The two dimensions or environmental segments that played a big role in determining whether Tanzania macro-environment would provide a suitable and supportive entry for South African Breweries are namely the Political or gal Environment and the Economic Environment. If rusty, in general, any well organized and effectively functioning government, and country, would attract investment and business from outside. The political leaders of Tanzania are striven to enhance the current political stability within mainland Tanzania, while also vitally focused on creating accessory political cohesion between Tanzania and the island Zanzibar.
A factor that is essential to any well-functioning government and country, which would have attracted SAAB, is that Tanzania had managed to rid its government of corruption. This was managed by the thinning -out and restructuring of the government in power, pre Saab’s involvement. Although Tanzania owned its own brewery (Tanzania Breweries Ltd) this company had fallen under complete disarray. SAAB grabbed the window of opportunity to acquire a share in the company. As a result, SAAB acquired a 45% share in T BAL (which later increased to 52%).
This was a great opportunity, as T BAL was an already well-established brewery that had certain assets, employees, client-base, distribution channels and government connections. In essence, this would have made the integration of SAAB into TAB a much smoother process. However, whenever a new organization tries to establish itself in a foreign country, one can expect some sort of hostility, as well as a battle between the governments regulations and the organization’s expectations.
At the time, the Tanzania government seemed cooperative and supportive of the whole endeavourer. The government and SAAB had a relatively joint relationship, and this meant that there would be some sort of mutual agreement between them as to the activities of the organization. Secondly, in order for an organization to evaluate whether it would thrive in a new economic environment, it is vital that it must determine the character and direction of the economy in which it wishes to establish itself.
Overall, Tanzania economy is growing continuously. This would be a key factor in determining whether or not it would be a healthy environment for an organization to put down roots. With growth and profits as one of Saab’s remarry’ objectives, the average growth of 6 per cent between 2000 and 2006 made Tanzania an ideal location for SAAB. There was also a great improvement once the government had moved away from the socialism concept of a free- market, and instead embraced a more market-orientated form of industry.
The reasonable low entry cost of entry also made it more economically viable for SAAB to initiate the start of a new organization, as the potential economic detriments were limited. In addition, there had been a serious under production and distribution of TAB products to the public. The evidence wows that more beer was being imported into Tanzania than was actually being produced by its own brewery. Thus, there was a definite short-fall in ‘supplier meeting consumer demand’. SAAB would have seen the potential to satisfy the demand of more customers, and the huge economic benefits that would come from that.
A negative factor with regards to Tanzania economy, is that a relatively high inflation rate is present, and this in turn affects consumer consumption priorities. However, this does not pose much of a threat to SAAB, as the benefits of the new organization far outweigh the negative attributes. At the time, SAAB was under the impression that they would be taking over a workforce of about 3000 employees, who all had knowledge and experience in the industry. This would save a vast amount of expense on employee training and employment administrative costs.
Tanzania economic environment had a large degree of appeal, and SAAB would reap the benefits, provided it maintains sound management principles and effective business strategies, for years to come SAAB made a very alert and smart business move when the company decided to expand its global boarders and establish itself in outside countries, such as Tanzania, where it an increase its performance and client base, and accelerate the growth and profits of the enterprise. Question 5 The vision and mission statement of TAB hold the key to its future success.
Tab’s vision, mission and values were created to maintain and enhance the various core functional components of its industry, that is: to ensure the wellbeing and performance of its employees who all have a high work ethic level; to provide a valuable service and product; to maintain customer satisfaction and loyalty; to remain dedicated to shareholders; and to secure the long term sustainability of the industry. SAAB pursed an External Growth Strategy of Horizontal Integration, through TAB in Tanzania. SAAB sort out ownership or an (increased control) over another similar/ alike industry, which was actually its competitor.
SAAB and T BAL merged/acquisition/takeover?? Essentially, this strategy was most attractive as it provided the opportunity for SAAB to expand outwards globally, achieve a higher growth rate and increase profits. This enabled SAAB to improve its competitive advantage over other organizations. The existence of a current trained and experienced labor force, as well as capital investments (T Bless assets acquired from the integration and investments made later on by SAAB), have aided the successful expansion of the organization.
There have been a few problems with regards to the integration of the two organizations. More specifically; surrounding the management styles, previous corrupt practices, over-employment, public scrutiny, and legal and governmental issues. Fortunately, the majority of these problems have been resolved. This was a very successful and business venture. TTL and SAAB, and the Tanzania economy have benefited from the integration of the two organizations.