Question 1 (Marks: 20)
We reimagine the way the world moves for the better
We are Uber. The go-getters. The kind of people who are relentless about helping people go anywhere and get anything. Movement is what we do. It’s our lifeblood. It runs through our veins. It’s what gets us out of bed each morning. It pushes us to constantly reimagine how we can move better. For you. For all the places you want to go. For all the things you want to get. For all the ways you want to earn. Across the entire world. In real time. At the incredible speed of now.
The idea for Uber was born on a snowy night in Paris in 2008, and ever since then our DNA of reimagination and reinvention carries on. We’ve grown into a global platform moving people and things in ever expanding ways. We’ve gone from rides on 4 wheels to rides on 2 wheels to 18-wheel freight deliveries. From takeout meals to daily essentials to prescription drugs to just about anything you need at any time. From drivers with background checks to real-time verification, safety is a top priority every single day. At Uber, the pursuit of reimagination is never finished, never stops, and is always just beginning.
Uber. 2022. About us – We reimagine the way the world moves for the better. [Online]. Available at: https://www.uber.com/za/en/about/ [Accessed 19 March 2022].
Q.1.1 With reference to Uber, discuss the concepts of value innovation and competitive advantage. Ensure that you provide at least two examples from the case.
Q.1.2 Briefly explain Kondratiev’s long wave theory of innovation and discuss the four stages that it follows.
Q.1.3 Discuss the role that transformational leaders play in encouraging innovation within an organisation.
Question 2 (Marks: 20)
Covid spurs Discovery to find low-income clients
Discovery Ltd. is starting to sell private health cover in South Africa at about a third of the price of its prior entry-level product, a move to attract new customers and tap into pandemic-heightened concerns about health. The administrator of the country’s largest medical-insurance provider, which has more than 40% market share, will offer primary care for about R350 ($23) a month, giving customers access to a network of doctors, emergency procedures and treatment for chronic conditions including HIV. “We have to try and make health care affordable and to more people,” Discovery chief executive officer Adrian Gore said in an interview at the company’s state-of-the-art headquarters in Johannesburg’s financial district. “We’ve never seen efficiency in health care, quite the opposite. Covid may change that as for the first time health care is being delivered potentially digitally.”
More affordable South African insurance could help address a shortage of doctors and dilapidated facilities in the public health system, which is relied on by at least 72% of the nation’s 60 million people. While the country’s ruling party agreed to enact universal national health insurance, known as NHI, in 2007 its implementation has stalled while funding and operational details are ironed out. Gore, a 57 year-old former actuary, started Discovery in 1992 focusing on private health insurance. The company has since expanded into banking, asset management, life insurance and casualty cover, and is valued at R108 billion.
The CEO has also presided over the creation of partnerships across countries including in Europe, US, China, Singapore and Australia, giving Discovery access to millions more customers for its Vitality program, which offers discounts to people who keep fit and eat healthily in a bid to lower insurance claims. Discovery has been criticised regularly over its rising premiums, and a 2018 industry inquiry ruled the company contributed to an uncompetitive market by generating far higher profit than competitors. The company said that was due to how well it runs the business and not because it charges higher fees. Still, the take-up of medical insurance in South Africa has stumbled with overall membership sliding 0.6% to 8.9 million beneficiaries in 2020 as a stagnant economy hammered disposable incomes.
But with as many as 8 million uninsured people wanting access to private health care, other entrants are circling. Dis-Chem Pharmacies Ltd. and digital bank Tyme this week launched insurance to tap into a wider and under-served segment of the population. Dis-Chem’s product starts at R431 a month and TymeHealth at R139, depending on what exactly a person gets covered. Buyers of the Flexicare product administered by Discovery also get acc to wellness and screening programs. People have become increasingly aware of this concern during Covid-19, Gore said.“ As Covid hit, we saw the correlations of the same risk factors such as diabetes and high body mass index driving higher levels of severe disease and death,” the CEO said. Covid has increased people’s “sense of wellness and resilience, and why it’s important.”
