Takealot Strategic Management Case Study Assignment

Question 1: DECLARATION

1. Insert the declaration template (Annexure C) here and complete it as part of your assignment.

Failure to complete the declaration of your own work will result in a zero (0) mark for the entire assignment. (NB: do not use an electronic signature. Type your name and surname as your signature and remember to include the date.)
Question 2:

2. Identify and discuss the corporate-level strategies evident in the case study. You should identify three (3) growth strategies and two (2) defensive strategies and their specific forms that are evident in the case study.
   Support your discussion by integrating the appropriate theory and practical examples from the case study.
   Total: [15]
   Your answer must not exceed 1½ page

Question 3:

3. Takealot.com has adopted a differentiation strategy in response to heightened competition in the South African e-commerce market. Identify and critically discuss three (3) key components of Takealot’s organisational architecture that enable it to deliver on its differentiation strategy.
   As part of your discussion, you must locate, incorporate and reference 1 (one) applicable academic article of your choice (published between 2019-2024) from the UNISA library into your discussion.
   Support your discussion by integrating the appropriate theory and practical examples from the case study.
   Total: [15]
   Your answer must not exceed 1½ page

Question 4:

4. Critically evaluate whether Mr Zietsman can be considered a strategic leader or not. Begin your evaluation by describing a strategic leader and then evaluate Mr Zietsman in relation to the following key responsibilities of a strategic leader:
   • Understanding the organisation as a system
   • Creating an integrated organisational system to enable strategy implementation

• Initiating and leading strategic change

Support your evaluation by integrating appropriate application of theory and examples from the case study.
Total: [15]
Your answer must not exceed 1½ page

Question 5:

5. Identify and discuss the risks that Takealot is facing and recommend appropriate
   strategic risk management strategies and methodologies to Takealot senior management team. Support your discussion by integrating the appropriate application of theory and examples from the case study.
   Your answer must not exceed 1½ page

Total: [15]

Question 6:

6. Answer the following reflection questions:

• While doing the assignment, did you realize that there is a gap between the theories and the practical application (i.e. how it is done in practice?)
• If yes, what do you think this means? Total: [5]

Takealot, takealot-More or takealot-less? The battle in the South African e-tailing industry

Introduction

Many have been waiting for the launch of Amazon in South Africa. Finally, in May 2024, the American giant opened its ecommerce doors for business in South Africa and partnered with courier companies to outwit the existing ecommerce giant, Takealot.com.

Takealot.com company background

Takealot was officially launched in June 2011 and set out to be the most customer-centric shopping destination in Africa (Takealot, 2024). Originally, the Takealot roots were in an existing ecommerce business called Take2. A US-based investment firm, Tiger Global Management and Kim Reid acquired Take2 in October 2010 and took on the South African market with a vision to be the largest, simplest, most customer-centric online shopping destination in Africa. Since its inception, Takealot has over 21 departments to select from, ranging from electronics, to lifestyle, media, gaming and fashion. Their warehouses are in Johannesburg, Durban and Cape Town.

Takealot.com strategic initiatives and growth

Takealot’s growth strategy has included significant investments and acquisitions. A $100 million investment from Tiger Global facilitated the acquisition of Mr Delivery, providing Takealot with its own logistics network through the Takealot Delivery Team Division (formerly Mr D Courier) and an app-based food delivery service through Mr D Food. From there, the growth through acquisition strategy continued and resulted in the purchase of Superbalist.com and then merging Naspers- owned Kalahari.com with takealot.com. In 2018, Naspers, the multinational internet, technology and multimedia holding company, increased its investment in takealot.com to 96% and later enabled the merging of Superbalist.com and Spree to provide customers with the latest on-rend local and international fashion.

Currently, the Takealot Group comprises three business units: Mr D, Superbalist and takealot.com.

Market context and challenges

Amazon’s entry adds a new dimension to South Africa’s e-commerce landscape, previously dominated by Takealot.com, which commands nearly half of the online sales market. Walmart- owned Massmart is also ramping up its e-commerce efforts. The timing of Amazon’s launch also coincides with a surge in online shopping in South Africa following the pandemic, which has spurred increased investments from retailers in the e-commerce sector.

Takealot.com faces several macro-environmental challenges, including rising inflation, higher energy costs, lower consumer confidence, and increased operational costs due to load shedding. Amazon’s promise of same-day delivery or collection presents an additional challenge, compelling Takealot.com to defend its market position vigorously.

Takealot.com’s strategic responses in response to Amazon (and other competitors)

Enhance customer value with TakealotMore: In response to Amazon Prime, Takealot launched TakealotMore, a monthly subscription service offering customers unlimited free deliveries for R40 per month (Meikl, 2024), including deliveries from Mr D Food. This initiative aims to retain loyal customers and attract new ones by offering convenience and cost savings.

Strengthening supply chain and logistics: Takealot.com has a robust logistics infrastructure with warehouses in key cities and a dedicated delivery network. Continuous investment in improving supply chain efficiency and expanding delivery capabilities will be crucial to competing with Amazon’s logistics prowess. Amazon’s partnership with The Courier Guy is bound to increase the efficiencies in the Takealot.com logistics.

Leveraging local partnerships: What may have been the result of the Competition Commission ruling, or not, the Takealot.com drive for local development distinguishes it from other competitors. Takealot has entered a R150 million partnership with the Gauteng Government to support the Township Economy Initiative (Crouth, 2024a). This initiative aims to drive local business and create economic opportunities. By supporting local enterprises, Takealot strengthens its community ties and differentiates itself from international competitors.

