Module 3 Summative assessment 3.2
MODULE 3
SUMMATIVE ASSESSMENT 3.2
MODEL ANSWER
100 MARKS
THIS ASSESSMENT COVERS:
UNIT 336700 - LEAD AND INFLUENCE THE SUPPLY CHAIN MANAGEMENT ENVIRONMENT
Please read the following case study and answer the 3 questions that follow.
http://www.thisdaylive.com/articles/as-south-african-retail-outlets-swoop-on-nigeria-/144856/
HOME > NEWS
1. As South African Retail Outlets Swoop on Nigeria…
14 Apr 2013
Game and Wallmart
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The penetration of South African-owned retailers like Shoprite, Game
Stores, PEP and Massmart into major Nigerian cities has been
attributed to the favourable investment climate and the big market in
Nigeria. When will South Africa reciprocate the gesture by removing all
the bottlenecks Nigerian businesses in South Africa, ask Festus
Akanbi and Affardi Catherine
Mr. Sanya Onifade (not real name) who had lived in Ilorin, the Kwara State capital,
until two years ago when he was redeployed to Lome, the Togolese capital, by a
multinational company he works for, had cause to visit his old parents he left back
at home last week.
After his arrival at the Murtala Mohammed International Airport in Lagos, Onifade
who could not do shopping for his relations back in Nigeria before he left Lome
took solace in the fact that Lagos, as the commercial nerve centre of Nigeria,
parades an array of big shopping malls run by some South African retailers where
he could buy a few household goods with the same qualities like those in Europe.
Having been to the Shoprite Shopping mall in Lekki twice before his transfer to
Togo, Onifade had thought of the heavy vehicular traffic he needed to contend with
before
picking
some
items
for
his
people
based
in
Ilorin.
But the Togolese returnee’s surprise began when the airport taxi driver told him he
could pick whatever he wanted at a nearby Shoprite shopping mall located in
Alausa a few minutes’ drive from the Lagos Airport. Onifade never knew another
shopping mall had sprung up in Ikeja.
However, another surprise awaited him on his arrival in Ilorin. Onifade, who arrived
the town around 7.30 in the evening, met the shock of his life when he saw the
customers’ traffic in and out of the sparkling edifice that houses the new Shoprite
shopping mall along Sate area of Ilorin.
He was shocked because nobody had thought that such concept, which had been
the exclusive preserves of big cities like Lagos, Abuja and Port Harcourt could be
found
in
far-flung
places
like
Ilorin
and
other
towns.
Today, major towns in the country are playing hosts to the rampaging retail
operators majorly from South Africa. In Lagos alone, such shopping malls can be
found in Lekki, Surulere and Ikeja. Apart from Ilorin, residents of areas like Ibadan,
Port Harcourt, Enugu and Kano also have access to such facility.
Some of the popular names of such big retail outlets that have found Nigeria very
attractive for their businesses are Shoprite, Game Stores, Massmart, Nando,
Woolworths, Spa. PEP and Foschini Limited, a South African clothing and
household goods retailer. Their presence in any city is distinguished by their
expansive, glittering shopping malls – which provide world-class shopping, dining
and entertainment for people of all ages. True, while in South African cities these
malls are the standard places for shopping and entertainment, in other countries,
the malls operate like oases of “modernity”, in environments that are often
otherwise run-down and overcrowded.
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However, watchers of the rapid expansion of these South African companies said
their presence in the area means roadside meat, vegetable and bread vendors
have been dealt a deadly blow, in a city where the retailing of virtually everything is
traditionally done informally.
Explaining the popularity of these retail outlets, analysts said going by the sheer
buying power of these retail giants and their ability to source merchandise, patrons
can be assured of relatively good prices for products of reasonably good quality.
Indeed, Shoprite frequently boasts in its adverts that because of its “extensive
buying power”, it sells products at “guaranteed” low prices. Some Nigerians have
also wondered why the South African retailers are having a free reign in Nigeria
whereas South African market is not friendly to Nigerian businesses. Apart from
cases of xenophobic attacks on Nigerians resident in the former apartheid region,
many Nigerians have continued to tell tales of hostile policies targeted at foreign
business owners, especially Nigerians in South Africa.
Trade and Investment Ministry on the Alert
Questions were raised over the role of the Trade and Investment Ministry in the
dominance of South African retail firms in Nigeria. However, the Minister of Trade
and Investment, Dr. Olusegun Aganga said his ministry was already beaming its
searchlight on the activities of retailers.
Speaking through his Special Adviser, Media and Publicity, Mrs. Yemi Kolapo, the
minister said: “We have monitoring procedures in place and we are taking
necessary steps to address the situation.”
Managing Director, Financial Derivatives Nigeria Limited, Mr. Bismarck Rewane,
also said nothing could be done to stop the coming of the South African retailers
into Nigeria. He believed that retail business has come to stay, explaining that it is
one of the largest employers of labour today. He pointed out that in the United
States and Germany, retail and post offices are the largest employers of labour.
