A Commenter on a previous videocast noted: “ndubuisi ekekwe, I know that Aliko Dangote is a great businessman, but why was he unable to break into the pasta/noodles sector? If he can really pick any sector and dominate it.” I did promise to explain via a video, besides my comment on LinkedIn. (Note: Dangote is still on pasta business; it exited the noodles’)
In this videocast, I explain how the makers of Indomie noodles used the same strategy Dangote Group had deployed across industrial sectors to defeat Dangote Noodles. The accumulation of capability which Dangote Group uses to crush competitors did not work because Dufil Prima Foods (makers of Indomie) did the same thing from electricity generation to production, for its noodles business. With their vertically integrated business, there was no left efficiency which Dangote could exploit to improve quality and reduce price. At the end, an established brand won and Dangote Noodles could not dislodge them. Dangote Group later sold its noodle business to Dufil Prima Foods. This shows a practical model anyone that wants to compete against Dangote Group can deploy. Beware: you need to be very solid!
Please read this brilliant comment on LinkedIn from a Commenter. It strengthens this conversation.
[Dufil] Prima foods mastered cost value and experience value through mainly the discipline of operational excellence to achieve and exploit leadership advantage by
1. leveraging is assets maximally to boost revenue and financial returns. Ndomie was operating more hours a day, producing more output a day, at less cost than Dangote.
2 Finding different markets to penetrate with their existing assets and boosting the utilisation of the existing assets. Hungryman pack, family pack, breakfast pack etc.
3. It shrank the idle time of its production assets and even used up dormant capacities. That is the formula of [Dufil] Prima foods. Mainly the discipline of operational excellence to deliver cost value and experience value. Just an analyst’s opinion.
--- I lead an Advisory Services business in Fasmicro Group. We help clients engineer growths through intelligent fusion of people, processes and technologies. Let’s solve your business challenges and make 2018 a great operating year.