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Introduction
Strategic Management Planning of Nando’s will be stated in this report. Business strategy refers to the competitive advantage that companies conduct to have more customers, compete strongly and acquire their organizational goals (Teece, 2010). It assists companies in knowing about the steps they should adopt for the betterment of the business. In this article, we will go through the Strategic Management Planning of Nando’s.
Strategic Management Planning of Nando’s: Analysis of the impact of the macro environment on organizations
The vision statement of Nando’s:
Nando’s vision is to become a restaurant that offers a unique dining experience that will make the customers highly satisfied and will visit the restaurant again and again (Nando’s: 3, 2020).
The mission statement of Nando’s:
The mission of Nando’s is to become the best chain in the world that offers a world-class chicken experience at a reasonable price (Peng, 2019). The company aims to provide consistent quality and value to their customers that will help them to fulfil its mission. The outstanding customer service with world-class foods will make the company one of the best chains in the globe.
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Objectives of Nando’s:
The objective of the company is to ensure professional management of both people and resources (Urban, and Hobbs, 2015). Employees of Nando’s respect and support each other within the company in order to ensure individual growth. This individual growth will be the strength of the whole Nando’s; therefore the company arranges training, education and reward system. It helps the company to make sure that they will be capable of achieving their objective by utilizing the talent and strengths of their employees.
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Company profile of Nando’s:
Nando’s is one of the most famous chicken restaurants. It is a South African restaurant but provides services in many countries. Nando’s is headquartered in Johannesburg, South Africa. It serves services in 30 countries of the world with 1200 restaurants (Business Chief, 2019). Nando’s is famous in countries such as the UK, Canada and Australia. Products of the restaurant are chicken and related cuisine furthermore drinks. Peri-peri style chicken dishes which are Portuguese-African food are the signature products of Nando’s and it is also renowned for sauces and bastings. The company have employees about more than 5000 (Business Chief, 2019). Revenue of the company was over one billion million British pounds in 2019 (Statista, 2020).
Strategic Management Planning of Nando’s: Macro Environment Analysis
PESTLE Analysis of Nando’s
PESTLE is the framework that is used to analyse macro environment of businesses. PESTLE analysis shows the impact of political, economic, social, telecommunication, ecological and legal environments on an organization’s execution (Team, 2013). In the same way, Lasserre (2017) revealed that PESTLE analysis plays a great role to help companies understand different forces of the macro-economic environment (which a company has no control over) which a company need to know for compiling strategic directions. As a result, companies can determine the steps that will assist them in interacting with the impact of the environment effectively. In this Strategic Management Planning of Nando’s, PESTEL will reveal the external environment.
Political Environment: The influence of political factors is analysed with the help of a political environment that helps companies to determine the decisions that should make in order to handle the influences (Fozer et al., 2017). Brexit is the political factor that will affect the operations of Nando’s in the UK because most of the vegetables, drinks and fruits are imported from the EU within the UK, and the costs of purchasing raw materials will increase for the restaurant (Phoenix Today, 2019). It will increase the operating cost and the company have to take steps to balance with the increased costs. Nando’s have to add new foods to their menu after considering the demand of UK people. That will increase Nando’s demand greatly in the UK, and they will be able to make balance the profit and costs.
Economic Environment: Economic environment analyses the impact of economic factors on an organization’s movement and they can take initiatives to adjust with the impacts (Kolios, and Read, 2013). COVID-19 have brought a negative economic impact on all types of organizations across the world. Nando’s has closed its restaurants in many countries to stop the spreading of the disease. For instance, it has closed 400 restaurants in the UK which will reduce the profit level of the company (Mirror, 2020). COVID-19 will cause global recession that will reduce the buying power of Nando’s, and it will also hamper their profit. It may provide discounts that time to attract customers and discount will help Nando’s to maintain its sales at that time.
Social Environment: This environment refers to the influence of social factors that have an influence on companies’ operations, and companies become able to adjust with the influences after identifying those (SHTAL et al., 2018). Social factors impact the sales of Nando’s. For instance, there are many people whose are vegetarian in India and avoid the restaurant because of non-veg foods. Nando’s also have vegetable dishes but many vegetarian people do not know about the dishes (Nando’s: 1, 2020). The restaurant has to promote their vegetable dishes more in order to attract the vegetarian customers in India. It will increase the sales of Nando’s enormously.