“Ours is a country of shopkeepers. If you are able to manage your inventory
properly, you will know how much you can sell.”
Rewane noted that world population is growing at an alarming rate, wondering how
governments all over the world intend to absorb the growing youth population into
schools.
He stressed the need to support the promoters of retail business, explaining that
there is need to support the growth of retail business in the country, saying “If
South Africans can come and revolutionise our retail business in Nigeria, let’s
encourage them.”
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The FDC boss believed that if people patronise these retail outlets, there would be
demand for Nigeria products, which in turn will put money in the hands of the
people. According to him, government can start to introduce some protectionist
policies if it feels there is need to do so.
On the allegations that Nigerian business do not have it smooth in South Africa,
Rewane said there is need for us to put our house in order first before we embark
on moves to expand beyond Nigerian shore.
“Are Nigerian firms performing well at home? We need to get it right before we take
our businesses to other lands.”
Catalyst for Local Initiatives
In a response to THISDAY enquiries, Head, Research and Intelligence, BGL Plc,
Mr. Olufemi Ademola, said the rising profile of South African retailers in Nigeria is
capable of spurring local investment and competition.
He said, “I think it is understandable for some Nigerians to be worried about the
growing investment of South African companies in Nigeria’s retail businesses.
However, I am of the opinion that it is a needed catalyst to spur local investment
and competition. To come out of our economic woes of the 1980s and 1990s, the
country decided to attract foreign investment into the country. We provide attractive
incentives for investment in the country and allow full capital mobility/repatriation.
And when we succeeded in attracting the investment, we introduced policies like
foreign exchange liberalisation and independent monetary policy to keep them.
“All these actions signify that the attraction of foreign investment is a deliberate
policy by the country to support economic activities, which in the present global
economic integration, is not a bad idea. The low growth of the Indian economy has
been blamed on the over-protection of domestic businesses, especially retail
businesses like supermarket chains, which were hitherto reserved for local
investors.”
On the alleged hostility against Nigerian businessmen in South Africa, the BGL
official said no nation can survive without external investments.
“I don’t have any fact about the hostility of South Africa to Nigerian businesses. I
have always believed that the country will allow any genuine and properly
channelled investment at any time, even from Nigerians.
“However, investment opportunities in South Africa is limited (compared to Nigeria)
due to the size of the population and the level of development in the country. In
addition, the recent financial crisis, which hits the developed and emerging markets
more led to protectionist reactions from several countries including South Africa.
In my opinion, this is a temporary situation and the country (ies) would soon revert
to freer markets. Nigeria has also tried indigenisation of companies in the past; at a
time when we considered it necessary but reversed the policy when the country
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needed to attract foreign investment.
“In conclusion, the decision of whether or not to allow foreign investment would
depend on Nigeria’s economic life-cycle and the requirements of the country at the
particular time. If we believe that the domestic capacity is available (financial,
infrastructure and human) to establish and run the businesses profitably and
sustainably to meet the demand, we can introduce a control of foreign direct
investment in particular sectors of the economy,” he said.
However, market sources said the retailers are cashing in on the prevailing low
liquidity situation in Nigeria, which is said to be compelling Nigerians to place
emphasis on food and essential household items above any other needs. They
also listed the existing investment-friendly policy in Nigeria which they said are rare
some other African countries including South Africa.
A survey carried out by the global financial advisory firm, Renaissance Capital, for
instance, showed that many of the retailers are already looking at smaller cities
outside the key cities of Lagos and Abuja. It was gathered that Massmart,
Woolworths and Shoprite, three leading retailers from South Africa recently opened
new stores in Enugu, in order to register their presence in the eastern part of the
country.
In their train could come a coterie of other retailers, because, if the plan is to do it
the South African way, then Nigerians should expect to see shopping malls of
different sizes and shapes in their neighbourhoods, and look forward to what could
significantly alter retail landscape.
Shoprite opened its fifth shop in Nigeria at the end of June 2012, with many more
underway. According to Whitey Basson, Shoprite’s CEO, the retail chain plans to
open up to 700 stores in the country. Equally, Massmart (partly owned by Walmart)
has announced that it intends to increase its presence from two to 20 stores; while,
Spar has partnered with Nigeria-based Artee Group to tap into the local market.
Going forward, the firms plan to increase their Lagos network and expand into Port
Harcourt and other cities across the nation.
Large Market
In all these, one fact that remains sacrosanct is the allure of the population
advantage, which Nigeria enjoys. “Several cities in Nigeria have populations of
more than eight million people. I can’t say all of them have the same spending
power, but Nigeria can support the same number of supermarkets as South Africa,”
Shoprite chief executive Whitey Basson told Reuters in an interview last year.
“Even if you have 60 percent of the population living in poverty, 40 percent of the
Nigerian population is still bigger than the South African population,” he added.
