Chance coffee with the owner of a Pizza Franchise in Zambia
Retail

The school run season is back. After dropping off my lad at his school, I decided to have a quick coffee as I digested the thoughts of how I was going to create value. So I stopped by the Levy Junction Mugg and Bean and opted to have my fix in the smoking booth. Upon entry, a cool looking gentleman who already indulging in the Mocca Java was handed me today’s paper. Unimpressed by an article I read in the previous day’s edition (poor journalism and lack of research are real in Zambia), I reluctantly accepted the offer to read through. However, it was not long before I put on my TFHZPC hat and began telling the gentleman about my successful launch of FinInsight Zambia’s website the previous week.

One of the issues we discussed was the impact of Porters macro forces on value. Being in a business that largely depends on scale, it is important that a country’s business legislation is in sync with what local businesses are trying to achieve. Ministry of Commerce is working tirelessly to achieve this and stakeholders such as ourselves are behind their efforts.However, as our discussion went on, I soon realized that dominance in the value chain is very important. Furthermore, if locals are going to make investments in franchise business, they must study the plethora of businesses that support their efforts. For example, in the management of contracts with small businesses that supply goods and services, being consistent in your product offering is very important. Take chicken farmers for instance. They demand that main stream business such as listed company Shoprite give them contracts to supply chickens. However, the management teams of these small business have neither the scale nor the consistency to meet the demands of the main stream supermarket.

What we must realize is that the current business world is increasingly getting more and more complex. More and more businesses (including ourselves)are using practices such as subcontracting of labor or outsourcing production that has now lead to what Alliance Manchester Business School (our alma mater) refers to as a Networked Organization (NO). This NO comprises of contracts and relations with external specialized organizations whose sole goal is to create value as a collective.These concepts are well documented in the theory of Transaction Cost Economics(TCE) which purports that firms compare the costs of internal co-ordination to the cost of using markets (transaction costs) in a aiding their decision to coordinate economic exchange for the purpose of optimizing efficiency. Therefore, Zambian entrepreneurs must embrace the nexus of contracts and respect the terms and conditions they hold or risk becoming obsolete.

As we continued to sip the Mocca Java (and they make brilliant coffee TFHZPC recommends it), the subject of skills transfer and not reinventing the wheel when it comes to skills development is crucial in the new economy. Aspects of organizational culture are real in Zambian businesses.For example, he cited his zero tolerance for employees who chose not to develop themselves even when opportunities are given to them. Low skilled labor doeshave a tendency of wanting to expire in their current role. This can be attributed to a number of reasons such as lack of willing to grow professionally by the employee. However, his leadership style is what struck me. Being able to inspire your employees can be the difference between your firms having positive or negative EBITDA.

Sipping my last drops of coffee, I showcased financialInsightZambia.com to him and he approved of the work we are doing. I believe that is the reason he paid for the coffee in the end. Sean Singh(Head of QSR at Dagon Investments Limited) it was great having coffee with you. Continue inspiring Zambian business. TFHZPC was honored to have Mocca Java with you.

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