration received the worst score because on the most
important strength of their peri-peri sauce, it has an attractive score of 1 i.e. it is not at
all attractive relative to the other strategy, as it barely capitalizes on this particular
element. The only strength that this strategy is more useful for is Products have
essential ingredients for a healthy life than the alternatives is one with lowest weight
due to its relative importance. Of the weakness, the other two are better at countering
the weaknesses, while it is only better than opening new outlets in other geographical
areas in the opportunity: peoples preference for meat which has a relatively low
weight of 0.07. Nevertheless, it is better at combating two important threats, namely
one major supplier of Nandos and the economic situation in the country than the other
two alternatives, as this strategy will enable better supply management while facing
these two threats.
6. Strategy Implementation
Nandos expertise in Peri Peri sauces and for grilled Chicken serves as its strength
that a company is fairly good at doing and that enhances its competitiveness. The
goldilocks of unique advertising and symbolic representation of the myths add
strong hold of the organizational expertise in translating its culture to its
operational activities and in brand transformation. Nandos has a wide worldwide
distribution and supply chain network, through which Nandos is capable of
importing its main constituent of the recipe, that is its marinades, and also the
chicken from its sole supplier KnNs. The forwarded myths and strong culture of
Nandos is its another strong competency, the company can articulate at by
translating the corporate culture into the administrating activities. The finest
chicken from KnNs and the imported high quality ingredients do not allow
Nandos to compromise at the quality dine, which can be used to strengthen the
differentiation element for the Nandos.
Although Nandos have pool of talented, fresh and young workforce, yet they
lack energy and risk taking capabilities. Therefore, Nandos should provide proper
training to it workforce consistent to its lively and energetic culture.
New strategies require significant budgets. Though being a global company the
resources of Nandos are not equally or substantially granted to the local
franchisees to develop and implement strategies bringing higher initial costs to the
company. In order to implement new strategies such as product development and
market development, Nandos needs to increase its budget. The market
development strategy would subsequently increase their distribution costs and also
the product development would mean buying sea food and meat which would
additionally increase the supplier costs. Therefore, Nandos will have to have
efficient budget in hand so as to align their budget with strategy.
Nandos need to stabilize its strategy in two important areas of concern, with
respect to the recommended strategies of product development and market
development. Firstly, Nandos need to expand its budget for its marketing and
promotional activities, by not just promoting few of it products at an interval basis
to the set of products marketed to the masses. This shall also inculcate to drive
from audio and print marketing to media advertisements. Moreover, Nandos also
needed to revise its policies regarding the internal communication of the
organization. Despite of the limited number of workforce, Nandos still experience
communication gap and dispersed functional activities, not integrated properly.
Nandos can improve on its value chain activities by implementing the strategy of
backward integration which would help Nandos drive the costs out of the value
chain. Nandos can do so by initiating its own poultry farms in South Africa in this
way Nandos would not require to import the sauces and the marinades, infact
they can directly import the chicken marinated in the Peri Peri sauces, under the
specialized supervision of the Nandos at South Africa. This shall in long run will
cause the company to drive costs out of its value chain, and will led all the
Nandos global franchisees import chicken from one place.
Nandos can work over all these three basic factors to strengthen its day to day
operations to achieve effectives and efficiency of work.
It is essentially important that the base of the rewards and incentives shall lie on
the performance of the employees. An attractive and lucrative reward system not
only motivates the employees towards optimum performance but also attract the
talented workforce. The strategy thus requires the good workforce to implement it,
and which requires fair reward system to attract and motivate employee for the
achievement of performance.
Nandos passed on culture is very strong that depicts their beleives, values, and
perceptions. The unique and energetic culture possessed by Nandos gives it a
unique strength which is hard to compete at. But this culture is limited more
towards literate values and publications in Nandos Pakistan than practically
adopted and implied.