Telecommunication Environment: Telecommunication environment shows its power and how companies can ensure their profitability by utilizing the technological factors of an organization (Racz et al., 2018). One of the most useful technology that companies use to increase their growth is online services. Demand of customers for online service compelled Nando’s to start providing online service in order to increase sales. For instance, customers can order Nando’s food via order.nandos.com.sg online and get home service (Nando’s: 2, 2020). It has increased the sales of the restaurant and they should start online service in all outlets to become highly profitable.
Ecological Environment: Ecological environment helps companies to execute business in an ethical way by showing the impact of companies on environment (Team, 2013). Environment-related laws have influenced Nando’s actions and encouraged them to take steps that will help to reduce environmental pollution. For instance, Nando’s first fully sustainable restaurant in the UK has 97 solar panels which are powered by 100% renewable energy and gas (Big Hospitality, 2017). The sustainable restaurant will reduce Nando’s environmental impact and people will be more loyal toward them. It will also boost up the revenue of the restaurant.
Legal Environment: By analysing the legal environment companies become aware about the legal factors that may affect their business and they become able to operate business in right way (Sridhar et al., 2016). Nando’s have to maintain the laws and regulations of host country to ensure that government will not interfere in their business. For instance, labour costs in the UK have risen by 3.6% in UK and Nando’s has to pay the increased labour expenses to avoid penalties (Trading Economics, 2020). It ensures that government will not get the chance to set compensate or penalty for Nando’s, and they can execute business without legal complexities.
Strategic Management Planning of Nando’s: Assessment of the organization’s internal environment and capabilities
VRIO Analysis of Nando’s
VRIO analysis is the tool that is analyses the internal resources and competitive advantages of an organization (Song, and Sung, 2015). Morden (2016) argued that the importance of VRIO model is embedded at helping a company know the values and capabilities of internal resources which are necessary to build competitive advantage. This analysis will be of great value for Nando’s because the company will be able to critically understand the values and rarity of its internal resources and help to identify an important aspect of Strategic Management Planning of Nando’s. It will also guide Nando’s to further improve its capabilities and resources. It has four segments: valuable, rare, imitable and organization.
Valuable: Financial resources, local food products, employees, patents and distribution network is the valuable resources of Nando’s (Maumbe, 2012). Financial resources of the company assist them to capture external opportunities through investing, and Nando’s become capable of fighting external threats. Local food products of the company are highly differentiated that delivers great value for customers and customers become more loyal toward Nando’s. Employees of the company bring highly productive output for them, and it becomes possible because of the training that makes them experts. Nando’s can maintain the unique taste of their foods and sell these foods to the market furthermore, competitors cannot copy their foods because of the patents (Fundudis, Nando’s Ltd, 2019).
Rear: The financial resources Nando’s have is rare because many few companies of the food chain have strong financial resources like the company (Roberts, 2018). The local foods provided by the restaurant is not really rear because many competitors in the industry provide these type of foods. But these local foods are the valuable resources through which Nando’s maintain its demand. The patents and distribution network that Nando’s have are rare because that cannot be found easily, but the employees are not rare as the company claims.
Imitable: Financial resources of Nando’s is costly to imitate, and the company have gained these resources by acquiring profits over the years; therefore financial resources are not imitable because competitors have generate same profit that Nando’s earn (Omar, and Fattah, 2013). Food products and employees of the company are not costly to imitate, and competitors can imitate these resources. Patents and distribution network is very costly to imitate therefore, these resources is also referred to as inimitable resources of Nando’s.
Organization: Financial resources of the company are well organized, it assists them to invest in the right project and prevent threats furthermore strengthening the competitive advantages of Nando’s (PENG, 2018). The distribution network of the company is also organized, and it makes sure that Nando’s foods are available in all outlets. It also boost up the competitive advantage of the company. The patents of Nando’s is not organized which means that the company is not using their patents in full potential.
Strategic Management Planning of Nando’s: SWOT Analysis of Nando’s
SWOT (which stands for s-strength, w-weakness, o-opportunities and t-threats) analysis reveals internal strength, weakness, and external opportunities and threats (Gürel, and Tat, 2017). In this part of the Strategic Management Planning of Nando’s, we will assess the SWOT analysis of Nando’s. The underlying significance of SWOT analysis for Nando’s is that it helps the company to critically find and evaluate strength, weakness, opportunities and threats; such findings help Nando’s to take protective actions to overcome threats and adopt strategies to utilize opportunities.
Strength
Nando’s provides peri-peri chicken dishes, and the taste of the chicken is unique. The unique taste of their dishes attracts customers to the restaurant.
