PESTEL and Porters Forces Analysis of The Consumer Product Industry of South Africa

EXTERNAL ANALYSIS OF TIGER
BRANDS SOUTH AFRICA

External analysis; PESTEL, Porters five forces & market positioning
NOVEMBER 25, 2018

TAMARA SHANELLE JULIUS-ZOWA
215310154
EXTERNAL ANALYSIS OF TIGER BRANDS SOUTH AFRICA
Executive summary
This is a paper containing the extensive external analysis of Tiger Brands limited that is a key competitor
in the Consumer goods industry as it is also according to Bloomberg the market leader of the consumer
goods industry in South Africa. The purpose of this paper is to analyze the chain reaction impact of each
of the external analysis frameworks components. The paper has 4 (four) main topics of focus that have
their sub topics that will be each addressed to develop a comprehensive point of departure for analysis.
The first part of the paper notes the background of the company chosen for the analysis (Tiger Brands
limited) taking into consideration the market size, main competitors and its financial performance for
the past three years a competitor will be presented as a point of comparison for the purpose of analysis.
The second part is the PESTEL analysis that elucidates opportunities and threats that lie in the external
environment. Following this is the third part about Porter’s five sources that identifies the specific
threat and justifies it.
The fourth and final part of the paper focuses on the strategic group analysis looking into the strategic
group of the industry making necessary relation and justification to the external environment.
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Company Profile
Tiger Brands limited is a South African company that ranks amongst the top 40 JSE (Johannesburg stock
exchange) It has managed to make its mark across 22 countries in Africa and is still likely to keep
expanding more and beyond that. Tiger Brands is one of the most dependent upon manufacturers and
marketers of FMCG (fast moving consumer goods) products in South Africa
It is a highly diversified firm that has been built over a number of years through numerous acquisitions
and take over as well as clustering of businesses. Perpetual renovation together with innovation of
brands also plays a major contributory factor in the growth survival and flourishing of the company.
Brief history of the company
Tiger Brands History
Founded in 1921 by Jacob Frankel, with some help from Joffe Marks, Tiger Brands Limited -formerly
known as Tiger Oats Limited – was built on the strength of family businesses and the spirit of
entrepreneurship.
Company products
Tiger Brands manufacturers branded food, personal care products, home-care products, baby care
products, groceries, beverages, snacks, perishables, out of home meals. It is well known for the brands;
Albany, Roses, Hugo’s, Hall’s, Purity, Ace, All Golds and Purity that are just few amongst many other
well-established brands
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Strategic business units (SBU)
1. Beverages
2. Condiments and ingredients
3. Personal care
4. Snacks and treats
5. Home care
Market representations in the world
The company has a global distribution in the rest of the world with presence in over 22 African countries
UK, Sweden < Ireland, Philippines Singapore Taiwan among others
Executive Officers;
 Lawrence Mac Dougall CEO
 Noel Doyle Chief Finance Officer
 Pieter Spies Chief Growth Officer; grains and bakeries
 Thiroshnee Naidoo Chief supply chain officer
 Mary Jane Morifi Chief corporate affairs officer
 Marc Eyres Chief Customer Officer
 Sinenhlanhla Magagula Chief Human resources officer
 Yokesh Maharaj Chief Growth Officer ; exports, international and snacks
 Becky Opdyke Chief Maketing Officer
Financial performance over past 3 years
file:///C:/Users/User/Documents/income-statements%20final%20tb.pdf
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 Grains
o Contributes up to 41 % of turnover
 Consumer brands
o Contributes up to 42 % of turnover
 International (including imports)
o Contributes up to17 % of turnover
 Associates
o Contributes up to 26% of group profit after tax
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VISION
“To deliver top tier financial results and be recognized by all stakeholders as the best FMCG company in
South Africa and most desirable growth company on the continent. we attract the best talent and are
recognized as a great place to work”
MISSION
 Unleash the power of the people
 Accelerate growth from our core
 Achieve selling and channel ubiquity
 Drive efficiency to fuel our growth
 Create a world class integrated supply chain
 As a good citizen, build a renewable and sustainable future
Tiger Brands limited competitors and their financial performances and markets
Tiger Brands as mentioned before is a very diversified company, and thus has a number of competitors
that actually specialize in other individual or grouped brands n not covering all. Each strategic group has
a separate competitor from the other showing how wide risk had been spread with the reduced relation
with each units’ competitors. However, there are other absolute competitors that compete with equal
force and diversification.
 Tongaat hulled
 Pioneer foods
 AVI ltd
 Astral foods ltd
 RCL foods ltd (South Africa)
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 RFG (Rhodes food group)
