Prima Innovation

Some of the weaknesses of the Retailer

8. A SWOT analysis for Massmart.

In order to stay competitive and manage the impact of the factors in the environment, a business needs to analyse both the internal and external environment. This is done through the SWOT analysis.

8.1 Strengths.

▪Job creation: Massmart is the largest private employer with more than 2.3 million staff.
▪ 89% of their permanent employees have medical benefits.
▪Savings for customer’s s ales cost ratio of 16.3% which is the lowest and enables them to compete aggressively on price.
▪Help customers 98.9 million kw/h of energy through sale of energy efficient and alternative energy products.

8.2 Weaknesses.

▪ Massmart has a rating of 3.6 from employees, which is low based on their standards.
▪ It experienced complaints related to their treatment of employees, such as discrimination, unpaid wages, working for long hours, complaints of owners being rude and humiliating employees.
▪ There is no differentiation between stores; we see this with them selling the same products at their different stores.

8.3 Opportunities.

▪ Massmart have an opportunity of expanding their online store.
▪Opportunity to offer their Western goods to developing countries, they have with this approach as they are already operating in 14 African countries.

8.4 Threats.

▪ There is competition from global retailers such as Amazon and Target.
▪An increase in social threats from customers that do not like Massmart coming into their communities and affecting small business owners.

THE MOST SUITABLE LEADERSHIP STYLE BASED ON THE BEHAVIOR, WOULD BE "THE DEMOCRATIC LEADER " FOR MASSMART

The Democratic leadership is when the employees also have a say in the decision making. The leader makes the decision based on the input of each team member. Although he he makes the final call, each employee has an equal say on the project's direction. This leadership style is one of the most effective leadership style for Massmart because it allows lower-level employees to exercise authority they will need to use wisely in future positions they might hold. It also resembles how decisions can be made in company board meetings.

For example, in Massmart board meeting, a Democratic leader might give the team a few decision-related options. They could then open a discussion about each option. After a discussion, the leader might take the board's thoughts and feedback into consideration, or they might open this decision up to a vote.
Team members feel their voice is heard and their contributions matter; the main benefit to this style of leadership is that team members tend to have high job satisfaction because their opinions are valued and they tend to work hard and stay put. Although the decision making process in this scenario can be slower, the results are often great.
On the downside, on those projects where speed and efficiency is critical, as it is during a crisis, time can sometimes be wasted on making sure all team members voices are heard.

ANALYSIS OF MASSMART CURRENT SITUATION

Massmart has hit times, reporting a bad financial year 2019.
Job cuts, stores closures, reduced capex and clamping down on expenses are all part of widespread cost-cutting measures in the retail group's ambitious turnaround plan, led by the new CEO and Walmart heavyweight, Mitch Slape who took over from Guy Hayward just six months ago, had told delegates earlier at the presentation how disappointed he was at the group's full-year performance.

The group reported an overall loss of R1.3 billion for the year to December 29, 2019, its headline loss came to R1.1 billion. This included the impact of new International Financial Reporting Standards (IFRS) 16 accounting rules. Due to the record loss, the group did not declare a dividend for the year.

Apart of its turnaround plan, the group is looking at closing 34 DionWired and former Masscash division stores, which could affect some 1440 jobs. A section 189 process is currently underway and Slape says the group is having constructive engagement with Unions.
Slape did not give an exact timeframe on when he anticipated Massmart would likely return to profitability. However, he did not say the turnaround " journey could take up to three years "