Addie Supermarket Ltd. is a large supermarket chain operating in six regions in Ghana. It is the vision of management to make Addie Supermarket a household name in South Sahara Africa within the next ten years. In its last management meeting, the following objectives were set in pursuant to its vision:
- To ensure the loyalty of its customers – i.e. to generate lifetime loyalty.
- To ensure its prices are at least 2 percent cheaper than the average of rival supermarkets – i.e. to create value for customers.
Required:
i) Identify TWO critical success factors (CSFs) for each of the above objectives set by Addie Supermarket management. (4 marks)
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To ensure the loyalty of its customers – i.e. to generate lifetime loyalty the following CSFs should be addressed:
- Stocking the goods that customers most want to buy
- Making the shopping experience as pleasant as possible/differentiating the shopping experience from that of other supermarkets to lock in customers.
- Making the supermarket more accessible to customers by establishing out-of-town outlets
- Etc.
To ensure its prices are at least 2 percent cheaper than the average of rival supermarkets – i.e. to create value for customers the following CSFs should be addressed: - Refining internal processes to operate the business on a cost-effective basis – e.g. building close partnerships with suppliers to implement a JIT system (in order to eliminate or reduce warehousing costs)
- Using economies of scale to source appropriate goods as cheaply as possible.
- Etc.
ii) In order to measure how well it is performing against the CSFs, the supermarket needs to set key performance indicators (KPIs). For each of the CSFs identified above, identify TWO KPIs to aid management in tracking the delivery of the CSFs. (6 marks)
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In order to measure how well Addie management is performing against the above CSFs, the supermarket needs to set the following KPIs: The first three KPIs are in respect of the first two CSFs above and the last three are in respect of the remaining CSFs.
- The proportion of goods taking more than a week to sell
- Results of customers feedback surveys
- Percentage of customers who are repeat customers
- Market share
- Cost measures and progress against savings targets
- Cost savings in procurement
- results of benchmarking prices or costs against that of rivals