Strategic Management Essay At Nando's Fuels Business Development.

Nando's was started by Robert Brozin and Fernando Duarte in South Africa.  In 1987, Fernando took Brozin to a chicken restaurant in Rosettenville, Johannesburg.  Brozin was so impressed that he proposed the pair of them bought the restaurant which was named after Fernando himself, and his son, who is also called Nando.  Growing from a single outlet in 1987, Nando's expanded to 4 outlets in 1990 followed by rapid expansion in 1991 when the organisation partnered with the South African Hollard group.  Each new outlet was operated as a separate company, and the business functioned on a joint venture basis with the Brozin/Hollard partnership retaining a controlling interested.  

Nando's expansion began with an outlet in Swaziland in 1991.  Later outlets were opened in Namibia, Zimbabwe, Botswana and Mauritius.  Further international expansion followed and by early 1997, 46 Nando's operations had been established in eight countries outside of the South African monetary union, including Australia, the United Kingdom, Canada, Israel and Portugal.  Towards the mid 1990's entrepreneurs from Southeast Asia began to show interest in Nando's.  One influential Hong Kong businessman, representing a major food chain, was particularly serious.  He loved the product and the Portuguese ambience, but made it clear to Brozin that Nando's did not have the infrastructure to handle a global expansion successfully.

In its early years, Nando's wasn't the success story it is today, but it actually struggled to get started in some countries; specifically the UK, where the franchise rights were bought by the Enthoven family in 1992. The first UK restaurant opened shortly after in Ealing, West London.  In 1995 Robby Enthoven (who is still the Managing Director of UK Nando's), took on the struggling restaurants in Ealing Common and Earl's Court , and came up with the order at the till, sit down and wait for your food philosophy.

In 1995, Nando's International was formed and a re-structuring process led to the joint venture partners being bought out by Nando's.  Brozin still remained as Chief Executive until 2014 and although the structure is unclear Brozin and the Enthoven family appear to be the main shareholders, with Andrew Lynch holding the position of Chief Executive Officer.

Strategic Decisions for Business Development at Nando's

Nando’s is an international brand of snacks joint present worldwide in different countries. It started by Robert Brozin and Fernando in 1987 in South Africa and from then it has expanded its business worldwide (nandos.com 2018). A strong business structure and strategic management is required to maintain such a large business. This discussion focuses on the different strategic decisions that can be used by Nando’s to develop and sustain their business.

One of the strategies that Nando’s can use is growth and expansion (Taylor 2016). Robust expansion to different parts of the world by opening outlets in different cities in different countries. This can let the brand gain a worldwide popularity and make it the customer’s first choice.

Secondly, Nando’s has to maintain its quality without compromising the price. The customer range of Nando’s primarily vary from 18years to 34 years. The young vibrant customer base is always on the lookout for new dishes along with the classic traditional ones (Holt 2018). Developing newer recipes in line with its peri-peri sauce can give Nando’s an edge over other brands such as KFC or McDonalds.

Suitability, Acceptability and Feasibility:

Suitability:  Nando’s has always focused on expansion, so further expansion is always sustainable for the company. Moreover, Nando’s rapid expansion in different markets has always acted as its strength, hence, this strategy falls in line with the objective of Nando’s (businessnews.com.au 2018). The second strategy which focuses on changes and adoption with time is also according to Nando’s work ethics which finds more suitability in changes than remaining traditional. The ability of Nando’s to change according to the change in taste of the customers is one of its major strengths.

Accetability: Nando’s has always shown a different attitude from the other companies in its work culture. It has a lenient management style, partner selection style (nandos.co.za 2018) and an informal relation with its staff. The implementation of new strategies has a higher acceptability factor in case of Nando’s as the partners and management are always ready to take risks. In the past it has been seen that Nando’s has gone through a tough phase but with the help of its partners and its successful strategic changes over time has shown its acceptability in the market.