 Clover industries
 British American Tobacco PLC
 Oceana group ltd
 Libstar Holdings
 Nestle
 Unilever
 Premier brands
 Mondelez International
 Kellogg’s
 General mills
 Beiersdorf
 P&G
 Kimberley Clark
The companies mentioned above are the ones closely competing with the company elected Tiger Brands
Limited. In all scopes of competing, however not all of them are listed companies but they still have
relevance and serve as worthy competitors to tiger brands.
Industry competed in;
Consumer goods Industry, producing
Industry growth for the past 3 years
Holding other things constant, the growth of the consumer goods industry can be said to closely linked
to the growth and trend in GDP as the industry is closely related to the trends in spending such that
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when the wealth of a country increases so does their spending on consumer goods increase thus
increase in GDP stimulates growth in consumer goods industry. The demand originating from these
trends in GDP then goes on to be manifested as a similar trend in the consumer goods industry.
South Africa’s GDP (ZAR Millions); source TADEECONOMICS-WORLD BANK
South Africa’s GDP per capita in Issoire TADEECONOMICS-WORLD BANK
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From the statement above and the supporting information from the graph above the GDP per capita of
south Africa for the past three years (2015-2017) dropped from 7575.2 USD to 7519.5 and then rose
slightly to 7524.51 USD this is a step in a positive direction after a trend of decline that the country
slipped into with the rest of the world
PESTEL Analysis
Political
The political environment of a country sets the overall tone of all else in a state, as from here most of
the most hindering or propelling business legislations or policies originate. In South Africa there has
been a general uncertainty in the government operations and quite much confusion in the operations
and governing procedures. The recent unexpected exit of then ruling president due to prosecution of
the Former President Jacob Zuma on allegations of state capture has left a lot of uncertainty trickling
down in to the country as this was met with a high cabinet turnover as a number of ministers were
being shifted across from one ministry to another others having been relieved from their positions due
to them being traced to be part of the Zuma regime that may have put a lot of legislations , laws and
regulations In place to favor their businesses or those of other businesses in the private sector that
belonged to a set of individuals that were enriching these few to sway political proceedings in their favor
and not that of the general public. This event took place in 2016 when the case came to light and is still
being investigated to date with new developments and evidence coming to light to this day. This has
caused a great increase in anxiety of the producing industry as a whole as a lot of these wrongfully made
legislations are speculated to be reversed as the new ministers and acting president in place are making
efforts to re gain the trust of the private sector and of the people in general. This caused a little speed
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hump in the operations of the Consumer goods industry, Tiger Brands limited included, as they may
have been hoping for the possible reversal of some unjustified stringent policies or legislations put in
place in earlier years that will increase the ease with which they carry out their operations.
In South Africa the political environment is quite untidy at the moment with upcoming elections in 2019
as well as the formerly explained state capture, the ruling party making efforts to clean up its scandals of
being riddled with corrupt officials is still heading a very aggressive campaign for 2019 to remain the
ruling party as it has been since independence. On the other hand, other political parties are coming in
even more aggressive as now more than ever they feel they stand a chance to win and, on this note,
political parties like EFF (Economic freedom fighters) that is made up mostly of youthful officials has
caused a lot of upheaval throughout the country due to their unprecedented insistence on the pursuit of
absolute indigenization through policies of expropriation of land specifically from white farmers without
compensation. This together with the continuous reminders they make of the apartheid period the time
during colonialism and back oppression. For this party all this just provides a horse to ride on for the
campaign however it trickles down into the general public due to a widespread of killings and violent
outbursts, lootings from shops and infrastructure destroying demonstrations.
cabinet changes and upcoming elections also creates a suspenseful environment as the election are
approaching closer so does the uncertainty and speculation grow as well on a daily basis causing a
political environment that may be considered as unstable. Trade agreements also exist between the
South African republic alike the BRICS, SADC and many others serve as an opportunity for so many
industries within the country to able to have a wider market base that they can export to thus creating
more income for them. However, from an analytical point of departure there is still much to lose as
