4.5 Balanced Scorecard
Steyn, Schmikl, and Van Dyk, P. (2018:30), summarises that organisations operations objectives are translated from a strategic direction by means of a balanced scorecard. Figure 4.5 indicate a breakdown of a generic scorecard
Figure 4.5.1 Steyn, Schmikl, and Van Dyk, P. (2018:30)
Below a breakdown of the Bidvest scorecard as per the authors.
4.5.1 Financial Perspective
Figure 4.1.2, below illustrate the standing of Bidvest as of 30 July 2018 since its inception by its founder Brian Joffe and Mervyn Chipkin in 1988 with only R8m. This figures highlights Bidvest Group as one of the greatest investments.
Figure 4.5.2. Bidvest Group Financial Standing. (2018: Online)
4.5.2 Customer Perspective
The Bidvest vision to be a leading South African services, trading and distribution group. The organisation is perceived by the customer as the biggest brand in South Africa based on the success of all the businesses under the group umbrella. Bidvest in 2017 was No: 30 on the South Africa’s 2017 top brands list. Anderson (2017: Online), explains that consumer perception is one of the criteria used to measure and come up with the list. This clearly shows how well the Bidvest brand is perceived by the customers.
4.5.3 Internal Business Perspective
The organisation lives their strategy of having a strong track record of consistent delivery, returns and growth which in turn bounds well with the group vision of being a leading South African services, trading and distribution group. Figure 4.5.3 shows Bidvest Group strategic pillars which they have managed to excel at.
Figure 4.5.3. Bidvest Group Strategic Pillars. (2018: Online)
4.5.4 Learning and Growth Perspective
One of Bidvest growth drivers in their business model is innovation. The organisation is on constant basis working and identifying better, simpler and cheaper way of doing the business. The below Figure 4.5.4 indicate Bidvest growth drivers which will propel them to stay competitive and above their competitors in the different industries they operate on.
Figure 4.5.4. Bidvest Group Growth Drivers. (2018: Online)
4.6 Pestel Analysis
Online:2016, Pestel analysis is a concept in marketing principles moreover, this concept is used as a tool by companies to track the environment they are operating in or are planning to launch a new project/product /service etc. things to keep in mind when doing Pestel analysis:
What is the political situation of the country and how can it affect the industry?
What are the prevalent economic factors?
How much importance does culture has in the market and what are its determinants.
What technological innovations are likely to pop up and affect the market structure?
Are there any current legislations that regulate the industry or can?
there be any change in the legislations for the industry.
What are the environment concerns for the industry?
According to insiders Adcock’s lacks the political connections of giant as compared to Aspen Pharmacare. Bidvest has some foothold in selling to the state. The state’s two biggest investor’s, the government Employees Pension Fund and the Public Investment Corporation(PIC). If Bidvest manages to buy Adcock Ingram it will get more business from the government and Adcock will also benefit from this acquisition.
Economic factors related to goods, services, and money. Despite directly affecting businesses, these variables refer to financial state of the economy on a greater level whether that be local or global. The reason for this is that the state of the economy can decide many of the important details that come up in an operating company, including topics such as consumer demand, taxes and asset value. Bidvest is still facing challenges in the current world economy, regulatory and legislative changes imperative in the countries where it operates.
Business also have their own social environmental factors. This is also known as internal social environments. There is some level of control by a business over its internal social environments in relation to its external environments, all of which are factors affecting business when it comes to their social environments. In simple terms, the beliefs, customs, practises and behaviours within the confines of the business.
Cultural determinants like demographics, growth trends, health consciousness, customer attitudes, etc. affect the demand for certain products or services. Consider your marketing strategy in the context of social norms, current trends and how these trends are likely to develop over time.
Consider current technology and advancements that are on the horizon. Innovations in technology can affect the company’s operations and the market in which it operates. The business needs to consider technological factors such as automation, research and development, connectivity, e-commerce, etc.
These are ecological aspects such as weather and climatic changes, tourism, farming, insurance, geographical locations, etc. An awareness of the impact of these factors is crucial to develop and deliver an effective marketing strategy that can succeed in the environment in which the business operates.
There are two issues in the pharmaceutical industry. The medicine producers should find a way to solve the health problem due to that pollution. The environmental hygiene also effective, because more disease appears, people need more medicine to solve it.
Bidvest and Adcock should work in partnership with its suppliers, customers and other relevant business partners, within its sphere of influence, to redesign and reduce the environmental impact of products, services and other business activities. Optimise consumption of raw materials and energy, and minimise waste through applying a ‘reduce, reuse, recycle’ philosophy.
Regulators are becoming more powerful and the legislative burden on businesses is arguably greater than ever. Your team needs to consider the legal factors that will affect your business now and in the future. This could be anything from data protection regulations through to employment legislation.
