Naboni Enterprises Explain the extent to which what transpired at Naboni Enterprises is consistent with Ansoff’s definition of strategy

Instruction Details

Naboni Enterprises 

Naboni was established in 1996 by Mr. Nicholas Menyani following a decision by the government of Zambia to liberalize the Zambian economy. Prior to 1991, the Zambian economy had been dominated by government ownership of business enterprises, resulting in many enterprises being state-owned. The liberalization of the Zambian economy in the nineties was an opportunity for the private sector to own and run business. It was this opportunity that led to the establishment of Naboni Enterprises by Nicholas Menyani to supply transformers to the mining companies on the Copperbelt.

Supplying to the mineswas a lucrative business. The mining sector was key to the Zambian economy: it not only contributed about 90 percent to the country’s tax revenue, but many manufacturing and commercial establishments depended on doing business with the mines for survival and prosperity. Because of the mining sector’s critical role in the Zambian economy, the Zambian government had, for strategic reasons, retained control of mining. Faced with rising unemployment in the country, the government had prevailed on mining companies to source supplies, such as minor equipment, spares, and safety wear from local suppliers. This arrangement suited both the mining companies and the local suppliers. For the mining companies, the bargaining power they enjoyed over local suppliers gave them wide latitude in negotiating the price they paid for the inputs they bought from the local suppliers. For the local suppliers, selling to the mines provided them with economic survival and a measure of self-employment.

Nicholas Menyani had worked as a technician for one of the mining companies for twenty-five years. In 1990 he retired and founded Naboni Enterprises in Kitwe, a mining town known as the ‘hub’ of the Copperbelt. He did odd jobs in and around Kitwe which did not give him a steady income. When one of the mining companies, Konkola Copper Mines (KCM), tendered for the supply and maintenance of mining equipment, Menyani’s company put in a bid and won the tender.

The contract Naboni Logistics had with KCM provided Menyani with a regular income. Then in late 2000, a South African company showed interest in supplying and maintaining mining equipment to the mining sector in Zambia. Officials of the South African company held meetings with the Minister of Mines and the Chamber of Mines to explore ways mining operations in Zambia could be improved. Menyani realized that the South African company would be a potential threat to Naboni if it ever entered the Zambian mining sector.  There were indications that KCM might be interested in doing business with the South African company attested by KCM hosting lunch for the South African delegation.

The threat of entry from the South African firm was worsened by the general knowledge that mining companies in Zambia used old technology in their mining operations. As if this was not enough, the price of copper had slumped. All told, these developments called for an innovative approach in the mining of copper in the country.  The prospect of South African technology was tantalizing.

Fearing a bleak future, Naboni Enterprises decided to take several strategic measures to ensure survival. First, it repositioned its business by concentrating on those activities in which the company had a distinctive competence. Second, it picked up the market share of some rival suppliers who had been decided to quit because they could not stomach the unfavorable business environment. Third, it diversified into other business unrelated to mining; the company had established a primary school in Wusakile, one of the townships in the African suburbs in Kitwe.

Required: 

Ansoff has defined strategy as “The positioning and relating of the firm to its environment in a way which will assure its continued success and make it secure from surprises.”

Explain the extent to which what transpired at Naboni Enterprises is consistent with Ansoff’s definition of strategy.

Answer Guide

Naboni Enterprises’ actions and decisions align well with Ansoff’s definition of strategy, which emphasizes positioning the firm within its environment to ensure sustained success and minimize surprises. Let’s analyze how Naboni’s actions correspond to Ansoff’s definition:

1. Repositioning Business and Distinctive Competence: Naboni Enterprises recognized the potential threat from the South African company entering the Zambian mining sector. To secure its position and ensure survival, Naboni repositioned its business by focusing on activities where it had a distinctive competence. This move reflects a strategic response to the changing environment. Ansoff’s concept of positioning the firm is evident here, as Naboni strategically evaluated its strengths and aligned its business to leverage them effectively.
2. Market Share Expansion and Unfavorable Environment: By capitalizing on the exit of rival suppliers who were unable to navigate the challenging business environment, Naboni Enterprises expanded its market share. This strategic action aligns with Ansoff’s idea of relating the firm to its environment. Naboni adapted to the competitive landscape by identifying and seizing opportunities arising from the exit of competitors.
3. Diversification into Unrelated Business: Naboni’s decision to diversify into establishing a primary school in a township showcases its strategic response to the changing circumstances. This move is consistent with Ansoff’s notion of positioning the firm to ensure continued success. By diversifying into an unrelated business, Naboni further secured its future by tapping into a different market segment, demonstrating its adaptability and resilience.
4. Anticipation of Technological Change: Recognizing the tantalizing prospect of South African technology and the potential technological shift in the mining sector, Naboni Enterprises proactively explored strategic measures. This action mirrors Ansoff’s emphasis on positioning and relating the firm to the environment to secure its continued success. Naboni’s anticipation of technology change and potential market shifts demonstrates a forward-thinking approach aligned with Ansoff’s strategy concept.

In summary, Naboni Enterprises’ responses to the evolving mining sector environment closely adhere to Ansoff’s definition of strategy. The company’s actions reflect a strategic mindset in terms of repositioning, adapting to the competitive landscape, diversifying into new markets, and anticipating technological changes. These strategic measures were aimed at ensuring continued success, mitigating potential challenges, and safeguarding the firm from uncertainties in its operating environment.