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most local industries are now exposed to more competition as the agreements are Bilateral. And if these
goods are from countries that are much technologically advanced, the prices may be lower therefore
putting local firms out of business as they may lack the capital to compete effectively, this however may
touch all industries.
Economic factors
It is of paramount importance to investigate and be aware of the economic health of a country making
use of interest rate analysis, consumers disposable income, unemployment rates, inflation and credit
availability.
The South African economy may be considered currently as being in contrast to years that it performed
better .At a macro perspective there is not much difference between the south African consumer from
the global consumer as trends are the same no huge growth in disposable income throughout the years
.In South Africa the average household net-adjusted disposable income per capita is at USD 10 872
lower than the average of OECD that is at USD 30 563, This however does not come as a disruptive
index to Tiger Brands due the nature of the products that they produce that may be categorized as
affordable luxuries and basic necessities and food products that will have a consistent demand at an
affordable price .The position of the consumer confidence Index that has been gaining points most of
the year has been gaining points with a slight slump but still maintaining a fairly high point bearing , this
indicates an optimistic consumer outlook meaning people are likely to spend more than they are likely
to save as they are confident in their financial future and the economy in general.
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For the Consumer goods producing industry this is good news as the demand for consumer goods has a
positive relationship with the CCI index. Tiger Brands now should be in a flexible position to maintain
level of production and also prepare to cater for any increased level of demand for their products in the
event of indications that it will slump it should also be in a position to slightly contract.
NB: The 2019 elections are accompanied by a lot of uncertainty and speculation might bear a negative or positive
impact on the CCI as political instability for the electoral period affects the economy , this is not only proved but
also confirmed by the changes in CCI seen on the graph after the month of July 2017 the unexpected stepping
down of President Jacob Zuma had a positive impact on consumer confidence in the economy until the cabinet
reshuffle started in June 2018 taking a chunk from the CCI level. Another contributory factor is the rise in fuel
prices.
High youth unemployment as according to Stats South Africa is sitting at a high level of 26.7%, meaning
that 1 in every 3 people aged between ages 15 and 34 is not employed. This is not only a national
problem but is also a global phenomenon as globally it sits high at 71 million (ILO) that seems to be a on
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term basis as no immediate solution is in sight. The Paradox to that is that there is still a of shortage of
highly skilled labor that is still sought after across all industries due to the fact that most of these youth
are not in employment, education or training showing a disengagement with the labor market, leading
to skill decomposition and incompetence to fill in any future openings. An opportunity presents itself
here as because of this consumer goods production industry within which Tiger Brands limited is a
player are able to maintain their costs in this sector specifically by paying salaries that are not too high.
However, a shadow of drawbacks still floats over them as the pool of highly skilled personnel is not
available due to unemployed spending a lot of time complacent and stagnant.
Further analysis into this instance also gives a great reflection of the market that is at Tiger Brands
disposal as a sophisticated one as it bears characteristics of an emerging market thus assuring Tiger
Brands continuous operations for a long period of time creating a penetration opportunity. however
also bears characteristic of a developed market within which it must maintain its position and defend it
competitively
Inflation and prices
The inflation rate in South Africa has increased to 5.1% that was mainly due to the rise in cost of
transportation brought forth by the fuel price hike in earlier months. The graphical impact of this can
also be seen on the consumer confidence index chart that shows a decline in that period too. This
inflator environment causing prices to rise resulting in the temporary contraction of demand for an
adjustment period as the purchasing power of consumers has taken a hit. South African (PPI) producer
prices rose 6.2% year-to-year in September2018, whereas the consumer price index (CPI)sat an increase
of 4.90% year-to-year in September 2018.STATSSA (2018.)
The calculation of the CPI is deduced from a basket of goods containing;
 Food and beverages
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 Housing
 Apparel
 Medical care
 Education and communication
 Transportation
 Other miscellaneous goods and services
As all these compete for a portion of a consumer’s disposable income. Further analysis shows that prices