Feasibility: Nando’s is one of the most successful food outlets in the world, having a decent financial turnover. Moreover, its successful management style (nandos.co.uk 2018) provides Nando’s with the perfect infrastructure required to bring about the strategic changes. The strategic changes are highly feasible considering Nando’s strength in the market and its ability to focus on constant development and change.

Considering the three factors in the SAF analysis, it can be said that expansion and development is the most effective strategy that Nando’s can adopt for its development in the future. It is suitable considering Nando’s robust growth in the last few years in different countries (Gander 2017). Moreover, Nando’s follows a lenient corporate structure which gives freedom to its partners and management. This can allow them to easily accept the required changes. Moreover, Nando’s has a strong financial development in the last few years. Its management and infrastructure allows its expansion strategy to be more feasible in the present market development.

Lewin's Three Phase Change Process

Implementation of change requires certain planning and processes. The most suitable strategy discussed in question 1 is expansion and growth. The rapid development and expansion of outlets all over the world has been seen as the most effective strategy that Nando’s can adopt for its future development. The process used for planning the implementation in this discussion is the Lewin’s Three Phase Change Process. This will explore the existing ideas which needs to unfreeze, then changed and again refreeze so that the change and strategic development takes place completely.

Unfreeze:

• Robust development and expansion is required for the company’s growth and development.
• Nando’s maintains a strong relationship with its partners and management who are always ready for change.
• In order to sustain in the competitive market Nando’s need to expand in a robust manner to increase profits and popularity.
• Nando’s strong infrastructure and growth requires the expansion to sustain and develop.

Change:

• The change requires strong communication between the authorities and the management who will be directly handling the expanding market.
• There might be hurdles in establishing foothold in certain markets but belief in the company’s vision can create a strong statement in repelling rumours and negative impacts.
• Establishing the outlets and successfully appealing to the new market is the key factor to change.
• Promotion and directly involving new people helps generate interest in a new market and trigger the required change.

Refreeze:

• When the outlets have already been established, it is essential to operate them successfully.
• Encouraging the management to achieve success and not highlighting the initial failure can motivate the employees to perform better in the expanded outlets.
• Providing training and support to the local employees can generate more interest among the local people who can adopt the newly opened outlets in their own culture, hence generating new markets.
• Moreover, it is very essential to celebrate the success of the organisation in the new outlets in order to motivate the new employees and bring in success to the organisation.

The above analysis perfectly highlights how the strategy can be successfully implemented in Nando’s and how successfully it can bring in the desired change in the sector which can help in the company’s growth and development. Moreover, these highlight the key points available to Nando’s for bringing in the change and how it can benefit the newly opened outlets. The success of this expansion theory further depends on how the company handles it and how it operates the management and the newly appointed employees. They can further encourage the new market and gain a strong foothold in that sector. The robustness, active promotion and aggressive marketing all are the key factors in the success of the new expansions and these play a major role in the development of Nando’s.

Nando’s is one of the most famous chicken restaurants in the world jointly opened by Robert Brozin and Fernando Duarte in 1987. The South Africa based restaurant expanded over the years from South Africa to other countries such as Namibia, Zimbabwe, Mauritius and Botswana. Subsequently it expanded to countries like Australia, UK, Portugal, Israel, and Canada. In the middle of the 1990s it spread to the South-East Asian countries and has the potential to become one of largest recognised food outlets all over the world.

SWOT analysis:

Strength:

• Nando’s uses exclusive décor for each outlet.
• Nando’s peri-peri chicken recipe is unique and popular among its customers.
• Customer satisfaction.
• Nando’s customer loyalty card.
• Active promotions.

Weakness:

• Nando’s is popular in only a few countries.
• Nando’s offers limited dishes besides the famous peri-peri chicken
• The rising costs of production compared to the affordable dishes that Nando’s offers to its customers.

Opportunities:

• Introducing new and global dishes to its menu.
• Expansion in a robust scale.
• Development of infrastructure.

