The association between strategic configurations and success for SMMEs supplying fuel in the South African commercial sector

Haw, Geoffrey Robin
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This study focuses on the South African commercial fuel industry, specifically the Small, Medium and Micro Enterprise (SMME) oil companies supplying diesel to commercial users. The supply and distribution of diesel is less regulated than that of petrol and price discounting is allowed. This has created a highly competitive environment for the commercial fuel industry. Within this industry there are two distinct sectors, the private and public sectors. Few SMME’s have had success in supplying fuel to the public sector despite the stated intention of organs of state to promote SMME businesses. Are some SMMEs finding success in the private and not the public sector? Is there a winning strategic style or configuration that promotes success in this industry? This study categorises SMME oil companies into one of four Miles and Snow (1978) strategic classifications, (1) Reactors, (2) Defenders, (3) Analysers and (4) Prospectors. Success in both the public and private sectors was measured and associations were then sought with strategic classification. In addition correlations were sought between public and private sector performance. The population of this study was the 26 SMME respondents to the 2010 tender for supply of fuel to the government transport parastatal, Transnet. Transnet accounted for 64.6% of public sector diesel usage in 2008 and the population was intended to be indicative of SMMEs trying to sell fuel in both the private and public sectors. Data was collected using a three part questionnaire in an interview environment. A total of 14 SMMEs participated in this study, all data collected was usable. No significant association was found between the SMMEs’ strategic classification or configuration, and the private sector performance. The rankings of public and private sector success were compared and a significant correlation was detected. None of the Miles and Snow strategic classifications work better in the commercial fuel industry. This may only be indicative of the industry as it is now as it has been undergoing much change. A more stable industry may yield different results. SMMEs that does well in the private sector tend to do well in selling fuel to the public sector. This implies an effective fuel supply tender process in Transnet
MBA thesis - WBS
Fuel supply, Small, medim and micro businesses