advanced faster in terms of CPI Inflation for transport and the slowest in terms of recreation and
culture. The increase in CPI for food and non-alcoholic beverages of 3.1% poses as an indicative problem
for the consumer goods producers as the prices of most of their commodities were affected and caused
to rise steadily in this period, reducing the volume sold.
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Although least affected companies are those in the recreation and culture business however the crunch
on transport may quickly catch up to erode any exempted effects. Those in communication might stand
to gain very minute but still considerable business as demand for more communication may increase in
the very short run (matter of up to 4 weeks) as consumers evade transportation costs where they can
and use different media of communicating to achieve same results, they would in the event they travel.
However, over time consumers will become adjusted to the price changes in this section and relapse
into their former or preferred habits and behavior patterns.
Opportunity with strong brands n strong base …………. GDP per capita growth shows there’s still room
for market growth therefore more consumers to be served in the future.
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Socio-Cultural
The demographic structure of South Africa is a unique one in comparison to the rest of the world as it
seems to head its own direction. With most of the populates of other countries in the world the majority
part of the population is made up of maturing and aging people showing a negative receding trend. On
the other hand, South Africa shows a positive trend of population more younger people than older
people in the population. As shown below according to the dominant class is 25-54 years that make up
41.78% of total population. STATSSA (2017.)
0-14 years: 28.27%
15-24 years: 17.61%
25-54 years: 41.78%
55-64 years: 6.66%
65 years and over: 5.68%
This presents a market that is young and of working class all potential consumers. This together with the
unemployment data may serve as futuristic benefit to the economy such that there is still room for
growth as it is not performing at its most efficient due the high level of idle human capital. Holding other
thing constant a middle-aged economy like this one is one with unprecedented potential. This goes to all
industries although all may be reliant on how effective government policies put in place will turn out for
the improvement of the sections.
The culture within south Africa is one of all god and jolly times. It is basically a nation that is always
ready to celebrate. This is something a lot of business’ can manipulate into their advantage.
Technology
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An ever-changing factor whose impacts cannot be ignored or avoided is technology. As times move
ahead the priority so to keep costs at the minimum. In bid to become more competitive African firms
together with African governments as a whole have been propelling forward a lot of efforts and making
heavy investments in in technology to improve their value addition whilst reaping out the most benefit
possible but keeping the costs at a considerably low level. From the innovative use of cloud technology
right down to the continuous improvement and building of cost saving industrial equipment, there is still
a lot of room for technological advancement and more catching up of South Africa to other countries
that represent the pinnacle of technological advancement such Asian, European and American
countries. According to the findings of PWC “the issues driving the technology industry today are many
and varied. E-business and the Internet, changing customer expectations, shifting business models and
dramatically altered financial recognition processes are just a few of the major issues.”
Ecological
The major ecological issues that South Africa is facing include water pollution. air pollution, global
warming, deforestation, desertification The Constitution of the Republic of South Africa 1996
(Constitution) is the all-encompassing statute. Section 24 of the Constitution sets out the right to an
environment that is not harmful to health or wellbeing, and calls on the government to take legislative
and other actions to: There is a ministry of environmental issues in South Africa that serves as the
watchdog to the operations of all firms within the Country its main functions is to promote conservation
of the natural state of the environment ,to prevent pollution and ecological degradation that most
manufacturing firms are usually guilty of this. They together with other NGOs pursue the need to secure
globally ecologically sustainable development. For this purpose, there are a number of key legislations
including but not limited to:
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Hazardous Substances Act No. 15 of 1989
Mineral and petroleum Recourses Development Act No. 28 of 2002(MPRDA)
National Environmental Management Act No. 107 of 1998 (NEMA).
Failure or ignorance of these factors can and will lead to possible demonstrations and actions by local
pressure groups that may go on to further to lead to prosecution and opening of law suits. This may be
accompanied by fines or a confiscation of companies license to operate, also coupled with bad publicity
