When we discussed Strategy and Competition, we introduced the idea of a 'profitable ownable space' that every business should try and identify in order to have a 'big bang for every buck' invested in the business...
We return to this important point to provide some illustrations so that it becomes front and centre in the C-Suite and indeed for every entrepreneur.
Some years back when there was little competition, it was possible to create these 'spaces' easily. It is said that as Henry Ford rolled out the model T from the 'new' assembly line, he is said to have commented that any body who wanted to buy the vehicle could buy it as long as it was black.
You see back then competition was limited and it was a supplier's market. That unfortunately is no longer the case. Rapid industrialization in the last decades coupled with the internet and communication technologies have put the consumers in the driving seat so much so that a consumer has a lot to choose from and in many cases the suppliers make little margins from their products.
How then does one identify these 'spaces' that will enable the business achieve decent margins. We had earlier given examples of known companies like
Microsoft, Cocacola, etc that have dominant positions in their chosen industries. But now we would like to talk about a local company in Zambia, who despite some recent set-back, appears to have identified a 'profitable ownable space' in their industry. This is
Zambeef.
This is a company which in the last decade has grown from a small business to a multi-million dollar business with operations now expanding into West Africa. It has a simple vision of being the most accessible and affordable protein provider in the region.
To achieve that, its model is an enviable vertically integrated farming, meat and diary business. It controls the value chain from
- its farms,
- the meat and diary operations,
- the manufacturing plants (for edible oils, stock feed, wheat mill, tannery and meat processing)
- to retail outlets in Shoprite supermarket stores and their own wholesale and retail outlets.
It even has its own fleet of trucks in order to control in and outward bound logistics.
We note that even though theer other farmers in Zambia growing wheat, soya bean and Maize, they are not as vertically integrated as Zambeef. Even though there are other players in the meat and diary industry they do not have or have limited capacity on the farms to provided their own stockfeeds. And of course they may not have the scale and reach that Zambeef is achieving through their retail operations.
We could conclude that they have created a 'profitable ownable space'. Executing this strategy will require a talent bench that understands the model coupled with deployment of industry best practices and of course adapting to competitive forces and changes in consumer behaviour.
If you would like us to help you to review your strategy and define a 'profitable ownable space', visit the website - www.bizresources.jigsy.com.
