FORMATIVE ASSESSMENT 1 Read the article below and answer ALL the questions Pick n Pay reveals strategy to restore its business 27 May 2024 [100 MARKS] Following a disappointing full year performance for FY24, Pick n Pay CEO Sean Summers has unveiled the new board- approved six-point strategy to restore the Group's core Pick n Pay supermarket business to profitability. PHASED APPROACH IMPLEMENTATION Leverage strength of partnerships Leadership and people 2 Reset the store estate 3 Improve offer to drive sales 4 Optimise operating model Leverage strength of partnerships Recapitalisation Pick n Pay Prod FY26 FY27 Before Tax break-even FY25 Halve Group H2 FY24 H1 FY25 H2 FY25 H1 FY26 H2 FY26 HI FY27 H2 FY27 KEY IMPACT AND/OR TARGETED OUTCOMES Appointing the right people, in the optimal roles, to Directly and indirectly impact revenue growth drivers and 1 drive sales and realise margin improvement 5 enhances gross and operating margins 2 Expected notable associated savings/loss avoidance Expected improvement in likeforlike sales growth to Over 100 stores under review as part of the reset process Expected >R500m annualised interest savings 6 Expected >R1bn from working capital optimisation and once-off cash inflow from disposals 3 unlock incremental annual profe Improved service levels for customers 4 Expected >Rlbn in benefits over the next three years Total equity raised from two-step recapitalisation plan indicatively R10 billion-R12 billion Funds raised from IPO: R6 billion-RB billion subject to future-dated variables click to enlarge The Group delivered a weak FY24 result to 25 February 2024, driven by a substantial trading loss in the Pick n Pay business, which more than offset a strong performance from Boxer. The result was further impacted by a significantly higher interest charge resulting from increased gearing and a R2.8 billion non-cash store asset impairment in the Pick n Pay business. The new Back-to-Basics strategy has six priorities and will focus on simplicity, quality, affordability and sustainability to help the iconic brand reclaim its former glory. Given the market environment, it is a reasonable and actionable plan. More importantly, the right operational team with the right experience is now in place to execute it. Important parts of the plan have already been implemented, some in place since February, with encouraging early results. For the first 10 weeks of FY25, positive like-for-like growth has been recorded by Pick n Pay, alongside a consistently strong performance from Boxer. The six strategic priorities are: 1. Leadership and people 2. Reset the store estate 3. Improve offer to drive sales 4. Optimise operating model 5. Recapitalisation 6. Leverage strength of partnerships "This is a three-year turnaround programme. We will work with vigour, energy and passion to get it right. We have a strong operational leadership team to help us set the business on a path of long-term sustainability," said Summers. Question 1 (25 Marks) Examine the competitive pressures that Pick n Pay faced because of shifting and changing market conditions that led to this strategy to restore business amidst sluggish market performance. Question 2 (25 Marks) Discuss how you would "reset the store estate" to remain competitive and relevant in the market? Question 3 (25 Marks) Elaborate on how Pick n Pay could use information technology and ERP systems across the company and their suppliers to improve their operating model? Question 4 (25 Marks) Discuss how developing internal performance measures to track the performance of supplier development, can create efficiency for Pick n Pay.

FORMATIVE ASSESSMENT 1 Read the article below and answer ALL the questions Pick n Pay reveals strategy to restore its business 27 May 2024 [100 MARKS] Following a disappointing full year performance for FY24, Pick n Pay CEO Sean Summers has unveiled the new board- approved six-point strategy to restore the Group's core Pick n Pay supermarket business to profitability. PHASED APPROACH IMPLEMENTATION Leverage strength of partnerships Leadership and people 2 Reset the store estate 3 Improve offer to drive sales 4 Optimise operating model Leverage strength of partnerships Recapitalisation Pick n Pay Prod FY26 FY27 Before Tax break-even FY25 Halve Group H2 FY24 H1 FY25 H2 FY25 H1 FY26 H2 FY26 HI FY27 H2 FY27 KEY IMPACT AND/OR TARGETED OUTCOMES Appointing the right people, in the optimal roles, to Directly and indirectly impact revenue growth drivers and 1 drive sales and realise margin improvement 5 enhances gross and operating margins 2 Expected notable associated savings/loss avoidance Expected improvement in likeforlike sales growth to Over 100 stores under review as part of the reset process Expected >R500m annualised interest savings 6 Expected >R1bn from working capital optimisation and once-off cash inflow from disposals 3 unlock incremental annual profe Improved service levels for customers 4 Expected >Rlbn in benefits over the next three years Total equity raised from two-step recapitalisation plan indicatively R10 billion-R12 billion Funds raised from IPO: R6 billion-RB billion subject to future-dated variables click to enlarge The Group delivered a weak FY24 result to 25 February 2024, driven by a substantial trading loss in the Pick n Pay business, which more than offset a strong performance from Boxer. The result was further impacted by a significantly higher interest charge resulting from increased gearing and a R2.8 billion non-cash store asset impairment in the Pick n Pay business. The new Back-to-Basics strategy has six priorities and will focus on simplicity, quality, affordability and sustainability to help the iconic brand reclaim its former glory. Given the market environment, it is a reasonable and actionable plan. More importantly, the right operational team with the right experience is now in place to execute it. Important parts of the plan have already been implemented, some in place since February, with encouraging early results. For the first 10 weeks of FY25, positive like-for-like growth has been recorded by Pick n Pay, alongside a consistently strong performance from Boxer. The six strategic priorities are: 1. Leadership and people 2. Reset the store estate 3. Improve offer to drive sales 4. Optimise operating model 5. Recapitalisation 6. Leverage strength of partnerships "This is a three-year turnaround programme. We will work with vigour, energy and passion to get it right. We have a strong operational leadership team to help us set the business on a path of long-term sustainability," said Summers. Question 1 (25 Marks) Examine the competitive pressures that Pick n Pay faced because of shifting and changing market conditions that led to this strategy to restore business amidst sluggish market performance. Question 2 (25 Marks) Discuss how you would "reset the store estate" to remain competitive and relevant in the market? Question 3 (25 Marks) Elaborate on how Pick n Pay could use information technology and ERP systems across the company and their suppliers to improve their operating model? Question 4 (25 Marks) Discuss how developing internal performance measures to track the performance of supplier development, can create efficiency for Pick n Pay.