Kew, J. 2022. Covid spurs Discovery to seek low-income clients. [Online]. Available at:
https://www.moneyweb.co.za/news/companies-and-deals/covid-spurs-discovery-to-seek-low- income-clients/ [Accessed 15 March 2022].
Q.2.1 There are various considerations that organisations can use when evaluating strategies to determine which are the most suitable. Using the information from the above case study, evaluate the feasibility, appropriateness and validity of the differentiation strategy that Discovery is following.
Note: Ensure that you draw on examples from the case to support your answer.
Q.2.2 Differentiate between the three levels of strategy with original examples.
Q.2.3 Using your own words, outline the disadvantages of focus strategies.
Question 3 (Marks: 20)
Cell C recap plan announced
Blue Label Telecoms on Tuesday unveiled long-awaited details of a planned recapitalisation of Cell C — a move aimed at dealing once and for all with the mobile operator’s crippling debt problem. The recap, which has been years in the making, is designed to put Cell C on an even keel, able to compete more effectively in the mobile services market against rivals Vodacom, MTN, Telkom and Rain without being constrained by a highly geared balance sheet. Blue Label, which bought 45% of Cell C five years ago for R5.5-billion, was later forced to write down the carrying value of its investment to zero. Investors have punished Blue Label as a result, with its share price trading well off its peak above R20/share.
The net result of the planned recapitalisation will be that Cell C will be restructured and refinanced with the purpose of deleveraging its balance sheet, providing it with liquidity with which to operate and grow its businesses, and to position itself for long-term success. “Cell C has implemented a turnaround strategy, focusing on operational efficiencies, reducing operational expenditure and optimising traffic. This includes a significant reduction in capital expenditure and a conversion of a fixed-cost, infrastructure-based network to a variable operational expenditure model,” Blue Label said.
“This, together with the recapitalisation of the current debt structure, will result in a significant improvement of its liquidity and ensure the long-term sustainability of the company. From a Blue Label perspective, the recapitalisation of Cell C, together with the benefits to be derived from Cell C’s turnaround strategy and its sustainability, will enhance the value of its investment therein and in turn restore its shareholder value.” Cell C reported earnings before interest and tax for the six- month period ended 30 November 2021 of R862-million. After accounting for finance costs of R791- million and forex losses of R923-million, the net loss after tax amounted to R849-million, Blue Label said. “It should be noted that finance costs and forex losses will be reduced going forward as a result of the proposed transaction.”
In an e-mailed statement, Cell C CEO Douglas Craigie Stevenson said Tuesday’s announcement by Blue Label takes Cell C “closer to concluding a transaction to ensure that it is well placed to take advantage of strategic growth opportunities with the right capital structure”.
“Restructuring the balance sheet and improving Cell C’s overall liquidity was part of the four-pillar strategy we put in place to turn the company into a profitable, competitive player in the South African telecoms industry,” Craigie Stevenson said. “The other two pillars include improving operational efficiencies and implementing an innovative network strategy. We have made significant strides on the latter two. Our leadership team has been focused on implementing a strategy to ensure the company is a fit-for-purpose entity when the transaction concludes.”
McLeod, D. 2022. Cell C recap plan announced – all the details [Online]. Available at: https://techcentral.co.za/cell-c-recap-plan-announced-all-the-details/208848/ [Accessed 01
The article above makes reference to a turnaround strategy. Recommend the various options that Cell C may have chosen from as part of a defensive turnaround strategy. Provide at least five examples / extracts from the case that support turnaround strategy actions taken by Cell C.
Answers to Above Questions on Business Management
Answer 1: Value Innovation and competitive advantage are the important concepts that are aimed at exceeding customer expectations from products and services ES. An analysis of the concept of value innovation indicates that it is the process whereby a company introduces new technologies with the objective of achieving both product differentiation and low cost. Competitive advantage on the other hand is defined as the additional advantage that allows a company to produce goods or services better or cheaper than its rivals. An analysis of the given case of Uber indicates that the company has value innovation and competitive advantage by way of introducing a technology that helps in carrying people to their destination on time…..
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