Threats:

• Development and growth of competitors.
• Entry of new players in the food market.
• Rising prices of cooking fuel and raw materials.

BCG analysis:

The BCG framework analyses some of the products and aspects of Nando’s which are crucial for understanding its sales benefits and growth. Over the years, it has been seen that Nando’s Peri-Peri chicken is its star product having a high market share and a high growth rate. Nando’s Peri-Per sauce is the product is its cash cow as it has a high market share, being one of its most popular products but has a low growth rate in terms of development. Other dishes that Nando’s offer can be put in the dog category as they neither have a high market share nor a high growth rate. The biggest question mark for Nando’s is its expansion strategy. Nando’s have made considerable expansions from its beginning, but the robust development that is required for the rapid growth of the company is missing.

Nando’s International Strategy:

Nando’s follows a global strategy that gives freedom to its shareholders in different countries worldwide. Nando’s promotes a spirit of entrepreneurship and ownership to its partners. The parameters and visions of operations are set by the headquarters, but at the same time it encourages the partners to take up responsibilities in their own hands so that they can operate in a freer manner with a spirit of managing one’s own company. This has resulted in creating a good relation between the management and the headquarters which has helped the company achieve a considerable development in the recent years.

Nando’s and innovation:

Nando’s has limited number of dishes and taste options. It prepares chicken with the utmost passion and aims at providing its customers with the best taste of Portugal. However, the introduction of the peri-peri sauce in the market created a huge scope for Nando’s (Quinn 2012). It generated large profits for Nando’s from 2004. It is still one of the largest selling products of Nando’s.

However, besides this Nando’s has very limited innovations. This is one of the negative factors of the company. This can further lead to a negative impact on the company’s reputation as the customers might get bored with the similar taste over the long period of time. However, the main dilemma limiting Nando’s innovation is its constant urge to provide the best peri-peri chicken and the taste of Portugal. There are different dishes of Portugal and Nando’s should explore on the development of those dishes so that the main objective of Nando’s is not harmed, and at same time it can innovate and develop its menu and taste for the future.

Reference:

businessnews.com.au 2018. Nando’s to expand in WA. [online] Business News. Available at: https://www.businessnews.com.au/article/Nando-s-to-expand-in-WA [Accessed 27 Jun. 2018].

Gander, K. 2017. It turns out you were learning to love peri-peri long before we ever had Nando's. [online] The Independent. Available at: https://www.independent.co.uk/life-style/food-and-drink/nandos-peri-peri-chicken-origin-rise-popularity-spice-levels-uk-restaurant-a7846706.html [Accessed 27 Jun. 2018].

Holt, M. 2018. Nando's are adding a new item to their menu and it involves lots of avocado. [online] mirror. Available at: https://www.mirror.co.uk/money/nandos-adding-new-item-menu-12633735 [Accessed 27 Jun. 2018].

nandos.co.uk 2018. Patrãos - Nando's Careers. [online] Nando's Careers. Available at: https://careers.nandos.co.uk/roles/patraos/ [Accessed 27 Jun. 2018].

nandos.co.za 2018. Nando's Franchising | A spicy journey to treasure the Nando's brand. [online] Nandos.co.za. Available at: https://www.nandos.co.za/franchising [Accessed 27 Jun. 2018].

nandos.com 2018. Story | Nando's. [online] Nandos.com. Available at: https://www.nandos.com/story/ [Accessed 27 Jun. 2018].

Quinn, J. 2012. Nando's profits and popularity on the up. [online] Telegraph.co.uk. Available at: https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9731950/Nandos-profits-and-popularity-on-the-up.html [Accessed 27 Jun. 2018].

Taylor, C. 2016. Nando’s hungry to expand after recording 28% jump in revenues. [online] The Irish Times. Available at: https://www.irishtimes.com/business/agribusiness-and-food/nando-s-hungry-to-expand-after-recording-28-jump-in-revenues-1.2789980 [Accessed 27 Jun. 2018].