(a) SWOT analysis is the appropriate tool for the case.

This is a tool used while analyzing

the business environment both internal and external. This involves strength, weaknesses,
opportunities and Threats.
Strength
Competitive loyalty programme which has enabled indigenous firms to increase sales for
example capital shoppers whose promotion starts as low as 5,000 compared to Nakumatt of
10,000 and capital shoppers which gives 4% discount compared to 1.5 or 0.2% discount by
Nakumatt.
Good buyer and supplier relationship. This has resulted in continuous business leading to
growth in sales, revenues and branch networks e..g Capital Shoppers pays their suppliers
promptly.
Strategic location. This has helped indigenous supermarkets to tap the wider market. E.g
Mega Supermarket is located just opposite old taxi park and capital shoppers has other
services strategically located near its outlets.
Weaknesses
High operating costs. This reduces the revenue for the foreign supermarkets. E.g. they hire
foreign workers who are paid as expatriates which adds to the ovberheads.
Low sales. This is due to highly priced goods of the foreign supermarkets. E.g. Nakumatts
prices are relatively high compared to other players.
Opportunity
Competition between farmers. Most farmers are interested in having their products in the
supermarkets shelves. Therefore supermarkets do not pay up fronts for the foodstuff on
display. Instead they require suppliers to supply on credit or until they sell.

Threat
Existence of small family stores known as Kukas. Most Ugandans generally do their
shopping at small family stores located near their homes as well provide goods on credit
which reduces the sales of supermarkets.
The following are reasons why local supermarkets are on rise while foreign supermarkets are
collapsing.

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Indigenous supermarkets operate a very competitive loyalty programme compared to foreign
supermarkets e.g. Capital Shoppers sales promotion starts for as low as 5,000 Shs. While
Nakumatts sales promotions start at 10,000. Which makes indigenous supermarkets to make
more sales compared to foreign supermarkets.
Indigenous supermarkets are strategically located compared to foreign supermarkets e.g.
Mega Supermarket is located near the old taxi park which enables it to tap large market
hence increasing its revenue as the sales of foreign supermarkets keep reducing leading to
their collapse.
Increased branch network of indigenous supermarkets for example Capital Shoppers has
branches in Nakawa, Garden City, Nakasero, Ntinda and yet to open another branch in
Wandegeya. Also Mega supermarket is soon opening a branch at Garden City which makes it
easy for customers to access their products compared to foreign supermarkets that have a
limited branch network.
Bureaucracy among foreign supermarkets. This delays decision making which hinders the
performance of these supermarkets for example in Shoprite Supermarket, payments to
suppliers would be generated in South Africa which scared away some Uganda suppliers
who later bad mouth the company.
Fraud in most foreign supermarkets. This has reduced revenues hence leading to the collapse
of these supermarkets. For example managers normally connive with landlords to hike rents
from which they share the difference compared to indigenous firms like Quality supermarket
is housed in its building making it difficult to face fraud related to rent.
(b) Expansion strategy. This is where a firm decides to increase on the pave of its activities
products and functions.
Merits
Wider market. Through opening of different branches in different locations, products are
able to reach a wider number of customers. For example capital shoppers is opening up a
new branch in Wandegeya in addition to the existing branches.
Increased sales. This is a result of additional offers given to customers for examples Capital
Shoppers give up to 4% discount and the sales promotion starts as low as Shs. 5,000.
Good reputation of the firm. Opening up more branches is a sign that the supermarket is
performing well which increase their loyalty to the customers.

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Increased profit. This is a result of increased sales which increases the revenue of the
supermarket.
Motivates the firm supermarket. This is because the supermarket has to put in place
strategies to maintain the additional activities and functions as well as the branches.
Increased employment opportunities. Through opening up different branches more
employees are required for example supermarkets managers, cashiers and attendants among
others hence creating employment opportunities for most Ugandans.
Employee turnover. This is as a result of increase in activities and functions within the
supermarkets without an increase in a number of employees leading to overworking of the
employees which forces them to leave the company.
Risk of failure. Expanding our business comes along with uncertainty of the outcome being
a failure or success in case of failure or the newly established branch, the supermarket incurs
losses.
Difficulty in management. As the supermarket expands it attracts the need to hire more
human resources which may be difficult to manage in terms of supervision.
Compromised quality. As the supermarket expands most of the resources are diverted
towards the expansion strategy and hence less focus is put on providing quality products and
services.

Part C.
Organizational analysis. This is a tool used to identify the internal weaknesses and strengths
and thereafter taking corrective action.
The organization can be analyzed using the following aspects that is functional analysis and
value chain analysis.
FUNCTIONAL ANALYSIS
Marketing department
Strength
Capital shoppers operates a very competitive loyalty programme. Their sales promotion starts
from as low as 5,000 and also offers a discount of 4%. In addition to this they operate a
concept of capital reward card where customers can buy track goods with their accumulated
points.

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Low prices offered to customers. Capital Shoppers keeps its prices as low as possible in order
to attract customers from different classes.
Finance and accounting
Strengths
Capital Shoppers pays suppliers promptly. This has helped to maintain a good relationship
with their suppliers which has resulted in continuous business operation.
Full control of the top management. The owners of capital shoppers Mr. and Mrs. Ngabirano
are said to be in full control of the business as they are always there full time to manage the
business.

Production and operations Department

Strength
Capital Shoppers is well stocked. This has made it a choice for most shoppers unlike Uchumi
Garden City branch which was facing stock out.
Value Chain Analysis
This is a strategy tool used to analyze internal firm activities. Its goal is to recognize which
activities are most valuable. Capital Shoppers is opening up a new branch in Wandegeya
bringing the number of outlets to five making it the largest locally owned supermarket chain
in the country.
Strategic advantage profile of Capital Shoppers
1. Strategic location Capital Shoppers is strategically located
near other services such as Bank ATM
branches, Photo Studios, restaurants, a
big parking lot and wine shop among
others.
2. Goodwill Mr. Ngabirano is said to be active in the
Catholic Church particularly Christ the
King Church Kampala and Mbuya
church a reason why there is a
Centenary Bank branch or ATM or
every Capital Shoppers outlet.

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3. Low Prices Capital Shoppers keeps its prices as low
as possible that attracts customers from
different classes such as diplomats as
well as students.

4. Good buyer and supplier relationship Capital Shoppers pays its suppliers
promptly and this has resulted in
continuous business operations.
5. Variety of goods Capital Shoppers has a stock of both
local and imported goods this makes the
customers shopping easy which boosts
sales.