How to Get Started in Social Media for Art League City
Market Entry & Expansion Strategies for Africa: Factors for Consideration - Eugene Nizeyimana
1. Market Entry &
Growth Strategies
for Africa: Factors
for Consideration
________________________________________________________________________________________________________________________
Eugene Nizeyimana
COO, Sub-Saharan Consulting Group (SSCG)
January 2013
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
2. Key Issues
________________________________________________________________________________________________________________________
1. Africa Market Attractiveness: Economic context,
characteristics, opportunities and risks
2. Strategizing for New Market Penetration and Growth
3. Core drivers for market selection
4. Factors to consider when choosing local partners
5. Growth strategies and partnerships for consideration
6. How to boost organisation client base, operation and capital
position
7. Key success factors for market entry
@2013 SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
3. Africa Economy at a Glance: Market
Context, Characteristics, Opportunities
and Risks
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
4. Market Attractiveness: Investment
Opportunities in Africa
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Source: World Bank 2012
+1.2 Billions Population
+$1.8 Trillion Africa’s collective GDP in 2013
+100 Billions Foreign inward direct investment in
Africa in 2013
6% Sub-Saharan African countries average GDP growth
+800 Millions Mobile subscribers and World's fastest
growing region in terms of M-banking.
54 Countries
5. Economic Growth and Market Characteristics
________________________________________________________________________________________________________________________
• Opportunities and risks
• While the continent’s sheer size would merit
attention, Africa offers much more than
resources alone
• Since 2000, consumer spending growth of 4%
per year, to reach $1 trillion in 2020
• Home to 6 of the 10 fastest growing markets
• Economic growth prediction – between 5%and
8% in 2013 and coming years
• Millions of Africans are finding a path from
poverty to greater opportunities and prosperity.
• 1.2 billion people – cheap labour force
• Rapidly improving income levels, infrastructure,
and business environments
• Continued discovery of new resources
• Regulatory and policies changes
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
6. Market Entry & Growth Strategies:
Strengthening Organisation Corporate
Landscape, Operations, Customer Base
and Capital Position in Africa
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
7. Strategizing for New Market Penetration and
Growth: Core Factors for Considerations
________________________________________________________________________________________________________________________
• New market role in the broader corporate
strategy
• Strategic positioning – Capital and
corporate
• Increase share and long term profitable
growth
• Optimize product portfolio
• Enhance corporate capabilities
• Achieve operational effectiveness
• Improve customer base
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
8. Market Selection: Key Factors for
Consideration
________________________________________________________________________________________________________________________
• Market size - exposure to a broader range
of large and small markets.
• Barriers to entry
• Political stability and security
• Economic stability and GDP Growth-
growth rates, incomes, costs, resources,
interest rates and inflation
• Geographic borders - remoteness, size of
country, population and climate
• Business infrastructure – Transport & IT
• Business ethics - language, ethnicity and
culture
• Competitors and industry structure
• Fiscal policies and regulatory regimes
• Availability of local suppliers
• Labour market and costs
• Partners - Potential and credibility local
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Key Issues:
• Uniqueness of products or services
• International experience and knowledge of
cultural issues
• Barriers to entry
• Scalability
• Business and operation model
• Local content laws
• Cost of local and overseas outsourcing or to
export?
• Is it better to license to infiltrate more
markets faster?
• Insurance against non-payment?
• Addressing legal issues or conflicts with
partners
• The Effects Of Currency Fluctuations and
mitigation plan?
9. Boosting Market, Customer Base and Capital
Position: Key to Business Success
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Critical factors for growth and operation
improvement
Market data and consumer insights
Value proposition – consumer and market needs
Network and contacts – Governments, suppliers and customers
Devising a feasible market entry strategies
Developing effective supply chain and linkages
Optimizing marketing channels and technologies
Establishing local presence and footprint: shared services
Identifying and developing strong local partnership
Talent and skills
10. Selecting a Business Partners: Optimizing
Local Operations & Footprint
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Factors for consideration
when selecting and
establishing business
partners in Africa
• Complementary skills & experience
• Reputation risks – Political association and
corruption
• Local content laws
• Cooperative cultures
• Compatible goals
• Commensurate risks
• Due diligence – careful selection
• Captive clients and contacts
11. Benefits for establishing local foot print and
operations
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Physical presence
Meet buyers
needs for local
contact point
Access customers
and improved
service levels
Enable just-in-time
delivery
Meet local content
laws and
regulatory
Establish better
relationships with
suppliers, buyers
and end users
Gain access to
local market data
and insights
Encourage
diversity and
innovation
Greater control of
marketing and
distribution
Direct interaction
with customers
Improved
credibility and
loyalty in market
place
12. Establishing Strategic Alliances (SA) & JVs:
Unlocking New Value
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Strategic Alliances (SA)
• Developing partnerships with a local or other global established organisations in the market
to form a new incorporated company.
• SA increases local credibility and trust as a new player in the market
• Both parties provide equity and resources to the venture and share in the management,
profits and losses.
Joint Ventures (JVs)
• Establishing partnership with highly established organisations or government institutions in
Africa is key to enhance local credibility.
• Strategic alliance partners can be identified through bankers, accountants, business
consultants, industry associations and networks, meetings and government contacts.
13. A/Disadvantages of JV & SA
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Partnership working provide greater opportunities and
advantages for organisations seeking to enhance
operation, client and capital position in a new market.
