Analysis of the structure and culture of Thanda Forestry Company (TFC).
1. BUSINESS PROFILE OF THANDA FORESTRY COMPANY (TFC)
TFC is a forestry parastatal which manages 175 000 hectors of State-owned commercial plantations. The Group consists of two main operating subsidiaries: Matanda Forests (“MF”) operating in South Africa’s 3 provinces (Limpopo, Mpumalanga and KwaZulu-Natal), and Florestais Mozambucus (“FM”) located in the Manica province of Mozambique. TFC was established in 1990 and has a total of 3000 employees with three main offices, two in South Africa and one in Mozambique.
2. EXECUTIVE SUMMARY
I conducted the analysis of TFC’s internal and external environments and ...view middle of the document...
They suggested that the organisation and its environment depend of each other for survival. The three main environments (see Figure 1) which has impact in organisation are; the internal, near and far environment which is also referred to as STEEP factor.
To be successful organisations must anticipate possible change and position change and position themselves to deal with opportunities and challenges in a proactive rather reactive manner.
4.2. Analysis of TFC’s external environment.
4.3.1. The near environment
The near environment also called competitive environment of TFC includes its customers who buys its products, its clients, contractors, public, land claimants suppliers and most importantly the competitors such as Yugesh Timbers, Milito Forests, Mundalis and Hanes Maarsy. They have an influence on TFC.
In analysing factors that may influence TFC over the next five years, I used Michael Porter’s model of competition which argues that there are five main forces affecting the profitability of industries as illustrated Figure 2. Table 1 show analysis of TFC’s competitive environment using Porter’s five forces.
Table 1 Analysis of TFC’s competitive environment using Porter’s five forces
Intensity of competition (industry structure) | Factors | Analysis of TFC |
| Number of competitors | The forestry industry in South Africa is still in the hands of the few minorities, the market is dominated by private companies and transformation agenda is very high. TFC is trading in a. Two of the major forestry companies are international companies and competitive advantage over TFC. |
| Market growth | The market for structural timber in South Africa is small and it’s growing very slow. TFC is a leader in the production of sawn timber which is mostly used as structural timber. Its sawn timber market share in South Africa is 13%. The recent economic meltdown dealt a huge blow in the market for structural timber which is one of the major products of TFC. |
| Product similarity | Although TFC’s timber produced is of very high standards, there is not much differentiation on its products as other competitors use similar standards. |
| Fixed costs | TFC is operating on very high fixed costs; most of the costs are overhead costs. Lack of mechanisation and the organisational structure of TFC are the main cause. Due to the positioning of TFC in rural areas, TFC is seen as government entity that could alleviate poverty by providing decent jobs to the impoverished communities. There is therefore high expectations from the public and from government for TFC to continue providing jobs even if difficult trading conditions |
| Exit barriers | There is lack of political direction on the existence of TFC as a parastatal. It is anticipated that TFC will continue to assist government in the poverty alleviation. |
Threat of New Entrance | Economies of Scale | Forestry requires large scale production in order to...