Advocacy and regulation: As only one of the many local e-tailers affected by off-shore competitors, Takealot.com is engaging with government and non-governmental institutions to address regulatory disparities that benefit offshore e-commerce players like SHEIN and Temu. Ensuring a level playing field through advocacy for fair import duties and taxes can mitigate the competitive advantage of these foreign retailers.

Competitive landscape

Amazon’s entry into South Africa provides local consumers with access to a vast range of products and improved delivery options, including same-day delivery and over 3,000 collection points nationwide. Amazon’s focus on customer obsession and its global supply chain capabilities poses a significant threat to Takealot’s market dominance.

• Walmart-Owned Massmart

Massmart is preparing to expand its e-commerce operations, adding another layer of competition. As a subsidiary of Walmart, Massmart can leverage its parent company’s resources and expertise in retail and logistics.

• Checkers Sixty60

Checkers’ Sixty60 initiative, offering 60-minute grocery delivery, intensifies competition for Takealot.com by raising consumer expectations for fast service and convenience, pressuring Takealot to enhance its logistics and delivery capabilities to maintain market share.

• Offshore retailers

SHEIN and Temu, known for their low prices and extensive product ranges, exploit tax and import duty loopholes, making it challenging for local retailers to compete on price. These companies also

face criticism for labour practices and data privacy concerns. In an interview with 702, Takealot Group CEO Fred Zietsman explained that while third-party sellers on Takealot are forced to pay import duties and taxes for imported products, some “new players” don’t tend to adhere to these regulations (Illidge, 2024). In the accompanying notes of the annual results from Naspers at the end of March 2024, Takealot even accuses Shein and Temu of threatening South Africa’s ‘reindustrialisation and localisation efforts’ (McLeod, 2024).

Takealot.com leadership

Takealot is led by Frederik Zietsman, a qualified Chartered Management Accountant. Previously, Zietsman served as the CEO of Takealot.com and after three years, was appointed as the group CEO of the entire Takealot.com Group, in February 2024. Zietsman’s background in revenue growth management and accounting positions him well to navigate the competitive landscape. During an interview on Business Talk with Michael Avery, Zietsman discussed his first few months as group CEO. He explained that his 9 years within the Takealot group gave him a strategic advantage in his new role as group CEO. When asked about the Amazon entry into the South African market, he explained that they had about 18-months to prepare their strategies and focus before Amazon,com launched in SA. He mentions the advantage to consider the entire Takealot Group in his new role as CEO and the importance of making strategic decisions on how the group can take business forward and present a complete value proposition to the consumer, and not only focus on one of the business units. Avery asked Zietsman why Takealot.com remains the preferred online shopping platform in the country and Zietsman explained that takealot.com is a trusted and truly South African brand. He also confirmed the importance of retaining consumer trust. According to him, trust is about delivering on what is promised and the Takealot.com culture is an innovative culture that explores new methods to pay, new ways to receive deliveries and new product ranges. He also cautions that trust can easily be lost (Businesstech, 2024).

In this battle for the e-tailing business, who are the leaders for the other competitors? Amazon’s leadership in South Africa includes Rob Koen, who emphasizes customer focus and has a track record of successful e-commerce initiatives in the US. SHEIN is led by Chris X (The Org, 2024) who has scaled the company from a wedding dress seller to a global fashion retailer. Temu (Crouth, 2024b) is associated with PDD Holdings, a Chinese online retailer, and focuses on offering competitive prices through its business model.

Consumer Impact and Future Outlook

Amazon’s entry is expected to drive improvements in Takealot’s services, particularly in delivery speed. While Takealot has a strong track record, it must enhance its offerings to compete with Amazon’s robust logistics and customer service. The ultimate outcome of this competitive battle will depend on several factors: financial resources, customer focus, and integration with local economies. Takealot’s ability to innovate and adapt to the changing market will be critical in sustaining its market leadership amidst increasing competition.

Conclusion

Amazon’s entry into the South African market presents both challenges and opportunities for Takealot.com. By focusing on enhancing customer value, leveraging local partnerships, advocating for fair regulations, and continually innovating, Takealot.com can defend its market position and

continue to thrive. This strategic approach will not only help Takealot.com compete effectively with Amazon but also address the broader competitive landscape, including players like SHEIN, Temu, and Massmart.

Strategic Management Answers: Expert Answers on Above Strategic Management Case Study

Corporate level strategies

Growth strategy: The growth strategy includes horizontal integration whereby Takealot performed the acquisition of Mr D. Superbalist to expand its market share. It also includes diversification as the company expanded into new business including fashion, food delivery and lifestyle products. Finally, the strategic partnership with Gauteng Govt to strengthen its Township economy is another good strategy followed by the company.
Defensive strategies: The defensive strategy include the cost containment which is undertaken to manage its rising cost from load shedding, and defensive marketing positioning as identifying the launch of TakealotMore subscription.

Differentiation and Organisation

The differentiation strategy of Takealot is highly dependent on logistics and infrastructure, customer centric systems, and innovation and partnerships.

Strategic leadership Ziersman

The important characteristics of a strategic leadership include an understanding of the system, integrated organisational system and leading the change. Zietsman makes use of knowledge of all Takealot units in order to integrate its strategy. Zietsman shows his leadership by guiding Takealot through Amazon’s entry by preparing for it for 18 months in advance.

Risk and strategic risk management

The risks identified are the high quality logistic infrastructure of Amazon which puts pricing pressure, rising cost of operations and offshore retailers exploiting tax loopholes. The risk management strategies can be to prepare for Amazon’s aggressive price strategies and lobby the government for fair import duties.

Disclaimer: This answer is a model for study and reference purposes only. Please do not submit it as your own work.

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