Management, Loose-Leaf Version

13th Edition

ISBN:9781305969308

Author:Richard L. Daft

Publisher:Richard L. Daft

Chapter8: Strategy Formulation And Execution

Section: Chapter Questions

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Transcribed Image Text:FORMATIVE ASSESSMENT 1 Read the article below and answer ALL the questions Pick n Pay reveals strategy to restore its business 27 May 2024 [100 MARKS] Following a disappointing full year performance for FY24, Pick n Pay CEO Sean Summers has unveiled the new board- approved six-point strategy to restore the Group's core Pick n Pay supermarket business to profitability. PHASED APPROACH IMPLEMENTATION Leverage strength of partnerships Leadership and people 2 Reset the store estate 3 Improve offer to drive sales 4 Optimise operating model Leverage strength of partnerships Recapitalisation Pick n Pay Prod FY26 FY27 Before Tax break-even FY25 Halve Group H2 FY24 H1 FY25 H2 FY25 H1 FY26 H2 FY26 HI FY27 H2 FY27 KEY IMPACT AND/OR TARGETED OUTCOMES Appointing the right people, in the optimal roles, to Directly and indirectly impact revenue growth drivers and 1 drive sales and realise margin improvement 5 enhances gross and operating margins 2 Expected notable associated savings/loss avoidance Expected improvement in likeforlike sales growth to Over 100 stores under review as part of the reset process Expected >R500m annualised interest savings 6 Expected >R1bn from working capital optimisation and once-off cash inflow from disposals 3 unlock incremental annual profe Improved service levels for customers 4 Expected >Rlbn in benefits over the next three years Total equity raised from two-step recapitalisation plan indicatively R10 billion-R12 billion Funds raised from IPO: R6 billion-RB billion subject to future-dated variables click to enlarge The Group delivered a weak FY24 result to 25 February 2024, driven by a substantial trading loss in the Pick n Pay business, which more than offset a strong performance from Boxer. The result was further impacted by a significantly higher interest charge resulting from increased gearing and a R2.8 billion non-cash store asset impairment in the Pick n Pay business. The new Back-to-Basics strategy has six priorities and will focus on simplicity, quality, affordability and sustainability to help the iconic brand reclaim its former glory. Given the market environment, it is a reasonable and actionable plan. More importantly, the right operational team with the right experience is now in place to execute it. Important parts of the plan have already been implemented, some in place since February, with encouraging early results. For the first 10 weeks of FY25, positive like-for-like growth has been recorded by Pick n Pay, alongside a consistently strong performance from Boxer. The six strategic priorities are: 1. Leadership and people 2. Reset the store estate 3. Improve offer to drive sales 4. Optimise operating model 5. Recapitalisation 6. Leverage strength of partnerships "This is a three-year turnaround programme. We will work with vigour, energy and passion to get it right. We have a strong operational leadership team to help us set the business on a path of long-term sustainability," said Summers.

Question 1
(25 Marks)
Examine the competitive pressures that Pick n Pay faced because of shifting and changing market conditions that led to
this strategy to restore business amidst sluggish market performance.
Question 2
(25 Marks)
Discuss how you would "reset the store estate" to remain competitive and relevant in the market?
Question 3
(25 Marks)
Elaborate on how Pick n Pay could use information technology and ERP systems across the company and their suppliers
to improve their operating model?
Question 4
(25 Marks)
Discuss how developing internal performance measures to track the performance of supplier development, can create
efficiency for Pick n Pay.

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