KEY SUCCESS FACTORS IN BUSINESS

KEY SUCCESS FACTORS : A CASE OF TANZANIABREWERIES LIMITED (TBL)

Author, J.H.Mwambange (MBA-Agribusiness,SUA)

INTRODUCTION

When an entrepreneur or organizations starts a business, they should consider business key success factors. These factors are key indicators and milestones that the organization set to measure the success of the company.

It is harder for firms entering the field to earn superior returns unless they have a competitive advantage such as some existing expertise like industry or technical experience or they acquire valuation talent with a book of business. Forward looking managers should recognize that some or all of the following will likely occur in the future or are already affecting the profession:

• More intense competition for market share.
• More selling to experienced, repeat buyers.
• Competitive focus shifting toward price and service.
• Cautious additions to capacity and personnel.
• Reorientation of a firm’s production processes, marketing and selling.
• International competition increases caused by standardization and price pressure.
• Industry profits falling during the transition to maturity, a change that may be either temporary or permanent.

How each firm reacts depends on its individual goals, resources, willingness to change and aversion to risk. Firms may, for instance, need to modify their marketing strategy, enhance client service and more carefully manage operations and financial performance.

KEY SUCCESS FACTORS IDENTIFIED: A CASE OF TANZANIABREWERIES LIMITED (TBL)

As a result of the TBL environmental analysis conducted underhere,the following key success factors were identified.

Marketing

A wide range of brands produced  by Tanzania Breweries  Limited from alcoholic to non alcoholic lead to capture a wide range of local markert as well as export market.Although TBL has loyal customer but keeps on advertising and promoting its products in order to impart constant awareness of the product.TBL conduct marketing research as a continous process for the pursose of analysing  consumer taste, preferences, quality, price, packaging and market segment. The crowns for all TBL brands are now made locally by Nampak Tanzania Limited, using highly technical equipment and the labels for all TBL Brands are made by Tanzania Printers Limited, who can produce about 2 million label sets a day for TBL  with a high quality and attractive to customers around the country.

Resource Management;

(a)   Raw material: TBL conduct contract farming with small and large scale farmers where by they facilitate financial loan and extension services that leads to produce raw materials in turn make it available locally at relatively low cost.  Eventualy TBL buy farmers produces in consideration of financial loan offered to farmers. Also the TBL has launched SAIDIANA project to ensure smoothly flow of materials. Through contract farming following this practices, TBL has lowered the burgaining power of suppliers and ensured the availability of raw materials at least cost.

(b)   Human resource:The company recruit a commited,qualified and skilled personnel mostly freshers graduate who are trainned to capture the organisation culture and work as a team to achive the organisation goals. The Company motivates its staff by providing  medical services through its dispensary and other outside hospitals. Staff are entitled to access referral hospitals as the need arises.In additional to medical services TBL provides other fringe benefits  and renumerations to its workers, some of these are free drinks, housing allowance, sharing profit bonus, training and organizing get together party (TBL family day) .The company places considerable value on the involvement of its employees and has continued its practice of keeping them informed on matters affecting them as employees. This is achieved through formal and informal meetings.

Financial Management.

One of the main key for TBL success is managing cash flow properly, maintaining open lines of communication to potential investors and lenders at all times. The Board strives to provide the right leadership, strategic oversight, and control environment to produce and sustain delivery of value to all of the company’s shareholders. The Board applies integrity, principles of good governance and accountability throughout its activities and each director brings independence of character and judgment to the role. All of the members of the board are individually and collectively aware of their responsibilities to the company shareholders. The Group Audit Committee monitors and reviews the effectiveness of the internal control and the internal financial control of the Company and its subsidiaries. TBL have quick financing due its capital and profitability status, lenders see that they are able to balance their books and maintain a profit, they are more likely to approve loan, Cash on hand is also important to TBL for those times when can not get approved for financing but need operating capital right away. Managing cash flow is making TBL to exist among competiting market and maximize profit as well.