It has over 1200 restaurants in 30 countries which ensuring that people of the countries get the services from Nando’s (Business Chief, 2019). The great presence of the restaurant makes its position stronger in the food chain.
The company deliver fresh chicken and does not serve frozen chicken. Because of the freshness of quality of the chicken, they have become able to build up a huge customer base globally.
Nando’s trimmed up the fat fats of chicken and do flame grill that makes the chicken healthier and does not harm health which increases their customers.
It serves sauces with a secret recipes which competitors could not copy, and it makes the chicken dishes delicious; therefore, they become able to maintain a unique taste that makes customers highly satisfied.
Nando’s provides a unique service which is showing nutritional value on the menu. As a result, health-conscious customers can choose how many calories they want to consume, which is a great strength of theirs.
Weakness
Nando’s does not provide online services like KFC, and other competitors do. It reduces the revenue of the company because customers prefer online service more now a days.
It does not focus on marketing advertisement more; therefore, many people do not know about the services of Nando’s and it also reduces their revenue.
It does not promote its services properly and it is one of the key reason of the less customer base of the company.
Nando’s does not invest more in R&D which causes fewer innovative foods than their competitors, and customers reduce purchasing from them because of the sameness of the foods.
Opportunities
Singapore can be one of the key profitable market of Nando’s where they have only 8 outlets (SHOPSinSG, 2020). The company will be capable of capturing a huge customer base in Singapore which will make the company highly profitable.
Nando’s should focus on marketing promotions to let more people know about themselves and attract the customers toward them.
The company will be capable of increasing its market share by launching new foods and conducting the effective promotions.
Nando’s should take steps to expand its business where it is possible to increase revenue and boost its brand value by capturing new markets.
Threats
Nando’s has established its business by emphasizing on the chicken menu, which may reduce its demand in future because customers like different types of foods to explore their tastes.
Competitors of Nando’s are expanding their business in new countries and areas which is making them stronger than the company. Even competitors offers various foods with attractive offers that may reduce the revenue of Nando’s.
Competitors are emphasizing on marketing promotions that will encourage the customers of Nando’s to switch to the competitors’ services.
Strategic Management Planning of Nando’s:Analysis of the outcomes of Porter’s Five Forces model
Evaluation of competitive position: Porter’s Five Forces model of Nando’s
Porter’s five forces model is the framework that is applied to organizations to evaluate the competitive position an organization (Ormanidhi, and Stringa, 2008). The authors further mentioned that the application of Porter’s Five Forces Models helps companies to see their position in the targeted market and take necessary initiatives to strengthen their position among competitors. There are five segments in this model such as: the threat of new entrants, the threat of substitutes, bargaining power of suppliers, bargaining power of buyers and competitive rivalry. In this Strategic Management Planning of Nando’s, the five segments will help us to analyse the competitive position of Nando’s.
Threat of new entrants: Low: The threat of new entrants segment refers to the influence of new entry on an organization (Magretta, 2011). Nando’s has achieved economies of scale by establishing its business in many countries with thousands of restaurants. That economies of scale are tough for new entrants to achieve because it needs time and investment, which is costlier for new entrants, and it makes the new entrants weaker than Nando’s. The company have built trust among global customers’ through delivering foods with world class quality and it has to maintain their standard to maintain their demand and keep the force of new entrants weaker.
Threat of substitutes: Average: It shows the threat of substitute products on an organization’s sales (Ormanidhi, and Stringa, 2008). Nando’s delivers chicken dishes of Portuguese-African style that makes them different than substitute products. But there are many restaurants in local areas of every country, and customers of the area choose the local restaurants because they are less interested in tasting different food. It refers to the average threat of the substitutes of Nando’s. The restaurant should customize their foods according to the local culture besides their special dishes to capture the local customers. It will also increase Nando’s market share.
Bargaining power of suppliers: Low: Bargaining power of substitutes shows the power of suppliers to influence the operations of a company (Tavitiyaman, and Zhang, 2011). Nando’s signature product is chicken dishes and chicken is the raw materials that they need. There are lot of suppliers of chicken than the buyers, and it makes the power of suppliers weaker. All suppliers provide chicken of standard quality within lower prices than each other. Therefore, Nando’s has the option to switch suppliers. Besides that, it is an international restaurant and suppliers take it as an honour to work with Nando’s which also makes suppliers weaker toward the company.
