GREAT ZIMBABWE UNIVRSITY
GROUP FOUR - DEVELOPMENT OF STRATEGY
MPAC520
LECTURER
STUDENT NAME
MR MUTEMBWA
REG NUMBER
ADRIAN MOYO
M225550
PATIENCE CHIVANGA
M121037
SINOYA OWEN
M223370
TRACEY RWAZEMBA
M225033
TAFADZWA MACHEKE
M155491
DEFINATE MUSEBA
M155294
FARISAI SHAVA
M225595
TATENDA MUKONOWESHURO
M215575
Porter Diamond Model emphasises the competitive advantage of an industry or business that
makes it work better than other competitors in the region or country. When you want to invest
outside the country, we use Porters Diamond Model to analyse the external environment. This
can be presented diagrammatically as below.
Advantages of acquisition
Pre-existing market share
Market share is the percentage to which a business in a particular sector supply, the bigger the
share the better off the entity has over its rivalry. Pre-existing business have already established
market share and obtained goodwill. More over through the acquisition the entity (DZL) will
access a wider customer base and increase the market share. The targeted business will be used
to explore other distribution channels and systems that can aid to a better competitive position.
Porter’s model give emphasis to attaining a competitive advantage through exploiting strategy
and rivalry.
Easy access to finance
Pre-existing entities such as DML have an established financial track record which adds as a
merit on sourcing out funds. Accessing funds for better production or distribution facilities
are often less expensive to buy than to build. Looking for a target business that are only
marginally profitable and have large unused capacity which can be bought at a small premium
to net asset value.
Knowledge and skilled labour force
DZL might obtain quality staff or additional skills, knowledge of the industry and other
business intelligences through acquisition of DML. Many of the problems associated with
such would have been faced and solved in the course of prior trade before acquisition.
B) Major benefits of entering the Malawian Dairy market through exporting than
acquisition
Acquisition of DML might trailer in with the risk associated with the inherent theory. The DML
might have poor relationship with the related and supporting industries which in turn might
affect the going concern of one. Therefore, producing in your own country and exporting to
Malawi can be advantageous, for the DZL will not be crucified for DML’s sins.
Government support on exporting firms as well as factor conditions such as raw materials and
labour availability locally in Zimbabwe makes it ideal and profitable for DHL to enter the
Malawian dairy market via exporting than acquisition. This is in the sense that DML might be
operating in the economy with harsh factor conditions and related and supporting industries.