THE FIVE FORCES OF BUSINESS ANALYSIS:

Threat of Entry of New Competitors;

Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents. New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. Particularly when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition, as Pepsi did when it entered the bottled water industry, Microsoft did when it began to offer internet browsers, and Apple did when it entered the music distribution business.

·         TBL has enables high customer loyalty through diversified brands.

·         Makes new entrants to have high investiment capital to compete eg in 2010 they spent 114.2 billion compare to 75 billion spent in 2009.

·         Enjoys economies of scales as they are producing in bulky so low production cost compared to its competitors.

·         TBL has high switching cost from one brand to another.

·         Have a reliable source of supply of raw materials internally or externally eg SAIDIANA project where supports small scale farmers in contract bases.

·         Also buying Kibo gold breweries in 2002 was one of the strategy to hinder the force of new entrants.

Bargaining Power of Customers:

In the current weak economic conditions, clients naturally look for ways to reduce costs. Consequently they take more time seeking lower-cost valuation services, or they avoid buying the services altogether. Buyers are powerful if they have negotiating leverage relative to industry participants, especially if they are price sensitive, using their clout primarily to pressure price reductions. A customer group has negotiating leverage if,there are few buyers or each one purchases in volumes that are large relative to the size of a single vendor. Large volume buyers are particularly powerful in industries with high fixed costs.To reduce the bargaining power of buyers.

·         TBL provides wide range of brands which enables the buyers to switch to those brands easily.

·         TBL aim to transform Wholesalers and Bulk buyers into Distribution Centers that will focus on distributing beer to retail outlets at Recommended price.

·         Buyers are sensitive to price change so TBL using economic of scale to produce their products which will results in lowering production cost hence maintain or lowering the price.

Bargaining Power of Suppliers:

The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labour, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm e.g charge excessively high prices for unique resources.

·         TBL recruits skilled labour and most are fresh graduate.

·         Have initiated SAIDIANA project where they provides extension services and financial assistance to farmers on contract bases, in order to ensure sustainability of raw materials.

·         Enhence the value of goods and services supplied by making effective use of information about the customer needs and preferences.

·         Reduced inventory costs by providing just intime deriveries.

·         TBL speeds the adoption of new technologies to produce more effectively and efficiently.

Intensity of competitive rivalry:

For most industries the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. This force considers whether industry incumbents tend to react to the actions taken by competitors. When competitive rivalry is intense, an industry is considered less attractive by its players.In reducing the intensity of competitive rivalry,TBL employs following measures.

·         Sustainable competitive advantage through quality and innovation.

·         Increasing level of advertising and promotion.

·         Flexibility through customization volume and variety.

·         Forms stronger relationships and build customer loyalty.

·         Focusing on unique segment of the market eg Balimi beer in Mwanza,Bingwa  beer in Kagera.

·         Delivery on time of additional capacity and capability including a new brewery in Mbeya and additional packaging line and rehabilitation of the third packaging line at Dar es Salaam Plant.

Threats of Substitute Services (or Products):

The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Note that this should not be confused with competitors' similar products but entirely different ones instead. For example soft drinks might be considered a substitute for beer.Increased marketing for soft drink might "shrink the pie" for beer.

·         TBL staying closerly in tune with customers preferencies and their differentiating their products by having different brands.

·         High level promotion and advertisiment.

CONCLUSION

Strategic planning starts with understanding the environment in which a firm operates. The analysis  discussed here offers a  way for strategic planning  to achieve more from their goals in the long run.Proactive firms will work harder to market their products and services with attention paid to existing and future clients and referral sources.Another tactic is working harder on client service meeting or exceeding client expectations to earn future business or recommendations. Also focusing on selling and marketing processes, managers ought to examine their internal production processes so they can perform their work more efficiently.

REFERENCES

1.      Gregory G.Dess, G.T.Lumpkin, Alan B.Eisner, (2008).Strategic Management,fourth edition, Mc Graw-Hill, New York.

2.      Porter, M.E (2008).The Five Competitive Forces That Shape Strategy, Harvard Business Review, January 2008.

3.      Tanzania Breweries limited. Annual and Accounts  Report,(2010).