Bargaining power of buyers: Low: This segment refers to the power of buyers to affect the profitability of a company (Porter, 2008). Nando’s provides delicious and healthy chicken dishes, there are fewer companies that provide healthy foods like restaurant that encourages heath-conscious people to buy the foods of the restaurant. Customers want the best quality foods with a reasonable price, a number of that type of restaurants is also limited. Nando’s provide peri-peri chicken dishes which is served with sauces which are made with a secret recipe, and they maintain the unique taste of their foods. All these factors refers to the lower power of buyers because they have fewer options to choose from that provide services like Nando’s.
Competitive rivalry: High: Last segment of the model is competitive rivalry which refers to the level of competition a company faces in targeted market (Dobbs, 2014). KFC, MC Donald’, Burger King, etcetera are the competitors of Nando’s (Word Press, 2014). All of the competitors focus on their marketing promotion and deliver attractive offers to increase sales. It seems that the company faces high competitive rivalry in the food industry. Nando’s have to focus on its promotion to increase their publicity and provide attractive offers to strengthen its position among competitors. These steps will attract many customers toward them and Nando’s will be capable to increase its market share.
Application of theories and models to interpret strategic direction
Application of Porter’s Generic strategies of Nando’s
Porter’s generic model is the framework that refers to the way through which companies can boost up their competitive advantage in their targeted market (Manteghi, and Zohrabi, 2011). The authors added that Porter’s Generic Strategies provides a company (such as Nando’s) with a range of strategic directions from which the company can select the most suitable approach based on their capabilities, resources and competitive position in the market.
Cost leadership: It I the process in which companies become the low cost service provider by controlling their production costs (Ormanidhi, and Stringa, 2008). Nando’s serves its services at a reasonable price but it is not the most effective service provider of the industry. Competitors of Nando’s as like as KFC and others, provide discounts and attractive cost-effective offers to attract customers them. It makes the competitors more acceptable toward customers because they get same services like Nando’s within different offers.
Differentiation: Differentiation is the way through which companies maintain the uniqueness of their products to keep them different from competitors and customers are ready to pay premium prices for the different feature of the services (Pretorius, 2008). Nando’s focuses on differentiation and provides peri-peri chicken that belongs to Portuguese-African dishes, and there is no competitor who serves peri-peri chicken. The restaurant also serves sauces with different taste that is made with their secret recipe. As a result, the customers who love peri-peri chicken and related dishes with unique sauces maintain sales from Nando’s. The company should put evidence of differentiations in all respects of business operations.
Focus: Focus refers to the way of boosting competitive advantage in which companies focus on both cost-effectiveness and differentiation services to become one of the most demanding brand among competitors (Tansey, Spillane, and Meng, 2014). Nando’s do not follow a focus strategy because they also focus on differentiation, but the level of differentiation is not high, and they do not focus on costs. Therefore, many customers switch to competitors who want delicious chicken dishes at lower prices. It reduces the customer base of Nando’s.
Application of Bowman’s model:
Bowman’s clock strategy refers to the set of eight strategies through which companies can increase their profitability by adopting effective strategies which are compatible with their business (Radut, 2015). Echchakoui (2018) stated the significance of the strategic clock mentioning that it helps a company to understand where they are located in customers’ perception, and this knowledge helps a company to offer related features and prices.
The above-stated diagram is the Bowman’s clock strategies which suggest possible strategic options a company may stand in between price and perceived value to customers. Nando’s should stand somewhere in between Hybrid and Differentiation because the company needs to be efficient at the same time differentiated. Without emphasizing cost control and focusing on differentiation will not make any positive results because the company will not realize profits due to heavy expenses. Therefore, Nando’s should emphasize on cost control, efficient sourcing and be differentiated.
Conclusion
PESTLE analysis has revealed that business activities of Nando’s are highly affected by the uncontrollable elements of macro-economic environment. It has been found that economic vulnerability due to COVID 19 will seriously affect customers’ economic condition and thus Nando’s sales will certainly be affected negatively. The suggested strategic directions will support them to handle to the negative impact of the environments and utilize the opportunities of the environments. VRIO analysis has evaluated the internal capabilities of Nandos’ and SWOT has shown the strengths, weakness, threats and opportunities. Therefore, Nando’s will be capable of utilizing its capabilities and strengths, and prevent threats and weakness to ensure outstanding growth. It has been suggested that Nando’s should adopt differentiation strategy with cost reduction focused to sustain in the post COVID 19 period crisis.