therefore being shunned by consumers. However, in the event that operations of the business are done
within the law there is positive benefits like tax holidays that are given by the south African government
this as well as reward to the company as recognition for operating in an environmentally conserving
manufacturing together with the good publicity is something of a good reward to an organization
Legal factors
Operating within the limits of the law is of great importance in south Africa as it is in any country that
restrictions will exist .In this document however the legal consideration that will be made are at a
general level as this scope is one of great depth and assortment however amongst the important factors
to consider within first opening a firm in the south Africa is that ownership even in term of shareholding
should be considered closely as some industries are limited as to nationality of allowed ownership
bound to this are industries such as minning,banking ,farming ,broadcasting ,telecoomunications aswell
as insurance.For these industries any foreignor or foreign company willing to engage can only have a 49
% stake in the company whilst a local will assume ownership of the 51% making them the major
shareholder .This is in line with the indeginisation policy which is being viciously pursued by the
government. This will eventually have a toll on the amount of FDI’s although it protects the locals and
gives them a better opportunity. However according to (Sward, D, 2018) there are 49 countries with
which south Africa has much flexible agreements with that ensures them a better percentage stake and
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also protects them. This serves as an attraction to ambitious investors out there. This will ensure of the
bringing in of updated technology as well as capital that serves as an injection into the economy Nd
depending n size and scope it will trickle down into the economy and improve living standards. It is also
an opening up of business opportunities of prospective local firms that work can be out sourced to but is
equally dangerous as its massive size can ostracize SME’s within south Africa. South African employees
are protected by an act named the (EEA) that was stipulated in the yea 1998 that rules against pay
inequality and labor practices that are unfair and or in humane. Strong labor unions are also there to
ensure of the enforcement and improvement of labor conditions. Consumer Standards also serves as a
government body that investigates the fitness for consumption of consumer goods. The health
department of south Africa also works to ensure of the legitimacy of ingredients used in manufacture.
(central. Caxton.). The law in south Africa shows absolutely no mercy to publicly traded consumer goods
producer like was the case towards tiger Brands limited that is still under investigation for negligence
leading to the listeriosis outbreak in 2018 that can possibly lead to hefty fines. The company is also
currently undergoing prosecution for the outbreak from lawyers of the affected patients.
Porters 5 forces
The extent of Tiger Brands operations in the national , continental and global level consumer goods
market puts it in a position to deal with a wide range of external factors .Each external factor affects the
firm in a different way in relation to profit and revenue levels an this is elucidated more by the Porters
five forces analysis , that though all are impactful their intensity differs and must be investigated to
determine strategic position in relation to theft the sake of this investigation a force considered to be
weak or low creates an environment of high profitability potential ,A strong or high pin pointing in this
case would mean there is low profitability potential. For Tiger Brands the following is true;
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1. Threats of new entrants (weak)
2. Bargaining power of Tiger Brands suppliers (moderate force)
3. Bargaining power of Tiger Brands customers/buyers (strong force)
4. Rivalry amongst existing firms (Strong force)
5. Threat of substitute (weak force)
1. Threats of new entrants (weak)
The industry of Consumer goods is a very strong one that has a well build foundation in South Africa, this
mean that Tiger Brands competes with firms that are well established and that are of a reasonably huge
size such as Pioneer foods and Tongaat Hullet.
 High economies of scale (weak force)
 High economies of scale (weak force)
 Barriers to entry capital legal technology drawbacks weak
This section of the analysis looks into the impacts of new firms on the industry that is shown as weak
highlighted above due to the fact that there are very stringent barriers to entry .Some of those barriers
to entry include the very high capital demands that very few firms will be able to come up with in order
to successfully penetrate into this industry .Another contributing factor to the barriers to entry are the
extremely tedious and time consuming legal formalities to be adhered to, advancement in technology
used in this industry as well like the CAD and CAM may be too expensive for new entrants to acquire
.high economies of scale enable them an advantage in being able to set competitive prices as they are
able to keep the costs at a very low level as they are being spread over a great number of units