Pro:
• Acquire competencies or skills not available in-house
• Rapid growth and market penetration
• Shared risks with more than one firm
• Enable faster entry and payback
• Government sharing or contract agreement
• Avoid tariff barriers and satisfy local content requirements
Cons:
• Partners do not have full control of management
• May be impossible to recover capital invested
• Disagreement on new export markets
• Partners may have different views on expected benefits
14. Shared Services: Driving Growth and
Performance
________________________________________________________________________________________________________________________
Key strategic objectives of Shared Services (SS)
in an organisation
• Redefine the business model to better align with the changing business environment
• Innovate and expand scope of services to partner with the enterprise to achieve business
outcomes
• Deliver insights and take actions based on the power of data and analytics
• Identify the right lead for the evolving organisation
Benefits
• Enhanced corporate landscape
• Drive value: Customers, shareholders and employees
• Reduce costs of decentralization, to increase the quality and professionalism of support
processes for the business,
• Increase cost flexibility for supporting services.
• Create a higher degree of strategic flexibility.
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
15. Merger & Acquisition (M&A)
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Benefits:
• Strategic restructuring
• Rapid market growth
• Enhanced operation and capital
position
• De-risking operations
• Mitigate entry barriers
Disadvantages:
• Increased financial risks
• Poor or slow post-merger
integration
• Overly optimistic appraisal of
synergies
• Overestimation of market potential
• Inadequate due diligence
• Incompatible corporate cultures
Acquisition or takeover of a local
business
Consolidation/Merger - Combining
with a local company to form a
new enterprise altogether
Differentiation: Cash, stock and
financing options
Types of M&A by functional roles in
market: horizontal, vertical and
Conglomerate M&A
16. Franchising and Licensing
________________________________________________________________________________________________________________________
• Developing on-going business relationship in the market where one party ('the
franchisor') grants to another ('the franchisee') the right to distribute goods or
services using the franchisor’s brand and system in exchange for a fee.
• More sophisticated franchise arrangements specify a precise business format
under which the franchisee is expected to carry on business and ensuring a
common customer experience throughout the network.
• Franchising and licensing foster rapid market expansion using the intellectual
property of the franchisor, and the capital and enthusiasm of a network of owner
operators.
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Determining the Type of Licensing and franchising Model
17. Outsourcing and Contracting
________________________________________________________________________________________________________________________
• Market entry through licensing where
(the licensor) agreeing to permit
another organisation (the licensee) to
use the manufacturing, processing,
trademark, know-how or some other
skill provided by the licensor for a fee.
• Organisations - contract services or
suppliers of products in the target
market.
• This will ensure products or services
are tailored to the conditions and
specific requirements of the local
market.
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Drivers of Outsourcing
and Contracting
• Reduce cost
• Leverage technology, expertise and
resources
• Labour – cost and skills
• Lack of in-house resources
• Improve customer value
• Improve competitiveness advantage
• Increase flexibility
• Consolidate assets/resources
• Increase value: shareholders, customers and
employees
18. Key Success Factors: KPIs & R.O.I Evaluation
________________________________________________________________________________________________________________________
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Long-term commitment Established and enhanced local footprint
Strong relationship development and
management
Supplier, distributors, local government,
partners
Patience and tenacity Slow administrative processes, decision making,
culture, time management, infrastructure
Value proposition Uniqueness of products and services, social
values
Brand reputation and association Strong reputation, brand confidence, positioning
Prior international experience and local know
how
Internationally experienced professionals,
standards, local content laws
Supply chains and linkages Lean, effective and robust
Consumer analytics, market insights and data Effective decision making and positioning
19. Benefits for Foreign Companies Seeking
to Invest Overseas: Africa
• Increased demand for home-sourced capital equipment and services
• Increased capital position: revenue, sales and profits
• Increased taxation income for Governments
• Improved profile and competitiveness of UK in the global marketplace
especially Africa
• Capitalise untapped market opportunities
• Global positioning
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
________________________________________________________________________________________________________________________
20. How SSCG Services and Resources Can
Help Your Organisation?
________________________________________________________________________________________________________________________
@2013 SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
21. How Can We Help You?
________________________________________________________________________________________________________________________
• Market research – Data and insights
• Business Intelligence (BI)
• Consult on market entry strategic approaches and planning.
• Location advice - information on what to take into account when deciding where to locate your
business.
• Devising market entry strategies for growth
• Research and consult on labour practices and costs. This includes identify local employment
practices to cover both legal and cultural issues.
• Identify the incentives available both at the international, national, state, and/or city level.
• Referrals to local experts.
• Introductions to networks and partner searches - Introduce you to the relevant industry
bodies , identify and verify appropriate people in the market such as agents or partners
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
22. Conclusion
________________________________________________________________________________________________________________________
As the African market and opportunities continue to grow more attractive, FDI inward flow
increasing, companies needs to devise innovative ways to gather market intelligence and develop
in-depth insights they need in order to device compelling consumer value proposition offering
and delivery strategies that can both meet the needs of African consumers and generate
sustainable robust revenue and profits.
Big data, analytics, experience and customer feedbacks indicates that current successful
international organisations in Africa employ structured approaches to understand and do business
in Africa. By focusing on the distinctive and niche needs, industries and preferences of consumer
segments and by applying systematic approaches to market entry, promotion, strategic
partnerships, firms can capture opportunities on their own terms, in the process ensuring
sustainable long-term growth.
@2013SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
23. Questions & Further Enquiry
________________________________________________________________________________________________________________________
For further information or to discuss your
organisation tailored needs, contact our
advisory team at:
E: Info@s-scg.com
W: www.s-scg.com
@2013 SSCG Copyright The information contained herein is of a general nature and subject to change. Applicability of the information to specific situations should be
determined through consultation with our advisers. For more information visit www.s-scg.com or contact us at info@s-scg.com
Stay Connected
@SSCGCorporation
@SSCGSMEForum
Facebook/sscg
Linkedin/sscg