Tiger Brands Limited (TBL) pursues a cost leadership strategy in the fast moving consumer goods (FMCG) industry in South Africa and other African countries. As the largest FMCG company in the region, TBL aims to offer the lowest prices through economies of scale, a wide distribution network across 22 countries, and pursuing backward integration to reduce costs. TBL also pursues product differentiation by introducing new product sizes and features. However, the FMCG industry has high competition, threat of substitution, and power of consumers, which forces TBL to maintain low prices while also innovating to differentiate its brands.

1. STRATEGIC BUSINESS MANAGEMENT
NAME: MUHAMMAD NAVEED QADIR
Tiger Brands Limited
1. How well does Tiger Brand’s vision and mission statements help narrow
down feasible alternative strategies available for the firm?
Tiger Brands Limited (TBL) is the largest manufacturer and marketer of food, home and personal
care brands in South Africa. The organization is operating in the Fast Moving Consumer Goods
(FMCG) industry. The following vision and mission statement of the organization are posted on
its website.
VISION
To be the most admired branded FMCG company in emerging markets.
MISSION
To deliver revenue growth that is 3% greater than SA GDP plus inflation and achieve our blended
operating margin of 15%, thereby achieving real earnings growth.
The Vision and Mission Statements reflect the following goals:
Goals:
1. Improve Domestic operating performance
2. Drive improved performance in Exports & International markets.
3. Earn healthy financial returns
4. Earn a reputation for innovation
5. Increase its ability to attract, retain and develop the best people
The vision and mission statements of TBL are specific and reflect the long term targets of the
organization. As the TBL is already the leading manufacturer and marketer of consumer goods in
South Africa the following alternative strategies will be helpful to achieve their vision and mission:
Market Development:
Market development involves introducing present products & services into new geographical
areas. With a distribution network that spans across 22 African countries. Being the market leader
in the South Africa and capable of investing the required financial, human and technical resources
required for expansion. And finally having an untapped and unsaturated market along with
increasing global scope of the FMCG sector. The market development strategy seems feasible for
the TBL to achieve its goals.
Backward Integration:
This is a strategy a company uses to reduce its costs and gain a competitive advantage. As the
company aims to export its products to other African countries and beyond. The prices in

2. international markets are very competitive. Therefore, it is a feasible strategy for TBL to lower its
prices by backward integration.
Acquisition:
This strategy is important if a firm wants to enter a new global market. TBL can acquire already
existing companies in the markets where they intent to compete.
2. Does TigerBrandpursue a costleadership, differentiation, orfocus strategy?
Evaluate its strategic approach in comparison to its competitors.
In order to evaluate the strategy of TBL in comparison to its competitors lets first analyze the
company’s competitive environment. For this propose we evaluate the Porters Five Forces Model.
PORTERS FIVE FORCES MODEL
Threat of new entrance
Economies of Scale are the key determinants of market structure and entry for any organization.
In FMCG Sector economics of scale is highly attractive because units produced of goods is very
larger scale and the costs incurred on those is comparatively less. FMCG has been a safe sector for
investors looking for predictable margins and stable returns during the economic crisis. So we can
say that the industry growth in the FMCG sector is high. Therefore, we can say that the threat of
new entrant in this sector is high.
Threat of substitutes
Being an essential commodity the demand for consumer products is elastic. Several brands are
positioned with narrow product differentiation. Companies entering a category /trying to gain
market share compete on pricing which increases products substitution. Hence, threat of substitute
is high in the FMCG industry.

3. Power of suppliers
In this sector the power of suppliers of raw materials and intermediate goods is not very high
because there is ample number of substitute suppliers available so the bargaining power of the
suppliers is low.
Power of consumers
To reduce cost or maximize value, customers bargain for higher quality or greater levels of service
at the lowest possible price by encouraging competition among firms in the industry. The product
differentiation is moderate in FMCG Sector and switching cost from one company to another is
low in this sector. Hence the power of consumers is high in this industry.
Competitive rivalry
The above analysis shows that the competitive rivalry among the organizations in the FMCG
industry is relatively high. There are a lot of market players in this segment which increases the
competition among the players. This means that the marketing as well as strategies in this segment
are aggressive.
Analysis
Keeping in view the competition in the market the Tiger Brands Limited uses the Type 1 Cost
Leadership i.e. low-cost strategy that offers products and services to a wide range of customers at
the lowest price available on the market. This is the reason the company has pursued the forward
integration of achieving the distribution network across 22 African countries to gain a low cost
advantage over its competitors. This type of strategy is especially effective because of the
following reasons:
1. Price competition among rival sellers is especially vigorous.
2. Products of rival sellers are essentially identical and supplies are readily available from any
of several eager sellers.
3. There are few ways to achieve product differentiation that have value to buyers.
4. Most buyers use the product in the same ways.
5. Buyers incur low costs in switching their purchases from one seller to another.
6. Buyers are large and have significant power to bargain down prices.
The cost leadership strategy should be pursued in conjunction with the differentiation. TBL
differentiate by introducing the products in different sizes, shapes, quantity etc. Further, the TBL
continues to strive for innovation and brand activation to gain a competitive advantage over its
competitors. TBL strive to introduce products with added features that increase the product value
and provides with differentiation. This followed by an aggressive marketing and advertisement.
Hence giving the TBL a competitive advantage over it competitors.

4. Economies of scale is the main factor that give the TBL a main competitive advantage over its
rival companies. As the TBL is already the largest manufacturer of the consumer goods it gives it
the cost advantage over its rival companies.