FORMATIVE ASSESSMENT 1 Read the article below and answer ALL questions in this section. New Tiger Brands boss has big plans to shake up SA's largest food producer Nick Wilson [100 MARKS] Tiger Brands's new CEO Tjaart Kruger plans to simplify its operating model and product ranges to get the group back on a growth trajectory. The company has been seen by the market as sluggish, with its nimbler competitors outperforming it in recent years. Kruger believes the company can be turned around, but that this will not be achieved overnight. Tiger Brands' new CEO Tjaart Kruger plans to inject new life into SA's biggest food producer after years of sluggish performance, by simplifying its operating model and product ranges. Speaking to analysts at a full-year results presentation and to News24 afterwards, Kruger, a former Premier Foods CEO, made no bones about the fact that the company had been overtaken by nimbler competitors in recent years. "If you look at the results that have just been presented to you, they are not great. And some of it is as a result of the environment out there, but I think all of you have done the comparisons with our competitors. Our competitors have done better than us." But Kruger believed the ship could be turned around, saying the company had the best brands in the business. This, he cautioned, would not be done overnight, however. While he did not foresee a lot of movement in the first six months of the new financial year, he said the market could expect to see some better numbers coming through in the second half. Earlier the company - which owns brands such as Koo baked beans, All Gold tomato sauce, Tastic rice and Albany bread - reported that while it had experienced relatively strong topline growth of 10% to R37.4 billion, the group's operating income had declined 9% to R3.1 billion. Earnings per share also fell 2% to 1725c, although at a headline earnings level, they increased 2c to 1735c. Its final dividend increased 3% to 671c. Its gross margin fell to 27.7% from 30.3% as the ongoing challenges of fully recovering input costs persisted into the second half. Kruger, who was persuaded to come out of retirement to replace Noel Doyle after he left Tiger by mutual agreement at the beginning of November, said it was important to address the group's operating model and make it as simple as possible. "It's too complex, and it probably has too many layers, and there are many decision forums. We must shorten our decision- making, we must simplify the operating model ... we must make decisions where the action is, at the coal face." The business itself was also too complex as things now stood from a product ranging point of view, with Kruger pointing out there were about 3 000 stock-keeping units (SKUS) across the business. He said there were too many and that this complicated the "factory, procurement and [...] working capital". But while it was simple to identify this problem, Kruger said you also had to apply your mind when it came to deciding what products had to go. "You can't just take out the bottom 50 because one of them may relate to something else. You must apply your mind properly. We must reduce complexity around that." He said if the company were able to make its product basket more efficient and have a more agile operating model, it would address a lot of the perceptions about Tiger Brands by the analyst community. As to what categories Tiger Brands could exit, Kruger said it had been previously communicated that the company was looking to exit its deciduous fruits business, Langeberg and Ashton. Another segment it wanted to exit was maize. Kruger, who has been brought on board for a 26-month contract, said he was open to staying on longer if required to fix Tiger Brands' business. He said not too much should be read into the shortness of the contract. "I was brought out of retirement. I'm 64 in January. I don't think the (Tiger Brands) board tried to offer me full-time employment, because they had to convince me a little bit. Not a lot, but a little. I was happily retired. They probably said it would be easier to get me to join if they asked me to come for two years." Kruger said he would do the job that needed to be done for a successor to take over. If one were not found immediately, he would probably "stay a bit longer until we have one". Question 1 (25 Marks) Examine the competitive pressures that Tiger brands faced because of shifting and changing market conditions that led to sluggish market performance.