produced .Tiger Brands also has high organizational efficiencies in terms of management economies that
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any new firm is most likely to lack due to the high expense of employing such officials. Building a strong
brand takes a lot of time and effort and Tiger Brands has managed to do this over a long period of time
so in the event that a new firm succeeds to enter the market its brand will drown and fade in that of
Tiger Brands and other big players. This external factor again confirms that the threat of new entrants
against the company is not so intense.
2. Bargaining power of Tiger Brands suppliers (moderate force)
Suppliers of Tiger Brands impact the industry to a moderate extent by having a degree of control on the
level of the supply available. The factors that contribute to the moderate bargaining power of suppliers
are as following;
 Size of individual suppliers is fairly big (moderate force)
 Availability of substitute input (moderate force)
 Importance of industry to suppliers
 Suppliers threat of forward integration (moderate force)
 Switching costs would be high as other option of neglecting
The level of production undertaken by Tiger Brands to produce enough to meet the whole nations
demand and beyond means that it will have a number of suppliers that are of a considerably huge size
but moderate in comparison to them. This impacts Tiger Brands operation in a moderate manner as
highlighted above the size and population of available suppliers allows them to have a reasonable but
not strong force over Tiger Brands and other companies in the industry .Importance of industry to the
supplier is a force that imposes a moderate threat Tiger Brands, due to the big size of each individual
buyer in the industry therefore a weakening of its Bargaining power in this instance as the loss of an
individual buyer from this industry can greatly affect the suppliers business. The threat of forward
integration by the supplier also boosts the suppliers bargaining power to a moderate extent as they are
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capable of doing so given their size and scope of operations. This shows the Bargaining power of
supplier is a force that poses a moderate threat and is a force to be reckoned with.
3. Bargaining power of Tiger Brands customers/buyers (strong force)
The viability of Tiger Brands limited business is highly dependent on the response of customers to its
product. The following factors are the ones that led to the conclusion that the customers had a high
bargaining power over Tiger Brands.
 Low switching cost from one product to another (strong force)
 High quality of information (strong force)
 Small size of individual buyers (weak force)
Low switching costs from the goods produced by Tiger Brands make it easy for consumers to opt to
purchase and consume other companies’ products. This bears a strong contribution to the bargaining
power of Tiger Brands consumers. There is perfect distribution of information concerning the consumer
goods thus making it easy for them to make an informed decision to switch from Tiger Brands, this also
increases the strength of the customers bargaining power. The size of most of the customers buying the
products is usually small thus, bears little significance however bundled together as a nation of small
quantities frequently purchasing customers it bears a strong contributing factor to the strong Bargaining
power of customers.
4.Rivalry amongst existing firms (Strong force)
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The strong force of competitive rivalry against Tiger Brands is based on the following factors as well as
their intensities. This section will comprehensively show what makes the intensity of rivalry amongst
firms strong;
 High number of firms in the consumer goods industry (strong force)
 High and intense level of aggressiveness by each firm in the industry (strong force)
 Low switching costs between firms as (strong force)
 Do competitors follow your moves or recruit your ex employees (strong force)
 Competitiveness of industry structure (strong force)
 General growth of the industry (moderate force )
 Strategic commitments (strong force)
 Exit barriers (strong force)
The consumer goods industry has a considerably high number of companies operating in it, this
obviously means there will be a strong impact on Tiger Brands in terms of competition amongst firms as
they each compete to remain relevant and gain more relevance and loyalty in the consumers eyes. The
huge size of most of the firms competing in this industry also adds on to the intensity of the level of
competition therefore
Low switching costs from Tiger Brands products maybe to those of its greatest competitor Pioneer foods
further intensifies the threat of rivalry amongst them and others in the Industry. Competitors of Tigers
Brands usually counter act any move put into play by Tiger Brands and are vigilant of the firm’s activities
so is Tiger Brands of theirs, all the more reason the rivalry amongst firms is vigorous. The impact of this
force bears an imperative significance in Tiger Brands industry environment.
The nature of the industry within which Tiger Brands operates in offers not much of a difference to a
consumer if they are to buy from Tongaat hulled or Pioneer foods. Because of this reason therefore it
