Strategic Management

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PEP STORES: AN EVALUATION OF THE STRATEGIC DEVELOPMENT OF THE ORGANISATION

INTRODUCTION AND OVERVIEW
Like most organisations, Pep stores was concerned with the long-term sustainability of the organisation, profits/financial performance, market performance and the satisfying its stakeholders, including the shareholders. With these factors often contradicting each other it is clear Pep stores struggled through the 1990’s balance these competing forces in other to achieve their organisational objectives. The case study of Pep Stores therefore presents a number of paradoxes. As a company seeking competitive advantage, it is evident that the organisation is constantly battling to expand certain factors that are apparently in conflict with one another. The company itself is apparently successful in managing emergent change, having found itself in a situation of declining financial performance and eventually succeeding in bringing the organisation back to into profit. Various paradoxical issues and a series of inter-dependent choices are at play as the management of Pep Stores search for the winning strategic position (De Wit and Meyer, 2004). Pep Stores struggle along the way to balance the competitive nature of strategy and it is apparent that they emerge from very uncertain conditions a changed organisation in many ways. The case study appears to suggest that Pep Stores was originally unaware of the competing nature of strategy and focussed heavily on growth, ignoring other factors. However it is possible that for Pep Stores to emerge with a distinct strategy as a result of changes in both the internal and external environment, then it must have been aware of these factors, balanced it and deliberately took its strategic position. The organisation was however did not anticipate the change that was to come, perhaps because strategy generates fear and paradoxes (de Wit and Meyer, 2004), which can be difficult to reconcile, causing Pep Stores to loose its strategic focus at a point.

PEP STORES: EMBRACING THE COMPETING DEMANDS OF STRATEGY
In the early years, Pep Stores focussed firmly on growth whilst keeping its operating costs low. However, by the 1990’s as the wind of change blew across South Africa, bringing in a wave of social and political uncertainty, Pep found itself having to respond to these changes by re-evaluating its operations to secure its profitability. The company was firmly aware of the social paradox inherent in the situation and responded by combining a hard and soft approach to implement strategy. Under the leadership of Labuschaige, whose approach to strategy implementation was softer, focussing on the people side of the organisation, Pep Stores created a corporate organisational culture (‘Sikhula KunYe’) with set boundaries that still allowed for some creativity. For example, through the decentralisation of some decision making processes, encouragement of personal initiative, direct communication to staff across all levels and training, Labuschaige was able to change the structure of Pep Stores, motivate staff and instil a culture of learning and performance. This can be viewed as a contradiction, given that Pep stores purports to be a cost leader. According to Hitt et al. (pp101, 2004), the organisational structure of a cost leadership firm should have a high degree of centralisation. This clearly is not the case with Pep Stores under Labuschaige’s management. Trompenaars and Hamden-Turner (2002) suggest that the cultural paradigm is becoming increasingly acceptable and is a business driver and indeed Pep Stores recognises and embraces organisational culture as a necessary business driver and allows the individual and collective cultures to shape the organisation.

PEP STORES: STRATEGIC DEVELOPMENT OVER TIME
A key success criterion in Pep stores’ journey through strategy development is the realisation of the need to address strategic issues early on. Johnson et al. (2008) suggest that strategy...
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