Question 1:

Explain Why Game (and MassMart) chose the countries it entered into and adopted that specific 'location strategy' from one country to the next. Be mindful of market, entry and operating challenges and the environment of business in general. What are the demographic and economic circumstances - as a starting point? Note existing local and international competition.

What are the contextual issues and future trajectory? 50 Marks

CASE STUDY

Game: Competing in Africa's Playing Fields

Game is one of South Africa's largest retail stores.

Regarding the supply chain to the African countries,

It consists of 93 large-format stores and thinks of itself

until about three or four years before, all distribution

as a driven discount cash retailer of consumer goods

of stock had been managed centrally from South Africa.

and general merchandise, electrical appliances, and

Game's experience in Nigeria changed this. While it

non-perishable items for home, leisure, and business

was never part of the original procurement model,

use. As a discount cash retailer, Game has a high-

Game decided it was best to use local suppliers in

volume, low-margin operating model that depends on

Nigeria because restrictions on certain imported

making a high volume of sales at a lower price as well

products meant that even one restricted product could

as on a sound and consistent promotional strategy.

hold a whole container back. In other countries,

however, Game imported up to 90 percent of its stock

Game started expanding into Africa in the early

from South Africa without any major difficulties.

1990s when it realized that its South African market

would mature quickly and that there was little space

Logistical challenges were common for Game in

for investment in the already over-traded market.

Africa. A large portion of its goods had to be

Recognizing

the

retail

market

potential of

the

transported by road, but getting those goods to certain

neighboring Southern African countries, Game started

countries meant that in some cases truck drivers had

investing in Africa by opening its first store in

to cross five different borders. The drivers therefore

Botswana in 1993.

had to build up good relations with the various border

officials to speed up the process, particularly because

It was only when the company decided to invest in

Game gave the drivers bonuses if they were able to

other African countries, specifically in Uganda (2004),

deliver the goods on time.

Nigeria (2005), Tanzania (2006) and Ghana (2007),

that the reality of Africa kicked in. The opening of the

By 2010, it had become clear that despite the risks,

Nigeria store was known to be a bit of a disaster after

it was very profitable for the company to invest in

the first container of stock was held up for nine

Africa. Game stores in Africa generated far higher

months at the local customs office because of Game's

profit and return on investment than their South

refusal to submit to bribery.

African counterparts. Until now, Game has not faced

serious

competition

from

international

players,

By 2010, Game had a presence in 11 African

although the company faced some competition from

countries and was planning to expand its presence in

the informal market as well as from Shoprite Holdings,

Africa in another six countries over the next five years.

another South Africa-based supermarket retailer.

Game had found that it could not simply cut and

However, Game expected a complete change in the

paste its South African business model into other

African business landscape and anticipated that more

African contexts. The businesses therefore had a

and more international companies would be attracted

separate business plan and business model for every

by the investment potential of Africa. The company

country. For example, whereas in South Africa every

was convinced that big multinational players such as

store stocked 12,000 active products, some remote

Wal-Mart and Carrefour, which had previously stayed

African stores such as Game Kampala had only 8,000.

away from investing in Africa, would form

This was because the logistics of supplying the full

partnerships with existing investors in Africa rather

range of products was expensive and Game realized

than risk going alone.

that the market was satisfied with a slightly more

limited choice.