Can the “Cardrepreneur” Create and Sustain Competitive Advantage in Zambia?

Its deals season. Brief case business with political acumen are on the rise. The dawn of small businessmen with access to some of the most lucrative deals has been reignited. They often operate as proxies (vertically integrating themselves for convenience during the short run of a deal). Value is created when the payoff comes igniting hedonistic spending until the next deal. They pop Moet when they win :-) LOL!!

This is a social factor that cannot be ignored because we see an opportunity for these street wise businessmen to actually create something credible that can compete with extant players (note to self as an extant player, these guys are in the box marked threat of competitors in Porters 5 forces model. You have been warned). Only concern is the hedonist behavior. They “gots” to check themselves before they wreck themselves. Corporate governance is another issue that they have no rules for therefore, we are inclined to be less optimistic on this front. We see aspects of agency costs rising during the process of negotiations for some deals. However, if they do get it right and collaborate correctly, we see a lot of opportunity to create competitive advantage (CA). Being new to formalized structures may be there undoing and affect their ability to sustain CA.

Sustaining CA requires an outlook on the market that is forward looking. Which often requires taking inventory of your resources and capabilities. The ability to sniff out a deal is a capability that is nontransferable. However, being a myriad player opting for ubiquitous deals can lead to loss of focus on the numbers that actually create value. Not all hugely marked deals yield competitive advantage that is sustainable. In fact, if the numbers are not done properly, value can actually be destroyed in the process.

Further to this is implementation of plowback strategy for all the winnings (those earnings / actual profit). Firms that seek to sustain competitive advantage usually have control over their appetite for dividends. They have tendencies of plowing back earnings into areas they believe will continue to yield their firms sustainable value creation. They look to the long run. This could be by investing in resources such as property plant and equipment (fixed assets that have the ability to generate income in the future).

We advise all “Cardrepreneurs” to keep an eye on Hon. Felix Mutati’s budget speech. He/She who decodes the numbers quickest will see where the opportunities to create value lie. Extant players will be watching. TFHZPC will be watching too.