Reference no: EM132300130

Zampork Ltd is one of the fastest growing companies in Zambia, and its stock price is increasing at a rate of 100 percent a year, to the delight of its shareholders. Achieving this high return has been a constant challenge for the company.

The company was founded by David Changata in 2001 after he retired from the Bank of Zambia. Changata used the generous retirement package to start a pork meat business at his small holding in Lusaka West. He soon realized that there was a high demand for pork and pork products in Lusaka and the rest of Zambia. He teamed up with some investors and, with the new capital infusion, turned his family business into a public company. Initially and before going public, Changata personally undertook most of the functions with the help of a nephew who had failed to proceed to Grade 8. While his nephew was charged with the cleaning of the pig sty and feeding of the animals, Changata superintended the slaughter of the animals, the cutting and packing of the meat, the keeping of the books, and the sales and marketing. Increasing demand for his pork products meant that within a few weeks he needed to hire people to help him, and soon he found himself supervising three additional employees who worked together with his nephew in the pig sty and took orders over the phone.

By 2005, Zampork Ltd. employed 500 workers and was hiring over 10 new workers each week just to keep pace with the demand for pork. When he found himself working eighteen-hour days managing the company, he realized he could not lead the company single-handedly. The company’s growth had to be managed, and he knew that he had to recruit and hire strategic managers who had experience in managing different functional areas, such as marketing, finance, and production. He recruited executives from Zambeef and with their help created a functional structure, one in which employees are grouped by the common skills they have or tasks they perform, to organize the value-chain activities necessary to deliver pork products to customers. As a part of this organizing process, Zampork’s structure also became taller, with more levels in the management hierarchy, to ensure that he and his managers had sufficient control over the different activities of his growing business. Changata delegated authority to control the company’s functional value-chain activities to his managers, which gave him the time he needed to perform his managerial task of finding new opportunities for the company.

The company’s functional structure worked well, and under its new management team, the company’s growth continued to soar. By 2009, the company had sales of over K2 million, twice as much as in 2002. Moreover, Zampork’s new structure had given functional managers the control they needed to squeeze out costs, and Zampork had become the lowest-cost pork producer. Analysts also reported that Zampork had developed a lean organizational culture, meaning that employees had developed norms and values that emphasized the importance of working hard to help each other find innovative new ways of making products to keep costs low and increase their reliability. Indeed, with the fewest customer complaints, Zampork rose to the top of the customer satisfaction rankings for meat producers; its employees became known for the excellent customer service they gave to pork buyers.

However, Changata realized that new and different kinds of problems were arising. Zampork was now selling huge quantities of pork to different kinds of customers, for example, households, organizations, and different kinds of businesses. Because customers now demanded pork with very different features, the company’s product line broadened rapidly. It started to become more difficult for employees to meet the needs of these different kinds of customers efficiently because each employee needed information about all product features.

In 2008, Zampork changed its market structure and created separate divisions, each geared to the needs of a different group of customers; a consumer division, a business division, and so on. In each division, teams of employees specialized in servicing the needs of one of these customer groups. This move to a more complex structure also allowed each division to develop a unique subculture that suited its tasks, and employees were able to obtain in-depth knowledge about the needs of their market that helped them to respond better to their customers’ needs. So successful was this change in structure and culture that by 2009 Zampork’s revenues were over K30 million and its profits were in excess of K2.5 million, a staggering increase from 2001.

Changata has continued to alter his company’s structure to respond to changing customer needs and to the company’s increase in distinctive competencies. For example, Changata realized he could leverage his company’s strengths in materials management, production, and credit sales over a wider range of pork products. So he decided to begin producing and packaging pork of different types and to compete with other pork producers and Zambeef. The increasing importance of the credit led him to split the market divisions into thirty-five smaller subunits that focused on more specialized groups of customers, and they all now conduct the majority of their business by credit. Today, for example, Zampork can offer its customers a complete range of pork products, and storage devices that can be customized to their needs.

Source: Charles W.L. Hill and Gareth R. Jones (2007), Strategic Management, New York: Houghton Mifflin Company

REQUIRED:

(a) Identify and describe the strategies that have characterized the company’s progress

(b) Analyse how the company implemented its strategies.