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.
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 mines was 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
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.
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