One very important aspect of instilling a cultural change is that it should be more
than cosmetic, i.e. it has to be complemented by actions and real movement, and
such actions must be indicative of the managements commitment to new strategic
initiatives and associated cultural changes. The easiest method is to engineer some
quick successes that highlight the benefits of strategy-culture change, thus making
enthusiasm for the changes contagious.
Nandos strategic leadership is only possible with a strategic mind on the top.
Success of an organization depends upon the sailor who boats the voyage through
strong values, accepted culture, risk-taking mind set, and vigorous moves to
implement the documented plans that matches with the consistent and future
customer needs, and creating a competitive edge.
CEO. It is the leader who creates power and force that constitutes strategy, so that
it is implemented correctly and consistently across the organization.
The balanced scorecard is a strategic planning and management system that helps
everyone in an organization understand and work towards a shared vision. A
completed scorecard system aligns the organizations picture of the future (shared
vision), with business strategy, desired employee behaviors, and day-to-day
operations. Strategic performance measures are used to better inform decision-making
and show progress toward desired results. The organization can then focus on the
most important things that are needed to achieve its Vision and satisfy customers,
stakeholders, and employees.
Financial Perspective
Customer Perspective
Since Nandos is opting for market development, it can firmly constitute its
objective of attracting and retaining customers with respect to the customer
perspective. The majority of the customers walking into Nandos are business
executives coming for lunch. This grants a good market to Nandos for stabilizing
the market for the business executives through Nandos Loyalty Cards.
time, thus increase in revenues for the company. This will give advance revenues
for the company that is before a sale was actually made. This method is effective
to increase the sales, attracting business executive, and creating more demand for
the Nandos Loyalty Cards.
Moreover, Nandos can make its delivery network more effective and strong to
meet the needs of the corporate and regular customers. Another initiative that can
be taken to attract and retain customers is through more variety based menu. This
will require Nandos to introduce new products and beverages. The attainment of
these objectives can be measured through increased customer database and
repeated customers walking in the outlet.
Internal Perspective
Since the strategies proposed and the objectives undertaken revolves around the
market and product development, Nandos need to put great emphasis on the
training and development of the employees in managing these objectives and to
further training the new hired employees in accordance to the increasing
operations in various regions. Moreover, the company needs to exert a dynamic,
energetic and risk taking culture to encourage the workforce move vigorously in
implementing the strategies and taking and managing calculated risks in market
development process. Also since, Nandos is recommended for product
development, another objective of Nandos shall be to accelerate the R&D
activities in introducing new products, for a variety based menu. These objectives
can be achieved through more product research and development, training
employees and infusing global culture in Nandos Pakistan. Nandos shall also
require to focus its targets such as generating a pool of energetic and risk taking
workforce, introducing new and improved products and exercising cultural
transformation.
businesses.
People who have new ideas are respected
and enjoy high status in the company.
Subtotal of CEO/Board score: 10
Total Score: 79
1. Strategy
2. Execution
The customers at Nandos expect the same quality grilled food, fun and energetic
environment and efficient service whenever they come to Nandos anywhere in
the world. To do so, Nandos should put the decision making authority close to the
front line employees so that they are better able to react to the changing market
conditions. Nandos should also improve its productivity at a rate that is roughly
twice the twice the industry average.
3. Culture
4. Structure
The structure of the company should be such so that it reflects simplicity in which
its easier to work in and with the organization. Nandos can do so by promoting
cooperation and exchange of information across the whole company. This would
further reduce bureaucracy.
5. Talent
Nandos does have a lot of young employees. It can hold on to talented employees
and develop them more by filling mid and high level jobs with outstanding talent.
Also, creating and maintaining effective training and development programs, by
designing jobs that challenge the best performers and keeping the senior
management involved in the selection and development of people.
6. Innovation
Nandos seriously needs to come up with more new and innovative products. Also,
it should not hesitate to cannibalize existing products. Furthermore, Nandos need
to enhance all its operating processes.
9. References
1. www.nandos.com