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can be deduced that this factor increases the intensity of rivalry among firms. The growth the consumer
goods producing industry has been reasonably in line with the
5.Threat of substitute (weak force)
Substitutes are goods that offer the same benefit or advantage basically serving the same purpose as
the products of Tiger Brands. This can reduce Tiger Brands revenues as well as profits
 Low switching costs (strong force)
 Low substitute availability (weak force)
 Low performance to price ratio (weak force)
The low switching costs creates a situation where it is easy for consumers to switch to substitutes of
Tiger Brands products makes this a very influentially strong force. This is especially true however the
substitutes of the particular set of products produced by Tiger Brands is not easily available therefore
neutralizing any potential negative impact of this force as the ease with which one can acquire Tiger
Brands products from the super market presents a much attractive convenience that substitutes may
not stand a chance in gaining significant relevance. This really weakens the intensity of the threat of
substitution.
Strategic group analysis
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Within an industry that has a great number of players there are a set of companies that operate with the
same business model therefore meaning that they will pursue goals that are similar and bear
resemblance of similar strategy.
For the sake of this paper and making efforts to deduce the strategic group make up of the consumer
goods industry the following companies within the industry will be assessed analyzed using two
unrelated determinants to try and come up with a perceptual map that shows the strategic groups that
exist within the industry
Above is the result of the strategic mapping of the Consumer goods industry. This therefore shows the
intensity of competition that is between firms that are grouped up close to each other. These have
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similar characteristics in expenses they incur as well as revenues they receive at the end of the day.
There is also great similarity in their market capitalization as well as the goods they produce. The
mobility barrier shown on the graph shows the level of difficulty other firm will have to pass through in
order to compete and be at the same level as Tiger Brands limited.
The great size of companies such as Tiger brand, Pioneer foods, RCI foods and Clover industry also
shows that they will be affected different by external force and can therefore respond at different
scopes of levels due to their strength in excess or available capital and cash to execute contingent
strategic approaches to the volatility of forces in the external environment. The effect of the Porters five
forces mentioned in a previous section also take a different toll on each of the companies all alike are
affected but to a different degree and extent. To big time players like Tongaat Hulled and Pioneer threat
of new entrants might serve as nothing but a primary level threat however to other like Oleanna the
threat is still of quite some high degree as its small size stands to lose if they are not vigilant of the new
entrant’s bold moves.
The bigger operations are the risk is spread over a great number of markets and product category. The
bigger firms also have a great opportunity to go beyond borders therefore exposing themselves to a
much conducive external environment in terms of local conditions pertaining to PESTEL. Ashwell as to
engage in least competitive market where the porter five forces all score as WEAK in different countries.
This will then ensure that such huge firms are able to scrub up a much higher level of profitability
compared to smaller firms that in as much as they are profitable, they are not as profitable as those in
the strategic group of Tiger brands.
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References
1. http://www.annualreports.com/HostedData/AnnualReportArchive/t/OTC_TBLMF_2014.pdf
2. http://www.statssa.gov.za/?s=disposable+income+&sitem=publications
3. http://www.oecdbetterlifeindex.org/countries/south-africa/
4. http://www.oecdbetterlifeindex.org/countries/south-africa/
5. https://tradingeconomics.com/south-africa/cpi-housing-utilities
6. https://countryeconomy.com/countries-cpi/south-africa
7. www.bloomberg.com’
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9. https://www.pwc.co.za/en/industries/technology.html
10. https://www.african-markets.com/en/stock-markets/jse/listed-companies
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12. https://www.youtube.com/watch?v=X4m53nPlxr4
13. https://www.youtube.com/watch?v=FQ2XGgbNXWY
14. https://oxfordbusinessgroup.com/search-
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15. http://www.tigerbrands-online.co.za/reports/ir-2015/index.php
16. file:///C:/Users/User/Documents/income-statements%20final%20tb.pdf
17. http://www.doingbusiness.org/content/dam/doingBusiness/media/Subnational-
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18. https://tradingeconomics.com/south-africa/gdp-per-capita
27
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PESTEL and Porters Forces Analysis of The Consumer Product Industry of South Africa