The expansion in the formal retail sector, analysts have pointed out, is on the back
of Nigeria’s large population, the growth in particular of the urban population,
positive macro-economic growth, the increase in disposable income among some
segments of the population, and a strong appetite for consumer goods among the
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populace.
A 2012 global strategy report by Straplan (Research and Planning), for instance,
revealed that Nigeria is leading the population boom as well as retail market
potential in sub-Saharan Africa (SSA). According to the report, Nigeria accounted
for 19 percent of Africa’s population in 2011 at over 160 million (compared to 51
million in South Africa), while the country’s robust trade (retail and wholesale)
sector accounted for about 19 percent of its Gross Domestic Product (GDP) in the
same year. The report noted: “Typical of the SSA region, Nigeria has a youthful
population with over 65 million aged 14 and below, representing 40 percent of its
population. Nigeria’s demographic play becomes more promising as its urban
dwellers gradually rise beyond 80 million, supporting the gradual emergence of a
middle class with significant financial resources and sophisticated demand.”
The efficiency of the Nigerian retail market, the report further said, would be
reinforced by the rise in mobile technology expected to fuel the country’s
integration with the global economy and also help to alleviate some of its
challenges of doing business. It pointed out that beyond its natural resources
SSA’s over 850 million people have become a strong attraction to investors, saying
the continent has also announced its presence as an emerging frontier for retail
investments
Please answer the following 3 questions:
1. Suppose you could change supply chain constraints in South Africa, what would you do to lead,
manage and influence the supply chain management environment in South Africa? (30 marks)
2. What changes would you make to develop a culture of productivity through people? (30 marks)
3. How would you lead change in the Supply Chain? (40 marks)
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MODEL ANSWER
Answer to be weighted 80/20, where 80 percent is knowledge based and 20% the learner's own
interpretation.
Q1. The student must critically evaluate the fundamental differences between leadership and
managing to determine their impact on the supply chain management environment.
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The student must assess the behavioural traits of successful leaders to determine their impact on
the supply chain management environment.
The student must develop a range of leadership styles and make judgements on when best to use
each.
The student must critically evaluate strategic leadership approaches in terms of business
influences (business influences include but not limited to Strategy, Human assets, Expertise,
Control and Change).
The student must use models of influence to try to influence people in the supply chain.
The student must critically assess the different sources of power to determine legitimacy and
acceptability when leading and influencing areas of the supply chain.
The student must execute leading and influencing activities through the utilisation of specific
strategies (Strategies include but not limited to managing the manager, identifying key methods
for managing upwards, influencing styles for leading direct reports and teams, range of
influencing styles for cross-functional leadership, range of external stakeholders [including
suppliers, customers, collaborators and other third parties] and effective influencing styles and
relative merits of escalation as a means of influencing.
The student must develop a range of tactics and definitions to effectively influence the supply
chain (Rational persuasion, Inspirational appeal, Consultation, Ingratiation, Exchange, Personal
appeal, Coalition, Legitimating and Pressure).
The student must critically assess the outcomes of attempts to influence the supply chain to
determine the impact on the supply chain (internalisation, compliance and resistance).
Q2. The student must explain the need for people to work effectively in terms of the benefits to
individuals and to work-based teams.
The student must develop a consensus on how to work together in order to identify potentials for
pitfalls and conflicts within the team (power, politics, position, lack of resource, poor
communications and poor leadership).
The student must critically assess diversity issues to determine how they relate to the success of
people and propose approaches to managing them.
The student must determine ways of developing and motivating people in order to try to increase
their productivity and effectiveness.
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The student must effectively plan team time is to include scheduling, justifying resources,
deadlines and delivery dates.
Q3. The student must develop innovative vision, values and culture for the future (Vision to
include justifying reasons and benefits associated with change, taking into account the
relationship between transformational and transactional change).
The student must critically evaluate a range of different models of change management to
consider the implications of implementing the purchasing function.
The student must develop an appropriate style for leading and managing for the strategic change
process that will encourage stakeholders to welcome and embrace change within the purchasing
function.
The student must set and priorities justifiable objectives for change and draw up strategies for
achieving them.
The student must determine resource requirements for the implementation of change within the
purchasing function (human, physical and financial).
The student must delegate responsibility is delegated for the effective implementation of change
(including planning and implementation and delegating both responsibility and power to
managers).
The student must use force field analysis to identify forces and barriers to change and determine
what needs to be done to develop and assist change (Bureaucracy: i.e. departmentalism, formality
of management; Resources; Politics; Insecurity; Risk; Blame culture; Deference).
The student must effectively negotiate difficult leadership and management situations in order for
resolution of the problem (Negotiation includes involvement in negotiating within industrial
relations situations).
The student must monitor and control the impact of the change process on the supply chain
performance to determine its effectiveness (Budgets, Projects measurement, Benchmarking,
Auditing, Employee and stakeholder reactions; appropriate communication programmes
involving third parties regarding internal changes).
The student must manage continuity of performance while implementing change in order to
maintain a business as usual approach for managing supply.
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