Pharmaceutical industry is subjected to regulatory and the department will examine all the data to support the safety, efficacy and stability. Pharmaceutical promotion is subjected to self-regulation. Representative requires passing all the examination testing of medical knowledge. Some countries, government require the agency to check if the promotional claim is consistency with the data
4.7 SWOT Analysis
Rouse (2013: Online), SWOT analyses (strengths, weaknesses, opportunities and threats analysis) is major strategic tool or framework to identifying internal and external factors that will impact the organisational strategy (in the case of Bidvest). Recording strengths and weaknesses of an organisation and turning them into value is the ultimate secret of this exercise. Steyn, Schmikl and Van Dyk (2018:264), outlines that strengths and weakness are internal to the organization, while opportunities and threats are in the external environment. A SWOT analysis need to highlight important factors relating to both the “as is” and the “to be” situations of the organization. (2018: Online), the below table outlines the SWOT analyses of Bidvest Group
Bidvest Group Limited SWOT Analysis)
Strengths ” Below is the Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis of Bidvest Group Limited :
1. Has a strong employee base of more than 100,000+ people operating in Europe, Asia Pacific and Africa markets
2. Largest private sector freight management business in sub-Saharan Africa
3. Increasing net profit and operating profit over the years
4. Diversified product portfolio
5. Goodwill generation by supporting Black Economic Empowerment
6. Lean corporate principle – effective management process
Weaknesses 1. Decentralized management model – inefficiency in operation integration
2. Heavy dependence on South African market
3. Majority of the revenue generated from few operating domains like transportation and catering
Opportunities 1. Expansion in developing Asian market
2. Positive outlook for packages food and water in global Arena
3. Vertical integration of operations like logistics, food processing and retailing
Threats 1. Environmental norms and marine life conservation norms
2. Intense competition from local companies.”
5. Why do companies merge with or acquire other companies?
Companies prefer mergers and acquisitions as a process to gain speedy growth and strategic change (Cumming ; Worley, 2015). Cumming ; Worley (2015) cited that some of the reasons for companies to undertake mergences and acquisitions include “diversification or vertical integration; gaining access to global markets, technology, or other resources; achieving operational efficiencies; improved innovation; and resource sharing”.
Mergers and Acquisitions (M;A): Definition
? Acquisition is when one company takes over another and clearly establishes itself as the new owner.
? Merger is when two firms agree to go forward as a single new company rather than remain separately owned and operated.
Types of mergers:
1. Vertical Integration
2. Horizontal Integration
? Micro and Macro Environmental Factors
Figure 5.1. Interrelationships between the organisation and its external environments.
Rob Renaud (updated December 28, 2017) cited some of the reasons why companies merge with or acquire other companies as the following:
? Synergy: The most used word in M;A is synergy, which is the idea that by combining business activities, performance will increase and costs will decrease. Essentially, a business will attempt to merge with another business that has complementary strengths and weaknesses.
? Diversification / Sharpening Business Focus: These two conflicting goals have been used to describe thousands of M;A transactions. A company that merges to diversify may acquire another company in a seemingly unrelated industry in order to reduce the impact of a particular industry’s performance on its profitability. Companies seeking to sharpen focus often merge with companies that have deeper market penetration in a key area of operations.
? Growth: Mergers can give the acquiring company an opportunity to grow market share without having to really earn it by doing the work themselves – instead, they buy a competitor’s business for a price. Usually, these are called horizontal mergers. For example, a beer company may choose to buy out a smaller competing brewery, enabling the smaller company to make more beer and sell more to its brand-loyal customers.
? Eliminate Competition: Many M;A deals allow the acquirer to eliminate future competition and gain a larger market share in its product’s market. The downside of this is that a large premium is usually required to convince the target company’s shareholders to accept the offer. It is not uncommon for the acquiring company’s shareholders to sell their shares and push the price lower in response to the company paying too much for the target company.
Mergers and acquisitions take place for many strategic business reasons, but the most common reasons for any business combination are economic at their core. Mergers and acquisitions occur for other reasons, too, but these are some of the most common. Frequently, companies have multiple reasons for combining. Combining companies has some potential downsides for employees, who have to deal with immediate fears about employment or business lines, but more positive sides of merging may include more opportunities for advancement or having access to more resources to do one’s job. Christina Tangora Schlachter, Terry H. Hildebrandt, MA, MA, PCC updated that the following are some of the various economic reasons:
? Increasing capabilities: Increased capabilities may come from expanded research and development opportunities or more robust manufacturing operations (or any range of core competencies a company wants to increase). Similarly, companies may want to combine to leverage costly manufacturing operations. Capability may not just be a particular department; the capability may come from acquiring a unique technology platform rather than trying to build it.
? Gaining a competitive advantage or larger market share: Companies may decide to merge into order to gain a better distribution or marketing network. A company may want to expand into different markets where a similar company is already operating rather than start from ground zero, and so the company may just merge with the other company. This distribution or marketing network gives both companies a wider customer base practically overnight.
? Replacing leadership: In a private company, the company may need to merge or be acquired if the current owners can’t identify someone within the company to succeed them. The owners may also wish to cash out to invest their money in something else, such as retirement!
? Cutting costs: When two companies have similar products or services, combining can create a large opportunity to reduce costs. When companies merge, frequently they have an opportunity to combine locations or reduce operating costs by integrating and streamlining support functions. This economic strategy has to do with economies of scale: When the total cost of production of services or products is lowered as the volume increases, the company therefore maximizes total profits.
? Surviving: It’s never easy for a company to willingly give up its identity to another company, but sometimes it is the only option in order for the company to survive. A number of companies used mergers and acquisitions to grow and survive during the global financial crisis from 2008 to 20