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PESTEL and Porters Forces Analysis of The Consumer Product Industry of South Africa

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EXTERNAL ANALYSIS OF TIGER

BRANDS SOUTH AFRICA

NOVEMBER 25, 2018

threat and justifies it.

marketers of FMCG (fast moving consumer goods) products in South Africa

Brief history of the company

Tiger Brands History

Strategic business units (SBU)

2. Condiments and ingredients

4. Snacks and treats

Market representations in the world

UK, Sweden < Ireland, Philippines Singapore Taiwan among others

 Lawrence Mac Dougall CEO

 Noel Doyle Chief Finance Officer

 Pieter Spies Chief Growth Officer; grains and bakeries

 Thiroshnee Naidoo Chief supply chain officer

 Mary Jane Morifi Chief corporate affairs officer

 Marc Eyres Chief Customer Officer

 Sinenhlanhla Magagula Chief Human resources officer

 Yokesh Maharaj Chief Growth Officer ; exports, international and snacks

 Becky Opdyke Chief Maketing Officer

Financial performance over past 3 years

 International (including imports)

o Contributes up to17 % of turnover

o Contributes up to 26% of group profit after tax

recognized as a great place to work”

 Unleash the power of the people

 Accelerate growth from our core

 Achieve selling and channel ubiquity

 Drive efficiency to fuel our growth

 Create a world class integrated supply chain

 As a good citizen, build a renewable and sustainable future

force and diversification.

 Astral foods ltd

 RCL foods ltd (South Africa)

 RFG (Rhodes food group)

 British American Tobacco PLC

 Oceana group ltd

relevance and serve as worthy competitors to tiger brands.

Industry competed in;

Consumer goods Industry, producing

Industry growth for the past 3 years

South Africa’s GDP (ZAR Millions); source TADEECONOMICS-WORLD BANK

South Africa’s GDP per capita in Issoire TADEECONOMICS-WORLD BANK

slipped into with the rest of the world

outbursts, lootings from shops and infrastructure destroying demonstrations.

touch all industries.

available due to unemployed spending a lot of time complacent and stagnant.

Inflation and prices

of 4.90% year-to-year in September 2018.STATSSA (2018.)

The calculation of the CPI is deduced from a basket of goods containing;

 Food and beverages

 Education and communication

 Other miscellaneous goods and services

to rise steadily in this period, reducing the volume sold.

into their former or preferred habits and behavior patterns.

for market growth therefore more consumers to be served in the future.

41.78% of total population. STATSSA (2017.)

0-14 years: 28.27%

15-24 years: 17.61%

25-54 years: 41.78%

55-64 years: 6.66%

65 years and over: 5.68%